What I Would Do Right Now to Save the World

The market was up huge yesterday. I don’t like it. 

I want the market to go up. I’m absolutely sure that there is greater than a 95% chance that the markets will be SIGNIFICANTLY higher in the near future. 

In other words, on the one hand, the market is a strong buy. 

But as I wrote last week (when the market was higher than it is now), I DO NOT BUY when markets go UP OR DOWN 10% in a day. 

That’s too insane. It means there is too much uncertainty. It means amateurs are getting in the game (or billionaires who can afford more risk). 

If you are a daytrader, knock yourself out. After a big down day, if I were daytrading, I’d buy short-term at the close and then get out the next day on an up open. Or if there’s a big down open, I’d buy the open and hold for a few minutes to catch a bounce. 

But I’m not a daytrader anymore (after 10 years, my body and mind couldn’t take it anymore). 

Instead, I’m long-term. 

Here are my assumptions: 

A) I want to invest in great opportunities that have one of these two characteristics: 

• A chance to go up more than 100% relatively quickly
• A stable choice that has a great dividend. We’re all getting 0% in our savings accounts and if a company that was unfairly crushed in this crisis now has a dividend of 15% (and many do) then COUNT ME IN. 

B) I don’t want to invest in the middle of a shitstorm. 

Just because things are going up, doesn’t mean I should rush to buy. Just like when things are going down, I shouldn’t rush to sell. 

Instead, there’s still a lot of uncertainty (and this is day by day): 

• Data on coronavirus. When will it peak? What is the mortality rate? So many questions. Although I am very optimistic, the uncertainty is still destroying people’s faith in the market. 
• Data on the stimulus. I’ll break down the stimulus point by point in a future email but I haven’t seen the final version so… uncertainty.
• The lockdown uncertainty. The economy is not a lightswitch. You can’t turn it off for three months and then turn it on. The average restaurant, before this crisis, had only 16 days of cash in the bank. 

Which means already most restaurants and the millions of workers they employ are out of business/unemployed. 

The number of unemployment filings this week will be greater than any week since the Great Depression and might actually be the greatest ever. 

Every single day of the lockdown pushes the economy closer to a breaking point. 

Now, I do think we are getting closer to CERTAINTY and here’s why (although these aren’t predictions, just guesses based on either my own experience, conversations I’ve had with experts on my podcast, or in my role as an investor, etc). 

A) CORONAVIRUS TIMELINE

In every country, it’s unclear what strategy worked. Some companies did aggressive testing and didn’t lockdown or close businesses (South Korea, Singapore, etc.). Some countries did aggressive lockdowns (China). Some countries didn’t really do anything until too late (Italy). I’d say the U.S. falls somewhere in the middle. 

Although we are too early to really tell, in all the countries where it started a month or so earlier than the U.S., the pandemic peaked and then, as pandemics have ALWAYS done throughout history, slowly drifted down. 

This pandemic seems to have lasted 3-4 months in every country. Regardless of strategy. So it’s unclear if any strategy works. It might be the case that the pandemic starts strong, affects the weakest (so deaths spike early), and then reduces its strength as it infects younger people, and then dies out. 

There’s some evidence Italy might be nearing a peak of “new deaths per day.” I’m keeping an eye on that and on the U.S. data. 

Also keeping an eye on China and South Korea as they try to get back to normal. Will the virus let them? 

We’ll see. 

My working theory: that the virus will peak in the US around mid-April, give or take a week. 

Again, we’ll see. 

B) THE STIMULUS

Regardless of the actual details, the stimulus, the Fed cuts, other actions the Fed is taking, other ancillary stimuli in the economy (e.g., low oil prices), will have an ENORMOUS effect on the economy. 

Or, at least, an economy that is back to work. 

We live in a $15 trillion economy. 

My guess is the stimulus is altogether going to add up to $6–10 TRILLION. Add in the fact that every single dollar tends to flow through the economy more than once (i.e., I use a dollar to buy a newspaper, the newspaper guy uses that dollar to buy a coffee — and $1 just added $2 to the economy) and the stimulus could be multiples larger. 

That’s actually scary in the long run (again, the topic of another post in the future). 

But short-term, assuming other things have some normalcy, this is A LOT OF STIMULUS. Everyone is going to feel the effects of this. It’ll feel as if money is dropping from trees. 

We have never been through stimulus like this (uncertainty). Not even close (2009 was less than half what I think will happen here). But I do know the effect on the stock market will be enormous. 

That’s certainty. But it depends on the other factors. 

