The COVID-19 crisis has resulted in the deepest downturn in global economic activity in the post-war era, but almost certainly the shortest recession. US stocks have rebounded over 50% since the March 23rd lows and the S&P 500 is now up over 5% through three quarters. Historically, the 4th quarter is the strongest quarter of the year, but there are some potential headwinds going into year-end. The largest concerns that we are hearing from clients surround the election and what it will mean for their investments. Please click here to continue reading our 3rd Quarter Newsletter.
How the 2020 Inc. 5000 Companies Were Selected
Companies on the 2020 Inc. 5000 are ranked according to percentage revenue growth from 2016 to 2019. To qualify, companies must have been founded and generating revenue by March 31, 2016. They must be U.S.-based, privately held, for-profit, and independent–not subsidiaries or divisions of other companies–as of December 31, 2019. (Since then, some on the list have gone public or been acquired.) The minimum revenue required for 2016 is $100,000; the minimum for 2019 is $2 million. As always, Inc. reserves the right to decline applicants for subjective reasons.
Note: Growth rates used to determine company rankings were calculated to two decimal places. In the case of ties, the companies with more revenue were placed higher.
As we briefly highlighted a few weeks ago, as the equity markets began to sell-off, we continue to monitor the economic turmoil and remain confident that global markets will recover from the economic uncertainty that we are facing with COVID-19 (Coronavirus). As we have told clients in the past, volatility and economic/political uncertainty is very normal in financial markets and it’s important to not overreact and panic. It is very normal for investors to feel like this time is different as we go through a correction. While the circumstances driving each are always different, one thing we know is that we eventually emerge, and over time, the markets continue to move higher.
Of course, we are closely following all the headlines and like everyone else don’t know how long this will persist; but what we do know is that the underlying US economy appears strong and the financial system is well-capitalized. We are still in the early stages of truly understanding the full economic, financial and social impact to our economy and globally. There is no doubt at this point that global GDP will slow, but we remind clients that the market is forward looking and already pricing this in to some extent. That said, the possibility of more downside is very real, and the bottoming process may take a while.
We are closely monitoring client portfolios and will adjust as new information becomes available, but we are not in the business of timing markets and calling tops/bottoms. Each of our clients are allocated based upon the plan that we set in place for them and we do not believe it’s a time to deviate from that by either dialing up risk or by bringing it down significantly. With the range of outcomes being so vast, we feel it best to stay the course. It’s not time to sell but it’s also not a time to ditch your bonds and cash for stocks.
We are hard at work trying to identify how we can use this downturn to our advantage: tax loss harvesting, buying great companies at steep discounts, & shedding exposure to areas of the economy that we view as being unstable, such as Energy. You have heard us harp on the importance of diversification and periods like we are currently experiencing are a reminder of why it is vitally important. Our bonds and other diversifying strategies have performed quite well over the last few weeks.
As always, we are here to answer any questions and be a resource. Please feel free to reach out at any time.
Canal Capital Management
Canal Capital is Pleased to announce that it was named to the RIA Future 50 list published by CityWire USA. The RIA Future 50 firms represent a group of finance professionals who are collectively creating this new investment landscape. They have their own unique story to tell, are driven to succeed on their own terms and, most importantly, are in charge of their own investment decisions.