Congress and the Federal Reserve have been pumping tremendous amounts of newly printed money into the economy in an effort to counteract economic damage caused by the COVID 19-related shutdowns. A portion of this “helicopter” money has been sent directly to citizens, and perhaps you found a government deposit in your bank account.

How will all this new money — and the attendant politics, reactions, backlashes and “unintended consequences” — impact the economy and your portfolio in the six months, a year, two years? There are all kinds of theories and predictions out there. We’re here to tell you the truth.
.
During the next six months or so, hopefully all this effort will keep the economic system functioning. Beyond this. . . . I have no idea. And in reality, neither does anyone else.
An old Danish proverb (often attributed to the physicist Niels Bohr) says: “It is difficult to make predictions, especially about the future.” Even with forecasting tools like “big data” and artificial intelligence, prognostication is often impossible (even with certain purely “deterministic systems,” but that is another story).

I won’t support my premise today about the oft-futility of trying to predict the future based on the current state of the world. There will be plenty of time for that, and I commit to doing so. Let me toss out an intuitive reason, without empirical or statistical justification. The world is super-duper complicated with billions and billions (or trillions) of moving and interacting parts. Many of these moving parts seem to pop into existence for no rhyme or reason and interfere with the “flow.” Some of these parts start tiny (even microscopic), like a new virus generated in a food-market stall in Wuhan province, China. Others are bigger from the outset, like the failure of a bank that cascades into financial crisis.

Who, or what, has the power to envision this cross-current of events, many impossible to foretell, and figure out how the maelstrom will impact the value of your stocks or home in a given finite period, like a year or two? No one can do this, or at least consistently. I quote from Stephen King’s novel The Institute: “There are too many variables!”

So what do you do? Develop a long-term financial plan that envisions periods of extremes and craziness Chances are, your plan will be a simple one that will, in effect, ignore or take advantage of these dislocations and crises.