This headline on Friday’s New York Times freaked investors.
The article contained these freak words:
The coronavirus pandemic’s toll on the nation’s economy became emphatically clearer Thursday as the government detailed the most devastating three-month collapse on record, which wiped away nearly five years of growth.
Gross domestic product, the broadest measure of goods and services produced, fell 9.5 percent in the second quarter of the year as consumers cut back spending, businesses pared investments and global trade dried up, the Commerce Department said.
The drop — the equivalent of a 32.9 percent annual rate of decline — would have been even more severe without trillions of dollars in government aid to households and businesses.
But there is mounting evidence that the attempt to freeze the economy and defeat the virus has not produced the rapid rebound that many envisioned. A surge in coronavirus cases and deaths across the country has led to a renewed pullback in economic activity, reflecting consumer unease and renewed shutdowns. And much of the government support is on the verge of running out, with Washington at an impasse over next steps.
For the full Casselman NYTimes article, click here.
One investor highlighted a Business Insider article last week in which the reporter talked about “Investing is a Mental Game.” He wrote:
Every day I wake up with extra stress I don’t need. Wearing masks outside of the home became law where I live here in Melbourne last night. The situation outside of my front door is not getting better. We’re running out of band-aids, but at least we see the crisis for what it is: a problem that needs camaraderie and a unified approach to a solution.
Thinking about investments is the last thing I need right now and you are probably in a similar situation. Despite all the hype about Tesla and stocks going to the moon, it’s false hope.
When there is too much hype, run.
Take a life raft and watch the storms from a distance. Sitting in cash is the cure to investment stress.
His timing couldn’t have been worse. He sold right before Friday’s huge boom in tech stocks, in which Apple rose 10%.
In America, my friend, who’s a Trumpie, wrote his dire concerns over the weekend:
Biden will be elected.
He will have a massive tax plan to put in play Jan 21. Much of the tax plan will be retroactive to Jan 1.
Income tax rates will go up. Capital gains taxes will probably go away and gains are ordinary income. 1031 exchanges are gone.
Minimum four years of those alterations.
My friend shouldn’t be freaking out over Biden (should he win).
The historical record shows that since 1900 the stock market has fared far better under Democratic presidents, with a 6.7 percent annualized return for the Dow Jones industrial average compared with just 3.5 percent under Republicans. (The results are similar when measured from Election Day to Election Day.) Data provided by Bespoke Investment Group shows that these are the best annualized returns under individual presidents:
- 25.5 percent under Calvin Coolidge, a Republican, in the 1920s.
- 15.9 percent under Bill Clinton, a Democrat.
- 12.1 percent under Barack Obama, a Democrat.
“Wall Street generally considers Republicans to be better for market returns but historically, that’s not true,” said Paul Hickey, co-founder of Bespoke. “Democratic presidents have generally had better returns versus Republicans.”
So, for now, let’s stay calm and fully invested.
Now to the point of today’s blog:
COVID is a crisis, Like all crises — wars, revolutions, crises, new technology, it up-ends old thinking and presents new opportunities:
+ Eastman Kodak discovered pharmaceuticals. I’m guessing it has some skills in chemistry based on Kodachrome, which, sadly, it no longer makes.
+ The stay-at-home crowd discovered Zoom Video. Look at it this year:
It also discovered DocuSign and Zscaler.
+ Given how long we’ve been quarantined with our spouses, I bet this business is booming:
+ I wouldn’t invest in airlines or restaurants, but companies that make emergency generators…Well that’s different story.
+ Retail is dead? Not entirely. The local Price Chopper supermarket in Chatham, NY, moved out. Two companies moved in: Advance Auto Parts and next door:
This photo of Mavis Discount Tire was lovingly taken by yours truly yesterday on his iPhone 11 Pro Max.
Talking about Apple, their profits are up and they’re splitting — four for one. Hence the stock is skyrocketing. I still think it’s a great buy — I bought some more on Friday and today.
+ We played tennis this morning at 7:30. The court is on a road called Route 203. I have never ever seen so much construction traffic beetling up and down Route 203. There is 24.9% unemployment in Nevada, with a wave of more than 18,000 people filing initial claims last week. But up here in Columbia County — 100 to 130 miles north of New York City — you can’t find a plumber, electrician, drywaller, carpenter, air conditioning fellow (man nor woman) for love nor money. Cash has no appeal. Everybody’s onto that racket. I haven’t tried bitcoin yet.
In short, real estate in NYC sucks. But up here…. it’s pretty, peaceful and the living is good, and a lot cheaper than New York City.
Underpinning all this are the enormous amounts of cash sloshing around looking for opportunities. My friends are begging me where should they put their money. Bonds are dead. Cash is dead. CDs are dead.
Innovation is alive. Start a company for our new world. Send me your latest idea.
Fauci got it right
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Dreaming
The veggies are really wonderful. These are local.
These are from our own garden. Real tomatoes. First time ever. I watered and talked to them. Organic. I didn’t even wash them.
This was Saturday. Today was 142.
We’ve now tried every make and model of tennis ball in the entire world. They vary widely in price.
There’s no difference, except we’re not big on Penn.
Conclusion: Buy the cheapest.
Our stocks are doing well. So is my top-spin forehand. See you tomorrow. — Harry Newton
