The Lockdown Experiment Is Ending

One by one, states are lifting their lockdown restrictions. Is that a mistake? And what does it mean for markets?

As usual, we’re looking at both sides. We can’t close the economy forever… but reopening too early would be counterproductive, since a surge in coronavirus cases would just lead to more uncertainty.

For the seventh week now, my senior analyst Matt Weinschenk and I sat down for an informal discussion to share information and suss out what may happen in the coming months.

In this week’s video, we present both sides of the reopening debate because we fall on opposite sides. One of us thinks we could be over the worst of the virus… the other fears a big resurgence in cases.

But both of us fear what may happen next in the market.

Click here to watch the debate.

We also cover which states don’t look safe to reopen (but actually are).

We share specific probabilities on just how hard it is to get a vaccine approved.

And we start to dig deeper into how the political and social decisions we make now will shape the next few decades of American society. But we’re just scratching the surface on that one.

As always, we’re just trying to figure things out and we’re glad to bring you along for the ride. No edits. No sales pitch. And it’s free to anyone who wants to watch.

Now, onto this week’s Q&A…

Q: I understand research is finding a link between high blood pressure and dementia. I know Doc abhors statins. But what do you recommend if one can’t control blood pressure with diet and exercise? – J.W.

A: You’re right, we’ve pounded the table on the dangers of statins for years. And we’ll continue to do so until research shows us they’re safe. But, we’re not unreasonable…

Sometimes, you can do all the right things like exercising regularly, eating right, and getting  plenty of sleep… and still battle high blood pressure. Talk to your doctor about your statin concerns and see if a non-statin drug would work for you. For example, there’s promising (although still new and scant) research on a non-statin called ezetimibe. You can read more on different non-statin treatments right here.

Sometimes, high blood pressure is due to unmanaged stress. There’s some evidence that cognitive behavioral therapy can help patients lower their blood pressure. Many therapists now offer online appointments, making it much easier to get help. You can find therapists here.

You can read more about how to decide if statins are right for you here.

Q: I see John Doody says he’s 100% in cash right now. Do you recommend that? – L.D.

A: I’m a strong advocate of asset allocation. Simply put: Asset allocation is how you balance your wealth among stocks, bonds, cash, real estate, commodities, and other investments in your portfolio.

Keeping your wealth stored in a good, diversified mix of assets is the key to avoiding catastrophic losses.

If you keep too much wealth – like 80% of it – in a few stocks and the stock market goes south, you’ll suffer badly. If you’re heavy in real estate (like many folks were in 2006), you’ll be wiped out in a big real estate crash (like many folks were in 2008).

The same goes for any asset… gold, oil, bonds, land, blue-chip stocks, etc.

There are lots of strategies to determine your optimal asset allocation and it varies depending on your age and risk tolerance. But the general idea is to spread your wealth across various assets: stocks, fixed income (like bonds), cash, and precious metals (especially gold). That way, your future isn’t dependent on any one asset doing well.

Q: I’m confused…

I saw a CNN headline that says, “WHO says no evidence shows that having coronavirus prevents a second infection.”

However, the holy grail of fighting COVID-19 seems to be finding a vaccine. But I thought a vaccine just used parts of the virus to trigger our immune system.

Can you explain how COVID-19 itself would not provide immunity yet somehow a vaccine would provide immunity? – W.C.

A: The key to understanding immunity is knowing that our immune system has two waves of attack. Your body’s first line of defense is the innate immune response. This involves things like natural killer cells and macrophages that immediately react to invaders and destroy them.

The second line of defense is the adaptive immune response. This is where more specialized immune cells come into play, like your T and B cells. If the infection starts to overwhelm the first wave, the B cells start to make antibodies. These are tags that identify and latch onto the invader cells so your body can better target and kill them.

Once you have enough antibodies, your body has learned to effectively recognize and quickly kill any of those invader cells. So if you catch that same virus or bacteria again, your body can ramp up its response quickly and get rid of it before you get sick.

When we get a vaccine, we introduce part of a virus that stimulates that adaptive response – we get our body to make antibodies. That way if we encounter that virus again, we can fight it off quickly.

What we’re seeing with COVID-19 is that some folks have it and don’t make antibodies. That’s why they don’t have an immunity. There are two reasons this is likely happening. The first is that as we age, our immune system weakens. Part of that involves our adaptive immune system starts to deteriorate. In other words, we have more trouble making antibodies. The second is that some folks seem to be getting less-severe strains of the SARS-CoV-2 virus and their innate immune systems are knocking it out before the B cells get involved.

Keep your questions, suggestions, and comments coming our way…  [email protected].

What We’re Reading…

Here’s to our health, wealth, and a great retirement,

Dr. David Eifrig and the Health & Wealth Bulletin Research Team
May 8, 2020