Category: Wealth

Eight Phases of Crisis: COVID-19 Edition

“You had a dishwasher box to sleep in?  I didn’t even know sleep.  It was pretty much twenty-four seven ball gags, brownie mix and clown porn.” – Deadpool

BATSLAP

One girl I dated in High School asked if she used too much makeup.  I replied, “Dunno, depends on if you are trying to kill Batman®”

“Great, now it’s the end of the world and we can’t get a new dishwasher,” The Mrs. actually said, after I finally relented that it would probably cost more to fix the dodgy old dishwasher than a new one would cost.  Plus, the old dishwasher is stainless steel, so if it were a hundred yards away, it would make quite a nice practice target.  I call that a win-win.  Besides, Amazon® actually has them in stock, so I could theoretically have one by next week.

See?  You can get quality appliances during the end of the world.

I started working from home yesterday, which was nice.  When it was lunchtime, I wasn’t hungry, but I was nice and warm so I took a nap right in my home office which is also known as the couch.  Good times.  I do have a concern – The Mrs. slapped my heinie as I walked by and said, “nice butt” so I’m thinking of bringing this up with HR.  I want to be treated as more than a sexual object.  I mean, not much more, but more.

As much as you might be interested in my derrière, I really do want to talk about COVID-19 and get to the bottom of how the issue will progress in the coming months.  While each crisis is different, they are all sort-of-predictable because in the end, people don’t change all that much, even though circumstances do.  Certainly we want to get this all behind us, in the rear view, so to speak.

Okay, I’ll stop.  Seven synonyms for the posterior in two paragraphs are quite enough.  I don’t want you to think I’m a bum.

But what is this pattern I mentioned?  Here are, as near as I can determine, Eight Stages of a Crisis™, a level at which each crisis can be evaluated compared to the other – this is my modification of work originally done by Zunin and Myers.  This is like the Kübler-Ross five stages of grief, but with the apocalypse in mind.  Why settle for one death, when you can have millions or billions on your mind?  It’s so nice and cheery.  The nice part of using this model is that you can gauge where we are in the current COVID-19 mess.

FRANZ

Who would he assassinate for a Klondike® bar?  Apparently Archduke Franz Ferdinand. 

The Warning

This is the opening stage of a crisis.  It may be short, as in 9/11, or it may be a slow-motion collapse like the gradually increasing troop buildups and mobilizations that led to World War I.  Everyone wanted to stop it, but no one was sane enough to say “no.”  The Warning before the first Civil War was literally decades in length.

In the current COVID crisis, The Warning came during and just after the December impeachment.  With the focus of the country elsewhere, who cared about the flu?  We don’t trust the media very much.  Why?  They don’t seem trustworthy.  Example:  when Trump shuts down air transport to China, CNN® says it’s racist.  When China shuts down air transport from the United States, CNN™ says it’s a wise and prudent move by China’s benevolent leadership.

In a world where CNN™ and the Chinese government have similar levels of credibility we tend to forget the ending to the story of the boy who cried wolf:  in the end, wolves really attacked.

DINOS

How did they not see this coming?

The Event

The Event is generally not long, but it can be.  It’s the Shot Heard Round the World at Lexington and Concord in the Revolutionary War.  The Event is when the rules change forever, and nothing can ever make the world go back to the way it was.  It’s the spark that lights the fire.  When people look back, everyone can see The Event.

Nothing is ever the same afterwards – The Event changes everyone that it touches, and often ends up changing systems permanently.  It is disruptive.  It may not be the reason that everything fails, it might just be a small event toppling an already unstable system.  In a crisis like 9/11, the event is obvious and instant.  COVID-19 has led to a slow-rolling avalanche across the economy.  Was it poised for a fall anyway?  Possibly.

As a longer cascade, what will be The Event that history will use to remember COVID-19?

In one of my more frightening thoughts:  what if we haven’t seen The Event yet?

DISB

I’m not sure he’s koalafied to make that decision.

Disbelief

When things have changed, and changed drastically, people refuse to believe it.  When the power is out because a tree fell on the power lines, I will walk into a room an automatically flip the light switch.  Why?  Habit, partially.  But there’s a part of my mind that is existing in Disbelief, perhaps, that doesn’t believe that the power could ever be gone.

Disbelief isn’t a coping strategy, and it’s not an attempt of the mind to protect itself, at least in a healthy person.  It’s more inertia.  You’re used to the world being a certain way, and when it isn’t, part of your mind isn’t quite ready to process it.

This might be an overreaction – COVID-19 might be no worse than the flu.  But that isn’t explained by the reactions we’ve seen so far from places that got it earlier than the United States.  Italy is locked down.  In two weeks, we will know more.  In a month, I think, we will have certainty.

PANIC

In order to calm panicked customers, Wal-Mart opened up a second register.

Panic

At some point, the mind is confronted with the new reality and forced to accept it.  But the rules are new, and unknown.  What to do?  One could take a deep breath, and review the situation and think logically or?  One could Panic.  Panic is easier, and doesn’t require a lot of thought.

Panic is the natural reaction when your brain realizes that it has done zero to prepare for the new reality.  So, what to do? Buy staples as required to build up the stockpile you’ve accumulated over time?  Or buy 550 cans of Diet Mountain Dew®?  Or just buy toilet paper, because everyone else is and you don’t know what to do or have any independent thought?   Toilet paper purchasing is Panic.

HERO

Not all heroes are able to walk.  I mean, some gained 400 lbs on the couch.

Heroism

While the Panic is ongoing, the first glimmer of Heroism starts to show.  Brave men and women working in the medical field are the first signs of Heroism.  Donald Trump talking with Al Sharpton to address the problems he sees is Heroism – realizing that there is a greater good, and that sacrifice is required.  Heroism is embodied throughout the response to the crises where a few have an opportunity to save many, and where enemies put aside squabbles for a time because it’s the right thing to do.

There was a family story – Grandma Wilder went during World War II to weld Liberty ships at the Alameda Ship Yard.  She would regularly get things sent to her from her mother who lived in the country in the middle of Flyover.  Needles were rationed in San Francisco, but not in Flyover.  Sugar was rationed in San Francisco, but not in Flyover.  Why ration needles and sugar?  To build common purpose, so even people not piloting P-51s or jumping out of landing craft at Iwo Jima could feel like they were doing their part.  To be fair, rationing was necessary in wide segments of the economy, it wasn’t a fake, but it did help bring everyone together.

Right now Heroism is going on, and we aren’t even asked to do anything more than to sit down and watch Netflix® unless we’re keeping vital industries going.  Here’s a link to Aesop’s place that shows the quiet heroism going on out there (LINK).  Read it all.

CLIFF

I read the other day that coyotes are about 10 miles an hour faster than road runners.  My entire childhood was a lie.

The Cliff

Keeping order requires energy.  Some part of the energy of the system is put into keeping order.  In a time of significant social cohesion, like World War II, the United States didn’t face The Cliff, even though virtually every other developed nation did.  Instead, the energy that the crisis took was replaced by people working together.

Most of the time in a real crisis, however, there’s The Cliff.  I wrote about it here: Seneca’s Cliff and You.

We have not fallen off The Cliff.  Is it certain that there is one?  No.  But every single leader, elected or appointed, is acting like it’s there.  I believe we will see it.  The new normal will be grow from events moving quickly.  Already at Wilder Redoubt, we’ve had nothing but home cooked meals for the last week, with a couple of store-bought sandwiches being the exception.

Will home cooked food, family dinners, and homeschooling be the legacy of COVID-19?

I expect that we’ll see The Cliff soon enough.  How deep will it go?  As I’ve mentioned before, no one knows.  The worst case is that the economy crashes through levels to Great Depression era lockup in two weeks or so.  Only 40% of Americans are able to absorb an unexpected $1,000 expense.  80% are living paycheck to paycheck, and those paychecks just stopped.

Dead.

