Today I heard about the death of a dear friend. George died last month from the Coronavirus. He was 80 years old. During the years I lived in Atlanta, he and his wife, Mary were like a second set of parents to me. I loved him. This is the first death of someone I know from the virus. I fear it will not be the last.
More Every Day
What does this have to do with the markets, A lot. This pandemic has effected the entire world. Its impact touched both Main Street and Wall Street. 84,000 people got infected yesterday, 87,000 the day before, and 84,000 the day before that.
These are not insignificant numbers. For the past month, 80,000 people were infected daily. We have not yet reached the apex and people want to go back to normal.
The New Normal
Despite warnings from the W.H.O. and other experts worldwide, national leaders acquiesced. They opted to pass the responsibility of leadership to local politicians. The economic interest of their supporters often influences politicians. The governors of Georgia and Tennessee reopened businesses. They did not even try to position the PR message as being for the public good. In hindsight we may discover the fortunes of a few companies may be less important than the public good.
Luckily the initial response from the public was lukewarm. Most have chosen to remain quarantined. How can we expect to reduce the spread of infection when we have not yet peaked? The NYTimes demonstrated the value of early containment to reduce infections and deaths. They also showed the negative impact of not taking serious the need to contain first. Recent local decisions may broaden the scope and lengthen the time of the present crisis.
What is Not Said
The following is the best explanation I have read about the risks of the Coronavirus. Why the Coronavirus Is So Confusing — by Ed Yong — The Atlantic — April 29, 2020. Too many seem to be acting like everything will be fine tomorrow. Our natural optimism blinds us to the risks. We then fail to prepare ourselves for any opportunities. Everyone seems to be pointing the finger elsewhere.
“…many aspects of 21st-century life … made the pandemic possible: humanity’s relentless expansion into wild spaces; soaring levels of air travel; chronic underfunding of public health; a just-in-time economy that runs on fragile supply chains; health-care systems that yoke medical care to employment; social networks that rapidly spread misinformation; the devaluation of expertise; the marginalization of the elderly; and centuries of structural racism that impoverished the health of minorities and indigenous groups. It may be easier to believe that the coronavirus was deliberately unleashed than to accept the harsher truth that we built a world that was prone to it, but not ready for it.” — Source — The Atlantic
Not only did we help create the problem, we dismissed early warnings. Businesses and communities failed to adapt or make the needed changes. Too many believe that the government’s ability to print money will solve the problem. But stimulus is not the answer, the answer, because taxpayers are paying themselves.
A Different Reality
The reality is very different from the perception. Below is a chart of the S&P 500 index without Amazon (a company prepared for the uncertainties of the future).
Too many companies are relying on their past success and have failed to innovate. Entire new industries will rise. They will disrupt the previous leaders. Here’s a list of some companies started during the 2008/09 financial crisis. Airbnb, Uber, WhatsApp, Slack, Square, Groupon. Each of these disrupted a major industry that failed to innovate. Over the last decade these companies carved out a significant slice of the market. Industries that thought they were safe from competition, were wrong.
Innovation and creativity are hallmarks of success. The greatest leaders and companies innovate new solutions. We too need to innovate to remain competitive.
- Clients demand innovation.
- Client years and prospect years
- Money in motion.
Be the lighthouse in the midst of the darkness. You must become the architect of your client’s future. For only then will you future-proof your practice and avoid the risk of being blindsided. You do not control the loss, you control the avoidance of loss. Do not talk about what you don’t control, learn to talk about what you do control.
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