C) THE LOCKDOWN 

If the lockdown lasts another few months, the economy will be fundamentally different. I don’t know how different (uncertainty) but different enough that I have no clue now what it would look like — only that it will be very bad. 

That said, I am optimistic. I don’t think this lockdown is going to last that long. 

At some point, the leaders of both parties are going to have to acknowledge that the deaths and suffering from not loosening up a little will be much more than any worst-case scenario of coronavirus. 

I am optimistic they know this. 

The reason for the lockdown is to “flatten the curve.” That doesn’t mean less deaths. It means more time between deaths, so that the hospitals do not get overwhelmed. 

Even if my scenario above (about the timeline of the virus) is wrong, we do know that companies are donating millions of masks, equipment, ventilators, etc. to the healthcare system. Cruises and convention centers are turning into hospitals. Many things are happening to achieve the goals of flattening the curve. 

If we are truly sticking to those goals, then stopping the lockdown does not have to do with avoiding a spread of the virus but has to do with not overwhelming the healthcare system. 

Which means the lockdown could start being unlocked as early as later this week or next (realistically, probably next week is a best-case scenario). 

My hope is by April 6 it is mostly unlocked to avoid a tipping point scenario (uncertainty). 

We’ll see. 

Here’s what I would do if I were making these decisions. You have to be very analytical in moments like this because no matter how you cut it there is tragedy. 

• Wait for stimulus bill to get passed (no sense unlocking if I don’t have the tools to kickstart the economy that has stalled in the middle of a highway) 
• Quarantine people who tested positive + their family + close contacts (and even people with symptoms)
• Quarantine the most susceptible (elderly and those with pre-existing conditions)
• Aggressively test (this is starting to happen)
• Give Chloroquine to every patient or person with symptoms and waive all malpractice and ignore the FDA. I can’t say Chloroquine works but it seems to be the drug everyone is mentioning and testing and taking with a doctor’s approval means avoiding risk of bad effects. 

THEN

• Open all businesses (except, at first, large gatherings)
• Week 1, everyone under 45 can go to work. Week 2, everyone under 65 can go to work
• Pay sick leave for everyone quarantined or not at work
• Public places like restaurants must be at max 50% capacity until better data is available on the virus, to keep some distance between customers. 
• Incentivize people to go out. For the first two months, maybe three, post quarantine, every expense at a street-facing store or restaurant can be written off against taxes. 

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FAQ: 

Isn’t this risking lives?

Unclear. Again, the goal of social distancing is to flatten the curve so the healthcare system can handle it. If it turns out cases go up and start to overwhelm the system, then this would have to be rethought. 

Also, people can still quarantine themselves until data is better. Always give that option.  

Is this favoring BIG MONEY over deaths from the virus? 

No. If there are 30 million people unemployed (as is expected if the lockdown goes on too long), then there will be considerably more death and suffering. 

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Unfortunately, these decisions have to be balanced. If I were on my deathbed right now from coronavirus, I would say the exact same thing. 

So… we wait. 

In the meantime, I’ve been interviewing tons of doctors, economists, specialists for my podcast and for these articles. 

And every day at 2 p.m. EST I do an Instagram Live to update people and answer questions. 

Also, today on my Instagram account, I’m doing a giveaway contest of my six favorite quarantine books. No strings attached — you just have to enter in your favorite books to be entered in the contest. I’ll do this every month. 

Don’t forget that this is the first time in the history of the human species that we’ve all been united under one goal, one purpose. 

To be alive now is painful, exciting, anxiety-ridden, sad, stressful. We are all going through it. 

But it’s momentous. This is what will define our generation(s) as the “greatest.” Nothing like this has happened in the past 200,000 years of our species. 

I don’t want to say “enjoy it.” But I do want to say: be the hero of your story. See who you can help. Be bigger than the anxiety trying to pull you down. Be able to look back at this moment and say you did your best in a time of incredible uncertainty. 

This virus seems to be enhancing what is already inside each person. Jerks are turning into bigger jerks. Compassionate people are becoming even more compassionate. 

This is one of the few times you get to really decide, in a very difficult time, who you really are. Hopefully, we all make the right decision. 

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Six Rules for Investing in a Crisis Market

The rules

Rule #1: Never try to call the bottom

It’s OK if you buy something and then it goes down more. Just don’t use what’s called “leverage” (i.e., borrow. In this case, you can go broke).

Rule #2: While some say, “Buy when there is blood in the streets,” I don’t like to do that

It’s OK to wait until there is some decent data out there, like stabilizing cases in the U.S., etc. 

