Good Morning,

If you were not able to see the Regeneron interview last evening, it would likely be somewhat relieving to listen in now.
I have provided you the YouTube link here.

No, it does not solve the problem tomorrow. The purpose of watching it – and really listening to it – is to drive home the fact that there are thousands of very, very smart people – with leading-edge technology and science on their side – working for us 24-hours-a-day.

We will have the solution – we just need to patiently allow these elements to work.

The Stop Light

Consider for a moment that you and I are driving in a car. We just got started on this trip – and the GPS has our destination logged in. Our destination is a replay of the 80’s and 90’s. Oddly enough, a check of the “map” shows that the first 6 months of the 80’s also started out in a pretty ugly and dramatic manner – with very weak markets and a recessionary period coming off of the lost decade of the 70’s.

Here is the deal though – picture us back in the car – and let’s further pretend we are 10 miles from the interstate. On our way, sometimes very quickly – we will hit a stop light.

We have to stop.

Sometimes that stop light might be a quick stop light. Other times, it may be a bit extended. And then sometimes, out of just bad luck – we might come to a stop light that is broken on red – and requires us to sit there for a while….

In essence, though, our road trip is still in the GPS – it is just on hold.

That’s all – it is on hold.

The roads ahead did not disappear. The bridges were not removed.

The turns and miles ahead up the mountain are still in our GPS – they did not vanish.

Our car did not break down.

We did not forget how to drive.

The fuel needed along the way to get there – did not get taken away.

We simply hit a stop light. It’s maddening, frustrating and for someone like me, greatly tests your patience.

But….when the light turns green again – we will be back on our road trip.

The Latest Case Numbers

Let’s look at the stats – and try hard to not get caught up in the hysteria spreading emotionally as the storyline has now literally drowned out not only everything else in life currently but anything before it.

The dreadful elements we spent our days fretting over every day before the middle of last month seem to have all vanished. Therein lies a lesson of some sort.

So here is the latest from   www.worldometers.info

And again, as stated before, please do not take any of the comments or words written to be in anyway disrespectful to the loss of life or illness. We have watched the panic remove $12 Trillion+ from market values in the last month or so – and that is just in the US.



The Numbers

Here is a scary thought – but the lesson is that there is something different going on than what your emotions will trigger when you read the next sentence – so please bear with me:

The number of cases in the US (6,524) have doubled in the last 5 days as testing floods the market. Expect it to go higher. Please note the red star box with a 12 in it. That is the number of “Critical / Serious Cases” in the US. Before the number of total cases doubled as testing expands, note that the number in the box where 12 is now – was 10.

The CDC tells one on their website, if you read enough of it – that there are three general categories: The Serious Category seems to kick in once/if your immune system cannot fight off the virus’ climb to the pneumonia level. This is where the elderly become the most at risk class as the documentation suggests.

The other two categories are – a) positive tests with “no symptoms” implying one has a very strong immune system and likely produces antibodies against it and b) a category most associated with symptoms of the common cold, “runny nose, cough, upper respiratory inflammation, sore muscles and potential for a fever for one or two days.”

So – yes, we have 6,524 tests for positive cases. Yes, that number has doubled in the last 4 days. Yes, there is every expectation that number will rise significantly as more and more tests flood the market.

The most vital data however is this: The serious cases have gone from 10 to 12 -as the totals cases have doubled. Just to be completely nutty, I have run a table to show you how numbers can confuse – but more important – how our system already handles something very similar to this – each and every year that passes on the calendar:



The Mountain Ahead

The data above is just a chart created internally to give you a sense of the same proliferation rate as the testing continues to spread. It is merely making a few assumptions based solely on the on the acceleration pace of the last few days – and assuming it doubles again every 4 days from here onward. The list going to “Double 10 in this case, would imply40 days from now.

It is designed to give a realistic sense of the sometimes rampantly, breathless and scary sounding reporting going on with vague references to how bad it gets. This just puts numbers to it – and assumes it gets progressively worse for the next 40 days at the same pace as the last 4.

I tried to make it even worse, by making the serious cases even start doubling and tripling from their current levels – which simply has not even remotely been proven out yet in the data itself. This is not scientific of course – just an effort to put numbers on it to provide comparison.

The normal flu season in the US – to which we have suffered through this year – like every year has this as an average from the CDC:

Well over 50,000,000 cases

Well over 500,000 serious hospitalizations

Well over 25,000-30,000 deaths

The US Dollar



Notice that the US Dollar is near highs seen before the virus arrived. The world of capital is not telling you that the US is done. The world of capital is instead rushing into the Dollar – and away from other currencies. The world of capital is acting very differently than the black boxes are in valuing the future of the US. Let’s just try to take that into consideration as this very, very stressful situational experience.

Panic Still Underway

All of this – of course, has not yet stopped the level of panic – some of which in and of itself is now becoming completely self-fulfilling.

The markets are not open yet – but one can strongly suspect that 5-7% ranges up and down every day are a) unprecedented and b) will likely keep driving the VIX futures to higher levels – maybe even more records.



Benefits of Panic?

Yes I know – that is an absurd subject – but here is an attempt at speaking in facts, in numbers and with an effort to speak to the creation of opportunity as panic unfolds in a world like we are witnessing today.

So here is a set of numbers that may be intriguing. We call dividends the “most overlooked benefit of the stock market.” Most people misunderstand that nearly 70% of Warren Buffet’s stock holdings are dividend stocks. Many are in “really bad” industries being hurt a lot right this moment. He is not running around selling stuff.

But here is what panic does when stocks fall in value out of social media hysteria, with no logic left: it increases the yield – even though we have to allow for many likely cases of held dividends – stopped and then trued up at year-end, etc etc.

So – I will close out today with the lesson about the value of panic. Note that it requires patience and the ability to let it unfold.

First – assumptions for both charts assume $1MM invested in a dividend producing portfolio (pre-virus-panic at a 5.23% yield level) – and watching the dividends expand each year at a pace of 6.5% (the historical average):



Then you see post panic where the yield rises to 6.77% – and even higher due to collapsing prices due to the panic:



Notice that as each year unfolds – the income rises at a faster pace and the compound effect can be significant. The even larger impact is the benefit of permitting dividends to buy more shares as time unfolds, creating a dual-compounding effect that far too many investors overlook while the panic is unfolding.

As with each note sent, especially during the unique panic threat and global reaction to it we currently face – we hope this has served to provide a beneficial view of what after-effects look like when we get past the red light.