The last few days have been nothing but ugly in the markets and the world. We are seeing the consequences on a global scale of inept, authoritarian and nationalistic leadership. We were told that this virus was “contained” last week, it’s not and it’s going to get much worse says the CDC today. One of the consequences of leadership only interested in preserving its political status is the hollowing out of competent people in government to be replaced by compliant toadies. These people are dangerously unqualified for their positions but their support for the “dear leader” is total. In a pre-social media society these type of administrations could exist for years and even decades however I think that window of time is much narrower now. Unfortunately we are now confronting a global health crisis that it seems most of the planet is completely unprepared to handle. For more on that and what needs to happen please take a look at this post from Epsilon Theory.
So what now, I can only comment as an individual and and advisor who is trying to make their clients money in the long term. As an individual I need to prepare for the fact that I may need to semi-isolate myself and my family until we get some kind of control over this pandemic. Certainly travel is a no-go, and making sure that vulnerable individuals in my social circle are being looked after (kids, older folks especially those with respiratory issues). I don’t think this is going to kill millions of people from what I have read but I have no idea.
As a professional investor I can only advise the following, think harder about your investments and what effect this virus will have on them. We have had an easy ride upward for many years, everything is getting hit now but to varying degrees. Take ride-sharing companies as an example, do you really want to get in a car with a driver that has been to the airport 10 times a day in the middle of this? What if the Olympics needs to be cancelled, or any event where people gather in large numbers? In the gig economy is a person close to the breadline really going to skip work if they have what they think is a “mild flu”? Our increasingly global supply chains won’t feel the hit from this until probably late spring. Don’t think that this is going to be a quick disruption and back to easy sailing. Now it’s time to put in the work, no more free lunch, sell into strength if you need to raise cash. There will be a time for smart investors to pick up good companies at a discount to what were very inflated prices but today is not that time.
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