Commentary on our recent strategy changesSubmitted by S. R. Schill & Associates on March 27th, 2020
As you know, this past Monday, we executed our strategic decision to concentrate more of your assets in what we call “stalwarts”, or companies with the strongest competitive and financial positions and which we believe are best positioned to weather the current uncertainties and thrive upon a return to normalcy. We did this for a couple of reasons: 1) increase portfolio concentration in higher quality equities; and 2) be better positioned in stocks of the highest quality as a protective measure if the COVID-19 outbreak and economic downturn are more prolonged than we expect. Based on what we have seen so far, the strategy appears to be working as we expected. During the three-day rally in the stock market earlier this week, your equity positions fully participated in the rally based on comparative indexes we looked at. This is encouraging and it appears we are on the right track.
Looking forward, while none of us can forecast the market in the near term, we believe it’s probable that the stock market may remain volatile for a while and we would not be at all surprised to see a retest of the market lows in the coming weeks. History shows that sometimes these retests can take the market below the previous low. That said, it is encouraging that the Federal Reserve, the CDC, Congress, the President, and federal and state governments are all moving swiftly and taking concerted actions to address the C-19 issues. It is within this context of an economic slowdown and expected volatile markets that we made the changes on Monday which we believe should provide the highest probability of both capital preservation and a successful outcome when we come out on the other side of this unprecedented event.
As always, if you have questions or concerns, please do not hesitate to contact us.
S.R. Schill & Associates