March 27, 2020 Highlights
Over the past twelve months, we have devoted a significant amount of energy and resources to upgrading our technology solutions. One of the silver linings to this virus is that we have been able to test “real time” our ability to work remotely and I am proud to share how seamless it has been. Our office phones are connected to our cell phones and we have access via the internet to Schwab, Tamarac (our portfolio management software), and Redtail (our database of client notes). We look forward to all returning to the office as soon as we can!
This week, an extraordinarily large stimulus package was passed. This was absolutely needed, but it will take time to implement and unfortunately, not all business models will be saved. Please be aware that with the stimulus package, scammers are getting creative and trying in many ways to gain access to your personal information. You will not be asked “to apply” for any benefits. The government will be utilizing your 2018 or, if already filed, 2019 tax returns to determine your qualifications and provide stimulus payouts.
The equity markets started the week down, saw 3 days of gains, but ended on another down day. This signals a classic bear-market bounce and we reduced our equity exposure a little more. The probability of a “V” shaped recovery is much lower now and some companies/industries will have more difficulty than others.
The fixed income market stabilized this week thanks to the Fed’s intervention. Last week the market experienced a mass liquidation of quality investments by large investors/institutions who needed to raise cash. There were more sellers than buyers which drove prices lower. This week our high-quality investments regained their prices as the market stabilized.
The VIX, or volatility index, remains extremely high at 64. To give context, the VIX in normal markets ranges from 9-18. This signifies that there is still a lot of market volatility yet to come.
I am spending my time analyzing every investment we own individually and assessing what the possible outcome may be for each given the current market environment. I’m listening to every conference call related to our funds, watching technical webcasts, and reading, reading, and reading.
Of course, no-one can predict how long or deep this recession will be, but I am dedicated to making the very best investment decisions now to protect our investments and then position them for the quickest recovery.
I have spoken with many of you on the phone, and I invite you to call or write with any questions or thoughts you may have. Enjoy the weekend and your friends and family just remember to keep social distancing in mind!