Pandemic and portfolios, what’s new

Dear Clients, Colleagues, Friends,

Well, we have officially entered the Summer of The Year of COVID-19. If you think of the early portion of the year as being caught in a snowglobe that fell off a mountain, you might characterize these last three months as the roller-coaster ride through a dense and misty fog. 

Let’s take a quick look back: By the end of last year, the market was up 28%, reflecting a huge one-year increase, and stock prices indicated sustained optimism for 2020. By late February, the knowledge that coronavirus would impact the business of multinational companies triggered sharp declines in the stock market. By the middle of March, all of the broad-market gains from 2019 were lost.

But suddenly, a recovery began, and moved as quickly as the initial plunge. At yesterday’s close, while the S&P 500 was down about 7% for the year, it was still 20% higher than 18 months prior, at the start of 2019.  

This rapid rally has returned us to levels that indicate a fair amount of optimism among investors. Normally cycles like the one we have just experienced take anywhere from several quarters to multiple years to run their course. This time it was only weeks.

The rapid and significant changes we have seen this year have caused the investment landscape to shift from one that was starting to present solid buying opportunities to one that is now more neutral.

Today we are balancing our long-term confidence in the economy and financial markets with our knowledge that the uncertainties of the next six to 12 months are heightened by an unusually wide range of shorter-term issues—including the scientific and economic ramifications of COVID-19, the economic impact of the anti-racism movement, trade relations with China, and what will likely be a heated run-up to our presidential election in November.

These kinds of current events are often a source of short-term volatility and long-term opportunity. As always, we employ a proactive view, taking advantage of the volatility of the day with a long-term eye instead of reacting with the crowd. Throughout the coming months, we will buy when individual opportunities meet our disciplined criteria for risk and return—and reduce positions in your portfolios when prices reflect excessive optimism and increasing risk.

Our work for you is really akin to navigating a never-ending trail run, not a 5k or a sprint. We need to be aware of the tree roots, mud-holes, wild animals, and sketchy downhill patches, but keep our eyes on our longer-term health to deliver the endurance that will mean a successful finish for you. We have trained with discipline and executed our trail-run strategy well. And unlike what the world may have felt like back in late February, and then mid-March, at Two Point Capital we are not trapped inside a tilted snow globe or riding a rogue roller-coaster. We are running ahead on our own steam, at our own pace. 

As always, I am energized by and grateful for your confidence in the work we do for you.


Our company update

As of this week, the Finger Lakes Region of New York State has entered Phase 4, which allows for a continued reopening of businesses and services. With an abundance of caution, we continue to work primarily from home, with team members being careful to stagger any time in the office. We are currently meeting with clients via Zoom or Skype, and are finding that works relatively well for people.

Our plan is to continue with our virtual platform, while monitoring coronavirus case numbers in our area to determine a reasonable timeframe for reopening the office to our clients, partners, and friends. You will be the first to know. 


More action, more talk 

As you know, the last few months have been very busy ones on the investment front. But as planned, we have begun to address our online presence to make it easier to communicate with you as well as with prospective clients. We are starting with more activity on social networks like Facebook, Twitter, and LinkedIn.

Next week we plan to launch our blog, and while our primary focus will continue to be delivering our unique investment insight, we will strive for some light-hearted balance. We will kick it off with a two-part post on thriving in The Summer of COVID. Part I will focus on enrichment, and Part II on entertainment. Our mission is to share information and analysis that inspires, energizes, and maybe makes you think.  

Stay safe this summer!

This is our niece Maria, and she has a secret weapon for staying safe during family picnics on the patio. Read more about it.

This weekend is the 4th of July! How are you handling the shift to warmer weather and outdoor activities? We have been practicing safe ways to gather with small groups of family and friends, and would love to incorporate your ideas into ours, and share them on the blog. 

Send us your summer gathering ideas!

This summer, may you and your loved ones remain safe and healthy.

Jack McGowan, CFA
Founder and CEO

~ we would love to hear from you on this post and our blog in general ~

~ if you enjoyed our post, please share it ~

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