Don’t let emotions drive the bus!

I have had an increasing number of conversations with many of my clients who are asking about adding risk to their portfolios, and purchasing securities trading at increased, and unrealistic valuations. This isn’t surprising and a classic case of risk compensation.

Risk compensation is a theory that people will adjust their behavior in response to the perceived level of risk, becoming less careful if they feel more protected. IE: Driving faster when wearing a seatbelt, or increasing portfolio risk during a global pandemic, because a few companies are carrying the indexes higher. This is something to keep in mind as we navigate the remainder of 2020.

What is the Covid-19 data telling us?

On Tuesday of last week, drug company Moderna, released positive results in their early- stage Covid-19 vaccination study helping boost the market. Take a look at the chart below for the most up to date Covid-19 key metric readings.

Pay close attention to daily deaths, and Rt, as those are the two most important pieces of statistical data about Covid-19.

• Are more people dying?
• • Yes. Daily deaths have increased, following the trend of increased hospitalization data.
• If R is below 1 that means for every person who has the virus, they will infect less than 1 person. This means the virus will die out. Over 1 means the virus will spread.

Rt broken down by state. For an interactive chart and source go here.