So far, 2020 has been a year for the history books. Even the most cursory review of the past quarter includes more economic, social and political data than you might expect from an entire year! All of this can become overwhelming and confusing, but during periods of volatility we are thankful that we have a process-driven approach to investing that shifts our focus from short-term outcomes to long-term goals. This focus was the entire topic of last quarter’s commentary, titled “Markets in Crisis: Using the Past as Our Guide.”
We are maintaining our view to remain neutral to targets on all portfolio recommendations, which means we intend to add to equity positions when prices are low and sell when prices are high. These decisions, when they are implemented, are not made in a vacuum. Quite the contrary – we are closely tracking how the delta (rate of change) of earnings projections moves up or down with COVID-19 case rates. Tracking this data led us to move forward on April 13th with our decision to rebalance and add to equity positions at that time.
Now, our focus on data is tied to next year’s earnings projections compared to today’s prices. The daily events surrounding COVID-19 seem to be the biggest driver of what the next year could look like for our economy. Maintaining a neutral stance to target allocations could change if mortality rates increase. The good news is that, so far, we are not seeing this happen.
We cannot let this quarter conclude without a reference to the civil unrest taking place in our country today. It is disheartening to witness this level of discord on so many different levels. We have become a society of people whose voices are getting drowned out by the extremes on the fringe, who feel the need to ridicule and attack instead of problem solving in a respectful way. In so many ways, it is feeling like this challenge is bigger than any we’ve outlined above. It is our hope that all voices of reason can be heard, and that meaningful progress can be made in a peaceful manner.
The team at Resolute wishes you and those you care most about a safe an enjoyable 2nd half of 2020.
The views expressed represent the opinion of Resolute Wealth Advisor, Inc. (RWA). The views are subject to change and are not intended as a forecast or guarantee of future results. This material is for informational purposes only. It does not constitute investment advice and is not intended as an endorsement of any specific investment. Stated information is derived from proprietary and nonproprietary sources that have not been independently verified for accuracy or completeness. While RWA believes the information to be accurate and reliable, we do not claim or have responsibility for its completeness, accuracy, or reliability. Statements of future expectations, estimates, projections, and other forward-looking statements are based on available information and the RWA’s view as of the time of these statements. Accordingly, such statements are inherently speculative as they are based on assumptions that may involve known and unknown risks and uncertainties. Actual results, performance or events may differ materially from those expressed or implied in such statements. Investing in equity securities involves risks, including the potential loss of principal. While equities may offer the potential for greater long-term growth than most debt securities, they generally have higher volatility. International investments may involve risk of capital loss from unfavorable fluctuation in currency values, from differences in generally accepted accounting principles, or from economic or political instability in other nations. Past performance is not indicative of future results.
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