Deciding When

We are all wondering “When will the current level of social and business restrictions be lifted? To what degree will they be lifted? In what locations will they be lifted and why or why not?”

These questions surround the current state of our collective response to the coronavirus. Social distancing appears to have had the desired effect of reducing the number of people being infected and the number of those dying from this pandemic. Less than 30 days ago the Imperial College estimated that as many as 2.2 million Americans could die if nothing was done. 1.1 million, if serious mitigation steps were taken. The latest estimates suggest that 60,000 US deaths may occur. Serious mitigation steps have been taken and they appear to have worked. Thank God!

Now decisions must be made as to how long the restrictions should stay in place. Health experts believe the virus will be with us for at least 12 – 18 months. That we will not be able to vaccinate everyone who needs it until 18 – 24 months. Dr. Zeke Emanuel, one of the key architects of the Affordable Care Act, has said that we cannot get back to normal until the number of new cases in the US is brought down to zero. If that’s the case, the cure may be worse than the disease, potentially causing more death and destruction than the pandemic ever would have.

How to balance the threat of lives lost to this virus with the threat of lives lost or otherwise ruined because of an economic collapse cannot be reduced to a binary choice of either a continued national shut down or the removal of all restrictions. There must be some agreed-upon path to a gradual reopening of the economy that still keeps the virus in check.

A recent New York Times article written by Aaron E. Carroll, Click Here to Read, contained the following four benchmarks that states could use as a guide:

Hospitals in the state must be able to safely treat all patients requiring hospitalization, without resorting to crisis standards of care.
A state needs to be able to at least test everyone who has symptoms.
The state is able to conduct monitoring of confirmed cases and contacts.
There must be a sustained reduction in cases for at least 14 days.
Benchmarks like these or others will likely be developed and implemented as we continue to see reductions in the rate of new cases and related fatalities. Exactly when and how this will happen is unclear. The equity markets are usually impacted by uncertainty, and we should expect continued market volatility until the current uncertainty is removed.

Until then it can be unnerving to see your wealth be subject to the large market fluctuations we are experiencing. It is natural to feel negative emotions about this, but we cannot let those negative emotions drive our investment decisions. It is especially important in times like these to follow your investment plan that contemplates volatility so that you are properly positioned to capture the positive returns that will eventually occur. Those positive returns will likely happen before all uncertainties about how to restart the economy are removed.

We are grateful for the relationship we have with you and appreciate the trust and respect that we share. Please feel welcome to contact us for any and all reasons as we get through this time together.

You should not assume that any discussion or information contained in this publication serves as the receipt of, or as a substitute for, personalized investment advice from FirstWave Financial. A copy of the FirstWave’s current written disclosure statement discussing our advisory services and fees is available upon request.