Fighting the coronavirus pandemic is akin to war. COVID-19 is a deadly foe and it will take toughness of mind to defeat it.

That’s why, amid this pandemic-induced crisis, it’s fitting to seek the advice of my colleague Amber Hestla.

Amber Hestla (picture here in Army fatigues) is the chief investment strategist of the trading services Income Trader, Profit Amplifier, Maximum Income, and Precision Pot Trader.

But Amber isn’t just a veteran of Wall Street. She’s also the veteran of a shooting war in the Middle East.

Amber served in Operation Iraqi Freedom. While deployed overseas with military intelligence, she learned the importance of interpreting data to forecast what is likely to happen in the future.

In military jargon, her job was to “analyze strategic and tactical intelligence about enemy forces and potential battle areas.” In plain English, she spent 14 hours a day trying to make sure other soldiers didn’t get blown apart by roadside bombs. So the idea of “risk” is always on her mind.

As a civilian, Amber specializes in generating income by applying analytical skills she learned on military deployments to the markets.

What’s her take on the investment risks spawned by COVID-19? I posed the following questions to her, during a one-on-one chat.

The stock market surged in April and seems to have regained momentum. Are you optimistic that the worst is behind us, or do you think additional sell-offs lie ahead?

I expect another sell-off. This is the pattern seen in all bear markets since at least 1900. There is a decline that attracts bargain hunters. That drives a partial recovery. Then there is a second leg down.

Charles Dow wrote about that pattern. The earliest reference I found so far is from May 1901. In The Wall Street Journal, Dow explained: “The swing of prices in and after a panic is always the same in character although of course not in extent. The figures have almost invariably shown first a severe drop, then a strong recovery, and then a relapse carrying prices back from one-half to two-thirds the amount of recovery.”

We’ve seen the panic and recovery so I’m expecting the relapse. Of course, that may not happen. But Dow believed he uncovered that pattern after researching the market for years, so we have at least 130 years of history telling us to expect another sell-off.

Do you expect a “V”-shaped economic recovery, one that’s “W”-shaped, or something altogether different?

It’s difficult to forecast the economy in detail, but like almost every other analyst, I believe we will see the deepest contraction in history this quarter. The Federal Reserve’s latest forecast is for a decline in U.S. gross domestic product of 11.8% in the second quarter (see chart).

That forecast is based on a model that is curve fitted to the last recession. Fed economists basically looked at the data from that recession and found the formula that had the best fit to the data.

Generally, curve fitting has its limits as a gauge, but this Fed estimate closely matches the Congressional Budget Office (CBO) forecast of an 11.8% contraction. CBO’s forecast was published two weeks ago, and the Fed is now catching up to that model.

So a decline of 11.8% for the second quarter seems like a good estimate. CBO expects growth of 5.3% in the third quarter and then growth averaging 2.5% to 3% into the end of 2021.

I think the CBO is being too optimistic. That same forecast shows unemployment averaging 14% in the second quarter, peaking above 16% in the third quarter and averaging 10.1% for 2021.

Read This Story: Don’t Bet on a “V” Shaped Recovery

In late 2009, unemployment peaked at 9.9% and that was a terrible economy. We could have unemployment above that level for the next year. As that reality settles in, I expect a W-shaped economy with a small rebound in the third quarter followed by a second decline.

The first of the W will form quickly, the second bottom will be more of an L-shaped decline and then I expect years of slow growth.

Will the fiscal and monetary stimulus we’ve seen so far prove sufficient to resuscitate the economy?

Fiscal policy is going to delay recovery. I’m sorry for offending some readers but I have to say unemployment benefits are too generous. A New York Times article explained that workers in more than half of states will receive, on average, more in unemployment benefits than their normal salaries.

This is because of the extra $600 per week in benefits included in the CARES package. When Congress was voting on that, some Republican senators asked that this be corrected because it must be an obvious drafting error. The Democratic response was that no one should argue about $600 a week for the unemployed. To keep the bill moving, it was passed.

Those benefits are set to end in July. By that time, many businesses will have failed and there will be fewer jobs to return to.

We’ve seen the worst energy demand destruction in history. Will crude oil prices recover to the point where the energy sector looks attractive to investors again?

Oil has endured booms and busts for more than a century. There is an old joke about seeing bumper stickers in Texas that said, “Please God, give me one more oil boom. This time I promise not to blow it.” Remember, they drive big trucks in Texas so their bumper stickers can be wordy.

This is the biggest bust in history but eventually there will be another boom. In the meantime, investors should take a short-term view of energy markets. Crude oil gained more than 50% in less than a week and there will be short-term opportunities, lasting days to weeks, in the sector.

Which sectors and asset classes look the most appealing to you right now?

Gold, especially mining stocks, are attractive. Gold is a classic hedge for times of crisis.

Read This Story: Best-Performing Asset of the Last 20 Years

Bonds also are attractive right now. They offer great potential. If interest rates fall, bond funds can deliver double-digit gains. There is room for rates to drop, especially if the economy performs like I expect it to.

Do you see any lurking dangers that the investment herd is underestimating right now?

Everybody seems to be underestimating quite a bit right now.

There is likely to be a second wave of the pandemic in the fall. Possibly a third wave in the winter. Will we shut down again?

Profit margins will be lower in the future. Over the past five years, companies in the S&P 500 reported more than $0.10 in profit on a dollar of sales (on average). That was a record. Now, companies will spend on personal protective equipment for workers and accept sub-optimal processes to avoid risks. This will compress margins.

These are worthwhile expenses so companies should spend that money. But lower margins create additional risks for shareholders and higher risk premiums imply lower stock prices.

John, I have more risks to cite that the herd mentality is ignoring, but I’ve taken a lot of your time. Let’s start on that topic the next time we talk.

Editor’s Note: Amber Hestla has just provided you with invaluable insights into how to protect and build your wealth during the coronavirus crisis. But she’s not the only expert on our staff who can help you make money in good times or bad. Consider the legendary trader Jim Fink.

Jim Fink is the chief investment strategist of the premium trading service, Jim Fink’s Inner Circle. Jim has developed a way to quickly and predictably multiply the gains of regular stocks.

Jim is now making you a promise. If the recommendations you get from his Inner Circle advisory don’t give you the opportunity to turn $5,000 into $50,000 in the next year, simply give us a call and we’ll give you another year free of charge.

Jim has put together a new presentation, in which he discusses how to make market-crushing profits, whether the market is going up…down…or sideways. Click here for details.