It’s official. The omicron COVID-19 variant is in the U.S.
And while the first patient reported to have it seems to be doing fine, virus infections are a lot like cockroaches … there’s rarely just one.
It’s still early, and we don’t have a lot of information. We likely won’t know for at least a few more days if this variant is more transmissible or has worse symptoms than other variants.
But the biggest risk is that omicron could blow through the current vaccines that have already been administered. Moderna CEO Stephane Bancel commented recently that he believed the effectiveness of the vaccines would see a “material drop.”
Again, we aren’t sure how this is going to shake out. And that uncertainty is enough to keep the markets on edge. Stocks have been choppy since the Friday after Thanksgiving, seeing some of their worst declines in over a year. The S&P 500 lost 3.2% between last Friday and Wednesday’s close. Thursday’s recovery was nice to see, but another sell-off wouldn’t surprise anyone at this point.
Let’s find the silver lining…
Omicron Isn’t a Repeat of COVID-19 in 2020
I get it.
The original COVID-19 outbreak caused one of the fastest and sharpest plunges into bear-market territory in March 2020.
Some folks have yet to recover from it, from both an economic perspective (because they sold at the bottom or missed the recovery rally) or psychological (because nobody wants to be caught a fool twice).
You know me. I keep my emotions and my “gut feelings” in check and let the numbers do the talking. But as I see it, society is at a different starting point today relative to early 2020.
Back then, COVID-19 blindsided all of us. It created an absurdly unknowable future.
Today, we know a lot more about the virus.
We have a number of effective treatments, and even if we need alterations to the vaccines to make them more effective, the technology exists to do that quickly. The infrastructure to distribute is already in place as well. And, perhaps most importantly, the political will for further “lockdowns” is almost nonexistent.
How to React? Don’t
I’m not saying that the health care community, nor we, should dismiss the omicron variant as unimportant. I’ll do whatever I can to keep my family safe.
But long-view investors shouldn’t make knee-jerk moves because of it.
And the themes we’re following in my premium research service Green Zone Fortunes will continue to change the world for the better regardless of how this unfolds.
Will omicron undermine the genomics revolution? Of course not. If anything, it underpins the importance of DNA-based medical advancements.
Will omicron knock the electric vehicle mega trend off course? I don’t see how it could.
I think the negative press will weigh on investor sentiment for a short while … then stocks will continue higher in anticipation of our continued resilience to the challenges the virus has posed and of the lucrative opportunities these long-run mega trends create.
My takeaway: The trends we talk about all the time in Money & Markets and Green Zone Fortunes are still in place. They’re alive and well … and will be for years.
If the market gets rough in the meantime, that’s OK. We talk about the power of stop losses for a reason. But that would be the case with or without the omicron variant. That’s just good, disciplined investing.
My team and I encourage you to stay focused on the long view and keep the latest omicron news in perspective.
We imagine it will be but a small bump in an otherwise long and prosperous road.
To good profits,
Chief Investment Strategist
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