The New Normal

Life has been incredibly hard in some ways and much simpler in others. We have returned to a life where eating in has replaced restaurants. Social experiences have been replaced by social distancing. A call to check in on friends or family or a Netflix movie has replaced happy hours and concerts. Most people are staying at home especially in large cities where businesses are closed or limited until at least May. These changes have meant sweeping ramifications in the economy.

Given the radical changes to our daily lives, do we invest when we don’t know when life can return to normal or are we instead looking at a  ”New Normal” with some of these changes lasting?   How can we value financial assets that will have no earnings for months? Will travel and lodging return in the same way?  Have we convinced ourselves we can work efficiently at home and will this experience cause us to rethink offices and fundamentally change the way we do business?

These are just a few questions that were not even a thought to many only six weeks ago. 2019 saw the lowest unemployment in history and a booming economy. Overseas jobs were migrating home and the Federal Reserve was constructive if not outright supportive for continued growth.

The world changed as China and the World Health Organization ignored early signs of trouble and allowed a novel Coronavirus to spread beyond China in a sea of misinformation and initial indifference. Unlike the pandemics of H1N1 and Ebola, countries and by proxy their citizens have been willing to shut down whole areas of the economy and give up broad civil liberties in hopes of reducing the spread of a virus that may be significantly more benign than initially feared.

I cannot speak to the number of lives saved by taking such actions, but I do know that in the last two weeks over 10 million people lost their jobs including two of my daughters. The economic devastation is so great, I venture each reader knows someone who has suffered a lost job or significantly reduced  income. There will likely be another 10 million more jobs lost in the next month and despite the government’s best efforts to mitigate the devastation, ten weeks of salary relief won’t save most Mom and Pop operations. Big companies will be the ultimate beneficiary with each extended shelter in place. It is critical therefore to restart reasonable activities as soon as practical.

Many of the initial virus concerns such as medical supply distribution and ventilator availability have been mitigated or eliminated in all but a few markets. Given that these issues have been ignored since H1N1 or before, it is my hope that we will never have to make a choice between the economy and safety. Let’s hope we have learned our lesson about preparedness.

It will take some time for investors to understand the damage we have done. Yet, as advisors, our experience tells us that large companies and companies with solid balance sheets will be able ride out the storm.  There will also be new winners and losers and a “New Normal”.  Economic disruptions of this magnitude often accelerate the trends already taking place. There are new stars emerging just as older themes (say mall retailers per example) can no longer attract capital. This time, the Federal Reserve has assured there is plenty of money in the system.  The appetite for financial assets will recover. It is certainly possible markets could retest the March 24th low before moving back up erratically as we gain further clarity. We have hit the economic reset button like never before and it will take time to fully understand the choices we made. Yet we have been here before another “New Normal” and we look forward to unearthing the new opportunities that lie ahead.

Everyone Stay Safe—





Joseph H. Ray


Joe Ray