Skip to content
News & commentary

October 2020 Portfolio Management Team Update

Home News & Commentary October 2020 Portfolio Management Team Update
Elvis Picardo

Elvis Picardo

North American and global indices retreated in September, weighed down by growing concerns about a second wave of COVID cases worldwide and uncertainty surrounding a potential U.S. stimulus deal, but still ended the third quarter with solid gains.

The TSX Composite posted an overall Q3 gain of 3.9% after declining 2.4% in September; the energy (-11.7%) and health care (-8.6%) sectors were down significantly in the month, while the defensive consumer staples (+7.4%) and utilities (+6.0%) groups were the best performers.

In the U.S., the S&P 500 reached a new record high of 3,588.11 on September 2, before commencing a three-week slide that briefly took it into correction territory (-10%). The index lost 3.9% last month for an overall Q3 gain of 8.5%, while the Dow Jones Industrial Average fell 2.3% for a Q3 advance of 7.6%. The Nasdaq Composite – whose mega-cap technology stock constituents have been in the vanguard of the U.S. equity rebound from the March 23 lows – surged 11.0% in Q3 despite a 5.2% decline last month and was up 24.5% YTD (as of September 30).

(Data Source: FactSet).

Our Strategy

 While September lived up to its reputation of being one of the worst months for equities, the markets have proved quite resilient to a couple of major risks that are literally around the corner. These are: a U.S. Presidential election that may well be the most contentious one in American history (judging by the acrimonious debate on September 29), and the possibility of a devastating second wave of COVID cases as the colder months approach.

News that President Trump has been diagnosed with COVID may amplify near-term market volatility. While the (eventual) Presidential election results could have a knee-jerk effect on specific sectors like health care, history suggests that the impact is unlikely to be long-lasting regardless of who wins.

The bigger risk is the ongoing pandemic, but unless the feared second wave is a catastrophic one, two factors may mitigate its market impact – (a) COVID is now  a ”known unknown” (unlike in the first quarter of 2020, when the coronavirus went from being a localized illness to a full-blown pandemic in a matter of weeks); and (b) most major economies may not go into full nationwide lockdown mode but may resort to targeted shutdowns and other measures. Other factors that may be buoying investors’ hopes include – prospects for an effective vaccine in the next few months, more effective treatments, and faster testing.

Markets are also being well-supported by record levels of fiscal stimulus and low interest rates in most major economies. With the Federal Reserve recently pledging that it would keep interest rates low until the U.S. economy is far along in its recovery, most Fed policymakers see rates staying at their near-zero level through 2022.

We rebalanced client portfolios in the second week of August, as the S&P 500 was approaching its record high, in order to trim some profitable equity positions and allocate the proceeds to less volatile asset classes such as fixed income and preferred shares. Due to expected volatility and looming risks, the Portfolio Management Team (PMT) will continue to monitor market conditions very closely and make tactical adjustments to client portfolios as required.


Please contact any member of the PMT if you have any questions or concerns regarding your accounts.

This information has been prepared by Luft Financial. Opinions expressed in this article are those of Luft Financial only and do not necessarily reflect those of HollisWealth®. Furthermore, this does not constitute an offer or solicitation to buy or sell any of the securities mentioned. The information contained herein may not apply to all types of investors.

How do we elevate your wealth?

It begins with understanding your needs and creating a comprehensive and tailored financial plan to help reduce tax, manage risk and grow your portfolio over the long term. Learn more about how we help you achieve financial security and peace of mind.

News & commentary

May 2021 Portfolio Management Team Update – Market & Economic Environment

The TSX Composite and U.S. indices reached new highs in April, buoyed by strong economic data and progress on the Covid-19 vaccination rollout. The Canadian economy expanded in March for the 11th straight month, while U.S. GDP accelerated to a 6.4% annual rate in the first quarter as personal consumption – the biggest part of […]

Read more

Term Insurance – An Inexpensive Way to Add Peace of Mind

As interest rates have continued to fall over the past few years, Canadians have continued to help themselves to more and more borrowed money. Household debt levels continue to climb, and yet many Canadians continue to leave some of this debt uninsured. This can potentially leave their family(ies) and financial plans at risk. Nobody wants […]

Read more

April 2021 Portfolio Management Team Update

With the TSX Composite, S&P 500 and Dow Jones Industrial Average reaching new record highs in March, global equities added to their February gains to finish the first quarter on a strong note and record their fourth straight quarterly advance. The TSX Composite rose 3.6% in March for a Q1 gain of 7.3%. For the […]

Read more