The thing about the end of the world is that it doesn’t happen very often.
The last several weeks we’ve been exposed to a barrage of horrible events and news stories. And while many of these stories can feel miserable to read, to us it does seem to be extremely one-sided. Research shows we tend to seek out negative news, especially in times of a crisis. As most of you know, Greenspring is not one to time the market or predict what is going to happen, but we also know what history tells us about the market. Mainly… it pays to be optimistic. So we are taking the optimistic approach with the news we read as well. When we see what seems like the entire investing world taking a view opposite of what the overwhelming odds tell us about markets long-term, we thought it would make sense to highlight some of the positive news out there that you may not be hearing:
- New cases and deaths in China, South Korea are slowing considerably and life is getting back to normal.
- You don’t have to pay your taxes until July 15th (assuming you owe less than $1 million)!
- New drugs and treatments are being explored at record speeds- the National Institute of Health (NIH) began a trial last month using the anti-viral drug remdsivir to treat COVID-19 patients. Regeneron Pharmaceuticals has announced a clinical trial of sarilumab, a drug that may be helpful in reducing lung inflammation of COVID-19 patients. There are other pharmaceutical companies and researchers continuing to explore the new and existing treatments to combat this virus. The NIH announced that clinical trials of a vaccine for COVID-19 started in Seattle. The trial is expected to last about a year, so while no vaccine can be expected in the short-term, there are potential drugs and therapies that are being tested that could ease the symptoms and impact of COVID-19.
- While they feel scary, lockdowns helps prevent the spread. They are a GOOD thing. Evidence is showing us that work from home, and social distancing like we see in China, South Korea and now Italy and the US do work. It takes several weeks to see results and sometimes they can be skewed if there is minimal testing on the front end, but keeping people isolated (especially those with symptoms) reverses the trajectory of infections. We would expect to see this start impacting the US over the next couple weeks.
- Recoveries- over 90,000 people have recovered from the virus. That number is almost certainly too low as many people who have mild or no symptoms may never have been tested (and therefore don’t show as recoveries). Researchers continue to learn more every day about this virus and how we can combat it.
- Fed easing, fiscal stimulus- the Federal Reserve has signaled that it is going to keep rates near zero until the economy has gotten past the coronavirus and is on track to meet the Fed’s targets for jobs and inflation. Low rates may not mean much now, but as we recover, the ability to borrow at very low rates helps accelerate growth. In addition, Congress seems likely to pass a stimulus package worth in excess of $1 trillion, delivering checks to most US households. While some families may not spend the money until they feel more comfortable to go out shopping, this will undoubtedly create pent up demand whenever the recovery starts.
- Stock markets tend to have gigantic future returns once they bottom after these types of losses- “In the year after the trough of the markets since 1929, the S&P 500 has gained an average of 47%”. Obviously we don’t know when we’ll hit bottom (or if we already have!), but if history is any guide, a significant portion of the gains typically accrues during the early months of a rally, making it very difficult to time the market.
- Humanity on display- despite all the pictures of people hoarding toilet paper and hand sanitizer, there are countless others showing how one person can make a difference. Health care workers on the front line, grocery store employees keeping the shelves stocked and neighbors looking out for each other. As Mr. Rogers once said, in times of crisis, “look for the helpers”. They always appear. They don’t do it for honor or recognition. They do it because they want to help their fellow man. Those helpers are the reason I know we will get through this.
- #Flattenthecurve, a movement that promotes staying indoors to avoid exposure and the subsequent need to seek medical care, is trending across social media as people across all risk categories and age groups find unique ways to help the greater community.
Again, we have no idea where the market is going over the next several months. But if history is any guide, there is a strong probability that 3, 5 and 10 years from now, the market will be much higher than current levels. There are good things happening. The human race is not stagnant, in fact, one could argue we are connected now more than ever, and we are leaning on one another – getting to work to make things better.
Information contained herein has been obtained from sources considered reliable, but its accuracy and completeness are not guaranteed. It is not intended as the primary basis for financial planning or investment decisions and should not be construed as advice meeting the particular investment needs of any investor. This material has been prepared for information purposes only and is not a solicitation or an offer to buy any security or instrument or to participate in any trading strategy. Past performance is no guarantee of future results.