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I'm really relieved to see the first signs of the slowing of the coronavirus in Europe. And in the United States, confirmed cases and deaths from the virus are growing more slowly. Many science and medical experts say that the social distancing measures are starting to work.
And that brings us to today's Reality Gap. Big Media hails the slowing growth as a reason the market has been up the last two days – and that seems to be quite true. But the reality is that slowing growth doesn't mean a return to business as normal anytime soon.
And while we prepare to put together our post-crisis Trade of the Decade portfolio, we need to keep in mind that even when the economy starts to recover, it's going to happen in a step-wise fashion. Here's how to invest now, what you can invest in, and what you should wait on…
How to Invest Before the "Return to Normal"
As parts of the United States are entering the peak of the coronavirus pandemic, some countries are starting to come out the other side.
In Europe, countries like Austria, Denmark, and hard-hit Italy have begun considering gradually reopening schools, businesses, and travel.
Meanwhile in China, the source of the outbreak and also the first country to at least officially get it under control, has reopened its factories, and its citizens are returning to work.
This will be a slow process, but it's starting now overseas. And before long, we will start loosening restrictions here in America, too.
Get Your Buy List Ready: COVID-19 has crushed markets, but stocks will bounce higher. This is a once-in-a-lifetime chance to get into great companies at historically low prices, so put these stocks on your buy list now…
So it's time to start putting together your post-COVID investment plan.
But temper your expectations. This pandemic, and the "pause" we put the economy on, will leave its marks. It will be a different world we reenter. Some of what we took for granted about business, the economy, and human behavior will no longer apply.
Here's how to make sure your post-COVID investment plan fits our new reality…
China Shows There's No Quick Return to Business as Usual
Once we pass the peak of the COVID pandemic, people will not go back to their old habits immediately.
For weeks we've all been cooped up in our homes, told not to go outside, and to stay six feet or more away from other people.
These messages, and the underlying fear of a second wave of coronavirus infections, will change our behavior for the long haul.
And I'm not just talking about the fact that more of us will be wearing face masks.
Take China, for example. It's clear that China has not been forthright on its count of infections and deaths during this pandemic. The Chinese government admitted as much when it recently stated that people who had tested positive for the coronavirus but did not show symptoms had not been counted in official numbers.
But it's equally clear that China has managed to get its outbreak under control. The loosening restrictions, closures of field hospitals, and lower amount of cases even from unofficial sources show that the outbreak is fading.
And yet the behavior of Chinese citizens is nowhere near close to normal.
Take a look at this chart from GPS provider TomTom showing traffic congestion in Beijing:
The red lines show how congested the streets of Beijing were this past 7 days. The dotted blue lines show the same data from a year ago.
As you can see, morning rush hour is more or less back at 2019 levels. But there is no congestion at all during the day, especially at noon. This shows that folks are not going out to run errands or drive to get lunch like they used to. And the evening rush hour is much lower – again, fewer errands and no stopping for an after-work drink with friends.
Moreover, there is barely any traffic over the weekend or during weekday evenings.
It's clear that people in Beijing have returned to their work commutes. But it seems no one is driving anywhere for lunch during the day, or to see a movie, go to a restaurant, or to any other entertainment venue during the evening.
In other words, life has not returned to normal.
We'll be seeing similar effects in Europe and the United States once our lockdowns begin to lift.
Here's how you should prepare…
About the Author
D.R. Barton, Jr., Technical Trading Specialist for Money Map Press, is a world-renowned authority on technical trading with 25 years of experience. He spent the first part of his career as a chemical engineer with DuPont. During this time, he researched and developed the trading secrets that led to his first successful research service. Thanks to the wealth he was able to create for himself and his followers, D.R. retired early to pursue his passion for investing and showing fellow investors how to build toward financial freedom.