COVID-19: A Global Disaster Like No Other (Part 1)

Key Points

  • The CARES Act represents unprecedented stimulus spending on behalf of the U.S. Government. Act now, supplies are limited.
  • The curve is not yet flat, but it is flattening.
  • There is hope, and the stock market has already rebounded over 25% from its low this year. Even so, we’re not out of the woods just yet.

We might be in the thick of things from many perspectives, and without doubt, disruption to daily life around the planet continues unabated. Given all this, in this post, we’ll cover where we are, how we got here, and where we might go from here.

Recap time.

mona lisa protection protect virus

So much has changed over the past few weeks, and we’re a long way from the end of this pandemic, and somethings will truly never be the same again. Nevertheless, even though there’s plenty of room for fear and anxiety, there is also plenty of reason for hope and optimism. Let’s dig into the good, the bad, and the ugly of all this. As we know, the outbreak was identified in Wuhan, China in December 2019. It was subsequently declared a Public Health Emergency of International Concern on January 30, 2020. And six weeks later, the virus was recognized as a pandemic by the World Health Organization on March 11, 2020.

For a concise overview of the virus itself, and what you can do to keep safe, Kurzgesagt – In a Nutshell has a great video on the topic. And of course, do look towards the CDC for the latest information and updates on the pandemic.

To address the economic fallout of the pandemic to Americans, the U.S. Congress passed the CARES Act, which was signed into law on March 27. This historic bill represents the largest stimulus package in U.S. history.

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Figure 1. Where Did the $2 Trillion Stimulus Package End Up? (Source: u/kuharido)

If you are an individual or a small business you will want to take advantage of these programs if you have been impacted by the virus. Here are resources that may help you navigate the current situation:

Some of these programs will require quick action on your part in order to obtain a benefit, and some of these programs have limits that will apply on a first-come, first-serve basis up until the limits are reached. So act quickly.

Stuck in Mud

Across the globe, there are over two million cases and over a hundred thousand deaths reported as of this week. Also this week, the U.S. will top 600,000 cases and 30,000 deaths. This now means that the U.S. has more cases by far than any other country on the planet.

As we all know, the phrase of the year is “Social Distancing”, and perhaps we can take some comfort in knowing that these stringent measures are in fact starting to work.

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Figure 2. The U.S. COVID-19 Cases for 2020 YTD (Source: Johns Hopkins)

Indeed, the good news is that the curve is flattening in the U.S. as we would expect. We are about a month into stay at home orders within the United States, and the impact on daily life has been tremendous. But the results of our fortitude are beginning to show.

The Future Is Uncertain, But Bright

A good leading indicator of risk and rebound from such risk is the stock market. And if the long-term history of the markets can be our guide, we know that things will eventually get much better.

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Figure 3. S&P 500® Index 2020 YTD (Source: Google Finance)

As noted in Figure 3 above, the S&P 500® Index has already rebounded over 25% from its low on March 23. As we have noted, a buy-and-hold, passive investing strategy is sensible during such periods as panic can often lead investors to bail at the very worst time, only to re-enter when it is too late. This recent period is just one more example of where such a market timing scenario has quite likely burnt many investors who left the markets too late and have yet to re-enter to catch the latest upswing.

However, there are some concerns that once the quarantine and stay at home orders are lifted that virus infections will begin to rise all over again. This is certainly a valid notion of concern. According to research from Imperial College, if we want to keep ICU cases under control, we will need to re-instate social distancing measures whenever cases begin to spike again. This might then lead to a wave of increasing and decreasing case counts for the next eighteen months (or basically until a vaccine can be developed and deployed across the globe).

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Figure 4. 18-Months of Social Distancing May Be Required (Source: MIT Technology Review)

Even so, I have no doubt we as a civilization will come out stronger because of all this. Indeed, there have not only been global pandemics in the past, but there have been plenty of situations where humanity has been tested to its limits. Nevertheless, we have persevered, and we will get through this. One day at a time, as they say.

If you’re ever in need of guidance, these blog posts may be of help. But be sure to contact a financial, tax, or legal professional for guidance and information specific to your individual situation. And as always you can reach out to me directly here with questions or concerns about your personal situation.

Finally, if you want to see how your risk appetite stacks up, check out my free risk assessment here.

The End.