Understand The Past To Understand The Future
“…in the medium and longer run, there is going to be a recovery, so you need to examine your goals, your particular constraints and resources, and do not panic.”
Given the times in which we find ourselves, it is safe to say uncertainty will be here for a while longer. The disruption and pain caused by this pandemic has far-reaching implications to every nation and certainly brought the entire global economy to a screeching halt. From a societal, financial, or public health perspective, no corner of the world is untouched. And even as some regions emerge from lockdown, a careful eye on the future and past will be required to fight and hopefully prevent new outbreaks.
Our team is often asked by our international investors to share some perspectives and insights as to how world events may impact our strategies, so, needless to say, we are constantly in research mode. Every so often, we come across unique theories or perspectives we want to highlight and share with you. We recently came across several pieces that delivered a unique perspective on the impact of this pandemic and some historical parallels that could help shape our take on “what’s next”. And in this post, we would like to share the first.
As it relates specifically to the disruption of the economy that this current pandemic shock has caused, preparing for a new reality is something that requires agility and, as suggested in this piece, an eye to the past. Naturally, one thinks of the 2008 financial crisis as being the historical context needed, but according to MIT finance professor Andrew Lo, while not an exact parallel, we can look at the 1918 influenza pandemic as well.
One interesting observation about that pandemic is that the economic effects appeared to be relatively short-term and did not hurt all industries equally, (He cites the healthcare industry as an example of businesses that performed better than others in 1918). While we can’t expect things to play out exactly as they did in 1918 (not that he suggested this), perhaps using the past as a guide, we should expect that some industries might recover sooner than others once we emerge from this global lockdown. So the key may be to identify which industries are best positioned in 2020 to recover and out-perform others initially, and then determine how this will drive the underlying demand (and subsequent supply) for related space. Lastly, perhaps the most important point made in this article is, as Professor Lo put it, “…in the medium and longer run, there is going to be a recovery, so you need to examine your goals, your particular constraints and resources, and do not panic.” Something we agree with entirely.
While our research will always have an eye on the road ahead, what experts like Professor Lo confirm is that the past (even the distant past) can be a useful map for the journey.
If you would like to review the entire article by Betsy Vereckey or Professor Lo’s presentation simply click here.
And as always, thank you and please stay healthy and happy.
