Random notes during the COVID pandemic
Regular readers of our column are probably aware of the fact that for nearly a quarter of a century, we at Fagan Associates have been keeping a journal pertaining to matters, both business and personal.
During periods of market stress, like the one we are currently experiencing, it has been helpful to review past entries to act as a potential guide. In addition, we continue to post for future reference. It is the latter that we wrote during the COVID Pandemic that you will find below. Hopefully you will find them useful to help you deal with the current environment.
For context, the current pandemic has had a profound impact on the health and financial lives of Americans and for that matter people all over the world. From a health perspective COVID-19 began to spread from its epicenter in Wuhan, China around the first of this year and as a result began impacting the U.S. financial markets as they were setting record closing highs, toward the latter part of February. From that closing high set February 19, over the next twenty-four trading days, by March 23, the S&P 500 shockingly fell 33.92%, only to then make an unexpected and abrupt about-face, rising 40.88% to now be within an earshot of that high set in February.
You will note that some of what follows comes directly from us and some from what we were listening to or reading at the time.
March 9 – “Unless you are quite old and intend to spend the last dollar in your portfolio over the next year, would you always be rooting for endless all-time highs. Corrections are cleansing and allow for future gains.”
“It is during volatile times like these that advisors add value.”
April 28 – “technology companies are becomes more and more a fabric of our lives similar to industrial companies a half century ago.”
May 4 – “there are potentially three phases to this market cycle and the potential for a retest of the March 23rd lows. This includes optimism regarding the success of the economic reopening; planning for an optimal outcome and then doubting the success of the reopening. At some point in time the financial markets will have to deal with the third phase, ‘doubting the success of the reopening.’ However, this does not imply a complete retest of the prior lows. Perhaps just a portion of the gains from the bottom will end up having been at risk.”
“You don’t have to make recover your losses the same way you initially lost it. America is going to exit this crisis to a whole new world. Your portfolio should reflect this reality and not the pre-COVID 19 one”
May 8 – “if you seek ‘comfort,’ you are in trouble. You have to learn to be comfortable being uncomfortable. In a sense, comfort and safety are your enemy.” (David Eiswert, Portfolio Manager; T. Rowe Price Global Stock Fund)
May 29 – “I agree with Andy Grove (former CEO of Intel Corporation) who wrote a book entitled, Only The Paranoid Survive in that it is ok to be paranoid! Think about it, if you are only correct once, it will have paid off and perhaps saved your business.”
“Bull markets are born on pessimism, grown on skepticism, mature on optimism and die on euphoria (legendary investor, Sir John Templeton).” We doubt we have reached the euphoric stage.
June 8 – “the things we fear the most are often the things we should fear the least. It’s irrational, but it’s what makes us human. And if we’re able to conquer those fears, then there is nothing we’re not capable of.” (from The House in the Cerulean Sea, by T.J. Klune)
July 9 – “the pace of activity in client portfolios does not have to match the frenetic pace of the news flow / news cycle. Resist the urge.”
“We may not be comfortable with the valuations of the Apples, Microsofts and Amazons of the world. However, we are comfortable with their projected rates of growth as compared to companies in other industries and with the relative valuations. If they are not going to lead the market, nothing is – and so we believe they will continue to outperform.” And finally, a pre-COVID 19 quote (March 22, 2018), “try to be a rainbow in someone’s cloud.” (Maya Angelou).
Take care. Stay healthy and be well.
Please note that all data is for general information purposes only and not meant as specific recommendations. The opinions of the authors are not a recommendation to buy or sell the stock, bond market or any security contained therein. Securities contain risks and fluctuations in principal will occur. Please research any investment thoroughly prior to committing money or consult with your financial advisor. Please note that Fagan Associates, Inc. or related persons buy or sell for itself securities that it also recommends to clients. Consult with your financial advisor prior to making any changes to your portfolio. To contact Fagan Associates, Please call (518) 279-1044.