Going first will be car payments.  The average monthly car payment is $800.  Me?  I’d sell you my daily driver for just two months of that, so expect car finance companies to seize up like an ungreased stripper pole.  But the businesses that employ those people aren’t much better off.  The best restaurant in Modern Mayberry came pretty close to closing down shop six years ago, but pulled through.  The second best restaurant didn’t survive.  There will be cascading failures as the debts owed from one business to the next go unpaid, and this won’t just be for small businesses.  I feel confident saying that several businesses with 10,000 or more employees will go bankrupt.  Overall loss to the economy?  40% of the GDP this year?

Is there a better case?  Sure.  We contain COVID-19 in a month or so, and then call it good.  We only lose 10% to 20% of our GDP this year, and government pumps five or six trillion dollars into the economy to juice it back up.  That’s the best case.  And that’s just in the United States.

I’m not kidding, that’s how deep The Cliff is.  If we’re lucky.

EMPEROR

Something, something, Dark Side®.

Disillusionment

After the fall, things suck.  We had heroes, but the time for Heroism is over.  Disillusionment sets in when things don’t snap back to normal.  Things will seem rosy, only for failure to crush hope.  The more government “helps” during this phase, the worse recovery will be.  Roosevelt “helped” so much during the Great Depression that he extended it for years.

But politicians will take drastic steps, because they can’t help themselves.  The length of time Disillusionment lasts?  Months to years.

FIX

Some re-assembly required.

Rebuilding

This is the other side of The Cliff.  Whereas, as Seneca said you go down a cliff pretty quickly, you only build up slowly.  Rebuilding the economy will take years.  If we do it right, we’ll build a stronger economy, less dependent upon foreign supply lines, that guarantees freedom while preserving the traditional values that built the wealth in the first place.

If done poorly?  The system is controlled, oppressive, and coercive.  Leaders matter, but the quality of the citizenry to fight back against the system is even more important.  Rebuilding takes years, and by my best case scenario, four to eight years.

DISHWASH

So, I guess I’ll get a jump start on rebuilding.  Dishwashers on the Internet.  Amazing.  My only problem is that there’s this lady at work who keeps making suggestive comments and touching me all the time.  Just a few minutes ago, she told me that she expects me to share a bed with her!  They always told me not to get my honey where I got my money, but what happens when you work at home?

If . . . Then . . . The Two Words That Allow You To See The Future

“And so, Arthur, we learned that gambling is bad and yet in a certain sense, isn’t life itself a gamble?  You can never be sure of anything.  Like who would have thought that dolphins could go bad and that fish were magnetic?  Not me, no sir, not me.” – The Tick (Animated)

coyote

But you were expecting the Spanish Inquisition?

Nassim Nicholas Taleb is most famous for his 2007 book The Black Swan:  The Impact of the Highly Improbable.  It’s a great book – I wish as many people read the book as bought it.  Then they might have at least understood why home prices plummeted faster than California’s self-respect in 2008-09.  Heck, if people would just retain a little bit of this book after they read it, they’d be better off than most MBAs.  The title of the book comes from Taleb describing Europeans touching down in Australia, and seeing something that they never thought possible:  a black swan.  All European swans are white.  Therefore?  All swans are white.

Until you see a black one.

Taleb defined his “Black Swan” events as having some important characteristics:

  • Black Swans are extremely rare. Standard techniques (like normal probability distributions) will never predict them.
  • Black Swans have huge consequences.
  • Everybody looks at the Black Swan event (after having gone through it) and concluded it was obviously going to happen.

I’ll throw out one other idea to mix with Taleb’s Black Swan concept – this one was from James P. Hogan’s wonderful 1982 book (that Hogan says helped topple the Soviet Union, and he might be right – LINK) Voyage from Yesteryear.  In this book, Hogan has a character talk about the difference between a phase change and a chemical reaction.  When you freeze water or melt ice, it’s just undergoing a phase change.  Warm the ice up, and you get water.  Make the water cold enough, and it’ll change back.

Phase changes are simple and reversible.  It’s only a matter of energy.  But burn a piece of paper, and like the girl you had a crush on your freshman year in high school?  It’s never coming back.  Burning the paper is a one way trip.  It’s a chemical reaction that you can’t reverse.  Or a restraining order in the case of the girl.  It turns out they don’t like you standing outside of their house holding a boom box over your head in real life.

CUSACK

In real life, John Cusack blocked me on Twitter®.  I probably deserved it.  I just wanted my two dollars.

Changing the guard from Republican to Democrat and back to Republican is a phase change.  Same stuff, different day.  But the American Revolution?  That was a chemical reaction – after the war we could never go back to being British subjects – the ideas of independence, freedom, and self-governance were too firmly rooted.  9/11 was another phase change.  Despite W’s desire that we “go on as normal” we never have been normal again and conventional ideas of privacy, freedom, independence, and self-governance are dead.

Oops.

All Black Swans are chemical reactions – they are irreversible, even though people expect a return to the “way things were” it never happens – you can’t unburn the paper.  The change is a one-way event.  In one (for me) particularly striking story in The Black Swan, Taleb wrote that his relatives from Lebanon were still waiting for things to return to normal, even though it had been thirty years since the war had ripped Lebanon apart.  No, they weren’t crack dealers, and they weren’t alone.  Even as late as 2012, 76,000 people were displaced within Lebanon, waiting for things to get back to normal.

Wuhan Flu, COVID-19, is a Black Swan.  It’s not quick and immediate like Pearl Harbor or 9/11 or the Great PEZ® famine of 1986.   This Black Swan is unfolding in slow motion across the economy and the world.  When this is studied in classes in fifty years, the students will think it happened all at once, rather than unfolding, day-by-day over the course of a year.  In a week, we’ve gone from business as usual to shutting down restaurants.  It’s the new normal.  And yes, I said a year.  We’ll be lucky if it doesn’t last a decade.

waterloo

A woman born at the beginning of the French Revolution would have already had kids by the time Napoleon was booted off stage permanently after Waterloo.  But history teaches it like it happened during the two minute warning at a football game.

As I’ve written about before, the economy is facing a crisis that’s at least twice as big as the 2008 Great Recession.  The stage was set beforehand for a phase change – from functioning economy to recession and then back again.  Trump had really juiced the economy in an unusual way:  clearing out regulations.  Sure, he pumped money back via tax cuts, but those tax cuts were targeted toward non-millionaire types and businesses.  This was, perhaps, the most wholesome way to grow the economy – by people making money rather than by government choosing who got to win.  Bernie, I’m talking about you.

In due time, we would have had a recession anyway.  Probably a big one, since the economic expansion has been going so long.  But just like Wuhan isn’t really the flu, this economic upset really isn’t a recession – it’s far worse.  Dow® 8,000 or less isn’t out of the question on the downside.  Really.

It’s that bad.

The government is going to take unusual actions.  I mean, more unusual than usual.  Today, it was floated to just start writing checks to most people.  “Millionaires” were excluded.  Free health care will come on the table soon enough.  We haven’t even scratched the surface of what’s going to happen.  And we will never go back to the way things were.  This isn’t a phase change.  Like a board game that you let a toddler open, things just won’t go back in the box the same way, ever, and all of the pieces are covered in cookie/saliva mix.

TODDLER

Honestly, I don’t miss toddlers, what with them trying to poison you or cut your brake lines or eating all the Cheeze-Its®.

Once upon a time, I got paid to think about disasters as a short time gig at a company I was working for.  It was a lot of fun.  I researched probabilities of things like civil wars and floods and tornadoes and visits from my ex-wife demonic manifestations.  My life for those months included a LOT of surfing of doomer porn sites and thinking about how the world could go to hell.  So, I guess that makes me sort-of a retired professional doomer.

And my thinking pattern developed a rhythm . . . If (generic disaster) happened, Then (outcome).

