Updates, Tips, & Finance News

Hi there—here's your investment update!

Announcement:

We released the newest version of the Round app on the iOS AppStore today!

Round App

Make sure to update to the latest version.


Market Update

The general consensus is that we’re currently in a Bear Market Rally

  • 2/3rds of fund managers polled by Bank of America said the stock market rally since March is a temporary bounce within a broader downturn.
  • Only 10% of those surveyed expect a V-shaped recovery.
  • The stock market has rallied back to Q4 2019 levels, yet it’s estimated that it will take four years minimum for economic activity to return to levels seen in Q4. There’s a liquidity-driven bubble forming, just like the dot-com, housing, and corporate debt bubbles.
Alternate text

We’ve reached a tipping point with investor euphoria

  • Investors have shifted from panic to euphoria at a startling velocity
  • The market is in a buying euphoria during some of the worst economic destruction ever recorded

Resembling the 1930's Great Depression

“Don’t be fooled by the recent rebound in stocks; [it’s] beginning to resemble the 1929 market crash and the early 1930s Great Depression.” – Bloomberg Economist

The initial market crash of 2020 has resembled the market crash of 1929.

  • In 1929, the S&P 500 fell -44% over the course of about 2 months.
  • In 2020, the S&P 500 fell -34% over the course of a month.

The recent stock market rally resembles the Bear Market Rally of 1929/1930.

  • In the middle of the Great Depression, the S&P 500 rallied +46% before crashing -83% further.
  • From March 23rd to May 29th 2020, the S&P 500 has rallied +37%.

Summary

Any way you spin it, it appears to be a lousy time to be a buyer of risk assets. The limited upside is simply not worth the fatal downside risk.

Had you invested in the Bear Market Rally of the Great Depression, it would have taken you over 20 years to make your money back.

When prices and valuations fall, as we believe that they will, that’s when the opportunity for strong long-term performances comes about. For the time being, Round portfolios will remain risk-off, given the growing divergence between the economy and stock prices.

Patience is crucial as an investor, and we are incredibly well-positioned to defend against the looming correction.

See you next week.

Best,
The Round Team


Have $100,000 or more to invest? You may qualify for Round Private Client. Contact our team at privateclient@investround.com.


Round Investments LLC, dba Round, is an SEC registered investment advisor. Securities offered through Apex Clearing Corporation, Member FINRA, SIPC. The information provided should not be relied upon as investment advice or recommendations, does not constitute a solicitation to buy or sell securities and should not be considered specific legal, investment or tax advice. The information provided does not take into account the specific objectives, financial situation or particular needs of any specific person. Diversification does not ensure a profit or protect against a loss in a declining market. There is no guarantee that any particular asset allocation or mix of funds will meet your investment objectives or provide you with a given level of income. Forecasts or projections of investment outcomes in investment plans are estimates only, based upon numerous assumptions about future capital markets returns and economic factors. As estimates, they are imprecise and hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results. Investing entails risk including the possible loss of principal and there is no assurance that the investment will provide positive performance over any period of time. The opinions expressed by Round represent the current, good faith views of Round and are provided for limited purposes, are not definitive investment advice and should not be relied upon as such. The stock market is in reference to the S&P 500 index. An index is unmanaged, does not reflect management or trading fees, and one cannot invest directly in an index. Stock market performance is in reference to the SPX Index and was provided by Bloomberg Terminal. To view Round's Brochure, Terms of Use, Privacy Policy, and Disclosures go to www.investround.com