Market Overview
Party likes it’s 1665
People are using words like “unique” and “unprecedented” to capture this moment, and applying it not only to epidemiology, but also to society and personal finance.
They are wrong.
If you’re struggling to find historical parallels for today, it’s not because they don’t exist, but rather because they are a little obscure. Still, we as a species have been here before. The entire Mediterranean basin was decimated in 541 to 543 by the Plague of Justinian. And yet life went on. While people were dropping dead on the streets of Constantinople, the Byzantine emperor continued to send troops to reconquer the remnants of the western Roman Empire from the Goths and Vandals while simultaneously repelling Neo-Persian aggression in the east. Armies were never cheap, so economic activity must have continued with some alacrity throughout the whole crisis.
The next example is, of course, the Black Death of the mid-14th century. This was the closest thing to a mass extinction event humanity has ever faced in recorded history, killing off roughly half of Europe and maybe one-fifth of the entire world’s population. Money was the last thing on anyone’s mind when they were in the middle of it, but documentation survives. Records show that, in material terms, those who survived saw an improved quality of life as wages rose sharply and rents fell.
That’s not the moral of this story, of course, but it’s true nonetheless.
London culling
What we’re getting at here is that, even in the most horrible times, there are still opportunities to not only protect your assets but also to grow them, albeit prudently. Probably, the most instructive moment in history to prove the point is the Great Plague of London.
This 1665 localized epidemic claimed 100,000 lives, or roughly one quarter of the population of England’s capital city. More than any other outbreak, it has been memorialized in print, so we have intimate knowledge of what life, death, society and commerce were like while it raged.
One contemporaneous account came from the quill of one Samuel Pepys (correctly, but rarely pronounced “Peeps”), a senior civilian overseeing the Admiralty and later a member of Parliament. As a gentleman he had the leisure and education to indulge a hobby. Starting in 1660, he began keeping a diary and kept it up for almost a decade. This candid glimpse into 17th-century life covers big events and small details – politics, arts, his extramarital dalliances and even his personal finances.
Oh, and the plague.
The original social distance-er
“But, Lord! how sad a sight it is to see the streets empty of people, and very few upon the 'Change,” he wrote on August 16, 1665. “Jealous of every door that one sees shut up, lest it should be the plague; and about us two shops in three, if not more, generally shut up.”
That’s a scene which anyone alive today can relate to. Fortunately for him, Pepys had stumbled across the efficacy of social distancing.
As a member of the upper middle class, he had his own home in a posh section of London. He also had an estate in the countryside, to which he could retire whenever he felt city life too confining. Pepys and his wife Elizabeth had no children, and thus many fewer possible sources of exposure to viruses than most people then or now.
Stop the spread
Pepys was a man with his mind on his money and his money on his mind.
“At the office all the morning, and after dinner there again, dispatched first my letters, and then to my accounts, not of the month but of the whole yeare also….” he wrote on December 31, 1664, “but yet I was well satisfied with my worke, and, above all, to find myself, by the great blessing of God, worth [£1,349, or roughly $18.5 million today].”
Two years later, he was worth £6,900. So, over the course of the outbreak, he had increased his net worth by a factor of five.
There is the question, though, of how he made his money. We wish we could tell you it was because he invested in a risk-adjusted portfolio of securities diversified by sector, geography and asset class, but that just wouldn’t be historically accurate. Rather, he leveraged his extended family relationships and – in a manner that was considered entirely aboveboard in his day – profited off his government positions.
But he didn’t just fall off a wagon into those high-level positions. And there are reasons why his relatives came to rely on Pepys rather than some other shirttail cousin to handle their affairs. It’s because he was focused, ambitious, with a head for numbers and a taste for long hours. He was the kind of person who would succeed financially no matter what era he was born into.
It’s fun to speculate what Pepys would do if he were alive today. He would certainly see opportunity in the current, inevitable expansion of the public sector and figure out which private companies would benefit most. He would also observe how the society that survives this crisis is going to change and find out who is developing and marketing products and services to meet the changing demand.
But he’s not alive today. So who knows what he’d make of the emerging post-coronavirus world. Even so, there are many financial professionals around who are also focused, ambitious, with a head for numbers and a taste for long hours.
Why not talk with one of them?
Steve Anglin, CPA is a Managing Partner at Smith Anglin Financial, and the Head of the Tax Preparation Services. He is also responsible for Smith Anglin’s compliance supervision. He holds a BBA in Accounting and a BBA in Real Estate, and numerous securities licenses and designations.
