We appreciate your continued support and reading of our Weekly Commentary. Thank you to those who graciously responded with your own comments, insights, and encouragements to our communications. It is one thing to write this content. Another all together when we get responses to it. We really enjoy hearing from you! With all that has happened thus far in 2020, and more expected to come as the election approaches, we feel connected to all of you as we have similar battles and hurdles to clear. Never in my lifetime, has there been a continuation of chaos affecting multiple parts of life: physical, mental, emotional, financial, spiritual, work, family, in such a short period of time. When I slow down long enough to think about it, it is quite overwhelming and exhausting. The good news is, we have been resilient and survived. May have been bumped and bruised, but my first check every morning is to ensure there is no toe-tag hanging off my big toe with my name on it. Thus far, every day has been a success based upon that perspective.
Despite the chaos, there is still much to be thankful for. Yes, I need to look a little harder to find it and recognize that many areas that I took for granted for decades, now am thankful for and appreciate. I have a job that I enjoy, most days, and get to work with talented, committed, and compassionate people that believe as I do in serving others. My family is healthy, and no one has been infected with COVID. I have a life partner, my wife Amy, who is committed to our relationship and our family. The second thing I check every morning before pulling the covers back, is that she is still laying in the bed next to me. My oldest daughter, McKenzie, is independent. She comes over for sleepovers occasionally but has not taken up residence on our family room sofa on a permanent basis expecting us to financially support her choices. I am so proud of her. She works two jobs to support her own way of living. My body still allows me to do the things I enjoy, like running early in the morning witnessing the sunrise. I could go on. I use this arsenal of blessings that have been bestowed upon me to combat the negative news, chaos, and challenges. It also helps to stop watching the news and all the news feeds. The chaos has led me to be more introspective of my own life over the last three months. And introspection, has made me more thankful for all the things I have and prevent me from getting caught up in what is happening around me. I encourage you to make a list of all your blessings and areas in your life you are thankful for. I promise, if you write down everything that comes to you, you will have an instant fix when you begin to feel anxious or overwhelmed. No matter how bad we think things are, there are still more items in our life we should take the time to recognize and appreciate. To quote the Nike slogan, “Just DO It!”
As anticipated and thus far, the markets have had a “V” recovery from the market lows that occurred in March. Many of our clients, have climbed back into positive territory when reviewing portfolios over the last 12 months. Both the Dow and the S&P 500 through close of business last Friday, June 5th, have had a strong week and 2nd quarter. The Dow was up 6.80% last week alone and up 24.40% for the 2nd quarter. The S&P 500 was up 5.00% last week and 24.10% for the quarter.1 Definitely the right momentum in the right direction. We are hopeful that some of the anxiety and concerns that many of you had over your account balances at the end of the 1st quarter, have subsided and you are feeling more comfortable. In addition, both indexes are back down into the single digit losses for the year. The Dow Jones is now down only -3.90% since January 1st and the S&P 500 is about back to break even at -0.30% for 2020.1 Again, greatly improved from the market lows we saw in March. While I think we can all take a deep breath on these improvements, we are not ready to call the volatility over. “Please keep your arms and hands inside the vehicle at all times, with the safety bar secured tightly against your lap for the duration of the ride.”
There are a few indicators that we are watching closely. Unemployment continues to rise, and we expect this trend to continue. Per the Bureau of Labor Statistics data released last Friday, the US lost over 20 million jobs in April spiking the unemployment rate to 14.70%, the worst it has been since the Great Depression.2 Some believe, as we do, this number is under stated and the real figure may be closer to 20% with 30 – 40 million Americans out of work. in addition, the Payroll Protection Program (PPP) stimulus provided to business owners was to keep their employees paid and the number of their employee headcounts constant for a maximum of eight weeks. That first distribution of stimulus went into effect April 3rd. Eight weeks post this period, would be June 3rd. There was also a second distribution of stimulus for the PPP announced on April 27th. Eight weeks later would be approximately June 27th. While this program kept many businesses viable, as the PPP eight-week periods come to conclusion, many in the month of June, we believe that more business owners may downsize their employee base and thus increase unemployment.
