When a Health Crisis Causes a Market Crisis

by J. David Lewis, Principal

Sunday, March 15, marked 35 years since I sat at the kitchen table and signed the documents that created Resource Advisory Services. In just two years, I was calling my few clients to reassure them, during the Crash of 1987. I remember both these occasions often and wrote a paragraph that I have published for many anniversaries. This year, I knew everyone is getting many emailed coronavirus newsletters and hesitated to add my words to the stream. Today, I feel compelled to say a few words about my context for the current worldwide distress.

Markets, economies and politicians have been battered by this coronavirus. The markets and economies have reacted to prospects of large numbers of people dying. Politicians have seemed focused on “fixing” markets and economies, while being less responsive to the prospects of people dying. Yes, it is their job to support the economy. Yes, they will have different opinions about how it should be done. Yes, they will scare the rest of us. In the U.S., it is up to us to demand that our politicians eventually negotiate the best decisions they can for both the economy and pandemic mitigation. It is tough to watch. None of us is likely to get our favored solution. In theory, this struggle should eventually produce the best overall outcome. It generally has. Watch the negotiations over slavery in the movie “Lincoln.”

In 2000, I was bemoaning the markets after the tech bubble burst, dreading what I saw ahead. My personal memory of crises starts with the Cuban Missile Crises, with little more than a feeling of fear. Family stories go back to my father as a banker during the Great Depression. In 1965, I began studying the history of economic crisis. My friend asked why I was so disturbed. I told her I didn’t want to go through feeling that much responsibility for clients again. She asked what choices I had. I realized there were none. And, here I am again.

Sometime shortly after 9/11, I was in a remote rural cemetery, shooting pictures of old tombstones.  A family had twins, born one November around 1900.  One died just before Thanksgiving.  The other died just before Christmas.  I got up thinking “we don’t have real problems.”  In the “Great Recession,” Bryan Hankla was with me to begin his experiences with these responsibilities.  He has heard much more about my “crisis experiences” and studied ways to help people get through them.  We are here again – together this time.  I appreciate the help.

Today, the most important thing for our focus is the prospects of large numbers of people dying.  This number must be kept as low as possible.  Otherwise, the best economy and markets will pale compared to personal human suffering.  The best health advice is available everywhere.  Avoid getting the virus yourself.  Avoid the possibility you may give it to others when you don’t know you have it.  That’s right, the best thing we can do is avoiding anything risky.  We, not our government, can do this part, even as we worry about paying bills.

Markets are outside anyone’s personal control.  Markets insist on accurate information.  We will not see meaningful, sustained market improvement until there is accurate measurement of things like numbers of reliable test results and what they reveal, so resources can be matched with needs most effectively.  When markets can see people using reliable information to solve problems, market improvement should follow.  This is the mechanism.  Don’t depend on markets suddenly launching upward as though a miracle occurred.  If that happens, expect markets to fall again.  A political deal can give the economy relief for a while.  Large numbers of deaths, or unreliable information about deaths, can readily wipe away anything politicians can do.  Politicians can only give us enough time to solve the underlying healthcare cause of this crisis.

Historians can someday tell us what we did right and wrong in this pandemic.  The world will be changed.  It was changed with The Cuban Missile Crisis, Assassination of Kennedy, Vietnam War, Hostages in Iran, Crash of 1987, Iraq’s Invasion of Kuwait, Tech Bubble, 9/11 and Great Recession.  Maybe this pandemic will finally demand better healthcare protections for us individually and as a society.

In 2000, I learned I have no choice other than live through this crisis, as I have all of them in my 72 years.  Keep yourself and others safe.