If there ever was a time to question what you believe, this may be it. Would you believe that an illness infecting less than 0.04% of the global population would close borders, bankrupt companies, and create a global recession at a speed and magnitude that is unprecedented in the modern era. Would you believe that 10 years of job growth could be undone in three weeks, or that U.S. GDP growth could be -30% over any time period? These are the incredible and unique times that we find ourselves in.
We are all learning what it means to live during a global pandemic. While there are still many unknowns, answers are developing, and we are seeing green shoots of optimism and clarity. Daily new case counts in the U.S. appear to have stabilized, relieving some of the strain on our healthcare systems. We are seeing early-stage data showing that specific therapeutics may be effective in relieving the virus and improving recovery times. Last, in an unprecedented response, governments around the world have provided bridge financing to help individuals and businesses survive the storm. While we are not out of the woods, we believe that the global economy is much closer to the end of this dark tunnel than the beginning.
As investors, we strive to find the opportunities within the crisis, and we have several significant changes to our asset allocation recommendations.. Like every previous cycle, the new economy will have its own unique characteristics that distinguish it from others. There will be changes in consumer and corporate behavior with both positive and negative consequences to the economy and financial assets. We should not be afraid of change. Despite the two prior “world changing” setbacks in just the last twenty years, our economy (and stock market) survived and grew.