April 3, 2020
Well, that seems to be the question we all want answered. From our perch we are working through it, both on the financial and the healthcare sides. In our last post we believed it would get worse before it gets better on the healthcare side, and unfortunately it seems we were correct. The Coronavirus pandemic will likely continue to cascade across the United States as well as the globe. We are preparing for a potential resurgence of the virus in the fall, however, no one can quantify the scope and scale of that impending situation. We will deal with that when it comes. The medical community continues to learn on an almost hourly basis the best ways to deal with, and adapt to, this crisis. These heroes are risking their own lives to help treat and save ours and deserve all the help and encouragement we can give them.
With regards to the financial markets, we again said it is going to get worse before it gets better and that seems to be playing out in real time. While there seems to be a fascination with trying to call/catch the bottom, we have no interest predict the unknown. We continue to hold on to the thought that we may be headed into a deep economic contraction and attempting to forecast the depth or length of such a contraction is a fools errand. The ramifications of this pandemic are going to be both far-reaching and long-lasting. We still hold that if our clients are invested they should stay that way, with a few important caveats. First and foremost, if your investments are causing you to lose sleep, then we need to reallocate to a place where you are comfortable. The last decade has skewed some individuals’ perception of their risk tolerance and the recent market action has revealed that. This is an individual circumstance and finding the right asset allocation involves both art and science, with a good degree of nuance. We still hold true to our thesis that good companies will weather this storm and likely come out stronger on the other side.
Specifically, where are we in this downturn? We don’t know. We don’t know because it is frankly unknowable. We believe it is a fool’s errand to try and predict these types of things. Our perspective is if you are comfortable with the plan we have constructed together, stay with it, this too will pass. Having some cash in these situations is helpful in a few ways. First, it’s nice knowing that you have something that will not lose value if the market continues to slide. Second, we believe there will likely be some great companies on the other side of this that will be well positioned to benefit once we return to the new “normal”, whatever that may be. We also personally believe that there will be a “new normal” in how we conduct business in the future. We see no reason to try and pick a bottom and we are not going to try. What we strongly recommend is that people stay patient and wait until we have more clarity on how this will all play out. Investing is a process, it is not a point in time. There is no need to rush into this.
On that note, we will acknowledge the tremendous strength of our communities. Again, betting against the United States of America has been a historically bad bet, and we believe that will again ring true. Stay safe. Stay strong. Be patient with yourself and others. Most importantly, look out for each other. That is what truly defines us during these trying times.
And for heaven’s sake, please wash your hands and stay inside. We’ll get through this together.
Doug Hendee, CFP, Chief Sales Officer & RJ DeMonte, Financial Advisor