Perspective on Where We Are At

My daughter Rowan was born on March 24, 2020.  She is our first child and as such were having to adjust to a very different lifestyle in the past couple of weeks.  That is only compounded by the fact that like many of you were social distancing in our home with limited contact with our family and friends.  We really are living in a very different world then even a few weeks ago. We feel very fortunate though to have our little girl at home and healthy.

There are many people, (including my girlfriend Kathryn) who wonder what kind of a world Rowan has been born into.  It certainly doesn't look great at the moment. Over 1,000,000 people have been infected with the Coronavirus worldwide and those numbers are still increasing substantially.  Over 50,000 people have already died and new projections suggest the death count in the US could be between 100,000 and 250,000 people alone.

As I write this, the US just released statistics which showed that over 6 million Americans filed for unemployment in the last 2 weeks.  If that is accurate then the unemployment rate in the US just went from 3.5% to over 10% in a week.  Last week we had unemployment claims of over 500,000 people here in Canada.  On top of this, many large and small businesses are struggling to survive as much of the economy has been shut down altogether.

So Where Do We Look for Optimism?

Well I do think it's important for everyone to take some perspective on these events. The coronavirus, while devastating, will be temporary.  Even without a vaccine or other effective treatment being developed, the virus will run its course. I think it's very difficult to predict when the crisis will abate, but it is certain that it will abate. When that happens, businesses will reopen, employees will be hired back, and the economy will get back to business.  

There may be some lingering effects on economic growth from the shock of the crisis, as some companies will go under, and usually consumers tend to save more in the wake of a crisis. But relatively normal operations will resume at some point.  You will be able to go out to eat in a restaurant or watch a movie in the theatre. You will be able to go to the gym or attend a hockey game. All of your regular normal routines will return. So we can take heart in that.

During the past 20 years we have suffered through, the 9-11 terrorist attacks, the Iraq and Afghan wars, the SAARS outbreak, the tech bubble and crash, the housing market implosion and financial crisis of 2008, multiple natural disasters, the Greek Debt crisis and possible breakup of the European Union, Brexit, the China-US Trade War, and now finally coronavirus. That's not to mention two world wars and numerous crises in the 20th century.  

At all of the preceding events, the market and the economy eventually bounced back to even greater highs. There is no reason to suspect this time will be any different. What's more, we are actually in great shape to handle this crisis. Part of the reason that the Great Depression became the Great Depression was that there was no structural supports in the economy like unemployment insurance and fiscal support. The world's central banks mostly sat on their hands during the Great Depression.  

Support Packages Helping to Make Recovery Easier

Today they are acting aggressively to counter the economic problems caused by the virus. Huge support packages have been announced by virtually every modern industrialized economy to help support their workers and their business owners to get through this difficult period. These measures will make a meaningful difference and will make the recovery that much easier.

So I think its important to get some perspective on things.  We were taking a video of Rowans first outing yesterday and I was explaining to her on the video that the reason why everything is so quiet is because everyone is social distancing because of Coronavirus. I realized by the time she's able to watch and understand the video, no one will be talking about Coronavirus and she probably wont even know what it is. That's what time will do to this crisis.  

So for anyone who is worried about the Coronavirus or what impact it might have on their portfolio, I'd strongly encourage you to try and take a bigger perspective. Keep washing your hands and social distancing, and lets all wait for better days. They are coming.

- Craig White, BA, LL.B., CIM

Craig White is an Investment Advisor at Endeavour Wealth Management with Industrial Alliance Securities Inc, an award-winning office as recognized by the Carson Group. Together with his partners he provides comprehensive wealth management planning for business owners, professionals and individual families.

This information has been prepared by Craig White an Investment Advisor for Industrial Alliance Securities Inc. (iA Securities) and does not necessarily reflect the opinion of iA Securities. The information contained in this newsletter comes from sources we believe reliable, but we cannot guarantee its accuracy or reliability. The opinions expressed are based on an analysis and interpretation dating from the date of publication and are subject to change without notice. Furthermore, they do not constitute an offer or solicitation to buy or sell any of the securities mentioned. The information contained herein may not apply to all types of investors. The Investment Advisor can open accounts only in the provinces in which they are registered.