The Haystack: No matches were found

“The sea was angry that day, my friends. Like an old man trying to return soup at a deli.” -George Costanza 

Replace “sea” with “market” and it kinda sums up the past three weeks, doesn’t it? 

• On Monday, volatility surpassed levels seen in 2008 
• For the first time since 1929, equities moved at least 4% every day of a single trading week (From March 9th to March 13th) 
• The velocity of the current drawdown in equities is simply unprecedented  
• There has literally been no place to hide, except cash

Opening levity aside, market post-mortems are out in spades, so I thought I would take a different tact in today’s note. 

 Like everyone here at Monument, I read a lot of research, including the house views from most major investment shops. For fun, I downloaded a dozen or so “2020 previews” in PDF form and decided to take “Ctrl-F” for a spin.  

1. Open 50-page PDF, crammed with ungodly amounts of intricate, well-thought out commentary, footnotes, disclosures and risks. The amount of CFA and PhD suffixes in these documents is mind boggling.
2. “Ctrl-F”
3. Enter search term “Virus”

Here’s the result on each of those dozen or so reports: 

What was interesting was the common risk themes across each of those pieces – they included: geopolitics, elections, climate change, inflation, trade tensions, Brexit, so on and so forth.  

But nothing on viruses, global pandemics, contagion or any related topic. 

And then out of left field comes COVID-19. 

Admittedly, a tremendous amount of blood, sweat and tears go into these research pieces, and the intellectual firepower behind the curtains is incredible. But market prognostication is an impossible, thankless job. While it does help investors set baseline expectations and think through the range of plausible scenarios, it can never be relied on. 

The point of this isn’t to dunk on people who make market forecasts, but rather to highlight that no one can really forecast events – in other words, “Shit Happens”, which is why having a solid strategy, plan and process in place before something unexpected happens is the only true way to reduce risk to a portfolio. Investing is hard, and I’m fond of this unattributed investing trope: “the market will try to screw over as many people as it possibly can.” I think the past three weeks have proven that.  

If you haven’t seen the blogs that Dave put out this week, they are worthy of reading: 

• From 3/18: This is more critical than anything you’ve done in the past 10 years.
• From 3/17: Certainty during complex uncertainty

 We are here for you – call us with questions or concerns. Dave said it well yesterday:

“Now is the time to make sure your portfolio is positioned for a future recovery…it is NOT the time to create a portfolio that you wish you had when this all started.” 

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