Financial Check 2020 – June 2020

Parts of the Canadian economy have started to reopen. Provinces are moving at very different speeds, with social distancing and other safety precautions in place.

The economic crisis stemming from COVID-19, likely to be one of the worst of the past 100 years, has disproportionately hit the most vulnerable segments of society. We are now entering a potential crucial turning point in the economic crisis.

During the initial outbreak, governments had little choice but to shut everything down or risk the collapse of the health-care system and economic devastation. Businesses and employees have already sustained heavy blows as governments have massively expanded spending to cushion the impact.

Financial markets continued their return to more normal conditions in May, as trading activity eased slightly and investment funds continued their recovery. The easing in equity trading comes as stocks have continued their rebound from lows in March. The S&P/TSX composite index finished May up by about 30% from its late-March low, but still down 10% from the start of 2020. Alongside this recovery in equity indexes, mutual fund sales and assets are continuing their resurgence.

North American employment data suggest that the economy is healing faster than expected as the economy begins to reopen. However, while the employment gains experienced in May are record breakers, the magnitudes aren’t nearly as eye-popping as the record declines were. The economy has a deep hole to climb out of.

Economic outlook: The potential peak in new cases and deaths from the pandemic and the expected re-opening of major economies has set the stage for a gradual recovery after a short and severe economic contraction in the second quarter.

From an investment standpoint, as difficult as the current crisis is, we believe it is important to take a longer view and try to look beyond the current situation.

We view equities as a long-duration asset and see opportunities even in some of those areas of the market facing significant economic pain and uncertainty. Getting back to normal, in our view, is a question of when, not if.

We are facing uncertain times right now, and there are still some things we can do to prepare for what life will look like when we emerge from this.

Having a dedicated emergency fund and creating a budget during a financial crisis when you don’t have the same income coming in.

Understanding your Spending habits:  Knowing where your money goes is a key factor in making your budget work.

Separate your Needs and Wants:  We don’t know how long the crisis will last, so it’s crucial to look at what is a necessity and what is just nice to have.

What does this mean for your investments?

There are two vital points to keep in mind:

  • This is an event-driven decline, and while the recovery may prove to be a slow and gradual one, the COVID-19 pandemic will one day end. As far away as that may feel, it will run its course. In the meantime, the difficult part is avoiding the emotional decisions that can tempt investors to make ill-advised changes.
  • Portfolios are built to last until the next event. We built it for the long term. This does not come with the expectation that your investments would never experience declines; rather, your portfolio is built to withstand them so that it can carry you through to the next recovery and future gains.

Please keep these two foundational points in mind as you turn on the news or look at the day’s market action, which can admittedly add to your feelings of fear and uncertainty.

As I stated in my previous postings, now is the time when active management differentiates itself by being active on the downside and also active when good buying opportunities present themselves.

Keep your long-term goals in sight and look at corrections like this as an opportunity to buy into the markets at a sale price.

With that in mind, you may still have specific questions about your portfolio and investment plan. If you do, we are always here to address them. Please do not hesitate to contact us.

For more information, please visit our website at:

www.madurifinancialgroup.com

In the minds and hearts of all people around the world is the suffering and the pain that our visible minorities, colleagues and friends are experiencing and have been experiencing for too long. It’s a time for all of us to reflect deeply on the work we need to do to set our country on a better path, starting with everything that we can directly control, in our workplace and in our daily lives.

 

This commentary represents Maduri Financial Group’s views at the date of this letter, which are subject to change without notice.

Important Legal Information This material is intended to be of general interest only and should not be construed as individual investment advice or a recommendation or solicitation to buy, sell or hold any security or to adopt any investment strategy. It does not constitute legal or tax advice. The information is not a complete analysis of every aspect of any market, country, industry, security or portfolio. Statements of fact are from sources considered to be reliable, but no representation or warranty is made as to their completeness or accuracy. Because market and economic conditions are subject to rapid change, opinions provided are valid only as of the date indicated. The views expressed may not be relied upon as investment advice and are not share class specific.