Many of our clients appreciated our prior market messages from February 27 followed by March 13 and encouraged us to “keep them coming”.

Dave

As the Coronavirus escalates and there are major developments every day, we want to stay in touch with you as much as possible.  Of course, we are monitoring those developments and keeping your long-term interests at heart.

Here is what is happening now and our take on what it all means to you.

• The Fed has taken a number of steps to maintain liquidity in a number of markets and has announced some new initiatives to help small business. (more detail in the third section) These efforts are reassuring to investors and will help eventually stabilize markets.
• Congress is, astonishingly, stuck in partisan bickering over a bailout package.  This is not good but will get resolved and that package will be heartily welcomed by the markets.
• We will definitely have a recession (it’s likely already started), and it may be a deep one, but the recovery will begin after the virus slows.
• Federal and local officials are working mightily to get a handle on the virus.  The better we can hunker down, the better we can help slow the virus.

We have spoken with many of you and always encourage you to call with any questions or concerns.

Denis

Wow, this crisis is coming fast and furious. “Cases double in a week”, “major damage to the economy”, “20% unemployment coming”, “deep depression”, “fastest 30% decline ever” – those are just some of the scariest soundbites from the past week which was the worst for the market since 2008. If you are still invested and sticking to the plan – congratulations, you are doing the right thing! Let’s be clear – this is a real crisis that will have major economic impact and we don’t want to minimize it. We don’t know if the market sell-off is overdone, underdone or just right. Things will definitely get worse on the health front and very likely to get worse on the investment side. The range of potential outcomes is so wide that the market is having a hard time handicapping it all which leads to these wild daily swings. That being said, eventually we will make medical/research breakthroughs, warmer weather might help, Congress will get its act together, Fed’s measures will stanch the bleeding  and don’t count the mighty U.S. consumer out with the pent-up demand for all things “normal”.

Some points of reassurance:

• Despite the volatility, we continue to recommend staying the course and focusing on things that we can control.
• We have been in touch with many of you about taking advantage of losses for tax purposes, making sure our cash and money market positions are solid and so on.
• Our bond funds saw some amount of stress last week but are holding up quite well and Fed is working hard to provide liquidity.
• Here is a great post giving a longer perspective on how diversified portfolio are holding up – your portfolio is not the market (with very few exceptions for very young clients).
• “Buy and Hold” is a core belief for us, not just lip service. Do not underestimate the mental anguish that comes after you abandon a core belief in time of crisis and the “hold” part is no longer set in stone.
• If you need to “do something”, focus on your health and family and not the investments.

Please call or email us if you need to talk through this, don’t wait until you can’t take any more and make up your mind about a big change to your portfolio that can be very damaging!

“Friend of the firm”

Please see the attachment for a great summary of the current government actions from a friend of ours who is very thoughtful on that front.