David Kotok, chief investment officer of Cumberland Advisors, a Vineland, N.J. shop with $800 million under management, is preparing for bird flu, which he thinks may come to the United States. Should you be doing the same? Or is the fear unjustified?
Kotok’s view is one of erring on the side of caution. In an email to clients last Friday, he warned that bird flu “must be taken very seriously.” He’s doing no less, as our conversation with him yesterday reveals.
It’s hard to know if Kotok’s money-management counterparts across America share his concern, although anecdotal evidence suggests that worrying about bird flu is not yet in season. That may change, and perhaps quickly. But for the moment, Kotok appears to be in the minority within the financial community.
If you’re interested in how the minority thinks on this matter, Kotok’s your man. Although he’s an investment professional, he’s well-read on the subject of bird flu, and has talked to various officials about what may be coming. He also has definite thoughts about what bird flu means when it comes to an investment portfolio. In sum, he says that raising cash will become increasingly warranted if and when the danger signs start to rise. If the virus becomes serious enough, he thinks selling equities completely will become prudent.
For the moment, however, bird flu is still very much a foreign hazard, and so cash-only portfolios remain the stuff of disaster planning in paper form only. Time will tell if it stays that way, although the flu seems to have some momentum, as the chart below suggests. The death toll among humans, although still tiny, is growing, as is the number of countries with avian flu in animals.
Source: US Health & Human Services Dept.
Meanwhile, with the approaching migratory season of Asian birds flying to North America there’s reason to worry anew, or so Kotok tells us in the following interview, which we conducted by phone yesterday, March 20. In fact, U.S. Interior Secretary Gale Norton said as much yesterday. “It is increasingly likely that we will detect a highly pathogenic H5N1 strain of avian flu in birds within the U.S. borders, possibly as early as this year,” the Secretary warned, according to McClatchy News Service via Detroit Free Press.
(If you’re interested in getting the government’s current spin on bird flu, take a look at PandemicFlu.gov. For news reports, Google has the usual surfeit of updates. Meanwhile, sleep with one eye open, and cast a wary eye on strange ducks in your backyard.)