- Michelle Durgy
- Chief Investment Officer
- Phone: (415) 554-5210
- Email: email
Now that the dog days of summer have seemingly set in, I have found myself with a little more time and yet, a little less cash to invest. Of course, after the turbulence we all experienced in June, unless you want to realize those losses, what else are you going to do?
Let's address the June market volatility for a moment. To those of you, who find themselves a bit underwater on those recent purchases, allow me to offer a few words of sympathy or encouragement or however, you want to take it. A fellow colleague, who I am happy to also call my friend, recently told me that if we are not unhappy and underwater on our May-June trades, then we were either asleep or simply don't care. With that in mind, personally, I am taking comfort that I did have skin in the game because I do care and like you, are trying to do the best I can for our beloved city.
So, back to the original topic at hand. After a busy budget season packed with meetings of every possible topic you can dream of, I find myself taking a deep breath and peering into a long list of items I have put off in favor of the more exciting and urgent matters. What's on the top of the list at San Francisco? Cash flows, cash flows, cash flows. Not the most exciting topic but definitely something that needs attention during this time. If you believe the general consensus from economists, Fed watchers and the Wall Street strategists, this market is not going back to .57% on the five-year anytime soon. It almost goes without saying, in a declining rate environment, your cash flows can be a little "looser," because you can always sell something at a gain. However, as rates begin to rise, you really need to be able to stick it on those maturity lengths, because at times, it can be unpalatable to sell at a loss, no matter what the net gain.
Being a city and county, our cash flows have an extra element of fun built in. They consist not only of the streams from multiple agency participants (SFO, the Public Utilities Commission, the school district, the city college, local hospitals), but also the revenues and expenditures of the City and the County. Hence, it requires a lot of outreach, effort and analysis to gain even a partially complete picture. To that end, that will be priority number one for us in August.
Nonetheless, I hope that you all are able to take some well-deserved time for yourselves this summer. And, when you return in the fall, consider attending our Investment Basics workshop, scheduled for September 18-19. Our Education Committee has worked tirelessly to create a robust two-day workshop, much along the lines of April's annual conference.
Good Luck Investing!