Hi Everyone,
I hope you are all healthy and finding their new “normal” in these unprecedented times.
As we go through this historic period where we have no context for the crisis and no precedent for understanding what challenges may come ahead, I feel somewhat guilty from the fact that I am completely fascinated by what is going on around us. My heart breaks for the deaths, sickness, financial loss and hardship resulting from Covid-19, and yet I am completely engrossed by the psychological, economic and political response to the pandemic. I also can’t help appreciating what an amazing opportunity we are being presented with to re-order our priorities. So much talk and impatience to get back to ‘normal” and guessing at what the new ‘normal” will look like when we emerge from isolation that it has really got me contemplating the construct of it. I have come to the realization that while there are many things I miss right now, there are also many things that I really want to bring forward from the isolation into my new definition of normalcy when the world reopens. I miss friends, restaurants and sports, but there is no question my life was overloaded and my time overextended. I have loved having regular family meals again and frequent hikes and bike rides into the mountains and lakes I am fortunate enough to live beside. I like working from home and while I won’t do it full time, I do fully expect to incorporate more home days into my work week for both myself and my team going forward. My new normal will not just be a return to the good old days of a month ago, it will be better!
There is a tremendous amount of information that I try to assimilate every week in terms of tracking virus data, interpreting market news and understanding policy. I hope it doesn’t dent your faith in my advising ability too much when I admit that I do not possess the ability to amalgamate all that data into a short-term cohesive action plan for making money. I feel somewhat encouraged in that I have yet to encounter anyone who can (although I have met lots who claim to!). I also take encouragement from the fact that a measured, disciplined approach to investing means that short term fluctuations do not matter to long term objectives. Despite my lack of soothsaying ability, I do try to at least stay on top of what is going on!
Virus wise we continue to see encouraging news as while numbers of cases and deaths continue to climb, the curve seems to be bending, reinforcing the feeling that began a couple weeks ago, that the worst is behind us. Germany has plans to re-open schools and factories this month and is phasing in the re-start of their economy. While the economy was turned off abruptly, it can’t simply be turned back on again and it is going to take time to get things back to full capacity. The US and Canada have tentative plans to begin easing restrictions in May with certain US states already reopening parks and beaches. Still real worries about reinfection, but promising shoots of optimism that some normalcy is coming.
While the Covid-19 news is positive, the IMF released its economic outlook this week, after accounting for the coronavirus outbreak, and the forecast was bleak. Global GDP for 2020 is expected to come in at -3% while US and Canada are expected to deliver -5.9% and -6.2%, respectively. Early signs point to a severe economic downturn. None of this was unexpected though, and markets were mostly unchanged, with the Canadian market slightly negative and the US market essentially flat last week. Markets have written off this quarter already, bad news here shouldn’t be a surprise. If things persist beyond a quarter, then we would expect a reaction.
With nothing of real import or at least new to report in terms of updates, it brings me back to my musings of what the new “normal” will look like in a year. I know I am not the only one who expects there to be a re-ordering or restructure to routine in the future. In the course of this pandemic I have found that my wife is actually pretty good at men’s haircuts. If it weren’t for the power that it gives her, I would be quite happy keep her as my stylist. Unfortunately, she pins me down on completing tasks on her “honey do list” while she is in the middle of clipping my hair, forcing me to give her concrete action plans and deadlines for knocking things off the list while I am the mercy of her shaving a bald spot into the middle of my scalp! Despite potential cost savings, I will happily be going back to my barber as it is far cheaper for me in the long run! While this is an extremely local application of a potential re-ordering of my own life, if we can think ahead to what the new normal will look like on a global scale, there are investment opportunities that present themselves that we might benefit from. How much work will continue to be done remotely? What jobs/professions are truly essential and what will become obsolete? Malls and retail shopping were already struggling to compete with ecommerce, does this pandemic kill them off entirely and further bolster the online model? Microsoft, Netflix and Amazon are hitting record highs again already, Google and Facebook (more advertisement dependent) are lagging – is this a trend that continues? The US has a petroleum reserve, even though it is currently energy independent and the largest oil producer in the world, is that a model that will be copied in the healthcare system going forward in terms of stockpiling masks, ventilators, testing kits etc.. that are proving to be so hard to come by today? Is Virtual doctoring a temporary short-term virus dependant trend or will it expand and grow into the new normal? Spend some time thinking about what actions you are doing now in your own life that may become lifetime habits even as things open up again, and that will give you an idea of what may become the new normal on a global scale. Keep in mind that this was virus initiated, but it was a government mandated economic shutdown of a pretty healthy economy. The sectors that were doing well and companies that were growing revenues before the shutdown are most likely to be the ones to accelerate out of the block when things re-open. Some of them may have been given an additional boost in terms of consumer behaviour becoming habitualized in lockdown, not to mention the added benefit of the stimulus packages that will be kicking into place.
My point here is simply that I don’t want you to simply react to the fear and uncertainty of the times by wishing for the good old days of a month ago. When we are fearful we crave the familiar and we react rather than respond. I urge you to take this extra time we have on our hands today to really reflect on changes we can make so that our new “normal’ is better when things reopen. Don’t be happy with just going back to the way things were. Expand that thought process to your finances by mentally preparing yourself to not react fearfully to the turbulence in the markets, but to try and respond to the volatility as a tremendous opportunity to set up your future finances so that your new normal is wealthier and more prosperous!
Stay safe, be healthy, and here’s hoping the new normal comes back soon and is better than the old!
Jeremy
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