Quarterly economic update Q2 2020
Dear clients, please note below our quarterly financial recap which aims at shedding some
light on the current dynamics of an ever-evolving macro environment and its impact on our
V Shaped? U Shaped? L Shaped or W Shaped?
No this is not a geometry test but rather the ongoing debate in the financial markets
regarding the economic recovery. As things stand, we are witnessing a V Shaped recovery
across the board pushing the tech heavy Nasdaq composite into positive territory for the
year. Nevertheless, it’s important to take these numbers with a grain of salt because market
indices are concentrated in their composition. As a matter of fact, a small number of
immense companies now make up and thus dictate overall performance of these indexes.
This has distorted market performance from the actual underlying economic reality causing
an apparent dichotomy between Wall Street and Main Street.
In these moments, adhering to your core investment principles is of the essence. A certain
sense of optimism seems to have taken over with the S&P500 breaching the psychological
3000 level a mere two months after hitting its low on March 23rd. Regardless, the
fundamental question to ask yourself as an investor is: “ Does the current economic
environment and future outlook justify general market behavior?”.
We remain of the mindset that the worst of this crisis will be felt in the next 12 to 18
months. The pandemic we are living is not “resolved” in a couple of weeks and even though
deconfinement has picked up across the globe, we must be careful not to associate this with
a return to pre Covid-19 life.
Some argue that markets are forward looking while economic data is backward looking,
but projecting too far ahead can lead to optimism bias and negligence of the current
Central banks have done an excellent job in keeping the ship afloat but have increasingly
borrowed against future GDP growth and expanded their respective balance sheets
making the future even more uncertain. That is why we prefer to be cautious in
managing your portfolios in order to preserver your capital while still looking to invest in
the companies of tomorrow that will reshape societies. Moreover, tension between
China and the US is rising again, the US elections are in November and there is fear of a
second Covid wave this fall.
We have delivered results throughout this whole market downturn and will keep on
demonstrating the same discipline, rigor and innovative vision to invest your money in
the best way possible. We identify undervalued blue-chip stocks to invest in while
simultaneously seeking companies in fields such as 5G, E-Gaming, cloud services,
We are truly grateful to you for entrusting us with your investments and remain at your
disposal for any additional concerns you may have. If you have loved ones that need
reassurance and wish to have an in-depth conversation, please remember that we are
available for anyone you care about.