Staring Across the Valley
As the pandemic starts to dissipate, businesses will open and individuals will come out of hibernation, but our world will be forever changed. Time at home has allowed for self-reflection. New behaviors will be adopted by individuals and businesses alike.
Think about all the obstacles, the frustrations, and the victories in between that each and everyone one of us has faced over the past 6 weeks… We now stand, staring across the valley, knowing that the other side exists but unsure as to what form it will take.
During the next phase we expect that innovation will grab the torch from intervention. We are seeing massive progress on testing and treating the virus and have made some positive strides towards a vaccine. In our lives before COVID we sometimes felt as if technology was moving our lives at such a rapid rate, that we could not keep up. This same technology is now helping us develop these solutions much more quickly than we would have ever thought possible. Imagine if the Wright Brothers could have sat at a computer with the power to create an airplane in less than 24 hours that would almost certainly fly? It would have saved them from having to jettison themselves off sand dunes in the Carolina’s risking death during each trial flight. Proof that the speed of innovation increases every day.
How does this affect my investments?
As we start to think about life after COVID19, the following macro trends seem to be increasingly relevant to our investment decisions.
Source: Manulife Investment Management
Each of these trends is important to consider when adjusting your portfolios for the future. Buying business that will profit from technology, infrastructure build and the huge increase in government spending is key, but so is staying invested. It would be less gut wrenching if we could grow capital in a more predictable way over the short term, but that is not the way it works.
The fact that markets have recovered as much as they have from their recent lows serves as a great example of the dangers of trying to time market moves, rather than staying invested for the long term.
By sticking with our long-term plan, we have had the luxury of avoiding this unpleasant surprise – when those who have pulled their money out must watch a bounce back in which they are not involved. This is not to say that we know the direction the market will take tomorrow or in the days and months to follow. In fact, it is precisely for this reason that we stay the course, making calculated adjustments to our plan to ride the waves during the good times and bad.
COVID19 Tip – Tax benefit for working at home
For those of you required to work at home by your employer, keep track of your house expenses (hydro, interest costs, internet etc) during this period as you may be eligible to write off a portion of these expenses. In order to benefit from these deductions, your employer will have to fill out a T2200. Contact your HR department to see if you are eligible.
If you have any questions or comments, please let us know!