SUMMARY. Fears of Covid-19 "second wave" continued in the media during the week as cases rose above prior peaks. Although cases have risen (not surprising tied to mass rioting) we do not expect this to change the fact that the reopening of the economy has started.
INVESTMENT IMPACT. Although we maintained holdings of our highest conviction equity names our cash/bond/preferred stock levels are nearing their highest levels since late 2019 across our model portfolios. Although we view any fears of "second wave" as short lived we recognize valuations in certain sectors maybe elevated. Furthermore, we aren't blind to cases rising which may continue to weigh on investment sentiment short-term. However, we expect over the course of Summer investor focus to shift to vaccine progress which may change that sentiment more positive. We are prepared to add hedges (assets that may rise when market falls) to protect assets returns in the short-term if we deem necessary by monitoring "second wave" fear. Thus, why we reduced stock exposures even lower this week and cash elevated if such actions are necessary.
Our model portfolio performance has been updated on our website as of 5/29/20.
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