You know we are in unusual times when you receive two emails from me in back to back weeks. Last week things accelerated to the downside after Italy took steps towards “shutting the country down” in order to slow the spread of the corona virus. Then most of the rest of the developed world, including the United States, took unique but similar paths in the same direction. The result is that while economic activity was solid in the United States as recently as a couple of weeks ago, and to state what might be obvious, analysts all agree that we will slow down. To what extent is dependent upon many factors which include how long we “quarantine”, how the policy makers react and our own collective psychological response.
From a stock market perspective this is the fastest drop to a bear market, which is defined by declines of greater than 20%, and by my count took only 16 days. Even in 2001 and 2008, the markets took many months of weakening fundamentals before the drop was this deep. I mentioned last week that computerized trading and leverage can make markets move much faster than ever and certainly faster than the “facts on the ground” support. Adding fuel to this is the uncertainty around when we will all go back to work and resume our normal routines. However, I think that before too long strategists and market participants will begin to get a better idea of the expected impact on the economy and respective investments.
With respect to our portfolio strategies, we did take some action late last week to reduce risk. We are in one of those rare times when the market defies very oversold conditions, and I, therefore moved to reduce our downside capture. As things continue to evolve, I will be identifying pockets of opportunity that I believe provide us with good risk/reward and will be adding those investments to the portfolio. In the meanwhile, I continue to monitor the situation very closely, will navigate through this the best that I can and am looking forward to better times ahead.
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
