We've Planned For This

Ok, we didn’t plan specifically for the Coronavirus.  But over the past year or so we have spent a lot of time with our clients going over their risk tolerance and their asset allocation to make sure everyone was comfortable with the amount of risk in their portfolios. 

This is the first “bear market” since the great recession of 2008-09.  Over the past year we have rebalanced many client portfolios, increased cash and tried to prepare people emotionally for the next downturn which has finally arrived.  We have listened to countless conference calls regarding the impact of the virus on health, the economy and the markets.  The narrative has changed dramatically over the past few days.  Sporting events, conferences, schools and businesses are being temporarily closed to try to stop the spread of the virus.  This is important because the healthcare infrastructure can only support so many people and stopping the spread is critical for all of us to get back to our normal lives.  Our hope is that the rate of infections around the globe will somewhat mirror that of China, which has seen a dramatic drop of new infections over the past few weeks and people are returning to work and school.

We have reviewed our models and will be making a few changes today to take some longer-term profits from two bond funds and reposition those profits into a short-term Government Treasury fund and increase cash.  These changes will allow us to take advantage of stock market volatility and reposition a portion of those assets back into stocks at lower prices.  In our opinion, investors can avoid big issues if they do not have to sell investments that are low to cover distributions.  All clients who are taking distributions have a significant amount of the portfolio invested in bonds and cash and should avoid needing to sell stocks that are down.  We will be reviewing portfolios that are not in the models to make similar types of adjustments if necessary.

We know these are very unusual and scary times, but over the past 38 years our firm has seen many different market cycles and many difficult situations.  We believe that our time-tested strategies of creating balanced, diversified, risk-appropriate portfolios and not panicking will continue to serve our clients well into the future.

Many of you have probably already read up on how to keep yourself healthy and safe.  Here is the link to the Centers for Disease Control and Prevention:  https://www.cdc.gov/coronavirus/2019-ncov/index.html  We believe it is a great resource.  Please refer to resources from healthcare professionals and NOT social media or the news outlets for your information on the Coronavirus.  There is so much misinformation out there, which is not helping keep people safe.

We want you to know you can always call or email us with any questions or concerns.  We are here to help get you through this difficult time. 

The Bond&Devick Team