It was thinking about the outcome that was the most fun.  If a tornado hit the headquarters, Then what?  Well, based upon the statistics that I could find, it was an average wait of 500 years for a tornado to hit any given spot in the geographic region of the HQ.  Even for someone as old as Ruth Buzzi Ginsburg, that’s not very often.  I tracked down and tried to figure out how much money the company would lose if it got hit by a tornado, volcano, hurricane and earthquake all on the same day – a Torcano Hurriquake™.  After researching with every department, it was concluded that we might not be able to collect on a few hundred thousand dollars’ worth of payments that people owed us.  As this company was a multi-billion dollar company where the executives had BMWs® that were designed to stop an RPG strike, that was less than the company spent on Featureless Grey Wallpaper® in a year.

BONUS

Hey, everybody who thinks exactly alike gets a bonus, right?

They didn’t think it was funny when I told them that a Civil War was 10 times as likely as a natural disaster shutting down operations.  When I showed them the math, they couldn’t argue, but they weren’t happy.  They didn’t like it even more when I pointed out that they could afford to spend about $100 a year in disaster prep – most of their systems already had offsite backups.  And no one was even slightly interested in shooting RPGs at the executives.

What the executives were interested in was things that they were used to, floods.  Torcanos. Hurriquakes.  Civil War?  I’m not sure I even brought up a pandemic, but they would probably have looked at me like I had six eyes.  “Just not credible.”

No Black Swan event is credible when you try to describe it to someone who is stuck in thinking normally.  Just like Taleb’s relatives looking for stability in Lebanon or me wondering when TSA will stop fondling my man parts, it’s not going to happen.  But describe trying to get on a flight in 2020 to an American in 1995?  They’d think it was a silly science fiction story.  If only we could convince the TSA to fondle Lebonese?

Which brings us back to COVID-19.  How do you discuss it with someone who is stuck thinking normally?  It’s difficult.  Their minds aren’t even playing in the zip code as people who prepare.  But even to them, it is undeniable that things have changed.  They just don’t realize it’s like herpes:  forever.

When I went to school, school lunches were something to be avoided.  The Lunch Ladies did their best with the USDA Approved sources of, I guess I’ll call it protein.  Now, school food is deemed to be a requirement even when school is out of service.  And they say that there isn’t a hell.

Yes, it was just Spring Break, and the school kitchens were closed.  And they close during summer, last I checked – every summer.  But now?  School food is a must.  Here in Modern Mayberry, they’re offering the school lunches for free to anyone who comes to pick them up.  I think it’s because at least someone in Washington pulled their head away from the bacon-wrapped-shrimp trough long enough to realize that we’re in trouble.  One of the brighter ones probably had the following thought:

If (Lunches are Free) Then (How Long Until They Become Free Community Lunches)?

If (Free Community Lunches Exist) Then (How Many People Remember Typhoid Mary Was A Lunch Lady Cook who spent 30 years in prison isolation because she wouldn’t stop killing people by infecting them with typhus cooking?).

Oops.

typhoid

If you cook them too long, they get all crunchy.

Schools are being closed.  This, in my opinion is good.  But If (Schools Close) Then (Are Daycares Any Safer?)  Your takeaway should be this question:  how long until daycares are closed?  If they can close the NBA, Then they can close daycares.  But I repeat myself.

What can you do?  The best time to prepare was last month.  The next best time to prepare is now.  I can’t tell you if you have enough cans of corn in your pantry.  And, no, that’s not a creepy metaphor referring to some orifice you may or may not have.  I mean actual corn.  Or tuna.  Still not a metaphor.  Or mayonnaise.  Whatever you normally eat, you have some extra, right?

As of now, the supermarkets are functioning.

If (Supermarkets Close) Then (what)?  The average supermarket used to have inventory for three days.  The average house, food enough for three days.   Add that up, and American is pretty close to being hungry.  What happens Then?  Martial law?  Food distributions?

If (Your Job Ceases to Exist) Then (what)?

That’s the key to preparing yourself, not only physically like those people building blanket forts with a semi-load of toilet paper in their basement as structural wall material, but also mentally.  To understand what’s going on, to be one step ahead, you have to imagine what could happen.  You have to let your mind make it real and run it to a logical conclusion.

Then you have to see if it makes sense.

TOM

Okay, not everything bad can happen.  I mean, cats with thumbs?  Silly.

When an idea makes sense, follow it through.  If so, Then what’s the consequence?  Don’t limit your thinking.  It’s a fun game.  Sure, sometimes it ends up in global thermonuclear war, but so did The Terminator™, and look how much fun that was.  But when you really think about it, you’ll look to see what happened in the past.  While the future won’t look exactly like the past, it will rhyme.  The cause and effect of many things doesn’t change.

If we’re quarantining, Then we won’t drive as much.  If we don’t drive as much, Then we won’t use as much of that sweet, sweet gasoline.  If we don’t use as much of that sweet, sweet, gasoline, Then the price of oil, refineries, and oil producing companies will drop and some will go out of business and lots of people will lose their jobs.  That’s exactly what happened last week, and will happen in the next month.

If.

Then.

COVID-19 wasn’t in my projections – I was expecting cake.  It wasn’t in the mindset of the people of the world.  Then it was.  So what happens next?  What chains will snap, further unraveling our civilization?  What changes will be permanent?

  • If you want to keep your doctors alive, Then how will you protect them from COVID-19?
  • If you want to save the people with the most future, Then how many over 40 will get one of the 60,000 ventilators? Besides me, I mean.
  • If your customers are being impacted, Then will they fail?
  • If your customers fail, Then who will pay you?
  • If government wants to control people and how they move, Then they’ll start using the tracking information from cell phones.
  • If the government tracks cell phones, Then why would they ever stop? About the time they stop touching your no-no areas so you can go to Cleveland?
  • If the clerk at Wal-Mart® tells you that “they” have been telling her to have a minimum of two weeks of food, Then will you listen?
  • If you hear from another Wal-Mart© employee that they are setting up special hours for employees to shop after the store is closed, Then will you pay attention?
  • If the government starts paying people just to breath, Then will they ever stop?
  • If I tell you that hope is not a plan, Then will you . . . plan?

We are in a Black Swan event, probably the biggest of your life, and 9/11 was no slouch.  Neither I, nor anyone else can tell you exactly what the future will bring.  But as I mentioned in my last post, the universe is a harsh grader.  The final exam is pass/fail.  And passing means you live.

Until the next exam.

If.

Then.

COVID-19: A Brave New World

“Because if just one of those things gets down here then that will be all!  Then all this – this bulls**t that you think is so important?  You can just kiss all that goodbye!” – Aliens

NEWT

I can’t stand people who are xenophobic.

Corona.  COVID-19.  There’s a catastrophe always lurking, but it’s never what you think.  But it’s always something.  Beer Flu.  Kung Flu.

Do you understand the magnitude?  Most people don’t.  I’m not even sure I do.

The last few nights here at Stately Wilder Mansion Redoubt have been especially enjoyable.  I took off some time last week, and plan on taking some time off this week, as well.  It’s a great time, especially if you’ve never read Poe’s Masque of the Red Death (LINK).

Rarely do things change so quickly:  we Wilders were preparing to go to a state-level event where Pugsley was going to compete.  Competing was an honor – it means that he was one of the very best in the state at competitive freestyle dramatic baking rhythmic knife combat.

The championship was cancelled – 6,000 people in the same place probably doesn’t make sense.  Why?  Mathematically I’m betting that at least one of the competitors or spectators would have been COVID-communicable.  6,000 would have been a wonderful place for one person to donate billions of virus fragments to thousands of others, just like one South Korean was responsible for over 1,000 cases.

batstew

Ahhh, panda.  So very tasty.  I like it with a side of bald eagle.

One of my friends and I were talking before the event was canceled and said to me, “John, it’s cancelled.  There is no way that’s going to happen.”  There was no uncertainty in his voice – it was clear he was 100% certain.  In my mind, I thought that somehow this event would sneak under the radar.  It did not.  And in retrospect, I found myself guilty of one of the chief sins of the universe:  thinking that normal can win in abnormal circumstances.  Thankfully, the penalty here wasn’t the usual penalty for such a sin:  death.  Okay, that was dramatic.  Mainly it’s feeling stupid.