The market might not be 33% down by then. It might just be 20% down. But there will still be MANY, MANY bargains. 

Rule #3: Don’t fight the Fed

And the Fed just put in a bunch of stimulus. 

Expect the stimulus to be fully seen in the economy within six months. But the market will anticipate it before then. 

Rule #4. Look at what’s changing: drones, robotics, oil, delivery, remote education, video conferencing

There are probably opportunities here that nobody realizes yet. 

Rule #5: The 3% rule

If you are buying stocks (as opposed to mutual funds or ETFs), never put more than 2–3% of your portfolio into any one investment. 

Being able to sleep at night is core to investing. If I am too dependent on one stock, then I have trouble sleeping. 

Warren Buffett would disagree. He made a ton of his money when, in 1962, he put 1/3 of his hedge fund into American Express while everyone else thought Amex might go bankrupt. 

BUT… he did his research. And he’s Warren Buffett. 

Rule #6: Risk over return

Manage risk over return. If you take huge risks, you won’t think straight. 

• Don’t get leveraged
• Know when you plan to get out of a stock that’s going down as well as going up
• Use a “story stop,” not a price stop. Get out when the story changes
• iDon’t just buy something because it’s down. Look for things that have a variety of reasons for upside potential and a variety of reasons why downside is limited
• Do your own research. 

What to look for right now

• Stimulus package passed
• Stability in the number of new deaths per day in Italy (March 22 had a 15% decline in new deaths. If that trend continues, then it’s a map of where the U.S. will be in 10 days)
• Signs that the lockdown here will be over. Every day of the lockdown is another possible hit against GDP. The lockdown might be OK, but the uncertainty of its length will keep driving the market down more. 

Summary

I personally would wait but I also think right now is a bargain. 

I just don’t like when it goes down OR up 10% a day. I like a few days or weeks of stability. 

After 9/11, the bottom didn’t really occur until March 2002. During the financial crisis the market also didn’t bottom until March 2009. It was a strong buy in October.

But there was time. There’s always time. 

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Life Advice from People Over 100

They survived the Great Depression, WWII, Vietnam, 9/11, the financial crisis, social media(!), and six pandemics. And probably a divorce or two.

I always want to be the dumbest person in the room. Now we’re all in virtual rooms so it’s trickier.

But the people in the attached graphic have been there, done that, and lived to tell the tale. To read their advice is invaluable to me as I try to struggle and muddle my way through my own fears now.

The thing about a lot of self-help is that it’s like smoking crack (from what I hear). It gives you a spike of “feel good” and then you feel worse than ever.

But right now it’s important to find the advice that works and stick to it.

To ask: How can I be the hero of my story in this period? There are too many victims.

Too many people fighting in the store over the last roll of toilet paper.

Being the hero means taking the call to action (I’m going to be healthy, I’m going to help others, I’m going to be creative) and then finding your peers along the way, while encountering and defeating bigger and bigger problems.

And then finally “returning” to what will be a new normal, a better person for your adventures. And using that experience to help us become a closer society in this new normal.

Paying attention to the wisdom and advice from those who survived these past 100 years is also a good reminder. A reminder that the elderly have played such a valuable role in creating who we are.

They are a continued blessing to life on this planet.

Thank you for LIVING.

 

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Finally, We Have a Good Market Day

Finally! 

A reasonable day in the markets. This is the first good sign I’ve seen in the financial markets since this crisis began. 

But, one might ask, what about those days that went up 10%?! Those were GREAT days, right? 

NO!

Volatility is volatility. Volatility is the enemy of your bank account. Most people are long-term investors. Volatility is great for day traders and hedge fund managers who hold stocks for an hour or two. But for long-term investors, you want to buy when people are not panicked AND there is still opportunity in the markets. 

But… but… shouldn’t you buy when there is “blood in the streets”? 

Of course you should. Right now the market is down over 30% from its high. And yes, that’s a buying opportunity. BUT… as a long-term investor looking for good value… it doesn’t matter to me if I get a stock when the market is 30% down or 20% down. If the information about this crisis is more calm (which it will be eventually, if not rather quickly in the next few weeks), then I am happy to hunt for value opportunities. 

Why not 30% down? Because, again, any market that goes up 10% in a day can also go down 10% in a day. I want to act when there’s still opportunity but I have a little more visibility on the future of whatever crisis we are in.

This  means staying informed (don’t count on mainstream media). I stay informed through the many guests on my podcast as well as my contacts in the hedge fund community (I was a hedge fund manager and also a professional money manager for over 20 years). 

