Quarterly Client Letter – 2020 Q2
Before we dive into the usual quarterly investment insights, here’s some fun trivia:
Did you know you have to count to 1,000 before you’ll find the letter “a” in a spelled-out number?
We thought you could use that break from the torrent of mid-year market commentaries on 2020’s bipolar extremes. The general theme has been how quickly global markets sold off and came back – even as economic and sociopolitical headlines continued to stoke bonfires of ongoing upheaval.
And the year is only half over.
We’ve seen comparisons to Rip Van Winkle, who could have slept through the extraordinary turmoil and awakened in June with only minor changes to his 60/40 stock/bond portfolio. We’re also seeing predictions that 60/40 portfolios have entered into a lost decade of paltry performance. Still other forecasters (perhaps to cover all grounds) suggest we’re in a time with “equal reasons for caution and optimism.” No kidding. So, what’s it going to be for the rest of 2020? As always, with respect to your investments, we have no idea what to expect as an encore through year-end. Instead, we agree with Jason Zweig, who wrote this in his recent “Intelligent Investor” e-newsletter:
The first half of 2020 should remind us that investing isn’t about conquering markets; it’s about mastering ourselves.
In this context, perhaps our trivial pursuit is not so disconnected after all. We know markets are highly likely to deliver inflation-busting returns to those who can patiently “count to a thousand” while riding out the inevitable downturns. We also know investment success can take longer than you might think – potentially much longer.
Similar to what you might have first guessed about the elusive “a” in our numbering system, the initial assumptions we make about investing are often off-target until we take the time to think them through. As such, we continue to remind you of the evidence on how to persistently participate in markets, lost and found. We also continue to recommend allocating your wealth appropriately (for you) between the market’s higher-risk, higher-expected-return extremes, and the sheltering calm of more stable, but lower-returning holdings.
Have we mastered the right balance for you and your personal financial goals? If not, let us know, so we can help you revisit your ideal allocations. In the meantime, let others conquer the markets, as you consider these additional words from Zweig:
To be an intelligent investor is to recognize that you’re in a lifelong struggle for self-control – an unending effort to keep yourself from yielding to fear or greed, believing that you know what the future holds or letting short-term news knock your long-term plans off track.
Again, let us know if we can help you and your financial plans remain on track.
Regards,
Excel Financial, LLC
Excel Financial is registered as an investment advisor with the United States Securities and Exchange Commission (SEC), and only transacts business in those states in which it is properly notice filed or in which it qualifies for an exemption or exclusion from notice filing requirements. Nothing in this material should be construed as a solicitation or offer, or recommendation, to acquire or dispose of any investment or to engage in any other transaction.
