COVID, The Next Wave Is Upon Us

This Wave Could Be Worse Than the First

We all want nothing more than for this coronavirus pandemic to end, and the existence of two vaccines is great news for humanity. However, while millions of doses are prepared, it will be at least spring before most everyday people are able to get their shots and get back to their normal lives. For now, much of the country is going back into lockdown. Fact is, this wave has higher case counts than the first.

Source: New York Times

As of December 8^th, new infections have increased 18% from the average two weeks earlier, with 220,225 new cases reported on December 8^th alone. This has caused California, representing 13% of the total US economy, to re-impose strict limits like it did last spring.

Source: New York Times

Many other states, including: New York, New Jersey, Illinois, Michigan, Minnesota, Virginia, West Virginia, Pennsylvania, Oregon, Washington, Wisconsin, North Carolina, Nevada, Kansas, Hawaii, Oklahoma, Connecticut, and others, are following suit to various degrees. Whether these actions are actually advisable is unclear and is fodder for debate. The resulting decrease in GDP is likely to continue through Q4 into Q1 2021.

The good news, if there is any, is as we improve our understanding of who is most vulnerable and how to treat affected patients, death rates have clearly been declining.

Source: New York Times

Indeed, once you adjust for some questionable decisions made in a couple NorthEastern states at the beginning of the pandemic (e.g., sending infected people to nursing homes), the overall death rate drops significantly.

Source: New York Times

Using the CDC data set, excluding New York and New Jersey, <5% of all COVID deaths occur in those under 50 years of age, and so far, COVID is responsible for <2% of those who died at <30 years of age this year.

Source: CDC Data

For perspective, more people die each year from heart attacks (22.7% of total deaths in 2018) and cancer (20.6% of total deaths). Yet we as a nation, continue to eat fatty foods, exercise less than we should, smoke, and consume alcohol. More kids under 17 years of age will die riding a bike this year than will die from COVID, yet we still allow them that freedom. (Each year 100 children are killed and 254,000 are injured as a result of bicycle-related accidents.)

Does this mean we should ignore COVID? Of course not, but we need to seriously ask ourselves if the forced school closures and general shutdowns many states are imposing are worth it? Would it not be better to focus our efforts on protecting those over 50 and letting the rest of the economy operate as normal? That is my interpretation of the CDC data, but you are encouraged to come to your own conclusions.

Moving On......

The market, however, has clearly moved on beyond COVID. On Vaccine Monday (November 9^th) the DOW climbed more than one-thousand points, with both it and the S&P500 climbing about 12% since. So, I think it is a good idea to stay invested, but to do so in dividend growth stocks that will be resilient if shutdowns once again cause the market to crash. Stocks which can see you through this wave, but can also do well if the market continues to show strength. Value oriented stocks with solid and growing dividends fit the bill. They can help an investor ride through the inevitable bumps, dips, and turns in the market, while also producing a good return over the long run.

Follow me for an article following this one which will cover 5 such stocks.