Experiment

May 27, 2020 - Published by IAG Wealth Partners

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Summer finally arrived in southern Wisconsin just in time for Memorial Day weekend.

After being cooped up by COVID-19, many people decided beautiful weather was just what they needed to be out and about this past weekend with family, friends, and even public crowds.

What happens over the next 7-10 days will likely have a significant impact on public health policy and the financial markets going forward.

If current COVID-19 cases start climbing we can expect more stringent social distancing requirements to be put in place and a negative reaction from traders who have been optimistically projecting a return to “normal” sooner rather than later.

If current COVID-19 cases stay constant or continue to decline we can expect further economic re-openings and a positive reaction from traders who will feel enhanced optimism toward the future.

The simple truth is that what we do not know about this virus far outweighs anything we think we know. The only way we will learn more is through observation and experiments over time. Some of those experiments are conducted in laboratories. Many of them will be conducted in real life such as this past weekend.

Thus, the new normal for public health policy and economic growth will likely be choppy and uneven as some real-world experiments will undoubtedly fail while others will succeed. We do not know the outcome in advance, so risk will be a constant companion along the way.

Whether in your portfolio or in your health, please make sure you understand your short-term and long-term risks before they become obvious. There never has been and never will be the opportunity to live a risk-free life.

 

 

Quote of the week: Morgan Housel: “When people think about risk, they don’t necessarily do it in an analytical way. They do it in a cultural way. What you think is risky and how you think about the topic of risk is heavily influenced by the culture you live in, the generation you were born into, [and] the values instilled in you by your parents.”

 

 

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