EscapeVelocity's Net Worth for March 2020


Assets Value Change ($) Change (%)
Stocks & Bonds $13,272,213 $167,659 1.28%
Retirement $1,040,746 ($89,828) (7.95%)
Home $2,137,500 - -
Other Real Estate $361,000 - -
Cars $480,000 - -
Personal Property $0 - -
Business $6,230,110 - -
$23,521,569 $77,831 0.33%
 
Debts Value Change ($) Change (%)
Home Mortgage(s) $0 - -
Other Mortgage(s) $0 - -
Student Loans $0 - -
Credit Cards $0 - -
Car Loans $0 - -
Other Debts $0 - -
Total Debts $0 - -
Net Worth $23,521,569 $77,831 0.33%
*All values shown in USD ($)
Notes:
Coronavirus -- an exogenous "black swan" with global implications that no domestic "policy" can stop. Rate cuts, such as they are, are not vaccines.

This is also not about mortality or how people with coronavirus "feel," it is about closed factories, supply chain disruptions, consumption, and hits to corporate profits in a year of already slowing and questionable world growth. Indeed, since a huge percentage of critical components to manufacturing are made in China, Korea, and Japan, even a "small" disruption in the supply chain can have major consequences when domestic producers run out of input materials.

This is not the "zombie apocalypse" but it's not a "nothing-burger" either, and we couldn't have more incompetent "leadership" domestically. Simply put, we are unprepared to meet this challenge and officials talking into the teevee, or lifting tariffs, or buying bonds won't meaningfully change anything.

To paraphrase someone on Twitter, you might have thought the riskiest words on Wall Street were that "it's different this time," but it's my view the riskiest words are "it's contained." Recall Bernake saying the sub-prime mortgage crisis was "contained" in 2007? Well, enter Larry Kudlow this week to say the virus is "contained."

We've had a massive, unstoppable, record-setting bull-run that was, at least to some degree, due to governments' putting their thumbs on the scales. We're overdue, and that cheap money cannot save us this time. Cheap money won't reopen ports, get people traveling again, or fix supply chain disruptions. This is also coming at a time of precipitous corporate leverage where the cheap money was used for share buybacks, not capital investments. Expect layoffs and closures to come.

This, of course, is not the end of the world, but it will be the end of this economic cycle. This will, in my view, put most of the world's developed countries into recession, including the U.S.

Comments

3/4/2020 7:39:34 PM plasticsurgeryrox
Partially agree with you. Mostly disagree. I'm more glass half full. I believe in innovation, science and rationality. I think that virus will be either gone or part of normal life by summertime. I think this is a buying opportunity for stocks and I am taking advantage of this opportunity. You and I may both be right. Short term slowdown or recession and long term we will be fine. I think the market has already priced in doomsday scenario as of now. TIme will tell.
3/5/2020 10:15:56 AM Time4planB
"Expect layoffs and closures to come". I am in the UK and an airline Flybe have gone into receivership and with more flights being canceled etc. This is going to hurt the tourist industry worldwide and every business that relies on tourism - amongst others. The UK government are already promising to contribute to sick pay costs. It's not the end of the world but this is going to seriously hit the global economy hard and I do not think that it can take it.
3/6/2020 11:17:52 AM EscapeVelocity
As far as we're concerned on a "net worth" site, the issue, in my view, isn't whether the virus will be gone by summertime (it won't be), whether there will be a vaccine (there will be), or whether the market is pricing in a doomsday scenario (it's not). The issue is whether the economic shock that is now occurring will tip the world into a recession (it will). I could write ad nauseam about why we're on the economic precipice, but I think the fact that a mere 30-days ago the 10-year was 1.5%%+ and that it's (more than) half as much today (at another record low) tells you all you need to know. You don't get those kinds of moves in the bond market unless the jig is up. That said, I agreed with you that "long term we will be fine," but it's equally true that "long term" we will be dead. Assuming all goes according to plan, I've got about 40 years of living left to do ... I can take a few risks, but I also want to slow down in the next few years and have some fun while I'm young enou
3/6/2020 11:18:20 AM EscapeVelocity
...enough to enjoy it, so maybe not too much risk. And that's been my consistent point: people need to be mindful of their individual risk tolerance and their unique circumstances. Life will go back to "normal" soon enough, but none of us are getting out of here alive. By the way, donchta love Larry (it's "contained" Kudlow) on the teevee telling everyone to get back to work. SMH
3/8/2020 9:53:13 AM Aweaverii
I agree with you. This is a black swan that is only a the first domino to fall in an over indebted environment. We just needed a trigger to start a real correction.
3/9/2020 11:20:57 AM EscapeVelocity
I bought stocks this morning, actually, after the market limited down and the circuit breakers were triggered. I'll continue to buy as things continue to get worse--and I think they will, to some extent--but I've made terrific money on my bonds and now it's time to rotate a bit into stocks. Even today, however, I only have 30% of my investible AA in stocks.