Market Update 4-6-2020

Last week was the least volatile, in terms of price swings, since late February. The major US stock market indices were down about 2%-3%. 1, while small cap indices and certain sectors performed a little worse. I was encouraged to see that Investment Grade Corporate bonds appeared to put in a positive week. 2 It would be a good sign if liquidity in the corporate bond market supported current price levels. If this were to continue, I think this could be an important step in restoring stability to other more volatile parts of the market. On the economic front, the bad data is starting to come in. It should be expected that while we are shutdown, economic numbers will deteriorate. As we’ve noted in previous updates, significant actions have been undertaken by the Federal Reserve and Federal Government to try to offset the damage. How all of this unfolds, where the bottom is, and what the recovery looks like is still unknowable at this point. With respect to our portfolio strategies, we remain on the cautious side for now. Speculation that the March 23rd price bottom will hold, and was a great buying opportunity, is something I’m not bold enough to proclaim. Our plan is to continue to slowly add to positions where we prefer the risk/reward characteristics. On a lighter note, we have been gearing up for the warmer months at our homes. This includes various home improvement projects such as building up our gardens with vegetables and flowers, cleaning up the exteriors and organizing. We hope you have been able to enjoy this beautiful weather too! Unless this coming week has something significant to update you with, we will probably skip next week and send out the next update in two weeks. Have a great week everyone. Kind regards, Edwin and George 1 “Stocks Decline as Investors Digest Colllapse in Jobs Market.” By Gunjan Banerji, Anna Hirtenstein and Chong Koh Ping. April 3, 2020. www.wsj.com. 2 “Credit Markets Show Signs of Stabilizing After Historic Fed Intervention.” By Sam Goldfarb and Anna Hirtenstein. April 6, 2020. www.wsj.com.

“Tough times never last, but tough people do.”– Robert H. Schuller

Last week was the least volatile, in terms of price swings, since late February. The major US stock market indices were down about 2%-3%. 1, while small cap indices and certain sectors performed a little worse. I was encouraged to see that Investment Grade Corporate bonds appeared to put in a positive week. 2, It would be a good sign if liquidity in the corporate bond market supported current price levels. If this were to continue, I think this could be an important step in restoring stability to other more volatile parts of the market.

On the economic front, the bad data is starting to come in. It should be expected that while we are shutdown, economic numbers will deteriorate. As we’ve noted in previous updates, significant actions have been undertaken by the Federal Reserve and Federal Government to try to offset the damage. How all of this unfolds, where the bottom is, and what the recovery looks like is still unknowable at this point.

With respect to our portfolio strategies, we remain on the cautious side for now. Speculation that the March 23rd price bottom will hold, and was a great buying opportunity, is something I’m not bold enough to proclaim. Our plan is to continue to slowly add to positions where we prefer the risk/reward characteristics.

On a lighter note, we have been gearing up for the warmer months at our homes. This includes various home improvement projects such as building up our gardens with vegetables and flowers, cleaning up the exteriors and organizing. We hope you have been able to enjoy this beautiful weather too!

Unless this coming week has something significant to update you with, we will probably skip next week and send out the next update in two weeks. Have a great week everyone.

Kind regards,

Edwin and George

1 “Stocks Decline as Investors Digest Colllapse in Jobs Market.” By Gunjan Banerji, Anna Hirtenstein and Chong Koh Ping. April 3, 2020. www.wsj.com.

2 “Credit Markets Show Signs of Stabilizing After Historic Fed Intervention.” By Sam Goldfarb and Anna Hirtenstein. April 6, 2020. www.wsj.com.