John Maynard Keynes said that in an economic downturn, people should collectively spend more to avoid a deeper recession. But he also admitted that they, instinctively, tend to do the opposite and instead save more. We must avoid falling victim to the paradox of thrift.
Our job as investors is to try and identify those last-man-standing companies. To do that, we need to dig into their balance sheets and cash flow statements because cash is king.
A vaccine is not a fancy motorised scooter or a piece of operating software where a minimum viable product or MVP will do. This is not something that can be fixed on the fly after it has been injected into millions.
US Federal Reserve is aiming to boost average inflation above a 2% target, whilst keeping interest rates ultra-low for years to boost employment. The two key words are “average” and “target”.
It will be a long time before things will return to normal, if that is even possible. But that doesn’t mean that our lives will have to come to a standstill.
Whilst it is still early days yet for the vaccine programmes, eventually, many people around the world should be able to fight off, and eventually put this awful pandemic behind us.
