{"id":242,"date":"2020-03-23T15:12:00","date_gmt":"2020-03-23T15:12:00","guid":{"rendered":"https:\/\/401advisor.com\/?p=242"},"modified":"2021-09-30T15:17:09","modified_gmt":"2021-09-30T15:17:09","slug":"covid-19-update","status":"publish","type":"post","link":"https:\/\/401advisor.com\/?p=242","title":{"rendered":"What You Do, Depends on What you Own"},"content":{"rendered":"\n
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March 23, 2020<\/p>\n\n\n\n

Dear Clients and Friends,<\/p>\n\n\n\n

After another weekend of COVID-19 news I\u2019m sure we are all on edge as we wait to see what the market has in store for the upcoming week. First and foremost, regardless of my opinion or anyone else\u2019s, no one knows what to expect. This is new. We\u2019ve never seen this before. But what I can say is that I cut my teeth in this business during the 1987 market crash and have been guiding clients since, through the Asian Crisis, junk bond collapse, tech wreck and the 2007 \u2013 2009 Financial Crisis. I\u2019d like to think I have learned a thing or two! Below I\u2019ll outline some of the steps we\u2019ve taken and are prepared to take.<\/p>\n\n\n\n

But first, for clients a house keeping note. In keeping with Governor DeWine\u2019s announcement today we will be intermittently working in the office and from home in the coming days. We will not be seeing clients in the office. However, our phones will be forwarded if no one is in the office, and we are well prepared to handle all administrative tasks via email or regular mail. Jim and I will be in constant contact assessing the situation and our investment policies.<\/p>\n\n\n\n

It\u2019s All About Strategy<\/strong><\/p>\n\n\n\n

The media would have you believe that the only decision to be made is whether to continue to hold your investments or to sell (and soon I hope, when to buy back in). This is a very simplistic, and in our opinion very harmful for most investors. How one reacts to a market sell off depends on\u2026and no surprise here\u2026on your overall investment strategy. I have preached how important strategy is to the investment process for years, and yet I see very little evidence of it in portfolios we review from outside our practice. A client recently stopped in and asked for advice on his retirement plan. I reviewed what he had and basically said he couldn\u2019t sell it fast enough, even after a very substantial decline. When I looked at the fund\u2019s holdings 8 of its top 10 holdings were in the energy sector, and not the large solid cash flow companies but the smaller debt burdened frackers. I think a couple may end up in bankruptcy. He hesitated as \u201cit did so well last year!\u201d I explained that he did a good job in picking the fund, but failed to develop a strategy, i.e. pick a point to take profits and rotate into something more retirement appropriate. He only implemented 1\/2 a strategy!<\/p>\n\n\n\n

This is where strategy and timing come into play. We have not sold a majority of our holdings. Why? Because, while no one could predict the COVID-19 breakout, our process identified the energy sector as being financially weak back in February. We sold our energy ETF that we held in some portfolios before the market dropped. We sold financials at the same time. Two of the hardest hit sectors over the last month. We have been focusing what we buy for two years now on high quality high yielding dividend paying stocks. Many companies have increased their dividend payouts for 50 years! These are cash flow rich companies that can weather a downturn. I\u2019m not so anxious to sell quality. We went into this downturn holding quality. Our strategy has been to collect our dividends throughout and and plan ahead for the eventual turn around. We\u2019ll see how we do, but I\u2019m pretty confident in what our accounts will look like in a year from now. We won\u2019t have dividend cutters, we won\u2019t have bankruptcies in our holdings. What we will have will be portfolios full of high quality companies that are back in business as usual mode.<\/p>\n\n\n\n

As the crisis has unfolded we have raised a bit of cash in some portfolios. We\u2019ve been short off and on in some, but our big focus is what we do when the market seems to be ready for a rebound. We\u2019ve created two portfolios that we feel can maximize our returns during a recovery without taking on undo risk. We\u2019ll be selling in non-qualified accounts to lock in losses for tax purposes (may as well let the IRS give us a little money back!) and rotating into those \u201crebound\u201d stocks I mentioned earlier. We\u2019re not just staring at the TV, frozen with indecision as those without an investment strategy are.<\/p>\n\n\n\n

What to do Now<\/p>\n\n\n\n

Unless you are holding stocks of low quality, high debt companies or junk bonds it\u2019s probably too late to sell now. If you\u2019re not a client feel free to schedule a time to discuss your portfolio, goals and an appropriate strategy for your circumstances.<\/p>\n\n\n\n

For clients feel free to call or email with any questions or concerns. We don\u2019t have all the answers but we do have a plan!<\/p>\n\n\n\n

And for everybody here is a reason for optimism, an article on possible treatment: https:\/\/www.livescience.com\/chloroquine-coronavirus-treatment.html<\/a><\/p>\n\n\n\n

Stay safe.<\/p>\n\n\n\n

Bill DeShurko and Jim Kilgore, CFP<\/p>\n","protected":false},"excerpt":{"rendered":"

March 23, 2020 Dear Clients and Friends, After another weekend of COVID-19 news I\u2019m sure we are all on edge as we wait to see what the market has in store for the upcoming week. First and foremost, regardless of my opinion or anyone else\u2019s, no one knows what to expect. This is new. We\u2019ve […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":""},"categories":[3],"tags":[],"class_list":["post-242","post","type-post","status-publish","format-standard","hentry","category-finance"],"_links":{"self":[{"href":"https:\/\/401advisor.com\/index.php?rest_route=\/wp\/v2\/posts\/242","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/401advisor.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/401advisor.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/401advisor.com\/index.php?rest_route=\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/401advisor.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=242"}],"version-history":[{"count":0,"href":"https:\/\/401advisor.com\/index.php?rest_route=\/wp\/v2\/posts\/242\/revisions"}],"wp:attachment":[{"href":"https:\/\/401advisor.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=242"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/401advisor.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=242"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/401advisor.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=242"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}