To all my clients,

After I have been busy adjusting client portfolios over the last few days, I would like to take some time to communicate a few thoughts about the recent events in the financial markets.

US and Global markets have been down more than 10% last week alone and spooked many investors. Although it’s clear that the Corona virus was the trigger, the reasons for this downturn are to find in many areas.

That’s why it’s unlikely that we will see a V-shaped recovery, meaning sharp downturn followed by a sharp upswing. While many countries in Europe and Asia have done a decent job in testing and reporting virus cases, the US has dropped the ball so far. Not very many people have been tested at this point and the CDC even initially refused to test the person in California which then turned out to be the first probable case in the US.

My thought is that as soon as the US is taking this more serious and will have actual numbers, it will send some more shockwaves throughout the markets initially but then help to calm the fear. The US is the most influential power out there and needs to be on the right side of this.

Then there is of course the upcoming US election and Bernie Sanders shaping up as the front runner for the Democrats worries some investors. Eventually there will be an understanding that even if he would become President, many of the things he proposes are simply un-implementable.

However, the number one reason for this correction is that it was simply overdue. Too much printed and borrowed money propping up the markets can only last that long.

The adjustments I have made to the portfolios are done differently from client to client and have different purposes. In most cases they are more a rebalancing process. If you had let’s say a 60% Equity – 40% Bond allocation 2 years ago, that would have shifted heavily in favor of the Equity portion within the last 2 years and make your portfolio more risky. That means some of these Equities need to be shifted into bonds to restore the 60-40 allocation.

I think the next few weeks will be unusual volatile but not straight down anymore. I think we could see a mix of large upswings but also more large declines. As always media is exaggerating the correction, creating fear and will exaggerate the upswings, creating a false sense of security and confidence. I think that caution and calculated risk will prevail as always.

As always, there are no fees or charges for any of the changes I have made.

Have a great week and I am more than happy to answer any questions you may have.