Investors will return from a long holiday weekend in the U.S. on Monday to what may be the calm before the storm: a relatively quiet week before a deluge of second-quarter corporate earnings reports are published starting July 13. Most observers are looking past second quarter earnings, as they are likely to not only be awful, but to come without any useful guidance from companies on what to expect for the rest of the year. The bigger question, then, is: what’s next? 

The problem is that the market is pricing in a coronavirus vaccine by Labor Day as well as endless fiscal and monetary stimulus. There are so many positive data points priced in that if we don’t get them, markets could go down. And then, there is the Presidential elections in November. After the polls got it so wrong last time around, no one believes the polls anymore and of course, no one believes the media. Who wins will be decided the day after the elections and it will be anyone’s guess who that will be until the results come out.

Future Wealth’s View

In his book – “On Not Being Someone Else: Tales of Our Unled Lives”, Andrew Miller states “We each live one life, formed by paths taken and untaken. Choosing a job, getting married, deciding on a place to live or whether to have children―every decision precludes another. But what if you’d gone the other way? It can be a seductive thought, even a haunting one.”

Life today is something like that – what if there was a vaccine readily available the day coronavirus emerged and everyone faithfully went and took a shot much like we do for the annual flu season? And what if this shelter in place never happened? Would we be better or worse for it?

These existential questions make us pause and think about the bigger picture. And in investing, that is the cardinal rule – to not get misled by the day to day happenings but instead to take a long term view on what the future will be and how the decisions we make today will have a longer term impact on our lives. And, that is how we should approach the next few weeks of corporate earnings from US companies. This is no time to panic.