Market Bulletin: Hope For The Best, Plan For The Worst (Audio Included)
June 2020

Priscilla’s Newsletter

OCTOBER 2020

DEAR CLIENTS:

4TH QUARTER 2020-WE HAVE ARRIVED

I am going to confess that when I was a kid and had visions of what the modern and distant year 2020 was going to be like, what we are living is certainly not what I expected. Instead of flying cars, rapid space travel and a Rosie The Maid robot cleaning our houses, we have been mired in politics and a pandemic. We try to prepare for everything, but this year has been challenging in ways we never would have imagined. The election will occur. The pandemic will resolve. Meanwhile, we will continue to focus on our mission—to help you achieve your investment goals.

We miss you. Years ago we made the decision that we would not work with anybody that we did not like, so when we meet with you here at our office, we are genuinely happy to see you. We are a demonstrative group, and while we are managing well in meeting with most all clients either by Zoom or conference call, we miss seeing you in person and giving you a hug or a handshake. So far, we are all remaining well and hope the same is true for you and your family.

ABOUT OUR TEAM

A few years ago, a friend that retired at a relatively young age from the military told me something that stuck with me. He said, “The Armed Services entrust very young people with very important things, and they are up to the task.” I have been asked why I have recruited several young people to join our team here at BF&A. I have done it because I want to ensure that for decades to come, you are going to have a consistent investment experience and the same level of service that you have come to expect from our office.

There is a theory that we humans possess both fluid and crystallized intelligence. Fluid intelligence refers to our ability to reason, analyze and solve problems without relying on any pre-existing knowledge. These abilities begin to decline as we acquire experiences, often starting as early as our 20’s. Crystallized intelligence refers to knowledge acquired through experience. We use crystallized intelligence when we encounter situations we have dealt with before or we possess facts or skills that we have been taught. The age range and experience level of our team members allows us to understand the steady concepts of markets and economies, as well as bring creativity to our investment process.

Our newest team members come to us with outstanding professional credentials and have given us a quantum leap forward with the technology we are using and providing to you, and (very importantly) helped some of us of a certain age in the office adapt to it. I have no immediate plans to retire, but I know that when I am ready to, you will be in good hands. They are up to the task.

BF&A NEWS

We now have a mobile app available for you to be able to access your accounts from your smart device. Search for Brent Forrest & Associates, LLC when you visit the App Store for the free download. If you are unsure of your login information once you download the app, give our office a call and we can provide you an activation link.

Every year, Investor.com publishes their Top RIA Firms to Watch list, and we are pleased to announce that BF&A has been included in the 2020 list. BF&A was one of only three firms in Texas to receive this accolade. To qualify for the list, a Registered Investment Advisory firm must meet the following standards:

  • The firms hold fiduciary status.
  • They have a secure website.
  • They have a fee-only model.
  • They do not have common conflicts of interest.
  • They do not have a 12b1 conflict (trail commissions)
  • They wrapped up 2019 with clean disciplinary records.

*Brent Forrest & Associates, LLC has been named one of the 2020 Firms to Watch List by investor.com. Brent Forrest & Associates, LLC did not make any solicitation payments to any of the award sponsors in order to be nominated or to qualify for nomination of the award. The basis for this inclusion to this list award presented on this website (or this article) is provided by accessing the Internet link to the award sponsor which is available by going to the award sponsor’s icon or name shown on the (or in this article) web pages herein.

ECONOMIC/MARKET UPDATE

In the first quarter of 2020, we experienced precipitous stock market declines around the world as the global community was coming to grips with the seriousness of the Covid-19 pandemic and the reality that many industries would face extended shut-downs. The US economy was plunged into recession. Aggressive actions by the Federal Reserve ensured normal functioning of financial markets, while unprecedented fiscal and monetary policy have helped to temporarily cushion the short-term financial impact. Economic stimulus in the form of direct payments to American taxpayers and businesses was used by Washington to help buoy the economy and in a short period of time, recovery was underway.

Uncertainty creates innovation and opportunities for disciplined long-term investors. It is important to identify where opportunity is, not just today but going forward. Out of this volatile period, some exciting opportunities – and reasons for optimism – begin to emerge. Technology stocks have been some of 2020’s leading performers, as employees transitioned to working from home. The demand for cloud services begin to grow and will continue to rise. This pandemic has been a catalyst for companies to reevaluate how they do business, with many companies leaning heavily in to cloud storage and services. This increase in demand is here to stay as many companies see the benefits of working from home, in fact Microsoft recently announced their employees will be able to work from home indefinitely. With this steady increase in demand, some analysts believe that the revenue in the public cloud market could more than double by 2025. Cloud service providers will in turn need to invest back into their own infrastructure to keep up with demand. That investment could lead to an increase in demand for CPUs, batteries and cooling equipment, everything needed to grow data centers.

An example of the acceleration in adoption of a technology is the rise of telemedicine. The focus on healthcare through this pandemic has been the race for treatments and a vaccine, however due to social distancing telemedicine has been quickly adopted with no signs of slowing down. The market size for global telemedicine is expected to rise from $46 billion in 2019 to over $176 billion by 2026. The combination of telemedicine with at-home diagnostic equipment could revolutionize our healthcare system, creating efficient and safe working conditions for our healthcare professionals as well as their patients.

Another trend that has gotten a boost from our need to social distance is video streaming, which is becoming the standard. Close to one-third of all content being consumed is done through a streaming service, and that could be as high as 80% by 2030, according to Brad Barrett an investment analyst with Capital Group. The leaders in this space, Netflix, Disney+ and Amazon Prime Video, continue to see their monthly subscribers increase. Even if consumers limit their consumption after we are through the worst of the pandemic, this trend toward streaming should stick around because of better content as well as a cheaper price point than traditional cable.

The ongoing uncertainly of the pandemic as well as the election, now only weeks away, has us prepared for volatility ahead. We have been working to improve the quality of the bond component in most portfolios and continue our focus on utilizing outstanding institutional managers that own “best in class” companies all over the world. The most important factor for any investor to survive difficult markets is to remain calm and stick with the investment plan set forth. We are here for you, should you need reassurance or if you just have a question.


All the best-

— Priscilla "Cilla" McKinley

President - Brent Forrest & Associates LLC

*Brent Forrest & Associates, LLC may discuss and display, charts, graphs, formulas, and specific holdings which are not intended to be used by themselves to determine which securities to buy or sell, or when to buy or sell them. These are offered with limited information and should not be used on their own to make investment decisions.