Worcester Business Journal

wbjournal.com | July 6, 2020 | Worcester Business Journal 15 F I N A N C I A L P L A N N I N G F O C U S "We're preaching caution," said Geoff Dancey, managing partner and portfolio manager at Cutler. He's been reminding clients to keep a longer-term view when they can. "e standard advice is always to stay the course." e stock market, however, has made giving solid explanations difficult, Provo said. e market has gone up despite tens of millions of Americans out of work and a pandemic ballooning to more than 2.5 million cases in the United States and more than 130,000 deaths. "ey're looking for guidance," Provo said of clients, "which is challenging to give in this environment." A solution, at least for now, has been to put more of clients' investments into cash to cushion them from market shocks. "Our goal long-term is to put people in a position to get the upside and protect the downside," said Pedro Silva, an investment executive at Provo Wealth Management Group. "ere's a way to do that if it's not just stocks and bonds." Investors still clearly recall past crises, which compounds anxiety, Silva said. "A lot of clients go back to the Great Recession, and ever since then they've looked forward to, 'When is the next one?'" Silva said. "People are still reeling from that and they don't want to go through that again." Experts see reasons for caution ahead, including more business closures in regions hardest hit by the pandemic now and second-quarter corporate earnings reports on the horizon potentially showing continued anemic revenue. "Even those who've kept their job, there's still a degree of uncertainty here," Hogan said. "Nothing's guaranteed." Provo is also looking ahead to potential further action from the Fed and upcoming quarterly earnings reports, particularly their guidance for the following quarter. Many companies withdrew previous guidance because of such uncertainty, including Boston Scientific and Hologic, both public companies based in Marlborough. "You'd expect earnings-per-share to be down," Provo said, "but what do you expect next quarter?" ere's been one silver lining: People are saving far more money than before. e personal savings rate hit 32% in April, according to the Federal Reserve Bank of St. Louis. Since such records began in 1959, the rate had never before exceeded 17%. Guiding firms through the turbulence Janice O'Reilly, a certified public accountant at the Westborough firm AAFCPAs, has been working to help her clients – small and midsized businesses – figure out how best to deal with an economic hit unlike anything they've experienced. Some business- es have needed guidance whether or how to use benefits under the CARES Act, or whether furloughing or laying off workers is the right deci- sion. O'Reilly has run pro-formas to show companies what their cash flow may look like in different scenarios. "Our focus is really on helping businesses recalibrate," O'Reilly said. Analyzing the finances of Central Massachusetts companies gives O'Reilly a unique insight into the viability of many of them to survive longer-term. She said she's mostly optimistic about companies that have been most flexible in their operations and those with a dedicated team to overseeing coronavirus-related issues, including employee safety and cybersecurity at a time when many employees are working at home. She's heartened by flexibility some firms have shown when business partners aren't able to meet their payments. Still, so much uncertainty remains, including whether another federal aid package is possible, O'Reilly can't tell her clients for sure what their future may be like. "ere are just so many unknowns, and here we are months into it," she said of the pandemic-inflicted economy. "Some of it is getting clear, but a lot of it isn't." W 3/9 4/1 20 40 60 80 100 5/1 6/26 Daily VIX close 82.69 34.73 Three months of volatility The Cboe Volatility Index, a prominent measure of stock market instability, shows num- bers have remained unusually high, though they've fallen since hitting nearly a record high in March. The index is typically below 25 in calmer periods. Source: Cboe Ameresco, Framingham $22.75 $15.19 $27.31 BJ's Wholesale Club, Westborough $21.78 $24.00 $37.87 Boston Scientific, Marlborough $43.02 $25.83 $34.65 Hanover Insurance Group, Worcester $137.51 $83.67 $100.02 Hologic, Marlborough $52.96 $29.38 $53.33 Insulet, Acton $215.67 $143.80 $186.97 IPG Photonics, Oxford $143.94 $110.02 $157.16 Oxford Immunotec, Marlborough $14.98 $9.15 $12.79 TJX Cos., Framinham $63.81 $36.76 $50.77 Waters Corp., Milford $216.65 $162.36 $176.62 Dow Jones Industrial Average 29,348.03 18,591.93 25,595.80 S&P 500 3,386.15 2,237.40 3,053.24 Feb. 19 March 23 June 29 Note: The Dow Jones Industrial Average peaked on Feb. 19 and hit its low point during the recent downturn on March 23. Source: Google Stock fluctuations Stocks in the 10 largest public companies in Central Mass. have fluctuated wildly since the coronavirus pandemic hit. Stock volatility The Cboe Volatility Index, or VIX, measures how much instability is taking place in the S&P 500, with spikes during unpredictable times. The index nearly set an all-time record in March. High points of stock market volatility as measured by the Cboe Vix index, which normally trends below 25, since its start in 1990: When Event Volatility peak October 1997 Asian financial crisis 48.64 April 2000 End of tech bubble 34.31 September 2001 9/11 terror attacks 49.35 October 2008 American financial crisis 89.53 May 2010 European debt crisis 48.20 June 2016 Brexit approved 26.72 March 2020 Coronavirus pandemic 85.47 Source: Cboe Janice O'Reilly, AAFCPAs Geoff Dancey, Cutler Capital Management Christopher Provo, Provo Wealth Management Group Pedro Silva, Provo Wealth Management Group

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