A letter from Kori Lannon- Founding Partner/Private Wealth Advisor

Halloween Edition – Edgar Allan Poe on 2020

“It is by no means an irrational fancy that, in a future existence, we shall look upon what we think our present existence, as a dream.”

  • Edgar Allan Poe, “Marginalia”, 1836

Our “present existence”, a dream?  A bad dream, maybe.  Or a nightmare!  Since my aim is not to depress everyone, let’s not dwell on that.  Let’s take a moment to look backward, and then look forward.

I suppose we could parlay “A Descent Into The Maelstrom” or “The Fall Of The House Of Usher” into a reflection on the unprecedented market mayhem experienced by investors in March.  We could maneuver Poe’s “The Gold Bug” to make the case that, although gold performed quite well over the summer, there could still be meaningful upside to the metal in the face of likely additional global stimulus and currency debasement, prolonged low and / or negative interest rates, and what remains to be an abundance of uncertainty.

Some time has passed since our last letter of this kind.  What tricks and treats have transpired in the interim?  We had a 4th of July mostly absent of fireworks.  COVID surged across the sunbelt.  South Dakota hosted the Sturgis Motorcycle Rally during a pandemic.  California and Colorado are tragically burning, and eleven named storms, including Zeta just this week, have pounded our coastal states.  Professional sports leagues squeezed in their seasons in a myriad of COVID-adapted ways.  Schools across the country struggled with how to execute on educating their students this academic year, and have proceeded in countless different fashions.  Many college students arrived on their campuses only to be sent home or locked down.  Social unrest persists in our headlines, if not visibly firsthand in our communities and neighborhoods.  Nonetheless, the S&P 500 continued its melt-up, led mostly by a handful of mega tech companies, and experienced a pullback in September, led mostly by those same companies.  American teenagers (and many adults) universally were spooked by the prospect of their beloved app TikTok ceasing to be accessible (crisis averted).  President Donald Trump got COVID, and quickly recovered under leader-of-the-free-world caliber care.  Kanye joined the race for President (I think), and then dropped out (I think).  In a contentious situation that spotlighted two truly remarkable, intelligent, and pioneering women of law, Supreme Court Justice Ruth Bader Ginsburg passed away, and her vacancy on the court has been filled by Amy Coney Barrett.

This reminiscence brings us to today, back to “The Masque Of The Red Death”.  What is behind the mask?  In this week that features a hurricane, Halloween, a blue moon, and a changing of our clocks, the Dow also sold off 943 points on Wednesday.  Scary.  What will the next several months bring?  I think that many of us are expecting a trying winter.  The news cycle (or should I say “opinion cycle”?) seems to be cueing a “second wave” of coronavirus, which appears logical given the inevitable – as a country, we will be forced to spend much less time outside in open spaces with fresh air.  France and Germany both announced new rounds of lockdowns (or lockdowns-lite) this week.  Next spring will probably be the most welcomed spring of our lives!  With regards to next week’s election, consensus among analysts and experts and witches and ghouls seems to be that the market’s biggest risks lie not in who wins, but in how long it will take to determine who wins.  Will we know by Thanksgiving?

As a firm, we anticipate market volatility post-election, a period that is likely to be marred by controversy, and exacerbated by our “present existence”.  Nevertheless, we are hopefully optimistic over the longer-term.  It will most probably be some time before the economy can find solid footing upon which to build a sustainable recovery.  Reliable vaccines, logistics to distribute them, and the population’s confidence in taking them will be the keys to economic recovery, much of which hinges upon the consumer and employment.  Those things will all take time, but they will come.  The shock and surprise of our initial encounters with coronavirus are behind us.  We are learning to live our lives in a pandemic era, a skill that I don’t believe any of us ever expected to master.  As the saying goes – this too, eventually, shall pass.

“Thank Heaven!  The crisis,

The danger, is past,

And the lingering illness

Is over at last –

And the fever called “Living” is conquered at last.”

  • Edgar Allan Poe, “For Annie”, 1849

Wishing you all a fun and happy Halloween weekend in our “present existence”.   I have heard of some people who will be sling-shotting candy (lob trajectory, I hope) to socially distanced trick-or-treaters, or shuttling the goods down from the front porch through PVC pipe.

Parting advice from me and the ghost of Mr. Poe:  If you do celebrate with some frighteningly fine wine this weekend, please beware any host who invites you down to his catacombs and wine vault to taste a rare vintage from his “Cask Of Amontillado”.



A letter from Herman Rij – Chairman, Quadrant Private Wealth

Reflections of and on Experience

Most of our clients are familiar with my occasional written musings or communications that periodically supplement my annual letter published routinely in the first quarter.  These additional letters tend to arise due to “events of significance”: usually market collapses, sometimes worldly events of potential consequence, or certainly whenever we endure a global pandemic.  Sometimes there are catalysts that may not be so scary, but still compel us to comment on them or share them with you.

I did not wake up on Wednesday expecting that the last thing I’d be doing before going to sleep was putting my final touches on this letter at 11:13pm.  My wife Claire and I are dog people, and we have a loving Golden Retriever, our longest-lived one of many, that we had needed to take for surgery, again, the day before. We refer to Swedie (her father was Sven, a Swedish import) as our “million dollar dog” because she is an enthusiastic athlete with a propensity for injuries that require repair.  She is now 13 ½ years old, and we had nervously wondered whether we would see her again after surgery. (Gratefully and deeply relieved, I picked her up Wednesday afternoon.  Good news.  She is home and recovering.  As are Claire and I.)

