Post CARES Act Investment Update.
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Post CARES Act Investment Update.

In less than a month, our lives have been turned upside down as COVID-19 continues to shut down countries and economies. The contrast could not be more pronounced as we have just come off one of the best years of investment returns in recent memory, the longest ever recorded bull market, and economic fundamentals appeared stronger than ever.

The calm confidence of January gave way to one of the most volatile quarters ever recorded. The almost daily 5- to 10-percent moves in the financial markets have been disconcerting to say the least and unnerving even for the most seasoned investor. The drawdown in the S&P 500 from the top of the market in February was -34%, putting us squarely in one of the quickest bear markets (defined as a correction of 20%+ from market highs) ever. The indiscriminate sell-off affected almost all investments from stocks and bonds to oil and real estate. Equity markets year-to-date are down anywhere from -15% to -31% depending on which market you are observing. As a firm we keep an eye toward the future and continue to be disciplined in our investment approach, leaning into our high-quality security selection process which accentuates strong balance sheets and cash flow.

We anticipate financial markets will continue to be volatile. Until we see the rate of growth in COVID-19 start to decline, and there is additional clarity around the duration of the shutdown, it is unlikely the current state of instability will subside. Looking ahead, we remind you that economic data typically troughs many months after financial markets bottom, consequently, we expect the highs of unemployment and lows in overall economic growth to be delivered later this year. In our opinion, although there are certainly risks yet to be discovered, the markets are rationally attempting to price in a recession both in global growth and corporate earnings.

With so much uncertainty around the timeline of this economic downturn, the Federal Reserve and our government have come together to provide wide-ranging support designed to take our economy to the other side of the crisis. The recently signed CARES (Coronavirus Aid, Relief, and Economic Security) Act, worth approximately $2 trillion in stimulus, will go a long way to support individuals, businesses, local governments and our healthcare system. In addition to lowering short-term interest rates, the Federal Reserve has also quickly enacted several massive financial facilities to support liquidity and credit markets. From a healthcare perspective, there appears to be increased coordination across government entities to provide medical supplies, test kits, and to find potential virus therapies.

Watching American ingenuity come together to find solutions, provide care and transform business practices within a matter of weeks, has been truly astounding to witness. On a personal level, WealthSouth has completely transformed our day-to-day work environment and communications, relying heavily on technology, while continuing to execute business without skipping a beat!

Although difficult during periods of great fear and panic, we are looking through the virus fog and positioning our portfolios for the recovery on the other side. As always, please reach out to our Investment Advisors at WealthSouth for advice, questions and concerns.

James Fereday,

Chief Investment Officer



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