Paul Meloan – Vested Interest

Nothing like a global pandemic to get me back at the keyboard and writing again.

As of March 18 (this morning) I’ve spent the last 2o consecutive days talking with clients about rebuilding their financial plans from the wreckage that is Covid-19. A recurring question is whether the pandemic will trigger anything like the Great Depression. I think not.

This isn’t the Great Depression, it’s more like World War II. My parents were very young children during the war but I imagine even in their early 80s have powerful impressions from that period. Consider some parallels:

  1. America had a strong isolationist/denialist element that refused to acknowledge the global risk of fascism. That persisted for years (1933-1941). Here the denialist element was born, lived and died in a few weeks.
  2. WW2 required a mobilization of the entire population and economy. While only some were called to combat, everyone made adjustments and sacrifices to daily life to support the effort. Not to do so was unpatriotic and would risk social retribution. When this ends we will learn of thousands of acts of individual and collective generosity to those affected most by the pandemic.  We’ll also learn of a few dozen Purell hoarders and profiteers.
  3. Leadership will emerge. While our president will never be mistaken for FDR, we have already seen real leadership on the local and state level making hard decisions based on science and evidence. It’s already started.  There are Eisenhowers and Bradleys leading the effort already. They wear lab coats instead of uniforms.
  4. Everyone is going to lose something. We’ve already lost some daily enjoyment, but some will lose their livelihoods, health or their lives. There will not be any class of citizen exempt from the risk. While there may not be many like Theodore Roosevelt, Jr. no amount of financial privilege will confer immunity from some pain.

Like the early days of the war we believe that things will get worse before they improve. No one knows where the bottom is with this and we think it’s an exercise in foolishness to try to locate it. The best we can hope for is to not act rashly: selling now (after a 30% drop) and never getting back in is the only way to guarantee these losses are permanent. If all we do is avoid that scenario then we will have done alright.

Paul Meloan is the co-founder and co-managing member of Aegis Wealth Management, LLC, in Bethesda, Maryland USA. Before Aegis Paul was a practicing attorney as well as working in the tax practice of Ernst & Young, LLP.

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