I was in Peru when the coronavirus panic hit, and now I’m stuck here. Around noon yesterday, we started hearing credible rumors that the government was about to declare a state of emergency. We weren’t sure what that meant for us, but we didn’t like the sound of it.
So, we threw everything we could into the car and hit the road to my in-law’s ranch. I figured I’d prefer to be out in the country — surrounded by a wall with plentiful food, water, and, yes, shotgun shells — in the event that order broke down and chaos ran rampant.
I’m not particularly worried about the virus. It’s the reaction of millions of scared people that concerns me.
It turns out my instinct was right.
Not long after we hit the road, the President of Peru, Martín Vizcarra, declared a national emergency and closed the airport for 15 days, essentially putting into force the same rules in effect over in Italy, France, and Spain. Unless you’re going to the grocery store or pharmacy, you are not allowed to leave your house.
Was it the right move?
Maybe. Maybe not. But it’s the move that government after government is making, and it’s contributing to the fear tanking the markets right now. No one in charge knows what to do because they’ve never had to deal with this before.
But let’s pause for a moment and consider a few things.
What a Time to be Alive
How truly amazing is it that I’m marooned on a ranch in the middle of nowhere Peru during the worst pandemic scare since the 1918 Spanish flu outbreak, yet I still have a functioning internet connection. I can carry on from here as if I were sitting at my desk in Dallas.
My colleagues are all online.
My files are secured in the cloud.
If I need a break, I can flip on Netflix for half an hour to clear my head. The modern world is Armageddon-proof.
Grocery shortages have been a problem, but, even with that, stores are getting restocked quickly… and that’s here in Peru, too. It’s a testament to how robust today’s distribution networks are.
For the life of me, I don’t understand how toilet paper shortages became a thing. If I were stocking my bunker for the zombie apocalypse, toilet paper would be low on my list of necessities. I’d be more concerned with basics: food, water, and medicine. Maybe that’s just me though.
But we’re in the business of telling others how to invest their money and ultimately concerned about how to turn this crisis into an opportunity.
How Will This End?
I’ll admit, I have no idea where the bottom in this bear market will be. It’s a moving target. As I write this we’re down around 30% (as of March 16), and that number is bound to change a few more times, perhaps even today. The median decline in historical bear markets was around 33%, though we’ve had a few that saw the S&P 500 lose roughly half its value.
Stocks were expensive going into it, and that suggests the losses could be larger than average. But we also live in an era of central bank interventions, so an onslaught of new liquidity injections by the Fed could put in a floor.
In the meantime, this is what you should do, in my opinion: make a list of every stock you’ve ever wanted to buy and enter a limit order with your broker for a price that you’d be willing to buy it at.
If we hit the number, fantastic. You’re now a proud shareholder.
There are already values popping up I never imagined I’d see again in my lifetime. So, if you’re the intrepid sort, now is the time to at least put your shopping list together.
I’ll have more to say later in the week. For now, I have a ranch to attend to.