2028February 26, 2020 -
Categorized in: IAG News
Concerns continue to rise over the spread of COVID-19. Efforts to contain its spread focus on keeping people isolated from each other.
Isolation has its advantages for slowing the spread of a contagious disease, but it could be a disadvantage for the global economy which relies on people working together.
The stock market adjustment over the last two days reflects the wide uncertainty about potential future economic outcomes. But before we think about future outcomes it may be beneficial to take a step back and review the past to understand how rapidly the future can change.
Less than two months ago the world was entirely unaware of COVID-19. It did not exist to the best of our knowledge. It was an unknown unknown.
In early January concerns rose in one province of China. Scientists identified COVID-19 as a new strain of coronavirus that had gained the ability to transmit from one human to another. Today the official statistics show that over 85,000 people have been infected, over 2,000 have died, and infections have been reported in 32 different countries around the world.
The future changed very rapidly for the worse.
Today it is easy focus on those negative headlines which were unthinkable just two months ago. However, the headlines two months from today will be driven by even more unknowns. Will scientists develop an effective vaccine soon? Will the isolation strategy slow the spread of COVID-19? How will isolation impact the global economy? Will other strategies for containment prove more effective?
All of these are unknown, and there are likely even more unknown unknowns.
The future is never as certain as we think. For that very reason our disciplined investment process limits our clients’ stock market allocation to assets that are unneeded for cash flow for at least 8 years.
While COVID-19 could cause significant additional market volatility in the coming months, odds are fairly high that it will be a non-issue by February 2028 when we will likely be coping with new unknown unknowns we can’t even imagine today.
Quote of the week: “Donald Rumsfeld “I would not say that the future is necessarily less predictable than the past. I think the past was not predictable when it started.”
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Past performance is no guarantee of future performance. In fact, the opposite can be true. The information contained in this report does not purport to be a complete description of the securities, markets, or development referred to in this material. Investing involves risk including loss of principal.
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