13 Mar Bear Market Investment Update
Fear and panic were palpable this past week, not only in the financial markets, but also in our personal lives.
We received a constant stream of news around schools, churches, sporting events and businesses shutting down in response to the COVID-19 pandemic. I have never seen anything similar over the last 20 years and likely most of you have not either. This truly meets the definition of a “Black Swan” event – unexpected and its effect incalculable.
Financial markets do not appreciate the rampant uncertainty and accordingly have priced in a significant recession in earnings and overall economic growth. In addition to the unknowns of COVID-19’s impact on our economy, the decision by Saudi Arabia to flood the oil market with supply has put massive pressure on the energy industry.
As emotional as these moments can be, we are encouraging our clients to remain focused on the long-term goals of their investment portfolios and act with a high degree of judiciousness. Understandably, many of us still have vivid memories of the financial crash in 2008, which weighs on our collective minds as we attempt to look through to the other side of this crisis and identify appropriate investment opportunities. While this is likely to be a difficult period for the global economy, the comparisons to the financial crisis appear unwarranted. Our banking system is in a strong capital position and markets have functioned orderly despite the extreme volatility.
Our investment team will continue to execute our investment process in a disciplined manner across all client portfolios in the context of specific personal objectives. We design portfolios in balanced structures, with a quality emphasis that gives your investments the greatest potential to meet current income needs, while also growing principal values over time. This design helps to protect in downside corrections, while continuing to provide liquidity, if needed, in the short-run.
Although no one knows if all the bad news has been reflected in our investments, the market has priced in a substantial slowdown at this point for 2020. We believe the increased coordination of action and communication between the Central Government, Federal Reserve and medical community will help to quell some of the short-term fears.
Email is certainly not our preferred method of communication, however, because of the speed of the ongoing news we wanted to share our thoughts quickly. I have been in discussions with many of you over the past two weeks, as have our other officers, and appreciate all the insight
and support. As always, please do not hesitate to reach out to me or anyone