This last quarter saw violent fluctuations in the capital markets, which have shaken the very core of retail investing for private clients as well as created massive stimulus actions by the federal government. Good thing we didn’t have anything else going on at the time! Oh, wait. COVID-19 has blanketed our country for a second time in 6 months, prompting widespread closures of shopping, dining, and almost all service-related industries. Masks are the new norm.

Times for Active and Passive Investment Management

For close to a decade, passive investment management has outperformed the stock pickers and active managers (for the most part). Why this was the case is a discussion for another time, although it is an easy argument to name lower volatility as the main cause. Since October 2018, we have seen significant volatility raise its head from the comfort of passive returns, and so for 2020, we see the same.

As of this writing, the S&P 500 has returned 0.27% YTD, while many active managers have posted double-digit returns in both Large and Small cap sectors. Passive investing is terrific when volatility is dampened, and everyone is making great returns. Riding the wave and lowering your costs is a very smart investing strategy.

Since the 4th quarter of 2018, we have seen an uptick in volatility as expected. What was unexpected is all the issues that contributed to that volatility. High performing managers may have the ability and history to move in and out of sectors and positions as needed in an attempt to outperform or lower risk, depending on the fund and manager. Of course, this is all based on individual goals, timelines, and tax rates.


Clients are asking about life insurance more and more, and for a good reason. Check your coverage, and double-check your beneficiaries. And never let your policies lapse without talking to a financial professional.

What I’m Watching

Obviously, I am watching federal stimulus packages. As of this writing, it looks like they will be lowering the extra unemployment stimulus package from $600 to $200 for qualified applicants in an attempt to continue to push the economy along while keeping those hardest hit on their feet and in their homes. With interest rates as low as they are, financing this massive stimulus may be less expensive than many think, but in my opinion, there will be significant pressure on lawmakers to either raise taxes or lower spending. Guess which one I am betting on?

On a personal note, I’m thrilled about the start of baseball, adding much-needed hope and normalcy to our lives. My son turns 2 in August. No big party this year, but hopefully this is the last time we celebrate alone.

Stay safe, social distance.

Please call my office if I can be of any further help: 626.788.3947

Philip Clark, CFP® | Director – Wealth Management

These opinions are based on Philip Clark’s observations and research and are not intended to predict or depict performance of any investment. These views are as of the close of business on 08/05/20 and are subject to change based on subsequent developments. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed. These views should not be construed as a recommendation to buy or sell any securities. Past performance does not guarantee future results.

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