M1 Finance Portfolio: Dividend Aristocrats 2020 - Week 24 (March 27th, 2020 - $274.28)

Week 24 - $274.28

The stock market experienced its greatest weekly gains since 1938 as the US government is set on passing a $2 trillion stimulus plan to shore up economic losses from shutdowns and quarantines from the COVID-19 pandemic.

Total Report (Since October 11th, 2019)

Positive Performing Sectors
None

Negative Performing Sectors
1. Consumer Staples (-16.11%)
2. Healthcare (-16.58%)
3. Utilities (-17.19%)
4. Information Technology (-26.90%)
5. Communication Services (-27.44%)
6. Industrials (-32.22%)
7. Materials (-32.49%)
8. Financials (-35.16%)
9. Consumer Discretionary (-38.26%)
10. Real Estate (-47.54%)
11. Energy (-55.25%)

Weekly Report (March 27th, 2020)

Positive Performing Sectors
1. Information Technology (+17.27%)
2. Consumer Discretionary (+15.12%)
3. Energy (+14.36%)
4. Industrials (+13.18%)
5. Real Estate (+10.52%)
6. Financials (+8.93%)
7. Utilities (+8.23%)
8. Materials (+7.56%)
9. Consumer Staples (+6.59%)
10. Healthcare (+5.51%)
11. Communication Services (+4.90%)

Negative Performing Sectors
None

GICS Sector Performance Ratio - Balanced: From 0:11 (0.00%) to 11:0 (100.00%)

Update

Due to M1 Finance changing their minimum buy amount for security purchasing and minimum cash balance for auto-investing, the GSPR-B Dividend Aristocrats portfolio will be changing its weekly contributions every Friday from $10 to $25 effective immediately.

Review

Stock prices surged mid-week despite a dramatic rise in coronavirus cases and unemployment claims. Investors so-far are shrugging off long-term economic fears on hopes that the US Government's $2 trillion stimulus bill and the Federal Reserve's unlimited Quantitative Easing will be enough to bridge running deficits for businesses across the country. This is substantially based on the idea that the pandemic is a short-term issue that will be quickly resolved with minor economic impact.

However, the market surge is more likely a "dead cat bounce", a sharp rise in stock prices followed by a decline. The US is currently in a bear market, and with quarantines and shutdowns still in effect for nearly three months, the price is not truly reflective of the current state of the economy. The high gains are more likely due to speculative trading, and it is expected that prices will continue to fall as businesses struggle to keep financially afloat by taking out loans and cutting down on expenses, and consumers save on essentials and reduce business traffic.

The United States faces a difficult trade-off: conserve healthcare capacity or reduce economic fallout. One is more immediate than the other,  yet both have disastrous consequences. If neither crises are handled well enough, the US may face another repeat of the Great Recession with an addition of a collapsing Healthcare Sector.

Last Week's Update (March 20th, 2020)

M1 Finance Platform Referral Link: https://m1.finance/UIl_N9XNA_CO

M1 Finance Dividend Aristocrats 2020 Pie: https://m1.finance/quB1JH2k6

M1 Finance Portfolio: Dividend Aristocrats 2020 - Week 23 (March 20th, 2020 - $240.13)

Week 23 - $240.13

Statewide shutdowns of all nonessential businesses have taken a toll on economic productivity. Shelter-in-place orders have slowed consumer traffic and the growing number of COVID-19 cases across the globe stretch worldwide healthcare capacity to its limits.

Total Report (Since October 11th, 2019)

Positive Performing Sectors
None

Negative Performing Sectors
1. Healthcare (-23.24%)
2. Consumer Staples (-23.97%)
3. Utilities (-26.35%)
4. Communication Services (-33.02%)
5. Materials (-40.88%)
6. Financials (-44.82%)
7. Information Technology (-45.09%)
8. Industrials (-46.24%)
9. Consumer Discretionary (-53.27%)
10. Real Estate (-58.29%)
11. Energy (-68.73%)

Weekly Report (March 20th, 2020)

