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So – Just when you thought the insanity level could not be topped, it triples.
How spooky is it that today is the 11-year anniversary of the 2008-2009 collapse low at DOW 6,700?
We have sadly reached that stage where panic and hysteria (and the media) have created a “mirage-like” scenario that literally is no longer logical – or correct.
√ Today – all-out panic has morphed into complete hysteria from over the weekend.
√ Do not lose sight of today’s title – I will get to that – but believe me, we are at that stage where you separate the wheat from the chaff – and it is never pretty.
√ As much as we have written about it before – the risk of “self-fulfilling” reactions are – for certain, unfolding now.
Any good news? Yes – but it will be ignored. Almost all key indicators leading right up to the “epidemic” showed that the US economy was in excellent shape – further supported by a complete blowout jobs report on Friday – which was never even really covered.
Add the 273,000 jobs in the last month to the revisions to the last two months and you get nearly 400,000 added jobs.
So let’s just pretend that the crazy- and I do mean crazy – response to the virus triggers layoffs of 500,000 people. If so, we will be back to job levels seen last in January.
Admittedly, I am noting this may mean little for another 6-12 months: The vital epidemic currently spreading – which risks changing life as we know it – has nothing to do with “the virus.”
It has everything to do with outright, unbridled, out-of-control…fear – leading to the domino-effect of panic and hysteria.
If one does not control panic, one tends to lose the game in meeting financial and/or wealth-building goals over time.
To help you step back from the ledge, bear with me. I bring you a snapshot below of the symptoms of COVID-19 (read- every – single – word -carefully):
Health officials (the ones who werenot covered by the media48 times over the weekend), noted, “It is important we remember that the Coronavirus is the strain that gives us the common cold.”
Ok, so let’s look at the symptoms -carefully. In the first paragraph of the image above, I have noted two sections for you:
“usually with a mild to moderate”
“similar to a common cold”
Step Back From The Ledge – for another second:
If I warned you every 11 seconds for the next 3 weeks that soon-to-be-over 112,000 people – from the entire planet – now had a serious cold – with stronger symptoms presenting higher risk in the very elderly or very young population,what would you say to me?
Please note – if I did tell you that, I would be lying to you.
I would be deceiving you because the Coronavirus data is being presented to you (every second of the day) in some of the most deceptive manners I have witnessed “news” being delivered.
To my friends in the media – you guys are great and your efforts and expertise are more than respected. Like all industries – bad apples can ruin the bunch…and your industry needs policing just like all other industries. They are enjoying the process of terrifying people.
Another set of images is required here – there is a test afterwardso pay attention…
By the way, you can track all of this for yourself here
Before we comment on the important numbers above,we should expect them to continue to rise – but at a slowing pace – with “cured cases” rising just as fast.
What wise investors – with proper perspectiveson the long-term horizon – will begin to look for is this: The health impact of this is set to peak far faster than now being reported via the hysteria unfolding now.
You can see a broader perspective here
In the meantime – peaks are already being hit in many areas first having cases:
When you hear references to “over 112,000 cases confirmed”, please note that is a fabricated perception trick – playing on your very worst fears, and permitting the law of big numbers to scare the crap out of you – and everyone you know.
From the Images Above…
Yes, 112,000++ (current) cases of this juiced up “similar to a common cold”, “flu” – have been announced -since the beginning – all over the world.
The key words are at the end of the sentence.
Falling under the non-reported category of all this breaking news are a few more interesting aspects:
Roughly45,000 of those cases are still active.
Recovered cases are 10 times+ higher than the number of remaining critical cases.
The critical case count has fallen as a percentage in the last 24 hours.
Recovered cases are 150%+ higher than the current entire active case count.
As the top image above in red shows you – mortality risk is nearly entirely centered in the elderly and in areas which simply do not have necessary medical tools/tech awareness to get things cured quickly.
So What Does This All Mean?
It means a very nasty flu/cold/bug has been released from labs in China.
It has a twinge of a bio-weapon/military element being covered up by China. This part of the story has been completely lost on the media – which may be why Defense Secretary Pompeo is now being interviewed on the latest aspects as well.
