The New Economy

I am dabbling in tiny amounts of investing, and actually buying individual securities for the first time in 20 years. This is mainly to keep my brain engaged, be able to evaluate my Financial Advisor’s performance effectively through this Black Swan Event, and make enough to buy a fancy new bike next year!

I have to insert a disclaimer: COVID is real, it’s deadly, and it’s way worse than the flu. I have a close friend who is on a ventilator under paralytic meds. Given my own medical history with respiratory issues, I fall firmly in the category of ‘underlying medical issues’ so I have strong reason to be wary. I am not making light of it in any way and have taken personal measures to combat this.

What interests me is the evolution we are going through. People are breaking into three groups:  those in Pandemic Panic who are actively flailing, the Hunker Down crowd that ignores all input and hope it goes away, and the Sharks who are scheming. PP folks are panic’d in public and social media. They are fueling a fire, not helping the situation, and adding more problems. Add to it there is a portion of them trying to promote identity politics in the middle of a global health crisis that are just worthless humans. The HD folks, which I am vastly familiar with having roots in a small town in Idaho, have a safe full of guns, boxes of loaded ammo, a stash of dried food, and are happy being left alone. They want it all to go away, but if they get an inflammatory email about martial law, there may be problems with this crew. The Sharks include those carefully assessing where to put their money, and those businesses that evolve while their rivals choke and die. In 18 months, the losers in the economy will be gone, and the new winners will emerge. The Sharks are already making those bets today. Right now there are more questions than answers, but change is inevitable. No matter how much stimulus, certain businesses will die, and others will become wildly successful.

I break the Sharks into two groups. The first group, we will call them Nursing Sharks, are historical genius’s. They are passive, but when they lock on a target they won’t stop. They evaluate the technical details of stocks over time, including market cap, performance, dividends, market share etc and pick the ones at high discounts with amazing histories and fill portfolios. The second group, we will call Great White Sharks, are light on their feet, can evolve, slash at everything with a few clean misses, and attempt see how this will forever change us. This major reset will not only cull the weak, but it will reward the smart. We may never have things that involve massive crowds, face to face meetings, and poor hygiene practices. The Great Whites are figuring out how to monetize that now. Don’t bet against Bezos, for example, expanding his scope vastly. Among Great Whites, he is King!

I talked with a close friend who is in advertising, and was amazed at the amount of front line business info he possessed. I had been doing lots of on line research and had forced myself to look at the news and even business media, and I learned more in 20 minutes from him, in a locked down state, Idaho, than any other source. He told me about a restaurant that closed its doors and rapidly converted to delivery of family style meals and was killing, while the rivals are sucking. You know on a grander scale that Amazon and Walmart are hiring as fast as they can for on line ordering. Schools and offices are going to increase the use of on line meetings as they find them to be just as effective in many cases. If we come out of this and end the irrational inflation of higher education, it will fundamentally change our economy.

I harvested a list of observations from my friend and other sources, and I freely plagiarize that list here:

Winners:
Lawn and Garden:  People are staying home, and hardware stores are considered essential.  Go get your potting soil, clean up your garden, and learn to compost. How cool.

Restaurants:  On line family style delivery as I stated. Those with effective delivery models will do well.

Zoom, Go to Meeting: Quite obvious. Zoom has had an incredible run.

Appliances: Who would have thought, but when you stare at that shitty fridge every day, all day, it appears to piss you off. Go online and get a new one.

ATV: Transportation is essential, and people are gearing up to head to the hills away from it all.

Digital media ads: This is going to be a generation of Rock Stars. Get your two year degree on line in this field for cheap and make bank.

Vitamins: On line sales rocking. Hmm maybe I need more iron or a nice B complex??

Handymen: I had one do some outlet work yesterday and asked if he was busy.  Even though it was 3pm, he wanted to get to one more job because he had a full slate for future. I don’t know if this falls in the essential category or not.

Losers:
Spa, Salon, Barber, Acupuncture, etc: Thank you, thank you, thank you, whatever motivated me to sell my commercial rental full of these businesses in 2019.

Jewelry: High touch and first to go on list of things to cut.

Photo/Events: None happening.

Hotels and Casinos: If your model is time with a client in your facility, forget about it. Remember the hole 2008 created in Vegas? It was not the first to recover.

The losers remind of something I have said, but never really absorbed: in a shitty economy, people never back off buying booze and cigarettes; everything else goes away. Recognizing what is essentially booze and cigarettes to the masses may be the key to investing!

A crisis is a terrible thing to waste!