As this is being written, the wild ride for the stock market continues, although it is softened by the historically quick recovery from the market bottom of March 23. The news is filled with updates on COVID cases, social unrest and, in Tucson, a stubborn wildfire. These issues will take quite a while to be resolved and their impact on the markets could be significant. (There is more certainty regarding the Fed – rates will be low for the foreseeable future and the Fed will continue buying bonds and injecting funds into markets to maintain liquidity.)
So, as always, we can’t be sure where the stock market will go from here. We may see continued recovery or a significant pullback as the reality of the current events settles in. Regardless of which way the market moves, we will continue our consistent and disciplined investment approach and we will not manage client portfolios based on personal opinions or “intuition” about the market. In other words, it is actually riskier to take bold action in anticipation of market developments; if the last couple months have taught us anything it is that things can turn on a dime.
While our approach remains consistent and rules-based, there are some things that can be reasonably done to take advantage of the market recovery. Our process involves managing cash positions and periodically rebalancing portfolios based on current market conditions. Currently most portfolios are close to targets and very few require significant adjustments. If the market continues to recover, the portfolios are well-positioned; however, if the market does retest its lows, cash management and rebalancing will reflect those changing conditions. As always, we feel that clear long-term objectives and a disciplined approach are still the best way to navigate the ups and downs.
Please contact us if you would like to discuss your particular cash needs and portfolio positioning.