May 2020 Update
We hope that this letter finds you and your loved ones safe and in good health. We wanted to start this letter thanking you. It is a privilege to help you and your family achieve your financial and investment goals. We are incredibly grateful for your business and support for all these years.
We would also like to salute the tireless and selfless efforts of those who are helping others during this challenging time. We have several clients who are doctors, nurses, paramedics, personal support workers and other front-line healthcare workers who have given themselves to helping others. Thank you for everything you are doing!
The COVID-19 pandemic continues to disrupt economies and capital markets worldwide. Global markets experienced severe declines during March followed by the beginnings of long-term recovery in April. Markets continue to be volatile on a day-to-day basis as investors continue to digest updated news.
· Commencing the first week in March 2020, more than 30 million people in the United States have filed for unemployment benefits.
· Many economies around the world continue to be shut down. Citizens are subject to social distancing and stay home policies that are meant to reduce infection rates and ‘flatten the curve’.
· Oil prices crash over the past month resulting in negative prices for crude oil for the first time in history.
· More than 100 countries have travel restrictions including Canada and the United States.
· Most advanced global economies are expected to be in recessions during 2020.
Amazingly, considering all of that and against one of the worst economic backdrops in history, global stock markets are performing reasonably well of late. As of May 1st, 2020, the Toronto Stock Market is down approximately 14.3% year to date, after a 19% gain in 2019. The S&P500 in the United States is down approximately 12.4% after a 28.8% gain in 2019. Many of our clients with balanced portfolios are seeing declines much less than overall market declines. While it is very likely that we are by no means finished with this terrible period in human history, we may be able to escape reasonably quickly and without devastating declines. Global central banks in advanced economies moved with historic speed and force that may have put a floor underneath markets and help us get through this period. Governments have also moved quickly to enact stimulus programs to help individuals, families and businesses get through this period.
Most economic downturns are caused by financial shocks or excesses that have built up in the financial system. In other words, the train falls off the tracks. Never has the train been stopped by governments ordering the shut down of vast portions of the economy. Most businesses have been affected to one degree or another, while businesses such as global air travel, hotels and restaurants have seen devastating declines. No-one knows how quickly these businesses will come back or how quickly the economy will come back once government allows businesses to reopen.
What we are doing:
We are showered with research from a variety of global providers daily. We attend several conference calls with global Portfolio Managers every week. We are on conference calls with companies understanding the impact of Covid-19 on their industry and on their business. We are doing our best to stay informed about the health situation and the economic implications of the virus.
What our clients are doing:
We are surprised and delighted by our client’s behaviour throughout the past few months. In 2008, clients were panicked and afraid of portfolio declines caused by very poor markets at that time. Today, clients are much calmer seemingly guided by experience and knowledge that current market declines will come back in time. For many risk tolerant clients, we have used this period as a buying opportunity to buy great investments at reduced prices.
What is our advice during this period?
We are experienced Investment Advisors having been through many downturns in the past. We subscribe to the Mandeville difference and emulate the behaviour of the wealthiest individuals in the world.
According to Mr. Warren Buffett (estimated $80 billion USD net worth), successful investing requires a sound intellectual framework and control of emotions. Brendan and I help you build a sound intellectual framework by creating a plan for you, and we help you maintain control over your emotions during good times and bad times. This is one of those times that requires control of emotions. Over our careers, we have learned that investors who panic and sell their investments during declines lose every single time. Selling is the easy part; the hard part is knowing what to do then. Typically, by the time the investor feels comfortable again, the market has risen by a large amount. We feel that every client should be looking at current markets with at least a five-year view. The current risk, volatility and uncertainty is sure to continue for some time. We are asking for your continued patience as the world works to resolve this terrible virus. We will continue to do everything we can to help you achieve your financial goals now and over the long term.
Our Office
Several weeks ago, the Ontario government declared Investment Dealers as an essential service. Although it is important to do our part in reducing virus transmission, we have been in the office daily as we normally would be. We have been careful of having clients into the office and visiting clients at their home. For the time being, we will continue to limit face to face meetings for financial reviews or for additional investments. We can conduct mostly all business by telephone, email or video conferencing. Deposits can be made electronically, and we can manage most paperwork by email and regular mail. We much prefer seeing you in person, but it will need to wait for a bit.
Many of you are aware that our previous assistant Erin left our office in March as she accepted an MBA program in Toronto. We are pleased to announce that we have hired a new Executive Assistant, Brittany Kinchen. We first met Brittany several years ago while she was working at Make-A-Wish. Brittany is very friendly, professional and excited to learn our business and help our clients. We are thrilled to have her on our team, and we can’t wait for you to meet her.
Family & Friends
We believe that there are many Canadians that are struggling with their finances, and with their investments in the current environment. It is easy to let fear of the unknown overwhelm us which can lead to unwise decisions. At Mandeville, we have a framework for making decisions for our clients, and access to the highest quality public and private investments to help your financial and investment goals come true. We also think that others who might be dealing at banks or other investment firms are not benefitting from what we are able to offer clients at Mandeville.
Brendan and I want to make sure that you are aware that we are accepting clients and would be thrilled to help your family and friends any way that we can. From financial planning, debt management, and investment management we can be extremely helpful during this period. It is during periods of market stress that good Financial Advisors prove their value. At Mandeville, our mission is to make clients wealthy. We can help!
One of my favourite phrases that I think about often is – ‘this too shall pass’.
Jamie C. Hodgins, CIM FMA FCSI
Senior Investment Advisor
Branch Manager
Mandeville Private Client Inc. is a member of the Investment Industry Regulatory Organization of Canada and a member of the Canadian Investor Protection Fund. This publication is solely the work of Jamie Hodgins and Brendan Colafranceschi, for the private information of his clients. Although the author is a Mandeville Private Client Inc. Advisor, he is not a financial analyst at Mandeville Private Client Inc. The views, opinions and recommendations are those of the author alone and they may not necessarily be those of Mandeville Private Client. The information contained herein was obtained from sources believed to be reliable; however, no representation or warranty, express or implied, is made by the writer, Mandeville Private Client or any other person as to its accuracy, completeness or correctness.