An Update from GMFG 3-26-20
Wow! Another week that brings both good and bad news. Starting with some of the bad:
- Worldwide acceleration of the COVID–19 spread. Cases grow to 528,000 from 80,000 1 month ago
- In the US, 200 million people in 21 states, 47 counties, and 14 cities are being urged to stay at home
- Unemployment soared to 3.3 million for the week of March 21 blowing away previous record of claims filed in a week of 695,000 claims from 1982
Now, focusing on the good:
- On Monday, March 23, The Federal Reserve unleashed its boldest effort yet to protect the U.S. economy by helping companies and governments large and small pay their bills and survive a devastating crisis
- This week, the Senate passed a $2.2 trillion fiscal stimulus relief package
- The Dow Jones finished its biggest 3 day rally on Thursday, March 26th since 1931, up over 20%
What have we accomplished this week? As mentioned, most of us are working from home. I have two teenagers and a college student so… I am happy to be at the office. Also, and more importantly, with the massive news flow, we continue to keep your best interest in mind. With the indices like the Dow Jones at times having year-to-date negative returns of over 30% this year, we have focused on managing volatility. As Bobby mentioned last week, we continue to hold both above average levels of Gold and cash thus minimizing these negative returns. That said, we have continued to act on buying opportunities this week. We focused on the technology sector. Low growth, low inflation, and low interest rates will continue to favor growth stocks as we come out the other side of this.
What will the next week or two bring? For all of us, it means more time with either ourselves or family at home. Last night I watched a VHS tape with my college student that I had made when I was his age. Tip of the day – destroy that tape if you have one at home – Brutal! In terms of the market, we see the euphoria of this fiscal stimulus being replaced with the reality that the economy is going to take a significant hit. This will result in more volatility with a chance of re-testing this year’s lows. However, Goldman Sachs still predicts after testing lows this year the S&P will finish at or above 3,000 or 14% + above Thursdays close. So, as we see further drawdowns in equity prices, we will likely continue adding to high conviction ideas.
So, in summary, we continue to look for opportunities that will help you meet your long term goals. Also, while it will take time for our lives to return back to normal, we will get there! In the interim, be safe and if you decide to watch an old VHS tape, wait until the kids go to bed.
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