I had some commitments on Wednesday morning, so as I set out at 11:30am on my journey to Philadelphia to pick up Swedie from the hospital, I was faced not only with my concerns regarding her forthcoming recovery, but also wondering whether I would make it back home in time in the afternoon.  Quadrant’s Advisory Team and Investment Committee had arranged a 4pm meeting with Byron Wien, a name you may recognize, particularly if you follow business networks or market commentary on television or in print.  In short, at age eighty-seven and still working seven days a week, Byron is a living legend, one of the most revered personalities in our industry.  He is currently Vice Chairman of Private Wealth Solutions at The Blackstone Group, the largest firm globally specializing in alternative investing.  Prior to joining Blackstone, he had acted as Chief Investment Strategist at Pequot Capital, and prior to that, was Chief U.S. Investment Strategist at Morgan Stanley for twenty-one years.  He is Harvard-educated, and has received countless industry accolades throughout his storied career.

Our colleague at Blackstone had extended us the privilege of an exclusive call with Byron, one of the most exciting opportunities of my not-so-fledgling career.  I was afraid that I would not be able to get back in time for the call.  I am happy to report that, despite a tedious north-bound ride on the turnpike, Swedie and I were even home early, and I was able to fully participate in the meeting.  I have summarized Byron’s perspective for you below, but I would like to preface his comments with some additional color.

Wednesday’s Zoom meeting with Byron was refreshing and rather enlightening. Some of you that have been clients of ours for many years, perhaps decades, realize that, like Swedie, I am getting “long in the tooth”. It is rare that I have the opportunity to exchange thoughts with one whose teeth may be longer.

For those of you who do watch the business channels, you see Byron on TV frequently.  He is meticulous in his appearance, always professional in decorum, and what you might expect of a major figure in finance and as a representative of one of the most prominent firms in our industry.  In our Zoom, Byron was wearing a baseball cap because he had allowed the same man who trims his landscaping to give his head a trim that didn’t turn out so well.  Byron was articulate, gracious, generous with his time, humble, modest, and unassuming.  He treated us like peers, and he valued taking our questions as much we valued him answering them.

Thus came the impetus behind the theme of this missive.  This is where the “Reflections of and on Experience” come in.  There is one person at our firm has in excess of 50 years in industry experience – me.  As I mentioned in last year’s annual letter, that metric alone is no longer of high relevance because the cumulative years of experience of the other advisors on our team now beat me by almost a multiple!  In addition, I was struck by this notion:  of equal importance is the fact that in our first six years, Quadrant has been able to forge and strengthen relationships with deeply experienced people, firms, and intellect like Blackstone, Byron Wien, Goldman Sachs, Launny Steffens, Spring Mountain Capital, Laurence Gottlieb, Fundamental Partners, and The Carlyle Group.  We were proud to be a part of Merrill Lynch for 43 ½ years, but in that environment, we could never have been able to access and achieve what we have now for the benefit of you, our clients.

So, thank you for bearing with me.  Without any further delay, what follows is my summary of notes from our one-hour dialogue with Byron Wien.  These are a blend of his perspectives as a representative of Blackstone, and as an investor himself.

These are really confusing times. 

Coronavirus was an unexpected event beyond anyone’s planning.  Its severity was initially underestimated in significance.  

We may have gone through the shortest recession in history after witnessing the swiftest, shortest collapse of asset price in history. 

There are many who believe in a V-shaped economic recovery and that 2021 will be a very strong year. Byron does not see that.  Blackstone believes in a square-root-shaped recovery that is represented by a quick uptick but then with meandering recovery as the world adjusts to the debacle of what has transpired. The initial recovery will last until the fall and then begin to taper off as we address the consequences of coronavirus and all that has come with it.  

People are essentially “fed up” and getting sloppy about coronavirus, which is not good.  Blackstone does not expect a “second wave” of coronavirus, calling it low probability at this stage, but does expect continued bubbling up of hot spots.  There are currently thirty-one states with a rising number of cases. 

There are currently approximately thirty million people unemployed.  Of those, twenty million will get jobs back. Almost ten million will not get their jobs back because the places at which they worked will no longer exist. Although the unemployment rate will fall to 8-10%, the remainder of the employment recovery will be challenging. 

Even people who are able to go back to work will mostly be more cautious when going to spend money.  Many will continue to avoid crowds in restaurants, bars, concerts, sports.  The older segment of our consumer population may wait even longer to go out until there is a vaccine or some kind of pharmaceutical drug.   

Life as we knew it may not come back until 2022.  A vaccine may exist by year-end 2020.  However, testing for validity will take time, maybe eighteen months or more, and then the logistics of getting a reliable vaccine distributed to the general public will take longer. Once the efficacy of the vaccine is established, front line workers will be able to get vaccinated first. There are many moving parts to this dance and parts of it will be sloppy.

