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Around The World In 100 Words-February, 2020: Week 8

This week Around The World revisits one of the big headlines from last month -Covid 19 -also known as the Corona virus. Curbing the Asian contagion is critical to mitigating the impact of the virus on global supply chains. This challenge facing the world economy falls squarely into the Known-Unknowns category. We know about it of course, but we just don’t know its severity. This includes the length of time it will take for science to wrest the virus under control. 

 When investors first heard of Corona In January, they reacted predictably with shares selling-off, only to recover on the view that it is less of an epidemic than first feared. But just when you thought it was safe to go back in the water again, fear is back and markets are in retreat. As always, context is important -though difficult to grasp when the situation is so fluid. But a revisit to SARS of 2003 may be helpful as a comparison. SARS lasted six months (February to September) and infected 8 thousand people worldwide, 10% fatally. To date the Corona virus has seen about a quarter of this number, though its economic impact is already greater.

 Interestingly, stock markets also sold off in 2003, only to finish the year up more than 15% after the SARS virus was contained and neutralized. Whether history will repeat itself here with Corona remains to be seen, but we are confident our Model Portfolios will weather any short term downturns and be positioned for future growth when this crisis is safely behind us.

 Market downside has an upside too -a silver lining if you will. Namely that it allows the institutional wealth managers we partner with to acquire positions in companies whose share price is temporarily lower. Buy low-sell high is the objective after all, and whatever reason markets have for selling-off short term, they represent opportunities for long term investors.

 Call me anytime.