And it also means don’t gut-sell or gut-buy just because there’s blood in the streets or you’re afraid to miss the boat or you think the world is going to end. 

1. The world is not going to end
2. When things are calm it’s easier to focus on the fundamentals of companies so you can buy value when it exists. 

TODAY is the first day in awhile that I’m seeing the kind of market I like. The S&P 500 is a little over 1% up as I write this. Perfect! I’d love to see this type of low volatility for a few more days. 

That tells me that people are not focusing as much on the panic and the hysteria but they still haven’t put their money back in the markets yet. 

Trust me, they will (the reasons for which I will outline in my next note). 

In the meantime, I’ll tell you some stocks on my radar. There are many but here are just a few that I am looking at. 

For one thing, this is an example of a no-brainer but I AM NOT GOING TO DO ANYTHING ABOUT IT because crazy is as crazy does. 

Check out ZOOM Technologies, Inc. (ZOOM). Now check out Zoom Video Communications (ZM). 

Zoom is video conferencing software that is changing the game in terms of remote work. This is one of the few stocks that has gone up huge since the crisis began. 

BUT… here’s the problem: Both ZOOM and ZM have gone up huge. 

ZOOM is not the company that makes the Zoom software. In fact, I don’t even think ZOOM does anything at all. I think it’s an empty shell with no business. 

And yet, the stock has gone from $2 to $14 during this crisis because the maniacs out there don’t realize it’s a DIFFERENT COMPANY than ZM. 

Does this mean it’s a “short” opportunity? In order words, can you place a bet that it’s going down? Because it will go down. It will go back to $1 or lower. 

And the answer is… NO! Don’t do it. Don’t be one of the crazies. Any stock that goes from $1–2 to $14 for horrible reasons can easily go from $14 to $50 overnight before people realize what’s happening. 

Funds can manipulate it. Daytraders can screw with it. Bankers can force the small investor to go broke by driving the stock price up before anyone can get out of their short. 

It will go down. It’s probably a good bet to bet against it. But I don’t like stress and it’s not the sort of investment that feels “safe” to me EVEN THOUGH it will certainly, at some point, be lower than it is now. 

Meanwhile, check out some good, safe plays that pay high dividends. These stocks are called “closed-end funds.” They are funds, but they trade like stocks, which means they can trade for LESS than their total assets are worth. 

It’s like someone is selling you a $100 wallet for $90. I would take that bet all day long. 

And it’s even better when it’s not $90 but $80, which is what is happening in this market. 

For instance, Royce Value Trust Inc. (RVT). Royce is a well known name in value investing. It basically owns a basket of stocks.

Imagine you could buy the stock market as a whole, but get it for a 20% discount. That’s what RVT is right now. And that discount is at its 52-week high, meaning it hasn’t traded this low versus the stocks it owns in over a year.

So, again, it’s like buying a $100 wallet for $80.

But even better, because it’s dipped so much, it pays a 14% dividend. You can’t find a dividend like that from any stable stock EVER. 

Does it own penny stocks? Not at all. It just owns a basket of solidly performing value stocks diversified across the world. But when RVT dips, the dividend goes up because you are getting this basket of stocks for a lower price than if you own them directly. 

Closed-end funds are ALWAYS my go-to strategy when there is a market crisis like this. It worked for me in the early ’00s. It worked for me in 2008/09. And it’s where I’m spending my time now to find stocks that: 

1. are high-quality
2. have potential to move up a quick 10–20%
3. pay a huge dividend.

It’s only in these situations that one can find huge dividends like this that are safe and value-driven. 

I have more of these but please write to the feedback email if you’d like to see more.

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Some Good News on the Coronavirus

We can’t focus every day on reading the news and saying, “OH MY GOD, THE WORLD IS GOING TO DIE!” 

That is not useful and it’s not even true. 

Media companies make money scaring you. Politicians stay in office (or get into office) by assuming the worst case and hoping for the best so they can say, “Look, we did everything we could.” 

So ignore that. Also ignore the market. As I said the other day, as long as it’s going up or down 5–10% a day, don’t invest. There will be opportunities later. 

Is the market cheap? It sure is. $5 trillion in stimulus is going to hit the economy, which is already assuming a worst-case scenario depression, which is not going to happen. 

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Listen: Keep people safe. Social distancing is fine. I don’t want to get this virus. And I don’t want to spread it if I get it. I’m socially distancing. 

But, be reasonable. Be calm. This is the story of your life and you want to make sure you are the hero of your story. 

