In Search of the Perfect Investment

Until you sell the shares you’re still holding, you haven’t lost money.

What you sell and what you hold is a function of what cash you’re going to need and your comfort level.

Most of our stocks will come back — but, meantime, they will go lower. We have not reached bottom. The economy is grinding to a halt. We are in a recession.

Assess each company you own. How its stock is moving today should give you a good indication of its vulnerability. Ask yourself how will my company bring in enough revenue to keep the doors open. If you own companies relying on rent from other companies, you may wish to dump them. I have sold completely out of  LADR.

Look at how much you’re down on some stocks you own. If you’re losing over 20% on a stock you should consider selling it.

Washington is cranking up another stimulus package, including help to the airlines and the newly-unemployed. But stock markets remain in major panic. Corporate “earnings” will be awful.

We are in a recession now. We will be in recession in 2021. No economist on Wall Street is predicting a recession for 2021 — but their job is to provide public relations succor to their company’s clients. Get them to pay their bills and their interest payments. When you see CNBC talking about “commercial paper,” loans and mortgages and bank deposits and withdrawals are what they’re talking about. It’s a huge daily balancing act. The Fed Reserve is trying to patch the cracks as they emerge.

Some companies are doing well out of this — TDOC, DOCU, and ZM. But the “big” money is being made by shorting obvious stocks — BA, energy stocks, airlines, retailers, etc. I have Boeing and Exxon shorts but I didn’t short the airlines, other energy stocks or the retailers. I simply avoided owning them. It’s really hard to switch one’s thinking around from the glorious future of scaleable cloud stocks into the depressing world of energy, retailing and airlines.

Several people are buying the SPXU — the triple S&P 500 short. This is not a good idea. Unless you play it during the day and get out by evening. There are “gotchas” in these things that don’t work overnight. Something about them being “re-set” every evening.

You don’t want to own cannabis, bitcoin or gold.

Right now — 11:30 AM — the Dow has turned positive again.

To put things into some sort of perspective, here’s a chart of the S&P500 over the past ten years. You can see we’re back to the lows of December 2018, which we recovered from early 2019 and gave us that wonderful year 2019.

But during those recovery days of 2019, businesses were open and serving customers. Employees came to work.

We’re now in a different world. When you work from home, figure a 50% reduction in productivity. Figure a total lack of interest in buying anything — except supplies from Amazon and some food from your local grocer. Remember 70% of our economy is the consumer. Roughly a quarter of working Americans don’t have paid sick leave, according to the Bureau of Labor Statistics. And many Americans live from paycheck to paycheck, with limited savings. Low-income Americans are at real risk.

The BIG health problem is the fact that some people who have Covid-19 will require being hooked to a ventilator. There’s a huge nationwide shortage of them. That’s why they’re trying “to flatten the curve” – to save the doctors from making decision as to who should die and who should be saved. I’m guessing a company like Cisco could gear up to make them — like the war effort to convert car factories into tank factories. But, the Administration isn’t there yet. It should be. Here’s what a ventilator looks like. A complex piece of equipment.

They shove a breathing tube down your throat and another one through your nose to your stomach to feed you since you can’t eat while the ventilator breathing tube is in place. It’s not pleasant. In fact, I hear it’s downright scary.

How bad are things? Look at this ten-year chart of America’s biggest exporter, Boeing:

Who are these idiots?

They lecture us on “social distancing.” We should stay six feet from each other. Look at them. Huddled together like a rugby scrum. They couldn’t have picked better positioning for maximum coronavirus transmission. Dr Fauci is huddled in there also. I thought he knew better. I plucked these photos off the White House web site. Morons.

What we are facing

  + The White House is clueless. It cares far less about us than adulating our president. And he cares only about being re-elected.

  + Even Fauci is far too optimistic. He should have convinced the White House to put the country on a war footing. His guidelines have been watered down by Trump. They need to be strengthened and made mandatory. We are in a War. Our nation’s resources should be directed 100% to solving it. If that means getting out the Army to enforce the rules, so be it.

  + We are in a recession. It will only get worse. No one is buying. There is no commerce, except food and cleaning supplies (f you can find them).

  + Things will happen that we never dreamed about — even in our wildest imagination. What happens if the Internet breaks under the strain and you can’t buy anything with your credit cards. Do you have enough cash? I bet you don’t. What happens if you can’t work from home?

  + Cloistered at home is very scary. Watching depressing TV. Reading depressing web sites. There will be broken marriages, broken relationships and suicides. People will die from drug overdoses. Please don’t snap.

  + There is some good news. The Fed Reserve is stepping up. And our state governors are taking over. New York’s Andrew Cuomo and Washington State’s Jay Inslee are giving us sound reliable information that Washington isn’t. Cuomo and Inslee make us feel that someone intelligent is in charge. I recommend you watch the Rachel Maddow Show each evening on MSNBC at 9 PM ET. She picks her guests for their knowledge, not for their politics. Her stuff is well-researched.

P.S. If you’re having trouble with DirecTV, your online broker, your Internet, or your computer, send me an email. Perhaps I can help, and save you the two hours I was on hold last night with DirecTV (now owned by and mismanaged by AT&T).

See you tomorrow. — Harry Newton