First and foremost, we hope you and your loved ones are in good health, and as always, thank you for your continued support. We realize everyone is likely tuned into the news with the utmost focus these days, so apologies in advance if this quarterly commentary becomes a broken record. I will do my best to digest the events that have unfolded over an unforgettable quarter.
As you can imagine, the COVID-19 outbreak has completely derailed our initial 2020 market outlook, and contraction is a certainty. The rise of the global pandemic certainly qualifies as a black swan event. The term “black swan” was well popularized by Nassim Taleb, a former Wall Street trader and finance academic. It is a metaphor used to describe an event that comes as a complete surprise, has a major effect, and is often inappropriately rationalized after the fact with the benefit of hindsight. If you haven’t yet read it, I highly recommend his book “Black Swan.” It’s something well worth reading especially when going through an unexpected crisis. As we mentioned, this was unpredictable and now measurement of the effects is the current exercise. Given the quarantine measures not only taken here, but globally, the downside to global output growth will be severe. The challenge for allocators at this point is gauging the depth and the duration of the recession. That means staying on top of the latest developments in news and data- from a policy, public health and capital markets perspective.