Investment Update: March 24, 2020
On behalf of Affinity Capital, thank you for the opportunity to serve you during these most difficult times. While portfolios across the world have seen difficult times, we are generally pleased in our management thus far and believe we are well-positioned for a recovery.
Affinity Capital: 10 Questions:
- What is the operational status of Affinity Capital during COVID-19?
- What is the operational status of Charles Schwab Institutional during COVID-19?
- I am still worried that the markets will continue to decline – should I sell and wait to reinvest?
- Will there be a recession?
- How would a recession affect my portfolio?
- As of today, the markets appear to be looking for a “bottom” – are we there?
- What about my 401k?
- I have other investment accounts or old 401k money that is unmanaged – what do I do?
- I keep hearing radio shows and commercials promising “market returns without the risk” – sounds too good to be true, especially in a market like this – is it?
- What can we do during this time of both market turbulence and stay at home requirements?
Bonus: Do you accept referrals? Yes.. and thank you!
What is the operational status of Affinity Capital during COVID-19?
Both the Houston and San Antonio offices are fully functional, as are home-based office capabilities for our staff. The financial industry is one of 16 critical infrastructure sectors identified by the National Cybersecurity and Infrastructure Agency (CISA) and therefore exempt from mandatory stay at home orders. We nevertheless are prudent in our activities between home and office as we fully serve our clients.
What is the operational status of Charles Schwab Institutional during COVID-19?
Our chosen custodian, Charles Schwab Institutional (separate from their retail branches) continues to fully operate. As the third largest asset manager in the nation with over $3 trillion in assets it has multiple locations and resources to operate confidently.
I am still worried that the markets will continue to decline – should I sell and wait to reinvest?
No. Although still very fluid, we see early signs that we may have weathered the major brunt of this storm. Even if the markets were to continue falling, we believe a recovery would bring them back to today’s levels and continue to move up from here.
From our February 28th Update:
- … predicting a hard bottom is impractical, so we rebalance and add to some equity positions during a decline. Rather than go to cash, we have increased our bond allocations to over 20%. We will continue to both rebalance and draw from our bond funds to ease further into equities as a clearer picture emerges.
Our early adjustments to your portfolios has been an advantage in relation to the overall markets. As you have seen from the many trade confirmations you have received, we have rebalanced often during this decline. While this has created more equity exposure during the more recent declines, it has positioned us well for the market recovery.
Will there be a recession?
We believe so. However, as of today, we think it could be shorter and not as deep as a normally occurring business cycle recession. We stress our opinion is “as of today”. The next few weeks will provide much guidance. Note: Not surprisingly, the definition of “recession” can vary. Generally, two consecutive quarters of declining or negative GDP - Gross Domestic Product.
How would a recession affect my portfolio?
A recession is a normal part of any economy. Whether part of a normal business cycle or event driven such as COVID-19. Over a full recessionary cycle, markets may underperform for a period but when you include the period of historical out-performance during the recovery, it is very manageable. There are allocations for all types of markets – another plus for professional portfolio management.
As of today, the markets appear to be looking for a “bottom” – are we there?
We see some data that may indicate the Dow is trying to find some stability in the 18,000 to 20,000 range but it remains day to day for now. Even if another “shoe were to drop”, we believe the markets would recover back to current levels. Therefore, to try and pick a bottom at this stage is not reasonable. The professional approach is to continue to rebalance as the markets dictate.
What about my 401k?
- If possible, increase your contributions during this weakness.
- Be sure to rebalance your portfolio
- Please feel free to call us for guidance
I have other investment accounts or old 401k money that is unmanaged – what do I do?
We believe this is an opportune time to consolidate assets for better management as well as simplifying the administration of multiple accounts. Feel free to call and discuss.
I keep hearing radio shows and commercials promising “market returns without the risk” – sounds too good to be true, especially in a market like this – is it?
In our opinion – yes! We do not say they are completely without merit but we have a saying that “insurance products are typically sold to a consumer and not bought”. Over decades of being a licensed insurance agent, I have yet to find an annuity owner that fully understands both the pros and the cons of these products.
If interested, we also have these products available. Ask us.
In the right circumstance for a fully informed consumer, they can be suitable and in your best interest. We will explain the fees, caps, spreads, limitations and estate ramifications of potentially leaving your hard earned assets to an insurance company or your heirs.
What can we do during this time of both market turbulence and stay at home requirements?
- We encourage you to reach out to us to discuss your investments and concerns.
- Begin or continue your comprehensive financial planning with Affinity Capital.
- A great time to review financial related statements such as:
- Other investment account statements
- 401k accounts
- Life insurance or annuity statements
- Social Security statements
- College accounts
- Is your “Will Package” up to date?
- Will
- Durable Power of Attorney
- Financial Power of Attorney
- Medical Power of Attorney
- Directive to Physician (Living Will)
- HIPPA Authorization (Privacy)
- Health Insurance Portability and Accountability Act
- Review Trust Documents / Partnership Agreements etc..
Affinity Capital can coordinate with you, your Estate Planning Attorney and your CPA.
Do you accept referrals?
Yes. This is an obvious request to ask for a referral of family, friends or co-workers. We know how valuable your recommendation is and promise that we will serve anyone whom you refer to us with great care and thankfulness for entrusting that responsibility to us.
We appreciate the numerous referrals we have received in just the last few weeks. As family and friends have shared stories of management, communication and service, we have been pleased with our comparisons within the financial industry.
Thank you !
As always, please feel free to call if we may assist you in any way.