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July 2020 Investor Note

Our typical quarterly commentary tends to review economic trends we have been following over the previous three months while providing a forward-looking eye on what we feel are important considerations for the next 60-180 days. We also like to share with you the relevant data that supports our thinking.

This quarter, we thought to change that a bit.  The economic data seems so mercurial lately.  Jobs, GDP, and Corporate Earnings are what we typically talk about but in our current landscape, the numbers cannot tell the whole story.  Instead, we will try to simplify things.  The second quarter of 2020 was a fine quarter.  In fact, following one of the harshest economic quarters in recent memory, it was one of the best performing quarters on record.  And while we anticipated the beginning of a long recovery, we did not see such a robust rebound coming.  In fact, we spent a fair amount of time these past few weeks talking to you about sticking to the long-term fundamental goals as we progress through this pandemic.

As of the midpoint in 2020 in our view, the markets do seem optimistic.  Certainly, the NASDAQ Index is rolling, and we have seen that several mega-cap companies are poised for record setting growth in this new remote, at home world.  But trying to suggest we, or anyone knows what the next 60 days or the next 120 days will bring is foolish. 

In fact, there are many things on the horizon that worry us.  We worry that the virus will continue to cause accelerated obstacles to business and commerce as summer rolls closer to fall.  We worry that this will muddle economic data and “emotional investing” will start to tempt again.  We are worried that children will not return to a normal school year in the fall and miss out on vital educational and social experiences.  We worry for the business owners, employees and staff of many business have felt damaging pain in these past few months.  Especially the smaller businesses struggling to cope with supply chain disruptions, customer disruptions, and the like.  But at the same time, we think it is reasonable to assume sometime in early 2021 we will have a vaccine for the virus.  Consequentially, notwithstanding picking through the damage, we will be back to business; probably not like business was, but as with most things, perspective and time passing gives way to progress.

Our economy was strong and then Covid-19 harmed it.  But Q2 showed in striking detail how resilient our portfolios and investing strategies are.  If we take another hit, we have already tested our portfolios and can say with confidence that we have our clients’ assets positioned well to maximize their individual goals and objectives. 

Furthermore, we have spent a lot of time talking with our managers about investing in quality businesses with strong cash flow and owning assets that are worth owning, specifically in these new times.  There are going to be new ways to do business and we will stay well positioned to take advantage where opportunities arise. 

There is plenty of risk in the markets, both new and old.  But we think time will mitigate most risk and therefore we have no plans to disrupt well thought out deployment of capital with rash movements.  When it is time to make changes to your portfolios, we will make the appropriate adjustments with the information we have, and we will contact you individually, as usual.

Thank you for your continued confidences as we strive to deliver our promise to you.

Sincerely,

US Advisory Group

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