• Ryan Sheriff

The year 2020 has been a rollercoaster ride. What comes next?

Updated: Aug 11

Our investment team weighs in.


What a difference a few months can make. As you review your statement from Open Access this quarter, you will note that your account recovered substantially from the dark days earlier in the year. Viewed over the course of the last one, three, and five years, your investments at Open Access are again moving in the right direction.


It’s been a Dickensian first half of 2020 (a tip of the cap to fans of classic novels). Certainly, your investment account at Open Access experienced the best of times, and the worst of times, so far this year.

Stock Markets are Recovering


Stock markets registered their fastest declines in history in February and March as the global economy steadily shut down in order to contain the pandemic. However, as winter gave way to spring and summer, markets reacted to the fact that things were gradually getting “less bad”. Over the last three months through June alone, global stock markets are up more than 15%. In this environment, your investments at Open Access posted some of its best quarterly gains in decades.


The natural question is, is this recent uplift in markets sustainable, or is it simply a flash in the pan?


While we’ve clearly experienced extremes in market volatility of late, we note that a divergence in views is typical when it comes to investing. This is what makes a market. Every time you buy a stock believing that it is attractive at the current price, there has to be a seller with the opposing view.


Two Divergences


There are two divergences today that investors are contending with. The first is the wide gap between historically weak economic indicators and the remarkable rise in stock markets of late. The second conflicting signal surfaces when we dig into what is actually driving the markets higher.


Rather than a broad-based advance across sectors and global markets, the bulk of the gains have been confined to a subset of technology firms. In particular, it’s been a “FANMAG” recovery—an acronym representing the recent run-up in Facebook, Amazon, Netflix, Microsoft, Apple and Google shares.


Defensive Stock Management


There is some merit to the view that this market rally makes sense. Yes, indicators are “less bad” than they were a few months ago. This is in context of an extraordinary recession being met by extraordinary support from governments and central banks. In addition, while stocks are volatile, at current interest rates, cash and bonds are unappealing alternatives.

That said, we are proceeding cautiously in managing your hard-earned savings.


This defensive strategy led to your account rising less than the benchmarks did in recent months. Although, this approach is sensible in light of current conditions. Generating performance for you is not only about achieving high returns, but also about providing downside protection in volatile times. Divergences in the markets naturally resolve themselves by moving in the direction of underlying fundamentals. Given the wide variances today, we believe there will be better opportunities to refocus on the returns side of performance in the quarters ahead.


If you have any questions about your Open Access statement, account holdings or portfolio positioning, please feel free to contact our client services team. In addition, check out the latest portfolio information under the “Log In” page of this website.






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