What an interesting year we’ve had so far. January kicked off with a relatively strong start, but the last week of February, with fears of the coronavirus spreading across the world, sent equity markets into a downward spiral. Near the end of March we literally hit rock bottom, but somehow the markets ignored the continued spread of Covid-19, protests, political, countries being closed to travel, and states now going back to closing certain areas of the economy, to have the best quarterly performance in decades.
So where do we go from here? Does the market come to its senses and start to go back down. Looking forward into next year, I can’t see the economy rebounding from the pandemic as quickly as the stock market has recovered. Shouldn’t this signal the end to the 11 year bull market? The only way the market goes up from here is there’s so much risk in bonds and in foreign markets, that the US Equity market maintains its current upward trend. But is it really sustainable. One thing the market likes is certainty. But with the Presidential election coming and no end in sight with Covid-19, I’m certain of only one thing and that is more volatility in the short term.
That said, our strategic asset allocation models at ISWM are positioned to lower risk in a downturn and still participate on the upside. We continue to monitor our positions, adjusting allocation percentages, and at times replacing holdings when we feel it’s prudent to do so. We are not market timing, we aren’t trying to be tactical by selling when the market goes down and buying when the market goes up. In fact we have been doing the opposite. Buying low and selling high in our rebalances so far this year. We did a full rebalance of all allocation models in January, March and again in June. Hopefully that has helped smooth the rollercoaster ride the market has experienced in the first half of 2020.
Over the short term and long term, we continue to provide strategic asset allocation mutual fund and ETF models that provide diversification across all risk tolerances and stock models that provide more equity exposure using individual stocks picked by some of the brightest minds in the industry. We feel confident that there are enough choices to provide a reasonable level of return to help meet of your goals.