Covid-19 Updates

Dear Client, 
 
We include an analysis from one of our strategists, the William Blair Company; in we hope you find informative.
 
Residential investment is typically one of the most cyclical components of consumer spending. Home purchases are easily the biggest of big-ticket consumer purchases and require healthy consumer balance sheets, rising incomes and employment, access to credit, and improving levels of confidence, in addition to various demographic aspects that also influence household formations.
 
This Economics Weekly,  examines an area of the economy that has held up surprisingly well during this crisis, the U.S. residential housing market. 
 
First, a Factoid of the Day (and a bit of levity for you coffee lovers).
 
 
Kopi Luwak, which translates as “Civet coffee”, is reputed to be the most expensive coffee in the world. This isn’t particularly surprising, given that approximately 500 pounds a year of Kopi Luwak constitutes the entire world supply.  What is surprising is why this particular coffee is so rare. It’s not the plants that are rare. It’s the civet droppings. Coffee beans aren’t Kopi Luwak until they’ve been passed through the digestive tract of a palm civet – a nocturnal, tree-dwelling, raccoon-like little critter, native to Asia. Civet eats the coffee cherries whole, but only digest the outer fruit, leaving the bean intact, giving them a unique flavor. As it is, Kopi Luwak is reported to have a character unlike any other coffee, complex with caramel undertones and an earthy or gamey flavor.  So, if you want a cup of coffee, and feel like crap, here’s the cup for you.
 
Levity aside, we wish you well.
Annadel Capital Inc.
 
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Dear Client:

As always, we hope this communication is helpful and offers additional insight for you as we continue to work through this strange period of time.

We continue to look for a solid recovery in the second half of the year. We see evidence of economic bottoming, looking more and more like a bottom has been put in place. Housing and auto sales are rebounding, providing indication of increased activity. Manufacturing is also beginning to recover nicely. We do expect another stimulus package of 1-2 trillion dollars. This stimulus continues to combat downside risks. There has been some concern that this stimulus will lead to significant inflation, however we don’t see this happening within the next few years. Although there is some concern as to what the short term effect on the economy will be, when the stimulus checks stop.

Realizing that there is an over supply of information about Covid-19 abounding out there, we are a bit hesitant to add to that volume. However, when we come upon something we feel will still add value, we want to share it. This article is fairly long but the bullet points at the front of the article can provide a quick summary of relevant points to keep in mind going forward from here.

COVID-19: Straight Answers from Top Epidemiologist Who Predicted the Pandemic

We continue to wish all of you our best, and with you, a hope for an improving future.

Annadel Capital

Dear Client,

We like many, are pleased, and somewhat amazed at the “bounce” the market has experienced. We say this in light of not only the US, but the world-wide slow-down and the process of opening up. Trying to reconcile a perceived dis-connect between a struggling economy, and a powerful up-sided market can feel confusing.

The attached “Eye on the Market” from JP Morgan may help provide insights into reconciling that perceived confusion. We apologize for its length.

Our best to you.
Annadel Capital

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Greetings!

Summer is almost here, and to quote young adult and children’s author, Jenny Han “Everything good, everything magical happens between the months of June and August.”  We all have hope that the next couple of months will see an opening up of ‘Shelter In Place’ and a return to a “new normal” whatever that looks like – maybe even good and magical.

We’ve attached some information we hope you find helpful.

Thank you,
Annadel Capital

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Dear Client:

As a result of the Covid-19 pandemic, the Federal Reserve has stepped in to support the economy with several stimulus programs.  This has caused concern over the size and growth of the national debt.  We have included two attachments for your reading in order to calm fears that the media coverage of this process may have caused you.  Thought generally speaking, use of excessive debt may feel uncomfortable on a personal level, the Federal Reserve and it’s specialized powers are put in place for this very purpose.

Warren Buffett’s simplified explanation; the Federal Reserve’s use of debt is one of the best we have seen.

We continue to wish you well as we all look to a return to normalcy at a future date.

Annadel Capital

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Dear Clients,

Last week we offered this event for you to attend if the subject matter was of interest to you.  The event is today and you will find the invitation attached for your convenience.  Briefly the panel of experts will be covering:

  •         Financial impact of this crisis on the industry and the economy
  •         Travel realities once restrictions are lifted in the U.S. and globally
  •         Airport screening and airline seating post-crisis
  •         Hotel sanitation and safety practices
  •         The new normal for meetings and live events

…and answer questions about planning travel.

Date:Thursday, May 28, 2020
Time:4:00 pm ET, 3:00 pm CST, 1:00 pm PT

Hope you find this information useful as we slowly transition towards our new “normal”.

Annadel Capital

 

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Dear Clients,

Beginning our third month in some form of “shelter in place”, many of us are getting antsy, and want to go.  Often, with not a specific thought, rather, just go to the Park, maybe the Mountains or the Beach.  With that in mind, we invite you to a Travel webinar (see attachment) this coming Thursday with three panelists: Joe D’Alessandro, President and CEO – San Francisco Travel Association; Melinda Yee Franklin, Managing Director Western Region, United Airlines; and Marian McLain, Vice President Global Sales, Marriott International.  Please join us.

At the same time we attach an article discussing a bit about the “new world order”, or globalization as it might appear from one of our strategists, William Blair and Company.

We close with this quote from Seth Godin.

“Along the way, we settle.  We settle for something not quite right, or an outfit that isn’t our best look, or a job that doesn’t quite maximize our talents.  We settle for relationships that don’t give us joy, or a website that’s, “good enough.”  The only way to get mediocre is one step at a time.  You don’t have to settle. It’s a choice you get to make every day.”

