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Today's Market Opinion

Dear Investors and Friends,

The most recent measures by governments around the world are going to be devastating for millions of citizens in countries all over the globe; especially in the United States, I foresee tremendous economic damage that is being done as we speak and which will also have sinister consequences for people's healthcare options and consequently their mid- to long term health in the future. We are in the middle of one of the worst economic crises ever and we have to be aware that it is mostly fabricated by government decisions, basically having shutdown the economy. The "lock-down" will lead to a recession with millions of people becoming unemployed and losing their healthcare, consequently struggling with being able to sufficiently take care of their health going forward. We have been seeing people's wealth evaporating within a few weeks, which is especially severe for people depending on their retirement accounts to make a living. This all will result in poverty and social inequality to an even bigger extent for years to come. Government measures taken against the Coronavirus are unprecedented and quite frankly, if these measures are seen as the new standard, the United States would need to basically close for 6 months every year - 3 months during the summer flu season and another 3 months during the winter flu season - completely out of proportion.  

So far, there is no evidence whether the shut-down substantially limits the outbreak other than slowing it down and by just looking at the numbers and predictions of infections within the course of this virus, we are a long way from the Coronavirus being more severe than previous pandemics such as the swine flu or even the common cold. However, we are wreaking havoc on the economy and are destroying wealth by the billions which is leading to severe economic issues with an estimate of up to 20% unemployment in the United States as a direct consequence. Furthermore, the trillions of newly issued debt that future generations will have to deal with is going to harm prosperity and the quality of life for decades. Overall, it is becoming more likely every day that the economic damage done will turn out to be way worse than the outfall from the Coronavirus itself; especially since 98% of all Coronavirus cases are recovering just fine and an immunisation of the broader population is going to happen all by itself even without a vaccine over time. Once people will have lost their jobs and their wealth, they will be even less in a position to take care of their health and will become easy victims to all kinds of future epidemics.   

In my very personal opinion, the government should end this insanity and just focus on the elderly as well as everyone with underlying health issues within the risk category, keeping them at home and unexposed while ensuring hospitals are equipped to deal with the necessary demand in capacity. The remaining 99% of the population should get back to work and business as usual should resume immediately. 

Sincerely yours,

Oliver E. Hohermuth, Principal & Chief Investment Officer