© 2019 BY CANNON CAPITAL MANAGEMENT, INC.

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Black Plague or Flu?

February 28, 2020

The Corona Virus has certainly captured our attention – as it should.  Unknown health risks have the ability to concentrate our focus.  So, as we share out thoughts on the Corona Virus and the actions of the stock market, we want to emphasize that we do recognize the potential concerns the Corona Virus represents to all of us. 

 

Hearing the word “pandemic” is at the very least startling if not downright, knee-shaking fearsome.  However, if we take a chance to catch our breath – pandemic does mean that the potential illness is no longer confined to a geographic area, that it is global in nature.  But pandemic does not mean that everyone who becomes infected with the disease is going to die. 

 

At this point we have learned that the Corona Virus is very contagious, that it seems to be related to the flu virus and has the highest mortality rate among the older population – I say that with no prejudice as I am now termed “old” by my kids and grandkids.  While the Corona Virus can cause extreme illness, the vast majority of people do survive the virus.  While no life or lives should be summarily shaped up as a statistic, it is important to try and put some perspective on the disease.

 

The economic impact on the global economy is real and combined with the tariff wars it has become very disruptive.  We believe the disruptions to supply chains, schools, events, etc. is cause for concern, but; that they will be temporary – weeks to months and not years. 

 

Governments across the globe are all calling for financial relief and beating the drum for economic stimulation to combat the effects of the Virus.  We believe economic relief efforts by governments combined with some pent-up demand for both businesses and consumers will drive a nice rebound in economic activity as we begin to see relief from the effects of the Corona Virus.

 

We view the stock market downturn as an opportunity to put cash to work at attractive prices.  We don’t have a crystal ball to the absolute bottom of the stock market; but we do feel that at current levels we should begin deploying cash that has been on the sidelines into the stock market. 

 

Let’s keep our heads on straight and remember we have been through other “scary” and at the time, unknown duration events.  It is the nature of life that we move forward without having all things known; however, we believe this pandemic will pass and that the stock market will reward us for our perseverance and willingness to take advantage of lower prices.

 

 

 

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