Opening Statement from the April 2020 Dividend Gems

Opening Statement from the April 2020 Dividend Gems

Originally published on April 19, 2020

Overview

Prior to the “Coronavirus collapse” of 2020 we had been gradually increasing our bearish bias on the stock market due to valuation concerns.

First, we lowered reentry prices for most securities on the Recommended List. We also recommended fewer securities for investors looking to take new positions.

Finally, for securities where investors held positions we advised the use of stop-loss orders to protect against large sudden downside. At the same time, we generally did not advise selling these stocks because they were continuing to benefit from strong momentum.

As it turned out, our bearish guidance and risk management strategy has worked out very well for the majority of stocks on the Recommended list since February. In the March issue (published on March 15) we recommended investors look to gradually reenter select securities and add to current positions. We provided more specific guidance in the detailed securities analysis section. This general guidance turned out to be the right call, as the stock market made a bottom one week later (March 23) and has since entered a strong bull rally, having officially exited the bear market that begun in March. 

Keep in mind that we publish each monthly issue of Dividend Gems on a specified predetermined date rather than publishing issues when we believe we can provide the best recommendations.

Given the extreme volatility and unprecedented events that have taken place over the past two months, even we are surprised at the results of our recommendations. In short, our active management recommendations from the February and March issues turned out remarkably good.

Moving forward...