From the February 12th, 2020 high of 29,551, the Dow Jones Industrial Average has fallen 10,378points, a decline of 33.3%. This week alone, the Dow Jones Industrial Average lost 17.3%. The S&P 500 has fallen 31.7% from its 2020 high. Oil is down a staggering 62% in a matter of weeks. The stock price of local giant, Boeing, is down 78.4% from its high! Entire industries within our economy – hospitality, gaming, airlines, cruise lines, energy, banking, professional and amatuer sports, movie theaters, shippings, Hollywood, automakers, retailers, conventions, restaurants and food service, theme parks, fitness gyms, ride sharing – have been devastated in just a few weeks. Many healthy, cash flow positive companies one month ago have ZERO revenue today! A total cessation of commerce like this for many of the aforementioned industries has never before occurred. These truly are unprecedented times!
We have all witnessed, or perhaps been personally involved in, tragic natural disasters like a hurricane, tornado, earthquake, tsunami, flood, etc. Large scale man made disasters like 911 have also personally touched the lives of many. While the psychological impact may have been widespread, the physical impact of these natural or man made disasters have been limited to relatively small geographic regions of our country or around the world. But COVID-19 is different; this Coronavirus pandemic is impacting every corner of the globe! All the world’s developed economies and most of the emerging economies are struggling as if they have been hit by a huge natural disaster. How long will domestic and global commerce be impacted? When are things going to return to normal or at least somewhat close to pre-pandemic normal? Nobody knows for sure. But here is what we do know.
No matter how bad it feels right now, this is not the end. As dire as things seem today, world commerce will one-day resume. Lines at SeaTac will be long again when flights become full. Restaurants will reopen. You will be able to go to a movie theater once again. We will see cruise ships in Elliott Bay again. Conventions will be held. The Mariners will play again in T-Mobile Park again, and the Sounders will host MLS games at CenturyLink Field. Families will return to Disneyland. Seattle rush-hour traffic will become obnoxious again. When the dust settles and the Coronavirus has been conquered, the stock portion of our portfolios will recover. Is there more pain to come? Perhaps. But one day in the not too distant future, we’ll look back at these unprecedented times as a rough patch in our nation’s and the world’s history. We will get through this.
Michael Bowers, CFA, CPA
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