22 Mar 2020
Hello reader!
The human and economic cost of the viral outbreak continues to mount. The stock market has adjusted rapidly to a looming recession which will now occur as the first and second quarters are going to show negative GDP growth. The key question remains if the economic fabric will be sufficiently preserved to allow a quick rebound in the second half. We don't know yet and it's hard to predict. Unfortunately, the news is going to get worse before it gets better. But we do know there is a major stimulus package that is imminent which will assist people and businesses
This is not how one expected to start the year. Even though uncertainty is always inherent in the market, the present situation is quite unmatched. The new environment was discussed in two recent postings:
Healthcare In A Bear Market
What’s Ahead For The Stock Market
The S&P 500 has dropped -33% at its worst so far, while the small-cap stocks have declined nearly -43%. This remains a time when one needs to keep market exposure low. The model portfolio exposure is presently at 3 positions or 30%. All the positions are in healthcare, which has declined relatively less than the broader market.
At the same time, the stock market is at extremely oversold levels and the stimulus can potentially provide some relief, even though short-lived. The model portfolio has experienced many ups-and-downs over the years and negotiated them successfully. The present situation will eventually create significant opportunities, and patience is required.
We will continue to keep you updated on any changes in the model portfolio.
For any questions, kindly contact us at support@GraycellAdvisors.com.
Wishing you good health!
Sincerely,
Graycell Advisors