On behalf of the Astorino Financial Group, this declaration will attempt to unpack the key issues and perspective we are facing not only as an advisory firm but as a nation and the world. Here we summarize our view, in simpler terms, of the following broad strokes:
- The Virus
- The Economy
- Portfolio Positioning
- Our Firm
- Our Clients
The virus is impacting us all physically, economically, emotionally, spiritually, collectively and individually. We see the primary issues from a health and economic perspective as containment, capacity, and commerce.
If we can contain the virus through distancing, quarantining, and extraordinary hygiene practice, the severity of the pandemic can slow down and lessen the impact globally. What makes this virus more problematic for our financial and physical security is the speed of the infection and the lack of adequate supply of health care providers and medical resources. Having to choose who gets a respirator or not is not a dilemma any health care provider wants to face. We need to lessen the duration of the spread and get immediate supply to the care providers.
The paradox is if we stay home, do not spend, do not have a productive working economy there is no growth. There is no means to pay back debts once cash flow dries up. As Jason Furman, professor of Economics, Kennedy School of Government at Harvard, says, “businesses can go bankrupt, but you cannot easily unbankrupt them.” So, how long can we be quarantined before the cure is worse than the illness?
The economy historically has always moved in cycles with expansions, peaks, recessions, bottoms, and recoveries. Let us focus on recession, response, and recovery for this moment in time. The recession could be severe. Unemployment was at a tolerable level up until late February with numbers that are about to reveal an extreme spike in job losses for March. The response has been an unprecedented release of over two trillion dollars into the fabric of our economy. That number if in seconds would go back to 60 years BC. It does not represent an ATM withdrawal that never gets paid back. This is fiscal policy going all in with the emphasis on saving lives and resuming the economy as best as it can, given the tools established by our government. The government can raise taxes, print money, spend money, buy treasury instruments and capture the media attention while impacting consumer sentiment, a major indicator of a healthy or unhealthy economy. The FED can lower or raise interest rates for which they have boldly done in a timely fashion. In short, fiscal and monetary policy can only do so much. We all know nothing is free so what we do today has to be addressed over time or we are just kicking the can perpetually until there is nowhere to kick.
We see no reason for there not to be another recovery on the horizon. Whether this is a deep, severe recession or one of the mild recessions with short duration, we believe there will likely be a recovery. The question is whether it will be an L shape, U shape or V shape recovery. The recovery shape is what will impact present and future portfolio decisions. Our portfolios are mostly individual based. Generally, we are more prepared for a U or a V shape recovery. That means we are mostly strategic in our outlook for a longer time horizon than two years unless you are near or in retirement or have specific needs for liquidity.
Toward being strategic, we put emphasis during this period on portfolio allocation, tax harvesting and liquidity. We are not all in cash because we do not want to miss a V shape recovery that happens before you get to move money from your banks to your portfolio. A U shape, more than likely, lets us take some time to adjust and make changes to your portfolio more tactically. Some investors can be opportunistic during this time and buy on discount. Others may be shifting their asset classes to be more blue chip or more municipal depending upon their situation and risk profile. Our managers are looking at company’s balance sheets with moderate leverage and strong cash positions so if it is a longer recovery they can endure adverse conditions for longer durations.
So, how is the Astorino Financial Group positioned? First and foremost, our clients are front and center. We are working on a case by case management, testing our assumptions for outcomes regardless of event-driven hardships. Such hardships include long term illness, divorce, death, education, retirement, legacy planning, major tax hurdles and preserving wealth. We look at each life transition that our clients are facing and our full staff members are on board whether virtual or at the office on a rotation basis.
Our staff utilization and retention are a major focus while we weather this storm. Our investment in technology and streamlining protocols have us fully operational with little impairment. We are collaborating via video conferencing and sharing task loads and skill sets so that the founder can draft correspondence like this to all the clients rather than just one at a time. We are rethinking the future as it pertains to space, cost, service models and networked relationships in the field of law, accounting, insurance and investments. We are still implementing many charitable gifts in spite of these daunting challenges we all face.
In conclusion, we see this as a time to REFLECT, RESET, AND RENEW! We reflect with gratitude, the loyalty and support of all our clients and staff. We are resetting our expectations and processes to handle increased demand as the recovery reveals its momentum and pace. We are renewing our pledge to “PUTTING CLIENTS FIRST” while social distancing and leveraging skills and tools to keep our clients plans whole. We thank you for that opportunity and we are committed throughout this journey together. Most importantly, be safe and find joy in the little things while we prepare for events to come.
Financial planning offered through THE ASTORINO FINANCIAL GROUP, a registered investment advisor and a separate entity (from LPL Financial). Securities and Advisory services offered through LPL Financial. A registered investment advisor. Member FINRA & SIPC. Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual Past performance is not guarantee of future results. Investing involves risk including loss of principal. The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.