Navigating The Coronavirus

a podcast featuring Dryden Pence (CIO of Pence Financial Group)
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Undoubtedly, you have heard recent news about the unprecedented actions being taken in response to the Coronavirus outbreak.

At PFG, we support the decisions being taken by our country’s leaders to curb and control the outbreak. We believe that though the mortality rate of Covid 19 may not be high, the loss of even one life—especially if it is the life of someone you love, is too many. If you have lost someone you love to the virus, we grieve with you and hope that you find comfort in those you love who are still with you and peace in the happy memories you have of your loved one.

However, market volatility, news headlines, and reported government responses to this pandemic can be unsettling, alarming, and confusing. The management at Pence Financial Group has years of experience in navigating confusing market turbulence.

We want to share with you the key information that affects our decisions regarding our investment guidance. We hope that by sharing this information it also gives you comfort and confidence that the market will rebound because this pandemic will only last a 60 – 90-day period of time. Please, do not let short term panic override decisions aimed at protecting the long term, for that would be another form of pandemic contagion that will bring more loss than you need to experience.

Here’s what we know:

  1. It is true that this virus is highly contagious but, compared to other viruses we’ve faced in the past, including the “common flu”, its mortality rate is relatively low, primarily affecting the elderly, smokers, and people with compromised immune or respiratory systems. If you are one of these people, we urge you to be extra cautious.
  2. Eighty percent of coronavirus cases are mild and the recovery rate is about 14 days. Thus, if you are healthy and not among the “at risk,” you have a very good chance of recovery.
  3. Twenty percent of the coronavirus cases are severe and the recovery rate is about 21 to 40 days. The total mortality rate is 3.7% – 15% of that are those over 80 years of age. Again, if you or someone you love falls into this category, please take the necessary precautions.
  4. In China where this started, peak outbreak occurred at about day 30 once this became a significant event. By day 45, more people were getting better than were getting sick. This means that the long-term effects of the virus itself is relatively mild and that the virus reached its peak contagion at day 45.

Based on the facts, this looks to be a 60-90 day “pothole in the road.” Keep in mind, the whole world did not enter into this at the same time, so recovery sequences will vary.

From a portfolio management standpoint: Our investment team maintained actions or had taken actions to limit risk ahead of this and have continued to make minor adjustment during this volatile time. However, large wholesale exits to the market as a knee jerk reaction to what is an event of limited duration is just that: a knee-jerk reaction.

There are no underlying structural or economic reasons that should cause our economy to fold upon itself. Government and Federal Reserve assistance will have longer positive effects on the economy than the 60-90 days of the life of the pandemic.

We have navigated rough waters before and while we are not clairvoyant or perfect, we will attend to the most relevant and reliable facts available and recognize that this difficulty is likely to be short-term and return to stability is imminent.

Your investment time horizon is much longer than the period of this out break. Short term turbulence should not get in the way of the long-term view. This is a very large pothole in the road not a permanent road closure.

Please know that we are addressing portfolio and investment issues daily on your behalf. Our investment team is diligently monitoring and assessing data.

Please, take care of yourself and those you love and know that we’ll take care of the wealth management side aimed to Empower your purpose!

The Pence Management Team


Disclosure: The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Historical performance is no guarantee of future results. All indices are unmanaged and may not be invested into directly.The economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful. All investing involves risk including loss of principal.Pence Financial Group does not provide legal and/or tax advice or services. Please consult your legal and/or tax advisor regarding your specific situation.The financial consultants of Pence Financial Group are registered representatives with, and securities and advisory services offered through LPL Financial. Member FINRA/SIPC.LPL Financial, Pence Financial Group, and Pence Capital Management are separate entities.

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At Pence Financial Group, we believe that good financial decisions don’t have to be confusing. If you have any questions or want to schedule a complimentary meeting to discuss your specific questions, please do not hesitate to contact us.

Pence Financial Group 5000 Birch Street W. Building Suite 3000 Newport Beach, CA 92660