To all my clients,

This is a reminder that I am working every day (by myself) and that I am here for any questions or concerns you may have as well as a little update on the markets.

The Virus

I have two messages regarding the virus before touching on the financial markets. One is to continue to practice social distancing and personal hygiene. I think it is very empowering to know that we're not at the mercy of external forces and that there are things that we can do, that make us and our families safer. The virus is spreading and the numbers reported over the next few days will be scary because more testing is being done now. But it will get better. Right now everything is about buying time so our frontlines can hold up and scientists can find a vaccine. The second message is to keep hope and understand there's light at the end of this tunnel. All diseases have a natural progression and it’s called a curve for a reason. There's always a down slope of a curve and we will eventually get there. Also keep in mind that most headlines are designed to sell. I personally take this virus very serious and it presents obviously a massive challenge, medically, socially and economically. But I think it is worth remembering that the world has never had better tools to fight it, that we know what it is, that we can test for it and that we know it can be contained.

The Drop

From the February intraday high, to last week Monday morning’s intraday low, the S&P had a 35% drawdown. It has rallied about 20% since then, but is still down about 22% from the highs. This was the sharpest decline I have ever seen regarding speed & magnitude.

However, looking at 26 historical bear markets, the average is approximately 33%-35%. Therefore, this decline is in line with the average. Markets will get through this, a lot of bad news that’s still to come, has already been priced into the 35% drawdown. 

The Recovery

Hopefully in the next couple of weeks there will be more good news than bad news. But we could see more wild swings over the next few days, going through earnings season.

When the growth rate of COVID19 peaks, we will start to build our recovery & get our lives back.

Markets have not started to recover. We could re-test last week’s low and even go lower. When we start to recover, it will take time and most likely we will not see this year’s January levels until the first quarter of 2021. But there are companies that have started to recover, mostly companies that have been dragged down too far and companies that proof to be more innovative than others.

The Opportunity

There will be real winners and there will be innovation. Even the great depression after 1929 brought us things like rockets, microwaves, Color TV, the first car radio, plastic and many other things.     

Disasters and emergencies throw light on the world as it is. History reveals that crises and disasters have continually set the stage for change, often for the better. There will be a change in corporate, political and individual behavior when this is all over. Companies will consider additional supply chains outside of China. We all just found out that our frontline and health care services are underfunded. There will be an increased trend to health and wellness. The realization that being healthy and well is fundamental to how we live our lives is bigger than ever and last but not least, the digitalization of our lives will speed up tremendously.

Not all companies will recover, even after we beat this virus. The advantage of being invested in a managed portfolio is that portfolio managers have started looking for companies that will come out    

as winners, considering many different factors. My commitment to you is, that I am working hard making sure that your portfolio will be exposed to many of these companies.