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Financial Trends

Lock In For the Future

I am sure all of you are hearing various news and opinions about today’s economic environment. Last week, I posted two opinions of contributors to CGO Wealth Management, LLC. I respect both of these contributors and acknowledge they had two very different approaches.

I do not know when COVID-19 will go away. The Polio virus, which FDR was afflicted with, was around for over 30 years before Jonas Salk came up with a cure in the early 1960s.

Having said that, I do not believe this virus will take that long to come up with a cure or vaccination. On the whole, we are smarter and more aggressive when it comes to science and technology, therefore I believe this virus will be resolved much more quickly. While I cannot speculate on the timing of when COVID-19 will lessen it’s impact on our global health, I believe we are getting our arms around it as a society.

Although I do not claim to be an expert in science or medical topics, I have spent much of my life becoming an expert on financial topics.

Here is what I know to be true — NEVER AGRUE WITH THE FED, the federal government, or oil prices. Right now, each one of these are your friend.

  • The Fed has been proactively aggressive in flooding the system with liquidity and lower interest rates.
  • The Federal Government has flooded the market with Trillions of dollars in rescue money, to keep people afloat until the economy opens up.
  • Oil pries are lower which is a savings to consumers. I spent $31 at Costco the other day to fill up my car , which 2 months ago took $72 to do the same

Remember – the market is a mechanism of things to come, not what was previously or what currently is.

We are already 25% off the lows and the news is bad every day. The market looks at what the wall street journal will tell us 6 months from now.

My advice to all of you – spend your time and energy to lock in today, instead of trying to predict the end of the virus.

Do not save a few dollars today and tax your future. In other words – if you have $1,000 today, you should invest it, instead of saving. With a smart investment, in 6 months, that money could be worth 20-30% more while your savings only maintained your $1,000.

Make an appointment with me today. Now is the time to review your plan, your investments, your strategy. Don’t bet against the big three. You will miss out.

Let’s get you locked in,
Claude

Careful of the Bounce

The following is contributed by Jack Bouroudjian
From Claude Ohanesian:
Jack is one of the finest professionals I know. He is a contributor to my firm, CGO Wealth Management, LLC as well as to CNBC. He runs a hedge fund and is closely related to a private company UCX. Jack also was president of Commerz bank and helped start the CME. Jack brings a half of a century of experience in trading to CGO Wealth. His insight to the particulars of the market are intriguing and on target. He is one of the best.

You know that feeling when you’re on a roller-coaster that’s clicking higher as it prepares for a drop? That is the feeling with equity traders these days as we witness historic volatility. But make no mistake, caution is still the word until further notice.

The seizure of the economy due to the virus did two very important things:

  • It was the catalyst for a correction. Which was, by all accounts, needed.
  • Showed the conviction of the Federal Reserve to protect the economy ‘at all cost’!

One would think that this combination would create a tailwind for the markets. But there are certain fundamentals which you can’t ignore. We all want the stock market to go back up to levels we saw earlier this year. But the reality is that it’s impossible to price stocks. Not without knowing what the earnings will be of the listed companies.

The future is cloudy for many of the great companies we own because no one knows how long or deep the damage is. If there was ever a time to be patient and let the dust settle, now is the time.

The equity market, after the vicious move down followed by a 50% bounce, is showing signs of strain. It is top heavy. A handful of stocks are responsible for this bounce. In other words, not all companies are participating, and a few big names are lifting all indexes. The Nasdaq is a great example. The FANG stocks are responsible for a bulk of the move with others being carried along by indexers. 

It’s crucial to stay objective. To be as unemotional as possible when facing extreme volatility. Keep in mind, fixed income is telling us a different story. While stocks are bouncing, bonds are concerned about disinflationary pressure. Coupled with headline risk from the virus. Which may continue to make historic low yields along the curve. 

Bottom line: It’s not over yet. 

There is a good chance the lows will be tested again. We’re entering a historically weak period for the markets. But this would give investors time, if not price, to put capital to work. Also, we need clarity to understand the full effect on earnings.  This will allow us to make better judgments on whether the market is too cheap or maybe too expensive. The good news is that great companies are trading at huge discounts! As they say, there’s always a gem of opportunity whenever there’s carnage.

It’s said that you don’t get a hangover from drinking…You get a hangover when you’re done drinking. Well, it appears the party is over for now. And the hangover could last a few months.  Fortunately for us all, this too will pass.

A Message To Our Valued Clients About COVID-19

As the situation surrounding COVID?19 continues to evolve, we want to assure you that your financial security is our top priority, and we are here to help you through whatever the coming weeks and months may bring.

We are fully “open” for business and ready to serve you. Remotely
For the well-being of our clients and our team, we are not having in-person appointments for now. Rest assured, we are available to assist you via phone or email. We are also happy to Facetime or Zoom in order to be face-to-face.

We will keep you posted when we are ready to have appointments in our office once again.

What do I do with my check that I am sending to CGO Wealth Management? 
Checks should still be mailed to the office:
CGO Wealth Management,LLC
600 Central Ave
Suite 200
Highland Park,  Il 60035

Claude is going in to the office regularly to attend to these items that need to be processed physically.

What do I do with my questions and correspondence? 
Continue with your conversations as you would previously. For emails during these times, please CC Claude (Claude@cgowealth.com) and Kevin (kevin@cgowealth.com) – who are both working remotely – as an extra step to ensure we continue to meet your needs without missing a beat.

In addition, feel free to text of call Claude on his cell phone: 847-275-9996

What is going to happen with the market? 
How did we get here? 
My belief is that the first 20% of the decline was due to the COVID-19 virus. However, the last 15% was due to a break in oil, which forced sovereign funds to liquidate stocks they margined to oil.

Much liquidity has been supplied to the economy/markets from the federal reserve and the federal government.

What happens now?
Although I do not know when this will end, rest assured our investments in your portfolio have been strategically arranged so that we will capitalize on the rebound when it comes. China is already sending people back to work and reassembling the economy.

With all of the liquidity being poured into the economies around the world, my belief is that we will see new highs in the market and our accounts.

We know everyone is being impacted in many ways – big and small. If you need to talk, we are here for you. Please do not hesitate to make an appointment with me. We can speak on the phone or via Facetime or Zoom, if needed.

We will prevail,
Claude