Kevins Korner

Navigating the Market Decline

In light of the continued volatility in the investment markets here's a quick summary of what we're working on to help you navigate this situation successfully.


1.Review of current investment strategies

We regularly review the performance and composition of everyone's accounts, and that process get's stepped up during periods like this. Here are some general numbers on how different investment mixes have performed this year (through Friday) and in 2019:


Percent in stocks

2020 YTD (thru 3/6/20)















For reference, the S&P500 was down -8% YTD through Friday, and the international stock markets were down about -11%. But bonds were up +4% YTD, showing once again how diversification works to smooth volatility.


2.Review of investable funds

We have done a top-to-bottom review of all of your accounts to look for investable cash. Declines like this are disconcerting, but ultimately can present fantastic opportunities. We want to be ready for that, and we'll be in touch when the time looks right to talk to you about this. (PS if you have investable cash outside of your SEI accounts let us know)


3.Review markets for opportunity

During uncertain times successful investors have the ability to set aside the hysteria and fear and look objectively for opportunity. Warren Buffett, probably the most consistently successful investor over the past 40 years, once said "Buy when others are fearful and sell when others are greedy". There are very compelling opportunities emerging in some markets, things we haven't seen since the Financial Crisis, and we'll be sharing those ideas with you when conditions stabilize (our approach errs on the conservative side, we'd rather wait for signs of things bottoming out and buy then rather than try to time the bottom).


Looking ahead 

I've read and heard a lot of opinions/forecasts from hundreds of the best strategists over the past few weeks, and the outlooks vary widely. At this point, the one that seems most probable goes as follows: 

·       the first half of 2020 is horrible for corporate earnings as many economies have ground to a halt-- arguably markets are now reflecting much of          this

·       the spread of the coronavirus slows through the Spring, and business recovers in the second half of the year--following on the trajectory of past          SARS/MERS outbreaks

·       some industries (cruise lines, airlines, hotels) will have a permanent loss of business from this period (ex. customer cancels a cruise and doesn't          necessarily re-book it in the future)

·      many industries will have a temporary loss of business (ex. customer doesn't buy an iPhone because supplies have been impacted but they will           still buy the phone when things normalize)

·      odds of a recession have risen from 20% to 60%, and depending on how long the coronavirus spread continues the odds may rise

·      the underlying economy was strong, and it's possible if the Fed cuts rates even more and the virus does not linger through summer that the                 markets could have a strong rebound later this year


Lastly-- a note from Italy

Thought I'd share this email we received from friends in the Milan area, given the above logical assessment of the markets please don't think I'm not concerned about the well-being of everyone and the severity of the situation. Stay well!


We all (Giuliano, Sara, my parents and sister, Sara's mother and relatives and friends in general and I) are fine: none has been infected (yet?)...
The situation is unknown to us: we are worried and scared, it looks like a zombie movies on tv, cities are empty and silent.
Since today we can't go out from Lombardia, except for serious family reasons and essential and demonstrable business reasons.
They asked us to limit any movement to the minimum also in the region.
In the shops no goods are missing but they let people to get in a few at a time: people have to stay at minimum a meter away each other.
All my and Sara jobs are frozen... How long, we do not know.
They need to slow down the infection
There is very few to do right now: just wait at home... It is so strange and abnormal, nobody is trained in this.


As always, please don't hesitate to call or email if there's anything we can help with.





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