Markets continued their rebound in May, with major equity indices rising mid-single- digit percentages. Emerging market equities were the laggard, rising less than 1%. Bond markets continued their return to normalcy as rates remained low and corporate credit spreads tightened. Overall, May was a good month for investors.
There is really not a whole lot to say about the activity. The market performance is largely a continuation of a rally that not many market participants seem to like. Many have pointed out that much of the market behavior seems irrational and divorced from the economic reality in front of us today. However, much of the analysis we read or hear seems to be first-order thinking when the market typically operates on at least a second and sometimes a third-order train of thought. Based on our anecdotal observations, we think this could be the most hated bull market ever.
At Accretive, we were proactive in maintaining dialogue with clients throughout February and March. They were appreciative of the outreach and many thought that it was the other clients that must be panicking. Suffice it say that we have great clients. We have since received many questions about the speed and pace of the recovery. We agree it has been surprising, but surprising investors is what the market tends to do. We think the hardest part about participating in the recovery may be ignoring the talking heads and resisting the urge to do something different.
We have consistently said the right investment strategy is the one you can stick with, in good markets and bad ones. If you made it through the other side and thought it was other people that must be panicking, congratulations, you have such a strategy. However, if you learned something about yourself and your risk tolerance in February and March, today is a much better day to address the mismatch than late March. If that is the case or you are unsure, we ask that you give us a call.
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