Fear and Perspective (3/23/2020)

I have no more idea where coronavirus and its total impact is going than anyone else. As a pandemic this is unprecedented for the world and the U.S. With global and national travel so fluid today, diseases can spread very rapidly.

To the extent that we can obtain a time frame for recovery, China appears to be seeing a positive change after about three months. The power of coronavirus is that it is highly infectious because there is no immunology built up.  Coronavirus also takes a serious toll on individuals over 60 with underlying medical issues.  All of this has caused governments around the world to ask people to shelter in place, avoid contact in groups of 10 or more and keep 6 feet apart.

With many businesses shuttered we will likely have anywhere between 6 and 20 million workers out of work for some period of time. It appears the U.S. government is preparing a package, that will hopefully, ease the financial pain and finance businesses to gear back up quickly, when things get better.

The financial markets are in Fear! While it is different than “other times” it is still being driven by fear of the unknown. When I look at most of my client’s accounts, I note that the value today is about equal to what the value was on January 1, 2019. In essence, we’ve lost 15 months of gains. While this is not good, it does put what is happening in perspective. Will the markets go down some more, likely, but will it recover? In looking at prior impacts of a fear generated stock market, recovery can happen rapidly or over a longer period. In the fall of 1918, the Spanish flu took hold, killed over 50 million people worldwide and about 675,000 in the U.S. This caused a 7-month recession in the U.S. that lasted until August 1919.

I don’t know how this will shape up, but I am taking the position that I’ve been around a very long time, and if you didn’t get out when things were high, you are not best served to sell now.

Ed Mallon

Posted March 23, 2020