Coronavirus (Again)

 

By:  James C. Denton, CFP®, Managing Partner

March 17, 2020

 

We’ve had a couple of phone calls asking about our office operating status and intentions so let me start with a report on our continuity of operations plans.  As of today, we expect to remain open for normal operations.  Obviously if some kind of government-directed stoppage should occur, we would comply and close, but we are not a high traffic operation, so there is neither a need to close down, or a greater than normal risk of exposure to us or our customers.  Barring government direction, we will be open and available for your calls.

 

If we were to be closed, it would only be to walk-in traffic.  Modern technology allows us to operate from just about anywhere, and we have continuity of operations plans to address any type of disaster.  If it became necessary to close one or both offices, we would set our telephones for call forwarding to either Aaron or myself, so that we would continue to be available to take your calls and there isn’t much I can do from my desk(s) that I can’t do from the parking lot of a McDonalds somewhere.  If I have a wifi signal, I’m open for business, and my cellphone has a hot-spot capability so if the markets are open, so am I.

 

Insofar as the economic and investment climate is concerned, obviously we are in uncharted territory.  You’ve heard the historic comparisons, the wild range of potential outcomes, and all the speculation from a lot of people who really don’t know what they are talking about.  The fact is no one really knows for sure how this event is going to play out and speculation is not valuable for anything beyond renting eyeballs and selling advertising.  Adding to the problem is a lot of misinformation, some intentional and some politically motivated that adds to rather than calms our natural concerns and fears.

 

We are a well-resourced, and a resourceful country, however.  We have very intelligent, well-educated and experienced professionals with extensive infrastructure supporting them, and I am confident the people responsible to do so will figure this out.  I can’t tell you it won’t get worse before it gets better, in fact it may very well do so, but I am confident that we will be writing the after-action reports and well into recovery mode by the end of the year.

 

I know from experience that gaming events of this nature is a fool’s errand.  We are always way too far into a correction or bear market before we recognize it for what it is sufficiently to take any meaningful avoidance actions.  At this point we’re pretty much committed to riding it out. 

 

This doesn’t mean we are doing nothing like a deer in the headlights.  I have often been asked in various ways whether “standing pat” in these situations is always the right approach, and as a matter of fact it isn’t.  What we have been doing is looking at our holdings and making situation-driven decisions on individual holdings and individual accounts.  We have already unloaded everything we owned that we don’t expect will do well in recovery.  Virtually everything we own right now, we like for the long term, and if you own something about which I can’t say that, you and I have already discussed it.

 

The next step in this process is to look at all the good stuff we own and categorize as “good”, “better” and “best”.  So you will be seeing transactions where we may be selling something that we (and you maybe) really like because that is our source of funds to buy something that we like even better.  Remember, WE WILL COME OUT OF THIS AT SOME POINT and when we do, some companies are going to recover faster than others.  I broke my crystal ball about two weeks ago when it lied to me one time too many so I can’t promise we’ll make the right decisions, but we have a pretty good track record in prioritizing among limited choices and that’s really the task right now.

 

Bottom line, your team, your friends, your advisors at DFS Advisors are showing up for work every day, we’re paying attention to what’s going on, and we are as on top of things as much as anyone can be in these “uncharted waters”.   Hang tough, you’ll be glad you did.

 

The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by LPL Financial. The material is for informational purposes only. All performance referenced is historical and is no guarantee of future results.

The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.

This information is not intended to be investment advice for any individual.  You should consult with your personal investment advisor before making any decisions based on this material.