A lesson I learned in the Marines, and especially during survival school, is that things usually aren’t as bad as they seem when you are first encountering them and that you must keep moving forward. Persevering when things feel their bleakest is not easy, but it is a lesson we again learned this year. During the height of the COVID lockdown, when the future looked very uncertain and the market fell precipitously over 30% in a month, many investors panicked and sold – but we didn’t.
During the crisis, I released a series of “Fireside Chats” during February and March discussing our outlook and strategy in light of the significant challenges ahead, which stressed the importance of patience, perseverance and a long-term approach – as well as the value of dividends. The rally since that period of time has been nothing short of remarkable and certainly surprised me too as I expected it to be more gradual. Of course, the benefit of our strategy (which some would call boring) is that we are paid to wait patiently collecting dividends while stock prices eventually find their true long-term value.
The advances in vaccine technology have been extraordinary and speed at which they were developed a remarkable achievement for science. As the broader community is vaccinated, the vaccines will gain public acceptance improving their effectiveness in controlling the spread of COVID. I believe we will move forward as a society as we have after previous pandemics - the most recent example being the Spanish flu pandemic of 1918.
It will take time, but the virus will eventually be contained (though not eliminated) through the efficaciousness of the vaccines. The other positive is that the virus' virulence is continuing to depreciate as therapeutics improve. I only worry about the most vulnerable of our population and my 75-year-old mother contracting it before she is vaccinated.
Some aspects of our lives will change permanently, but some will go back to a semblance of normality and companies will adapt. Much like life after 9/11, some things changed permanently (like fortified cockpit doors and increased security screening) while other activities (like large, public congregations or flights on aircraft) eventually returned though taking time for people to feel comfortable.
We have positioned our portfolios for what we believe the future will look like long-term. We will likely continue drinking Coca-Cola and eating McDonald's; yet, real estate may permanently be impacted in large cities like New York City. Though our firm is completely paperless and has worked on the cloud for well over a decade with multiple offices, many companies were not aware that they could work successfully under such a setting. Now, it is clear that employees who enjoy working from home will continue to do so and that businesses will benefit from a smaller real estate footprint.
This has been an incredibly turbulent year and I am immensely grateful for the trust many have placed in our firm. As always, please don’t hesitate to contact us with any questions about our investment strategy or your personal financial planning matters.