February 2020

Play Video The market's down maybe 10% this week. Let's play "Catch a Falling Knife." So it looks like we're entering official bear market territory, especially when we refer to the peak in early February. We've been here before. We've seen this before and always, it appears obvious with hindsight. But let's do a quick recap of what we know. We know there's a Coronavirus and we know it's pretty likely going to hit all corners of the Earth. We know there are a lot of underreported cases and the most likely fatality rate, especially in Western nations, is probably at or below half a percent. That's significant, but the regular flu is one 10th of a percent. Disproportionately it's affecting males over 65. Interestingly, it's not affecting children that much. I mean, from a very callous point of view - and trust me, this is not where my heart...

Play Video So now that the Coronoavirus has found its way to Italy, South Korea - unsurprisingly, the U S markets - the global markets have come down with a case of the flu. I'm not going to spend too much time on the topic other than to say, as I've said before, that the history of these pandemics is that the market reacts in the short-term. Then rebalances itself for long-term expectations, which means a recovery. And of all the viruses and pandemics out there, the one that has the greatest potential for short-term disruption, compared with almost no potential for long-term disruption, is the Coronavirus. The victims of the Coronavirus are disproportionately people who are not of working age. One: that is not to downplay the tragedy, the severity and the potential for fear. It is a real potential for short-term disaster, for want of a better word,...

  It's been an interesting week. We've got the Kansas City Chiefs winning the Super Bowl. I don't know what to say about the debacle in Iowa, but really what's on everyone's mind is how will a Coronavirus affect stock markets and your investment portfolio? Now there are precedents, so we can talk about this. The SARS virus, there's Avian Flu and there's Ebola. What are the threats? Why would markets be so upset? Well, the biggest threat we're concerned about is these travel bans - especially in China. One of the things that's been learned with Ebola in Africa is the stricter the travel ban, the harder people will work to actually violate it. The other threat is what does it do to economic consumption and global GDP markets? We do know from history that travel bans rarely work.   We also know from history that this type of...