Thursday’s coronavirus-driven stock market plunge spurred intense news. “Unprecedented” was a term often used. In this time of uncertainty, we’d like to provide Fenimore’s perspective:
- The spread of the virus is hurting businesses worldwide. The airline, hotel and cruise ship industries have been hardest hit so far. In the days ahead, we’ll see what other industries begin to feel the pinch as they take employees off the road, see orders from hospitality businesses decline, or experience difficulties in obtaining globally sourced supplies. Earnings power at global and American businesses will be temporarily reduced.
- The key word is “temporarily.” This is the seventh decline of 10% or more since the bull market began in 2009 — an average of once every 18 months. While the S&P 500 Index suffered a historic drop Thursday, just a week before it was at an all-time high.*
- There have been many market disruptions. For example: global terrorism, last decade’s financial crisis, the tariff-induced global slowdown of 2018, and the emergence of the SARS virus 17 years ago all caused significant stock market disruption.
- It makes sense to stay the course in our view. While we don’t know how long the virus or its impacts will last, our experience dictates that the best way to navigate any storm is in a sturdy ship. For the past 46 years, we have built our investors’ financial futures on a time-tested process of rational, intelligent and consistent decision-making structured to weather financial and economic storms.
We believe we’re invested in a select group of quality companies that are financially strong, generate significant cash profits and have skilled, ethical management teams. We stay in close contact with these managers and understand how global disruptions may impact them. This gives us confidence in these holdings during downturns and we often find new opportunities to invest in quality businesses that are declining in price, but hold the potential for future growth.
Our team recognizes the news can be unsettling or downright scary and that each of your situations is different. We hope our perspective, and long-term approach that has served us well for decades, helps alleviate your concerns.
If you’d like to speak with one of our associates, don’t hesitate to call (800) 721-5391 or visit us in Albany or Cobleskill. Thank you for your ongoing trust.
*Bloomberg as of 2/27/20