The further volatility we predicted in our last letter has materialized. Be assured that we are not taking the situation lightly. We do recognize that there will be real and lasting fallout for many. At the same time, there will also be winners. Lower oil prices will hurt the U.S. energy industry and the large number of bonds connected to it. Low oil prices will also ultimately benefit oil consumers, both in business and in the private economy. When the panic passes, as it ultimately will, many will realize that they do not want to sit in cash and that the prices of many companies are worth considering. Moreover, people will realize that not only are there bargains, ultimately, but that they are accompanied by massive stimulus, both from central banks and low commodity prices. Only a few weeks ago, greed prevailed in the market, now it is fear. Sentiment changes with incredible speed.
We are reviewing accounts and looking for tax and income opportunities. The amount of volatility precludes us from making changes en masse. We are well diversified and maintain balanced positions in most accounts. We can’t escape volatility, but we can work with it to prudently manage accounts. Those who sell into down markets due to fear will ultimately suffer regret.