 On a global basis, the relationship with China is of paramount importance and one that is difficult to replace. They are our most important trading partner.  It is unhealthy for the world’s two largest economies to be at odds with one another.  It would undoubtedly affect profit margins if we on-shored all manufacturing and production.  The Phase I agreement is moving forward, but the relationship between Xi and Trump is deteriorating. There may not be a Phase II. 

There is a legitimate concern about the level of debt that is being accumulated at the federal and national levels. Currently, spending on economic stimulus is $7 trillion, probably on its way to $9 trillion. It is too much too soon. The fiscal deficit is looking to be $3-5 trillion this year. In 2000, the annual federal debt service requirement was $350 billion at a higher rate on a lower debt level.  Today we have a much higher debt level but the blessing, in this regard, of much lower interest rates.  So the annual debt service amount now is $450 billion. If rates rise, and eventually they will, the debt burden to the government will be incredibly significant and will impact not only how the government is run, but how effectively the economy will be able to operate. 

We are headed for higher taxes.  There is no alternative. If the Democrats take control in November, higher taxes will come sooner rather than later, and the impact to the economy and the markets will be felt sooner than later.  This will be seen in corporate earnings and price/earnings multiples. 

Although Biden is leading in the polls, do not count Trump out.  He has come from behind before, and there are several months until the election. 

With regards to having the virus under control, we are not where Byron expected us to be at this point. We “opened too soon.” We were going to respect social distancing, crowd control, etc. But that has not happened universally…we just do not have it under control. 

Positive view: we are recovering! Earnings will be disappointing until 2022.

Concerns: speculation in the markets is troubling. Current market levels are unsustainable. 

Price of oil will go up; energy stocks have been depressed for too long.  

Precious metals: Gold is in a bull market and going higher because of worldwide concerns – conflict with China, expansion of balance sheet, economic recovery, state of Europe, general uncertainty that abounds. Owns gold personally and will be increasing his shares. 

Negative intertest rates do not makes sense.  Result of too much apprehension, too much liquidity. 

Blackstone is sitting on $150 billion in cash waiting for opportunities. The desirable environment for private equity, private credit and other alternative investments is uncompromised; the key is choosing the right partner. 

There will probably be a pullback in the public markets, perhaps 10%, although 15% would not surprise Byron.  He does not see a revisiting of the recent bear market, but feels that the market momentum is headed towards “taking a rest”.  (I’d like to add a quote from Yogi Berra here: “the problem with the future is you don’t know what is going to happen”.)

In closing, I apologize for the length of this missive.  I was so inspired by our conversation with Byron, as was every member of our Advisory Team and Investment Committee, that I wanted to share his “pearls of wisdom” with you.  We try not to overburden you with our communications, but it is not often we get an opportunity such as this.

When done, Byron volunteered to make himself available to us again. We definitely intend to take him up on his offer.

As always, please feel welcome to give any of us a call.  Just as Byron is not too experienced to learn from our questions, we are not too experienced to learn from yours.



Wednesday June 10th, 2020

From Kori Lannon, Founding Partner / Private Wealth Advisor, Quadrant Private Wealth:

Dear Clients,

It has been about six weeks since we last reached out to you with one of our letters in this format.  Life seems to have gotten much easier.  The equity markets have nearly erased their severe losses of March.  U.S. government-stimulus-to-beat-all-stimulus is bolstering the economy.  The Fed is engaged in a no-holds-barred, whatever-it-takes policy strategy to save the economy.  Re-openings are occurring around the country and the around the world.  Phew.  Nothing but smooth sailing ahead.

If only we could be assured that today’s sense of security is not a false one.  Maybe that is the case.

However, there are many millions of Americans who are suffering still in the wreckage of COVID-19.  Some are the unemployed.  Some are the small business owners who remained shuttered.  Some are the sick, or have loved ones who are sick, or have lost loved ones.  Are there any of us who do not know first-hand someone who has been meaningfully impacted for the worse by COVID-19 and its collateral damage?  Just when we thought we might be seeing a faint and distant light at the end of the coronavirus tunnel, our country and its optimism surrounding re-opening are figuratively shoved in the chest by societal unrest of a magnitude not seen in our country since the 1960s.

There was a column in Barron’s newspaper last weekend by Steven M. Sears likening the behavior of the S&P 500 in the face of all this pain and destruction to an aloof Roman emperor Nero, obliviously playing his fiddle as Rome burned around his palace.  How callous, arrogant, ignorant, and out-of-touch the market is to soar while So Much Is Wrong.  Although, it is said that while the market is an emotional mechanism, it does not have emotions.

I don’t feel compelled to defend the market’s behavior.  I don’t think the market feels it needs defending.  Nevertheless, for me, the Nero reference immediately conjured up another, kinder image involving string instruments in a moment of chaos.  I’d like to try think of the market not as Nero, but more like Wallace Hartley.  Whether you saw James Cameron’s film production of the story or not, you are familiar with the history of the Titanic.  After the vessel hit an iceberg and began to sink, and thousands panicked around him, fearing for their lives, a violinist named Wallace Hartley and his classical bandmates played gentle music, trying to keep the passengers calm as the crew loaded the lifeboats.  It was the one thing Hartley and his colleagues could control, and they contributed what they could to make the best of a very bad situation.  Is this a naïve perspective on the market?  Absolutely.  Because there is such a large percentage of our society that benefits very little, if at all, from any soothing or salve the market’s stellar performance may provide.