Pugsley was disappointed since he had his katana sharp, his Hamlet memorized, and his recipe book tattooed on his left thigh, but cancelling the event was the right call.

The Boy was back in town for spring break, so the four of us Wilders are hunkered down in the basement as I write this.  The other three idiots have been taking turns invading my writing space playing a video game.  Thankfully, we like each other and have a reasonable supply of deodorant and soap.  If the soap runs low, I volunteer to try to make some out our fire pit ashes and the cat.

SOAP

But is it made from cat?

The Boy and Pugsley have been out into the world since COVID-19™ hit more than The Mrs. and I.  The Boy went back to his college on Saturday.  They say that the college will open at some unspecified time in the future, but sent a note out that maybe you should think about coming to get your stuff.  The Boy and Pugsley took a road trip for just that purpose.  While The Mrs. hasn’t had her job officially cancelled for the foreseeable future, I expect that will be the case.  I don’t expect either of the three of them to be required to be outside of the house in the month of March except for runs to Wal-Mart®.

TRIPS

Okay, it wasn’t that bad.  They didn’t even ask me for gas money.  Hey, have you guys seen my credit card?

My job?  It’s probably not directly required for the United States to keep going on a daily basis, so I could see myself being restricted to working from home unless I absolutely had to be somewhere to defuse a bomb or perform a circumcision an alien.  As it is, if I have symptoms of Corona, I can’t come back to work unless I’ve been cleared via a doctor’s note.  Assuming I can find one of the six doctors in the county, but, hey, I can sign a signature that might look like a doctor?  It looks just like an Ebola© virus, right?

I’ve really enjoyed the time at home.  It’s surreal, since as I listen to the Internet radio, I can hear everything crumbling as the news gets weirder by the day.  I dumped my 401k (the part that was in stocks) into the money market fund this morning on Sunday.  That means they’re supposed to dispose of it tomorrow.  But as the market is lock-limit down already, what does that even mean?  Can my money even find an exit point?

I’m betting the Fed dumps a trillion dollars, or maybe even two trillion into the market.

Tomorrow.

It’s that bad.  I hope I’m wrong, but I think it’s going to be October in 1929 bad.

COLLAPSE

Maybe this will work.  Seems stable, right?

It’s obvious that the world around us has already changed.  As we drove to Wal-Mart© on Friday for a scouting expedition, I looked at a parade of businesses that would soon be closed as I drove by them one by one on the street.

  • Move theater? Who’s going to go, especially since the movies are crap?
  • Diner frequented mainly by old people?   Old couples are going to be self-quarantined watching the Price is Right® until they welcome COVID-19 to escape each other.
  • Car dealerships?   I’d like to buy that new Jeep® Coronaâ„¢ Wagon.
  • Scented candle places? Okay, I’m not sure how they stay in business anyway in 2020, unless they launder meth money.
  • Insurance companies?
  • Laundromats?
  • Thrift shops?
  • The VFW?
  • Churches?
  • Bars?
  • Liquor stores?   Let’s not get crazy here.

People don’t really need those things.  Except for liquor stores.  From start to finish, what do people need in a modern society?  I left off Law Enforcement because they keep people I don’t like away from me.  Yeah, some of them are tools, but for the most part we really do want them around for a modern society.  Or, if we don’t have Law Enforcement, a lot more ammo.

HILLARY

But the FBI seems reluctant to stop them.  Even for speeding. 

And need is not for the basics of life, it is for the basics of life for a modern society.

  • Water
  • Transport
  • Grocery Stores
  • Electricity
  • Their Bank
  • Pharmacies
  • Internet
  • Gasoline/Fuels
  • Natural Gas

But each of these requires people going to work to make things happen.  The people who run the water system have to purify the water.  The farmers have to farm, ranchers have to ranch, and dairy owners have to, um, dairy?  The systems that provide water, milk, eggs, meat and corn are fundamental.  They keep us in Doritos® and salsa and Monterrey Jack™ cheese.

What will keep the system going?  The city water department needs chemicals, so we need a chemical plant to make chlorine.  But will we open the potato chip factory, or expect people can figure out how to cook potatoes?  Will we open the frozen food factory, or assume people can make their own pizza?  We move from a market economy to one where “shortages” are created based upon allocations – what’s the best way to minimize the number of people that congregate while minimizing the spread of CoronaChan?

I don’t know.   But I do know that some foods will be considered so frivolous or interpersonal contact intensive that good sense won’t let them be made.  Eating at a restaurant?  That involves additional people, from cooks to servers that are potential additional viral vectors.

BEAN

And as far as the tip, wash your hands.

What else don’t we need?  That’s a tough question.  Do we need the latest spring fashions shipped in from China?  Do we need the latest iPhone®?  Do we need Stephen Colbert?  Definitely not.  Heck, I’m not sure we need most of those things on any given day at all, let alone during a catastrophe.

And that’s just consumer products and a lame late night host.  How much gasoline do we need if we’re not travelling to and from work?  Not very much.  Lots of diesel is needed to move products in semi-trucks and on trains.  In the United States, about 9 million barrels (42 gallons per barrel) are used each day as motor fuel.  After Corona?

Three quarters of that?  Half?

This weekend I would have probably used 30 gallons.  Instead?  None.  Multiply that by millions of people, and gasoline demand is sunk.  Get ready for the lowest gasoline prices you’ll ever see in your life.  And, since we’ll not be transporting a lot of “stuff”?  The lowest diesel prices, too, and unlike the hoarded toilet paper, they’ll hit bottom.

ESSENT

Maybe there will be new markets???

I look at this from a standpoint that I’ve got some food in my house that I’ve bought for times just such as this.  I don’t owe much to anyone.  As I’ve indicated before, if you have money (and if money is still good, which may not be a given) you’re in for the buying opportunity of a lifetime.  Want an oil well?  You’ll never have a better chance at getting a good one, if you have money.  Especially the baby oil wells.  Contrary to popular opinion baby oil isn’t made from babies, but from toddlers.

But it’s the people who don’t have money that I’m concerned about.  The theater owner can’t keep the theater going if there are no butts in seats.  The diner waitress can’t make the payments on their car if they can’t bring plates filled with eggs and bacon with a side of biscuits and gravy to Grandpa Verne.  She depends on the tips that pay the bank for that car, since Virgil can’t hold a job now that he’s in the county lockup for fighting Clem again.

Most people depend on this week’s income to pay this month’s bills.  I’ve been there.  I lived several years of my life one month and one lost job away from bankruptcy.  Thankfully, now I can live without a month of income.  Most people can’t.

How does that end up?  It’s simple enough to say, “Well, let the banks take a hit on a month of payments.  They’re greedy and don’t need that money.”

But . . . it’s my money you’re talking about.  My money is in the bank.  How does Hells Wargo® pay me back if my money isn’t collected from the waitress and the theater owner?  For every transaction, there’s another party.  And if you have more money than zero, you’re impacted.  That money of yours that your bank has?  You loaned it to them.  And if the loans that they made don’t pay back?  What happens then?

Another system failure.  I’m expecting that the Federal government will just pony up several trillion to make it all go away.  They have a printing press, ink, and paper.  Why not?

INFLATE

It worked out okay for Zimbabwe and Venezuela, right?

From the best available information I’ve seen slowing down the WuFlu® isn’t enough.  It has to be stopped.  COVID-19® isn’t the flu.  All available data indicates that it is far more deadly, and far more contagious.

At the high end of mortality, it would kill up to 7,500,000 Americans, assuming half of the people in the US get it.  What else is a factor?  How quickly we get it.  If you want to live, having a ventilator will be an issue for some percentage, say, 5% of people who get it.  No ventilator for that 5%?  They die.  Mortality rate skyrockets without care – it’s the difference between as low as 0.5% (as observed in South Korea) to as high as 5% in overwhelmed countries.