Positive Performing Sectors
None

Negative Performing Sectors
1. Consumer Staples (-8.28%)
2. Healthcare (-12.70%)
3. Materials (-13.84%)
4. Financials (-14.70%)
5. Utilities (-17.12%)
6. Communication Services (-17.49%)
7. Industrials (-18.75%)
8. Energy (-21.06%)
9. Consumer Discretionary (-21.59%)
10. Information Technology (-22.22%)
11. Real Estate (-30.76%)

GICS Sector Performance Ratio - Balanced: From 0:11 (0.00%)  to 0:11 (0.00%)
 

Review
 

Global stock markets continue to fall as COVID-19 cases of infected rise and the death toll grows at an exponential rate. Healthcare facilities are already operating at maximum capacity, with essential equipment and materials facing a substantial shortage. Many areas are under a state of emergency, with orders to shelter in place and all non-essential businesses forced to shut down or face fines. A massive national crisis in the US has effectively shut nearly the entire economy down within a few months of the original outbreak, revealing the financial instability of many sectors.

Bear markets tend to be unique in the events that cause their initial selloffs. In this current bear market, it was the sudden and disruptive shutdowns of global economies that resulted in the economic and financial meltdown currently underway. Many businesses over the past decade have used whatever free cash was available to them to contribute to stock buybacks and thus inflate the value of their stocks that had no ties to their intrinsic value, saving little to nothing for emergency situations in an effort to convince investors of their business ventures' profitable prosperity. With a national emergency and an abrupt shutdown to nearly all economic activity, companies are finding themselves without cash to keep their business afloat. For years they had relied on a stable, consistent source of income through their consumers. Without a means to conduct business nor consumers willing to spend money, this has put companies in a dire situation, with a dramatic domino effect taking place.

These same businesses asked for loans to finance their lack of liquid cash, and with nearly every business asking for these loans, the banks themselves had run out of cash to lend. Without anymore cash to lend, businesses could become bankrupt and shut down permanently. To avoid this, the Federal Reserve had been pumping trillions of dollars to resolve the cash liquidity crisis. However even this was not good enough, as the companies could not afford the loan payments to begin with. This forced even further measures to be taken to ensure businesses stay afloat. Interest rate were cut to near zero and in some cases temporarily halted. While this may save some companies, the financial sector themselves rely on these loans to be paid back to maintain their own cash.

A further trillion-dollar stimulus plan is underway, earmarked for companies in financial trouble due to the economic shutdown and to the general public currently under orders to shelter in place. While in the short term this will keep a financial disaster from materializing, in the long term should this crisis continue, expect to see shortages of many goods as manufacturing is slowed and prices subsequently rise. It is likely some companies will not survive even with the bailout package and that some sectors will be dramatically hit.

COVID-19 would have stayed a small epidemic had it not been for the mismanagement of governments around the world. While some countries such as China and South Korea had managed to contain the spread through swift and decisive action backed by years of planning, training, and stockpiling, other countries had not done their due diligence. Many countries are operating on debt, consuming more than they produce. They are heavily reliant on outside trade to keep resource shortages at bay. This is why places such as Europe and the United States have been reluctant to shut down the economy despite the serious threat of the virus. They simply cannot afford to. The coronavirus pandemic would have had the same fate as past epidemics in the last twenty years had the systems been in place to prevent it. Yet none of the emergency measures were around to stop it because the policy of today is to keep the economy growing at all costs. The pandemic crisis has made light of that fact to the public once more.

Sustainability is paramount to any economy's health.Without sustainability, economic growth is worthless, as it can easily collapse as fast as it rose. The crisis may resolve itself within the next few months, but the lasting economic impact might continue for the next few years.

Last Week's Update (March 13th, 2020)

M1 Finance Platform Referral Link: https://m1.finance/UIl_N9XNA_CO

M1 Finance Dividend Aristocrats 2020 Pie: https://m1.finance/quB1JH2k6

M1 Finance Portfolio: Dividend Aristocrats 2020 - Week 22 (March 13th, 2020 - $280.67)

Week 22 - $280.67

The stock continues to see dramatic swings as massive buy-ins and sell-outs occurred throughout the week, with a notable rally on Friday on hopes of a stimulus plan to boost the economy during the COVID-19 pandemic.

