Home|Our Services|Our Philosophy|Client Center|Planning Ideas|Resources|Disclosure|Contact Us

Investment Letter

1st Quarter 2020

April 1, 2020

The close of the first quarter finds the world in a fight against a highly contagious virus that has turned life upside down and stymied the best economy in U.S. history. Descriptive words like uncharted, unprecedented, perilous, uncertain are being used to define current conditions around the world. Mandated approaches on health, travel, social interaction, sports, school, work, and worship have been adopted in efforts to slow the virus spread. Domestically, government and private sector officials work diligently to provide the health care system with tools to fight the virus, and essential employees are tirelessly providing services, support, and care. The severity and scope of this health crisis seems to change daily, but officials believe conditions will eventually improve with time. Let’s hope it will be sooner rather than later.

Investors experienced a mixture of good, bad, and ugly during the recent quarter. The good – economic conditions in 2020 continued to be solid and the stock market climbed higher to set new all-time highs. The bad the arrival of the coronavirus called COVID-19 and the impact of social distancing requirements. The ugly – the fallout from a global pandemic wildcard that shocked equity markets and brought down the longest bull market in history. 

From the all-time closing high on 2/19/2020 the S&P 500 Index fell more than 30% before the quarter ended.  The precipitous decline in stocks ended the bull market’s 11-year run (2009-2020) and started the 12th bear market since the end of WWII.  The tables below illustrate the 1st Quarter 2020 point and percentage loss for domestic and international equites, and the total return performance for the major indices.

Stock Indices

12/31/2019 Close

03/31/2020 Close


% Gain/Loss








S&P 500












Russell 2000













2020 Total Return Index Performance

Asset Class




BofA/ML Three-Month U.S. Treasury


U.S. Bonds

Barclays Intermediate-Term Treasury


U.S. Large Co. Stocks

S&P 500


U.S. Small Co. Stocks

Russell 2000


International Stocks

MSCI EAFE (net div.)


Real Estate

DJ Select Real Estate Securities Total Return


Source: Morningstar


Leading up to the COVID-19 crisis, the domestic economy had a well-established foundation: jobs were plentiful, inflation was low, consumers were spending, production was steady, and the housing market was improving. Now, much of what we knew about the economy from the first quarter has become old news. Job losses and economic disruptions from social distancing are the current economic variables. Post crisis data will be about the depth of the economic contraction, and we expect the second quarter to be full of uncertainties.  We are hopeful the economic setbacks will be temporary. Despite the social interaction restrictions, the economy is not in shutdown mode. The list of essential businesses in every city is vast and a large portion of the workforce is still being productive and adapting to new work environments. As the workforce regains strength and social interaction returns, we anticipate many areas of the economy to rapidly improve. The solid foundation built in the years of the expansion should withstand this test.

In response to the crisis and decline in the financial markets, Federal Reserve officials committed to a full range of tools to support households, businesses, and the U.S. economy. Their quick and decisive monetary policy actions started by lowering the target range for the federal funds rate twice in the month of March by a total of 1.5%. The current range now stands at 0 to 0.25%.  Officials also decided to provide the necessary support for the smooth functioning of Treasury markets by restarting the quantitative easing process.  Over the coming months, the Federal Open Market Committee will increase its holdings of Treasuries by $500 billion, mortgage-backed securities by $200 billion, and reinvest all principal payments from agency debt.  Lastly, the Committee decided to establish a wide range of credit facilities to further support the functioning of short-term liquidity needs.  The Fed will continue to monitor and adjust plans as needed, but they are confident these aggressive actions will help limit losses, aid in the recovery, and promote its maximum employment and price stability goals.

U.S. policymakers also took swift action with fiscal support by passing a historic $2 Trillion emergency aid package. Officially titled the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the 800+ page bill provides a lifeline for businesses and individuals impacted by the COVID-19 pandemic.  See the attached summary for additional details on the 2020 CARES Act.

Our outlook for the economy is a dose of realism with a splash of optimism.  Over the short-term, the economic contraction will be a sobering reality as we adjust to a different normal.  The “Great Lockdown” will continue for several weeks (maybe more) and social events and mass gatherings will continue to be postponed or canceled.  We expect virus conditions around the country to fluctuate based on locations as attempts to slowly restart the economy will begin.  The longer-term outlook is where we are the most optimistic.  We are encouraged by the fiscal and monetary policy support and the positive impact it will have for individuals and businesses. We believe the financial markets will make a recovery, the economy will get better with time, jobs will return, and life will resume.   

Additionally, we are hopeful containment efforts will help save lives, effective treatments will be available for those affected, and for the development of a successful vaccine. Lastly, we look forward to uniting with family and friends, celebrations, and the eventual return of sports!