My trigger for “not the flu” is 30,000.  That seems like a big number, but when you divide it by the number of people in America, it’s really not.  The flu (as near as we can see today) is a LOT less fatal.  And, unless I missed a day in kindergarten, 30,000 is a lot less than 7,500,000.

heaven

Okay, not me.  I have to write.  And I have HBO®.

But until we see how it pans out, I guess I get the big prize:  spending time with Wilders.  And I’ll enjoy spending time with each of them.

Except the cat.

Buy Gold? Is There a Downside?

“Calm down, Doctor.  Now’s not the time for fear.  That comes later.” – The Dark Knight Rises

gold

When I retire, I’ve discussed with The Mrs. that I just might become a gold prospector.  She doesn’t think that will pan out.

What’s happening right now in the financial markets is panic.  Panic comes from uncertainty.  This sort of thing was seen back all the way to the Japanese financial crisis starting in the late 1980’s.  Their banking industry was a mess.  Origami Bank folded; First Sumo Bank went belly up.  Even Bonsai Bank had to cut some of its branches.

We’re in a different place in the United States in 2020.  If I’m right, the world markets are just beginning their trip down.  I’m not sure that anything saves them at this point except for raw panic causing markets to plunge enough that Wall Street hedge fund managers have to consider the idea of flying commercial.

Different sectors will be impacted differently by the Coronavirus.  Bonus points if you understand that insurance companies make money by investing in stocks and such, and the insurance is just a way to get your money to invest to make profit, until you have a claim.  What do you think will happen when insurance companies start taking losses?  Extra credit:  what do you think health insurance companies will do when faced with huge numbers of patients that weren’t in their projections when they set their rates? There will be several pop quizzes as events unfold.  Eventually, though, the class is pass/fail.

CORONA

I’d like to self-quarantine for, oh, 20 years or so?

We’re experiencing the economic dislocation brought on by the Coronavirus, it seems like a good time to talk about some basic principles.  As I’ve noted in previous posts, my expectation is that if we see a panic, that’s the time to buy assets.  Crude oil dropped to $30, and if that price stays for six months, oil rig hands will be begging to offload their Ford Shelby GT350® at bargain prices.  If it stays that low for a year?  Texas oil execs will be offering to sell you their $281,000 Lambo Hürącán Pérförmånté™ for a handful of magic beans.

Which brings us to gold.

I regularly correspond with several folks who are commenters here or fellow bloggers.  Feel free to drop me a line:  movingnorth@gmail.com.  While I look forward to being so big that I say, “I don’t respond to every e-mail but I read them all” and then whipping an unpaid intern while yelling “be funnier!” while I lay in a hammock in the shade not reading your email on the marble patio complaining that the pool’s too hot, well, that hasn’t happened yet.

But a man can dream.

time

The best thing about the future?  No more Bon Jovi.

Anyway, folks that write get responses, and some of them lead to lengthy conversations.  One of people is Frequent Commenter Ricky.  Ricky sent me a piece he was working on, and I thought it was brilliant.  With his permission, I’m using it as a jumping off point to make a few points about our current economy.  To the extent it’s not as good as his original, well, that’s on me.  I’ll give the intern “motivation” to be better with a few nights in The Box if you guys don’t like it.

Ricky used a metaphor of Back to the Future to explain how currency has moved relative to gold, but I’m going to mangle it right from the start, which is on me, not Ricky.  Let’s say that you were going to use the DeLorean® from Back to the Future to go back to the year 2000.  That’s a nice, round number.  Why 2000?  Well, you only wear underwear from Montgomery Wards®, and they went out of business in 2000.  So, if your tighty-whities are looking more like exclusive Swiss underwear since they are holier than St. Peter’s Basilica, it’s time for a new pair, and you should probably stock up.

So, off to Wards™, and let’s say you took $300 with you.  I mean, it’s not like there’s a Wards® in every timeline, right?

When you get to the mall, you find that there’s a nice coin shop right next to Wards©.  You stop in.  You see that you can buy, for $300, an ounce of gold.

wards

I hear these were featured in the 1983 Victor’s Secret® catalog, back when men used to just walk around the house proudly in their Wards™ underwear.

What?  Why would you do that, man!  You were after the gold standard of underwear, why settle for gold?

Because, with that same $300, you could buy an ounce of gold that in March of 2020 is worth $1675.  You could buy a LOT of underwear in 2020.  So, given the choice, what would you send back from the past?  An ounce of gold, or $300 in cash, or $300 in Montgomery Ward© underwear?

Of course, the underwear.  But if you’re like me, the number two choice would be the ounce of gold from the year 2000.

Ricky then asks the question:

If you could use that time machine to send yourself a gift in 2030, what would it be?

  • $1 million in cash?
  • Or $1 million in 2020 gold?
  • Or $1 million in underwear. Ricky is sane, he didn’t ask this question.

I can certainly come across a time when, if I bought gold, it would have been a bad investment.  On an inflation-adjusted basis, had I bought gold in 1980, I’d be at about a breakeven today – and a breakeven, even including inflation, isn’t a great investment.  But at least money wasn’t lost.  But that doesn’t mean that gold can’t be a losing investment:  had I sold that 1980 ounce in 2000, I would have lost about $1500 in today’s dollars.

Ouch.

80s

If these two married, it would be a constant fight over the hair products.

But why did gold peak in 1980?

The United States was a mess.  The market was a mess.  The Soviets looked unstoppable, as did inflation.  Air Supply was on the radio, until it was declared a terrorist organization in one of the best moves the Reagan administration ever made.  Gold looked like a good investment while the world looked like it was falling apart.

Would I buy gold today at these prices of $1600+ an ounce?  Probably not.  Would I buy gold in six months after the market had crashed and gold was around $1200?  Probably then.  When (if) gold hits $1000?  Certainly.  And platinum?  Hmmm.  That looks interesting.

The long-term trend is clear:  countries are attempting to devalue their currencies to make them more competitive, and this will increase as economic tensions increase.  The Fed will actively seek to lower the value of the dollar.  What does that imply?  That the dollar will continue to inflate away until it becomes worth much less.

japan

Ah, the good old days, when Japan was going to take over the world . . . . 

But an ounce of gold will still be an ounce of gold, even if we run into problems like Japan had, where Samurai Savings and Loan faced sharp cutbacks, and investigators found that Bank of Sushi was up to something fishy, and in the end customers got a raw deal.

Warning:  I’m an internet humorist, not an investment adviser.  Most mornings I’m wrong six times before I’ve even had my first cup of coffee.  I don’t plan to change any investment position in any listed commodity in the next three days, and haven’t made any changes in the last three days, mainly because I’m lazy. 

Uncertainty, Retirement, and Immortal Lawyers

“This is your life, and it’s ending one minute at a time.” – Fight Club

juicebox

The 13th Rule of Fight Club:  If your mom is going to drive you home after Fight Club, make sure she signs you out first.

With everything in the news right now, it’s probably a good time to talk about money and life.  There are significant uncertainties right now, and here are a few examples in no particular order:

  • Corona Virus – A big deal? It might be.  I just saw that Corona® beer had changed their name to Bubonic Plague™.
  • Nuclear Iran And Nuclear North Korea – The plus side of nuclear war is no more pop-up ads.
  • Impending Market Meltdowns – Escalators were down, while Pencils lost a few points. Paper was stationary and Diapers remained unchanged, while Toilet Paper reached a new bottom.
  • A Left Wing That Has Bad Intentions When It Gains Power – The upside is that when a Leftist walks into a bar after the Revolution, he’ll order shots all around.
  • Jack’s Raging Bile Duct – Wait, hold up?

Okay, it’s not really a bile duct.  And the guy’s name wasn’t Jack.

