By Morgan Christen
CFA, CFP, CDFA, MBA, CEO and CIO

Welcome,

As I inch closer to the half a century mark, I reflect on thoughts and rules (both personally and financially) I have taken as a form of my own personal Pirate Code.

Pirates were known for their discipline, order, and strict social code. These last couple of months have tested and confirmed those rules. During these volatile times, investors were tested and learned a lot about their relationship with their advisor and their investment strategy.

One thing we have been pleased with is our clients did not wonder if we had rules while responding to the heightened volatility. We had a plan and we executed (and continue to execute) that plan.

As the saying goes, “if a man knows not to which port he sails, no wind is favorable.”

SOME FINANCIAL RULES TO LIVE BY

• There are reasons why a company/sector is cheap. Cheap does not make it a buy. Damaged stock versus a damaged company.
• It is ok to pay a capital gain.
• Don’t panic sell. Give bad news a day or so.
• Refuse to look back. Avoid regret.
• Corrections will happen.
• Beware of hype and fear.

Sentiment and Market Response

As the chart shows, the market will turn before the collective “consumer” changes their feelings. We swung from expansion to contraction almost overnight. Unemployment rose to record highs; personal income took a hit and consumer sentiment crashed.

But as the chart shows, the markets can begin to move before sentiment and data improves. Selling on hype, fear, and panic is never a good idea and usually too late.

Financial markets have historically shown a remarkable ability to anticipate a better tomorrow, even when today feels bad. COVID’s speed and severity along with the behavior and economic consequences will continue to challenge the markets. But is has been during these dire times, that markets have turned.

Although, no single economic, market or financial crisis is like the prior and the triggers may be different, there are some commonalities to be observed. Namely, they all come with a new set of ingredients and problems that appear too big to solve. As investors we embrace uncertainty, as without it there would be no opportunity for return.

Codes for Living

We have all faced changes in our lives these last couple of months. Some good and some bad.

Your response to that news is everything and determines the ultimate outcome.

During times like these, we morph and change, but we also learn and grow.

As we all move through phases in our life and times, perhaps the rules below can guide you.

• Do not enter a pool using the stairs.
• Play with passion or do not play at all.
• If you need music on the beach, you are missing the point.
• Be like a duck. Remain calm on the surface and paddle like crazy underneath.
• Thank a veteran.
• Be confident and humble at the same time.
• In all things, lead by example, not explanation.
• The rougher the seas, the smoother we sail.

Take that leap into the pool – who needs stairs! For our clients, please know we will continue to make those tough decisions on your behalf, it is our code. Our relationships with you is paramount to both of our success.

Remember, not all treasure is gold and silver.

– Captain Morgan

Disclosure

The information contained herein is based on internal research derived from various sources and does not purport to be statements of all material facts relating to the securities mentioned. The information contained herein, while not guaranteed as to the accuracy or completeness, has been obtained from sources we believe to be reliable. Opinions expressed herein are subject to change without notice.