Clover Portfolio Update (the COVID-19 edition)

Credit: Photo by Sandro Capatti/Shutterstock: Daily life during the Coronavirus outbreak, Parma, Italy

Key Take-outs:

  • The stellar returns of 2019 were erased in full by one of the fastest (and possibly shortest) bear markets in history, with the bellwether US S&P 500 index falling 35% in the four weeks between late Feb and late March as market panic spread worldwide.
  • After the punishing drawdown, markets, particularly the US, have recovered strongly, with the S&P 500 index gaining 23.6% since its late March lows.
  • The Australian sharemarket has been less responsive, weighed down by the banking and listed property sectors.
  • The S&P/ASX 200 index fell 39% in the same late Feb to late March period, but has only recovered 18.5% to date since the March trough.
  • Despite the falls of the last three months, the longer-term return picture remains remarkably robust.
  • Clover’s positioning to favour overseas versus Australian shares has cushioned our portfolios relative to more traditional asset allocations.

To say it’s been one hell of a ride these past few weeks is an understatement.  You don’t see market volatility like this very often, and for many it probably felt like being caught in the open by a Category 5 cyclone with nowhere to hide.

Amidst the mayhem of February and March there have, however, been some important lessons, provided you’re prepared to learn from the experience. To do so, read on.

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Coronavirus v Superhuman. Who Wins?

Here we go again. The financial headlines are once again screaming financial market annihilation and impending collapse. “ASX slammed” shouts one, while another tells of a “Wall Street crumble” and, in relation to the Dow Jones, “the biggest point drop in history”.

Everywhere you look, the financial news is currently filled with stories of share markets crashing and of investors fleeing, presumably for the safety of cash. To a novice investor these shrill warnings can’t help but create anxiety, however long-standing Clover investors will know that we’ll hear these same siren songs from time to time, without the imminent financial meltdown eventuating.

Continue reading “Coronavirus v Superhuman. Who Wins?”