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2nd Quarter Money Management

Some decades nothing of consequence seems to happen and then there are times when a decade worth of events occur over a very short period. TwentyTwenty is one of those years when a decade’s worth of events have already occurred.

Jan. 27, 2020 – “Coronavirus is something that could bring stocks down in a big way.”

This past January, near the end of a TV interview, we mentioned that Coronavirus may pressure stocks as stock valuations hit all time highs. One month later stocks were still hitting new highs and we mentioned supply chain interruptions and other negative consequences of the spread of this pandemic that investors were not taking seriously. 

We ended that interview with a statement that finally proved very timely, “It is typically unexpected events that lead to a rapid decline in stock prices, something that was not on investors’ radar.” Global equities markets soon plunged 38% in less than five weeks, the quickest plunge from all time highs in stock market history. 

Feb. 24, 2020 – “Supply chain disruptions and its negative affect on the global economy is not being discussed and it is typically unexpected events that lead to the most rapid declines in stock prices.”

We then went through what we labeled “The Most Critical 45 Days in U.S. Financial History”, which saw states re-open and prevented a potential depressionary environment. While we are not out of the woods, there will continue to be many opportunities in times like these as there are in any periods with extreme volatility. 

The second half of 2020 will have its own set of challenges.  This includes important decisions on further stimulus, school openings, and political determinations that will influence both the country and the economy for many years to come.  Rest assured, we are living through historic times, and the next two quarters will complete a year that will be written about for many decades.  In addition, the consequences of the decisions made in the second half of 2020 will be felt for generations to come.  Positioning assets for these consequences should be part of all smart investors’ plans.  It should not matter whether these consequences are unintentional or not… either way they will be real and salient to every American.

June 23, 2020 – “Investors should consider this incredible rebound a gift, especially in those speculative areas that have surged in value.”

Currently, as speculation has surged in so many areas, we are focusing back on the same higher quality income opportunities that we emphasized in the depths of the sell-off back in March.  Rather than having a period when everything is overvalued with unfavorable risk-to-reward, the quality companies have been ignored after initially moving up into the rebound.  The U.S. stock market, along with many international markets, experienced the best 50 day period in its history during this quarter.  In times of extremes, it makes sense to not follow the herd, so staying away from the rampant speculative and focusing back on quality income vehicles makes sense.