Total Report (Since October 11th, 2019)

Positive Performing Sectors
None

Negative Performing Sectors
1. Utilities (-4.06%)
2. Healthcare (-6.55%)
3. Communication Services (-11.43%)
4. Consumer Staples (-13.84%)
5. Information Technology (-17.39%)
6. Industrials (-24.24%)
7. Real Estate (-24.46%)
8. Materials (-25.19%)
9. Financials (-28.39%)
10. Consumer Discretionary (-29.38%)
11. Energy (-49.58%)

Weekly Report (March 13th, 2020)

 

 

 

Positive Performing Sectors
None

Negative Performing Sectors
1. Utilities (-1.32%)
2. Healthcare (-4.42%)
3. Communication Services (-6.75%)
4. Information Technology (-8.19%)
5. Consumer Staples (-8.73%)
6. Consumer Discretionary (-9.06%)
7. Materials (-10.18%)
8. Industrials (-10.27%)
9. Financials (-10.84%)
10. Real Estate (-11.25%)
11. Energy (-15.23%)

GICS Sector Performance Ratio - Balanced: From 8:3 (72.73%) to 0:11 (0.00%)

 

 

 

Review

 

Another tumultuous week for the stock market left every sector deeper in the red as cases for COVID-19 impact states nationwide and force many companies to take austerity measures to contain the pandemic's spread. Productivity has slowed and the Healthcare sector is strained as shortages for basic medicine and equipment become widespread. Although cases in China, the epicenter of the COVID-19 virus, have thus far plateaued, the cases reported globally continue to grow by the hour. Extreme measures are likely to take place in an effort to stem the virus, with the US already declaring a national emergency and Italy quarantining millions of people along with dozens of other countries. This will have a significant impact on global trade and production. It is not known how long this slowdown will remain, but with estimates for a vaccine placed to as far as the end of next year, any future spikes in COVID-19 cases especially in sensitive population centers will have a dramatic effect on world resources. Draconian measures are likely to be placed once the pandemic becomes too widespread to handle, and with the markets leaking equity as a result of business shutdowns, there is a likely chance of a recession occurring should the panic continue to endure in the next few months.

This of course relies on the reports coming out from China. If the information is as reliable as the Chinese Communist Party claims, then it is expected that the panic will fizzle out as people begin to recover from the virus and the number of infected plateaus. However, if this turns out to not be the case, then what is seen these past few weeks is only the beginning of something much worse.

Last Week's Update (March 6th, 2020)

M1 Finance Platform Referral Link: https://m1.finance/UIl_N9XNA_CO

M1 Finance Dividend Aristocrats 2020 Pie: https://m1.finance/quB1JH2k6 

M1 Finance Portfolio: Dividend Aristocrats 2020 - Week 21 (March 6th, 2020 - $296.43)

Week 21 - $296.43

The stock market experienced wild swings throughout the week as mixed reactions were priced in over the risk of investing during the global economic slowdown caused by the COVID-19 pandemic.

Total Report (Since October 11th, 2019)

 

Positive Performing Sectors
None

Negative Performing Sectors
1. Healthcare (-0.17%)
2. Consumer Staples (-1.51%)
3. Communication Services (-2.11%)
4. Utilities (-2.28%)
5. Information Technology (-5.98%)
6. Real Estate (-10.10%)
7. Industrials (-10.37%)
8. Materials (-11.80%)
9. Financials (-14.34%)
10. Consumer Discretionary (-17.87%)
11. Energy (-32.40%)

Weekly Report (March 6th, 2020)

Positive Performing Sectors
1. Utilities (+10.90%)
2. Consumer Staples (+5.66%)
3. Communication Services (+5.15%)
4. Real Estate (+4.38%)
5. Information Technology (+2.92%)
6. Healthcare (+2.03%)
7. Materials (+1.57%)
8. Financials (+0.16%)

Negative Performing Sectors
9. Industrials (-0.55%)
10. Consumer Discretionary (-1.88%)
11. Energy (-2.68%)

GICS Sector Performance Ratio - Balanced: From 0:11 (0.00%) to 8:3 (72.73%)

Review

The stock markets experienced one of the most wildest swings in the its history over the past two weeks, with percentages dropping over 3-4% in a given day. Although some stock prices made intermittent gains this week, selloffs continued to dominate the overall market environment. Business dependent on international trade, particularly those with supply chains in China, were the most impacted among the economic slowdown. While the stock markets may be down for past two weeks, Dividend Aristocrats outperformed the major indexes this week, coming out positive despite the high market volatility.

