As this letter is being penned on this first day of April the sun is shining bright and the temperature is mild, allowing one to get out of the house and take a walk in the neighborhood or in an area park. Given the happenings of the past five or six weeks, for many of us getting outside and enjoying nature is one of the few things we are still able or permitted to do.
This letter will take on a different tone than many letters of the past. We all are very aware that the world changed in dramatic fashion a month or two ago when COVID-19 first started to be taken seriously. A disease that could spread from country to country and change the very way that people conduct their daily lives. The fall out has been massive and fast. U.S. stock markets were hitting new highs as late as February 19th and we were remarking in the shop how two of the largest, well known technology stocks were going up by $5 per share just about every day. The good times were rolling.
Fast forward to the present and the ball game has completely changed. COVID-19 is spreading quickly and is expected to continue to do so until at least mid- April, when the social distancing we have been practicing may start having a positive impact. Even then we won’t know if it is safe to resume some semblance of normal activity. The thought is that warmer weather may slow the disease, but as we speak it is spreading rapidly in Miami where the weather is practically summer- like every day. We also don’t know when a viable vaccine will come to market, but most infectious disease experts opine that a vaccine will likely not be ready for up to a year. Given this backdrop, the S&P 500 stock index dropped a stunning 35% in four short weeks, the largest drop of that magnitude on record for that short of a time frame. Having been caught somewhat flat footed by the 2008-2009 crisis, our government and Federal Reserve moved quickly and crafted a relief package totaling over $2 trillion, as well as cutting short term interest rates back toward zero. This stabilized the market for a few days, but the long- term ramifications of the package are unknown. What we do know is that most local businesses are shuttered and may remain so for months to come. Companies and entire market sectors that were thought to be of quality and well financed may in fact be at risk for their very survival as the future months and weeks elapse. Our country hasn’t encountered anything like this in our lifetimes, unless you are 102 years old. None of us know exactly what our country will look like once we come out the other side. We are likely to look quite different than what we are all used to today. While we can’t predict the long term impacts the virus’ fallout will have on the domestic economy, our equity allocations include a great many of the most well capitalized companies in the world. We feel it’s these types of firms that are best positioned to withstand any period of prolonged economic stress.
I hope we can use the weeks and months ahead to realize how good we have it in the United States of America. To pull together, unite, and all work toward the greater good. Check on a neighbor in need. Contact a friend we haven’t seen or contacted in a while and make sure they are doing ok.
Although it has been around for 10 years already, I’m getting reacquainted with Facetime. If it isn’t on your smart phone’s screen, you can download it from the App Store that also should be on your screen. Even for the technologically challenged like me, it was easy. Tap on the Facetime icon and a list of your contacts should come up. Tap the one you want and in a few seconds your friend’s face should appear, and you are ready to commence your video chat. Another way to connect is via Zoom Video Conferencing or GoToMeeting on your home PC or laptop. If you have a webcam on your computer screen display you are good to go. A great many of us have experienced “Zoom Life” over the past several weeks, whether it’s a virtual business meeting, a “coffee hour” with friends or even a community worship service; we are all doing the best we can to stay in touch and to keep ourselves and our friends and neighbors safe at the same time.
In closing, the weeks ahead are likely to be very difficult for the economy and our financial markets. We are all in this together and will get through this together.
We thank you for the opportunity to work with you over the past years and are honored to be able to do so.
Sincerely, your GSB Wealth Management team.