We live in an age of instant experts.
Last year social media was full of constitutional experts who were the definitive source for impeachment related information and the proper definition of high crimes and misdemeanors. In 2020 the number of experts on viral diseases and how to best manage a global pandemic. The murder hornet experts are currently on deck.
I have dealt with all of this for decades in the markets. Everybody is an expert and knows exactly what will happen in the financial markets over the next days, year, or decade. They can very confidently tell you where the stock market will bottom and where it will peak with a shocking degree of confidence. They are almost always wrong, but that’s your problem if you followed their advice. They have moved on to the next story and the next victim.
The coronavirus experts are killing me with their alleged knowledge right now (unfortunately, in some cases, that could literally mean killing me). The experts- the real experts who have studied viral pandemics for decades- are telling us that they have no idea how this plays out. This virus is different than the last, which was different from the one before that. They have told us that social distancing and not touching your face help prevent the spread. Washing your hands often is a game-changer as well.
That’s not enough for the new experts. They want to tell you exactly what the virus will do, how it will and will not infect or kill. They know what you should do. They know if masks do or do not help prevent the spread (they do). None of them have spent a minute in a medical school or lab, but they can lecture you on herd immunity at length.
One section of the newly minted experts thinks we should stay in lockdown until there is a vaccine. Most of these people have a stack of cash in the bank and are in an excellent position to ride this thing out. Many of them have nice safe government jobs. A full lockdown would cost them nothing, keep them safe while ruining the lives of so-called non-essential workers and business owners.
The other side wants everything opened with no restrictions right now. For some reason, there is a subset that thinks the way to express their demands is to parade around with loaded weapons and yell a lot. The path chosen by these experts is going to mean more infections, more deaths, and there is a strong possibility of overwhelmed health care systems. Apparently, they don’t care as long as they can go to the beaches and bars.
There is a middle ground. I will freely admit I know little to nothing about infectious viral diseases and how they attack us. I do have a really good Rolodex (that’s contacts list for the younger among us). I put it to use calling people who do have an understanding of these things and how to prevent a wider spread. I talked with emergency room personnel, EMT’s. Infectious disease doctors and research physicians over the past several weeks. I have read a few dozen studies on preventive measures.
If we all practiced social distancing and wore masks, we could reopen most of the economy right now. Infection rates would plummet, giving scientists time to perfect vaccines and treatments. We could be almost normal, except for the masks and the painful chore of standing six feet away from everybody else.
Look, I get it. The masks are a pain in the ass. I don’t like it either. I won’t pretend I am wearing my mask for you. I am wearing my mask for ME. I am 59 and smoked for 40 years. I do not want to spend any time gasping for air in a hospital bed because I didn’t want to be mildly uncomfortable when I venture out and about.
For the masks don’t work crowd, you should know all the evidence suggests that they work and work very well. Look at Japan, Korea, Taiwan, and Vietnam for the results of the experiment that proves the hypothesis.
We can have the best of both worlds. Open economy and increased safety.
We have lots of stock mark experts out and about these days as well. Some say we are going to the moon. Some say we will fall into the abyss. Both are possible, and I have no idea which one is right.
I do know that any forecasts made based on earnings projection or current stated values of assets are probably wrong.
I know that Warren Buffett and Sam Zell, two of the best-known bear market buyers in history, are doing nothing yet.
I know all of the private equity executives on a recent conference call said that while they were putting some money to work in special situations, none of them expect a quick ending to this and have lots more cash they hope to put to work at lower prices.
I didn’t sell off my portfolio when this started. I didn’t buy on the way down either because this is not a financial crisis. It is an economic and health crisis, and the eventual impact is unknown. If we see a rise in cases as we try to reopen and the economy slams shut again, these prices will seem like a pipe dream.
I am building cash and looking at industrial REITs and infrastructure REITs that won cell towers and data centers. I am building a list of high quality, conservatively financed companies that I hope to buy at bargain prices. I am tracking infrastructure companies that will play a huge role in the eventual economic recovery. I am talking to bankers and closely watching call reports to determine asset quality, so when the time comes, I will be ready to buy more small banks.
When today's bulls are puking, and Warren and Sam are buying, I will become a huge buyer. If I am wrong and stocks do continue to move higher, then the stocks I currently own will also go higher.
It’s the middle ground.
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