April saw no shortage of news and not all has been good, yet the markets managed to rebound to cover almost half of the losses experienced the month before. The actions of the Federal Reserve and the Bank of Canada provided much-needed liquidity to the market. Now, the question is, "where do we go from here?"
The rebound has quite a few shaking their heads wondering how this is possible. The market runs on facts and emotions; emotions in the short-term and facts in the long-term. The current situation is now producing more and more facts globally, which gives the market information to look forward and price the situation based on this information. When we look at the current headlines or potential fears going forward, it has now been priced looking further out. It is the shocks (out of left field) that cause the market to sell off fast and furious.
Now we’re looking at where we go from here. There will be changes and there will be both winners and losers, as well as new trends. There are also current trends that were progressing prior to COVID-19 and have now been kicked into overdrive. I have been repositioning the portfolios to look through the day-to-day chaos to find opportunities that will benefit the portfolios. When a market goes down, we are all caught in the selloff. It is the rebound that sets good portfolio managers apart. While others seem to be scrambling, we are readjusting the portfolios into these newer areas with solid balance sheets. Out of every crisis, something positive always comes through.
In summary, we know oil and the energy industry is likely to suffer further. Technology is likely to ramp up even further and we are increasing our exposure here. Obviously, health care will remain front and center and some good old tried-and-true utilities will still be there going forward. Canada will likely struggle and I see more opportunities outside of our country, so we are positioned for that. There is not enough space to write all the things I would like to, as there is so much to discuss. Keep in mind, the summer may bring some short-term setbacks but I do feel the worst is over and we will soon get our portfolios back on track.
Paul Belous, CIM
Vice President, Portfolio Manager