The second area we are watching is home foreclosures and evictions. Due to COVID, many states passed legislation placing moratoriums on banks foreclosing due to non-payments, and the same on both residential and commercial rental evictions. With the unemployment numbers as high as they are and possibly being under-reported, we believe that some Americans are already behind on their payments. Once the moratoriums expire, in Arizona expected at the end of June and July, and lacking additional government stimulus or interventions, we believe the activity in this sector may increase. If this continues over the long term, it could put suppression on real estate values. Real estate is very strong and with very low interest rates many Americans are buying homes or refinancing their existing loans. While we have opinions and possibilities, we are NOT in the forecasting business. The decisions made in the next six months at both the company and employee level, aggressive or conservative nature of the banks on foreclosures, and continued or lack of government intervention, are going to determine the direction. Oh yes, do not know if you heard, it is also an election year with a lot riding on both the White House occupant and which party will control the Senate. “Ladies and gentlemen, please keep your arms and hands inside the vehicle at all times and the safety bar secured tightly against your lap for the duration of the ride.”
Here is the reality. Whatever may happen is going to happen and there is not a lot we can do to keep or control it from happening. Nobody could have predicted COVID would turn into protests and riots across America. Therefore, what can you do:
- Stay Calm – You have control over what you feed your mind. Your brain will consume whatever you provide it. Do not get wrapped up in the chaos. It is very easy to find. Do not allow it to consume you and if you do, take the time to create your List of Appreciations at the very least, to provide the good balanced with the not so good.
- This Too Shall Pass – Nothing lasts forever. You may not like it. You may feel uneasy, apprehensive, and outside your comfort zone. The stock market reaching a bear status in 3 weeks in March, is almost at break even 3 months later for the year. If you feel uneasy, do something. Go for a walk, clean a closet, complete a project, learn a foreign language. This negativity will consume you if you dwell on it. Do not give it a foothold, stay active and keep your mind focused on other things that inspire you.
- Think Long Term, Not React Short Term – When negative things happen in life, we feel we must do something. When overweight, eat better and exercise. When not feeling our best, see a doctor. The act of doing something in and of itself, makes us feel both in control and we are improving our situation for the better. While true regarding your health, the same thing can not necessarily be said about your investments. Many times, the best response, is to relax and do nothing and stay focused on the big picture. Many of you did just that in March by not making changes to your investments and resisting the desire to go to cash.
- Call Us – As we have shared, your money is very emotional. Loss of any kind, is emotional. Your money to us is very logical. We managed money during the Dot Com / Bomb of the late 90s, 2008 and The Financial Crisis, through COVID, and whatever else 2020 has in store this year. I have gotten a little defiant, so I say bring it on! We are here, for you, to help make it better however we can. We are all in this together.
In closing, I want to say again how very proud of you we are. Late February and March were scary and some of you called to talk through your investments. All but two of our clients, stayed the course. Because of those decisions, despite your desire to relieve the pressure and go to cash, you have been rewarded for your diligence and keeping to your plans. As your advisors, we are so proud of your resolve. As stated, there are still possible bumps to come, and some of them may be big. We are committed to your long term success and will continue our communication, provide our guidance, give you direction, to help you cross “The Finish Line” however you define that for yourselves, your family, and your businesses. Thank you for entrusting us with your dreams, futures, money, and legacies.
Pursuing Wealth, Wisdom, and Well Being Together,
Todd Martin
1 Amundi Pioneer Market Monitor (6/05/2020)
2 “Don’t be Fooled by Official Unemployment Rate of 14.7%; The Real Figure is Even Scarier”
This information does not have regard to the specific investment objectives, financial situation and the particular needs of any specific person who may view this information. Statements, opinions and forecasts made represent a particular observation and assessment of the market environment at a specific point in time and are not intended to be a forecast of future events or a guarantee of future results. Investors should seek financial advice regarding the appropriateness of investing in any securities or investment strategies discussed or recommended. Statements regarding future prospects
may not be realized and may differ materially from actual events or results. Past performance is not indicative of future performance.
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