√ Its release was covered up by China for far too long – and their denial of any access and or sharing of any data points to their guilt.
√ Now, we will fix it – and it will be remedied – but the panic and hysteria is the larger event – and is having a far greater economic impact.
√ Had China shared the data with the globe, much of what is unfolding today (very likely) could have been avoided.
Now, to make a final effort to jar our senses into reality and focus us all on the steadiness needed today to conquer and push away the blinding fog of fear, consider this…
I deliberately listened to financial news on CNBC for the last few days. I wanted to listen now (as I rarely ever do), because I wanted to hear what the audience was being told. It is my opinion that there are some individuals who hold the “talking head” positions on these shows who should never be permitted to speak to an audience again. They are dangerous, they do not tell you the truth – and they seem to actually enjoy scaring you.
By the way – don’t ever forget – these are “shows.” Like Seinfeld, they compete with other shows in their same time slot and genre. They do that every day of the week.
How do you think they make their money?
√ You are the product.
√ Your wealth is their cost of goods sold.
√ DON’T – EVER – FORGET – THAT – AGAIN.
Ask Yourself This…
Would you pay attention if the “Breaking News” stated this instead:
“Sorry to interrupt you. Listen, that bad cold/flu bug going around right now has infected 112,000 or so around the globe pretty quickly.
The good news is that it seems to go away just about as quickly – for most – with over 62,000 cases already cured. Currently, less than 6,000 case remain in the critical category.
Sadly – the data clearly show the greater risk profile evident:
If you are elderly and/or already sick when you get this bug – your risk of more serious illness is a good deal higher – but that it pretty much the case all the time – for any bug – even the common cold.”
The Cat’s Out of The Bag
…and you can’t get him back in until the panic epidemic has run its course.
Don’t believe it is an epidemic in panic? Long-term investors will take note of the numerous indicators below leaving no doubt as to what this really is….
…read ’em and reap:
Record Fear Levels…
The VIX set new highs.
More number of stocks now below their 50-day moving average is a record low.
The number below their 200-day is closing in on same.
A “3” on the “Fear and Greed” index?
Does all this seem logical to you?
The implication of each image/data graphic above?
FEAR, PANIC, HYSTERIA…lots of it – everywhere.
The reactions will now be the impact. If the last six weeks of growing hysteria and panic impact are worse than expected – we likely now face a short two-quarter recession – with a massive Q3 and Q4/Q1-2021 bounce-back.
How Could All of This Happen in 20 Days?
You may be wondering.
How could the perspective change so quickly? How could we have gone from record highs to the end of the world in less than a month? It is hard to perceive when all around you is nutty, but consider this as an idea.
When I was a kid, my Mom told me you never yell “fire” in a crowded theatre because you will cause panic and injury when 200 people rush to the exits.
This is where it gets a little interesting – and tech has almost everything to do with it.
Check the main potentially differentiating factors today over past epidemics:
2003 – Mortality Rate SARS 10% (affected 26 countries)
2009 -Mortality Rate Swine Flu 4.5% (affected 57 million)
2014 -Mortality Rate Ebola 25%, killed 11,310
2020 – Mortality Rate Coronavirus 2%, killed 3500 (and counting)
One could wonder why COVID-19 from China sounds so much worse and is causing so much more panic. The answer could be “news” –
2003 – During SARS – No Facebook, no Whatsapp
2009 – During Swine Flu – FB had just 150 million users
2014 – During Ebola – Whatsapp had just 450 million users
2020 – COVID-19 – Whatsapp – 2 Billion Users – FB – 1.7 Billion users
Do the math. It’s everywhere. Group think at its very worst.
Friends Group, Relatives Group, Cousins Group, Work Group, School Group….all the same sharing until it appears overwhelmingly bad.
Like shouting “fire” in a theatre with a few billion people in it.
Take precautions – don’t panic.
When this one is over – and it will end – we feel strongly that when we look back on it, the opportunity for the patient and disciplined investor will have been as substantial as 2008-2009 – if not more so.
