It’s been a rough three months, in more ways than one…
In mid-December some dude deep in the Wuhan decided to order the Sweet & Sour Bat for dinner. The world has endured 3 months of heartburn as a result. Now things are going bat-shit-crazy!
The S&P 500 has shed 27% off its high less than one month ago, Feb. 19. What a drop! We basically have the world heading into lockdown while investors are heading for the exits. What sense can we make of it all? Not much where I can tell, but let’s break down what’s going on these days…
The JWYHs (Just Wash Your Hands)
The JWYHs believe we can conquer a global pandemic with soap and water. Epic decisions are currently being made by world leaders to limit crowd sizes, quarantine entire countries, and ban travel in and out of massive geographic jurisdictions. Enormous business decisions are being made with historic economic impact such as canceling major sporting seasons, large events, and having workers work from home. The JWYHs continue to shake their heads and lather their palms while they sing “Happy Birthday” two times through because counting slowly to 20 is too difficult for them. If we ever lose the power grid for 6 months JWYHs will be first folks we have to bury.
The DTYFs (Don’t Touch Your Face)
The DTYFs are taking a hands off approach to the whole scenario. Hands in pocket, they could very well have the detritus of this morning’s breakfast stuck on their chin but they don’t care. They only thing we have to fear is face itself. They will combat COVID-19 with hands below hips at all times. The thing is, they are probably on the right track but the biggest DTYF I know is a chronic nose-picker. Someone help me there…
The IJTFs (It’s Just the Flu)
During the impeachment hearings I was amazed at how many constitutional scholars I know. I had no idea! Within a month I now know even more expert virologists. The IJTFs started strong, wobbled in the middle rounds, and are now up against the ropes. Comparing Covid-19 to the flu has officially run its course. Myopic math in terms of infection to death rates fail to uncover the true vulnerability we have to Covid-19. Furthermore, many IJTFs are now pushing the “fact” that the old and debilitated are at the greatest risk of coronavirus, so us young-uns have nothing to worry about. If the disease struck hardest in the 18-35 age group, we’d see a different tact. Instead we’re encouraged to ignore the predicaments of our older generations and take an ageist / ableist point of view. The fact is the death rate of Covid-19 is 10-20 times the rate of influenza and a totally different disease. I’ve also seen Covid-19 compared to the death rates of lightning strikes, drunk driving, the common cold, heart disease, obesity, and recreational swimming. I’ve walked away from all of these analogies.
These folks need TP for their bungholios – and lots of it. I don’t know why Covid-19 has led to a run on toilet paper when it is a primarily a respiratory disease. I always thought most people were full of shit, but this validates my thinking. The ironic thing is, most folks with shopping carts full of toilet paper have the bottom of their carts loaded with bottled water. This proves they failed the most basic biology classes our schools have to offer – but go ahead and listen to their viewpoints on a complicated virus as you stand in a long line at Costco. I’m sure you’ll learn something of value.
Italy is closed up and locked down. Norway and Saudi Arabia too. Iran has been decimated. Justin Trudeau has self-isolated (four more years… four more years…) and the US is having fits and spasms toward some pretty big quarantines in various areas.
The NBA, NHL, and March Madness have been cancelled. I think the WNBA as well, but that’s like a tree falling in the forest. SXSW is off. Coachella is too. Pearl Jam cancelled. F1 is teetering, having cancelled their opening race but they say they’ll run the next one with no fans in the stands (fun…).
Are these overreactions or prudent decisions? Obviously the ITJFs and the JWYHs see it one way. There are some pretty big brains and some folks with a lot of money on the line who see it another.
I don’t know what to make of all of this, so I’m simply concentrating on the “what ifs”. I don’t know if a quarantine is necessary, and I’m not qualified to have an opinion, but what if one happens? I want be prepared… What if I am told not to report to work? What if stores close and I am asked to stay in my home for a period of time? What if I am unable to leave my immediate area at will? It’s all happening folks – happening right this very minute – and it’s happing wether you think it’s warranted or not.
Absolutely brutal. Thursday 3/12 was the worst day in the markets since the crash of 1987. Furthermore, losing almost 30% in less than a month is a historic drop that will live in infamy. That being said, a 60/40 stock/bond portfolio is only down about half that amount. It’s buffeted by bonds which are topping record highs as yields get obliterated. This shows the importance of allocating across a wide spectrum of asset classes.
So now what do you do? Hopefully you’re still in the game, adjusting your allocations, and sticking with your long term plan. Forego the urge to try to “time” things. If you have some extra money you can throw in your accounts now it’s not a bad time to get in on the cheap, but don’t feel like you have to. Keep on going with your regularly scheduled contributions so you buy some cheap stuff now. Certainly don’t panic and sell to lock in losses. Turn off the news and sign out of Twitter if you need to.
Will it get worse? It might. When will end? I don’t know. When will we recover these losses? Down the road – but you will recover these losses…
When the Going Gets Weird
These are crazy times for sure. Historic times, and I can’t wait to read the books that are going to be written on 2020. But when the going gets weird, the weird turn pro. So get pro. Stop incessantly posting WHO graphs and CDC charts on social media. Stop quoting Dr. Drew, Dr. Oz, and Dr. Gupta – the Three Stooges. Stop watching Cramer. Grab some TP but you don’t need to fill the spare bedroom with it. Grab some extra non-perishable food items while you’re on aisles 1-5 as well. Things are going to start getting hard to find and a run on grocery stores could leave you in a pickle. People laughed at me 6 weeks ago when I was buying up nitrile gloves, sanitizing supplies, N95 masks, non-perishable food items, vitamins, and health related supplies. I cruised Kroger & Publix yesterday out of curiosity and you won’t find some of those things now.
Get ready for some SHTF scenarios but play smart and level headed. Remember, we’ve survived war with the Nazis, the Vietcong, Lehman Brothers, crazed Muslims flying planes into NYC, AIDS, LTCM, Y2K, The Dust Bowl, 1929, 1987, 2009, The View, and multiple Yoko Ono solo records. We got this.
Cheers, and thanks for reading!