It feels like 2020 started just yesterday. Here we are already well into August and look at what we have lived through! We were coming off a strong 2019 for most asset classes, a strong economy and then the world was blindsided by the Coronavirus Pandemic. As the virus spread across the globe, Governments shut down their economies in an effort to contain the spread and we saw the deepest and quickest bear market in March since the 2008 Financial Crisis. In the midst of the uncertainty, the Dow Jones went from an all-time high at 29,551 on February 12 and declined to 18,591 (-37.09%) over the span of about 5 weeks. Supply chains were disrupted, businesses had to pivot quickly and working remotely became the new reality. During the lockdown, we saw rapid action by Central Banks by way of monetary policy which has led to an incredibly rapid recovery of equity markets as well as rising bond values. The Dow Jones rose back to about 28,100 (+51.16% from bottom on March 23) in just about 4 months. To make matters even more interesting, we have seen an already politically divided United States become seemingly even more divided over the Pandemic as well as other social issues. All of this is happening right before a US election coming up in November.

Our advice has been:

• Do not react based on fear and do not attempt to time the market. Cashing out in March would have been a very costly move. History has shown us that equity market declines have always been temporary. Your ability to live through those moments is the very thing that what would have rewarded you over time.
• Diversify well, including investment style. Investors typically think of Value stocks or high dividend-paying stocks as a protector during volatile times. We saw that having growth stocks as part of the overall portfolio was crucial in this particular situation. Because we acknowledge that we cannot accurately and reliably forecast the future, we diversify well.
• Rebalance systematically on the way down. In March, the hard thing to do was to purchase equities as their prices fell lower and lower. Naturally, you are rewarded for doing this during a recovery.

In light of the circumstances and the US elections coming up, I want to share an insightful article with you from RBC Wealth Management’s Global Advisory Committee. This article is focused on the following:

• Political Reality Checks
• How good is gold?
• Global Equity: A long and winding road
• Global Fixed Income: Change of pace
• Inside the markets

Please visit the following link to access the article :

 

https://ca.rbcwealthmanagement.com/documents/10180/0/monthly.pdf

 

I hope this message finds you well. As always, we have our eyes on the road and our hands on the steering wheel.

 

Warm regards,

Alex

 

PS. If you have logged in to your accounts online recently, you would have noticed we have a revamped DS Online platform (and it’s awesome!). If you need help navigating it, reach out to us and we’ll be happy to help.