I was reading about a guy who just retired at about age 60.  He had saved and invested his whole life, making sure that he would have enough money to last until he was 90.  Since he had been a high-powered Wall Street guy, he did really well.  He had saved millions, so he intended to live a pretty nice retirement with lots of travel around the world.  Oh, he wanted to live in a pretty expensive town.  And, even though money isn’t everything, it kept him in touch with his children.

Then?

mario

Mario had to retire from plumbing because the Yelp® reviews all mentioned him raiding the fridge for mushrooms and stomping on any pet turtles he saw.

He was diagnosed with cancer – but a type that’s incurable.  And it’s a fairly tough type:  it’s got a 50% survival rate to make it for 5 years.  Amazingly, he was writing about what people in their fifties might do in the current investment climate.  He wasn’t writing about the fact that the remainder of his life was maybe reduced by 83% from his plans.

Me?  If I were him, I’d be spending at least some of the money that I’d saved to last me for twenty-five years of life until 90 on a very, very nice bottle of scotch.  And perhaps a cigar made from angel wings.  For dinner? Nothing special.  Maybe some surf and turf:  yeti with Loch Ness monster filets grilled over lava pulled from the center of the Earth.  I’d make sure that I used every second that I had left to me.

hannibal

No clowns though.  They taste funny.

But what if our lives were infinite, would that change anything?

I was driving down the street with The Boy and Pugsley several years ago.  We were driving home from a camping trip, and were going through a small town on a sleepy Sunday morning.  It was early enough that people hadn’t even gotten up for church yet.  As we drove I saw a sign that said, “Jim McGill, Insurance and Real Estate” and decided to make a joke, because we’re a fun family.

I pulled out my best booming operatic voice, so deep and resonant it makes Brian Blessed sound like he hasn’t yet hit puberty:

blessed

Don’t hate him because he’s beardiful.

“Jim McGill is here to help you with all of your insurance and real estate needs, as he has for a thousand years here in Cedar Ridge.

“No one has more experience than McGill, who has studied the intricacies of umbrella insurance policies for decades of the countless years of his nigh-immortal life.  McGill can also use his communion with the deep and ancient dark spirits of the Earth to find the very best property for you.  Since the dawn of single-celled life on this puny planet, there is no insurance agent or realtor who will ever get you a better deal.”

The Boy piped in: “Brought to you by the power of the Necronomicon™.”

See, I told you we’re a fun family.

immortal

Oh, I thought you said immoral.  My bad.

I was making a joke, but stumbled upon a truth.  The joke was supposed to funny because here was an immortal being, selling insurance in a small town in the Midwest.  But as I drove on, I realized a different truth:  if an immortal can’t afford to spend his life doing trivial things, why do we?

Not that there’s a problem selling insurance, or a problem with selling real estate.  I have a friend who dreams about selling real estate.  She’s going to get her license.  I think she’ll have a lot of fun with it – she likes working with people, and it’s something that’s important to her – finding the right person to sell the right house to will probably be fun and she probably won’t have to summon demons and other Satanic spirits to find a nice three bedroom on a cul-de-sac for a married couple with a baby on the way.  Probably.

For me, personally, selling real estate would be one of the punishments that would be reserved for a deep level of Hell:  lower than people who mow lawns at 8am on Saturday morning but not quite as low as Congressmen.  But I think it will really make my friend happy.

jake

He has a very special set of skills . . . .

And that’s a good reason to be a realtor – being happy by helping other people.  It’s also a good reason to sell insurance.  But never forget, doing a job is just that, doing a job.

We may not like everything we have to do at work, and we’re certainly not special snowflakes who deserve the job of our dreams just because we got a Master of Fine Arts in Paranormal Entity Identification and Eradication.  We get paid to go to work because it’s not a hobby.  Lots of times we’ll do things we’d only do if you were getting paid, like when I polished Grandma’s corns for a shiny new nickel.

It may be that the gentleman with cancer is writing for a reason – because that’s how he’s wired.  I get it – I’m writing this sentence at 4am.  But he has a choice.

There comes a time to realize that, if the basics are covered, you really do have a choice.  Money only buys a certain amount of happiness.  A new car isn’t necessary if you have one that works – no matter how old it is.  You are trading your life for money, and even if you die with a lot of money, you’re still dead.

Make sure the trade is worth it, because you’re literally trading your life for it.

Meanwhile . . . somebody go pluck an angel’s wings.

The Coming Recession, Explained Using Six and a Half Bikinis.

“Well, just find yourself a man with a spotless genetic makeup and a really high tolerance for being second guessed and start pumping out the little uber Scullys.” – The X-Files

FIRST

After the next recession, most people will be on their feet in no time, after the bank repossesses the cars.

This wasn’t my originally planned topic. My originally planned topic was a discussion of PEZ® seed pricing mechanisms in 1850’s Great Britain, complete with discussion on how many orphans could be traded per bushel of finished PEZ™. Alas, I’ll have to return to that exciting topic some other time, since the world financial system seems to be imploding.

Okay, imploding isn’t the right word. And it really may not be as bad as it looks.

But today? It looks bad. Maybe not implosion bad, but I heard that some bankers had been discouraged. I guess they lost interest.

How bad could it be?

If it just stays at a financial level, the worst I would expect would be a W.I.L.D.E.R.™ Level 4 (Great Depression) in the United States, though it might hit a W.I.L.D.E.R.™ Level 5 (National Collapse) in China. You can read all about the W.I.L.D.E.R.™ Levels here (The Lighter Side of the Apocalypse) in an article praised by critics as “one of the best things ever written by a man with such questionable levels of personal hygiene, fashion sense, and grooming.”

In order to understand and guess at the future, let’s take a look at the past. The most recent past economic downturn was the Great Recession. What happened then?

sp500

As you can see from this chart, the S&P 500 experienced a big downturn right around the calf and knee area. Feel free to enlarge – just explain that the study of economics is really interesting.

Several things: first, lowered interest rates and the idea that anyone could and should get a mortgage led to a massive mis-investment in housing. Part of the cause were things called stealing and looting mortgage-backed securities and collateralized debt obligations. I won’t go into technical details, but it was a way that Harvard® educated MBAs convinced themselves that a strawberry picker making $14,000 a year could afford a $720,000 mortgage (LINK). And, yes, this really happened.

Second, the world was awash in money after the Fed flooded the fields with money after the Dotcom Bubble. Where did that money go? Everywhere. Houses. And . . . oil. Oil prices skyrocketed during that time. Companies rented oil tankers and kept them full, sitting at sea, continually selling futures on the oil in the tanker. They made fortunes by pretending to sell oil. I know that sounds like I’m making an obscure joke, but no, that really happened.

The price of housing hit the financial system like a mousetrap on a cat’s tail. Or a cat with a mousetrap on its tail? Or . . . nevermind. People kept borrowing more on their houses as their houses appreciated. They spent that money on pickups and boats and child care and food and vacations. The people weren’t evil, but they thought that the value of their house could never go down, so the risk was small. Rational people, like bankers, were telling them this. Heck, some even invested in more houses so they could double or triple their magic ATM.

30year

This view of 30 year mortgage rates explains that there have been mortgage rates. Look closely, and you can see them.

Finally, one day the music stopped on the housing prices. Was there a cause in particular? Not really. But the market lost the one thing required to keep it afloat – belief. Every market rises as the beliefs of the participants overcomes the worry of loss. Wow, that sounded poetic and cool. But it’s also true.

In many ways, the stock market is a barometer not only of the actual underlying economic performance, but how people feel about the future. It keeps going up as long as people keep being optimistic and has proven to be a much better barometer of economic activity than the amount of leg hair I grow before each winter and then form into a nice, soft nest to sleep in when it gets cold.

crude

Crude oil prices had Exxon® jumping for joy in 2008!

