George has been hard at work preparing the Quarterly Portfolio Report and commentary. They will make some tough reading.
The good news however is they are historic. 8 days into April and markets have bounced significantly from their low point on 19th March.
1st January – 19th March 2020 (the low point)
| Cautious Portfolio | -25.80% |
| Balanced Portfolio | -27.55% |
| Moderately Adventurous Portfolio | -29.16% |
| Adventurous Portfolio | -29.29% |
| Positive Impact Portfolio (Ethical) | -23.80% |
1st January – 31st March 2020
| Cautious Portfolio | -18.12% |
| Balanced Portfolio | -19.41% |
| Moderately Adventurous Portfolio | -21.10% |
| Adventurous Portfolio | -21.35% |
| Positive Impact Portfolio (Ethical) | -17.25% |
1st January – 8th April 2020
| Cautious Portfolio | -16.14% |
| Balanced Portfolio | -17.35% |
| Moderately Adventurous Portfolio | -18.67% |
| Adventurous Portfolio | -18.90% |
| Positive Impact Portfolio (Ethical) | -15.35% |
The table shows the impact of the returns from the low point up to 8th April:
19th March 2020 – 8th April 2020
| Cautious Portfolio | +12.41% |
| Balanced Portfolio | +13.38% |
| Moderately Adventurous Portfolio | +14.37% |
| Adventurous Portfolio | +14.48% |
| Positive Impact Portfolio (Ethical) | +8.52% |
So why have they bounced
back?
I think we can already pretty accurately know the following:
- The down draught was significantly magnified by short selling and forced liquidations of levered holdings. It went way too fast and too far to be natural.
- The epic levels of support from Governments and Central banks that were then confirmed is so beyond anything seen, that it stopped the panic.
- As the magnitude of the support sank in and trusted analysts came out and said, this is game changing, markets relaxed and then re-evaluated.
- Everyone understands that on the other side of the pandemic is a huge demand for assets which give a positive return. The measures taken to support the economy have removed a number of options from the pre virus menu as they now yield zero.
- Markets have bounced and there will be a debate ongoing about how much is justified. Markets will therefore be volatile going forward as the process of incrementally knowing what isn’t yet known is achieved.
- There are two pieces of knowledge we fundamentally need to know:
- How long before we have therapeutics (medical interventions) that reassure people to re-engage with less fear. And then how long to a vaccine?
- How much damage is suffered by economies and businesses until the above.
So portfolios have recovered a fair chunk and quickly. But equally nothing significant has progressed from 4 weeks ago in terms of medical treatment of the illness. Plainly the world’s experts are focused on this one issue and unlimited resource is being allocated. We have adjusted to the changed circumstances and the curve is bending. The focus will now be on creating coherent plans for restarting everyday life.
Note: This is written in a personal capacity and reflects the view of the author. It does not necessarily reflect the view of LWM Consultants. The post has been checked and approved to ensure that it is both accurate and not misleading. However, this is a blog and the reader should accept that by its very nature many of the points are subjective and opinions of the author. Individuals wishing to buy any product or service as a result of this blog must seek advice or carry out their own research before making any decision, the author will not be held liable for decisions made as a result of this blog (particularly where no advice has been sought). Investors should also note that past performance is not a guide to future performance and investments can fall as well as rise.