March 31st Statements & the Markets

Monday, April 20, 2020

Dear Clients,
 
I hope all of you had a nice Easter. I know it was special for me, as our son made it back from Rome and out of his quarantine. Along with our son, our two daughters, our grandson and son-in-law, Kathy and I had a great Easter.
 
All of you should now have had a chance to receive and review your March 31st monthly statements. Just like our monthly statements here at the Smith household they were not pretty. However, remember the bad month of March was offset by the great 2019 and the first 2 months of 2020. For most of you, your rates of return were up 20%, 25% and, some of you, up 30% for the period January 1, 2019 until February 29, 2020. When we add in the terrible March and the first couple of weeks of April, most of you are still positive for that one year plus rate of return. When the markets are still down 20% from the highs of the markets back in February, most of you might be down half of that minus 20% for the year to date rates of return in 2020. So keep in mind you are not investing for one month, one quarter or even one year. We are investing for the long run or at least 5 years or more. Where do we go from here than?
 
I can make this analogous to a sporting event. Let’s take Aggie football for example. The Aggies are down 21 to nothing in the first quarter of the game. So, just like in the markets, do we panic and become very conservative and move all of our investments to cash and C.D.s? Do the Aggies only run the football on every play for the rest of the game so they don’t have an interception, passing the ball, and lose the game 42 to nothing? No, the Aggies maintain their game plan and slowly come back in the game because they have 3 more quarters in the game. Just as we need to maintain our financial and investment plans to recover what losses we may have. Yes, we may reallocate SOME of our investments, but most of our investments were carefully chosen to begin with, to not only decline much to begin with, but to climb or ascend after a downturn in the markets. Therefore, we are analyzing all of your portfolios and we might make some fine tuning recommendations, but not wholesale changes. Right now large growth companies (like Microsoft, Apple, Amazon, and many others) are doing well, but are they overpriced or overvalued? We are constantly researching the markets (both the macro economy and individual securities), listening to objective experts and second guessing and back testing your portfolios in an effort to improve the long term outcomes of your portfolios. We will not be able to keep your portfolio positive every month, quarter or even every year, but will always strive to have your portfolio meet your goals while keeping risk, volatility and fees as low as possible.  
 
Thank you again for not overreacting to these tough times. Just like 2008-2009, 2001-2002 and even back to 1987 the markets and the economy will come back and thrive. However, it doesn’t make it easy right now and we recognize and empathize with that.
 
As always we are here for you. So don’t hesitate to contact any of us with your questions or concerns.
 
Be safe and healthy,
Brien