Blake Asset Management Struggles Are Representative of Erratic U.S. Markets
Club tries to maintain normalcy despite meeting virtually
As a recession looms, Blake Upper School’s BAM (Blake Asset Management) have made serious adaptations in the transition to online learning.
The open schedule on Fridays has allowed the club to continue its practice of weekly meetings by way of Zoom. But one drawback of the club is that during times of great volatility in the stock market, quick decision making is very hard to come by.
According to the Kellogg School of Northwestern, total volatility in U.S. markets exceeds that of the 2008 Global Financial Crisis and nearly reaches that of the 1929 Stock Market Crash. Per Fox Business, On March 16th, The Dow Jones Industrial Average recorded its biggest single day point drop off ever at a loss of 2,997 points (13%). While such quick and rapid change in prices isn’t inherently an indicator of long term recession, the effects of the COVID-19 pandemic continue to make negative growth possible. With that, then, for Hemphill and BAM, repairing their portfolio could prove quite tough.
Relatedly, BAM leader Timo Hemphill ‘20 explains “we also are continuing to discuss politics, economic concepts, and other factors that will impact the markets.” Hemphill says on the hopeful side that, like many investors, “We are looking to make several decisions in the coming weeks that will return our portfolio to where it was.”
High unpredictably isn’t necessarily a prompt to not invest at all, as there are still some risks worthy of taking. The protection and “core allocation” should especially be with government bonds. As Hannah Anderson of J.P. Morgan Asset Management pointed out on CNBC on April 23rd, “volatility is going to be a mainstay… but there are still opportunities to reap returns by taking some risks.” Let’s not also forget that volatility goes both ways.
But the recent decision to suspend immigration for at least 60 days by President Trump, ongoing stay-at-home orders, and other factors from the pandemic may force BAM and other hopefuls to exercise further patience.