“On top of that, we have the challenge of the coronavirus disease itself,” Oaktree Capital’s Howard Marks said on Yahoo Finance’s The Final Round last week. “We shouldn't lose track of the fact that that's the problem.”
Fed Chair Jerome Powell recently described the trillions of dollars of emergency actions by policymakers as a “bridge” for the once fundamentally strong economy to get to the other side of this health crisis. But those actions won’t do much as long as the economy remains on lockdown as the coronavirus death toll continues to rise.
“I don't think you can buy the virus off,” Marks said. “So the point is, the economy will stay closed for some period of time. Exactly how long, we don't know.”
Wall Street experts almost unanimously agree that market volatility won’t settle until there is some sort of inflection in the coronavirus crisis. It would be at that point, economists would be able to begin modeling the outlook for the economy with any degree of certainty.
“At a certain point, we will get the spread of the virus under control and at that time confidence will return,” Fed Chair Powell said. “Businesses will open again. People will come back to work.”
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Unfortunately, the question of when the virus comes under control remains unknown. And money and rhetoric only go so far.
“It’s become evident that the virus doesn’t care about your political ideology, or your wealth, or your status,” NYU professor Scott Galloway said on Yahoo Finance’s On The Move on Friday. “In America, I think we’ve taken cold comfort in believing that we’re all going to be rich and that none of us are ever going to get sick... Your wealth or your 401(k) isn’t going to protect you.”
All this makes for an incredibly complicated situation for investors, who are deciding whether to buy, sell or just sit tight.
“There are two risks every investor, ranging from the amateur to the wealthy individual to the professional like me, has to shoulder every day: the risk of losing money, and the risk of missing opportunity,” Marks said in an interview with Goldman Sachs last week.
Marks, who weighs value heavily in his investment decisions, believes there are opportunities out there for discerning investors.
“I think the outlook for the economy is weak. The outlook for the disease is bad. On the other hand, there's good value in the markets,” Marks said last week, adding “there is good value.”
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