Waiting for the Storm By: Gabriel PotterMBA, AIFA® 2020.03.31

Some natural disasters, like a hurricane or a tsunami, you can see coming.  With wise leadership and thoughtful collective action, we have time to prepare for the worst of it and make ourselves ready to weather the storm.  The past couple of weeks have been a prologue to what’s likely to end up as a bitter springtime. April in particular. 

The recently passed CARES (Coronavirus, Aid, Relief and Economic Security) Act is modeled very much like natural disaster relief care packages, but without geographical targeting since the economic impact is going to be felt widely across the US, indeed across the globe.  The provisions of the bill have been well structured to maintain the economic status quo while many businesses remain in a state of suspended animation for the next month, or longer. 

It's important to be realistic in the face of real health consequences.  Even if everyone enacted social distancing perfectly from this point forward, there are still going to be a few difficult weeks of news headlines as testing expands and as previously infected people become critically ill.

On the other hand, there is a lot of evidence to support long-term optimism in the markets and the economy when dealing with health crises like this.  Even before modern medicine and ubiquitous telecommunication, we’ve managed to cope with multiple pandemics.  With the internet, we have the ability to keep much of the country’s business operating while individuals act safely in isolation.  We have tremendous advantages compared to generations past, but we have become inured to scientific progress happening at light speed.  It is important to, as an investor, to be realistic.  We will get through this pandemic and we will likely do so at an incredible rate, relative to similarly far reaching pandemics in decades prior, but it won’t happen overnight.  We still have to hunker down today and patiently wait out the storm.

 

 

 

 

Gabriel Potter

Gabriel is a Senior Investment Research Associate at Westminster Consulting, where he is responsible for designing strategic asset allocations and conducts proprietary market research.

An avid writer, Gabriel manages the firm’s blog and has been published in the Journal of Compensation and Benefits,...

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