We are currently in the 5th month of a global pandemic and its economic, social, and political repercussions. It’s safe to say that we’re all feeling a bit of anxiety. Let’s briefly recap what has been happening April through June 2020.
Markets
The markets have recovered significantly since March, with the S&P up 20.54% for the quarter and the MSCI Index slightly behind with a gain of 14.88%. Year-to-date results still showed a loss from the highs of December 2019.
US GDP continues to face headwinds. The Federal Reserve predicts US gross domestic product will shrink by about 35% for the second quarter of 2020.
Unemployment rates surged to 14.7% in April and fell to 11.1% in June.
We are officially in a state of recession. The definition of a recession is a decline in economic activity that lasts more than a few months.
Coronavirus
Coronavirus continued to dominate our lives and headlines across the world.
Cases in the U.S. reached 3 million and cases continue climbing in a majority of states.
States began reopening, but many have had to close again. The U.S.’ haphazard opening strategy has resulted in skyrocketing infection rates.
Political divides continue to widen as coronavirus responses are split along party lines.
Emergency benefits are set to expire soon. Will there be another round of stimulus checks and government relief coming?
Social justice
The Black Lives Matter movement sparked protests across the world, ignited by George Floyd, Ahmaud Arbery, and Breonna Taylor’s murders.
Police reform is a priority across the country as the Minneapolis City Council has voted to dismantle the police department and budget cuts have been implemented for the LAPD and NYPD.
Companies step up their commitment to social justice, some implementing meaningful changes, many just for show.
What a rollercoaster of a quarter. Following a broad market downturn at the end of Q1, US stocks have nearly regained all of those losses. April ended as the best April for stocks in 32 years. However, the economy hasn’t followed suit. This may be because the stock market is forward looking while economic data is based on things that have already happened, such as unemployment rates and GDP. We will be the first to admit that there is an incredible amount of uncertainty these days. When will a coronavirus vaccine be ready? What will the next round of economic stimulus from the federal government look like? What is going to happen to our country politically?
All this being the case, we are staying the course! Everything that has happened has reinforced our commitment to the following core investment principles:
Establish a long-term financial plan with realistic goals.
Invest in a diversified portfolio to reduce overall risk and increase returns.
Make sure your portfolio is aligned with your risk tolerance.
Ignore the short-term noise and remain focused on your plan.
You know what they say, stay calm and plan on!