August Weather Report

It is the spring of 1942. The United States is in the throes of war against Germany and the Axis powers. Fear and chaos are gripping Americans as Germans bring the fighting close to home. In the first six months of that year, German U-boats sink 400 ships in the Atlantic. On April 16th, the American merchant ship, SS Alcoa Guide, is bringing supplies and equipment from New Jersey to the West Indies. 300 miles off the coast of North Carolina, chaos erupts.

Men on board watched as a German U-boat, the U-123, surfaced and began firing on the unarmed vessel. With no way to defend themselves, the captain attempted to ram the submarine, but was easily outmaneuvered. The Alcoa Guide began taking on water and the order to evacuate to the lifeboats was given.

Russian immigrant Waldemar Semenov was serving as junior engineer on the American ship at this time. No stranger to combat, he recounts remaining calm and a desire to “size up the situation.” He went to his cabin and grabbed his small compass and several loaves of bread and then proceeded to get on one of the two lifeboats. Using his compass, Semenov navigated the lifeboat west towards the nearest shipping lanes. After 4 days in the lifeboat, a patrol plane spotted the men and was able to rescue them the following day.

This story illustrates several relevant points that can be applied to us today. To be fair, most of us do not have to stare death in the face to this extent. But there is a real atmosphere of fear, chaos, and uncertainty in our current environment. No one knows how long COVID will impact our lives, or how the election will pan out. These factors are outside of our control, but what is most important is how we respond.

History has seen its fair share of pandemics and economic uncertainty. Remaining calm and using history as our guide, we can navigate this current storm and find our way to safety. We must ignore all the noise and focus on the tools we have in place that guide our investment policies and decision making. No matter the storm, a level of peace and stillness can be maintained. We believe that being patient over these two months is a wise approach to take. With the amount of risks we see in the market, we are most concerned with preservation of capital at this stage. If you have any questions about your portfolio or concerns about the markets, please do not hesitate to reach out to us.