For most investors the first quarter of 2020 was a challenge, to say the least. The Dow 30 stocks (DIA) lost 24% of their value. On average our client accounts were down 16.57%. While the current pandemic continues to take lives and disrupt economies, we welcome recent stock market optimism. However, we continue to be very cautious, especially with regard to our most conservative clients.
Note 1: Preliminary first quarter reports have been posted. Final reports will replace the preliminary reports after inflation information becomes available. It should be noted that investor experiences can vary significantly, especially for those with large cash flows during the period. In addition, we generally invest new clients gradually which can limit gains during bull markets. This strategy would also limit losses during bear markets.
Note 2: 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.