The Road to Recovery from COVID-19
- According to a recent article, recovery from the virus will take 2 years, and then the economy can begin to recover.
- There are several roadblocks to economic recovery, including previous threats that have now been intensified.
- The current increases in stock prices appear to be looking out 2 years and expecting the best.
- 78 million baby boomers are in the crosshairs for both physical and financial harm
The sooner we accept that we are stuck on a long and unfamiliar road, the sooner we can consider what this new landscape means for investment choices. David Kelly in “Road to Recovery”
A recent article in Financial Advisor Magazine lays out a credible course in the Road to Recovery from COVID-19. Here’s the link: https://www.fa-mag.com/news/the-road-to-recovery-55278.html?section=43
There are 5 phases ahead that will bring us into 2022:
- April: The Strict Lockdown Phase
- May: The Adjusted Lockdown Phase
- September: The School Reopening/Better Treatment Phase
- Q1 2021: The Vaccine Distribution Phase
- Q3 2021: The Post COVID-19 Phase
Curves in the Road
This road has several curves, some mentioned in the article, some not:
- Immunologists say that isolation means we have not built immunities, so there will be a spike in infections in states with lockdowns when lockdowns are eased in May. Damned if you do, and damned if you don’t. These immunologists think isolation has been a mistake for healthy young people.
- Recent stock markets appear to be pricing in 2022. In other words, they remain expensive. Bond markets are silly crazy with interest rates about to go below zero. A lot can happen in the meantime. Please see our February warnings that included COVID-19 weeks before it was recognized as a pandemic.
- Federal relief programs of more than $6 trillion added on top of Quantitative Easing at $5 trillion is a heck of a lot of money. Does anyone still think we won’t have too much money chasing too few goods? Deflation is probably a reasonable near-term forecast in light of current oil prices and business closings.
- As we’ve been saying for a long time, 78 million baby boomers are being terribly hurt & won’t recover. They need to protect themselves now. It’s already too late, but it will get worse. Younger folks can be thinking about maybe recovering in 2022.
- Fear motivates investors to seek investment advisors, but beware that most use cookie-cutter models and turnkey asset management platforms (TAMPS) that are just plain wrong for baby boomers.
- Most target-date funds have not, and will not, protect baby boomers, but one does.
This will not be an easy journey. There are 78 million baby boomers who are especially vulnerable both physically and financially making this journey. Their losses are society’s losses.