The world of financial planning and investments can be confusing…especially in times like these. Folks wonder where to go to get reliable help and advice.

Where to start! We started the previous newsletter the same way but for different reasons than will be covered here. At the end of Q1 the mood was pretty much as dim as it could be, and the markets had just finished off one of the worst quarters in history. Fast forward to the end of the 2nd quarter and the mood is drastically different.

For the Quarter, the S & P 500 index was up nearly 20%. Yes, we followed one of the worst quarters in history with one of the best. In fact, it was the best quarter since 1987. No one could have predicted the economic and stock market paths over the first 6 months. To say the least it has been a wild ride.

In our previous newsletter, we had mentioned the fact that the Federal Reserve had cut interest rates and instituted multiple other stimulus programs. We had also mention that more often than not this was positive for the stock market. This certainly turned out to be the case.

By quarter-end, the Fed had reduced the levels of stimulus somewhat but they are still running at record levels and it appears they will do whatever is necessary to avoid a major economic disruption.

Economically it should not be a surprise that we are officially in a recession that started in late February. This ended the longest economic expansion in American history. The good news here is that this lays the groundwork for a new expansion to begin. The bad news is we believe we have a long way to go yet before this occurs. The employment situation still needs to stabilize and the Covid 19 virus while appearing to be more contained than it was in March is still extremely active and may rear its ugly head at any time. There is still a looming prospect for more closures if the virus were to get out of control again which could stall any attempt short term of economic recovery.

The best cure for this will be the eventual vaccine. Unfortunately, this appears to be a way off as well most likely sometime in 2021. Suffice to say there is still a ton of uncertainty out there. Hence, we feel that the more conservative approach we have taken is still the best approach. The worst may or may not be over and the range of outcomes for the stock market is still extremely wide as we enter the second half of 2020.

For the quarter, the only change we made to any of the models was in the income model where we reduced stock exposure to 25% of the portfolio. We were able to do so without a decrease in the income which is the key component to that particular model. All other models remain in the risk reduced state we have had them for the past several quarters, but we are evaluating each closely at quarter-end, and changes may be in order for some.

And, of course, if you have questions, need our help or know someone else who might benefit from what we do, please send us a note.

Stay healthy and safe,
Rockport Wealth Advisors