Guest Post by Simon Black
At precisely 11am on November 11, 1918, in a nondescript railroad car in northeastern France, a group of senior military officers and government officials signed an armistice agreement that effectively ended World War 1.
The Great War had killed a staggering 9 million soldiers in four years. That’s more than nearly every major global conflict in the previous two centuries combined.
Yet right at the same time as the war ended, a mysterious new virus started spreading around the world that eventually became known as the Spanish Flu.
And in less than three years the Spanish Flu infected 500 million people and killed as many as 100 million people, roughly 5% of the entire world population at the time.
This made the Spanish Flu five times deadlier than World War 1. And that’s really scary to think about.
But let me be clear: the Coronavirus is not the Spanish Flu. Not even close.
It’s understandable and completely normal to be nervous about the Coronavirus. It’s starting to spread rapidly, infection rates are climbing, and financial markets are swooning.
But we are going to be just fine. Humanity as suffered through much worse.
Now, to shrug this off as ‘no big deal’ is frankly a bit silly. This is obviously a pretty big deal, and it’s having a major impact worldwide in some of the strangest ways.
For example, lately I have been negotiating the refinance of an approximately $8 million loan with a large European bank. But that deal has slowed to a crawl thanks to Coronavirus. (Fortunately, the loan continues to earn substantial interest, so the delay is quite profitable for us.)
In Hong Kong, I’m leading a civil lawsuit against a fraudulent investment scheme, but the courts have been closed for weeks and don’t look to be opening anytime soon.
And I expect the impact will only grow… so being a little bit nervous about this does not make you paranoid.
But just remember that, as human beings, we generally make HORRIBLE decisions when we’re emotional… especially when that emotion is FEAR.
It’s also very easy to succumb to a herd mentality at a time like this. When everyone else is freaking out and panicking, it’s even easier to freak out and panic.
So let’s step back for a moment and think rationally together about a few things:
First, don’t do anything drastic. Avoid reactionary decisions, especially related to your finances.
For example, if you’re thinking about dumping all of your stocks because of the Coronavirus, then why did you buy them in the first place?
Business is hard, and there are always going to be complications and challenges. You can’t expect everything to be smooth sailing 100% of the time.
Great businesses adapt and overcome. They thrive when others buckle, and they come out of turmoil stronger than ever.
So think twice before you follow the crowd and sell shares of a great business that’s managed by talented people of integrity.
Second– three weeks ago I wrote about the virus, saying that “It doesn’t hurt to have a Plan B. . . if the virus appears to be spreading, you can bet that there will be a run on surgical masks and potentially even food at the grocery store.”
That appears to be happening in a number of places that have heavy infection rates. And it’s very difficult to find N95 respirator masks now.
I’ll reiterate—there is no downside to stocking up on some extra food, especially non-perishables, and some medicine.
Last, I’ll tell you a quick story that you’ll hopefully find hilarious.
A few weeks ago when the virus started becoming more of a concern, I thought to myself, “if the virus really starts to spread, stock markets will take a big hit.”
So I bought some ‘out of the money’ put options on the S&P 500. If you’re not sure what that means, I was essentially betting a small amount of money that the stock market would fall. And if my prediction came true, the bet would have paid off probably 10x within 2-3 weeks.
The thing about options, though, is that they’re not open-ended. I had to bet that the market would fall by a specific date. And the date I chose was Friday, February 21st—last week.
Well, Friday February 21st came and went without any fuss whatsoever. So I lost all the money I bet.
The very next trading day, Monday morning, the market tanked. And the day after that. And the day after that. And the day after that.
So I was right that the market would plummet. But I was just barely wrong about the timing. I was wrong by literally one trading day… and as a result I lost 100% of my investment.
The good news is that the amount of money I put down was trivial, so no big deal.
But it is a nice reminder that, even when you get the trend right, it’s damn near impossible to predict the timing.
Frankly I should have just bought more gold.
Gold has surged as a result of the virus spreading around the world because it’s a safe haven asset. On top of that, gold has several supply and demand fundamentals that support higher prices.
But we’ll talk more about gold soon, and why I think it has even more room to run.
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What’s all the fuss. This Corona thing is a Win Win Win! USA stops Chinese Imports. Hence, Domestic production rises. Immigration slows to a crawl, literally and figuratively. Globalization is finally seen as the threat it really is to sovereign nations. Population… Industry…. Pollution…… ebb (Greta dances.) Stock Market NORMALIZES. Fear breeds opportunity for the thick-skinned and culls the herd. And they get to try out some fancy new vaccines.
“USA stops Chinese Imports”
well a sudden big stop will kill a lot of people. heh – more than covid19.
I guarantee someone in America is dead as collateral damage.
Auto repairs are being delayed because of supply disruptions and price gouging.
I can assure you a fatal accident has occurred somewhere.
