BY DREW FINERTY
Hello everyone,
The Great Awakening!
The world is coming alive. Countries around the globe are starting to re-open, as we are here in BC. It will be very interesting to see how the next few weeks playout as some sectors get going, amid new restrictions and a new world in the work-place. It was quite evident over the long weekend, that most people have gone as long as they can tolerating self isolation, as we hit Day 70 of the shut-down. We finally got to have our grand-kids up for a sleepover and how they have changed in only 2-3 months…and through our travels to pick them up and drop them off, there was lots of signs of activity out there. After a slight pull back on the markets last week, news of a vaccine trial (albeit with only 8 test subjects) Monday, reported some success (along with more financial stimulus in the States), that gave the markets one of their biggest days of gains since early April.
Yesterday, there was a drop back, as those test results were challenged, and today it was up as much it was down Tuesday. This is the kind of activity I am expecting to see, as we get further into the re-opening, as markets are looking for any data that is optimistic about a restart, even though economic data doesn’t match those trends. I don’t want to under value the hopes that economic stimulus will provide some stability for people in both countries to stay afloat, pay their bills & spend more while businesses start to recall their employees, but I still see some headwinds as most Portfolio Managers do regarding a second wave. However, a treatment and potential early vaccine could keep the market sentiment positive until it doesn’t.
Statement Shock?
By now, most of you (who are clients) will have seen your March 31st statements. I was going to suggest your don’t even open the envelope as they look as bad as it could have been. However, I decided against that idea, knowing this is a very good education moment that you should understand, so you can see how the statements are only a “snap shot” of a moment in time. I didn’t alter your emotions when 2019 had one of the best and most positive return years since 2013, so I wanted you to see “what goes up, will come down and what goes down, will come up”…After the markets peaked on Feb. 19th, they hit the floor on March 23rd, only a week before the statements were due to be sent out. Of course, the markets have rallied about 50% since then and the YTD returns are in an “almost normal down-year” range.
The big question on everyone’s mind, is where do they go from here? Given this is an unprecedented (sorry, I know you’ve heard that word so often over the past few months, but it is the best one to describe the situation) time in the history of human-kind, we are really in unchartered water, but that doesn’t mean we don’t have maps and sonar equipment to keep us safe. Not only is the health and economic damage unlike anything we have ever seen, but the Government and Central Bank responses have matched those curves, to provide financial stability never seen before, not even through the Depression, World Wars and the Global Financial Crisis.
If there is a silver lining, it is the fact that technology and science are also at their most historic levels of all-time and that suggests human ingenuity will prevail. I am both optimist (mid-long term) and a tad pessimistic (short-term), but really there is a lot of 50/50 in everything we know. There’s a 50% chance we get hit with another outbreak, there’s a 50% chance the markets will improve/decline, there’s a 50% chance that reopening the economy will be slow enough to allow some growth to start happening, but not change the way we work from home…etc, etc, etc.
As in any disrupted marketplace, the best advice is to hang tight, buy-in if you have surplus cash, and be patient for the recovery to happen. Trying to out-guess the market is usually a low percentage call and historical records show that holding on to your portfolio will always out-perform the timing aspect of getting out and back in without missing the best days, over the short and medium term.
Re-opening our Office.
As of right now, we are remaining patient with our re-opening. I have a lot of Senior clients and I want to ensure everyone is safe before we open. I am expecting more cases to happen with the general restart of the economy, so I will remain diligent in my need to protect my clients. My plan is to see how the experience goes here in BC, the rest of Canada, and especially in the USA, before making a decision. There are still a lot of new daily cases and deaths south of the border and I am not willing to risk any of my client’s health for the sake of opening too soon.
I have been hosting ZOOM video meetings 2-3 times a day with clients and our Team, and so far, everyone I ask, has enjoyed them and found them valuable to actually meet face-to-face. If you would like to me to set up a video meeting, don’t hesitate to let me know by email or phone, so I can send you an invite by email. I am also available any day to speak with you on the phone or by email, if you are more comfortable with that form of communication.
I hope you are all healthy and well…stay safe, wash your hands a lot and continue to practice physical distancing if you must go out into the world…all the best, cheers!