One thing that brought the mood of people down in 2008 was the price of oil. In the midst of the recession that came from the housing bubble, the secondary oil bubble inflated. Prices increased more than double in a single year – from $70 per barrel to over $140 per barrel at the peak. Oil acts as a tax on everything to do with physical goods. To move a Tom Brady’s booty dinghy from where it’s made in by incontinent baboons in Romania to his rump mechanic in Massachusetts requires energy – energy from oil.

So that’s the “why” for 2008. How does that relate to today?

The Great Recession was brought about by an actual recession – things slowed down in the country because there were only so many houses that could be made. That’s different than today’s trouble. The stock market is tanking not because of a recession, but because the worry about Corona-Chan locking up the flow of physical goods from China. I wrote about that last week (Corona Virus, with a Slice of Recession?).

What have we seen so far?

stand

This was a pretty good miniseries documentary.

The stock market has decreased in value. In general, a stock price has two components – the first is the value of the factories and land and machinery that the company owns. This is boring, it’s like saying a Stradivarius violin worth less than a piece of firewood because the firewood weighs more – in the hands of a genius, the violin can make masterful music, though in the hands of my kids it just made me contemplate the positives of being deaf.

The second and often biggest component of value to a stock is the assumed growth of that stock. This is why older, boring stocks like Ford® are priced closer to the value of the assets they own – no one thinks that Ford™ will end up tripling in size in the next three years. There’s an ex-wife “tripling size in three years” joke, but I’m bigger than that.

But people do think that Tesla© can triple in size in three years. Therefore, people value Tesla™ more than Ford® even though it sells about six million cars a year and Tesla© sold only 370,000 cars in the last year. You’d think that Ford™ would be worth about 10 times what Tesla® is. But in reality, Ford© is valued at $28 billion, while Tesla™ is valued at $147 billion. Is Tesla™ really worth that much? That’s up to Tesla®. But give me $147 billion and I bet I could sell 380,000 cars a year, too. And they would be pretty neat ones and they wouldn’t look like they were designed by a third grader with limited imagination.

cyber

Elon took a lot of heat for the Cyber Truck design, primarily because it looks like something that no human would buy. Thankfully, Elon’s next advance will be robotic customers.

Tesla© has convinced people it is almost six times more valuable than Ford©. That’s what I call optimism. Or a con, but at least a con for a good cause (Elon Musk: The Man Who Sold Mars).

Since the stock market is based on optimism, this latest decline in February of 2020 shows that investors are shaken. The world hasn’t (yet) changed but the implications are now becoming concerning enough to cause the market to drop. Is this going to be a big drop, like in 2008, or another head fake?

I can’t be sure. But I do know that this seems like a good time to trot out what I learned the last time the economy went south.

Lesson One:

Market bubbles aren’t rational. Companies rise faster and farther in a bubble without regard to, well, anything. Uber®, which is basically “Taxi App” is worth $61 billion dollars, which is more than Elon Musk spends in a typical year on hair plugs. Uber© lost $8.5 billion dollars last year while generating tons of bad publicity because its founder is a douche and it treats drivers worse than Mongolian bull milkers. There are tons of companies just like Uber™, and all with an idea that they’ll “disrupt” segments of society. Essentially, disrupting involves an app, a smart phone, and booting someone out of a job. Some are, I assume, legitimate ideas that will be profitable in the future. Others are like GoPro™, which is (in Karl Denninger’s words) just “camera on a stick.”

I heard someone call this the Disruption Bubble, and it’s as good a name as any to describe the distortions and irrational money flows as everyone tries to find the next Amazon™, Facebook© or Google®. In a real panic, stupidly valued things like Uber® deflate, and deflate quickly. But companies that are really worth something will fall in value, too.

The best time to buy a company is when it is cheap. It will never be cheaper than when people are panicking like Godzilla® is hungry for Japanese take-out and orders Tokyo. Finding quality companies that are selling at a 90% discount is possible during a real panic.

Lesson Two:

When the market falls, investors have less money. But they still have bills. So what will they do? If this is like 2008, they’ll sell other things. What kinds of things? Cool cars will be cheap, but not everyone is in the market for a Lambo. But gold dropped, too. During 2008, gold went from $1000 per ounce to as low as $720.

gold

You can see the price of gold really drop around the shoulder area, and take off afterwards.

I can’t guarantee that gold will drop, but I’d be watching if you want to buy some – there might be a great opportunity to buy gold at a lower price than the current $1655 per ounce.

Lesson Three:

In past recessions, the interest rate that is charged for the 10 Year T-Bill generally dropped. Why? People wanted to get to a safer asset. That asset has generally been the dollar. The most likely candidates to replace the dollar were the Chinese whatever-they-call-it and the Euro. As China is now in the grip of Corona, it’s not a flight to safety. Every European country with a beach is thinking about dumping the Euro and exiting the EU so they can print wrapping paper and call it money, the Euro isn’t a great one, either. The Swiss Franc is kinda awesome, but they only make so many of those.

10year

Look closely and you can see that the Fed doesn’t have a lot of room to lower rates.

Nope. It’s the dollar. In times of economic uncertainty, the dollar will increase in value relative to other currencies. Does it make sense? Maybe? It seems that the world notices the Navy, Army, Marines, and all of those nuclear weapons and those make the banks in New York seem a bit more secure.

Expect that if this goes like 2008 for a while you can buy foreign stuff like a king. For grins I track the New Zealand dollar – it’s right now at its lowest value in five years. I bet it goes even lower soon, so sheep should be quite a bargain. Remember New Zealand’s national motto: “We’re not Australia.”

Don’t expect to find a great place to get a good yield anytime soon if Uncle Sam is paying less than a 1%, you’re not going to get even that good of a deal. Negative interest rates have already hit Europe, and there’s no reason they won’t hit the rest of the world. Investing in cash in mason jars buried in the backyard might be a good idea. Send me your map, and I’ll keep it safe.

Lesson Four:

No financial collapse looks the same. Each one of them is unique, and this one has been a long time in coming so, if it’s hitting right now, it could be really bad. Each of the above lessons might be wrong, so look for opportunities where you see them, not where an Internet humorist thinks they might be, no matter how charming and freshly showered he might be. Oh, if you have cash, it does no good if it’s in a bank that collapses. Just sayin’.

A friend of mine made the joke in 2008 that “when the tide goes out, you see who isn’t wearing a swimsuit.” There are vulnerabilities that very few people know about right now that will (in hindsight) become obvious in the days or years ahead. Just nod sagely and pretend like you expected it would happen all along. That’s what I’ll be doing.

Wildcards:

Desperate people sometimes do desperate things. As the Soviet Union collapsed, there was some small risk that an official decided he was better dead than not red, and pushed the button. That didn’t happen – in large part because by the time the Soviet Union collapsed, nobody believed in it anymore: it was as tired as Joe Biden’s campaign.

mankini

Okay, I’m sorry.

sorry

If China were to teeter near collapse, would they decide to launch a regional war to keep the people together so the nation didn’t collapse or fall into civil war? Hopefully not, but the chances of it happening are greater than zero. As you prepare for a world where there is a financial dislocation, don’t forget to prepare for a cultural dislocation as well. Buying food now when it’s cheap and easy to get doesn’t make you a hoarder – it makes you one less person who is drawing on system resources if things go bad. Preparing for bad times when times are good is a profoundly moral thing to do. But don’t forget to complain like everyone else.

Nobody likes a smug prepper.

Disclaimer:

Keep in mind, this is NOT INVESTMENT ADVICE. I make fun of Johnny Depp and PEZ® and post pictures of girls in bikinis over economic graphs and am even writing this sober. Consult someone who has those credentials and maybe drinks martinis at lunch since that seems pretty swanky. Also, I don’t own any direct positions in any of the stocks discussed, and don’t plan on taking any positions in them (maybe ever), though I do own a Ford™ truck. I’m betting that maybe some of my 401k money is investing in, well, something and might include these stocks, but I don’t know. Maybe it’s just invested in magic beans?

Corona Virus, with a Slice of Recession?

