Positioning portfolios in context of the Corona Virus (4)

A salute to our doctors, nurses, police forces and sanitation workers who are at the forefront of this battle.   A salute also to the Indian state – we are always criticized by the West, but we show our best when our backs our against the wall.  And we have done a far better job than the developed world so far.

I am writing to share a few thoughts

1.       Be careful how you interpret the news you are reading

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Interpreting news flow

We have witnessed a black swan event.  We need to wait out the storm.  We will not panic and sell unless we believe the fundamental 3-5 year prospects of a company have been significantly challenged.   Selling now – just because there is short term uncertainty  – will crystallize a temporary loss and make it permanent. 

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Positioning portfolios in context of the Corona Virus (3)

It has been a really tough month for all of us.  Portfolios will be down about ~25-30% in a month.  This is a speed of decline which I have never encountered as a Fund Manager. 

Solidarity believes that following a disciplined process will result in good outcomes over the medium term, even if we get the occasional bad break that we are experiencing at present. 

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Positioning portfolios in context of the Corona Virus (2)

Markets have been on a continuous sell-off mode since then. A draw down of 20% from peak in a year is not an uncommon occurrence.  However, we have all been surprised because we have not experienced it for a while.  And, unlike other corrections, we have all been surprised at the speed of the decline as it has come in less than 3 weeks.

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