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Live Sessions

Market Update: May 01 2020

  • Dollar Cost Averaging
  • Market Expectations
  • Portfolio Rebalancing

Here is a recap of our live Q&A session held on 5/1/20 presented by Joe Randazzo JD, CFP® from FNA Wealth Management and Dave Stone CPA, CFP® from Tartan Wealth Management.  Please join our next Q&A on Friday, May 8, 2020 at 10 am.

Details for our next event can be found here

Should I aggressively invest cash in the market so I do not miss the recovery in the market?

As we have discussed in previous video meetings, and depending on your unique situation, if you have cash to invest you could consider investing a portion in the market systematically. Market bottoms are hard to time. The S&P 500 has had a significant rebound off the March 23rd lows. Previous major downturns have usually been comprised of a severe downturn followed by a short-lived rally then a re-test of the previous low or new lows. We are not sure if we have hit market lows or not but we do believe that we will have some re-test of the bottom of March 23rd as sentiment shifts from the virus to the economy. For long-term investors with the financial ability to continue purchasing through periods of fluctuation, we recommend dollar cost averaging in to the market over the coming months.  Again, dependent on your specific situation

Thanks Dave, I would echo those comments. I believe there’s not a professional in the market that can tell you it’s possible to time market peaks or bottoms. While there’s no guarantee of minimizing or avoiding loss, dollar cost averaging, or systematically investing over a period of time, spreads the risk of buying out over a period of time and may actually allow volatility to work in your favor.

What is your expectation of an economic rebound over the coming quarters?

We think the virus will continue to dictate the economy. If we continue to see positive news in the progression of the virus, testing, and potential vaccines or medications the economy would likely track this news. We would expect the 3rd quarter economic numbers to be bad but on the rise. In our opinion, the 4th quarter in turn should be much better as Americans get back to work and living their lives in a “new” normal. The biggest risk would be if the virus reappears later in the year in some impactful way. Remember the stock market is forward looking. If the virus news continues to improve and scientists discover treatments then we believe that the market low of March 23rd may stand.

Well put Dave. You know, I mentioned last week that we have been sitting in on more webinars, analyst calls, think tank chats, etc then we can possibly count. There are some strong feelings out there regarding where we go from here. My firm opinion is that this is still very much a health related issue and, until we know whether or not this thing resurfaces, it’s simply a guessing game on where the economy or market goes in the near term.  If a slow and steady opening of state economies is successful, and if a treatment and vaccine are developed and distributed in a timely manner, then those that are guessing the economy is already beginning to rebound and this market rally is sustainable will have been correct. However, if the opposite is true and it takes longer to get treatment and vaccine to the marketplace then we hope, and if we start to see an uptick in reported cases again enough so that requires more economic shut down, then those that are guessing this is simply an irrational bounce will have been correct.  Until we can turn to market fundamentals to support daily movements, we expect volatility and uncertainty to reign.

Are there any portfolio adjustments I could make without making additional investments?

Depending on your specific situation, it may be prudent to shift some money from bonds to stocks to rebalance your portfolio to your recommended allocation. A systematic approach may be the best approach in this reallocation strategy. There also may be opportunities to realize some tax losses in taxable accounts. These losses may prove to be valuable in offsetting future portfolio gains. A lot of these concepts tie together: dollar cost averaging, rebalancing, diversification, and so on.  If you are a long-term investor and you believe in the long term potential of the markets, consider staying your course, rebalance periodically, and make sure your portfolio structure is in line with your risk tolerance and time horizon, and not just with what’s going on in the world around us. Each investor needs to evaluate their own circumstances and there is no guarantee that any strategy will be profitable or prevent losses. Please contact us to discuss your situation and what we might feel is appropriate for you.

The views and opinions expressed herein are those of the author(s) and date noted and may or may not represent the views of Beacon Financial Advisory or Lincoln Investment.  The material presented is provided for informational purposes only. Nothing contained herein should be construed as a recommendation to buy or sell any securities.  Past performance is no guarantee of future results. No person or system can predict the market. All investments are subject to risk, including the risk of principal loss.  There is no guarantee that any strategies discussed will result in a positive outcome. You should discuss any legal, tax or financial matters with the appropriate professional.

S&P 500 Index is an index of 500 of the largest exchange-traded stocks in the US from a broad range of industries whose collective performance mirrors the overall stock market.  Investors cannot invest directly in an index.

Diversification or asset allocation do not guarantee a profit or protect against a loss.

Advisory services offered through Beacon Financial Advisory LLC or Lincoln Investment, Registered Investment Advisers. Securities offered through Lincoln Investment, Broker Dealer, Member FINRA/SIPC. www.finra.org www.sipc.org www.lincolninvestment.com, Tartan Wealth Management, FNA Wealth Management, and the above firms are independent, and non- affiliated.

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