Are the magnificent ships that are the U.S. economy and the S&P 500 doomed to go down?  Let’s hope a Titanic ending is well beyond a worst-case scenario!!  The purpose of this letter is not to prognosticate for or against the case for recovery of either.  And certainly not to suggest that we are all about to go down with the ship.

To shoplift an analogy from Lara Rhame, Chief U.S. Economist at FS Investments in Philadelphia, the market and the economy are not one and the same.  However they are inextricably connected to one another, like a kite and the person flying it.  Likewise, at Quadrant, we have an inextricable connection to the market.  As such, I don’t want to think of myself as an extension of Nero carelessly playing his fiddle while humanity suffers.  I prefer to associate with the likes of Wallace Hartley, doing my best to keep the peace in times of trouble.

I do think that we have times of trouble ahead, post-iceberg.  To what degree remains to be seen.  The twenty-two million jobs lost over a two-month period thru the end of April are three times the number lost over an eighteen-month period beginning with December 2007 in the financial crisis.  The U.S. is a consumer-based economy.   Put those two statements together, and I don’t believe we have only smooth waters ahead.

Like Wallace Hartley and his colleagues, your Quadrant team continues our commitment to what we can control.  We are working hard seeking out the best information and perspective available from the world-class resources with whom we have the privilege of working, and we apply what we distill into action, or sometimes purposeful inaction, in your portfolios.

We are living in unprecedented, uncertain, and volatile times.  We continue to wish you and your loved ones health and protection from coronavirus, as well as safety, the blessings of family and friends, and now thankfully, the joys of long sunlit days and outdoor experiences of summer.

Kori Lannon

Founding Partner

Dear Clients,

What you are about to read is an obviously different type of communication than usual, driven primarily by the fact that these are abnormal times.

For example…I have learned that my car now gets 3 weeks to the gallon.  Talk about gasoline efficiency!

I have also realized that there are ancillary benefits to a normal work lifestyle. For example, I used to have to walk to get things done: visit clients, see a co-worker, go to a meeting, get from the parking garage to the office, etc.  Now…I walk from the bedroom, to the bathroom, to my desk, back to the bathroom, sometimes to the kitchen, back to the desk, back to the bathroom. I used to try to meet a goal of walking 10,000 steps per day.  Now the only way I can get those steps in is to ask to use the bathroom of our neighbors down the street.  They didn’t like that.  Thus, my exercise regimen has decreased.

What have we learned about the markets, the economy, and a potential “light at the end of the tunnel”?  Not much is clear.  One example:  guidance that I have seen from economic forecasters over the past week – and these are bright, respected individuals in their field – is for 2nd quarter GDP ranging from a negative 9% to a negative 50%.  (Incidentally, there is a reason that economics is referred to as “the dismal science.”)  Although it is common for these forecasting professionals to disagree, it is normally with significantly less variation from one another.

This week, we endured the enlightening and mind-stretching experience of learning that the price of oil can be a negative number, and that the front month oil contract is capable of dropping 300% from +$18/barrel to -$36/barrel (yes, negative $36) in one afternoon.  Think about this – that means one can be paid for buying oil??  It also means that for a period of time early this week, a roll of toilet paper was more expensive than a barrel of oil.

Please be prepared, since we are discussing negatives…the dismal scientists are suggesting that even the U.S. will be witnessing negative interest rate policy as a result of global developments and our efforts to overcome the devastating economic impact of COVID-19. Think about that – this means we will be paying the bank to hold our money!  Another mind-stretching concept.  Even more weird, at the extreme, as in parts of Europe recently, there exist negative mortgage rates.  This means – wait for it – THE BANK PAYS YOU to take out a mortgage.  So…let’s see, do I buy this small cottage at the beach, or do I go for that big monster on the water?  Hmmm.

Dr. David Kelly, Chief Economist at JP Morgan, made some observations this week related to new growth businesses that may emerge on “the other side” of this bizarre experience. Unfortunately, one of them is marital counseling, and another is an increasing demand for attorneys specializing in divorce.

Thankfully, there are positives to all of this too, although they may not be as readily apparent as the barrage of negatives we are all facing on a daily basis.  Many households are spending more quality time together, absent the frenetic schedules they were keeping before COVID-19.  People are re-evaluating their priorities in life.  Projects are getting done around homes (not mine).  Relationships are being rekindled as people reach out to connect in both an old-fashioned way – picking up the phone, and a new-fangled way – Zoom!  (Zoom and Social Distancing are two terms I use now daily that I had never heard before early March…along with Flattening the Curve, PPE, PPP, and lest we forget the one that started it all, Coronavirus.)

Learning.  From an economic, monetary and investment perspective, we have much yet to learn. There are so many unknowns in this new learning experience:

  • How long before we come out of this?
  • When we get back to normal life, what will our new normal look like?
  • What will be the long-term societal and economic impacts of today’s emergency actions?
  • When will the markets become normal again, and by what will the valuations be determined?
  • What becomes of the college experience? Just as we have discovered that non-commuting can be much more effective than we ever considered, is it necessary to pay for room and board when one can learn at home at a fraction of the cost?
  • Will Clorox wipes and hand sanitizer ever again be on the usual store shelves, or will they be found in the ration-controlled section of the store, hidden behind locked cabinets like weapons, certain drugs, and ultra-expensive wines and liquors of today?

