Finding perspective amid a public health crisis and a sudden bear market isn’t easy. As simplistic as it does sound, I find it helpful to remind myself frequently that both will pass in time. And my personal view is that we will be stronger and more resilient as a country for what we have been through. The question is how best to protect ourselves and live our lives in the meantime.
Bear Market Perspective
Investment perspective may be easier to come by than insight into pandemics. Goldman Sachs has excellent historical data on bear markets. They fall into 3 categories: Cyclical (caused by rising interest rates, an impending recession and falling profits); Structural (caused by financial bubbles or structural economic or financial problems); and Event-driven (caused by a one-time external shock). What we are experiencing now is an Event-driven bear market triggered by COVID-19. The good news? Event-driven bear markets are on average much shorter and with lower market drops than the Cyclical or Structural bear markets. Event-driven bear markets fall on an average by -26% and recover in 7 months on average. Compare this to a Cyclical bear market with average length of 26 months and an average drop of -30% and to a Structural bear market with an average length of 42 months and average loss of -57%. If the past is a reasonable guide to the present, this bear market may be nasty but with a relatively quick recovery. Many economists, but not all, share this view and expect an economic recovery as soon as the third quarter. My view is that we need to be prepared for a wide range of outcomes because the pandemic is such an unknown.
COVID-19 Information Sources
Almost overnight, we are all inundated with opinions, explanations and suggestions about COVID-19. People mean well, but it can be overwhelming. My suggestion is to find some sources on COVID-19 that you trust and screen out most everything else (or risk going nuts-your choice!). I want sources that are as “spin-free” as possible, so I subscribed to a Johns Hopkins COVID-19 daily newsletter. Search for Johns Hopkins COVID-19 Daily Situation Reports to find and subscribe. I also set up a Google News topic search for Dr. Anthony Fauci, a widely respected and frequently quoted infectious disease expert. Lastly, the New York Times has lowered its paywall for its comprehensive webpage on COVID-19. (New York Times)
Please read on for more of the following: Medicare Covers COVID-19 Testing; Amazon Prioritizing Delivery of Household Staples; When Isaac Newton Worked from Home; Biden’s Rapid Recovery; The Butterfield Diet; and A Quote I Like.
- Medicare Covers COVID-19 Testing: For those eligible for Medicare, this is welcome news although getting tested may be difficult for a while. As we know, a major COVID-19 issue is that our healthcare system is overwhelmed. One client pointed out that one positive in all this is that we get to learn on COVID-19, which is truly dangerous, but may help us to prepare for even more virulent infectious diseases that may come later. (Medicare.gov)