Good morning all,
St. Patrick’s Day was yesterday, in case you missed in in the midst of other news. Many of the faithful start the day with a church service, one of the most beautiful of which is at St. John the Baptist Church in Savannah, Georgia. Just a few thoughts about the economy, markets, unexpected events…
We recently wrote about how to prepare mentally, in the face of crisis. Just now, we will discuss how to prepare physically. In lieu of my ramblings, I’ll quote from Joel Thomas of SPIN Global, which firm specializes in disaster planning and management. Following is an excerpt from an email from Joel.
From a resource point of view, I would advise you to make provision for at least two weeks’ worth of cash on hand, water, food, and fuel, in addition to other emergency supplies you can see on the attached list or from online search. In the event supply chains are disrupted and grocery stores are low on food, or if there were orders to stay at home in a pandemic of epic proportions, you need nonperishable food and water on hand. Most of the world lives on rice and beans, and my family actually purchases bulk rice, oats, and beans(dried or canned) that we just use as part of our normal life routine and replenish as needed. If you want to get fancy, cans of tuna are great! 🙂 This keeps our costs down (buying bulk stuff we eat), keeps the product fresh (using it as part of our natural routine), and ensures we have emergency supplies that frankly could feed our family of six for several weeks. Water is a bit more tricky. Having bottled water is good but needs to be replenished at least every 6 months…thus I am not a huge fan, but it is easy to buy. In an emergency, you could boil water from a 50-gallon hot water tank, rain barrels, or the river. It is advisable to get some of those drinking straws or bottles that filter river water so that you can drink it. Water is THE single most important resource for survival, so I’d suggest thinking carefully on this one. None of this has to be hard or too expensive – try to think about how to use/conserve resources you already have or could easily integrate into your life. Buying an emergency supply kit is what a lot of people do, and it is a good start to have emergency supplies on hand if you have none, but often folks have much of what they need, and can simply organize their lives better to be prepared.
As you know by now, corporate risk management is in overdrive, in an attempt to mitigate the risks associated with the Covid-19 virus. We have no argument with the decisions being made, and in fact are certain that the event cancellations and store closings serve many well. It is intriguing though, to watch as man attempts to deal with a scenario where he feels as if he is not in control.
How can we look beyond ourselves, and serve others? What opportunities are there to offer a word of encouragement, to share supernatural peace in the face of anxiety, concern, and worry? Are there neighbors or others whose immune systems are compromised, such that they fear getting out? Could we bring food and other supplies to them, serve them in this way, to ease their worry? In any crisis there is opportunity, and one of the primary opportunities is to meet the physical, emotional, spiritual, and support needs of those experiencing the negative effects of crisis.
All manner of events have been cancelled, schools and stores are closed, and work from home is the mantra of the day. The travel tourism, and hospitality industries have taken it on the chin. How this affects employment, inflation, GDP, and other metrics remains to be seen. Based on the traffic flying south on I85 Friday morning, we expect the various economic reports for Q1 2020won’t be as robust as those of 2019.
The public markets detest uncertainty, as showcased by their recent behavior. We are finally in a bear market, so we can get that behind us. And we are still standing, with no long-term damage, unless you went to cash last week. Q1 earnings are likely to be unpleasant, with Q2 earnings still a question, though probably less than late 2019 estimates.
Through last Monday’s close, the DJIA, S&P 500, and NASDAQ were off from their highs by 31.7%, 29.4%, and 29% respectively. It can become easy to fall prey to “recency bias”, believing that what is happened recently will continue indefinitely. However, now that the bear is here, we can take our focus off when it will happen and look toward the future.
The reaction to C-19 is disruptive in ways that force our attention. This disruption forces us to think of options we may not have thought of previously, or otherwise considered, as they didn’t seem within the realm of possibility, or perhaps seemed to be outlandish. The beauty of crisis though, is that it almost always sparks creativity.
What ideas which have been languishing will fully find their voice and place in business, as a result of these changes? How many parents will decide that home schooling may be an option after all? What changes will take place in the work environment, based on what we are currently learning? Once this reaction becomes part of the white noise of history, much will return to the way it was. But, there will be permanent changes to some elements of our society and culture. How do embrace them with enthusiasm instead of fear? What opportunities are in front of those with the cash and the vision to move forward?
Whether personally or at the business level, nothing showcases the value of the principles of handling cash flow more than a crisis. If ever there was a time to maintain a cash reserve, both personally and for your business, this is it. If ever there was a time to have low or non-existent debt service, this is it. And, if those habits aren’t fully internalized, there is nothing like a crisis to aid the process.
What do you want? You may have business interests, dollars working in real estate or the public markets, more cash flow than you can use. Perhaps though, the question of what you want, of a clear and compelling future, hasn’t been addressed. If you’d like to explore the answers to those questions, reach out. We can meet in person or, if you prefer, connect via Zoom.
Thanks for reading this far. I’ve found one way to reduce fatigue is to step away from the news. We are experiencing together the ups and downs of life, simply part of the journey. It’s helpful for me to remember what the Apostle Paul said when he wrote to the Philippians. In chapter 4, he said “do not be anxious about anything, but in every situation, by prayer and petition, with thanksgiving, present your requests to God. And the peace of God, which transcends all understanding, will guard your hearts and your minds in Christ Jesus.”
Until we see you again, our warmest regards,