It was the worst quarter for stocks since the financial crisis of 2008, with the S&P 500 down 20% and the Dow off 23%, collapsing from record highs in February with a speed and ferocity not seen since the one-day drop of 22.6% in October of 1987. Quarantine restrictions for most of the country have crushed the economy, with estimates of the unemployment rate soaring from February’s low of 3.5% to anywhere from 15-30%. Consumer confidence is plummeting as job losses, housing prices and savings are negatively affected.

However, with the indiscriminate selling in the markets has come opportunity, as the market has swiftly discounted a Mad Max, dystopian scenario, and policy responses have been unprecedented in their scope and immediacy.

The Fed cut rates early and aggressively, instituting a multitude of other measures to insure the stability of the financial system. Congress responded in near-record time with a $2T cash infusion labeled as a relief not stimulus package to support businesses of all sizes, as well as the nearly three in ten Americans who have no emergency savings. More is highly likely to come, and soon.

With quarantines likely to remain in place through April and much of May if not June, the likelihood of deeper and longer-lasting damage to the economy grows, dampening what should be a strong stock market recovery in the latter part of this year as people get back to work and the economy starts to normalize in the third quarter.

However, the unemployment rate will not likely return to the low pre-pandemic levels until sometime in 2021 as businesses re-evaluate hiring needs. That, plus consumer caution around spending levels given the sudden shocks to income and savings, will also work to restrain the recovery. It may be some time in 2021 before we see a return to full economic health.

So, what do we do as investors and individuals who have others who advise and manage their personal finances for them, as we do here at BD8 Capital Partners?

While the stock market may or may not have bottomed and will remain volatile given continued but short-term uncertainty as to earnings, numerous buying opportunities have opened up given panicked, indiscriminate selling. At BD8 Capital, we have slowly and carefully been putting cash to work in stocks we know well and at prices we have not seen for a long time: companies with long runways of growth, strong balance sheets, expert managements, whose earnings may
be nicked in the short-run, but in the long run should perform well. We have also been trimming stocks making new highs (e.g., Netflix, Zoom) while nibbling on some stocks too expensive to buy before, confident the market will be higher by year-end.

We are also recommending rebalancing some portion of bond portfolios into stocks given their relative performance and valuations. The S&P 500 dividend yield is almost four times the yield on the 10-year US Treasury note and is 1% higher than the 30-year US Treasury bond.

If you would like to discuss your financial planning needs, the health of your portfolios and whether you are well positioned for what lies ahead, please feel free to contact us at BD8 Capital Partners.

Hoping you all stay safe and healthy.

Warmest regards,
Barbara
Barbara Doran
Managing Member
Chief Investment Officer
bdoran@bd8cap.com
BD8 Capital Partners LLC
299 Park Avenue, Floor 21|New York|10171
Cell: 917-733-7644
Office: 646-885-5682
Fax: 917-580-6882

The content of this article is for informational purposes only and should not be considered a recommendation of any particular security, strategy, investment product or investing advice of any kind. There are risks associated with investing, including the entire loss of principal invested. Past performance does not guarantee future results. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the opinions of Spire Wealth Management, LLC, Spire Securities, LLC or its affiliates.

Spire Wealth Management, LLC is a Federally Registered Investment Advisory Firm. Securities offered through an affiliated company, Spire Securities, LLC a Registered Broker/Dealer and member FINRA/SIPC

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