Looking Past the Virus

As regular readers of these posts know, I have not been conventionally employed in the five years since the business I used to help manage was sold. The Beloved Spouse and I have been living off income from our portion of the proceeds of the sale.

After the sale I placed our savings in the hands of capable and sober institutional managers and paid as little attention to what they were doing as I could get away with. Once a year or so, the Beloved Spouse and I sit down with the money managers, hear what they have to say, agree with the great majority of their recommendations, and depart. Fortunately, until the last couple of weeks, the markets have been very kind.

The first time I took the initiative to ask the managers to take any significant action was three weeks ago today, when I instructed them to turn about 20% of our then-total of investments into cash as a way of battening down the hatches in case of rough weather. The timing of this action proved to be absurdly lucky, as the markets began their steep dives on the following Monday.  

I have no intention of mistaking my luck for anything else, though, and will not now regularly make investment decisions based on my own assessments of the timing of market turns; that would be a fool’s errand. I would never try to pass myself off as a seer or even – lesser variant – one who has special ability to predict the market.

All of that having been written, I do believe that the market’s selloff is overdone. The coronavirus pandemic will come under control in this country (and globally) sooner or later – I’m inclined to think sooner – and that a vaccine and a cure will be forthcoming in a matter of months. When, thereafter, the human cost of the virus in terms of numbers of deaths and damaged lungs is tabulated, it will be found, however sad, to bear almost no relation to the something like 25% declines in the markets’ collective values. Most people will get right back to work and to living the best lives that they are capable of attaining.

Which is not to imply that all survivors’ (and that will surely be almost all of us) lives will go back to what was normal until a couple of months ago. All too many businesses will have failed – and perhaps not be replaced, at least in the same forms – reflecting both the strange hiatus in which we now find ourselves, and new patterns of post-pandemic activity that will reflect understandings of risks we hadn’t previously appreciated.

In the near term, most of the economic shifts resulting from the virus will involve disruption and pain. Many restaurants – which traditionally live at the edge – will fail, as (I’m guessing) will some travel companies, cruise lines, airlines, trains, and even bus lines, all of which are likely facing permanently reduced demand. Hotels, too. Entertainment world patterns will be challenged: movie theater chains’ declines will accelerate and the professional sports leagues will take a big hit this year, and maybe next.  

A lot of modestly-paid service workers, who probably have little in the way of savings, will be looking for new jobs. Even experienced executives in many fields – most with families and huge personal responsibilities – will find themselves displaced due to abrupt changes that absolutely nobody foresaw .

My heart goes out to all of them.

Some of the economic shifts flowing from the virus will benefit Americans – I am convinced, for example, that our pharmaceutical companies will relocate much more of their sourcing onshore – and that there will be a much greater reluctance on the parts of diverse American companies to be quite so dependent on the Chinese or on the just-in-time supply chains elsewhere that have proven to be vulnerable to disruption based on of both ordinary trade disputes and virus-related trade restrictions.

More subtly, some previously time-honored business models will inevitably be changed. Many of the best colleges are now shifting to online lectures and testing; when the crisis is past, they may well find that the efficiencies of the new model (and fears about dorm life being “a cruise ship without the sea”) – added to the already-acknowledged unaffordability of the old model – mean that the whole sector has undergone an unexpected, sudden shift in paradigms.  

America is resilient. Notwithstanding the current crisis, ours is a (largely) free and vibrant land, better able to adjust to rapid changes in circumstance than a centrally-planned economy can ever hope to be. A year from now, or two at most, people will look back on the coronavirus pandemic and see it as an event that, while painful, ushered in changes that have moved the country forward.

M.H. Johnston  

One comment to Looking Past the Virus

  • Vivian Wadlin  says:

    I have a very old tee-shirt that says “This Is Not A Rehearsal.”

    A silver lining to all this is the fact that we will be better prepared for the next pandemic because there is always something lurking out there for which we make a tasty or desirable home–and if it is not already out there, something will evolve to take up the niche of space on the planet–us.

    So, all the panic, stock selling, shelf-clearing, and job losses may make us think twice about how we spend our money and why a little savings can go a long way toward weathering a storm.

    I think I will go look for my tee-shirt.

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