In scale the crisis lies second only to that of world war. So, it is perhaps unsurprising that the language of the media is more suited to global conflict than a medical emergency and its attendant economic aftermath. Long-established personal freedoms have been given up by us all, hopefully only temporarily, but seemingly without complaint. And some face professional and financial uncertainty alongside the fear and tragedy of infection.
Yet there is optimism too, with Asia showing some containment of the outbreak leading to a loosening of previously draconian restrictions and the resumption of local economies; and there are hints of progress towards agreement on oil volumes between Russia and the Kingdom of Saudi Arabia.
The capital markets remain volatile. There have been both bull and bear market movements within a calendar week – a surer sign of uncertainty we will not see. The principal concern remains the worsening situation in the US. One thing we do know, however, is that America is a brave and vital nation and, when roused, there is little they cannot do.
As a business leader in time of crisis, my focus remains threefold: SKAGEN's people and their families; our investing; and our communication and service to our clients. We remain fully operational and are considering ways to support the wellness of colleagues adapting to working from home. The investment team continue to protect the now, while positioning for the expected rebound. And we will continue to ensure that our communication is timely, and event driven.
Our planning is directed towards 3 distinct future scenarios:
- a short-lived recession with the outbreak controlled globally during 2020;
- a more prolonged recession with the outbreak re-emerging; and
- a sustained recession due to successive waves of infection and their attendant restrictions.
The truth is, none of these scenarios will be correct, but they do afford a set of assumptions and challenges that we can think around. This allows us to remain well balanced, whether investing or running the business. It also allows us to ensure our advice to clients is correct and reflects the most likely outcomes as far as we can judge.
My advice to our clients remains the same, make sure to speak to us to confirm your investment strategy remains valid. Thereafter, remain actively disengaged i.e. monitor and challenge your investment strategy but do not act rashly. For the long-term investor there are significant opportunities in times of crisis and correction and SKAGEN, as an avowed long-term investor, exists to help you benefit from these.
Please stay well, observe government direction, and seek advice from SKAGEN if you need it. I wish you a Happy Easter and hope you are able to find some relaxation over the holiday period.