I can only conclude that madness rather than coronavirus had infected these poor individuals – surely only cabin fever could explain why anyone would have any faith in official information released by the Chinese Communist Party. As I write, markets have taken another turn for the worse as cases accelerate in the US, and the potential extent of the economic toll becomes clear, which should have been obvious to anyone looking at a situation in which millions of Americans have already lost their jobs, high streets and workplaces are abandoned, and a fifth of UK businesses could run out of cash this month.
History certainly tells us there have been plenty of suckers’ rallies within bear markets, as Mark Robinson examines in Taking Stock on page 55. And as Mr Bearbull notes on page 24, the superforecasters at the Good Judgement Project suggest that there is a 20 per cent chance that markets will fall by a fifth by 19 June,and odds on that they will be at least 5 per cent lower.
We are all shooting in the dark, though, compounded further by our lack of knowledge about Covid-19. As influential podcaster Joe Rogan – he of smoking pot with Elon Musk fame – put it brilliantly in a tweet this morning: “Sometimes when I smoke the devil’s cabbage and think about how infinitely bizarre the current state of affairs are, I get the unmistakeable sensation that things are never going back to normal...”
I get that sense, too, although without any help from the devil’s cabbage, which is why this week we are looking at how Covid-19 may indeed change the world’s behaviour permanently, and what this could mean for investors. And such has been the scale of the government’s response, the extent of the economic sacrifices that they have been prepared to make, and the way in which long-established industries are being shaken to the core, that it’s equally hard to imagine that this crisis won’t also yield major changes to the world’s system of globalised governance and finance – but that’s a story for another time.
Nevertheless, as optimistic equity investors we must believe that recovery will come, and that one day business and markets will go back to looking something like normal. To that end, on page 34 we’ve put together a watchlist of great companies we think will survive, but which may soon become a lot more affordable than they have been – because, right now, a quick recovery appears to be a mirage rather than the oasis that desperate travellers have been hoping for.