This market does not feel good. More than just the markets there is fear of the unknown about our collective health. This is causing a double whammy. This can leave you with a knot in your stomach. We are feeling the same emotions that you are, and the knot is in our stomach as well.
But that does not mean that we are not prepared for what to do when equity markets go down. We are following our process for getting defensive. We hope that this market drawdown has a quick resolution. We do not like to see people or the economy suffer. The following are some of the defensive moves that we have made:
February 28th in our Tactical Asset Allocation Models
• We made the first of our defensive moves by taking a minimum volatility equity position. While not eliminating equity exposure this move is intended to dampen the volatility of moves in the equity market.
March 2nd in our Opportunity Models
• These models began getting defensive with the Global less than 50% in equities.
• Move to a neutral equity weighting in Tactical Asset Allocation models
o Trim US Small Caps, Developed International Equity, and Emerging Markets Equity.
• Trim equity exposure to US Growth Opportunity.
• Trim High Yield Bond exposure in Focused Income.
We will continue to work our process and move defensive as the equity markets dictate. There are so many unknowns about the true economic damage that COVID-19 will do that we cannot begin to speculate how this plays out. But we are seeing tangible effects everywhere with the canceling of so many public events.
This is a time to be thankful for modern medicine and sanitation. It has given us confidence that our ancestors could not have had 50 or 100 years ago. For everything that divides us we should all recognize the benefits of modern life.
We do not have any known exposure to COVID-19 in any of our office locations. We are also doing everything we can to prepare for the healthcare side of this coin. Our offices are currently open; if that changes, you will receive an email notification on a location by location basis. We have increased our cleaning regimen; using disinfecting wipes after each meeting, offering hand sanitizer in public spaces, and spraying down or wiping our office spaces and doors daily. We do have a plan and process in place for working offsite should that become necessary in the future.
We have lived through many large pullbacks, and several bear markets. None of them feel good. Where we go from here is unknown, but we will be ever vigilant and do our best for our clients.
Please feel free to reach out to me if you have any questions.