We hope this finds you well. Here is a recap of market performance for the month of April and year to date:
Year to date, the low point of the S&P 500 happened on March 23rd. Since that time, stocks have rallied in spite of a host of negative announcements on the economy and record high unemployment. This rally continued in April, rewarding investors who maintained their allocation or added cash during this period. As we have written before, stocks can and likely will increase before the economic news turns positive. This is exactly what we saw in April.
In other significant news, today Ohio begins the slow, deliberate, and intentional process of reopening the economy. The Columbus Dispatch has written a comprehensive recap of Governor DeWine’s policy here. While reopening society will take time, and it’s important to maintain caution, this is an essential step and indicates the progress we have made over the past 6 weeks.
What does the reopening mean for the market and your investment accounts?
On one hand, it doesn’t mean much. Governments can provide policy decisions and guidelines, but ultimately, the long-term economic recovery will be driven by individuals and their confidence to safely increase their own social activity. Therefore, we need clearer answers to the following questions:
- What is the current reach and spread of the virus?
- How likely is it that I contract it in the future?
- If that happens, how serious will my symptoms likely be?
- What treatments are broadly available in the case of serious illness?
Having concise answers to these questions would be the real fuel for economic recovery. Well-meaning caution and fear of these unknowns will keep people from re-engaging in society. While there are many ideas and theories, we need definitive answers that the vast majority of people accept.
On the other hand, this reopening is meaningful. It means we believe the worst of the pandemic is over (take a minute and think about that). It also means we have achieved our original goal of flattening the curve, and that hospitals have the capacity and equipment necessary to treat patients. We have avoided the worst-case scenarios. These are important milestones that should be celebrated.
These accomplishments translate into economic and market positives. We anticipate greater progress over the next few months as we continue to learn more, follow the evidence, and develop more precise tactics with which to fight this battle.
As always, please contact us with any additional questions or to discuss your accounts in further detail.