In Search of the Perfect Investment

Phyllis and Jack Fredericks just celebrated their 54th wedding anniversary. They were each 19 when they married. “It was different time,”, says Phyllis. They now run Fredericks Performance in Ghent, the best car repair place in the entire world. For fun, they drive their RV around the country. They want to go traveling this summer, but are having trouble getting a reservation in the nation’s campgrounds. They’re booked up.

Everyone and their uncle has cabin fever. Hence Phyllis and Jack’s hard time getting reservations.

RV stocks are booming. Here’s Camping World, Thor and Winnebago this year.

As we go back to work and get out of the house, the world is changing. Airlines are coming back and zooming is ebbing. Our portfolio includes Southwest Airlines (LUV), which is up today and Zoom  Video, which is down today despite last night’s blow-out financial report.

Joel Ross of Ross Rant newsletter summarized the market today:

We are now dealing with a pandemic, the worst shutdown of the US economy and world economy in history, a new cold war with China, and now rioting and looting. Other than that Mrs. Lincoln how did you enjoy the show. One would have thought the stock market would be cratering again. It seems apparent that investors are focused on the future, and the money assumes Trump is reelected. If all of this does not negatively impact the stock market it is unclear what could.

We have two takeaways. Either the market is totally irrational, which it often is, or investors are betting that 20121 will be a very good year when much of this will be behind us with Corona being just another disease, the riots long over, a continuation of Trump deregulation and pro-business and the economy back on a positive growth trend. For the moment I am in between and remain fully invested in US large cap equities. I take the market action to indicate that generally most investors feel confident we will overcome this period and return to growth. That being the case, for the moment I remain fully invested. My portfolio is up almost 5% over Dec 31 by just being patient and sticking with my investing philosophy of long term strong companies, and not quick profits on the latest hot stock of the week. Goldman and other pundits have now reversed their pessimistic forecasts and now seem to agree that the economy will recoup much faster than they predicted.

In short, it’s easy for the pundits not to be negative when the world is falling around them. It’s not easy for them to proffer, “Stay put. Don’t do nothing.”

But that was the right advice.

It’s equally difficult for them to get in front of the seismic shifts we’ve seeing — from stay-at-home to RVs, to airlines and cruise lines. Look at Carnival. It’s up more than 80% since its low in early April. That’s far better than a slap in the belly with a cold fish (charming Australian expression).

This morning as I await yet another avalanche of packages from Amazon, I’m reading a paragraph from Joel Ross:

I believe the economy is going through a major transition, from basic ways to do business and live, to one in which technology is the dominant force and driver of growth. The pandemic and now riots, have simply greatly accelerated this trend by wiping out the weak old time companies like JC Penny, and seeing companies like Microsoft boom. Just look at which companies are thriving and which are dying. The big tech companies have giant cash loaded balance sheets, and little exposure to hard assets, and to a single market. Amazon and Wal Mart sell everything to anyone. They make it easy to buy from your couch. JC Penny never went for online and is dying. Netflix brought the movie theater to your living room. Verizon and Apple make it easy to talk to anyone anywhere, anytime, or to look up any kind of information about anything anytime. As more young people enter the workforce and start companies, the faster technology will infuse into everything we do. AI is making everything from simple tasks to research move to a much higher quality place, and with incredible speed of the analytical powers. This is a huge accelerant of the US ability to lead the world in the future.  …

What you read above suggests that it’s the time to buy some beaten-down non-tech stocks whose future is being determined by technology, e.g. Starbucks, Dominoes, and Southwest Airlines.

If you missed yesterday’s column on stocks, you should read it. It talks about finding a silver lining in the virus. It makes a great companion to today’s — Click here.

How effective are masks?

They work. You should wear them. Here’s why. Click here.

How awful has the CDC been?

Major awful. The New York Times did a huge piece.

For the full gruesome piece, click here.

Wonderful pun

She looks happy?

GE Man Size Appliances.

A short ad for a line of GE BIG BOY home appliances. Wonderfully creative. Another seismic shift. There’s a point here.

Do you run a business?

If you do, you should be selling more and more online, viz Shopify. You should also have a robust 24/7 online customer support operation, viz. Salesforce. and if you’re cheap (like me) and want to do it yourself, you can go with WIX and the software that runs this column, viz WordPress, which is free and used by companies including the Wall Street Journal, the New York Times and a million plus web sites around the world.

I’m playing tennis shortly. Meantime, I got to pay some bills.

I have been heartened to see videos of the protesters returning to looted stores and cleaning up the mess.

Meantime, Manhattan is plywood city. Can I buy stock in plywood companies? Apple’s two stores close to where I live look like Sarcophaguses, (the Egyptian variety) according to my bicycling correspondent, Ed Sonderling.

See you tomorrow. — Harry Newton