“Out of an Abundance of Caution”….We need to get used to hearing those six words.
As Corona hysteria continues to unnerve global markets, almost all investment asset classes are seeing red as the seemingly endless takedown of global markets continues to devastate everything in its path. Today, after all of the carnage we’ve seen since the markets peaked earlier this year, the Dow Jones Industrial Average managed to plunge yet another 10% in the biggest one-day rout since the crash of ‘87 as investors continue to stampede out of equities. The coronavirus is now a real pandemic, the oil sector is obliterated, interest rates are still in a total frenzy, corporate bonds are deteriorating, and, “out of an abundance of caution” business leaders are quarantining employees, people are working from home, collegiate and professional sport seasons are cancelled outright, schools are closed, Broadway theaters have gone dark, state public health officials are telling us to stay away from each other, and there are now more “preppers” in the USA than ever before.
Soooooo….What to do? Well, put down your new copy of “Coronavirus for Dummies” for a minute and let’s try to breakdown what we’re seeing and what we’re going through:
First, if you’re invested in stocks, like most people are, unless you have extraordinary circumstances, it’s way too late to “get out” and selling into the chaos makes absolutely no sense, in my view. By now, readers of my messages know that the time to sell stocks is into strength, not weakness and we here at Capstone did exactly that when markets were rallying and were much calmer last year. Remember? Panic is never a strategy, but complacency can be a potential killer too.
At Capstone, we are registered investment advisors and, as such, we must put the best interest of our clients ahead of all else and, notwithstanding market conditions, our legal obligation to clients is to manage portfolios by providing what we believe is the best investment at the lowest cost to fulfill asset allocation requirements. We do not sell expensive investment products or charge excessive fees and/or commissions, and that, along with technology we utilize, enhances our ability as investment advisors to be efficient when making investment recommendations and transactions for clients. That said, based on our models, overall discipline, and approach to risk management, we have, in fact, as recently as this week, modified our client portfolios to reduce overall risk while still riding this tidal wave of volatility that we’re stuck in.
The stock market has many investors fearing for their lives as there seems to be no bottom in sight – at all. We are in total freefall and everybody’s a ball of nerves wondering if something should be done within investment portfolios. So, is there? Well, depending on the overall composition of your investment lineup, perhaps, yes, there is. Risk is a very simple term, but it can hide in many areas of investment portfolios. At Capstone, our advisors have nearly 50 combined years of experience in managing client assets and we’ve successfully managed clients through dozens of downturns, including the 1999-2000 “dot.com tech wreck” and the 2008-2009 “Great Recession”.
Until now, the rising tide in stocks has lifted all boats…But as that tide is rolling out to sea, now more than ever, investors need trusted advice, a plan, and a strategy. Cliques like “ride it out, we’ll be fine” or “don’t try to catch a falling knife” might not be quite enough at this point.
As always, clients can reach us at (570) 587-7800 (direct) or 888-587-7526 (toll free) with questions or concerns and for any of our readers that are not clients yet, but are nervous and worried, feel free to contact us if you’d like to discuss your current financial and investment state of affairs.
(The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.)