When you discover that your house is on fire, you turn on the hose, fill as many buckets with water as you have available, and do whatever it takes to douse the flames….
…. The last thing that you think about at the time is how much the utility bill will be at the end of the month. There is plenty of time to worry about that later.
Right now, governments and central banks around the world are doing whatever it takes to stop the coronavirus from wreaking havoc. They are throwing buckets of cash at the problem. It won’t neutralise the deadly pathogen. That is a scientific, medical and healthcare problem….
But failure to provide financial support where it is needed now could cause lasting social, psychological and economic damage.
We need to build bridges – lots of them – between where we are now and where we hope to be when we get to the other side of this pandemic. At some point, we will emerge from this crisis.
But for the moment, it is all about lockdowns, social distancing, circuit breakers and travel restrictions. It’s all about wearing masks and surgical gloves, using hand sanitisers and disinfectants. These are necessary measures to ensure that the virus cannot spread.
It is a Herculean task. But despite all the financial help, there will still be casualties – both human and commercial. Some businesses will fail, despite all the financial aid. The loss in demand during and after the pandemic could be devastating for some companies.
But not all businesses will be affected similarly.
However, the market is reacting as though just about every company is a basket case. It is behaving as though not only the global population is in lockdown but that dividends have been permanently locked down too. That is just not true.
Not all companies have waived, cut or even delayed their payout to shareholders. But those that have, are doing so for good reasons….
…. Landlords should cut their tenants some slack; creditors and debtors need to work together, and lenders need to be more understanding.
As investors, we need to be patient, too. There will be people out there who will tell you that the rules of investing have changed. That is only true if your time horizon is too short. So, hang in there!
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Disclosure: David Kuo does not own shares in any of the companies mentioned.
