An Update from Cairn

Greetings,
​
It’s been a month since our Quarterly Newsletter went out, and I thought that you might appreciate an update on our office situation and some thoughts on the COVID economy. 

Our office remains closed to visitors, and I expect this to continue through the end of May, probably longer. We are getting reasonably adept at online meetings through WebEx, so if you feel the need for a catchup discussion that requires more than a phone call, please, let us know and we’ll set something up. 

Patricia continues to report into the office every day, handling incoming calls, deliveries, and various office tasks. I’m here 2 to 4 days a week, trying to reduce my chances of getting infected, but remaining otherwise effective. The rest of the team works remotely.

Remote work is interesting, and I think very different than most of us imagined. The ability to make a call, trade securities, do research, etc. is essentially as good as it always was. There are some challenges with reviewing items by multiple team members; all surmountable. The real difference is the lack of easy, casual interactions that help stimulate thoughts and redirect energy. I’ve likened this to “dancing without music.” There is nothing stopping one from taking the first step, but conversely, nothing provides a cue to start either. It takes some getting used to.

Equity markets are up considerably since the last time I wrote. I can’t say that this offends me in any way, but it does seem a bit optimistic as most of the bad news in the form of poor quarterly earnings, dividend reductions, companies pulling guidance, high unemployment, and a GDP reading indicating a deep recession has not yet been heard. At this point much remains to be known, as most indications signal that the shutdown will reverberate for quite a while into the future.

A big bright spot has been technology stocks, which, as a group, are up for the year. This reflects a number of factors, not the least being our obvious dependence on technology to get through times like this. It does make one wonder ultimately where this goes; how much further can they go up without having their own 21st century tech bubble. Overall, valuation is still a concern, as US large cap stocks are close to levels seen only a few short months ago.

I’ve asked Patrick to discuss this in a separate post that you’ll see soon. He’ll detail our thoughts on what to expect and what we are doing as we go through this exceptional Spring.

Until we meet again, I wish you and yours well.

The Cairn Team