March 12, 2020 and the number of coronavirus cases in the USA currently sit at 1,380, worldwide there are 56,733 active cases and there have been a total of 130,164 cases so far. Those numbers will undoubtedly be larger by the time this sentence is read. It’s officially been declared a pandemic and its non-health side effects are numerous and worldwide. Large events all natures are being cancelled to minimize exposure risk, here in Austin SXSW has been cancelled for the first time in 34 years, the NBA has suspended its season, and we’ve just had European travel suspended. And then there is the effect all of this is having on the markets.
There’s no sugar coating it, the markets have been plunging. Wednesday the Dow officially hit bear market territory, meaning a drop of twenty percent from the high. The S&P 500 is now there as well. It’s been 11 years since we’ve been in a bear market, the 2008 financial crisis getting us there last time. Plunged, there’s no other way to say it. Stocks fell so fast this week there were not one but two halts to trading triggered.
We’ve never seen anything like this, no one has. We are however prepared for this. The market this year was already assumed to be volatile because it is an election year, and the first rumblings of the coronavirus back in January only boosted the assumption of amplified volatility. Warren Buffet said it best regarding market crashes, “Predicting rain doesn't count, building the ark does” and "The best chance to deploy capital is when things are going down." There is going to be more downside, and what that means for us is that there is going to be a whole lot of buying opportunities with strong stocks at a discount rate.
There are still a lot of unknowns with the coronavirus, with the true scope of it in the U.S. probably a few weeks out from revealing itself, but there are certainly measure you can take to protect yourself and the community. Wash hands frequently throughout the day for at least twenty seconds; avoid touching your eyes, nose, and mouth with unwashed hands; clean and disinfect surfaces; and stay at home if you are ill. It’s been estimated that 40 to 70 percent of the population will be exposed to the coronavirus but by flattening the curve of the outbreak as shown in the chart below, which has been making the rounds recently, by limiting exposure to crowds and self-quarantining when ill lives will be saved simply by not putting the health care system over capacity.
And if you need a tune to keep time on the twenty seconds of hand washing might we suggest the below, because who doesn’t love Dolly Parton:
On another non-coronavirus related note, if you’ve got a mortgage rate of 4% or higher you might want to refinance your home at the end of the month. We just had a rate cut and will likely have another on the 18th, rates are already at historic lows. Even if you’ve refinanced in the last year or so now is a great opportunity to leave more money in your pocket down the road with a refinance.
If you want to talk about any of this or anything at all don’t hesitate to reach out to us. Thanks as always.
This report is for informational purposes only and is not a solicitation, or recommendation that any particular investor should purchase or sell any particular security. The information contained herein is obtained from sources believed to be reliable but its accuracy and completeness is not guaranteed. Due to market volatility, any opinions expressed herein are subject to change without notice. Investors should be aware that there are risks inherent in all investments, such as fluctuation in investment principal. Past performance does not guarantee future performance. The options expressed are those of Edward S. Kozun, III and Kozun Capital Management.
https://www.vox.com/2020/3/10/21171481/coronavirus-us-cases-quarantine-cancellation