(315) 624-7300 / Email Us
Ascent Wealth Partners
  • Home
  • Investing
  • Planning
  • 401(k)
  • Knowledge
  • Team
    • Brad Kowalczyk
    • Mark Moshier
    • Scott McCartney
    • Doug Bissonette
    • Neil Edmonds
    • Joe Summa
    • Nancy Kowalczyk
    • Chris Lai
    • Tim Welchons
    • Steve Basile
    • Connie Benson
  • My Account
    • Schwab Login
  • Contact Us
  • Form-CRS
Ascent Wealth Partners
  • Home
  • Investing
  • Planning
  • 401(k)
  • Knowledge
  • Team
    • Brad Kowalczyk
    • Mark Moshier
    • Scott McCartney
    • Doug Bissonette
    • Neil Edmonds
    • Joe Summa
    • Nancy Kowalczyk
    • Chris Lai
    • Tim Welchons
    • Steve Basile
    • Connie Benson
  • My Account
    • Schwab Login
  • Contact Us
  • Form-CRS
Home Scott McCartney Back to the Highs
Back Home

Back to the Highs

byadmin inScott McCartney posted onAugust 21, 2020
0
0
Back to the Highs

The S&P 500 hit a fresh all-time closing high earlier this week, eclipsing its prior high set on February 19th, and is now up nearly 6% on the year.  Shortly after its February milestone, the market went into freefall, as the rapid spread and severity of the coronavirus pandemic became apparent.  Over the next month, stocks dropped by a full third, reaching their bottom on March 23rd.  The depth of the crisis set Congress and the Administration into uncharacteristically swift and cooperative action, releasing a torrent of money to households via stimulus payments and unemployment support.  The Fed returned to a familiar crisis role, slashing interest rates and backstopping credit markets.  Combined, these policy actions helped to sustain an economy badly damaged by the COVID-19 pandemic.

The pandemic continues to affect all facets of our lives, and will yet for some time.  Case counts and fatalities have steadily marched higher, and were given an unfortunate boost by what we now know to be a too-hasty reopening in much of the country in late Spring.  There is some encouraging news, however.  The hottest hot spots in the South and West have come off the boil, and fatality rates are down as we’ve learned more about treating the sick and protecting the vulnerable.  The goal of developing effective vaccines draws closer with the passing of time.  At present, four vaccines have entered late-stage Phase 3 testing, with several more nearing that important threshold.

Clumsily, haltingly, we are learning to live with the pandemic.  The initial case surge that enveloped New York and New Jersey has passed.  The worst of equipment shortages has abated, although testing remains (still!) a problem area for timely, accurate diagnosing.  Unfortunately, throughout the country, there are countless people insisting on doing things the hard way, refusing to wear masks even where they are required, for example, or flouting the conventions on group gatherings and social distancing.  All of these behaviors only serve to prolong the pandemic.

But what are to make of the stock market?  Statistically, this is the shortest-ever bear market recovery from the old high to the fresh one, with a severe drop in between: just under five months.  Are we back on an economic roll?  We believe the answer is a nuanced one, and there remain plenty of unknowns, but we find market prices as fair ones.

One wonders if the resiliency of the stock market may owe itself, in part, to our collective bungles on pandemic response; they’ve shown us how bad things could get.  We have backed away from the worst of outcomes, though.  Although we are laboring on with the drag of the pandemic’s effects, with life not close to being the “old normal” and with a multitude of industries such as travel, restaurants, and smaller retail still suffering mightily, we have come to understand the contours of this pandemic.  COVID-19 will continue to alter the economic landscape and society’s fabric, but perhaps in ways we think we can understand.

Although the S&P 500 has returned to its highs, other measures of stocks have lagged.  The average stock in the S&P 500 still remains negative on the year, off 3.6%, despite the overall index being ahead 5.8%. This disparity is due to the largest companies in the index performing much more strongly than the average stock.  Apple, for instance, became the first company in history to reach a $2 trillion market value.  The big are getting bigger, and more valuable; at the same time, the biggest companies are those that are better-insulated than most to the economic effects of COVID.  Apple, Microsoft, Amazon, Google, and Facebook—to pick the most valuable companies in the market—are all, to varying degrees, significant beneficiaries of the disruptions caused by COVID.  Meanwhile, smaller stocks in the market have struggled, in a relative sense.  On balance, all of these developments make sense to us.