But it’s important to recognize that this pandemic HAS A LIFESPAN MEASURED IN MONTHS and not “forever” as some suggest.

This virus will run its course and we will face massive stimulus to get the economy back in shape. Chinese stock markets are back to all-time highs, for instance.

BUT… here is some good news.

First note: I’ve seen this list from a few different sources. Some people are claiming it’s “fake news.”

So I went and CHECKED EVERY, SINGLE ITEM and can say these are all true positive developments.

1. Vaccine development

An experimental vaccine developed by Moderna, Inc. began the first stage of a clinical trial on Monday, testing on 45 healthy adults in Seattle.

[Note: People say 12 months of study is needed to prove safety, but my guess is they will figure out how to make this faster.]

2. China’s new cases plummet

China has now closed down its last temporary hospital built to handle COVID-19. There are not enough new cases to warrant them.

[Note: Not sure if this is proof that containment worked, since its lockdown occurred late in the game. Containment DOES reduce transmission, though. BUT… this pandemic has a timeline regardless of containment.]

3. Drugs that work

Doctors in India have successfully treated two Italian patients with COVID-19, administering a combination of drugs — principally Lopinavir and Ritonavir, alongside Oseltamivir and Chloroquine. Several are now suggesting the same medical treatment on a case-by-case basis, globally.

[Note: Chloroquine is a prescription. I’ve been taking Lactoferrin as an over-the-counter substitute, but consult your doctor. The basic components come from the same bark. Again, consult your doctor.]

4. Antibodies to the rescue

Researchers at the Erasmus Medical Center claim to have found an antibody that can fend off infection by COVID-19.

[Note: I looked this up. Previously discovered for SARS and not being tested for COVID.]

5. 103-year-old recovery

A 103-year-old Chinese woman has made a full recovery from COVID-19 after being treated for six days in Wuhan, China — becoming the oldest person to beat the disease.

6. Stores reopening

Apple has reopened all 42 of its retail stores in China.

[Note: Further evidence that the timeline for this pandemic is about three months from beginning to end.]

7. Test results in 2 hours

Cleveland’s MetroHealth Medical Center has developed a COVID-19 test that can now deliver results in just two hours, rather than in a matter of days.

[Note: True. Question: Why isn’t this being used by everyone?]

8. South Korea’s dramatic drop in new cases

After its peak of 909 newly reported COVID-19 cases on February 29th, South Korea has now seen a dramatic drop in the number of new cases reported daily.

[Note: More evidence of a three-month timeline on the pandemic.]

9. Mortality rates inflated?

Experts predict that Italy has seen a higher mortality rate of COVID-19 given its significant aging population, as well as its higher percentage of COVID-19 patients with pre-existing health conditions. This might suggest that COVID-19’s fatality rate may have been slightly more inflated than previously thought for the general population.

[Note: New cases in Italy seem to be stabilizing the past two–three days.]

10. Israeli vaccine development

More than 50 scientists in Israel are now working to develop a vaccine and antibody for COVID-19, having reported significant breakthroughs in understanding the biological mechanism and characteristics of the novel coronavirus.

11. Full recoveries

Three patients in Maryland who tested positive for COVID-19 have now been reported to have “fully recovered.”

12. Isolated virus

A network of Canadian scientists isolated the COVID-19 virus, which can now be replicated to test diagnostics, treatments, and vaccines.

13. Yet another vaccine in the works

San Diego biotech company Arcturus Therapeutics is developing a COVID-19 vaccine in collaboration with Duke University and National University of Singapore.

14. Treatment protocols

Seven patients who were treated for COVID-19 at Jaipur’s Sawai Man Singh (SFS) Hospital and Delhi’s Safdarjung Hospital in India have recovered. The treatment protocol will be widely scaled to other hospitals.

15. Another treatment

Plasma from newly recovered COVID-19 patients (involving the harvesting of virus-fighting antibodies) holds promise for treating others infected by the virus.

[Note: Oddly… true. People saying this is “fake news,” but look up Takeda Pharma in Japan].

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“Good news” doesn’t mean “ignore bad news”

But understand:

1. The pandemic has a timeline
2. The level of contagion (the “R naught” number) seems to decrease over time. The virus gets weaker after the initial elderly population gets hit with it.
3. Economies past the peak are moving forward.

In other words:

We will survive this, we will move on, we will have vaccines and treatment. We are acting like it’s a worst-case scenario (which is fine), but realize that the fears are probably more used to manipulate than to inform.  

