On Resilience . . .

March 22, 2020


This post is about resilience. Resilience is defined as, “an ability to adapt and recover, often from misfortune, adversity, or change; aka grit.” The C-19 crisis will test our resilience and grit.  It will test us as individuals, as spouses, as parents, as leaders, and as citizens. It will test our systems of healthcare, government, social safety nets, financial markets, and civil society.

The past few weeks have been grueling and exhausting. It will likely get worse. Unlike the 2008 financial crisis, every industry will be affected. Unlike September 11th, C-19 will impact every town. Both rose-colored glasses and doomsaying are equally baseless. Instead, we must “confront the brutal facts” – while also rising to the challenge of an unwavering confidence that we will prevail. The story of Admiral Jim Stockdale’s eight-year internment in the Hanoi Hilton was also the basis of the 1987 film In Love & War

Now, a word on Money Market Funds, the Federal Reserve’s actions over the weekend, and the Congressional stimulus package. The Federal Reserve has indicated it will use all tools at its disposal to ensure liquidity within money markets and money market funds – an incredible backstop. This includes the purchase of commercial paper, corporate bonds, and municipal bonds. Essentially, if necessary, the Fed will be a buyer of last resort for underlying money market assets to ensure that they do not “break the buck.” Fed Chairman Powell also unveiled new, additional credit and lending facilities to lessen the economic impact of a sustained downturn. Lastly, while Congress has yet to pass a fiscal stimulus bill, that’s not unusual. It took several iterations and many weeks of wrangling before Congress passed similar measures in 2008. Legislative action IS coming, though, it’s just a question of when.  All of these developments should help markets find a footing during the C-19 period.

Finally, let me tell you where things stand for BSW:

BSW is ready to meet this challenge. The team is energized and confident. There is much work to do. We are confident we have a strong game plan. We will give it our all. We eat our own cooking and stand shoulder to shoulder with clients in all of our investments.

BSW clients have been calm and measured. Their trust and confidence bolsters our drive. Their concern for their employees, neighbors, and communities is inspiring.

Our investment partners and managers have been outstanding. In vetting managers, we evaluate “People, Process, Performance” and the exceptional quality of our partners is evident. They are executing, finding new opportunities, and addressing the human aspects of their respective businesses in a C-19 world – whether that be apartment buildings, private companies, etc.

Although it doesn’t diminish the fact that absolute performance has been painful, BSW has fared better than many peers on a relative basis. Due to our focus on targeting “the risk you need versus the risk you can afford,” our overall asset allocation was more defensively positioned via bonds and direct real estate and less “reaching for return” in public equities.

BSW is strong. We have managed our business wisely. We have zero debt. We will look to build our capabilities for clients further in 2020.

We are stepping forward to assist our community. As a first step, for each BSW employee I will be personally funding a gift card to their local independent restaurant of choice to use for takeout. This helps to support the local economy, eases the task list for our staff and their families, and hopefully provides a pick-me-up after their long hours. A small step, but small steps matter.

The shutdowns, quarantines, and dark moments ahead will require us to answer tough questions: How do we slow down and focus on what is truly important? How do we create more resiliency in our lives, our communities, and our nation? How will we meet this challenge and the unforeseen ones to come?

We will continue to send ongoing and regular correspondence throughout this period and are working on additional ways to provide you with the information you need and answers to your questions. In the meantime, please reach out to me or any of my BSW colleagues – we are here to help.

-David Wolf, CEO