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Panic is the enemy

From The Desk Of The CIO – Fixed Income

COVID-19 is leading to unprecedented economic destruction across the world. While the human and financial cost will be enormous, periods of dislocation also present investment opportunities. Investors will need patience and a longer time horizon to benefit.

There is only one conclusion evident at this point: COVID-19 is going to create the most precipitous destruction of economic activity any of us have ever experienced in our lives. Much of the world has come to a complete stop. There is no modern-day precedent for this type of halt in global commerce and employment. The human cost is mammoth, in terms of illness and loss of life, but also because the livelihood of so many families — their ability to secure the necessities of life — is now in severe jeopardy.

We are only just beginning to comprehend the enormity of the imprint this will leave on the global economy and the way we live our lives in the 21st century. The global inter-connectedness that has characterized the last few decades, epitomized by the advent of Uber, Airbnb and just-in-time inventories, will undoubtedly take a step back — a social distance, to borrow a phrase that has become the meme of this time.

We should keep in mind, though, that the world has weathered many crises in the past: world wars, widespread famines and deadly viruses. Humanity has emerged from these tumultuous periods, not without cost, but often stronger for it. Thus, in the world of finance, rather than allow panic to dictate our path, we should dispassionately ask, what do we do now?

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