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Investment Insights, Inc.

This Too Shall Pass

Nothing has happened in during my life like we are going through right now.  In my life we eliminated polio from the United States and most of the world.  We beat back measles and other horrible diseases.

Several new horrible diseases have come along – HIV and Ebola come to mind.  MERS and SARS are terrible killers but they aren’t very contagious.  Neither is Ebola. 

But now we have a killer virus that aggressively spreads.  Now we have mass hysteria. 

I have known about mass hysteria but it’s always been something I’ve read about.  Now we’re living through it and it’s not fun. 

Let’s get right to the point.  Humanity has been attacked for millennia by viruses.  I have no doubt at all that the result of this will be the same as all previous epidemics and pandemics.  We will survive.  We will find a way to manage this.  I don’t expect Covid 19 to go away but I do expect us to find effective treatments and vaccines and I expect humans to develop some immunity to it. 

For now the biggest health risk seems to me to be ignorance.  Because some people refuse to accept it and believe this is all just so much hype, many won’t take precautions against getting it and, more important to you and me, many won’t take precautions against spreading it. 

Further, the lack of testing kits is a major problem because there may be many thousands of people who have this disease and don’t know it. 

But what does this mean to investors?

A whole lot of the economy is being shut down.  The NBA suspending its season may not cause a recession.  The NBA, NHL, MLB and PGA all suspending their seasons may not cause a recession.  But then you add in all the conferences, business travel, tours, etc being canceled.  I went to a local restaurant the other day and it was empty.  No conferences or tours canceled.  People just don’t want to eat out.  I can’t blame them.  And that means that across the country hotels, restaurants, bars, the entire sports and entertainment industry is being hammered. 

Just like I have no doubt we will manage this disease, I also have no doubt we are dropping into recession fast.  How long it lasts will depend on how long it takes us to learn how to manage this disease.  I don’t think it will be weeks.  I think it will be months and maybe even years.
 
But right now we have mass hysteria and I do not expect that to last nearly as long.  Humans are incredibly adaptable.  We will learn to live with this emergency and that includes markets.  Markets are rapidly being repriced to account for a recession.  I expect this repricing to go too far.  There is no magic price that everyone knows markets have to get too.  The panic will run its course, if it hasn’t already by the time you read this.  The market will calm down.  And before you think the disease emergency is over, the market will probably start to stage a comeback in anticipation of that. 

Recessions were not canceled just because it was 11 years since the last one ended.  Bear markets did not become extinct.  But this being the end of the world is one of the least likely outcomes so if you are a long term investor, you have to look at times like this as both a time to remain calm and a time to look for opportunities. 

Both of those things are far easier to say than do.  We are all emotional creatures.  Keeping your head in a crisis is not easy, but it is important.
 
I am reminded of extreme weather.  In a blizzard you don’t make changes.  You hunker down and wait for it to pass.  And if you need to go somewhere, you probably don’t wait for the last snowflake to fall before you get outside, clear the driveway and get going again.
 
The current time is a lot like that.  A lot like a storm that will pass.  Whatever action you took before the storm came is what you did or did not do in preparation.  But now the storm is here so it’s probably better to hunker down rather than risk getting blown around in a blind snowstorm. 

Be safe.  Wash your hands a lot.  More than you think you need to.  We’ll get through it.


Hal Masover is a Chartered Rerement Planning Counselor and a registered representave. His ?rm, Investment Insights, Inc is at 508 N 2nd Street, Suite 203, Fair?eld, IA 52556. Securies o?ered through, Cambridge Investment Research, Inc, a Broker/Dealer, Member FINRA/SIPC. Investment Advisor Representave, Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Investment Insights, Inc & Cambridge are not a?liated. Comments and quesons can be sent to hal.masover@emailsri.com These are the opinions of Hal Masover and not necessarily those of Cambridge, are for informational purposes only, and should not be construed or acted upon as individualized investment advice. Investing involves risk. Depending on the types of investments, there may be varying degrees of risk. Investors should be prepared to bear loss, including total loss of principal. Past performance is no guarantee of future results.  Indices mentioned are unmanaged and cannot be invested in directly.

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