As the Coronavirus and its repercussions dominate the news, we want to reach out as much as possible to clients regarding investment portfolios. Stocks have now descended into bear market territory – a situation that history would indicate was overdue. However, the speed of the descent and the inability to quantify the effects of the coronavirus continue to lead to fairly chaotic behavior. Briefly, we offer a few thoughts. First, many clients have balanced portfolios, owning both stocks and bonds. While stocks retrace gains, bonds are doing exactly what we have long discussed; they are holding their value and serving as a ballast to the portfolios. Second, we continue to dig into the financials of our holdings, looking particularly at their ability to service their debt over the next year or so with the possibility of a recessionary impact on their income statement and cash flow statement. We do this constantly but are reworking calculations as the global situation continues to unfold. Third, perhaps the hardest hit sectors are things such as airlines, cruise companies, and energy. We have almost zero exposure to these areas. While all stocks are going down, our lack of exposure in these areas is a positive. Finally, we continue to search for new ideas. We’ve had a number of calls from clients to put cash to work – we will do so as is prudent, but also recognizing that this is an incredibly fluid situation. This eventually will pass and the business of America and the world will regroup and continue, but the dynamics of that are impossible to predict right now.
In addition, as schools, sporting events, and other gatherings close down, rest assured we have contingency plans in place in the event our physical location needs to close for the protection of our employees. We have the ability to continue to work remotely and service the needs of our clients. We are at this time encouraging that communication be by phone or email rather than face to face.
Please let us know if you have any questions or thoughts in the coming days as this situation continues to unfold, and we will continue to reach out as we have additional thoughts. Know that we are here for you.
While most clients have these handy, for convenience, we have included our email addresses below.
Mark Scarlett, CFA
Principal, Portfolio Manager
Mark Scarlett: firstname.lastname@example.org
Matt Roehr: email@example.com
Maria Elena Catala:firstname.lastname@example.org