Stock prices have also been helped from the paltry interest rates currently in the market.  It’s a global phenomenon, as rates are low everywhere, courtesy of coordinated central bank actions.  Higher rates normally would offer a degree of competition for investors’ capital.  Right now, they are not mounting a fight.  Rather, low rates and high liquidity (money supply) conditions have had the effect of leaking into financial markets and helping to bid up stock prices.  With inflation relatively quiet at present, there is a legitimate case to value the earning assets and profits of companies more fully via higher stock prices.  And we do foresee continued “easy money” conditions coming from the Fed.  They’ve explicitly told us as much.

We have continued to position our clients’ portfolios in line with our thinking. In our Global Growth strategy, we have prudently trimmed some strong performers that had grown to outsized positions, and added capital back to several smaller holdings in social media and technology.  In our Opportunity strategy, we initiated positions in the nation’s dominant food distribution company, and also in the leading provider of sleep apnea appliances.  In our Ascent Managed Portfolios (AMP) strategies for smaller accounts, we have repositioned capital toward larger and “growthier” parts of the market, while exiting other sectors such as Real Estate entirely.  We have maintained our investments in Ascent Dividend Focus since several repositioning actions we took around the March lows.

In sum, we can make a case for the market’s levels.  We had a good economy before the onset of COVID.  It was an increasingly mature expansion, yet one without the excesses that typically serve as recession precursors.  We have bounced back from the darkest and most fearful days of the pandemic as, right or wrong, we are believing we’ve sized up the opponent.  In the meantime, supported by low interest rates, market prices have attained their earlier levels, or close to them, although with some relative winners and losers throughout that process, as the nascent recovery unfolds.

Share:

Previous

Market Currents- 8/18/2020

Next

Market Currents- 09/11/2020

Related Posts

Strategizing For 2023
January 6, 2023
Strategizing For 2023
No Comments
Mobilizing Our Efforts
March 23, 2020
Mobilizing Our Efforts
No Comments
The Coronavirus Continues to Infect
March 2, 2020
The Coronavirus Continues to Infect
No Comments

Leave a Comment Cancel reply

Your email address will not be published. Required fields are marked *

Archives

  • March 2023
  • February 2023
  • January 2023
  • November 2022
  • October 2022
  • September 2022
  • August 2022
  • June 2022
  • May 2022
  • April 2022
  • March 2022
  • February 2022
  • January 2022
  • December 2021
  • October 2021
  • September 2021
  • August 2021
  • July 2021
  • June 2021
  • May 2021
  • April 2021
  • March 2021
  • January 2021
  • November 2020
  • October 2020
  • September 2020
  • August 2020
  • July 2020
  • June 2020
  • May 2020
  • April 2020
  • March 2020
  • February 2020
  • January 2020
  • December 2019
  • November 2019
  • October 2019
  • September 2019
  • August 2019
  • July 2019
  • June 2019
  • May 2019
  • April 2019
  • February 2019
  • January 2019
  • December 2018
  • November 2018
  • October 2018
  • July 2018
  • June 2018
  • May 2018
  • April 2018
  • March 2018
  • February 2018
  • January 2018
  • December 2017
  • October 2017
  • September 2017
  • July 2017
  • May 2017
  • March 2017
  • February 2017
  • January 2017
  • December 2016
  • November 2016
  • October 2016
  • August 2016
  • July 2016
  • June 2016
  • April 2016
  • February 2016
  • January 2016
  • November 2015
  • September 2015
  • July 2015
  • January 2015
  • November 2014
  • September 2014
  • May 2014
  • October 2013
  • June 2013
  • November 2012
  • May 2012
  • March 2012

Recent Posts

  • What Is Your Cash Doing For You?
  • Market Currents – 2/7/23
  • Market Currents – 1/12/23

Contact Us

  • Address
    NEW HARTFORD: 89 Genesee Street | New Hartford, NY 13413 | 315.624.7300

    ELMIRA: 1225 W. Water Street, Suite 1 | Elmira, NY 14905 | 607.734.2002

    SARATOGA: 16 Lake Avenue | Saratoga Springs, NY 12866 | 518.306.4220
  • Home
  • Investing
  • Planning
  • 401(k)
  • Team
  • Contact Us
  • Terms of use

Recent Posts

  • What Is Your Cash Doing For You? March 7, 2023
  • Market Currents – 2/7/23 February 7, 2023
  • Market Currents – 1/12/23 January 12, 2023
  • Strategizing For 2023 January 6, 2023

Login To Your Schwab Account

Copyright © 2023 Ascent Wealth Partners. All Rights Reserved.