As mentioned in our last few posts, volatility is here to stay (for a while at least) and last week was no exception. The equity markets were up over 10% for the week, during which we experienced multiple 5% swings daily. The combination of aggressive moves from both the Federal Reserve and Congress will have meaningful impacts over the year to combat recession-like conditions ahead. Economic data points from unemployment to corporate earnings are going to look bleak in response to the Covid19 global shutdown. The stimulus will take time to enter the system and we need to stay patient with a timeline on recovery. Headlines will continue to add shock value; we will maintain our long-term strategy for portfolio management.
Just as the CDC have their models for projections on health, we have our own models on the financial outlook ahead. Our research partners have different opinions on year-end highs and near-term lows. Collectively they are all in line with the following: We most likely will retest market lows of two weeks ago and then trade higher toward year end. How much higher will depend on the length of the shutdown and when Coronavirus cases peak. Keeping a balanced strategy will be the best safeguard for the short term before we get the upside momentum of recovery. During severe selloffs, as experienced recently, it will typically take 4-5 times of hitting bottom before stocks begin a longer-term recovery.
The time to have patience is now. There will certainly be a combination of anxious and calmer days ahead. We need to find small distractions during the day that quiet the mind. If you find yourself staring at the markets or news feeds…turn them off for a while and reset. We have listed a handful of activities that have allowed us at Katahdin to refresh and stay focused to help you navigate the financial turbulence. Cooking, running, walking, doing puzzles, biking, hiking, reading (not just headlines), gardening, meditation, figuring out Zoom to connect with family and friends. If you haven't already, give one a try.
As always, we are here for you. Feel free to call our office anytime.
Stay safe and healthy,
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
All investing involves risk including loss of principal. No strategy assures success or protects against loss. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.
The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.