Tellone Management Group – Market Update (March 13, 2020)
Before discussing markets and financial news, we at Tellone Management Group want to encourage all our clients to stay safe and healthy. During this outbreak of COVID-19 everyone has been encouraged to take extra precautions regarding their health and wellbeing. Out of an abundance of caution, we have elected to limit in-person client meetings. We remain available over the phone, via email or even a scheduled web conference. We appreciate your patience and understanding in these matters.
The stock market is officially in bear market territory, meaning we’ve experienced a 20% downturn from recent highs. Concerns about the COVID-19 pandemic and oil price wars between OPEC and Russia have caused significant market downturns in short order.
We understand that news about record drops in the Dow Jones, or trading being temporarily halted due to the steep selloff on the stock market can cause anxiety. Looking at your portfolio during a downturn can be disheartening to say the least. No one knows for certain how long or how impactful this current downturn will be, or even if it will cause a recession, but we do have prior data to help establish some estimates.
While a recession is not necessarily guaranteed in the US at this time, recent data has elevated the odds from 20% to 50%. The chart above illustrates that from the start of a recession to a full recovery is generally between 12-18 months, with the great recession in 2007 being the outlier. While we expect that certain industries may experience more volatility than others, the US economy remains robust, capable of bouncing back from the economic effects of COVID-19 and the turbulent oil market.
What are we at Tellone Management Group doing during this downturn?
Over one year ago, we made changes to all our accounts under management, reducing risk levels by increasing fixed income positions and rebalancing accounts to keep their risk levels in line . Even with this reduction in risk, our strategic stock selection led to strong appreciation during 2019. More recently, that risk reduction has helped shield our client’s portfolios from some of the worst of this downturn. Our rules-based investing system is designed to help take the emotion out of our investment decisions, and provide stability during any market volatility.
Patient investors who are able to take advantage of longer time horizons will utilize this time to purchase quality stocks at reduced prices. We aim to look past the short-term market movements and focus on our clients’ long-term goals. At Tellone, we will continue to vigilantly monitor the market situation, and determine the best course of action for our clients .
We are here to help assist you. Please contact us with any additional questions or concerns you may have.