Broker Check

Looking across the valley...just became a bit more clear

September 03, 2020

The Covid-19 lockdown orders have increasingly, for all of us, become a daily reminder of what we’ve been required to give up / what we cannot do. One of the most persistent of these for me being the absence of time spent socializing with neighbors, I set about to organize what we’ve called “Sippin’ at Seven”: a gathering of a few of us at 7 pm on an evening at week’s end – with our soccer chairs arrayed at appropriate distances across one of our driveways – to chat (rather loudly, to carry the distance!) while enjoying a weekend beverage (on a BYO basis, of course).


The conversation, naturally, turns frequently to Covid-19 and its impacts. One evening recently the question that circulated was “How will we ever be able to fly on a plane again?”

Such sentiment, so very pervasive these days, is representative of two present conditions:

1) We have all been lost in a Dense Fog of Unknowing about our near futures.

2) Every stock Bear Market, including this one, looks unique and that “it’s different this time” when we’re in the midst of it.

As a result, true prepare-for-the-worst conditions came our way across the board: toilet paper became the new gold; businesses, schools and houses of worship alike all were vacated; international travel was halted. The US stock market promptly plummeted 34% in a record 33 days with cash stashed in money market funds exceeding $4 trillion for the first time ever. 1


Most certainly, it must really be different this time, it must be unprecedented … or is it? If you are at least old enough to recall the music of the likes of Alicia Keys, Faith Hill, Usher, N Sync, or Tim McGraw, then you have already seen two other Black Swans paddle by before this one:

1) On a crisp, clear September morning in 2001, the most prominent features of the Manhattan skyline collapsed; modern America’s Pearl Harbor moment was at hand; the stock market completely closed for nearly a week; stocks fell over 50% as a result… before doubling over the following 5 years.

2) 2008: the Global Financial Crisis saw the utter meltdown of not only a great number of residential mortgages, but also the trillions in derivatives linked to them. The financial system seized up; major banks were spared by massive loans from the Federal Reserve; stocks fell over 50% as a result… before quintupling over the 11 years since.

Find it hard to imagine in this moment the Covid-19 crisis – and the many restrictions imposed to combat it – moving off to take its place in the pages of history alongside these other Black Swan events? If you do, you are not only not alone, but fully in the mainstream of conventional wisdom. What is asserted here is in no way a prediction of either the shape or date of the eventual recovery. What is here asserted is simply that whenever the people and the factories and the shops and the stores of our America that has always risen to meet every crisis are freed again, the advance and growth of our economy will inevitably resume.

1 “Ultimately, This Time Isn’t Different”, Nick Murray Interactive, May, 2020.
2 “Maker of coronavirus trial drug aims for wide distribution”, Reuters, May 1, 2020.
3 ”AstraZeneca partners with Oxford University to produce Covid-19 vaccine”, The Guardian, May 1, 2020.
4, April 30, 2020.
These opinions are based on observations and research and are not intended to predict or depict performance of any investment. These views are as of the close of business on May 1, 2020 and are subject to change based on subsequent developments. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed. These views should not be construed as a recommendation to buy or sell any securities. Past performance does not guarantee future results.