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Past Commentaries


Current Commentary

Dear Friends:

The blow that knocks you down is the one you don't see coming. The Covid-19 virus was kept pretty well hidden in December by the Chinese Communist Party and their acolytes in the United Nation's WHO; unrecognized by a U.S. administration and Congress embroiled in an impeachment; and disguised to a scientific community that had never been confronted by this particular strain of corona virus. The shutdown of so much commerce will cause a recession. How quickly we have gone from an economy running at full steam. The depth of the market drop will require some time to recover. While there is significant evidence that a bottom may be in place the confirmation of a market recovery is not. Historically, the market typically takes off when a recession is officially recognized.

The 11-year bull market has ended. The S&P 500 Index that was trading at 26 times earnings now trades at 19.8 times. The dividend yield which was 1.6% is now 2.3%. The market has been re-priced to a P/E level last seen in 2009. The indexes more than doubled thereafter. Even if stock prices fall further from here - and they might - these are great entry level prices. Our prior highs will be recovered, it is only a matter of time. Risk is mitigated by diversification and time.

I am working to make sure you have enough cash and cash flow within your risk parameters. We will harvest tax losses and reinvest in great companies. American entrepreneurs are solving problems, making improvements, finding ways to remain solvent and regain profitability. I'm looking for those companies with positive earnings growth; companies which are priced at a discount to those earnings. Stocks are well-valued. Dividends are high. Interest rates are low. Stock buybacks are on hold but dividends and dividend increases are not. Mergers and acquisitions will resume as the strong assume the weak. We will manage.

What we cannot cure we try to control. Immunity to the virus only comes from antibodies. Antibodies are developed by exposure (and hopefully survival) to the virus or a vaccine - which may be a year or more away. I pray for the health and safety of you and your family.


Dennis M. O’Connor