Speed of Information Sets Coronavirus Pandemic Reaction Apart

Although the world has seen pandemics before, the novel coronavirus (COVID-19) is unique in its dangers and effects on daily life. According to Mark Zinder, the speed at which information is being disseminated is only matched by the rapid pace at which developments have been evolving, and that speed may be the key to finding a solution.

BY MARK ZINDER

As much as I prefer to speak about how we got to where we are, my clients are asking me to ignore the history and comment on the hysteria. We must all pause, reflect and remember in times like these, there have always been times like these.

In 2002, Donald Rumsfeld, when referring to the government of Iraq, famously stated that there were the known knowns, the known unknowns and the unknown unknowns. At first, he was chided for the ludicrous nature of his comments but today, we find ourselves exploring those very sentiments. As I write this article, with the television on mute in the background, I can occasionally look up to see another school, another city and even the entire country of Italy on lockdown. Planes are flying without passengers, hotels are empty and toilet paper is in short supply.

I once had the honor of working with famed money manager and market forecaster, Sir John Templeton. On numerous occasions, he said, “The four most dangerous words in the English language are: ‘this time it’s different.’”

Is it different this time? Have we seen this before? Are the reactions warranted? More importantly, the question that should be on our minds is: “What happens next?” Will the stock market recover? Will we be able to travel again without concern of contacting a deadly disease and being quarantined and forced to wait weeks for medical attention or eventual release just to get on another plane and start the process all over again? Should we decide to be cautious and sit this one out, or throw caution to the wind and continue on with hand sanitizer and surgical masks at the ready?

Yes, we have seen this before. According to the CDC, the SARS epidemic in 2002 had a fatality rate of 9.6%. In 2009, the health scare was the H1N1 virus. In 2014, the Ebola outbreak alarmed so many. I believe what makes it different this time is how well-informed we are and the steps we are taking to address the situation. The impact on the economy and international commerce will certainly be felt in a shorter period, and that is why we are witnessing such wild swings in the stock market. Rather than playing out over a couple of years, the hope is to contain the virus in months. The speed at which the world is responding is playing out in our financial markets as well.

Is it different this time or will everything eventually return to normal? Whether it was the fear of war, the fear of natural disasters or the fear of pandemics, history has taught us that we will eventually right the ship — that, as President Franklin Delano Roosevelt said, the only thing we have to fear is fear itself.

When I am asked by family and friends about the volatile sessions in the stock market, I simply state that stocks go up because earnings improve, period. The historical return on the stock market and the historical returns of corporate earnings are closely aligned. With people traveling less, eating out less and generally purchasing less, the forward-thinking stock market is taking into account the immediate loss of profits and money managers, the short-term thinkers that they are, are reacting accordingly. The general public also is being made acutely aware of what is going on in real time as headlines buzz our smartphones with every new announcement. A journalist once told me the media’s mantra is “if it bleeds, it leads.” Today, the news is spreading many times faster than the virus, which when taken in the appropriate construct, is a blessing to us all.

We have seen similar periods before and with each new dilemma came the discovery of a new solution, making the world a better and safer place to live. What’s different this time is the speed in which we are all aware, and that, I propose, is a good thing.

Mark Zinder is a trend forecaster at Mark Zinder and Associates.