Market Review - Q1 & Q2 2020
I hope that you had a relaxing and enjoyable 4th of July “firework-free” weekend in the ongoing saga of things that are different in 2020 from “normal” years. Remember all the excitement about “2020 Vision” and the anticipation of the year ahead just 6 months ago? Certainly no one saw this coming for the 1st half and I don’t think anyone expects a slowdown in the unexpected as we hit the 2nd half of the year with the elections coming up.
That being said, if you were just to look at market indexes from the beginning of the year to now you would think it’s been a pretty ho-hum, normal, slightly negative year so far. The S&P 500 was down about 3.1% through the end of June. The Barclays Aggregate Bond Index was up about 6.1% thanks especially to Treasuries. Developed and Emerging International and Small Cap indexes are a bit worse, all down 9.7% or more though (JP Morgan). While none of those stock index numbers seem great, they are a dramatic improvement from where we were toward the end of March when all were over 30% off of their peak at one point. The vast differences from the 1st quarter and 2nd quarter are highlighted by both being in the top 10 all time of worst and best quarters for the S&P 500 (-19.6% and +20.5% respectively) (A Wealth of Common Sense).
As unpredictable as the impact of the pandemic was on our economy, the dramatic recovery of the markets felt equally unpredictable for many and highlighted the importance of remaining invested at your appropriate risk tolerance for long term investors and making sure to consider risk tolerance and risk reduction options for those with shorter term needs. While I have spoken with most of you, let me know if there is anything we need to discuss around that for your situation. I am working on a more in-depth market and economic review for the first half of the year to dive into those numbers visually in more detail for anyone interested. Let me know if you would like to be included when it is approved by my compliance. There is a lot of interesting info we can learn from that is guiding our portfolio positioning and outlooks going forward.
Speaking of outlooks, I have posted Mid-Year Outlook pieces from Vanguard and American Funds to our website with valuable insights from their portfolio and research teams to guide what we are paying attention to in the months ahead. Please click here to read those on our site as well as an article on 14 ways the COVID-19 crisis might make life better for those of us “glass-half-full”. Additionally, I have been spending a lot of time on coordinating different flowcharts and checklists for clients on financial planning topics and will be recording videos over the weeks ahead trying to help people process decisions related to various life events, taxes, healthcare, insurance, Social Security & Medicare, rollovers, retirement, college planning and more. In the meantime, let us know anytime if you have any of those items that you need to work through.
It has been encouraging to talk to many of you over these last few months who acknowledged gratitude for having made difficult decisions in the past to get out of debt and build up emergency reserves to have been able to weather this economic downturn better than you would have been able to otherwise, including a number of you who have lost jobs. For anyone in your life who has found themselves in a financially exposed position who wants to be able to say “Never Again” I would encourage you to forward them this link to a recent Dave Ramsey Livestream event that is very timely. It has the potential to really impact their financial future if they will take the steps.
And finally, in the midst of these turbulent times, I just want to take a moment to encourage you to go out of your way to be kind. In a world that is trying to divide us politically, racially, and in any other way possible, let’s do our part to bring healing any way that we can. We can often feel inadequate to impact things the size of what we seem to be facing, but if we think proactively about kindness and take action to bless a person or organization that we wouldn’t do otherwise, we are at least taking steps in the right direction. I know that many of us have Giving as a high priority in our lives. In a world where so many are hurting and on-edge, consider the opportunity to identify people you can make a difference for and do what you need to do to make it happen. A lot of this has been guiding our family conversations lately and involving our kids in those decisions is a great opportunity to share what is important with them. There are no easy solutions, but if we each do our part, we can begin to break down divisions that need not be so divisive.