Market Insights: Market Commentary
Milestone Wealth Management Ltd. - Jun 12, 2020
Market developments Volatility returned to North American and global equity markets throughout this week. Both the Canadian and US markets were down this week, giving back some of the gains over recent weeks. Oil prices similarly gave back some recen
Market developments
- Volatility returned to North American and global equity markets throughout this week. Both the Canadian and US markets were down this week, giving back some of the gains over recent weeks.
- Oil prices similarly gave back some recent gains this week, with the US WTI price trading around $36 and the Canadian WCS price around $25 on Friday.
- 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?
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. That said, there are no guarantees on how markets will react in the future. What we can be sure of is that missing such sudden moves to the upside can greatly hurt a portfolio. That’s why we believe in being patient and staying committed to our investment process.
This process involves a precise top down asset allocation that is diversified across asset classes, sectors, and styles, as well as a detailed bottom up security selection, and risk management through gearing risk down and up along the way. In addition, it takes an in-depth knowledge of the market cycle and various components of capital markets to have a good understanding of where we are in the cycle and the appropriate asset allocation.
Here is a great chart looking at the long-term investment cycle and showing that there have been many reasons to exit the stock market over the past decade. However, sticking to a structured investment management process has still be the best approach. Although we have been through a tumultuous time in the markets of late, the secular bull market that began in 2009 remains intact and we believe still has years left to run.
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. That said, there are no guarantees on how markets will react in the future. What we can be sure of is that missing such sudden moves to the upside can greatly hurt a portfolio. That’s why we believe in being patient and staying committed to our investment process.
This process involves a precise top down asset allocation that is diversified across asset classes, sectors, and styles, as well as a detailed bottom up security selection, and risk management through gearing risk down and up along the way. In addition, it takes an in-depth knowledge of the market cycle and various components of capital markets to have a good understanding of where we are in the cycle and the appropriate asset allocation.
Here is a great chart looking at the long-term investment cycle and showing that there have been many reasons to exit the stock market over the past decade. However, sticking to a structured investment management process has still be the best approach. Although we have been through a tumultuous time in the markets of late, the secular bull market that began in 2009 remains intact and we believe still has years left to run.
