A Couple of Things.

“It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness…”

I suppose this quote from Charles Dickens might well apply to any time in human history. It certainly seems to apply to now. For some this moment is good, for others not good. I recently heard someone ask if it is possible to have a do over for this year.

How has “the market” done?

For most investors the first quarter of 2020 was not good. Thirty of the largest US stocks (Dow 30) lost value, namely 24%. The second quarter was better. By the end of the second quarter the Dow 30 stocks had regained some of their lost value and were down “only” 10.65%.

The change in value of the Dow 30 is -10.65% so far this year.
Question: The Dow was down 24% in the first quarter, then recovered 23% in the second quarter. So why isn’t it down only 1%?
Answer: The 23% gain is on 76% of the start of year value, therefore a larger gain would be required to fully recover from the loss.

I should also point out that other “baskets” of stocks had other results, some did better, some worse. The Dow 30 is representative of the largest US stocks and is usually what folks refer to when they are discussing “the market”.


Our clients’ results.

During the 1st quarter our clients’ investment accounts lost value, namely 16.57%. As of June 30 the accounts are down 9.76%.

In spite of optimism on the part of many investors and some analysts we remain very concerned, and have re-allocated many of our clients’ accounts, especially those of our most conservative clients toward less volatile asset types. Our investment management clients’ detailed reports have been posted to their web portals.

Note: The calculation used to determine our clients’ aggregate returns is called the internal rate of return. It is cash flow specific and is net of all fees and expenses. It represents the average return experienced by our investment clients, from the most conservative to the least conservative who were invested during any portion of the period. Typically, our younger clients experience returns greater than the aggregate, and our most conservative investors may experience results that are lower. Investment return information is provided by Morningstar using GIPS standards.


Are your family members in the loop?

In the course of our clients’ annual financial planning reviews it is always the case that we discuss concerns related to aging. The Society of Actuaries has published an infographic which provides information relevant to those discussions. Among the facts and recommendations offered by the Society of Actuaries is this tip: Make sure you and your family members are ready to work together so you will all be on the same (road)map when decisions arise. You can view the infographic here.


Final thought.

We are all tired of limiting our activities, wearing masks and maintaining safe distances, but for now it is what might prevent this time from becoming the worst of times. Take care.


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