Update From GMFG
Where do I start – school closures, massive rate cuts around the globe, increasing cases of COVID-19, 1,000+ point swings in the Dow, travel restrictions, bars and restaurants being shutdown, fiscal stimulus packages, and on and on it goes. Any one of those could be a full topic to explore by itself. What it highlights is that the current public health and economic situations around the world are changing by the minute and that creates fear and uncertainty. While it can be overwhelming when taken as a whole, we have remained focused on the facts and have made investment decision based on well-thought out and actionable items. As things change and the spread of this virus gets under control we will adjust portfolios accordingly.
So, what have we done so far? As stated in previous correspondence we’ve taken a lot of equity risk off the table and added some gold to portfolios. In fact, on the bounce in the market Tuesday this week we further reduced some equity positions to generate cash we will ultimately use in our reinvestment strategy. At this point, portfolios have very little equity exposure and very elevated levels of cash.
What’s next? That is the question everyone has been asking. We do think the volatility will continue and the market will generally trend lower for now. However, until the virus spread slows and we get data on the real economic impact, it is nearly impossible to predict the exact bottom. That said there are companies and certain sectors that have held up or are poised to make money in this market. We have identified numerous companies we like at their current prices and have formulated an overall reinvestment plan when we feel comfortable that certain risks have subsided or began to decrease. In fact, we put a little bit of cash back to work this week as part of our broader rotation. We will keep you posted as we continue to re-deploy cash into opportunities.
In closing, we don’t have a crystal ball. What we do have is a plan that we will adjust and implement as the facts dictate. While no one knows the exact timetable, this crisis, like those before it, will pass. In the meantime, we are thinking of those most directly impacted from a business and health perspective due to this virus. There will be a lot of collateral damage from this virus when it is over. We feel it is important to remember that as neighbors and Americans it is our duty to help out those in need when and where we can.
Thank you for your trust and confidence. Be safe and as Grandma always told me… wash your hands.
Robert J. Phillips
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