Not Nearly Enough

Since I have written nearly three-hundred newsletters over the past twenty-five years, I’m finding it necessary to do a search before I begin the next edition. As the saying goes, I want to make sure I’m not being redundant over and over again.  When the theme of this edition began to germinate, I thought it would be apropos to talk about Dwight Eisenhower and Andrew Higgins, but even my failing memory suspected I had done that before.  In fact, I had not once but twice.  First in May of 2012 and again in March of 2017.  So, we won’t go there again.    

Nevertheless, there is another amazing story from June of 1944 that we might want to remember.  In just six days after the historic D-Day landings, the U.S. military engineers constructed five operational airfields.  Within two weeks there were eleven.  The logistical accomplishments made by the Allies following the invasion of Normandy were unprecedented and haven’t been approached since.  It took leadership, planning, and faith in the cause.  Are we capable of that today as we face what may be the defining challenge of our generation?      

It seems that our country has finally taken the Coronavirus threat seriously.  Schools are closing, sports activities are being postponed or cancelled, and businesses are encouraging their employees to work from home.  All these initiatives are focused on slowing the contagion and they all make sense.  We all know the economy is going to take a hit, possibly a recession is at hand.  It remains unknown how long and deep it will be.

The attitude of our country matters a lot at times like these.  Are we focused more on what we should have done, or what mistakes were made, or how to score political points?  Or are we focused on what we can accomplish working together?  Can the private sector and the public sector unite for the greater good?  Can we harness our collective creativity, ingenuity, and determination that has been the hallmark of our country since its founding? I may be going out on an idealistic limb here, but I believe all this will happen.  I see and feel the attitude of our country changing as we come to grips with this nationwide health issue.  Despite our political differences, we are coming together as a nation.  It’s early in the process, but it is happening, and good things will come from it.

The faith of our country also matters a lot at times like these.  Do we have faith in our leaders and institutions?  Do we have faith in each other, and do we have faith that a higher power is ultimately in control?  When we are impacted by events out of our control, it is natural to fall back to our foundation and our core beliefs.  These are certainly going to be tested in the weeks and months ahead.  My hope is that we will find renewed faith, and I believe it too will happen.

Novelist James Lane Allen said, “Adversity does not build character, it reveals it.”  Could it not do both?  Can we, as a nation, face our failings, admit our weaknesses and commit to doing better and being better?  Isn’t that the challenge before us right now?

This past week, the stock market had one of its wildest rides since the 1987 crash.  The market fell 10% on Thursday and rebounded nearly 10% on Friday.  I have not witnessed this kind of volatility in my 35+ year career. 

Heavy weight boxing champion Mike Tyson once said, “Everyone has a plan until they get hit in the mouth.”  Well, America has been hit in the mouth, and now we are responding.  We are going to unite with business and government both playing an important role.  We will get through this, stronger, more united, more faithful.

In the meantime, extraordinary market volatility is likely to remain until we more fully understand the extent of the contagion and the degree of severity for those infected.  I believe we will know significantly more over the next couple months.  For right now, we are being patient, looking for opportunities to upgrade the quality of our holdings in all of our portfolio strategies, and to improve the overall upside potential once the eventual recovery arrives.

During one of the most difficult market days recently, a good friend texted me asking how I was doing.  My short answer was, “I live for moments like this.”  Given the continuous news of people getting sick, a small percentage dying, and all the economic and financial carnage, how can this be?  Let me try to explain.

When the game is on the line, the greatest players demand the ball.  They want to shoot the clutch fourth quarter free throws.  They live for these moments to demonstrate poise, and the self-confidence they have built through all the hard work, dedication, and commitment to be the best they can be.  That’s the essence of competitive greatness, as defined by John Wooden.  I make no boast about my abilities in clutch situations, but I am supremely confident in our team at Willingdon.  We remain laser-focused on three critical responsibilities:

  1. Developing appropriate asset allocation specific to each client
  2. Maintaining prudent risk management across each portfolio strategy
  3. Relying on disciplined fundamental analysis on every individual security

Through our time-tested approach, we can remove the emotions from our decision-making process.  In the current environment, that is no easy task, but one we embrace every day.  Fourth-quarter free throws…  We live for moments like this.

One last thought, in case you’re wondering, I did do a search to see how many times I used a quote or theme from John Wooden.  Only four times in the past ten years.  Not nearly enough… 

 Michael Kayes, CFA