Market Bulletin: What Is After The Coronavirus (Audio Included)
March 2020
Market Bulletin: Resilience (Audio Included)
April 2020

Market Bulletin: It Takes a Village (Audio Included)

MARCH 2020

It Takes a Village

We are living in a unique period of modern history. Last Friday, President Trump declared the Covid-19 outbreak to be a national emergency and we have continued to experience uncertainty about what that means for the economy and the world.

Broadly, governments from around the world have begun a coordinated effort to support the global economy. The Federal Reserve has cut interest rates to near zero, creating low cost loans for businesses to keep up with expenses through this period of decreased demand. The European Central Bank (ECB) has announced they are going to purchase €750 billion ($818.7 billion) worth of private and public debt. Both the Chinese and Japanese central banks have also promised to continue with more economic stimulus. There has never been cooperation of this magnitude from these central banks. All are dedicated to supporting their respective economies, and in turn, the global economy. Late Wednesday evening President Trump signed into law a paid-leave bill that ensures workers will be able to stay afloat during this time of reduced employment, as well as ensuring coronavirus testing and treatment is free for all Americans. The Senate is also considering other stimulus options including a $1 Trillion proposal from the Trump administration that includes payments made directly to Americans. It takes a village to keep society running, and the global efforts are extremely encouraging for the future.

It also takes a village to invest money successfully. You know the team you have working for you here at BF&A and you can always call us directly with any concerns or questions, but we are just the front lines for you and your money. We go through a rigorous investment selection process to find the right active managers to help our clients reach their investment goals. Our all-star management team includes over 150 active portfolio managers and 400 investment analysts located all around the world. One of the most important things that we look for when it comes to investment managers, is that they invest their own money in the funds that they oversee. These managers are invested right alongside our clients, and us. That means they are invested with us in the good times but more importantly, they are invested through challenging markets as well. We have had many calls with these portfolio managers over the last several weeks and their message remains consistent---uncertainty creates opportunities for disciplined long-term investors. Our investment managers have been building up cash over the last several years and in crises times like these, they are buying companies that they have conviction in. Fear driven selloffs tend to drag everything down at the same time, even companies that are innovators and leaders in their sectors. Experienced investment managers are finding bargains. They are controlling what they can, and they are positioning themselves to take advantage of the economic recovery when it happens. And it will happen.

In spite of all the dire headlines, there are some bright spots. H.E.B. is in a mass hiring phase. Because of the increase in demand, they are looking for people to help stock their shelves overnight. Amazon is in the process of hiring over 100,000 new employees. Trader Joe’s has announced that due to an unprecedented increase in sales they are going to be giving all their employees bonuses. Individuals have decided to show support for their favorite local restaurants by ordering food for takeout, or to be delivered, or even buying gift cards to use when they are able to open their doors again. In the course of my 33 years working in the investment industry, I have gone through 3 bear markets. When we are in the thick of it, it can be hard to imagine that things will ever get better, but invariably, they do. Coming out the other side of this crises, there will be technological and medical advancements that will change the world we live in for the better. The human race is resilient. Society will continue and individuals will continue to live their lives, go back to work and keep the economy moving forward.

At the end of this bulletin, you will find a link that includes a highly informative piece written by Rob Lovelace, an equity portfolio manager with Capital Group. In it, Rob outlines both the challenges and opportunities that lie ahead of us. I encourage you to read it.

In an effort to adhere to the currently recommended social distancing standards, for now, we are meeting with clients via phone or video conference. We have the technology in place that will allow all of our staff members to remain in their homes and provide service to clients without interruption.

So for now, it is a lovely spring in Texas and the bluebonnets are a wonderful reminder of the perennial nature of life. Even with social distancing, you are not alone. We are here for you and continue to monitor the situation and your investments. We will continue to provide updates as they occur. Feel free to reach out to us with any questions or concerns that you might have. Please wash your hands and take care.