As a result of current and foreseeable circumstances we wanted to provide you with our communication plan moving forward.
The team at Park City Family Office will be providing daily updates to help you interpret what is going on in the financial markets. We believe that the vicissitudes in investor sentiment will continue to as the COVID-19 crisis unfolds. Our combined experience navigating financial markets through multiple historic crises allows us, at Park City Family Office, to provide an informed and clear-eyed perspective.
The 30% correction in the broad market indices is clearly reflective of diminished earnings expectations due to colossal disruptions from COVID 19. That said, the impact of the virus, while tough to peg from a timing and severity basis is not a systemic change in fundamentals. Earnings will recover and stocks are likely to follow. The logical approach would be to avoid selling during times of panic and to potentially begin to average into positions that increase equity exposures. Long term investor may heed Rudyard Kipling’s sage advice to “can keep your head when all about your are losing theirs”
03.16.2020 in bullet points:
1. The Fed cut rates 1% to near zero last night. They have also taken measures to provide liquidity to help banks with business and household lending. Note that this is not a banking crisis like 2008. While the Fed is providing liquidity, it is to help firms in the non-financial economy, not the banks.
2. Stock prices have moved lower today on continued worries about the economy and corporate earnings despite the Fed moves on Sunday night. On a positive note- even though the market has fallen, liquidity in the markets has been orderly; there have been no problems buying and selling stocks.
3. Bond prices are becoming more attractive for tax-free and corporate bonds. While it may make sense to look at some issuers, given that we expect more volatility, it could be that yields go even higher.