APRIL 16th, 2020
On January 8th, the New York Times published a news story in their Global Health section, headlined “China Identifies New Virus Causing Pneumonialike illness” with a lead paragraph saying, “There is no evidence that the new virus is readily spread by humans.” That was three days before the first death, one month before the stock market high, and both a short and very long three months ago.
What a huge month of loss we have all experienced, some much more acutely than others. We have lost the ability to move freely, see loved ones, hug friends. Many of us have lost pay or jobs. Our portfolios have lost value. These losses are all temporary in nature, part of a response designed to curb the most tragic and permanent loss – that of human life.
Jobs will come back, schools and universities will reopen, the economy and our portfolios will recover with time. The important thing is that we all meet the current moment with compassion and resilience. We will get through this crisis and it will be how we compose ourselves and how we emerge from this crisis that will define how we recover and what we take away from this experience. These are the moments where we step up as individuals and when unexpected and unknown leaders in our community emerge. These unlikely leaders set examples for how we can all make a difference. Take seventeen year-old Avi Schiffman, who created the most widely used tracking website(1) for the coronavirus and refused $8 million to put ads on the site, or Wade Miquelon and the team at JOANN Fabric & Crafts, who have led in the effort of sewing 100 million cloth masks to be donated to healthcare professionals. They’re already 40% of the way there.
As for the markets, it is important to understand that there are patterns that we can see from past returns and while history does not repeat itself, it often rhymes. We know that markets are anticipatory in that they reflect future expectations, not what is happening in the present. We saw this in late February and early March as investors were anticipating the spread of the virus, a rise in deaths, record unemployment numbers, and a contraction of the global economy unseen in modern times. Conversely, we saw the same thing happen on the upside in late March and early April as markets ticked back up over 20% in response to news signaling a drop in the daily deaths in Italy, a slowing of new infections in New York, and that this crisis may indeed have a finite duration. This is despite headlines concurrently reporting the ‘worst week’ Americans have had to face in lives lost to the coronavirus.
Going forward, we expect markets to continue to be more volatile for the next several months, but as more green shoots begin to sprout – like a slowing of the infection rate, fewer daily deaths, widespread testing availability, promising treatment for severe cases, and companies or entire industries growing earnings – we will see the market rebound, albeit lumpy and in fits and spurts.
As we continue to live through this crisis, what is abundantly clear is that we are all in this together. We all want to see our family, friends, and communities come out of this healthy and thriving. Focusing our collective energy on taking care of each other, especially those who are struggling, will help us all recover and be stronger when we get to the other side. We are thinking about you during these challenging times and are here to answer questions, serve as a thought partner, or help in any way we can.