Clients and friends of our firm:
Hunker Down
In a crisis, Mondays are the worst. The weekend allows time for investors to sit in a stew of their worst fears. As a result the pent up desire to sell bursts like a dam when Monday trading opens. It’s a rush for the exits. The sentiment this morning was to sell at any price. But we are not selling (other than minor tweaks). We did our selling prior to the onset of the crisis. It’s now time to hunker down. Here’s a reminder of our convictions:
- In the near term, the crisis will deepen. In Europe and the U.S., the negative news cycle will continue its downward spiral for several weeks.
- The crisis will end. We expect its peak somewhere in the next 60 to 120 days. That puts us in the mid-May to July timeframe (our projections are based on the virus’ behavior and timelines experienced in China and South Korea).
- When the crisis ends, there will be a worldwide hunger for safe, yield-generating investments. That is what we own already. We are in the “path of development”, so to speak.
We Are Buying
This crisis is generating bargains not seen since the Financial Crisis of 2007 – 2008. The opportunity to pick through the rubble while others panic is in front of us. There’s no rush. We remain selective and methodical in what we choose to buy. In the midst of chaos, we remain on plan. Perhaps the oldest market axiom that exists is “Buy low, sell high”. But what is “low”? I can tell you one thing: low doesn’t feel good. It comes wrapped and boxed in heavy doses of panic, fear, and uncertainty. Welcome to low. The exact bottom is too hard to call, but this is what low looks and feels like.
So hunker down, physically with your family and loved ones, and financially in the quality of the securities you now own and to which we will be acquiring through this period. Stay healthy. God bless. There’s a better day coming.
Jonathan Boyd
Direct: (843) 540-1149