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RowanOak Commentary – June 15, 2020

It’s more than not selling when markets go down!
RowanOak Commentary – June 15, 2020

I trust that all is well with you and you have been enjoying the nice weather of late. Below you will find a summary of this week’s market developments and related thoughts.

Market Developments

  • Following the best 50-day period in the history of the S&P 500 Index (which measures the stock performance of 500 large companies listed on stock exchanges in the U.S.) and the Nasdaq (a stock exchange that includes the world’s primary technology and biotech giants) hitting new all-time highs,  North American equity markets fluctuated throughout the week.
  • North American equity markets declined sharply on Thursday, June 11. Analysts said markets reacted to a gloomy outlook from the U.S. Federal Reserve and an uptick in COVID-19 cases in several states.
  • Dr. Anthony Fauci, Director, National Institute of Allergy and Infectious Diseases, stated that the coronavirus outbreak “isn’t over yet” as hospitalizations in at least nine states have risen since Memorial Day (May 25).
  • Opposition parties refused to give unanimous consent to Canada’s Liberal government to speedily pass new emergency COVID-19 legislation, which is focused on expansion of the wage subsidy program and penalties for fraudulently claiming the Canada Emergency Response Benefit.
  • The U.S Federal Reserve said it expects interest rates to remain near zero through 2022, and while U.S. GDP is forecast to shrink by 6.5% in 2020, it is expected to bounce back to 5% growth in 2021.
  • Weekly jobless claims in the U.S. were 1.54 million.

How does this affect my investments?

The fact that the S&P 500 gained 40% in just 50 days – even as the economy falls into a severe recession – should give most investors pause when they consider trying to “time” the market. You may have heard the saying, “It’s time in the market, not timing the market,” and the last few months have lent credence to that statement.

When the coronavirus first emerged and the lockdowns began, it was difficult to foresee the sheer extent of stimulus that governments and central banks would provide to keep economies and markets functioning. Those who remained invested benefited from those measures.

That said, there are no guarantees on how markets will react in the future, as we saw during June 11’s strong and sudden decline. What we can be sure of is that missing such sudden moves to the upside can greatly hurt a portfolio. That’s why I believe in being patient and staying committed to your investment plan.

As I have always promoted, getting you monthly cashflow is king! Yes, the monthly distributions you are so accustom to continue as always, regardless of the ups and down of the market price of your shares. Your investments continue generating cash flow for those of you using it for lifestyle needs, and for those not using it as such, purchasing more shares/units of your great investments at the end of each month. More units means increased cash flow/distributions going forward! In fact, a dollar cost averaging effect automatically taking place for you during these uncertain times.

We are always happy to discuss your investment plans if you feel it would be helpful. Please do not hesitate to contact the office at any time.

Sincerely,

Paul Rowan
President, Chief Executive Officer
Chairman of Investment Committee

RowanOak Private Wealth Counsel

Over the last 20 years, RowanOak Private Wealth Counsel has gained the reputation of an industry-leading innovator for its approach to wealth management. Considered a pioneer in providing the highest standards of proactive advice and planning, the RowanOak team places the interests of its clients first in all aspects of the practice.

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