Several weeks ago, I was attending an analyst call hosted by Doctor David Kelly, Chief Global Strategist with JP Morgan. He introduced me to the concept of The Cans, The Can’ts and The Could’s in a recovery. I thought it was a great analogy and an effective way to describe today’s stock market.
Dr. Kelly said “There are already some tentative signs of a recovery. It is useful to separate businesses and activities into three categories: those that can return to normal, those that can’t, and those that could, with a little ingenuity and some help from Washington.”
They also stressed in the call that if you’re buying stocks for the next 6 to 9 months, it will be volatile until we have a working vaccination. However, if you’re investing for 3 or more years, you should be buying high quality stock and mutual funds with experienced active managers today.
The Dow 30, also known as the Dow Jones Industrial Average (DJIA), consists of 30 large, publicly-traded U.S. companies. It ended 2019 at 28,462 and was up 23.7% for the year. On 3/31/2020, it ended the first quarter at 21,227 down 25.4%. Now it’s the end of the second quarter and the Dow 30 ended at 25,596 up 20.6%. Yes it’s been volatile but everyone knows the story as the world has shut down and is now starting to reopen.
In general, our clients hold a high percentage of all these stocks in the following mutual funds and exchange trades funds including: Lord Abbett Growth Leaders, Arke Focus Retail, Fidelity Healthcare, Ishares Dividend Growth & the T Rowe Price Dividend Growth. All of these holdings have done fairly well during these difficult times. I wouldn’t bet against any of the Dow 30 companies over the next 3 years as all Americans use products and services from these companies every day, even while in “lock down”.
Best wishes to everyone and please stay safe!!!
Here’s the link to the full article if you’re interested in more details. https://www.linkedin.com/pulse/cans-cants-coulds-tradeoff-david-kelly?trk=portfolio_article-card_title