Dear Valued Client,
Equity markets made new highs in February after shrugging off initial concerns about COVID-19. However, as outbreaks in South Korea, Italy and Iran occurred, the markets sold off sharply. This risk-off process is still ongoing and will likely result in volatility over the next few weeks as the world watches how the pandemic develops.
During times like this, investors should take a step back from the babbling crowd and put the big picture in perspective. Firstly, the markets have been very strong and returns over the past 13 months have been spectacular. Hence, a corrective phase should not come as a surprise. The worsening situation of COVID-19 simply provided the excuse for a correction to start. Secondly, while the pandemic is a huge concern for the world, being optimistic that it will eventually be contained and that medical solutions will eventually be developed is the wiser and more rational view to have. Thirdly, while there will be a drag on global growth, it is expected to be temporary. It is very likely that many countries will be providing fiscal and monetary stimulus to counteract the economic disruptions of the pandemic as well.
The long-term uptrend has not been broken yet, and hence our view remains the same – the secular bull market is still intact. This is a corrective phase which is likely to be volatile. The markets will be watching the daily statistics of the pandemic closely, with the main concern being whether there will be more serious outbreaks, especially in North America. As we have somewhat reduced risk in our portfolios over the past couple of months, and will probably be making more adjustments in our portfolios as this correction develops, we should be able to weather this storm quite well, as we have done so with previous storms.
As always, if you have any questions or wish to discuss whether any of the mentioned investments are suitable for you, please do not hesitate to call us at 604-658-3043 or email.
Best Regards,
Ron Aloni / Alan Goh / Jason Chen
This commentary is intended for information purposes only and does not constitute an offer to buy or sell our products or services nor is it intended as investment and/or financial advice on any subject matter and is provided for your information only. Every effort has been made to ensure the accuracy of its contents. The views contained herein do not necessarily constitute the views of Leede Jones Gable Inc. Leede Jones Gable Inc. is licensed as an investment dealer in every Canadian Province and Territory and is a member of the IIROC and the Canadian Investor Protection Fund.
