Q2 2020 is officially in the history books.
The COVID-19 global pandemic shocked life as we knew it in many ways. We were forced to reassess daily activities that we used to take for granted; it forced us to change how we spend time with friends and loved ones, and to reconsider our daily work habits. The corresponding shock to the economy with government-imposed shutdowns and social distancing measures was severe. Countries fared differently depending on the strength of their healthcare systems, the decisiveness and strength of government intervention, and social willingness to cooperate with restricted freedoms. For example, Canada’s health care outcome has been relatively better compared to the US.
Through this pandemic, global markets responded initially as would have been expected. They fell severely and precipitously.
Certain companies – mostly healthcare, technology, and stay-at-home-companies – were recognized as being potential winners of the global shutdown and led the subsequent rally. Not all financial markets or companies have rebounded equally from this market correction.
Portfolios at Tall Oak Private Wealth were not immune to volatility but fared generally well as the downside was minimized. We raised cash in February 2020 in most portfolios at the height of the markets. We were overweight in our portfolios in the following sectors: technology, health care, consumer defensive and US stocks, and so clients did not experience as extensive a negative decline. We also held no oil stocks in the portfolios, which experienced a very strong decline, with shrinking global demand exacerbated by a geopolitical battle between Saudi Arabia and Russia.
Despite being out of the quarter, we are not out of the woods. Re-openings are challenging policymakers and healthcare workers; a second wave in the fall remains probable according to many health experts, and at some point, government stimulus must be wound down. Will employment rebound or will many jobs be permanently lost? Will behaviours return to pre-pandemic habits? Will employees return to the workplace or continue to work from home? Will the economy rebound quickly or be hampered by multiple setbacks? Will effective treatments or vaccines be developed within a shorter timeframe? We continue to believe that the key to this recovery remains threefold — providing enough lifeline and stimulus to allow businesses and individuals to remain solvent; overcoming psychological inhibitions due to COVID with either better case outcomes or medicine; and finding ways to stimulate actual economic growth.
In this environment, dynamic active management remains key to navigating the ever-changing economic landscape and markets. At Tall Oak Private Wealth, we have maintained balance in the portfolios throughout this recovery. We have done this by choosing to carefully invest in securities that are exposed to growth in this environment, such as healthcare and technology stocks, and by minimizing exposure to higher risk companies in other sectors, such as retail/consumer discretionary, travel and oil. Portfolios have benefited from this approach with reduced volatility on the way down, but we participated in the recent rebound.
As always, we thank you for the trust you have placed in us to steward your portfolios. We continue to work hard on your behalf to ensure that we are managing your assets through these challenging times.
We welcome you to reach out to us to discuss how this impacts your personal portfolios as we remain just a phone call away.
The views expressed in this commentary are those of Tall Oak Capital Advisors as at the date of publication and are subject to change without notice. This commentary is presented only as a general source of information and is not intended as a solicitation to buy or sell specific investments, nor is it intended to provide tax or legal advice. Statistics, factual data and other information are from sources Tall Oak believes to be reliable but their accuracy cannot be guaranteed. This commentary is intended for distribution only in those jurisdictions where Tall Oak Capital Advisors are registered. Securities-related products and services are offered through Raymond James Ltd., member Canadian Investor Protection Fund. Insurance products and services are offered through Gryphin Advantage Inc., which is not a member-Canadian Investor Protection Fund. This commentary may provide links to other Internet sites for the convenience of users. Tall Oak Capital Advisors is not responsible for the availability or content of these external sites, nor does Tall Oak Capital Advisors endorse, warrant or guarantee the products, services or information described or offered at these other Internet sites. Users cannot assume that the external sites will abide by the same Privacy Policy which Tall Oak Capital Advisors adheres to.
The views expressed in this commentary are those of Tall Oak Capital Advisors as at the date of publication and are subject to change without notice. This commentary is presented only as a general source of information and is not intended as a solicitation to buy or sell specific investments, nor is it intended to provide tax or legal advice. Statistics, factual data and other information are from sources Tall Oak believes to be reliable but their accuracy cannot be guaranteed. This commentary is intended for distribution only in those jurisdictions where Tall Oak Capital Advisors are registered. Securities-related products and services are offered through Raymond James Correspondent Services Ltd., member Canadian Investor Protection Fund. Insurance products and services are offered through Gryphin Advantage Inc., which is not a member-Canadian Investor Protection Fund. This commentary may provide links to other Internet sites for the convenience of users. Tall Oak Capital Advisors is not responsible for the availability or content of these external sites, nor does Tall Oak Capital Advisors endorse, warrant or guarantee the products, services or information described or offered at these other Internet sites. Users cannot assume that the external sites will abide by the same Privacy Policy which Tall Oak Capital Advisors adheres to.
