Weekly Investment Perspective

Keep up-to-date with our Weekly Investment Perspective.

Our Thoughts in Trying Times


We wanted to stay in touch and let you know about some defensive changes we are making in your portfolio. Unprecedented measures being taken globally to combat the COVID-19 virus will most certainly have negative economic repercussions, which we believe will be both deeper and longer-lasting than investment markets are currently recognizing. The spike of last week’s weekly unemployment claims, for instance, is likely just the beginning, if plans to shutter businesses and keep people in their homes becomes the order of the day. And in an increasing number of cities and states, it has.
Our first action is to reduce our already-low exposure to international equities. A further deterioration of the capital base of many European banks could lead to a curtailment of their lending ability, making an already-poor situation in their commerce worse. We will keep a minor amount in actively-managed funds and reduce or eliminate exposure to indexed funds. The proceeds of this action will be placed in an intermediate-term U.S. Treasury-only bond fund, which should be safe and provide a return above what money market funds are currently paying.
Two, we are reducing our small-company fund exposure, and strategically reallocating the proceeds into more defensive large-company investments, providing things that you have to have on a daily basis and also provide greater rebound potential when this storm passes. Examples could be individual companies, sector-specific funds, or broad market mutual funds where the fund manager shares our views of what makes a good business.
Our focus is primarily on reducing exposure to these two equity subclasses in general, and particularly indexed mutual funds representing those subclasses. During times like these we believe it important to focus on companies, sectors, and funds that will be defensive (where historic equity market volatility has proved them to be a safer haven) but still provide participation when equity markets rebound.
We will closely track the dollar value of our de-risking process so that we will be ready to unwind it when we believe the time is right, and there will be an opportune time, we are certain of that. While currently causing significant economic interruption, the global mobilization of a lot of bright people and a lot of money will provide a turnaround, at some point. And we have learned over the years, never count out human endeavor. History clearly shows we have an amazing ability to adapt to changing circumstances.
We thank you for your relationship with us, and as partners welcome your thoughts and feedback. Best wishes for your safety and health in these trying time



Previous Perspectives