March 2020 Update

Michelle Trouvé |

Keep Calm and Remember We Have a Plan

As the headlines remain frightening, I would like to provide you with some calm, straightforward thoughts regarding our money.

We have done everything right. By this, I mean:

  • We are long-term investors.

  • We believe in embracing your true risk tolerance.

  • We have built portfolios for you in line with those tolerances and have appropriate exposure to equities and fixed income.

  • If you take monthly draws, we have built in 3-6-12 months of reserve so that we would never have to sell on a day or in a market we didn't want to.

  • We have diversified investments within each asset class.

  • We have been cautious and underweight equities since October 2018, adding more defensive positions (utilities and real estate).

  • We have sold lower quality fixed income investments and purchased more government securities.

In addition, this past Monday, we reduced our equity exposures even more by selling our SCHB which represents between 10-15% of our equity portfolios and another 5% in our market neutral fund.  We will keep these proceeds in cash for now as we know there will be excellent buying opportunities over the next 6 to 8 weeks as the virus moves through the US.

Nonetheless, many of our investments are still down as the markets this week experienced major turbulence. Stocks, bonds, gold, treasuries, and even crypto currencies were negative on Thursday. The VIX, which measures volatility, hit 74 which is an all-time high. The last highest reading on the VIX was 54 during the 2008 financial crisis.  Many of our preferred fixed income dividend-oriented securities have suffered paper losses as these good investments are being liquidated by others to raise cash. We lived through this very same phenomenon in 2008 and these same securities rebounded faster than the equity markets.

These are a just a few of the many gyrations that have occurred in the markets this week and although scary, they would suggest that we are nearing a bottom. Unfortunately, finding a bottom takes time.

History has proven many times that markets rebound faster than one can buy into, and staying the course is the right plan. 

We remain dedicated to you and your investments and will continue to monitor the markets and our investments with extreme diligence. Please don’t be shy about calling or writing with any questions you may have. We are 100% available!

Michelle