Investor Insight: Navigating the Markets in a Pandemic

Jim Tausz |

Bradford Investment Program Saves Clients half the loss of others in the market

A crisis has a way of pressure-testing all aspects of a company, its people and their processes. Just six months ago we were heavily invested in a consistently climbing market with clients 100% in active markets.

Enter the coronavirus.

COVID-19 changed everything…except for our resolve, our money management, our financial knowledge and our faith.

Bradford’s Army the Envy of General Patton

I’ve always considered this Bradford team to be enviable. Amid work-from-home initiatives (which Bradford has never, in 50 years of business, ever had to do), our team swiftly put our disaster recovery plan into action and have operated as a powerful army. Though we’re not eyeball to eyeball right now, all our operations are being exercised with efficiency and quality like business as usual. It’s been a phenomenal experience to witness.

The phones are being answered and administrated. Darla Tweeten, our office manager is my right hand and has proven our team is equipped for this challenge. Our insurance department is going strong. Clients are dropping off their tax documents and we’re getting those important tax preparations done as a part of Bradford Tax and Accounting. Our trust department is running full blast and our financial planners are talking with clients and making trades. This is the kind of army that even General Patton would be proud to have.

Investor Confidence

What has unfolded over the last month and the unwieldiness of the markets has many financial institutions dealing with negative calls. I am genuinely amazed at how our clients have responded. Personally, I’ve taken 18 calls from clients since this began, none are negative.

Most of our clients want to discuss what we think of the crisis and where we think it will end up. They are asking, “Hey Jim we notice that the market is down 40% but our account isn’t looking as bad.”

There are calls asking to put money into the market to take advantage of what’s unfolding. This confidence in Bradford has a lot to do with how we manage the market in crisis moments just like COVID-19.

Our Watch and Manage™ program has put clients at ease because we have thresholds in place, depending on the individual’s preset risk tolerance, to manage the buys and sells. For example, as of writing this, the average investor has lost 40% of its portfolio value. But our Watch and Manage™ clients are down 15-20%. No loss is great, but if we can keep these portfolios from losing as badly as the rest of the market, clients can retain more of their hard-earned money.

This program uses a proprietary system of stop losses and alerts that give important indications on when our experts should pull out of an investment or put more money in.

How Watch and Manage™ Protects Investments

To manage a portfolio under the Watch and Manage™ program, our team has several duties to the client and the buys and sells under this program are not charged commissions or flat fees, instead, Bradford uses a percentage of the assets we manage on your behalf that are taken quarterly. So, we do better when you do better. Our duties are:

  1. To be in the market when it’s good
  2. To be out of the market when it’s not good

When the Market’s Good: In 2019 when the market was climbing, we had our clients 100% invested in the market (Dow Jones Industrial, NASDAQ, S&P 500, Wilshire 5000, Russell 2000). We put all we could into the market at that time; it was a good time to be in.

When the Market’s Not Good: Our duty at times like these is to move investor money into what we call “safe havens,” like U.S. government Money Markets that are FDIC insured. This is where a dollar equals a dollar and it’s a smart place to be when markets show turbulence. This tactic also ensures assets are accessible when the market opportunities arise. We may also invest in ETFs that provide safety in industry-based funds rather than one specific stock.

Our Watch and Manage™ program is meant to protect investors from catastrophic losses during volatile and pick the right securities depending on a person's goals. Everyone is different, with varying tolerances for risk; because of this, their portfolio looks different. But the one thing that is the same under our Watch and Manage™ program is that all our clients in the program have thresholds that trigger when an investment should be sold and when we should buy more.

What You Should Do Now

The market’s volatility has sent reverberating fear across Wall Street. At Bradford, we recommend taking an educated approach to making your next financial move.

  • Listen to the news. Sure, it’s not all great, but keep an ear out for what you hear about sectors doing well. Retailers like Amazon are skyrocketing because they meet a need for shopping from home. Are the Wal-Marts or Targets closing? No, so these are industries that tell us something about where investments might show stability during the storm. Pay attention to political news, too. Defense talk supported by both parties bodes well for manufacturing companies with defense contracts.
  • Avoid penny stocks. Their values are up and then down; single stocks are volatile and inherently risky.
  • Spread out the risk. Rather than buying Boeing (with U.S. defense programs ramping up it may seem like an aircraft manufacturer to the U.S. government could be a good stock) as an individual stock investment, consider the industry as a whole by investing in an ETF which combines several strong players in that industry into one managed fund, effectively spreading out the risk. The ETFs Bradford considers are ones that include an industry kingpin: Microsoft, Boeing, Wal-Mart for example.
  • Lean on what you know. It stands to reason that certain industries are well-positioned in a crisis. Pharmaceuticals - with a coronavirus vaccine in the works. Technology - with extensive needs for online products as we work from home.
  • Assess your financial partner. Has your financial professional checked on you? Do they have 40-100% of your money out of the market? If you need a financial partner, Bradford stands on the ready with an army of talented people and support staff if you need us.

Now more than ever, Bradford recognizes the importance of our clients, our teams, our families. It is time to be supportive of one another. It’s a time to share gratitude with those who do have to be eyeball to eyeball with customers or patients or the community. It’s a time to connect with family and faith because while America has run into fierce problems and volatile markets before…we’ve always won.

Be well. Be strong. Be loving. Be faithful.

James Tausz, President of Bradford Financial Center