Investment Insights: Market Commentary - July 2020
Before we highlight insights that help frame our current situation, we want to extend our thoughts and prayers to those impacted by COVID-19 and recognize the courageous individuals on the front lines whose efforts allow us to see potential and positivity in the future.
As we turn the page on another quarter in these unprecedented times, our Investment Strategy Group took to the history books, citing a quote from the, often overlooked, leadership of a seemingly “simple man from Missouri”:
“America was not built on fear. America was built on courage, on imagination and an unbeatable determination to do the job at hand."
– President Harry S. Truman
With these words serving as inspiration, this month’s commentary draws some insightful parallels from the crisis-fueled events of our past, to help inform and shape potential outcomes and developments for what may be greeting investors ahead.
Some key takeaways include:
- Courage and innovation leads us out of difficult times. Innovation is increasing the efficacy of drug testing, reducing costs and shortening development times. We are also benefiting from innovation in fiscal and particularly monetary policies.
- Domestic equities experienced a strong snapback during the second quarter, but opportunities are still abound, including in other asset classes.
- Global economic stimulus is powering a better than expected rebound after a precipitous economic drop.
- Innovation is key to economic development and also presents investment opportunities. One must consider companies that often reside outside of the U.S.
- Domestic equities have experienced a strong rebound. International equities have cheaper valuations and may provide leadership going forward. Global infrastructure is attractive for their yields, valuations and long-term fundamentals.
- Corporate and muni bonds are much more attractive than U.S. Treasuries. If history is to repeat, tremendous opportunities exist in high yield corporates and convertibles securities.
- While we keep a watchful eye on increases in COVID-19 cases and other risks, what is most important to monitor is our ability to course correct re-openings regionally and to keep hospitalization and ICU utilizations at manageable levels.
- Investing is never easy and a “wait-for-the-vaccine-and-jump-back-in” mentality may not be a good investment strategy.