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  • Writer's pictureDMattersdorff

Corona Virus and the Market

I would like to express my opinion that we are in a good, old-fashioned market panic.  At some point, calmer, more rational heads will prevail, and the markets will stabilize and then start to recover.  I guess I'm not quite sure when that will happen.  To be honest, I expected it last week.  But I'm still sure it will happen.

I think that the financial system is in essentially good working order.  The fed has eased interest rates and taken other steps to keep liquidity flowing.  We have nothing like the monetary conditions which existed in 2008, which, among many other things, created secondary panic in our money markets and payments system and required substantial bailouts from the government just to keep the system running..

Part of me would like to go somewhere and intentionally catch the virus.  We've already had a case in Lake Oswego, and I no longer doubt that we will all be exposed to it sooner or later.  I don't do that, because I would like to protect my family and friends, and I see that it's not rational.  But if I could make my small contribution to calming panic by catching the illness and surviving - get it over with - and if I did not have to consider the health of others whom I love, I would.  I have a level of confidence of 99%, that I will be part of the 99% who survive.

On the Diamond Princess, the cruise ship which suffered a serious outbreak of the virus, and on which the passengers were quarantined for a couple of weeks in February just outside of port in Yokohama, 700 from a total of 3,700 passengers caught the virus.  Of those, seven died, all in their 70s or 80s*.  I don't mean to minimize their suffering, but I don't think that we should allow this problem to shut down the global economy.

Franklin Roosevelt said, "The only thing we have to fear is fear itself."  He was talking about the Great Depression, not a virus, and the parallels with today are not precise.  But those words apply to today's economic and investment environment, which have reacted far in excess of the seriousness of the problem.  The Corona virus is not bubonic plague.  The huge majority of us will feel ill for a week and then recover.  I think we should bear this in mind while the scary headlines about pandemic swirl and markets panic.

* According to Wikipedia.

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