Back to Basics
Published On: March 23, 2020
Written by: Ben Atwater and Matt Malick
The news gets worse by the minute. Second quarter gross domestic product is set to drop by more than 25%; the unemployment rate is on its way north of 10%; the S&P 500 is down 32% so far, but stocks lost 57% and 49% peak-to-trough during the 2008-2009 financial crisis and 2000-2002 dot com bust, respectively.
50% of Americans will contract COVID-19; and 15% of those will be hospitalized; and 25% of those will die.
These numbers are merely educated guesses by a variety of experts. All the while, the range of outcomes among experts regarding COVID-19 and the economy vary widely and change frequently.
Bottom line, the news is bad and getting worse. Fear is rampant, frustration is high. We’re in a real mess.
The range of outcomes and their probabilities are wide enough that they only merit attention as an intellectual exercise. Forecasting, in this environment, is hopeless.
This means we need to get back to basics:
These are no doubt unique times. We feel the stress and dislocations that you feel, but after evaluating myriad options and after extensive deliberations, we are of the mind that staying the course is your best strategy. As investor John Templeton once said, “This time is different” are the four most expensive words in the English language.