As for stocks. I dusted off my playbook from the Great Recession in 2008/09. The same strategy will work now. 

Tomorrow I’ll show you some of the stocks I’m considering buying as the news goes from chaos to a little more certainty and the markets start to stabilize. 

I am focusing on good, stable stocks and companies that are paying very high dividends and have a lot of room to go once the market recovers and the stimulus hits the market. 

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Is There Opportunity in Uncertainty? Yes, There Is

I’ve been afraid like this on three different occasions (and I’m sure this is true for many people): 9/11, the financial crisis, and now this coronavirus crisis. 

These things happened in each crisis: 

1. People thought it was “the end of the world” as we knew it. A “new normal.” The “world is forever changed,” etc. 
2. Financially, everyone thought each crisis was a disaster. Jobs were lost, homes were foreclosed on, etc. 
3. Massive stimulus was put into the economy, ranging from Fed rate cuts, to bailouts, to checks to Americans. 

What makes this crisis a bit different, and worse, from a societal perspective is: 

People can’t leave their house. They can’t talk to people. They are losing jobs because everyone is quarantined, etc. 

For every event that is cancelled, every bar closed, every airport shutdown, hundreds or even thousands of people lose jobs. Some lose permanent jobs. Some lose gig jobs that they were counting on. 

SXSW is a great example. A mega-conference that feeds the economy of Austin for the entire year. It occurs over a three- or four-week period in March. 

There’s a site, Ilostmygig.com, that is tracking all of the gigs that were lost, and how much in income was lost by young, independent workers who had gigs lined up for SXSW. The dollars lost: $4,285,037.

For example, Leo Aguirre lost a freelance video gig where he was going to make $7,000. 

What’s great is: each person who lost their gig posts their Venmo ID and it’s a great way to maybe contribute to society. If you are perhaps more fortunate in this time, you can pick a few random people, send $25 to each person, and help them make up the money they lost. 

Again, the role of government is to help people who cannot help themselves for various reasons. 

But the role of a community is to also help people and not just rely on a government to do it. 

$4 million doesn’t seem like a lot. But it is to those people. Remember the saying, “A recession is when your neighbor loses his job. A depression is when you lose your job.” 

Thousands of events cancelled. Thousands of businesses shut down. Many businesses live month to month (just like people) and will go out of business. 

My guess is—just like we see a $4 million “slowdown” from SXSW being cancelled if you add it all up (I have not added it all up but have been researching each industry one at a time)—the actual impact to the economy will be around $100–200 billion. 

Add to that a “money multiplier” (i.e., people who make money, then spend it on people who then spend it, etc.). Probably the entire impact on the economy will be a short-term hit of $400–500 billion. 

That is an enormously painful amount. I’ve lost money. You’ve lost money. Many people very close to me have lost their livelihoods. We are feeling this in a way that makes us feel powerless and hopeless. 

My friend, the self-help author Cheryl Richardson, wrote an article about her friend who was astonished to see two women fighting in the grocery store over a roll of toilet paper. 

But Cheryl was not surprised. She wrote that when adults feel powerless, we often turn into children. We resort back to our primitive fight, flight, or freeze instincts. 

This is what is happening. 

We have become children, changing our view of the economy by $1 trillion up or down every day. This is ridiculous. But it’s because uncertainty makes us feel powerless, makes us make decisions out of fear rather than growth. 

Every decision is either a fear decision or a growth decision. Each individual has to train themselves now to act from growth rather than act from fear. 

First off, what are we uncertain about?

1. We are uncertain if containment as a strategy works to stem the virus. It feels like it does (in China and South Korea, containment might have worked, but we are not 100% sure).
2. We are uncertain if the entire world is going to be different after this. To be honest, it probably will be and I will address this more in the future. The entire world did, in fact, change after 9/11 and the financial crisis of 2008. 
3. We are uncertain if any of the financial stimulus will work. The Fed has so far cut rates by 200 basis points, put in trillions more into the short-term commercial loans market, the government is going to send checks to everyone and set aside another $1 trillion to help industries, and even more will happen. But will it work? Yes, but we don’t know when or how. 
4. There will be chaos in the streets. Robberies, no law, military, etc. I don’t think this will happen but certainly this is in the air. 

