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Market Commentary

May 2020 Update

Continuous effort, not strength or intelligence, is the key to unlocking our potential – Winston Churchill

I am pleased to report that the Growth Portfolio recorded its best month on record this April, up 15%, and that all mandates increased in value over the month, as of the time of writing. Our stocks performed well, many reaching new all-time highs. In the Income Portfolio our government bonds and corporate bonds also did well. Towards the end of the month we increased cash balances substantially in the equity portfolios to reflect a more defensive positioning.

Stock markets rallied significantly over the month, fueled by government stimulus and back-to-work optimism. Emerging challenges to this outlook include a slower than anticipated back-to-work rollout, structural long-lasting unemployment, and lower consumer demand. If investors switch focus to any one of these challenges, it could result in stock markets revisiting lows. For that reason, remaining cautious is important, even in the midst of the recovery narrative.

The companies we own in each portfolio share a simple but powerful set of characteristics including positive price trend, growing earnings, growing cashflow, and good balance sheets. We are invested to protect and grow.

Financial Planning

At some point in the not too distant future, the bill for all this government stimulus spending will come due. Investors should be prepared to see an increase in tax rates, likely both on income and capital. There are a variety of tools to help minimize taxes, each custom tailored to your individual situation as a business owner, professional, or private investor. In investment portfolios it may be an ideal time to crystallize unrealized capital gains, either against losses or as a strategy to avoid potential higher future tax rates. Please be in touch to discuss.

Recommended reading
Venture Capital firm Andreesen Horowitz on how to stimulate growth through infrastructure investment

Real time reporting via Yelp shows economic conditions

For better or worse, policy is being shaped by popular narrative


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