And the US no longer has the manufacturing capacity, infrastructure, etc. to make up for such a shift in trade/consumption. From a long term basis it might be possible, but the pain and suffering during the transition will be enormous. Government tax/regulatory/protectionism policies have destroyed our manufacturing base. It didn’t come come into existence overnight, and it won’t return overnight….no matter how desperate we might be. Especially since it goes all the way back to the raw materials and extracting them from the ground.
If the US wants or is forced to re-industrialize I am of the opinion that it can be done, and probably more quickly than many think (that coming from an old IT guy-no, not that IT, but Industrial Technology).
Think about it for a while: if supposedly new and often untested concepts (think most forms of renewable energy) can get traction then there is no reason (other than greta and aoc type of stupidity) why we cannot restore our capabilities in textiles, steel making, mining, natural resources, etc., with etc. including finished consumer products-all the way from high end electronic devices to the mundane-like underwear from Vietnam.
Like it or not, wars provide the incentive for major technological improvements and improved industrial capabilities. Case in point: natural rubber sources dried up during WWII, giving the impetus for the rapid development of synthetic rubber.
If the supply chain for Chinese shit is broken (make that SHIT, meaning low quality/low value junk that-in a pinch-we really don’t need and can quickly learn to live without anyway) there is little reason that we cannot manufacture the more important stuff that we used to be capable of decades ago. There is no reason we should not be able to reclaim at least some of our old infrastructure-say textile mills in New England that are still waiting to be repurposed-make improvements, and widen our economic base. I’d much rather spend $12K per year for 2 years training young job seekers than having some liberal offer $1K/month of suck-the-titty “free” OPM money to unmotivated people who buy into the warped notion that they deserve it. Hey Bernie, the new paradigm is not free stuff, but if you want to get ahead, learn to weld, learn a trade, learn a skill.
Some claim we need to spend huge sums on aging infrastructure-maybe a large, negative cv impact will be the golden opportunity for a second chance to achieve modern industrialization and when we are done with that we can reap the rewards and take on things like the aging infrastructure.
To hell with China-America First.
“it’s having a major impact worldwide in some of the strangest ways”
you mean the reaction to it is having a major impact. the virus itself does not yet seem all that significant.
https://en.wikipedia.org/wiki/2019%E2%80%9320_coronavirus_outbreak_by_country_and_territory
Key words… “not yet”.
“Key words … ‘not yet'”.
sure. but extrapolating above the existing situation seems to be based on wishful thinking rather than any realistic assessment. now of course there’s no telling what damage the hysterical over-reaction to covid19 will cause, or what nefarious scams will be pulled using covid19 as a cover, but near as I can tell covid19 itself is not going to be a major event. we’ll know beyond any doubt in a month or so (probably in a week or so), then I’ll repost everyone’s hysterical ranting here – “hey everyone, remember when we were all gonna die?” – and they can downvote me all over again. “you didn’t understand then and you don’t understand now!” yeah, sure.
Perhaps it is all a politically motivated scam to influence the election in a way the Russians, the Ukranians, the FBI and other traitorious alphabet agencies could not. Covid19 may be the perfect storm to first blame it on Trump, and then get not residual but flaming and continuing hysteria for the next 8 months that will make Mueller, impeachment, and stuff like that look like kids play. On top of that-and as so many have anticipated-throw in a blown up stock market and what more could Alinsky the Jew ever ask?
Trump is knocked out and in waltzes someone like Hillary to save the day. Bloomie, Soros, and the Devil will all be smiling.
Agreed.
It’s the overreaction that kills people on the highway when someone drifts into their lane.
People swere to avoid squirrels and crash into immovable trees.
Action-reaction and the “cure” is worse than the disease.
Has anyone ever swerved to miss a lawyer?
That’s what I thought.
… and there’s a new 10-year-high for s/g – 93.72
this keeps up you can expect 110 or so.
Time to back up the olde Silver wagon then eh?
if silver and gold are relevant to you, might as well. S/G could go from 95.3 (geez, just this morning) to .23 at some point.
wow, look at djia and s&p drop.
Gold and silver taking the mid-day monkeyhammer, both down from their recent highs today. It’s a good short-term percentage discount opportunity to dollar cost average into physical because the eventual sector rotation into metals hasn’t happened yet and the ETFs have more value to shed. Hoping the prices stay depressed and manipulated a bit longer to allow me to acquire a bit more on the cheap. Silver under $20 with a gold-to-silver ratio above 80-something is a coiled spring waiting to happen in this environment.
It’s payday for me so that means a few more jingling silver Eagles are going in pocket tomorrow. It’s my “Plan B” savings account because I have absolutely no confidence in our underfunded state pension scheme being solvent a few years down the road.
This shit is real.
HSF Sum Ting Wong here.
https://www.youtube.com/watch?v=KpQK3na5cuA&t=1111s
Simon Black huh….. That makes perfect sense for a scheister to be talking about tegrity in businesses in the modern day….. The only business I have heard of with tegrity is Randy Marsh’s tegrity farms in South Park, or cartoon land….. What is Mr. Black talking about? every damn business on wallstreet is on the take and run by scumbags with no tegrity……
Corona-Treasuries
?