The first quarter of 2020 is officially behind us, and it will go down in the record books as one of the most volatile and worst quarters for US equities in history. Luckily, we had begun taking some profits off the table in January in anticipation of normal, broader profit taking in February after a strong 2019 fourth quarter and continued rising stock prices in January. This move helped our portfolio performance. Also, not only is it important what we did hold in our portfolios, but also what we did NOT hold. As the markets rolled over, we did not hold much real estate or energy, banking, restaurants, retail, hospitality, or travel stocks. As in the crash of 2008, the charts kept us out of the biggest danger areas long before they started to collapse.
The chaos of the first quarter was sobering indeed, and the market remains uneasy. However, things have already improved from where they were just a week or so ago. Perhaps, not surprisingly in light of the rising markets last week, we have the ball again even as risk levels have risen. Therefore, we are continuing to cautiously play offense in the strongest sectors of the US markets in technology, health and consumer staples industries as well as a few others … while continuing to keep a much higher cash position than normal in most cases. Those investments that were unattractive before the correction are still unattractive today. Once again there has been large-scale monetary and fiscal intervention to help stabilize both the market and the economy, and it has had a positive effect. There is truth to the old saying of “Don’t fight the Fed”. As of the market close on April 7th, the S&P 500 had gained more than +18% from its low close on March 23rd (Source: FactSet).
If you would like to become more familiar with my investment process and the tools I use to identify market leadership across major asset classes and within asset classes, please contact me at your convenience.
For those of you who fit the following criteria or know someone who does, please note: Now might be the best time to consider a reverse mortgage if your home is paid off or nearly paid off. Property values remain high, and interest rates are at record lows. A reverse mortgage can be a powerful tool for you, especially now. A reverse mortgage can help reduce monthly expenses by eliminating your current mortgage payment or at least make payments voluntary, rather than mandatory. It can also provide additional income through a line of credit or monthly payments so that you don’t have to withdraw from your market investments in uncertain times. Borrowers must be age 62 or older, occupy the home as a primary residence, and remain current on property taxes, homeowner’s insurance, the costs of home maintenance, and any HOA fees. Let me know if you are interested in getting more information about a reverse mortgage, and we will put you in touch with a specialist. We do not receive compensation for these referrals; we simply want our clients to be aware of this valuable resource.
If you would like to have a portfolio review by phone or video conference, please call or email Priestley (priestley@wofm.us)
