What a difference 2 weeks can make! I write this letter with the realization it was only 2 weeks ago Lisa and I returned from 5 days on the Caribbean Island of Grand Cayman. We were with 100 or so of my colleagues at an invitation only event hosted each spring for Commonwealth Financials top advisors, their spouses and families. In all, about 300 were in attendance including all the partners of Commonwealth. I’ve been lucky having been invited to this conference for roughly the past 15 years and have bonded over dinner and drinks with many in attendance at this year’s event. This is a small conference, with many attending year-after-year. A true camaraderie develops among those annually attending. In addition to the morning meetings featuring some of the best speakers in the industry, the event allows us to trade war stories, opinions, and best practice ideas with some of the most respected and brightest planners in the country. Of course, this year’s discussions centered around the economic impact of politics and the Coronavirus.
This year’s conference location was especially appealing to me. We stayed at the Ritz Carlton on Grand Cayman’s 7 mile beach, one of the finest hotels on the Island. And what an Island! Grand Cayman is not what I have experienced while visiting Islands in the Caribbean. Although beautiful, many Islands are poor, underdeveloped countries with few opportunities for their populations outside of the low paying positions in the hospitality and tourism industry. Grand Cayman is different. In addition to the usual tourism and hospitality jobs are good paying jobs in finance, banking, healthcare, and education, to name a few. The country has excellent schools, including a state of the art high school, plus colleges specializing in medicine, law and veterinary sciences and a stable, well run government. And the locals, as a rule are well educated, employed with no outward signs of poverty, crime or underdevelopment. In fact, the Island most reminds me of Marco Island in Florida.
Although a wonderful property and an amazing location, this was not the reason the location was so appealing. Grand Cayman is known for excellent bone fishing. Upon receiving my invitation to attend, I began a search for a fly-fishing guide. A little research led me to Randall Parchment. Randall is a retired biologist who spent his career at leading biotech companies in Texas and Washington State and after retiring, decided to follow his passion and guide for bonefish. I hired Randall to take me out on two days. Although Lisa is very understanding, my spending two days in class and 2 days fishing on a 5 day stay would not have left much “us” time and after 35 years of marriage, let’s just say I have learned from past mistakes. The fishing on Grand Cayman follows the tide which means fishing is from daybreak until 10am. It’s a small Island, roughly 20 miles by 7 miles so traversing the Island was not an issue. I met Randall each morning before 6am and was back in the hotel by 10:30, plenty of time for touring the Island, visiting shops or simply relaxing on the beach. I found Randall to be an excellent guide, very bright and well read. While solving all of the World’s problems, our conversations delved into the Island and its history, culturally, economically and geologically. I found the geology of the Island fascinating. Turns out the island is actually the peak of a mountain rising some 24,600 feet from sea floor below and only 60 feet is visible above the ocean.
Two weeks later, here in Illinois, we are under lock-down orders from our Governor. Although not marshal law, businesses are ordered shuttered. Schools, places of worship, libraries and locations where people congregate are off limits and closed. We are being encouraged to “shelter in place” until mid-April to reduce the infection rate of Covid-19 from overwhelming our health care system and potentially jeopardizing the lives of our families and friends. What a difference 2 weeks can make! The shock waves of the pandemic have rippled through the markets, reducing the values of our investments and potentially unleashing a worldwide recession. Economists are all discussing how deep and long the resulting recession may be. But, I believe the answer lies in the statistics. How many are people currently infected and can our health care system stay ahead of the infection rate? The medical experts tell us we need data. If the numbers being reported of those infected are close to accurate, they tell us we can keep the virus from overrunning our system. However, if like Grand Cayman, the mountain is below the sea and we are only seeing the visible 60 feet, we may be in for a longer and more severe downturn. Either way, epidemiologists have assured us that the impact of this virus will not be indefinite. In 12-18 months, a vaccine is expected. With the World’s medical labs working to find medicines effective in treating the symptoms, it is only logical they will be successful in the weeks and months ahead. Finally, we are told a herd immunity will develop as many are infected, recover and develop immunity from the virus. This epidemic, and its economic ramifications will end.
We strongly advise adhering to your Investment Policy Statement as your best defense in a falling market and to combat economic malaise. Please call us with any concerns, to discuss your personal situation, or simply to further discuss our strategies and outlook.
As always, we thank you for your business and for your continued trust.