I could go on and on.

One thing is known. We will all be victims AND beneficiaries of PTSD (Post Traumatic Sequester Disorder)!  We will have a fresh appreciation for our freedoms, our liberties, our simple blessings.  Personally, I am tired of Social Distancing.  I miss my friends, my family…those people to whom I am closest. I cannot wait to see them, hug them, love them, and just be with them.  This fiasco has also cost me an expensive hearing aid, thanks to one of those masks that we have to wear outside of the house.  The elastic band that secures the mask can also serve as a slingshot to spiral a hearing aid into oblivion somewhere on Broad Street.

In all sincerity, I cannot wait until I see each and every one of you again.

At Quadrant, we will continue to focus on what it is we are supposed to do.  Although we are uncertain about the future, we are certain about our need and desire to be in frequent communication with you, and to help maintain appropriate perspective in an incredibly challenging time.  Over the last couple of months, we have witnessed the fastest-bear-market-plus in history, the most volatile market month since 1929 as characterized by an average daily market move of over 4% up or down, and one of the quickest 20%-plus market recoveries in history.

As I prepare to finish this letter, I realize that this communication is lacking some “meat on the bones”. It is not for lack of trying.  As I have mentioned before, it is of paramount value having access to some of the brightest, most-informed and well-networked people in our industry worldwide.   Our advisory team is in constant contact with those many resources upon which we have relied in the past:  Goldman Sachs, JP Morgan, Blackrock, Blackstone, The Carlyle Group, and Spring Mountain Capital.  The universal response we are getting is that the future has rarely been more uncertain.  As stewards of your assets, our job is to keep learning in the new world, condense the collective wisdom we glean, and convert it to strategies and opportunities to benefit you.

In all candor, no one in our business has ever lived through something like this before.  The last pandemic occurred over a hundred years ago.  I have been in touch with peers and colleagues of mine who have been in our business for 50 years, and even for us, this is new territory!

As always, please feel welcome to reach out to me or anyone else on our team at any time for any reason.

Have a nice weekend.  My best wishes to you all as we head into Week 6, and the lessons it will bring.


From “Imagine”…to April Fools.

Dear Clients,

Many of us “gray-hairs” grew up infatuated with the Beatles, subsequently became disappointed by their break-up, and then glommed onto our favorite member of the band, hopefully “treading water” until a reunion took place. John Lennon’s death not only made that impossible, but it gave many of us a realization of mortality, even among the “immortals.”

Actually, I was more of a Paul McCartney fan. Nevertheless, one of the most memorable post-break-up songs by a former Beatle was John’s Imagine. It was a song of optimism, idealism, hope…reminiscent of what the investment environment was only 45 days ago.

The U.S. has just completed one of the strongest economic and equity market advances in history, followed by one of, if not the most malicious, painful and scarring market corrections in history. That reversal took place in less than one month. While it would have been so welcome to wake up on April 1st and hear someone exclaim “April Fools!” to signal that this has all been a cruel joke, unfortunately, the COVID-19 reality persists. Given that truth, today we are focused on what happens next.

In our last letter, I spoke about the valuable partnerships we have with thought leaders in the industry. Over the past month, we have spent as much time counseling with them as we have speaking with you, our clients. These resources and perspectives provide us with a multi-dimensional, multi-layered and global spectrum of data that we digest and interpret to fuel our investment outlook for an unprecedented time.

What have we learned? Key points from our countless discussions:

  • Economically, it is going to get worse before it gets better.  There can be no substantial resolution to economic problems until there is much more certainty surrounding the global health crisis at hand.
  • U.S. GDP is being forecast down between -9% and -40% (quite a range) for Q2.
  • Unemployment may reach twenty to thirty million people in the US, or ~20% of our workforce (some estimates are even higher).
  • Total deaths could exceed 200,000 Americans.
  • Liquidity, which fuels financial markets and is critical to their functionality, remains a global concern impacting nearly all investment categories.

Lest any of these points be new news to you, allow me to counter them with guarded optimism:

  • We now live in a “brand new world,” just as it was post-9/11. Nevertheless, the U.S. economy and markets managed one of the most vibrant revivals of all time since then.  Hope is not a proven nor recommended investment strategy.  But it is a staple to the health and survival of the human spirit.
  • History has shown that market sell-offs of this magnitude are usually followed by 12-24-36 month recoveries that are quite healing in their results.
  • A recurring theme that is being repeated by our sources is “do not panic.” In times like these, choosing to do nothing can be a prudent and purposeful action.

For years we have been speaking with our clients about realistic expectations, risk management and risk-adjusted returns. Your portfolios were built in accordance with those principles. Our investment committee and advisors are in frequent contact sharing information, perspective and applying all of these to your portfolios as appropriate.

We will no doubt enter a new paradigm “post-virus,” and that may involve a slightly new conversation. The core of our risk-management approach to investing will not change. For the near-term, what I would call “during-virus,” we must remain vigilant, cautious and realistic. President Kennedy famously said (with some leeway on the translation) that the Chinese term for “crisis” is a combination of two characters – “danger” and “opportunity”. In this time of crisis, we strive to avoid danger and will seek out opportunity.

