Back in March, when COVID-19 was causing a quick and severe correction in the stock market, we wrote a post outlining some of the advice we were giving our clients at that time. This advice included ideas such as not panicking, remembering long-term goals, and being proactive rather than reactive. These ideas coincide with how we at B&C construct and manage investment portfolios. By reducing emotional responses to market movements and making decisions based on clients’ personal circumstances and goals, we give each of our clients a better chance at achieving financial success.
We have stood firm in these principles since the day our firm was founded. However, this does not mean there is no flexibility in the way a client’s portfolio is managed. On the contrary, we update parameters and make certain considerations according to current market conditions when we deem it appropriate. Currently, there are several uncertainties in the financial markets due to the far-reaching effects of COVID-19. Below are some thoughts we recently shared with our clients on some of these uncertainties and more:
Based on our research from various independent sources to which we subscribe, we continue investing with no material changes to our investment strategies recommended at this time. We are, first and foremost, asset allocators with a focus on long-term investing. We are not economic or stock market forecasters. Our sincere belief is the companies in which we invest for our clients will be worth more in the years ahead, regardless of any short-term economic issues.
The reasons we continue to stay the course are based on the following:
1. It is our belief the Fed is on the side of assisting the financial markets, and we should not be on the opposite side of them.
2. A second stimulus package is likely to be passed by both parties and should be viewed favorably by the financial markets.
3. Interest rates are at historically low levels and are not expected to increase anytime in the foreseeable future—certainly a positive for the stock market.
4. Fixed income investing is hurting our income yields rather than helping. Importantly, though, the bonds provide preservation of capital, diversification and “sleep at night comfort,” despite bond income being lower than dividends in many cases.
5. Many economic numbers seem to indicate the worst has passed.
6. A vaccine appears to be on the horizon. If a vaccine is developed, that should certainly be favorably accepted by the equity markets.
For all the above reasons, we will continue to stay the course and continue selling bonds in cases where equity allocation has been waiting for additional funds.
Please reach out to B&C Financial Advisors if you have any questions about any of the above or wish to discuss your portfolio with one of our advisors.
B&C Financial Advisors
The information presented in this article is for educational purposes only and is not meant to provide individual advice to the reader. There is no guarantee the information provided above relates to your personal situation. All financial situations are unique and should be advised as such.