Over the past two months, the coronavirus brought with it many economic “firsts” for investors. For example, for the first time:
- Significant components of the economy were forced to shut down;
- The US government began purchasing corporate investment grade debt and a subset of high yield debt;
- Weekly jobless claims were in the multi-millions for four consecutive weeks; and
- The price for a barrel of oil went negative as storage has become increasingly scarce.
There are other “firsts” we could add to this list, and we bet the list will only grow in the coming months. In fact, we believe there will be many eye-grabbing headlines over the next 12 months related to company layoffs, the cutting or suspension of dividend programs, and bankruptcy filings.
While many of these events will cause concern, we have taken steps that we believe strike a good balance between defense and offense in our clients’ portfolios. On the defensive side, we have reduced exposure to companies that we feel will be permanently impaired by this recession. Additionally, in many of our discretionary accounts, we have increased cash balances and added a small exposure to gold where warranted. On the offensive side, we have continued to maintain exposure to high quality companies and have added to positions when we felt that the price was right. Owning high quality companies has compounded owners’ capital in the past, and we believe it will continue to do so for many years in the future.
We understand that everyone’s investment time horizon and risk tolerance is unique. If you have had any changes in your financial picture or would like to discuss your portfolio, please feel free to reach out to us.
All the best,
The Gamble Jones Team