In closing I was on a call with Byron Wien, Vice Chairman of Blackstone, on Wednesday (April Fool’s Day).  He reminded us all of a famous tenet, a reality of the market: NO ONE RINGS A BELL AT THE BOTTOM. Whether we are at the market bottom, near the bottom or still far from the bottom, we anticipate volatility and choppiness ahead.

We are living through an unprecedented global event, perhaps multi-generational and society-altering in nature, whose ramifications may challenge even the Great Depression. However, the collective efforts of the Federal Reserve, U.S. Treasury, U.S. Government (despite its polarized state), along with world central banks are also unprecedented.  They are doing and will continue to do what is necessary to mitigate this crisis and set the world on a path to recovery.

Although we are now forced to work remotely and unfortunately do not have a virtual bell to ring to signify the bottom, we are working as hard as ever as stewards of your assets. We strive to be in continuous contact with you during this period, and encourage you to reach out to anybody on our team at any time.  Please do not hesitate.

We wish, most importantly, continued health for all of you and your loved ones.

Have a good weekend,


Dear Clients,

As a follow up to last Friday’s communication, we have enacted our business continuity plan and we remain operational. In accordance with Pennsylvania’s closure of all non-life sustaining businesses, we are now operating 100% remotely. Our goal is to minimize disruption to clients, and we appreciate your understanding as subtle adjustments are made to accommodate the new circumstances. When possible, we recommend all clients to direct calls and emails directly to team members and avoid calling the “main” office number – this will ensure faster response times.

Please also find below my latest market commentary, a follow up to the critically acclaimed Chairman’s Letter from a few short weeks ago.

Even Methuselah Died, Part Two:  A COVID-19 Fatality

What an amazingly different world since I authored the prequel to this letter in early March. As in the days following 9/11, the world is a much different place. Most certainly, we will never forget this experience.

As you are aware, for years we have been developing and participating in risk-mitigating and risk-minimizing strategies and investments.  However, just as we learned during the years that bracketed the Great Financial Crisis, when markets are under stress, unanticipated dislocations do occur. Over the past several weeks, we have reached out almost daily to those same resources who have been a crucial part of the development of those risk-management strategies – companies like Blackstone, Goldman Sachs, The Carlyle Group and JP Morgan. These world-class partners of ours represent some of the smartest, most experienced and best informed investing and market minds in the world.  In summary, our collective feedback from digesting all of their perspectives follows below.

What we have recently experienced is without precedent.  After an economy that was producing some of its strongest results only three weeks ago, we are undoubtedly going into a recession within the next ninety days. This message was delivered by stock market performance that had been the longest bull run in history becoming the quickest onset ever of a bear market in history, in only ten days.

Such volatility has created some investment dislocations. Some investments that we considered to be safe havens, particularly in the fixed income market, have acted decidedly less so and provided temporary confusion and disappointment.

History tells us that there are three types of bear markets: cyclical, structural and event-driven. The first two are longer lasting with subsequent longer recovery periods. Event-driven bear markets tend to fall into an average dropdown (market peak to bottom) in the 30-35% range, with an average recovery period of seven-to-nine months. There is no doubt that this one was event-driven by COVID-19, coupled with shocks to the oil market. It is possible that the economic ramifications of the virus will morph this event-driven bear market into a cyclical one, which does not bode for a meaningfully different average drawdown, but does extend the recovery period.  Medical professionals working closely with the government are forecasting that from start to finish, we should expect a very challenging two-to-four months or longer of new lifestyle restrictions and economic slowdown while the coronavirus runs its course in the U.S.  We also know from history that markets tend to anticipate economic recovery with a lead time of approximately 6 months. As a result, the concept of a third and fourth quarter market recovery certainly remains possible.  Of course, all of this is dependent upon the effectiveness with which most Americans adhere to the recommended social distancing and, when needed, self-quarantining.

Regarding our strategies: we still are of the opinion that as the markets stabilize, most of those disappointments caused by severe dislocations and illiquidity will perform as expected when we emerge from the other side of this unpleasantness. The positive news: once out of this cycle, we believe we will be at the beginning of another constructive economic cycle because of the inherent strength exhibited by the economy of yesterday, pre COVID-19, and bolstered by fiscal and monetary stimulus.

As always, please feel welcome to reach out to any of us at Quadrant Private Wealth. We are working hard to operate effectively and efficiently to address all of your needs on a timely basis.

Stay safe and well,



BETHLEHEM, PA (Feb. 24, 2020)Quadrant Private Wealth (“Quadrant”), a boutique wealth management firm headquartered in Bethlehem, Pennsylvania, is pleased to announce that longtime private wealth advisor David Decker and his team (the “Decker Group”) have joined Quadrant as part of a strategic initiative to expand Quadrant’s team of advisors, investment capabilities and geographic reach.

The Decker Group will service clients from both Quadrant’s headquarters in Bethlehem, Pennsylvania and a newly established Quadrant location in Sarasota, Florida. The three-person  team also includes Paul Francis, a private wealth advisor, and Mona Campos, a client servicing professional. Combined, the members of the Decker Group have more than 60 years of experience providing personal wealth management services to high net worth individuals, families and business owners.

