But What If? {Introduction}

Conventional wisdom {CW from now on} is groupthink.  It's the collective assumptions we all make about certain things, events or ideas.  CW when looking at the future is often wrong, largely because it is fighting the last war.  By that I mean it is taking the collective experience of some event or past idea and projecting it out into the future.  today we're going to start another new series and we'll call it "But What If?"  Here we'll examen conventional wisdom and throw out some other scenarios and then add at the end our projected probability of that scenario turning out to be what actually occurs.  Here goes and remember this is a work in progress.

Economic recovery:

CW says it will take us years to undo the damage the virus has inflicted on our economy.  Most estimates I've seen say it will be 2022 before we get back to where we were at the end of 2019.  But what if instead through a combination of science and best practices we have a much better understanding of how to live with the virus by next fall?  And what if because of that knowledge unemployed people are rehired at a much faster rate than currently expected?  And what if people begin to feel comfortable and safe start to venture out again?  Most importantly, what if when they go outside they begin to spend money again?  There's currently something like 4.8 trillion dollars sitting on the sidelines either looking to be invested or to be spent.  The conventional wisdom in many quarters was at the end of World War II we'd resume the Great Depression.  The thinking then was that all those demobilized soldiers and reduced defense spending would wipe out a lot of the economic gains made during the war.  Indeed, the US did experience a short recession in 1946-1947.  But then a combination of all that money saved during the war, defense applications turned to civilian usage and the GI bill turned the economy around.  It also didn't hurt that those GIs came home and started families.  What if we see some combination of that in the months ahead.  If so then economic growth could resume at a much faster speed than many currently think.

Projected probability of this being a likely outcome.  50-60%.

A 2nd wave:

CW says we'll see a 2nd wave of the virus in the fall as we all head back indoors similar to what was experienced in 1918.  But what if that same combination of science and best practices blunts outbreaks of the disease to isolated and manageable pockets next winter?  Science and public health has advanced quite a bit since 1918.  What if by next winter Covid-19 is a manageable event similar to influenza?

Projected probability of this being a likely outcome.  40-50%.

So this is a start on tackling conventional wisdom.  I'd say that while this may be the CW in the press and amongst the pundit class one does need to consider the possibility that Mr. Market has already said this is a higher probability event than most think given its recent actions.