Companies with proven track records of high, stable profitability over the long term while consistently paying increasing dividends to shareholders not only are less volatile than the general stock market, but outperform the stock market over the long term due to the grounded fundamentals of stable, tangible growth over speculative short-term profits. This is especially true in bull-market environments. Companies that have reliable, all-round streams of income and are not totally dependent on taking on debt or gathering investments to conduct business will hold well or even outperform against those that regularly do as profit opportunities shrink and leverage becomes riskier.

Last Week's Update (February 28th, 2020)

M1 Finance Platform Referral Link: https://m1.finance/UIl_N9XNA_CO

M1 Finance Dividend Aristocrats 2020 Pie: https://m1.finance/quB1JH2k6

M1 Finance Portfolio: Dividend Aristocrats 2020 - Week 20 (February 28th, 2020 - $279.57)

Week 20 - $279.57

The week experienced consistent major selloffs through each day as fears over COVID-19's impact over the global economy strengthened following growing reports of coronavirus cases internationally.

Total Report (Since October 11th, 2019)

Positive Performing Sectors
None

Negative Performing Sectors
1. Healthcare (-3.12%)
2. Communication Services (-9.22%)
3. Consumer Staples (-9.37%)
4. Industrials (-9.85%)
5. Information Technology (-10.12%)
6. Materials (-14.24%)
7. Financials (-14.90%)
8. Consumer Discretionary (-15.78%)
9. Real Estate (-15.97%)
10. Utilities (-16.29%)
11. Energy (-30.02%)

Weekly Report (February 28th, 2020)

Positive Performing Sectors
None

Negative Performing Sectors
1. Communication Services (-8.54%)
2. Consumer Staples (-9.97%)
3. Real Estate (-9.98%)
4. Industrials (-10.08%)
5. Healthcare (-10.28%)
6. Consumer Discretionary (-11.72%)
7. Materials (-12.27%)
8. Utilities (-12.54%)
9. Energy (-13.16%)
10. Information Technology (-13.18%)
11. Financials (-13.33%)

GICS Sector Performance Ratio - Balanced: From 3:8 (27.27%) to 0:11 (0.00%)

Review

The stock market quickly fell into a correction for the week, with selloffs occurring across all sectors. Unrealized gains since the start of the portfolio have been reversed and all sectors are experiencing negative performance. The coronavirus COVID-19 has had a substantial impact on the worldwide market unlike that seen with most epidemics of the 21st century. Many have been contained within their country of origin, but with this particular epidemic, the exponential scale in which the virus has spread has forced many countries to reconsider their international trade connections. Businesses across the world has slowed thanks in part to the notable over-reliance on the Chinese economy to produce basic products and materials and government efforts to contain the spread of the epidemic by enforcing strict no-contact measures.

COVID-19 may reach pandemic scale, but like many widespread outbreaks in the past, it will eventually fizzle out as more patients become better and vaccines are developed. It is often forgotten that there are still diseases lingering and still infecting people from past epidemics in the 21st century itself, yet because there are now treatments and preventative care available for those diseases, that is why people feel more secure. The stock market will be negatively performing for some time, perhaps for weeks or even months. However this drop in the market is mainly due to investor sentiment. Yes, business has been affected by the affliction, and it is expected that the next quarter will report negative losses. However, the businesses themselves would have to be in serious financial trouble already for a single bad year to put them out of business. Blue-chip companies especially are very resilient against dramatic dips. They have enough cushion to last them through a good portion of bad income times.

Thereby, this correction is a healthy readjustment of the market, with investors looking more closely at the inherent value of the asset and analyzing it with practical, reasonable, and logical conclusions. Many stocks have been bloated with equity value for some time without reasonable cause, and this correction will help bring the valuations down to a value more grounded in reality than speculation.

Last Week's Update (February 21st, 2020)

M1 Finance Platform Referral Link: https://m1.finance/UIl_N9XNA_CO

M1 Finance Dividend Aristocrats 2020 Pie: https://m1.finance/quB1JH2k6