“We created Quadrant to provide clients with objective wealth management and financial planning advice designed specifically around their individual financial goals. Our hope was that other advisors would be drawn to our firm’s commitment to delivering independent, client-centric financial services,” said Jason Cort, President and a Founding Partner of Quadrant. “David Decker and his team share our philosophy and commitment to exceptional client service, and we are excited to welcome the team into our Quadrant family.”

“We wanted to continue to enhance the capabilities we can offer our clients, and this move allows us to do just that,” said David Decker, who has known the founders of Quadrant for his entire 30-year career. “The Quadrant team brings a level of expertise, particularly in investment management, that complements our services. Our team will be able to leverage Quadrant’s experience with a broad range of investment solutions, including alternative investments and fixed income solutions. The combined talent under one roof truly enhances our ability to continue expanding our services and supporting our clients’ needs.”

For Quadrant, the Decker Group’s differentiated approach to equity investing, together with its roster of clients in Southwest Florida, will open up new growth opportunities while deepening Quadrant’s investment capabilities and bench strength.

“The Lehigh Valley, and the 100-mile radius around it, has been core to our growth since inception. As we evaluate new ways to enhance the client experience, we are focused on adding talented advisors and expanding into growth markets. This is a first step in a series of strategic efforts to grow our presence in core markets, beginning with Florida,” said Frank Lawler, COO and Partner at Quadrant.

About Quadrant Private Wealth

Established by former Merrill Lynch advisors Herman Rij, Jason Cort, Kori Lannon and Brian Cort, Quadrant is a boutique wealth management firm located in Bethlehem, Pennsylvania. Quadrant is an independent registered investment advisor and a partner firm of Focus Financial Partners Inc., a leading partnership of fiduciary wealth management firms. For more information about Quadrant, please visit www.quadrantprivatewealth.com.

Cautionary Note Concerning Forward-Looking Statements

This release contains certain forward-looking statements that reflect Quadrant’s current views with respect to certain current and future events. These forward-looking statements are and will be, subject to many risks, uncertainties and factors relating to Quadrant’s operations and business environment which may cause future events to be materially different from these forward-looking statements or anything implied therein. Any forward-looking statements in this release are based upon information available to Quadrant on the date of this release. Quadrant does not undertake to publicly update or revise its forward-looking statements even if experience or future changes make it clear that any statements expressed or implied therein will not be realized. Additional information on risk factors that could affect Quadrant may be found in the filings with the Securities and Exchange Commission made by Focus Financial Partners Inc.




Even Methuselah Died

Methuselah was the longest-living person in the Bible. Depending upon the interpretation, he lived to be 969 years old, give or take a few. In today’s world, we also have some historically long-lived events taking place, although not on a Biblical scale, of course.

The last ten years have certainly been historic. There was annualized double-digit S&P growth over the past decade. Equities are experiencing their longest bull market in history. Interest rates are at historic lows. We are now in the longest economic expansion in history, albeit accompanied by one of the lowest GDP growth rates ever in a ten-year period.  While there is value in reviewing this unique period in history, let’s look forward.

We are entering yet another new decade. However, as the famous philosopher, Yogi Berra, once observed: “It is difficult to make projections, especially about the future.” While the US equity market is coming off a very successful decade, there has never been a ten-year period that followed such a win-streak whose returns were anywhere near as impressive as the first ten. This data does not mean we are taking a doom-and-gloom position on the future. We just continue to emphasize that the need for risk focus and management has probably never been higher.

While there are countless unknowns, I would like to highlight some “knowns” and share some introductions.  2020 will be a benchmark year for me. My career in this industry will be turning 50 years old (another modern-day Methuselah?). Our firm will celebrate its 6-year anniversary in just a few months, hard to believe. In June, Quadrant Private Wealth will have occupied its renovated World Headquarters for three years.

Our firm has grown, patiently. In 2019, we were very pleased to hire the first student who transitioned from our intern program to become a full-time employee. Mike Mittl graduated from Moravian College and joined QPW as a Financial Analyst. Last month, we proudly announced that Joe Flannery had joined Quadrant as a Private Wealth Advisor after a very successful career in sales & finance. Just last week, another former Merrill Lynch team, The Decker Group, became a part of Quadrant Private Wealth.  Dave Decker Jr. and his team, Paul Francis and Mona Campos, bring a valuable dimension of depth, perspective, and talent to Quadrant.  We are so excited to have them aboard.

All of these additions to our firm have something in common. These are genuinely wonderful individuals that have merged into our family. There is no doubt that QPW and our clients will benefit by working with these outstanding people. Part of the “dating process” was to evaluate each other’s philosophies and priorities. The biggest takeaway is our new colleagues’ client-centric focus, a theme that we have propounded since our inception. We happily welcome them all, and deeply appreciate that they are as confident in us as we are in them.

Back to the market, and observations.  As you may recall, my past several annual letters have been themed with a country western song.  This year, I refer to a song by Tracy Byrd: “Ten Rounds with Jose Cuervo”. This song reminds me of the past decade.  The singer had a really tough experience (bear market of 2007-2009) that he wants to forget, and does so by visiting a pub:

  • “Then after three rounds with Jose Cuervo…I forgot what I came to forget”…(Quantitative Easing 1, 2, 3, by the Federal Reserve, 2008-2014)
  • “And after round seven, or was it eight, I bought a round for the whole darn place”…(QE 2019!)
  • “And after ten rounds…I lost count and started counting again”…(New all- time highs S&P, DOW, NASDAQ!)

