Lessons from other health crises

“If the past is any guide…the growth scare should be relatively brief. Recent global contagions going back to the SARS virus in 2003 have seen a sharp slowdown lasting about a quarter, followed by a sharp recovery over the next quarter. That’s why the consensus on Wall Street is that...within six months the whole scare will be over.”

– Ruchir Sharma, chief global strategist at Morgan Stanley Investment Management, commenting on the COVID-19 outbreak in a 2/25/20 opinion piece in The New York Times. Read more at nyti.ms/3a43nOL

Growing concerns

“It’s very different to have one country on lockdown for a couple of weeks versus rolling lockdowns throughout the global economy.”

– Patrick Chovanec of Silvercrest Asset Management and an expert on the Chinese economy, quoted in the same issue of The New York Times. The article said there’s a growing recognition on Wall Street that the economic toll from coronavirus may be deeper and longer lasting than first anticipated. Read more at nyti.ms/2I0CC1D

An ordinary year

“The normal state of affairs for the stock market is abnormal returns from year to year. We just don’t know if those returns will be abnormally high or abnormally low.”

– Ben Carlson, in a 1/28/20 post on his blog,
A Wealth of Common Sense, on the unpredictability of the stock market. Read more at bit.ly/2wFcyqu

The premium investors must pay

“There will be another drawdown. And when it comes, you will have no way of knowing if it will be just a 5% pullback, a 10% correction, a 20% decline, or something more. And that’s OK. Uncertainty is a feature of equities, not a bug. Bearing that risk is the price of admission for long-term investors, without which there would be no reward.”

– Charlie Bilello of Compound Capital Advisors in a 2/12/20 blog post on the tension that comes with the territory of investing. Read more at bit.ly/2w1x0lc

How investors profit

“The Bored man doesn’t waste his time trying to figure out what’s going to happen next and position his portfolio accordingly. He’s already built his portfolio to withstand both good and bad scenarios.”

– Stephen Nelson, in a 2/21/20 post on his Per Diem blog, in which he compared the ideal investor’s philosophy to the play of Los Angeles Clippers forward Kawhi Leonard—a “board man” happy to thrive on the defensive side of the court. Similarly, Nelson said investors should think of themselves as “bored men” (or women), opting for unexciting attributes such as a long-term view and ignoring today’s “hot” investments. Read more at bit.ly/380Clq4