As
you know, this past Monday, we executed our strategic decision to concentrate more
of your assets in what we call “stalwarts”, or companies with the strongest
competitive and financial positions and which we believe are best positioned to
weather the current uncertainties and thrive upon a return to normalcy. We did
this for a couple of reasons: 1) increase portfolio concentration in higher
quality equities; and 2) be better positioned in stocks of the highest quality
as a protective measure if the COVID-19 outbreak and economic downturn are more
prolonged than we expect. Based on what we have seen so far, the strategy
appears to be working as we expected. During the three-day rally in the stock
market earlier this week, your equity positions fully participated in the rally
based on comparative indexes we looked at. This is encouraging and it appears we
are on the right track.
Looking
forward, while none of us can forecast the market in the near term, we believe
it’s probable that the stock market may remain volatile for a while and we
would not be at all surprised to see a retest of the market lows in the coming
weeks. History shows that sometimes these retests can take the market below the
previous low. That said, it is encouraging that the Federal Reserve, the CDC,
Congress, the President, and federal and state governments are all moving
swiftly and taking concerted actions to address the C-19 issues. It is within
this context of an economic slowdown and expected volatile markets that we made
the changes on Monday which we believe should provide the highest probability
of both capital preservation and a successful outcome when we come out on the other
side of this unprecedented event.
As
always, if you have questions or concerns, please do not hesitate to contact
us.
S.R.
Schill & Associates
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