Managing stress and anxiety during turbulent times (declining asset values) for any investor is a difficult task. Consider a new approach if present conditions are causing you sleepless nights.   We suggest perspective and patience. Keeping events in the proper perspective and not over reacting can be a great coping mechanism. History teaches us that market declines are a natural part of the investing process, and imbalances (economic or financial) are often the root cause of declines.  In rare cases, a wildcard can be the impetus that causes markets to stumble. Our current situation is the result of that wildcard event, a health care emergency not a fundamental problem with the economy or financial markets.  History also demonstrates how market declines can vary in intensity, frequency, and duration. Small declines are common, and markets recover quickly. Larger declines are less frequent and tend to have longer recovery periods.   In historical terms, how severe is the current financial crisis?  The table below illustrates the speed and severity of the 2020 crash. From the peak of the S&P 500 bull market, it only took 22 days to reach bear market territory (20% decline from an all-time high) with a maximum decline of 33.92%.    





Trough Price


Bear Start Date - 20% Below Peak

Total Days
Peak to
Bear Start




New Peak Date































































The current situation is significant, but not as severe as others we have experienced. The Global Financial Crisis (2007-2008) posted a decline of 57% and the Dot.com bubble/9-11 years (2000-2001) turned in a decline of 49%. Though the table only provides recent history, it does show that investors need to be patient. Recovery times from a bear market start back to a peak (all-time high) can vary greatly. The lesson for investors during volatile and uncertain times is to simply hit the pause button and take a deep breath.  The economy has a lot of pent-up unanswered demand, and financial markets will eventually recover and flourish. We have been here before and survived.

Here are some additional tips to help mitigate market volatility.


  • Stay calm
  • Remain invested
  • Maintain a diversified portfolio
  • Monitor your investments
  • Understand your risk tolerance
  • Set realistic expectations
  • Consult your financial advisor periodically to make sure you are on track


  • Panic
  • Make emotional investment decisions
  • Attempt to time the market
  • Lose focus of your long-term financial goals

As I have often stated, our investment philosophy remains based on the fundamentals. We believe it is time---not timing---that matters most. The successful long-term investor is patient, weathers market swings, and adheres to a disciplined investment process. 

Over the course of a lifetime, financial goals and objectives change and evolve. A financial check-up can help evaluate your financial health, highlight adjustments needed, and develop and implement a plan for success. If you would like to discuss changes to your financial situation, schedule a meeting, or have any questions, please contact our office.

In closing, I want to thank you for the opportunity of working with you and for your continued confidence and trust. I wish you and your family good health.

With kindest personal regards, I am

Very truly yours,




2020 Coronavirus Aid, Relief, and Economic Security (CARES) Act

$2.283 trillion emergency relief package. Designed to cushion the effects of virus-containment policies on business and personal finances.

  • $150 billion to support hospitals and community health centers.
  • $500 billion in loans for distressed industries and businesses (airlines, mass transit, postal service).
  • $350 billion allocated to support small businesses through Small Business Admininstration: Economic Injury Disaster Loan (low interest loan), Emergency Economic Injury Grant (advance on disaster loan up to $10,000), Small Business Debt Relief Program (additional access to credit), and the Paycheck Protection Program (forgivable loan for payroll, rent and utilities).
  • $150 billion in direct support for state and local governments to fight pandemic.
  • Economic impact payments to households: one-time stimulus check amounting to $1,200 per adult and $500 per child (subject to income and phaseout limits).
  • Improvements to unemployment benefits: unemployment insurance expands from 26 weeks to 39 weeks, benefit payments increase by $600 per week for 4 months,  contractors, and self employed eligible to receive benefits.  
  • Moratorium on RMDs from IRAs and other retirement plans.  Distributions made for the 2020 calendar year can be returned to tax-deferred accounts. Inherited IRA distributions are not eligible to be returned.
  • Penalties for early “hardship” withdrawals are waived in 2020 for coronavirus related distributions from IRAs and qualified plans. Distributions subject to income tax but the amount can be spread out over a three-year period.  Distributions are also eligible for recontribution within three years of withdrawal.
  • Retirement plan loan limits increased: $100,000 or 100% of vested balance (whichever is less), expanded limits apply to loans made from March 27 to September 23, 2020, and loan repayments deferred for 2020.
  • Charitable giving changes: Qualified Charitable Contributions will not offset an RMD this year since RMDs are suspended for 2020, a new above-the-line deduction created for charitable contributions of $300, cash gifts to most public charities increased for 2020 up to 100% of adjusted gross income (normally limited to 60% of AGI).
  • Federal tax filing deadline delayed until July 15, 2020.
  • $30 billion to bolster state education and school funding.  Federal student loan and interest payments suspended through September 30th
  • Health Savings Accounts and Healthcare Flexible Spending Accounts allowed to use assets for over-the-counter medications.
  • Mandatory insurance coverage for COVID-19 treatment and vaccine. Free testing.


© 2023 William Howard & Co. Financial Advisors, Inc. | International Place II | 6410 Poplar Avenue, Suite 330, Memphis, TN 38119 | All rights reserved
P: 901-761-5068 | F: 901-761-2217 |
Disclosure | Privacy Policy | Contact Us | ADV Part 3 |