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Coronavirus and the markets

Sprouting InnovationWho knows what the future holds in this historic moment? As I write this, the self-quarantine movement to stave off the novel coronavirus outbreak is starting to take full effect. Within a couple of days, the boredom of many are being posted on Twitter and Instagram. Many outlets of fun — like the NBA, NHL, March Madness, The Master, gyms, bars, and movie theaters — are closed, canceled, or postponed. But there must be a silver lining here amidst the craziness (and the quiet.) What might that be? What about coronavirus and the markets?

Let’s start with a dose of reality. Not to undermine the very serious nature of the outbreak, but this is not the curtain call. Markets will recover over time. Many of us remember 2008 and how the deep uncertainty of our financial system during that time permeated throughout our daily lives. That might seem even more familiar now.

Necessity is the mother of invention (and opportunity)

But just like then, there is an opportunity here for free markets to prevail once again. After all, necessity is the mother of invention. To my knowledge, this is one of the few moments in modern times that the Federal government has reached out — in a very public way — to the private sector, asking for help solving a problem. This is similar to World War II when factories were learning to speed up production lines to meet the war demand, and rubber was the material being put on center stage to change our lives.

Create!Innovation can flourish during uncertain times

Let’s also think about how much innovation is going into keeping us safe and solving the issue of a worldwide pandemic the likes of which we haven’t seen before. Even more so, of how much will our medical systems and technology will benefit from those advancements after the pandemic is controlled.

Adaptation helps us find better solutions

Plus, in how many other ways is the world around us changing right in front of our eyes due to the coronavirus outbreak? Here are some examples:

  • Movies slated to go to theaters this month are now going straight to streaming, and not because they are anticipated failures.
  • Restaurants that never considered curbside delivery as part of their business model are now being forced out of their comfort zone with social distancing rules.
  • Retail stores are offering off-peak times just for senior citizens to shop to keep them safe from the threat of illness.

So many of these things are happening in order to adapt our lives to the current landscape and keep people safe. But think of how many of these changes will stick around because they are found to be a benefit; a better way of doing things. Challenging, uncertain times like this have a way of exposing old, unnecessary, or inefficient routines or processes. This in turn creates not only the opportunity for markets to bounce back after a crisis, but opportunities for growth over time as well.

A look at history

Coming out of the Great Recession, in 2010, U.S. patents were up in 2010 by 7.19%. They continued increasing for the next 7 years after. Successful, well-known companies like Live Nation, Pinterest, We Work, Beyond Meat, Square, Trunk Club, Venmo, Uber, Zulily, and Airbnb were all created during those unstable years. Those were times when fear and uncertainty about the markets was extremely high.

Every Cloud Has a Silver LiningThe silver lining

Crises like the current coronavirus pandemic are unnerving. They give us a pause for question. They present challenges that must be overcome, and they leave a lasting impact on humanity. But there will be those that continue to lean in, see the world from a different angle, keep on working hard, and who take chances when others are afraid. They’ll come out on the other side changing lives and making the world a better place. Through innovation, adaptation, and finding opportunities, we — and the markets — can bounce back.

 

April 2020

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