MY TWO CENTS:
Hopefully, our last edition of MTC helped you take a breath and remain calm. Since our writing of that edition, quite a lot has transpired that may have tested your resolve to live in peace and joy.
Three of the most recent and vivid items that seems to be capturing our attention in the media are Covid-19, also known as Coronavirus, the precipitous drop in oil prices, and the subsequent decline in US stock market values. These are real issues about which many people are pontificating…and very few have solid answers.
If you’ll allow me some latitude to share some of my own thoughts on these few items, we can filter what we are being fed through the 24 hours news media and the varied social media outlets to gain a bit of perspective.
First, let’s start with oil prices. This is effectively an argument between Middle East nations and Russia over the price of oil. While this is a geopolitically complex issue, we’ve been through situations like this before. When we get right down to the immediate impact, we notice that it’ll cost us less to fill up our fuel tanks. These lower prices could create long term issues for smaller, more unstable domestic energy producers which, by nature of our free market, will allow more stable and better run energy companies to buy the assets of those unstable companies at discounted prices. Nutshell: good deal in the short term for all of us, and good deal in the long term for well-run energy companies.
We are in unprecedented territory with regards to Coronavirus. We have had global health issues affect the US before like the “Spanish Flu”, “Asian Flu”, “Hong Kong Flu”, “Avian Flu”, and “Swine Flu”. While these had higher infection and death rates than the Coronavirus (to-date), one substantial difference was the speed of communication of the issue. This is what I mean by unprecedented territory. Please…HEAR ME CLEARLY…while we’ve had stuff like this happen before, we’ve never had such ubiquitous means of sharing information in the history of humankind. While this can make things kind of scary (read: easily panicked), we should also acknowledge that good news lies in the reality that the speed with which we can begin to address the issue has increased as well.
Finally, I’ll touch on stock market values ever so briefly. If you’ve read MTC for any period of time, you’ll know that we ARE NOT stock market predictors, market timers, or high volume traders looking for the “deal of the day/week/month.”
What we do know is that US economic indicators were very strong to begin 2020. In fact, there were indications that our economy was gaining steam before the Coronavirus hit. The recent decline in the US stock markets have put us into bear market territory (a decline of 20% or more from a high point). While we are not sure how the effects of the Coronavirus will play out over time, we have a reasonable degree of confidence that our economy is strong enough to sustain this value decline and recover. This is not a prediction, just a bit of perspective on how panic can make the stock markets do silly things that get settled and corrected over time.
We also want to assure you that Legacy Capital Planners has prepared ourselves to serve our clients with a pre-established infrastructure allowing for minimal disruption through such circumstances as a Coronavirus impact. All of our systems allow for remote engagement, and our providers have systems in place to allow us to engage with them consistently as well. If screen share or teleconference meetings are preferred, we are prepared to engage that way to help our clients stay focused on their highest priorities.
You may have already received these resources, but we wanted to be sure by sharing prevention and treatment information available at CDC > Coronavirus Disease 2019 (COVID-19) > What You Should Know from the Centers for Disease Control and Prevention (CDC) and encourage everyone to follow these recommendations. The CDC has also provided guidance on preparing your household for a possible COVID-19 outbreak, see CDC > Coronavirus Disease 2019 (COVID-19) > Preventing COVID-19 Spread in Communities.
Please don’t hesitate to let us know if we can help in any way, and make it a great week!
Scott Cousino, CFP®