When I was growing up in Michigan, one of the great things about the month of March was it signaled that we were heading to the end of winter. My mother had a saying about March. “In like a lion, out like a lamb” or “In like a lamb, out like a lion”. Well, March has certainly come in like a lion and it remains to be seen how it might end. One new term did come into our vocabulary, “Covid-19”, and it has certainly caused a tornado through the equity markets.
Unfortunately, the pundits have their day. The World Health Organization upped its highly unrealistic death rate estimate to 3.4%. The figure came loaded with caveats, the biggest is the probable failure of governments in China and most countries to detect thousands of mild or symptomless cases. In the New England Journal of Medicine last week, U.S. experts predicted that the American fatality rate may be closer to the flu’s 0.1%. Please keep in mind that the ordinary flu is believed to kill upward of 300,000 globally every year.
The attached article, “The Fed’s emergency rate cut was a big mistake”, sheds some light on the shape of our economy going into this crisis and the numbers were looking pretty good. Personally, I agree. How all of this is going to play out is an unknown. As I did say in last week’s email, there are a lot of resources being applied to this virus. Medicines, antidotes and vaccines will follow. Again, my personal opinion is that, should the Covid-19 virus end up being no worse that ordinary flu’s mortality rate, markets should recover. FYI, the S&P 500 started the year at 3257.85, got as high as 3386.15, and closed at 2972.37 last Friday with the drop all coming in the last 3 weeks.
So, we shall see how March ends in the coming few weeks. As always, should you have any questions or wish to talk please call or email me so we can schedule a time together. For now, let’s us just practice good hygiene and be conscious of who we’re hanging around with. I did learn something new this week. So, now instead of shaking hands or hugging friends, I can do the elbow bump. Hope you have a super week.
PS: This is not an offer to buy or sell securities. No investment process is free of risk, and there is no guarantee that the investment process or the investment opportunities referenced herein will be profitable. Past performance is not indicative of current or future performance and is not a guarantee. The investment opportunities referenced herein may not be suitable for all investors.