I had an interesting realization the other day as I was speaking to someone. He really didn’t really have any context for this current situation. He doesn’t know much about SARS, or the Bird Flu, or H1N1. In 2008, the last time we had a nasty bear market, he was still in high school.
We have a severe crisis, and every time we face a severe crisis it can feel like this time it is different. That this is some unprecedented calamity, with an inevitable dire outcome.
But, yes, we have been here before.
Please don’t get me wrong. I am not saying that this is not a serious situation. Obviously, it is. People are dying. It doesn’t get more serious.
As I write this there are 2.4 million confirmed cases of Covid-19 worldwide. More than 166,000 people have died. Those numbers will get bigger.
Now, I am a big believer in staying in your lane. I am not a medical expert, so I am not going to even try to differentiate the medical differences from past epidemics.
Having said that, lets revisit the H1N1 pandemic, also known as the Swine Flu, which occurred in 2009. This was also a novel strain that we did not have a vaccine for, and it spread quickly. Approximately 24 percent of the global population was eventually infected, and it killed more than 284,000 people.
Is it the same as Covid-19? I don’t know. Ask a doctor for that. But it was highly contagious, affected millions, and it killed 284,000, so I am going to use it as a historical example anyway.
Undisputedly, stock markets have been incredibly volatile over the last few weeks. Many investors are trying to cope with fear and uncertainty. Some of them will be wondering if maybe this time this is different.
But as Sir John Templeton famously said, “The four most dangerous words in investing are: This time its different!”
When it comes to investment planning, we use history as a guide all the time. Because, when you think of it, its really the only guide we have. We look at precedents, and we look at how they played out.
So I present to you the performance of the Standard and Poors 500 Index going back to the Great Depression, with a number of past epidemics highlighted.
We have been here before. This time is not different. It never is.
In the meantime, keep your distance and wash your hands.
Brad Brain is a Portfolio Manager with Aligned Capital Partners Incorporated (ACPI). ACPI is regulated by the Investment Industry Regulatory Organization of Canada (www.iiroc.ca) and a Member of the Canadian Investor Protection Fund (www.cipf.ca). This publication is for informational purposes only and shall not be construed to constitute any form of investment advice. H1N1 statistics found here: https://www.healthline.com/health-news/how-deadly-is-the-coronavirus-compared-to-past-outbreaks The views expressed are those of the author and may not necessarily be those of ACPI. Content is prepared for general circulation and has been prepared without regard to the individual financial circumstances and objectives of persons who receive it.