The stock market is closed today in observance of Good Friday.
The S&P 500 gained 10.4% this week, the best weekly performance since 1974 as the Federal Reserve unleashed another $2.3 trillion in lending for small businesses, cities, and states. The stock market has risen 27.5% from the low on March 23.
Our models continue to rebalance weekly to keep your asset allocation and risk tolerance in check. This week our models purchased small-cap stocks, which rose 15.3%. A few weeks ago, we bought real estate holdings, and they were up 20.5% this week.
The central theme for our models is diversification because we never know which sector will take the lead. It’s like a horse race. When the horses enter the gate, we do not know which one is going to win. The lead will change several times during the race, but when it’s over, one horse will come in first, one will finish last, and the remainder of the field will fall somewhere in between.
I grew up near Santa Anita Race Track in Arcadia, California, and I went to the races often. A former neighbor of mine entered the horse racing business, and I asked him how he trained successful horses. He said, “Sometimes you just got to let ‘em run.” We’re letting our models run.
We’re entering the earning season, and it won’t be pretty as companies will report terrible news. However, this news is baked into the market. If it’s “less bad,” it will be good. Make sense? Companies will write off as much as they can this year, so next year their balance sheets look immaculate. The stock market is forward-looking, so it has already set its sites on next year.
Here’s how stocks, bonds, and other asset classes performed this past week.
- The S&P 500 rose 10.4%
- The NASDAQ rose 7.9%
- International Stocks rose 6.6%
- Emerging Markets rose 4.5%
- Long-Term Bonds fell 1.6%
- Gold rose 4.4%
- Oil fell 3.5%
- Chinese Stocks rose 2.6%
In Punjuab, a city in northern India, the residents can see the Himalayan mountain range for the first time in thirty years as pollution has dropped during the global shutdown. Here’s the article: https://www.cnn.com/travel/article/himalayas-visible-lockdown-india-scli-intl/index.html
Astronaut Scott Kelly spent a year in space, and he dealt with isolation by staying busy, committing to a daily plan, keeping a journal, following a schedule, going outside, and participating in a hobby. Here’s the article: https://www.nytimes.com/2020/03/21/opinion/scott-kelly-coronavirus-isolation.html
“When I first looked back at the Earth, standing on the Moon, I cried.” ~ Alan Shepherd
Have a great weekend, and keep the faith!
Bill Parrott, CFP®
President and CEO
Parrott Wealth Management