Every day is a roller-coaster with the COVID-19 virus – and we expect that to continue. With the news about closures growing, there will not be a shortage of negative headlines. We expect to see the positive case numbers grow as the virus spreads, and with that, we can expect some troubling economic data to emerge over the coming months. We won’t be surprised to see the unemployment rate rise led by the hospitality industry, as well as see a contraction in overall economic activity in the coming Spring months.
However, there will also be positive headlines and moments to celebrate. The federal government is coming together to put a package in place that could exceed $1 Trillion in new spending and include money for struggling Americans, as well as small businesses and corporations. While the federal government is working on this part of the problem, private American healthcare companies are being innovative and trying to create treatments, cures, and vaccines to fight this virus.
All the news headlines are affecting our personal lives and we are making changes in the way we live. By now, we are all aware of the steps we can take to slow the spread of the virus or shield ourselves against it, including washing our hands frequently and avoiding touching our faces.
These are steps we can take to protect ourselves, but the principles can be applied to our portfolios. If you are concerned that your portfolio is “sick”, call your advisor… not your neighbor. Everyone’s portfolio is different and behaves differently. At CPS, we know that times like this will occur, but we don’t always know when.
In order to prepare for stressful times, we construct portfolios comprised of strong companies that vary in business and location, and whose products are desired through economic cycles. Continue to understand why you own what you own and “wash your hands” of the fear. Above all, try to avoid touching your portfolio. Your portfolio was created to get you through these tough times, as well as the easy ones.
Our country has survived two world wars, the great depression, the tech bubble, a financial crisis, oil embargos, several different strains of the flu, and other diseases. We are confident that we will also conquer this new challenge.
Michael Scott | MBA, CFA
Senior Portfolio Analyst