All the to-do about the Coronavirus brings to mind the old song by Miles Davis -So What. While not to be taken too lightly and not to forget those who succumbed to its ravages, the number of people who have, had or will have severe outcomes from contracting it has been and will be rather small. China has crested their "high water mark" of cases and is moving down.
The number one solution is to "just wash your hands" regularly. Contact by hands is a primary culprit.
Anyway, equities are feeling the pain of the virus in the short term. Why? With the paranoia surrounding it, lots of activities that consumers spend on are being curtailed. The real question is will this outbreak go beyond the most recent quarter? It could and it could be the "straw that broke the camel's back" on this longest running expansion.
Although not in the majority, I believe the direct effects of the virus will be limited. Earnings will be down in the next quarter as a result. Stocks are "taking it on the nose" from fearful investor's fleeing to the safety of bonds. The 30 year treasury is yielding 1.29%. At that rate, it will take 55.8 year to double your investment by the rule of 72's (72/1.29). To that I say, which is more viral, the medicine or the virus? Who has 55.8 years to wait anyway?
Time to focus on owning a diversified set of high quality, first line equities with reasonable amounts of debt and a long dividend record of payouts. The sale on many of these is on now. "Blue light special, Isle 9." I hear echos of Dustin Hoffman saying this. High end companies are loath to cut dividends when they have a long track record. While some will, diversification protects from the inevitable ones who do.
The days of focusing on capital gains are coming to a close. Having a dividend that will pay to wait for the next upswing is where I want to be.
In the meantime, wash your hands!
Be smart, be well-read and be successful.
