As we close out a tumultuous week, we wanted to reach out to address the current volatility in the markets and to let you know our thinking and thoughts moving forward.
- Nothing beats good preparation. Our focus on risk when structuring your accounts, before the current volatility, will help the accounts weather this storm with the least amount of pain. We strongly believe in taking no more risk than necessary, and our accounts reflect that. Please know we are staying vigilant and attentive to the situation.
- Take heart in the lesson of 2008 – 2009. The unease of the last few days is familiar to those of us who withstood the financial crisis of 2008 – 2009. But so also is the hope that 2009 brought us, and the memory of the greatest bull market in history that followed which saw the S&P 500 appreciate by 399% from the low of 2009.
- Beware the “breaking news” commentary – it is not solid investment advice. Every time there is a crisis, it’s only a matter of time before the “breaking news” commentary begins, claiming the current crisis is unique and nothing like it has happened before. Objectively speaking, that’s not the case. Since 1980, we can point to 12 major epidemics, from HIV to SARS and Ebola. Examining the market’s resilience through these challenges is a good reminder to keep perspective and remain positive on the benefits of investing for the long term.Moreover, we knew we were due for a correction. We knew that risk for disease increases as the world population grows. And we’ve seen price wars with respect to the supply of oil. The coronavirus may be new, but this situation is not unique.
- We expect a strong recovery once the virus fears abate. From our own Dan Morgan today: “At this point we cannot be 100% sure that the coronavirus will not trigger a recession and / or a bear market, however if the virus does create such a sustained economic / market downturn it would be the first time an epidemic has created such an outcome. Could the coronavirus simply be an excuse the market was looking for to wring out some of the excesses after its historic 11-year rise?With already low global short rates and both monetary and fiscal stimulus being implemented around the world this should help create a V-shaped recovery once the virus fears abate. All the fundamentals are still in place for a strong economy and equity market – an accommodating Fed, low unemployment, reliable personal consumption, muted inflation, projected S&P 500 profits for FY20 of 5.5%, positive FY20 U.S. GDP growth of 1.9% – 2.0% and continued governmental fiscal stimulus.”
- We urge you to make the most of this situation. Over the next few weeks, all of us will have more time on our hands as events are cancelled and plans revised. We hope this can be a time of reflection and focus – a reminder of those things we hold most dear and precious. The assets we manage in your accounts are for the benefit and magnification of those valuables in your life. When we come out on the other side of this, let’s get together and confirm that your investment plan still centers on objectives that are most meaningful for you.
- We want to hear from you. Please know we are available at any time to discuss your thoughts and concerns. There are no bad questions and no insignificant concerns.
We’re grateful for you and the trust you put in us.