Investors could be forgiven for feeling disconnected from reality at the end of Q3 2020. Among many disrupted patterns and expectations, we’ve witnessed a skyrocketing stock market amidst deepening global economic pain and human suffering. Yes, there are always opportunities hidden within calamities. But who could have predicted the astounding gains of the last two quarters?

In August the stock market seemed to shrug off the bad and worrisome news related to Covid-19. Instead, investors continued to pour money into tech and communications stocks perceived to be essential to the new stay-at-home world in which we now live. How to make sense of it all? This month we dive into explanations for tech’s skyrocketing valuations—and the things that could make those valuations take a nosedive. We begin with a look at the market’s stellar performance in August.

A feeling of “what’s next?” is in the air. By now, Congress has gone home for the summer. Efforts to put more money in the pockets of tens of millions of unemployed Americans are stalled. Fall campaigning and mud-slinging have begun in earnest. Covid-19 rages on, a deadly whack-a-mole game played across the earth. Amid the uncertainty, July markets did well. But what can we read into the dollar’s decline and gold’s ascent? Let’s take a look.

If you had lived on a mountaintop for the first six months of 2020, unaware of all the tumult below, you may have concluded that nothing much happened to move the markets while you were gone. By the end of June 2020, the S&P 500 Index was down just slightly from where it began the year. This sanguine performance came despite scenes of death, destruction, isolation, outrage and fear that have rarely been witnessed on such a global scale. We offer our Q2 wrap-up and perspective here, followed by the June market report.

 

Despite more than 108,000 US deaths from Covid-19 and deep job losses caused by the economic shutdown to prevent even more fatalities, US stock prices are hovering within 8% of their all-time peaks reached earlier this year. How does this square with the bleak news of the past month? We share our thoughts on a turbulent period of social unrest and economic uncertainty following a brief market summary.

April was a temperamental month filled with swings in investor mood and sentiment. And despite a blockbuster performance by stocks, it was a month filled with anxiety. How can we go about our day-to-day lives while bracing ourselves for further volatility? We offer our perspective here.

Just weeks after climbing to record heights, US stocks sank more than 30%, ending the longest bull market ever and returning stock prices to where they were when President Trump took office in January 2017. Oil stocks slid to an 18-year low. A stampede out of bond markets and into cash added to the chaos. Many financial analysts believe that the value of private equity investments have been eroded even more than the broader stock market, due to the high leverage involved in most private equity deals. What should you do now? Here we offer context and guidance, followed by a review of Q1 numbers.

Life is unpredictable. The chaotic, steep slide of the market over the last few weeks and underlying fears of the Novel Coronavirus reinforced that undeniable fact. Vacation plans? Out the window. School schedule? Work routine? In flux. Business conferences? That deal in the works? Cancelled. Uncertain. Unpredictable. In the past few weeks I’ve written to our clients several times about the precipitous market decline. This month’s report will be short and to the point. In a nutshell: when life is unpredictable, stick to the plan you made in calmer times.

You wouldn’t know it from reading headline news, but the S&P 500 today closed up over half a percent compared to a week ago (2972 on Friday March 6 versus 2954.22 on Friday February 28). The takeaway: Our collective mood doesn’t always reflect reality. Meanwhile a record-breaking global bond rally accelerated on Friday, with growing fears over the economic impact of coronavirus sending investors scrambling for the safety of government debt at the fastest pace since the financial crisis of 2008.

You are no doubt painfully aware of the market drop last week. A chart of the past five days looks like stepping off a steep cliff. By the time markets closed on Friday (28-February), the Dow had lost 12% for the week and the S&P had lost 11%, their worst week since October 2008, during the global financial crisis. Yields on the ten-year Treasury Bond plummeted to an all-time low. Oil prices dropped to their lowest level since December 2018.  And gold, usually a haven amid nasty stock market sell-offs had its biggest fall in years. If there was any good news, it was bittersweet: losses were smaller on Friday than they had been all week.