October 2020, Portfolio Meeting Recap

Zachary Bouck, CIMA® |

Zachary Bouck, CIMA®

Listen to the Mind of a Millionaire Podcast on iTunes or Stitcher.

On the first Tuesday of every month, the Denver Wealth Management Investment Committee takes to the war room (now Amazon Chime) for our Portfolio Review Meeting. The purpose of this meeting is to assess where we are currently based on the market’s historical performance (1-year, 5-year, 10-year) and determine what changes may need to occur to address our clients’ long-term investment objectives.

You can listen to our co-founder and chief investment officer, Zachary Bouck, CIMA®, recap the meeting on iTunes or Stitcher—or simply read on.

Despite the, dare I say it, unprecedented economic turmoil that we have been experiencing this year, our September meeting was relatively uneventful. The majority of our conversation revolved around the virus and, more specifically, what another round of shutdowns would mean for several sectors of the stock market. From there, our team discussed the election and touched on fixed-income. 


 Over the past few weeks, we have witnessed another spike in Coronavirus cases on a national and, relatively, global scale. Last week, Europe experienced its worst single-day jump in new Coronavirus cases, surpassing 100,000 new confirmations.

Couple the recent spike with the approaching cold season, many states and municipalities are opting to re-close numerous non-essential businesses to curb the spread. Closures are nothing new—we can all remember how that impacted our economy just months ago. We also know who the losers were and are likely to be once again (hotels, airlines, movie theaters, etc.).

Let’s start with the winners. Of course, your specific situation may differ, but if you’re currently invested with us (DWM), a portion of your portfolio may be invested in international securities. In March, we dumped a substantial amount of our international investments. Foreign and developing countries were hit harder toward the beginning of the year. Thus, freeing up cash lent us the opportunity to re-invest in international investments at a lower price.

Our advisors remain optimistic that specific international opportunities may be a valuable addition to your portfolio right now. China, for example, appears to be recovering more quickly than the United States. Sure, you may be hesitant to trust their data entirely, but many indicators don’t lie. Last week, China celebrated “Golden Week,” in which more than 637 million people traveled within the country, generating nearly 466 billion yuan ($68.6 billion) (Pitrelli, CNBC). Tickets for the Great Wall of China, now allowing up to 75% capacity, sold out almost immediately.

Two other winners, in our opinion, are the software services sector and specific real estate investments. We say specific real estate investments because many facets of the industry will continue to struggle: retail shops can’t operate if their doors are closed; commercial buildings may lose tenants if the workforce continues to work from home. However, real estate investments span far beyond commercial and retail and even residential (i.e., dams, cellphone towers, parking lots, computer server buildings, infrastructure buildings, farm and ranch land, etc.).

To shed light on software services industry and its growth potential (our opinion, of course), I'll use banks as an example. Ten years ago, consumers may have selected a bank based on geography (how many locations or ATMs were near their home). Now, most banking can be managed remotely. If our phones could print cash, we may never step foot in another branch. Already contesting against 100% online institutions, large brick-and-mortar banks are a prime example of the necessity for expedited software development—a trend we expect to continue.

Unfortunately, when there’s a winner, there’s also a loser. In this case, most investors are aware of the struggling sectors: hotels, airlines, restaurants. Sure, many of those businesses can bounce back—this too shall pass—and, after all, equity investing is a long-term activity. An equity investor must practice patience; however, that does not mean buying dying companies with the hopes of a rebound once the pandemic ends. The sad reality is, some businesses simply don’t have the resources to survive.

Take, for example, movie theaters. Upon the economic shutdown, movie theaters suffered. But upon reopening, theaters only have limited showings. A large popcorn may cost the same amount as a mortgage payment on a two-bedroom condo in San Francisco, but you still need entertainment to get people in the door. On top of that, film studios are hesitant to release new films directly to theaters with a restricted audience. And on top of that, streaming platforms are releasing more and more movies straight to your home. The future earnings potential for theaters is not looking bright.

If you’re an equity investor, look at what you own. If you’re an index investor (e.g., mutual funds), open the hood, and assess the holdings. What companies are held within that fund? Where will those companies be in one, five, and ten years?

I’ll mention value investments here because, although not a loser per se, they may not be winners either. As an investor, it’s tempting to hold value investments with the hope that they will leap 10% soon. That’s a dangerous game to play. What is the outlook for future earnings?


 For a second, let’s pretend there was no novel Coronavirus (nice, huh?); historically, the stock market struggles in election years. Uncertainty means volatility. However, investors tend to want to make massive changes depending on their outlook of the final results—favorable or not.

As a group, we agree that right now is not the time for significant portfolio changes. We cannot see into the future; therefore, we don’t recommend that investors either gamble on one party or hedge against the other.

Come early November, we may make adjustments depending on the political landscape for the next four years. Cracking open our history books once more, we see that the stock market is relatively indifferent to either political party. The pistons in the engine of the capital markets will continue to fire; companies will continue to operate.


The Fed has made it pretty clear that interest rates will remain low for the next one to three years—that’s nothing new.  Low interest rates mean investors should not count on bonds to generate substantial gains unless you are comfortable taking on considerable risk.

Fixed-income is a significant portion of retirement income, but it’s not an exciting part. As an investor, determine how much risk you’re willing to take—whether that’s with municipal, corporate, treasury, junk, or whatever bonds—and stick with it. If you can keep up with inflation, then you’re doing alright.


Coronavirus re-shutdowns means more winners and more losers—a situation that 2020 investors have become privy to. I was never great at conclusions, and I’m sure half of the readers have dropped off by now, so I’ll leave you with this:

We are here for you. We are monitoring the situation and adjusting as needed, all the while enjoying what we do. Thank you for your continued trust in our team. If you have any questions regarding your portfolio or long-term financial plan, please do not hesitate to contact us.

If you are not working with the Denver Wealth Management team, we would be happy for the opportunity to compete for your business. Call our office at (303) 261-8015 to set a free consultation.

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Pitrelli, Monica Buchanan. “More Than 600 Million People Traveled in China During ‘Golden Week.’” CNBC, Global Traveler. https://www.cnbc.com/2020/10/09/china-attractions-630-million-people-travel-during-golden-week.html. (Accessed: October 15, 2020)


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

All investing includes risk including the possible loss of principal. No strategy assures success or protects against loss.

The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.

All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly

International investing involves risks such as currency fluctuation and political instability and may not be suitable for all investors.

Value investments can perform differently from the market as a whole. They can remain undervalued by the market for long periods of time.

Bonds are subject to marker and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price

Government bonds and Treasury bills are guaranteed by the US government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value.