A Defensive Shift
by Eric Nager on Oct 6, 2020
Today , October 2 , 2020 the level of uncertainty reached the threshold that caused us to begin taking about 25% of the market exposure off of the table. These funds have been placed into a short-term US Government bond fund.
As many of you know from previous e-mail blasts and newsletters, we have been preparing a defensive strategy. We have been reluctant to actually begin implementation of the strategy because the economic numbers have been strong and the market has been rising. But, the announcement that the President and the First Lady have tested positive for the virus was the "straw that broke the camel's back" and caused us to do phase one of the defensive shift (25%). Once again, the focus was back on the virus. The fact that even the First Family was vulnerable with all of their precautions and safeguards produces more anxiety among the general population and could further slow down the recovery.
The concerns about the election process itself with the mail-in ballots and the likely legal challenges are substantial. Also, the potential final outcome and changes in policy, regulation and taxation are additional sources of uncertainty, which is what the stock market does not like. Therefore, we will be watching to determine if we need to implement phases two and three. We are sending this out to let you know how we are approaching these volatile times. Please contact us with any questions or concerns.
We hope all is well with you and your families.
Your Southern Capital Services Team