Through May 27th, the stock market has been on a tear the last two months. While the Dow, the index that had been lagging the other indexes, grew at a double digit 11.8% this month, the S&P 500 was up a very respectable 4.3%. We usually don’t see that much of a divergence between those two indexes. The NASDAQ was up 5.9% for the month, while the Russell 2000 finally woke up and advanced 9.5%. So, where do they stand for the year? Well, the Dow, the S&P and the Russell 2000 are all still down for the year at -4.6%, -6.0% and -13.9% respectively, the NASDAQ is surprisingly up by 4.9%. That is not too surprising since the NASDAQ is heavily laden with tech sector stocks, and with so many people having to work from home, tech companies got a big boost through the shutdown.
Like so many Americans, we are not as interested in what the stock market has done for us as we are in what it will do for us. Everyone on TV keeps talking about the “new normal.” Will masks become permanent, and even become a fashion accessory? Will the Thousands of years old tradition of shaking hands go away? Will cars get wider so we can sit six feet apart while riding to church? Yeah, and what about church? Will sanctuaries that can hold 1500 congregants suddenly only be able to accommodate 300? Will we still be able to hug our grandchildren without fear of easily catching something that can kill us? Will buses become a thing of the past? Will a vaccine for COVID fix everything for good, or will there be virus after virus coming from who-knows-where that will keep us locked up and afraid?
We did change our behavior after September, 2001, at least in airports. We accept security screenings, pat downs, and not being able to walk our loved ones all the way to the boarding gate anymore. We know there are people in this world that want to kill us for simply being here and not believing they way they believe. There are people who have hate in their hearts if someone doesn’t look like them, or talk like them, or live where they do. They have it in their minds that those “others” wish to bring harm on them. And in believing they are thwarting evil against themselves, they commit evil acts on others. But there has always been evil. Most of the Book of Proverbs is about avoiding evil and evil people.
Knowing all that I’ve said, what can we do to safeguard not only our assets, but the purchasing power that it has? The main thing is to keep a watch on our accounts. We are paying attention every day to the research we purchase and the signals we get. I am not convinced at all that the sudden bear we went into in March is anywhere near over. I believe this recovery we are seeing right now is a classic bear market rally, and that the markets have yet to see the bottom of this bear. However, if the market does or if it doesn’t go down again, we are ready. That’s why we are investing in the market only on certain days of the month. We feel very good about this strategy and stand ready to discuss it with anyone who’d like to call us about it. If the stock market smoothes out and starts a steady increase, we will switch strategies. However, my primary goal is to preserve my clients’ assets. And to do it in such a way that gives them the opportunity to get market returns with the stock market is forging ahead. I look forward to continuing to meet and exceed your expectations.