However, we are also CERTAIN about some things and we can’t forget that: 

• The pandemic will end. Whether it’s three months (as in China and South Korea) or five months (as Trump suggests it “might” be although he is being conservative) doesn’t matter. IT WILL END. 
• The pandemic will have a peak in the middle. I wrote yesterday that it might be April 15. I admit to being optimistic but that’s based on a conversation I had with Dr. Marty Makary from Johns Hopkins (see my podcast from this past Monday). 
• Financial stimulus will have some impact. It saved the economy in 2009 and this is much, much, MUCH, MUCH greater. It won’t have an impact tomorrow but a month? Six months? Let’s think about it:
  • A direct check: as soon as you get the check
  • Income tax holiday: will have a stimulus effect within next six months
  • Fed rate cuts: normally 12 months but they are so massive this time it could be sooner
  • Funding the “commercial paper” window: I have no clue but this is happening now and happened in 2008/09 and it protects the banks and many businesses from failing. 

The stock market has lost over $10 TRILLION in value from its high on February 19. $10 TRILLION! Almost half of its dollar value (the dollar value different from the price of the various market indices because the biggest companies have fallen very hard). 

I mentioned above that individuals and companies might take a $500 billion hit. Again, that’s just a guess. Heck, multiply it by 10. $5 trillion. I don’t think it’s anywhere near that. 

But still, the U.S. stock market has lost $10 TRILLION or more. 

This is too much. 

Does this mean the market is a buy? Yes. If you buy the S&P 500 right now, it will most likely be a lot higher within the year or even within the next three to six months. 

The Chinese stock market has already recovered to ALL-TIME HIGHS. 

Does this mean YOU should buy? I don’t know. As long as it is crazy like this, it can go down more. Again, if you are a long-term investor, I’d wait until some of the uncertain items mentioned above are a little bit more certain. 

Now is the time to start looking at opportunities. But be careful. 

I was looking this morning at ENR—a REIT in the leisure recreation space (movie theaters, restaurants, etc.).

It’s fallen from $76 to $20 and has a 20% dividend. 

I don’t think it’s a buy. Maybe it will go straight up. But I think it will be a while before we know if people are willing to go back to restaurants (as a society) and movie theaters. Some will. But some never will again. 

I mentioned oil last night as an industry to look at and I gave the reasons. 

Let’s think of some other industries. Specifically, what industries were used in China to help them with the containment of this virus?

China, with 2 billion people, are reporting 3,000 deaths and about 100,000 cases, give or take. 

Assume the numbers are wrong. Assume they are lying. It’s still a fraction of 2 billion people and now the pandemic is OVER. 

What tech did they use to help them? (Hat tip to my recent podcast guest Peter Diamandis for a recent letter he wrote): 

• Drones were sent out to disinfect surfaces and also used to send samples to hospitals.
• Robots were used to create zero-contact environments with patients who had the virus.
• Biotech for cures and vaccines, although I feel this is a gamble and a lot of these stocks have already gone up
• Virtual classrooms: I think this is going to be a cultural shift in our attitude towards education 
• Remote working: More people than ever will continue to work from home.

These are just a few of the industries that are permanently impacted (in a positive way). 

Time to start researching companies that can benefit. 

These are not recommendations but I will tell you some of the companies I am starting to look at: 

• AMBA makes chips for drones. 
• IRBT  makes robots
• NVDA makes high-end chips for video and graphics. Not only for leisure activities like gaming and video, but for remote work tasks like video conferencing. 

I’ll cover stocks and ideas like this every day. 

I know I’m not doing an in-depth analysis of each of these stocks. They look interesting to me and we have time to buy stocks. No need to buy at the bottom. These companies will be opportunities for a while. 

I am trying to just introduce a method of thinking rationally about what is happening.  

Don’t jump the gun and say, “I’ve got to buy now!!!!!” or “I’ve got to sell now!!!!”

Unless there is the permanent breakdown of society, we will move on from this. Most people don’t even have any idea that all pandemics come to an end. 

Most people have not compared this pandemic with prior ones like the Spanish Flu, the Asian Flu of 1957, or the Hong Kong Flu of 1968, all of which resulted in many more deaths than we are even close to seeing now worldwide. 

But it’s an opportunity for smart investors to look at: 

• what in uncertain (so we know what data to watch for)
• what is certain (so we know where opportunities might lie).

And then to use that information and data to make rational decisions about what stocks might have been hit too hard and what stocks might still fall under the category of massive uncertainty. 

Most importantly, remember that every single decision is one made out of FEAR or GROWTH. 

The good thing is, you get to choose which category your decisions will be in. 

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Daily Thoughts on the Market and the Coronavirus

A lot of people are asking, “Should I buy now? Is it the bottom?” or, “What is the ONE stock I should buy right now?” 

The answer to both questions is… “I can’t answer that.” 