How Will It Unfold?
Consider this first: Right this moment, more medical science, technology, and medical specialists’ brain-power from around the world is focused on this problem – searching for a cure – more so than any other medical element in the history of mankind.
So, out of the smoldering embers of stark-raving-mad hysteria and fear – will come headlines that start to sound something like the headlines below.
Gilead’s XYZ treatment has completely cured 12 patients with the virus in a high-risk test in Japan.
Feared massive job reductions do not appear to be showing up in the data afterall.
Earnings have been hit for sure – but not remotely as hard as many experts perceived weeks ago….
J&J has tested a cleaning disinfectant for hotels and cruise ships – showing that 100% of COVID-19 virus killed in infected areas in less than 12 hours from treatment.
Massive surge in savings turned out to be the buffer the consumer needed to stand the virus.
It appears that Job Growth only paused in the last few months – before turning up again in June data.
Cost reductions to households and companies across the country from lower rates and lower energy costs served as a buffer at a far greater level than thought.
…all of this, of course – is pure speculation. But then again, so is almost everything else you are being told to fear today.
Remember – FEAR and FAITH ask of us all the very same thing: to be driven by it, one must believe in something one cannot see.
The problem with all of this?
The biggest ghost of all….
You gotta go through the mess to get the benefit.
But I can safely bet one thing: I suspect we are close to seeing a big Berkshire purchase that will once again mark the real value of panics for long-term investors.
Sadly, it takes pain in the short run to get there.
The Larger Issues At Hand
Above all else, in the panic-laced carnage, we are forgetting our collective ability to consistently overcome hurdles – both large and small, short and long-term in nature.
In the end, doubting sobasically ignores all of history. But I also recognize how difficult that is to focus on when everyone is acting silly.
Call me simplistic if you must – but at the end of the day, it pretty much is simpler than most make it:
Build your plan*
Cover your needs*
Focus on steady (and increasing) dividend income*
Understand your timeframes*
Control your outflows*
Invest capital based on your plan*
Stick to your plan*
Control your emotions*
Accept the fact that storms will blow in all the time*
Stick to your plan*
Stick to your plan*
Stick to your plan*
Stick to your plan*
Stick to your plan*
Stick to your plan*
*If you did this for any span of 5-10 years (or more) in the past – you were fine.
To each reader:
These notes are not designed to make anything seem less important than the loss of life or the health risk posed by this latest virus.
But, sadly, we have seen all this panic before – and so far, we have gotten over every hurdle.
So, if we must have a new layer of panic over “when it rains it pours” on top of the new virus – now is a great time to do it. Because when it is all said and done – and this too has been vanquished – it came to us when the US was strong on many fronts:
√ Car lots will be filed with those who may have put off buying a new car
√ Home-model sales offices across the land will be filled with Gen Y buyers – taking advantage of new, record-low mortgage rates
√ Restaurants will be packed with people “getting back out”
√ Shipping lanes will be filled to the brim moving inventory into starved pipelines
√ Flights will be booked solid to see family and friends
√ New technologies will be created to fend off further implications
√ New services will be branded to solve the next one like this – or make it easier to work with and move beyond
√ And do not forget the even larger event to unfold:
The completely overlooked thing? All of this mess is not mentioning at all what may be a huge benefit to the US – 6 months out. That would be the massive movement of manufacturing back to US soil…driving more long-term benefits for the US.
Bottom Line for Investors???
The flu is bad. Take a look at the case count chart again above. Make sure you differentiate between “cases ever created” and active cases. Our own flu is far worse for tens of thousands of US citizens – every single year.
It has always been bad.
Now, fear, panic and hysteria – are all going viral.
We hope that people soon will have good reasons to conclude, as we have for now, that this too shall pass.
In the meantime, we suggest we all stay steady, work very hard to not let fearful headlines impact your emotions – and above all else stay focused on horizon above all this noise – with the long-term investing approach we cover always – instead of getting caught up in daily price movements.
To help you do this, I thought you might want to review this quick video again about corrections:
…there will be more later – but for now…