Panic. Then Relief. Now What?

Market Update, April 15, 2020

The stock market is an erratic creature, swinging wildly from branch to branch trying to decide which altitude to land and when.  The market has rebounded more than 20% from its recent lows—statistically signaling a new bull market.  Unfortunately, I believe we are still in the swinging phase.

I don’t expect the upward strength of this erratic creature to last much longer without at least pausing to catch its breathe.  Put another way, I doubt the market will get back all of the COVID-related losses by the end of the year.

The stock market collapsed, then recovered, and neither seemed to be driven by a clear set of facts.  We know COVID-19 is very contagious, and sometimes deadly, but the hard facts seem to stop there.

As a result, a large population has suddenly and dramatically changed its collective behavior.  These changes will not reverse back quickly.  In fact, some changes will likely become permanent—like widely-adopted work-from-home practices.

As we try to adjust to our new normal, we are left with our collective ingenuity to find the new path forward.  I’m confident we will find many new paths forward, just like we have done in the aftermath of past crises.  I’m confident that fabulous opportunities lie ahead.  And, I’m confident it will take time.

In terms of predictions, I have only two: 1) The market will remain volatile for the next several months. 2) The stock market will eventually recover.

Beyond that, it’s too early in this crisis, especially considering that we do not have adequate testing, any proven treatment, no vaccine, no tracking, and no containment.

As the situation evolves over the next several weeks and months, we will be monitoring it closely.  At this point, we know there is much we don’t know and need to learn.

We are also closely watching the latest economic releases to understand how our economy is shifting and what might lie ahead in terms of employment, delinquencies, bankruptcies, government policy effectiveness, overall stability (or instability) of economic activity, winners and losers, etc..

Our commitment is to take on this crisis as we have successfully taken on crises in the past.  Specifically, learn as much as possible, then formulate investment strategies to meet the challenges and opportunities of the new reality. And, communicate our views and perspectives to our clients as we look to growth and protect their wealth.

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