Sound will start sending these VLOGS as often as we can to our clients. These will be on multiple topics in our lives currently, some funny, but we will do our best to make all joyful.
So, let’s talk plainly for a minute. There is a lot of anxiety and many unknowns in society right now, and as you know, the markets are reflecting this anxiety. The “fear” trade led to a sell-off of unprecedented speed, in our opinion.
That being said, these are the 3 points I want to make for you today:
- What have we done?
- We took nearly all of our clients’ accounts to a risk-off position on February 28th.
- Over the past week, we have been working to move our clients’ accounts yet another step more conservative. This is a little trickier in these markets.
- We have been measuring trading ranges, and begin as specific as possible to make the best trades we can in a difficult situation.
- What are we watching?
- The bond markets. If these calm down, we believe our portfolios can play defense again and even score some points.
- The Fed. They have committed a ton of money to the markets. This will help the markets, but it will take time.
- The Coronavirus. We believe that the social distancing efforts that leaders throughout our society are advocating will work, but it will take time and all of us are doing our part. We also believe that when the Coronavirus reports level off, the markets can then react on data, not fear.
- What are we planning for the future?
- First, in these conservative moves, we have been raising cash (as much as possible) to prepare to participate in future growth.
- Secondly, we are studying past markets such as 1929, 1973 and 2008 to see what asset classes seem to perform well in times of extreme stress.
- Third, we are building a distressed stock list. We think there are some great companies doing great and profitable works. Their stocks are getting beaten up right now, and it’s our opinion that our clients will want to own some of these at the right time, but not now.
Please remember that we do not have a crystal ball and don’t know the future, but you are getting our best efforts and our team is working hard for you.
I’m going to end with a verse that I have been hanging on to:
“Blessed is the man who trusts in the Lord, and whose trust is the Lord. For he shall be like a tree planted by the waters, that extends its roots by a stream; And will not fear when the heat comes; But is leaves will be green, and it will not be anxious in a year of drought nor cease to yield fruit”
Jeremiah 17:7-8
