Market Update: Week of April 6

Published: April 9, 2020

As we ponder what’s occurring today in the world and financial markets, and look ahead to the future, we believe that we must consider our investment philosophy and strategy in the context of how these unprecedented events might permanently impact us. The current reality is affecting all aspects of our life and society, both in the U.S. and globally. These changes include how we work, learn, communicate, socialize (Zoom party anyone?), purchase, consume news and information, and experience entertainment. Some of these changes have long been in process but are being accelerated as a result of the effects of COVID-19. Other areas being impacted – some only temporarily and some fundamentally – include travel, trade, labor, transportation, retail, and restaurants.   

The government takes action
Changes may trickle into the public arena as well, in terms of both an individual’s relationship to government and the interplay between federal and state governments. The pandemic has highlighted the role that the federal government, with its tremendous resources and ability to supply unlimited financing, can take. While state and local governments must rely on the federal government to provide these services to residents during crises, they predominate in other areas, such as health care, education, welfare and municipal services, such as fire and police, water and sewer, municipal transportation, and local roadway upkeep and maintenance. A renewed understanding of the roles of different levels of governments could influence our future opinions and decisions on taxation and regulations. 

Technology steps up
Innovations in technology have allowed most Americans to work, shop, and go to school from home, with varying degrees of success. Companies such as Slack, Zoom, Amazon, Prologis, Salesforce, Adobe, PayPal, Alphabet, Disney, Microsoft and others enable us to work, shop, learn and communicate from “distributed” locations. Forced experience has taught us that we do not need to physically congregate together every day to conduct business effectively, and may reorient our priorities about what is essential and what is not.

Winners will emerge
The necessity of conducting life from home is leading to the birth of new companies and technologies. Americans are highly creative, resilient, and restless, and we anticipate a great many new innovations in the next several quarters. As these innovations drive changes in our society, we may adjust our portfolios and investments to reflect this evolution. We are evaluating the potential of industries and sectors that may be less affected than others, such as food, pharmaceuticals, finance, and those, such as energy and automobiles, which are already in the midst of more permanent transformation. Our goal is to adjust asset allocation and individual investments in order to position portfolios to benefit from what we believe will be the economy of the future.

Important Disclosures

This material is provided for informational or educational purposes only and should not be construed as investment, accounting, tax or legal advice. Always consult a financial, tax and/or legal professional regarding your specific situation. This communication is not intended as a recommendation or as investment advice of any kind. It is not provided in a fiduciary capacity and may not be relied upon for or in connection with the making of investment decisions. Nothing herein constitutes or should be construed as an offering of advisory services or an offer to sell or a solicitation to buy any securities or a recommendation to invest in any specific investment strategy. Investing involves risk, including the possible loss of principal. Past performance is not indicative of future returns. The views expressed herein are as of a particular point in time and are subject to change without notice. The information and opinions presented herein are general in nature and have been obtained from, or are based on, sources believed by Klingenstein Fields Advisors (“KF Advisors’) to be reliable, but KF Advisors makes no representation as to their accuracy or completeness. Although the information provided is carefully reviewed, KF Advisors cannot be held responsible for any direct or incidental loss resulting from applying any of the information provided. KF Advisors represents two investment advisers registered with the Securities and Exchange Commission: Klingenstein, Fields & Co., L.P. and KF Group, LP. If you are a KF Advisors client, please remember that it remains your responsibility to advise KF Advisors, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services.