We wish you well.
Annadel Capital

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Dear Clients:

We begin by quoting Walt Disney:  All the adversity I’ve had in my life, all my troubles and obstacles, have strengthened me… You may not realize it when it happens, but a kick in the teeth may be the best thing in the world for you. 

This quote may seem like telling a starving man that there will be a huge banquet next week.  It is much simpler to say such things once the storm has passed.  We bring this to your attention during the storm and before the banquet in an effort to bring perspective to an emotional environment full of uncertainty.  We have learned over decades of experience in the financial arena that emotion is the enemy of thoughtful investing, and that irrational emotionality is at a peak during periods of uncertainty –  much like the current environment.

We have attached for your reading, an article written at another time of high emotion and uncertainty.  Looking back at this time period and being able to see how it worked out has value in bringing perspective to the current situation.

As always, we wish you well and we hope this will bring you some helpful perspective.

Annadel Capital

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Dear Clients:

Most of us find the present world quite out of kilter, and for those of you who are missing Baseball, a bit of advice from ‘The Essays of Warren Buffet’.

Nevertheless, says Buffet, we will stick with the approach that got us here and try not to relax our standard.  Ted Williams, in The Story of My Life, explains why:  “My argument is, to be a good hitter, you‘ve got to get a good ball to hit.  It’s the first rule in the book.  If I have to bite at stuff that is out of my happy zone, I’m not a .344 hitter.  I might only be a .250 hitter.”  Charlie (Buffet’s partner in Berkshire Hathaway) and I agree and will try to wait for opportunities that are well within our own “happy zone.”  We will continue to ignore political and economic forecasts, which are an expensive distraction for many investors and businessmen.  Thirty years ago, no one could have foreseen the huge expansion of the Vietnam War, wage and price controls, two oil shocks, the resignation of a president, the dissolution of the Soviet Union, or treasury bills fluctuating between 2.8% and 17.4%.  But, surprise – none of these blockbuster events made the slightest dent in Ben Graham’s (Buffet’s teacher and the Father of Value Investing) investment principles.  A different set of major shocks is sure to occur in the next 30 years.

This essay was written around 1994.  And true to Buffet’s comments, not quite 30 years from then brings us to now.  A different shock to be sure. 

But this too shall pass, bears repeating.

Stay well and vigilant.  We wish you and your families all our best!

Annadel Capital

 

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Dear Clients:

As we know, the apex of the pandemic is predicted for this week.  Our wish is that all of you stay sheltered at home, safe and healthy.  This difficult circumstance will have an end at some point and there will be recovery.  Until then, we will continue to send out information (such as below as well as the attachment) that we feel is pertinent for you to consider.

Peter Lynch managed the Fidelity Magellan Fund from 1977 to 1990 and quite possibly would be considered the best manager ever.  He is often quoted.  We’ve included his quote “Charts are great for predicting the past”, to illustrate, with a smile, what we all know.  We know there has never been a time when the market has not rebounded from the many “bear markets” that have come and gone; and this time will be no exception.  And we also know, from looking at charts, that if you missed the two worst days, per decade, from 1930 to 2000, your 1930 investment would have grown by 91%.  But if you include the two best days, per decade,  for the same period, your investment would have grown by 15,000%. 

We wish you and your families a safe and protected next several weeks.

Annadel Capital

 

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Dear Clients:

We are adjusting to this temporary disruption to the norm as are you.  Our wish is that this process be as smooth for you as possible, until things return to normal.

As we stated in our last email to clients, we will occasionally be sending out information that we believe will be of interest and helpful to you.  There is so much out there already and every news channel is full of information.  Our purpose is to provide more narrowly focused information for you to contemplate.  This video features Dr. David Price on how to deal with Coronavirus, from one physician who is in the middle of the pandemic in New York.

https://www.youtube.com/watch?v=YitWZj9QhdQ

We wish you peace and health!

Everyone from Annadel Capital

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Dear Client and Fellow Investor,

“May You Live In Interesting Times”.  Although often attributed to Chinese in its origination, it is actually of western origin, and is seemingly more intended as a commentary on living in times fraught with insecurity, than as a blessing.  We are, indeed for the moment, experiencing significant uncertainly and insecurity as it applies to the financial markets, as well as the lives we live.  And we are all looking for the moment of less concern and a bit less troubling.

We continue to encourage you to be thoughtful as you contemplate the state of the world’s economy, how it will impact our personal economies; as such we have included two pieces which hopefully will help to inform you and maybe even provide some solace in a longer view.

We surely wish you well-being and good health, and increasing peace of mind.  We certainly welcome any narrative or chat you might desire as it regards to the attachments or what have you.

Our Best to You,
Annadel Capital Inc.

 

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RE:  COVID-19 MARKET VOLATILITY AND THE CRAZY WORLD OF THE MOMENT THOUGHTS

Hello,

We want to provide you with a perspective on the recent market volatility/drop.  Attached please find commentary from different strategists on their views.  We have included for perspective, a look back at the 2008 great recession entitled “On Fires That Burn Out” that you may find of interest.

Our view is that this is a short-term event that will certainly impact the economy for at least Q1 and Q2 of 2020.  However, history has shown that these types of external events can cause emotional responses which can have negative long-term effects on portfolio construction.  It has been our experience over the past 40 years that when these types of unpredicted external events occur, it is best to buckle up and ride them out.  Appropriate adjustments may be made in small ways by our strategists, which is why they are there.  But to make large sweeping changes or big adjustments to a well thought out strategy would be the wrong thing to do.

We will be monitoring developments vigilantly and continue to stay abreast of changes as they occur.

Sincerely, 
Annadel Capital

 

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