Coronavirus update #2

We have experienced a very challenging week and I want to share some comments on the recent market volatility. In particular, there are two things I would ask you to keep in mind during this period of uncertainty.

Firstly, we have been very active with the investment portfolios and I summarize some of our actions below:

1. Since the beginning of 2019, we have increased client’s fixed income component (example: bonds, GICs and cash equivalents) while reducing the Canadian and US equity exposure.
   This action was intended to reduce portfolio volatility.
2. We transferred short term bonds to long term bonds, thereby capturing gains if/when interest rates fall.
3. Cash flow requirements for the next 3-5 years have been secured in Guaranteed Investments. This allows investors to maintain their lifestyle while allowing equites time to recover.
4. We have consistently trimmed overweight stocks, hence reducing the exposure to any specific stock.

Secondly, we must not succumb to panic, there is good news which I believe is overlooked. Here’s a summary of an article published by the World Economic Forum on March 8th, 2020:

(The full article can be found at: Coronavirus ten reasons not to panic)

1. We know what the virus is, and we know how to detect the virus
2. The situation is improving in China, so we know how to stop the virus
3. 80% of cases are mild
4. A large percentage of Infected people heal. There are 13 times more cured cases than deaths
5. Symptoms appear mild in children
6. The virus can be wiped clean with soap and water
7. Science is on it, globally
8. There are already vaccine protypes
9. Antiviral trials are underway

I know the situation seems frightening, I feel it as well, but let’s put our fear in perspective.

Remember, we know how to stop the virus and China has showed the world that the virus can be contained. I expect governments to provide financial assistance for those affected (e.g. Removing the one week waiting time to qualify for employment insurance) and support additional fiscal and monetary stimulus programs.

If you wish to discuss your investment portfolio, please call our office, we’re at our desks.

Stay healthy and stay positive.

Richard Dri