Just a few weeks ago, before coronavirus struck the world, we witnessed new highs in risky assets.  At the same time, traditional havens from risk (gold and Treasury bonds) also registered records. This juxtaposition is highly unusual, to say the least.

As for the future, remember what Yogi said…Despite Yogi’s wisdom regarding projections, and knowing that even Methusaleh died, there is one prognostication I am unequivocally willing to make as I enter the twilight of my career.  When I reflect upon the founding members of our team, as well as the high quality of character that we have succeeded in adding as we’ve grown, I have paramount confidence in the future of our firm – and most importantly in our capabilities to serve you, our clients, with a rewarding relationship and purposeful stewardship of your assets.

We sincerely thank you for your trust and partnership with Quadrant Private Wealth.


Herman L. Rij, CIMA®





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January 16, 2019

Dear Friends,

Allow me to extend to you our cumulative wishes for a happy and healthy 2019.

If you recall my letter of last year, my theme was from Dust on the Bottle  by country artist David Lee Murphy.  I am also a fan of classical music – to the point that few are willing to enter my office during the day.  Sadly, what culminated in a volatile 2018 did not lend itself to the sage commentary of Bach, Beethoven, nor Brahms.  As a result, I decided to go to my fall back in the country genre – a visit with Kenny Chesney.  After all, who knows?  Two centuries from now, he may be considered “classic”, along with the likes of Snoop Doggy Dog, (if I have that correct?).

Nonetheless – getting back to Kenny, he has a wonderful song titled Don’t Blink.  Perhaps as the years roll on, I am becoming more sensitive to his message.  All of us in excess of an age beginning with the number “6” can identify. I encourage you to look up its lyrics.  Here is the beginning:

“I turned on the evening news

Saw an old man being interviewed

Turning a hundred and two today

Asked him what’s the secret to life

He looked up from his old pipe

Laughed and said: All I can say is Don’t Blink”…

Don’t Blink: Time Moves Faster and Faster 

As we enter 2019, I am beginning my 49th year in an advisory capacity.  Although shocking, at least to me, what is almost as significant is that this year we will already be celebrating our 5th anniversary as an independent firm, and our 2nd anniversary in our new “World Headquarters”.  Our advisory staff’s cumulative experience now numbers 103 years.  Augmented by the experience of our support team, “in-house” QPW experience now exceeds 167 years. One of the most flattering comments I received during the year – which actually came from multiple sources – has little to do with me.  It came in the form of a question: How have you been able to gather such a talented yet youthful group of individuals to become part of QPW? My normal response is: My good looks and charming personality!  The obvious response back then is: No, seriously?  Our team evolved and continues to evolve with diligent patience.  Along that line, there was a new addition to our support team this year, Jason Doughtry.  No, not the hard rock musician “Daughtry”, but a talented person, nonetheless.  However, let me assure you his addition has filled our quota of “Jasons”.  We will continue to add to our team opportunistically as we find individuals that have the skill sets necessary to allow us to continue to do the best we can for you, the essence of our business.

Don’t Blink: We Are Late in The Economic Cycle

We may be ending the longest economic expansion in US history.  We are not yet there, but by July, that will have been accomplished.  Whether there is recession in 2019, 2020, or 2021 is debatable, but it is clear that growth is slowing globally.  With many equity indices around the world flirting with 20% declines from 2018 highs, the US bull market is also showing signs of old age.  It is important to remember that cycles are normal and necessary for long-term prosperity.  Economic expansions and contractions and bull and bear markets will always be with us.

Don’t Blink: Closing Your Eyes and Hoping Things Get Better Is Not A Strategy

According to a recent research report by Deutsche Bank, calendar year 2018 represented the worst year on record since 1901 by measure of the highest percentage of assets with a negative total return.  Based on the universe of major financial assets Deutsche Bank tracks globally, approximately 93% were negative in 2018.

The good news is that we believe our investment strategies are well positioned to deal with the difficulties – AND opportunities – ahead.  We continue to broaden and deepen our investment matrix in order to confidently create value in what could be trying times to come.

During our weekly Investment Committee meetings, we are constantly challenging what we are doing, why are we doing so, and searching for the best solutions to improve upon the delivery of what is most important – the successful accomplishment of your desired goals and objectives.  The key message we want to deliver in that regard: At QPW, we do not believe in “models and cookie cutter approaches” for our clients.  We manage your portfolios to meet your individual needs.  We promise to keep treating you as unique clients who deserve unique solutions.  The rules of the markets will never dissolve.  Return is a function of risk.  Our focus has been, and will always be, to seek out the very best risk-adjusted returns based on your specific circumstances.

Don’t Blink: The January 2020 Letter Will Be Here Before We Know It 

Our heartfelt thanks for your faith and confidence.  Our eternal goal is to reward you with our unyielding collective effort to help you accomplish your personal goals.  May we all have much to look back on with gratitude and satisfaction after another inevitable blink of the eye.

“Trust me friend, a hundred years goes faster than you think

So don’t blink

Naw, don’t blink

Life goes faster than you think…”


Herman L. Rij, CIMA®