If I were still daytrading I might have a different answer.

BUT… for long-term investing: 9% UP days are just as bad as 10% DOWN days.

We had a 10% up day on Friday and everyone was saying, “Damn! I’m too late.” 

The thing is, the world economy doesn’t move 10% in value ANY day. It never does. Moves like this (up or down) imply massive volatility, massive uncertainty. For a long-term investor, the best course of action is to wait until there is more certainty in the market and in the world. 

That said… 

A week ago, billionaire real estate investor Sam Zell said it was a massive opportunity to buy energy stocks. He is presumably down on this trade now but this approach makes sense. 

First: Sam Zell made his billions when he sold his huge real estate company for billions at the very, very top in 2006. 

Oil went from $50 to $30 in the past two weeks, largely because of one thing that had nothing to do with the coronavirus: Saudi Arabia is trying to crush Russia by driving prices lower.

Oil often goes down because world demand goes down in a recession. That is NOT what happened here. Oil went down because Saudi Arabia announced it would produce more. This is practically a joke. Saudi Arabia has been hiding the fact that it’s been running out of oil for years. It can’t produce more and even if it could, it would take months to get the infrastructure in place. So this was a non-event, a game between world powers.     

But because of current world fears around the coronavirus, everything collapsed. “Oh no! Oil is going down! Maybe we’re in a recession.” Maybe we are, but that’s not the reason oil is down. 

In fact, it’s GOOD for consumers that oil is down. Imagine if you are like 50 million other people in the U.S. who drive to work every day. Oil going from $50 to $30 is like having a pay increase. Less money for gas every single day. It’s a massive stimulus to the economy. Hence, the artificial collapse of the stocks of many oil companies is, as Sam Zell pointed out, is probably a buying opportunity. 

I have no idea what he’s buying. But it’s interesting to know he doesn’t care that he’s currently down. NOBODY can catch the bottom. Bernard Baruch, one of the most famous investors of all time, once said, “I always bought too soon and sold too quickly.” He died with $100 million (the equivalent of several billion today) made solely from investing. 

If you want to play around with this idea, look for the big mega oil companies that are trading with dividends between 5–10% (not higher because there could be other things wrong, and not lower because at this point, a decent oil company that’s been hit hard in this market will have a dividend over 5%. Shell (RDS) is an example (not a recommendation but an observation). 

Finally, some thoughts on the coronavirus. 

Of course, people have seen too many dystopian movies. My kids just watched “Outbreak.” I refused to watch it. But I did watch “Contagion” because A) it resembled more the situation now (albeit a worst-case scenario) and B) the technical advisor on it, Dr. Larry Brilliant, who eradicated smallpox in the ’70s in India, was a friend of mine and we were on a few boards together.

It feels to me like everyone’s seen these movies and now just assume we are going into some dystopian post-economy world. We’re not. 

I’ve been doing a podcast every Monday about the coronavirus. Today was the fourth one. I spoke with Dr. Marty Makary at Johns Hopkins, a regular CNBC and Fox contributor on this subject, as well as the author of several bestselling books on healthcare. 

He mentioned to me a couple of things I found interesting: 

1. Pandemics in general, and this pandemic specifically, seem to last three months. This was true for South Korea, China, Singapore, etc. China is reporting no new cases and people are going back to work, for instance. We’re a few months behind China. 
2. If you date the start of the U.S. version of this pandemic on March 1, that would put the END of this pandemic at the end of May. 
3. “Peak Coronavirus” in each country tends to be exactly halfway through. For the U.S., that would make it April 15. 
4. If we continue the practice of “social distancing” and the current lockdowns (and maybe more) it should DRASTICALLY reduce the infection rate. 

DON’T FORGET, China, a country with 2 billion people, had only 3,000 reported deaths. Now, assume it’s lying. Let’s say it was 100,000 deaths (even though there were only about 80,000 reported cases in China). The U.S. has 1/6 the population of China. We certainly will not overflow the medical system, even if the number of deaths in China was THIRTY TIMES GREATER THAN WHAT WAS SAID. 

I’m not trying to be too optimistic. I do think social distancing is important. I am scared for the small businesses that are suffering and I wonder what will happen to help. Let’s see. 

But focus on what we can do today: stay healthy, exercise, be creative, be around people you love, try to help people. Take a big breather from every second thinking about the stock market, particularly if  you don’t daytrade. 

This pandemic will be over. Stimulus will kick in. Stocks will go up (China’s market, by the way, is back to all-time highs!) and there will be many, many opportunities.

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