It has been four weeks since the selloff related to the Corona virus started, and this is my third update. During this volatile time, I will try to write an update if I feel that I can provide some perspective. As most of the country is now practicing either social distancing, stay at home mandates or shelter in place, it is clear that the economy will decline in the current and coming months. I’ll repeat what I wrote last week, which was that the extent of the economic decline is dependent upon many factors which include how long we “quarantine”, how the policy makers react and our own collective psychological response.
From an investment perspective, stocks had another very rough week. It’s been reported that this is the most severe 20 day stock market sell off in history. What was different about last week was that certain types of bonds which are considered among the more conservative investments, such as US Treasuries, Municipal Bonds and Investment Grade Bonds were also sold off, or liquidated to raise cash to meet any number of requirements, such as funding corporate responsibilities, investor redemptions, deleveraging and even forced liquidations. This has caught the Federal Reserve’s attention and they have signaled that they will go back to the 2008 playbook to support certain fixed income investments that they deem are worthy of supporting. Additionally, the Federal Government is preparing to approve the largest stimulus package ever.
With respect to our portfolio strategies, we did take some additional action early in the week to continue to reduce our downside capture. The technical indicators that statistically point to an oversold market are more stretched than I’ve ever seen them, and therefore have lost their predictive value in the current environment. As this progresses, we are identifying investments that we think provide us with good risk/reward and are slowly adding those to the portfolio. In closing, our team is here for you, we take this responsibility and the trust you place in us very seriously, and we will give our best effort to help us all get through this difficult time the best as we possibly know how.
Kind regards,
Edwin and George
Waingart Wealth Advisors of Janney Montgomery Scott
403 Roper Creek Drive, Greenville, SC 29615
864.438.3817 | ewaingart@janney.com
