Nine months after the first lockdowns, it’s a race between advancing vaccines and an out-of-control virus. Time for the market to hit another wall of worry.
Remember February? A lot of people were tired after what seemed at the time like a prolonged flu season and stocks were tired too.
Corporate growth had stalled. The market mood turned icy. Then the country started shutting down and the selling started.
Here we are now, three quarters of a year later and looking at a bigger wave of COVID infections. Hospitals are groaning again. The first vaccines are still months away.
For you and your clients, it can either feel like the end of the world or it can feel like déjà vu. You can’t live through the actual end of the world twice.
Resilient markets, dynamic industry
The world didn’t end in February. The Fed and other institutions proved they have the resources and the will to keep society on life support while the virus runs its course.
The banks didn’t crash. They’re not loving a zero-rate environment but as long as it means free cash is available to cushion the shocks, they’ll survive.
Industry by industry, the story plays out the same way. Restaurants, airlines, hotels, real estate groups and retail chains have had a miserable year . . . but the government won’t let them fail.
As long as they’re on life support, they’ve already survived the worst conditions imaginable. Their revenue dropped as close as it gets to zero in the spring lockdowns.
But as March turned into April and then May, executives adapted. Stores and restaurants pivoted to online ordering, curbside and delivery. It was a drag on margins but sales started moving the right way again.
They’ve seen the bottom. Even though stimulus has been elusive, the Fed isn’t going to take the cushion away until these companies are strong enough to stand on their own again.
Odds are extremely good they’ll err on the side of caution. The consumer economy will get more than enough support, one way or another.
And when the vaccine is ready, the virus will end. All the Fed needs to do is keep these companies alive until that moment.
That’s why we’re talking about Dow 30k in the face of what still looks like the deepest recession in our lifetime. Investors are buying the light at the end of the tunnel.
Even if another train is coming up fast, we’ve already seen where it goes. Hospitals will find a way to share capacity and treat as many people as they can.
New York got through the spring. Beds can be found. It might be a tough season, but we know a lot more about the disease now, too.
The recombinant therapies really work. People who take the cocktail are back on their feet in a day. That’s an improvement from where we were nine months ago, taking a lot of strain off the system.
The great accelerant
Wealth managers, meanwhile, were already evolving toward more virtual operations. The technology was in place years ago. The early adopters already adopted online client meetings and electronic signatures.
From their perspective, the new normal of the post-pandemic world looks just like the old one. They stay in touch with the “office” 24/7 via secure mobile devices. Everything they need travels with them or simply stays home.
I know of wealth management groups that haven’t opened the doors since February. Asset managers who were already working remotely didn’t have to pivot for the pandemic.
Now that necessity has forced everyone to figure out video meetings, those tools are now available to all as part of the everyday work cycle.
If and when you can schedule in-office meetings, you can do it. But if your clients would prefer to talk remotely, you can do that too.
Some of us will find that we don’t really need to keep up the office at all. We’ve come almost an entire year forward on our commercial leases. Are the hardwood panels and expensive shelves really worth the expense?
Another lockdown only takes us farther along that timeline and makes the ultimate decisions easier. You don’t really need a nice place to sit while waiting for clients to come see you. If you want to meet face to face, talk over lunch or come to see them.
Rent a desk and a storage locker by the hour if you need somewhere to sit and store physical records. Or spend the money refitting your home office and get the tax break.
I suspect office spaces are about to get a lot cheaper. And you can theoretically set up shop anywhere: the beach, the heartland, wherever you get the best combination of prices and quality of life.
Supervision and follow-up actually get easier when the conversations can be recorded for compliance or client educational purposes. We’ve known this for years but now it’s common industry knowledge.
It’s in our DNA now. You can reach clients anywhere you’re licensed to go. All you need is the right system.
Lockdowns are frustrating but they’re not as disruptive as they were a year ago. A generation ago, it would be impossible to work as long as we have under these conditions.
Admittedly, glitches happen all the time. The systems still aren’t perfect, especially when everyone is trying to talk at once.
But glitches are a fact of life. The virus was a big one. We learn, we evolve. We find our limits and then transcend them.
That’s what the market does. You know that. Have you reminded your clients lately?
A lot of big banks will never go back to completely in-office operations. Guess what? They haven't been there for years.
Flextime was real even before the pandemic. I know bankers who haven't gone into headquarters more than a handful of times in the past decade.
They run their meetings from home. They cash the same paycheck.
It's okay if you don't want to adapt to that world. A lot of people are hating this and will probably retire in the next year or two anyway.
Their clients and their accounts will go to someone. It's just how life works.
