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Portfolio > Economy & Markets

'False Hope' for End to COVID Blinds Clients to New Threats, Advisor Says

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Always be ready for the next crisis. Retired U.S. Army Captain Christopher Manske steadfastly abided by that tenet serving in Germany and Bosnia for five years.

As a 21-year financial advisor, he now applies the same perspective to coping with the COVID-19 pandemic.

“The more we hold onto the false hope of ‘an end’ to COVID, the less ready we’ll be for what’s coming as things change,” the founder and president of Manske Wealth Management argues in an interview with ThinkAdvisor.

COVID-19 won’t “be over” and “behind us,” maintains Manske, 49. “It’s going to be around just like the flu. These viruses aren’t going to disappear. It’s not accurate to say ‘when this is all over’ about COVID.” 

Nonetheless, he contends that the coronavirus now “has a lot less influence over the market” since it has already been priced into it.

After 12 years as a top Merrill Lynch advisor post-Army retirement, Manske opened his own RIA nine years ago in Houston. 

He focuses primarily on the consulting industry, energy and retirement planning. AUM: nearly $400 million.

Author of “The Prepared Investor: How to Prevent the Next Crisis from Affecting Your Financial Independence” (2020), Manske’s current recommendation to clients is to change their focus from how COVID is affecting their investments to “what’s really affecting investments.”

That is: “Inflation will become our biggest enemy during the next 5 to 10 years,” he predicts.

In the interview, the CFP discusses his optimistic outlook for the volatile market during the rest of this year and the sectors he likes.

In opining on reasons behind the nation’s unexpected labor shortage, a major one, he says, is that by providing stimulus payments, the government ”overestimated” the pandemic’s “danger” to businesses.

ThinkAdvisor held a phone interview with Manske on Aug. 11. Speaking from Houston, he called the issue of whether to raise interest rates “a pickle” for the Federal Reserve, remarking that, in view of the huge national debt, “some say the government is manipulating things to its benefit.”

Here are highlights of our conversation:

THINKADVISOR: When I interviewed you in December 2020, you argued that investors were too “giddy” over emergency authorization for COVID-19 vaccines and warned of an uncertain future.

Now, with delta-variant cases spiking among the unvaccinated, does this seem like a repeat of what happened in the pandemic last year?

CHRISTOPHER MANSKE: It does seem like we’re experiencing déjà vu with the nation and maybe even the world reeling from the fact that the virus has mutated. The need to vaccinate remains the same.

I’m very much against language that talks of “an end” to COVID-19. There won’t be “an end.” COVID is going to be around, just like the flu.

A lot of the messaging is tied to, “When this is over” or “When this is behind us.” 

We’ve got to move past that because the more we hold onto that false hope of “an end,” the less ready we’ll be for what’s coming as things change.

The idea that we’re going to get back to how it used to be “when this is all over” is [unrealistic] — no, we’re not. 

We need to get to a point where after we’ve had our vaccinations and an annual booster shot, we’re as [protected] as possible against this virus.

But many people still don’t want to take the vaccine. Will they transition to the side of health and positivity?

A lot of people will get vaccinated and get a booster shot, and a lot won’t. As a nation, we’ll get to a, sort of, equilibrium just like we have with other viruses and community health issues.

Is the future just as uncertain now as it was last year? 

It’s very uncertain. But the coronavirus has a lot less influence now over the stock market from a crisis standpoint. It’s been priced into the market.

What are you talking to your clients about when it comes to investing?

I’m asking them to consider changing their focus from COVID affecting their investments to what’s really affecting investments.

Right now, that’s inflation — the value of the dollar going down — and the really crazy uptick in real assets like real estate and other commodities. 

Do you foresee inflation rising to a much higher level?

Inflation is going to be our big enemy over the next five to 10 years.

What, then, will happen with interest rates?

That’s the pickle. The government needs to keep interest rates low to help manage our debt. If the CPI [Consumer Price Index] goes up — indicating that inflation is rising — the government would have to pay more on a lot of different pensions and other welfare-type benefits. 

The Fed needs to battle inflation, and the easiest way is to restrict the money supply.

If they raise rates, we would be in a real tough situation as to how to manage our national debt. Some say the government is manipulating things to its benefit. I expect that, as the months turn into years, we’re going to see how that plays out.

What’s your outlook for the stock market for the rest of this year?

We’ll see lots of volatility — lots of ups and downs, but mostly up. The market will probably [end] the year up.  

What sectors do you like?

In the short term, I’m trying to stay focused on energy, which has been beaten up — there are still good deals there; health care, for obvious reasons; and staples, the toothpaste and toilet paper companies of the world.

What with all the challenges we’ve just discussed, why would the stock market end on a positive note this year?

Those negative things are not major crisis-type events that would cause the market to suddenly crash. 

Unless there’s a major quarantine announced out of the blue, I wouldn’t anticipate any market reaction to COVID-19 because it’s old news. We know about it; it’s priced into the market.

Same thing with inflation. No one is going to get frightened of it.

But the flip side is that the market could drop like crazy tomorrow if tonight, there’s a serious Russian cyberattack that has major impact on our infrastructure. That could sink the market. 

Another example would be if our interaction with China in the South China Sea has a real complication — some significant threat involving one of their subs or our destroyers.

Investors as a whole are really concerned about the North Korea, China and Russia scenario.

What are your thoughts about additional financial stimulus?

I think that part of the U.S. labor shortage was created by the stimulus. I suspect there’s going to be some sort of reckoning, and it will involve the stock market. A diversified portfolio is designed to weather a storm like that.

Did economists and other experts foresee the labor shortage?

I don’t think we saw that. We were predicting that a lot people would be out of work and that businesses were going under and that there’d be lots of economic problems.

But it’s just the opposite. We were wrong about how badly businesses would be affected by COVID: We overestimated the danger. 

However, because of the delta variant, COVID-19 cases and deaths rose nationally this week by more than 20% vs. last week, and hospitalizations are more than 30% higher, according to the Centers for Disease Control and Prevention. 

The CDC urges people in areas with high COVID transmission return to wearing masks indoors even if vaccinated. Are we trending back to a more restrictive approach that could again culminate in quarantining?

It could be that we’ll go to a quarantine, but it will be a slow movement that won’t come as a surprise. It won’t be like the one we had the first time around. 

If we do it again, we’ll do it better. We’ll be smarter about it. And that will reassure people. 

You won’t see the Biden administration taking a panicked route of full quarantine out of nowhere. None of it would be a surprise, and it won’t create panic in the stock market.

(Pictured: Christopher Manske)


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