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We attended our son’s virtual commencement from Ohio State on May 3rd in our kitchen while he and our daughter-in-law quarantined together with us.  Other parents have learned to juggle Zoom office meetings with schoolwork, barking dogs and enthusiastic toddlers.  And while most of us have been disappointed by missed family milestones like graduations and weddings, my friend lost his mother to COVID-19.

We’ve all been impacted by the coronavirus, and we’re all shaped by our own personal experiences.  Those who live in areas with low levels of infection may feel steps taken to keep people from gathering were unnecessary and harmful to the economy and are anxious to get back to their earlier lives.  Those living in more densely populated states like New York, and those personally affected by the death of a loved one or loss of employment caused by a COVID-driven shutdown may feel the world will never be the same.

Each time we go through a crisis it creates a ripple of change.  After 9/11 we were faced with increased airport security and 3.4 oz. bottles squeezed into quart-size bags.  We adjusted by signing up for TSA Pre-check and learning to travel with less.  In 2007 before the real estate-driven financial crisis, getting a mortgage loan was easier than renewing your driver’s license.  Today we know we’ll be asked to put our entire financial lives on paper, but the mortgage business is still booming.  As we wade through all the financial and emotional impact of COVID-19 we are all trying to determine what permanent changes the coronavirus will make to our day-to-day lives and the world, and how we will all adjust.

A recent article written by Tom Frieden, the former director of the Centers for Disease Control and Prevention, suggested that the five stages of grief outlined by Elizabeth Kubler-Ross’s model proved a useful framework for thinking about the coronavirus crisis and how we have been working our way through it: denial, anger, bargaining, depression and finally, acceptance.

From a financial standpoint, the stock market seems to be far more optimistic than any of us feel, and there have been concerns voiced about the disconnect between the economy and the market.  As I write this blog the Dow Jones Industrial Average posted a 912-point gain for the day, continuing its climb from a March 23 low of 18,592 and capping off a 6,006-point advance so far.  While we’re still trying to decide whether it’s safe to eat in a restaurant or return to the gym, our collective opinions – which is what the market is made of – seem to be projecting an acceptance that once again the future will be very different, but not necessarily dire.

I was reminded of that in my recent CEO Roundtable meeting – conducted over Zoom last week – and the experiences shared by our group.  A son graduating from a prestigious university still has an excellent job, but his start date has been pushed back to January.  Those in our group who work in construction and related industries are doing very well, and those who work easily from home commented that they are more efficient without traveling and feel they’re getting more work done than before.  Others are more impacted by plant shutdowns and closings in their industries, but as a group they have dealt with the changes in their businesses and are not as negative as you would expect.

There is no doubt the coronavirus will have a Darwinian effect on businesses everywhere, and those companies that were struggling before COVID-19 will downsize or cease to be.  In the retail industry, Neiman Marcus, J. Crew, and most recently J.C. Penney have filed for bankruptcy.  Before the pandemic, Macy’s said it would close about 125 of its 580 stores over the next three years.  Meanwhile, Walmart has started using 2,400 of its nearly 4,700 U.S. stores to gather and ship online orders, up from only 130 stores a few weeks ago, which may begin to give Amazon more competition.  Nothing ever stays the same, and a crisis only speeds the process.

As we work through the changes in our personal lives, businesses are doing the same.  Winners and losers will emerge that will be difficult to predict with 100% certainty.  Just when we think we’re certain about what comes next – the cruise industry will surely sink – people surprise us with a totally different reaction – bookings are up 40%.

We believe in the market’s ability to accept, adjust and evolve, but we don’t believe in the ability to predict with certainty who the winners and losers will be.  As we work our way to an ‘after COVID-19’ reality, we will continue to construct portfolios with companies in a diversified range of sizes, countries and industries, to increase the opportunity to capture all the returns the market has to offer.