“Global? Oh, great. I’ve doomed humanity.” – Ash Versus Evil Dead

china

I hear it can only be caught from crowds.  Introverts everywhere smiled as they stared at your shoes.

The other day I was emailing back and forth with James M. Dakin, proprietor of the Bison Prepper (LINK).  I mentioned that I’d bring up an old essay we’d both read back when Jim and I went to different high schools together.  That essay was I, Pencil.

I, Pencil was written by Leonard Read and published in 1958.  The essay is available here (LINK).  I, Pencil is a fairly short essay with a fairly long introduction.  Spoiler alert:  Leonard felt that no single person on planet Earth can make something as simple as a boring old yellow No. 2 pencil.  And, he’s right.  A pencil, even a 1958 version, uses components that are sourced all over the globe.  Mr. Read makes a great point – the free market takes components from all around the world to make even the simplest and most mundane object.

pencil

I cut myself with a pencil – I drew blood.

Likewise, the knowledge required to make that pencil is distributed across the globe.  No single person can make the pigments for the paint by milking the Tanganyikan paint turtles, and pick the aluminum from the Australian aluminum trees to make ferrule that holds the eraser on.  And that eraser?  It’s made of rubber from the Congo.  I’d make fun of the Congo, but, really.  It’s the Congo and they have enough problems (LINK to a really fascinating story of crossing the Congo).  Plus the wood is made from sustainably farmed free-range vegan trees in California.  Don’t forget the graphite – it’s from the Sri Lankan graphite glaciers.

The humble pencil is a creature of Globalization.

How much Globalization?  Sadly, it looks like Dixon Ticonderoga used to make most of its pencils in the United States, but now apparently makes only enough pencils here to claim that it actually makes pencils in the United States (LINK).  There were a few pencil jokes I was going to make here, but they’re pointless.

While we talk about globalization as being a new phenomenon, Globalization has been a thing since the days of the American Revolution – the tea that Sam Adams threw in the harbor during the Boston Tea Party came from halfway across the planet.  Even back to the days of Rome, there is evidence of far flung trade – shipwrecks found in the Mediterranean are often found filled with wine or olive oil being shipped across the Empire.  Sadly, the Romans abandoned those cargos after they broke the V second rule of being on the bottom of the ocean.   

ROME

X/X

Globalization provides a huge advantage.  Some things aren’t available around the world – resources come from other places for a reason – corn is imported to the South Pole because corn grows rather poorly in ice.  Shockingly, wood comes from places with trees, and having Saudi Arabia export timber is probably not a great business strategy.  But having Saudi Arabia export oil is.  And having the United States export food also makes sense – we grow more than we can eat.

When done right, Globalization provides the benefits of bringing together resources and knowledge from far-flung corners of the world to meet the needs of people that most of them will never meet.  But Globalization doesn’t consist only of benefits.  With Globalization, Ticonderoga® can decide to make pencils in China.  Hundreds of jobs are then lost in the United States.  A typical journalist would indicate that the people who lost pencil-making jobs should, “learn to code.”  When those same journalists lost their jobs due to Globalization, they cried on Twitter® when told that perhaps it was their turn to #learntocode.  The journalists even got people banned for suggesting they take their own advice (LINK).  Still missing:  journalists who became coders.  Also missing:  journalists with a sense of humor and irony.

Although the United States spends hundreds of millions of dollars a year on yellow No. 2 pencils made in China, should pencils stop showing up from China, there won’t be chaos and anarchy in the streets except around SAT® test taking time.  I mean, we all remember the No. 2 pencil riots of 1989, right?

But that is just a humble pencil.  What other things are imported from China (LINK – warning – quite an addictive set of graphs)?

crust2

You can tell that toothpaste was invented in New York City.  Otherwise they would have called it teethpaste.

A lot of the things the United States imports from China are trivial, or convenience items that we could live without:

  • Lots of toys are manufactured in China, including trikes and video game consoles, virtually all Christmas decorations, and (the census has a category for this) practical jokes. Yes, the Corona Virus could directly cause a shortage of fake dog poo.
  • Strollers and toasters are almost all made in China. Why did I combine these items?  No reason.  None at all.
  • Millions of wet heads could result.
  • Artificial flowers. Now here the Chinese are particularly cunning – they’ve cornered the production of not only plastic artificial flowers, but also artificial flowers not made from plastic.  This is a true strategic threat.
  • Nearly every thermos. The United States could bankrupt itself in additional ice costs.  Also, cold soup?
  • 100% of lawn edgers are made in China. 100% of my lawn edger hasn’t left the garage in five years.

Okay.  There is a lot of stuff that comes from China we live without.  Unless you work at Wal-Mart®.  Without those imports to be sold, the impact should be minimal.  Very few people have ever had a life or death situation that could be solved by fake dog poo.  I’m pretty sure this is the first time that last sentence was ever written in the English language.

polystat

Had much super fun time inserting receptacle into hand.

But . . .

  • Nearly every “portable digital automatic data processing machine not weighing more than 10 kilograms” comes from China – all $37 billion worth.
  • 65% of cell phones – $72 billion.
  • 80% of “other radio telephones” $44 billion.
  • And, oops, it seems that 80% of pharmaceuticals and 97% of antibiotics in the United States are imported from China ().

Amazingly, everything that China exports to the United States only amounts to (about) 3% or of the United States economy.  Stopping Chinese imports to the United States would have an immediate impact because of lowered sales regardless of what we import.  But as the bullet points above show, slowdown of imports from China could also have an immediate effect because of what we import.

The third impact would come from what we make out of the things that China sends us.  Things like . . . cars and pickups.  Where does the housing for the alternator in the Ford® pickup come from?  Touch screens?  How many are made in China?  How many days until Chevy™ can’t build a car because it’s missing a switch that runs an air conditioner?  Last time I checked, most cars need nearly 100% of the parts to be called a car.  At least until I work on the engine – then I always seem to have a few bolts left over.

headlight

Not one of my repairs.  But I have used zip ties as a structural material.

The third impact of reducing manufacturing in the United States would be large.  I don’t have precise figures but I can guess – it might be as much as a 10% drop in the economy in the year it happened.  For reference, the Great Recession of 2008 had a 4% drop in economic activity.

I’m probably not the guy to talk about how the Wuhan Flu is going to spread.  I’m certainly not the guy to tell you how to treat it if you get it.  But I do know that something like the shutting down of factories in China can spill over to the United States and cause recessions or worse, even if the Corona virus never became an epidemic here.

Stock up on pencils while you can . . . .

The Lighter Side of the Apocalypse

“It’s the Apocalypse all right.  I always thought I’d have a hand in it.” – Futurama

spider

I make apocalypse jokes like there’s no tomorrow.

Wednesday’s are normally a day to talk about wealth, and when you’re prepping, what is wealth?  Is it gold coins?  Is it ammunition?  Is it beer?  Is it a paid off house?  Is it a decade’s worth of PEZ®?

In many cases when I go to other websites that discuss either economic or social dislocation I see people arguing in the comments section about the way to prepare.  In some cases, these arguments have even occurred here at this humble bastion of Internet civility and decorum.  All of the people arguing are right.

No, that doesn’t mean that John Wilder is out there awarding participation trophies for comments, far from it.  The problem is one of definition.  As Tolstoy said in Anna Kareninananana, “All happy families are alike; each unhappy family is unhappy in its own way.”  Each of the stunningly attractive and freshly washed (and waxed!) geniuses that comments here has an IQ that would put Joe Biden to shame.  Yet they disagree because they’re talking about different things – each apocalypse is unique in its own way.

charlie

Protip:  if you’re a mortician, tie all of the corpses shoes together – that way if we do have a zombie apocalypse, it’ll be funny.

Therefore, I’ve decided it’s important to talk about the W.I.L.D.E.R. Scale.  It’s like the Richter Scale for earthquakes or the Fujita Scale for tornados or the Joe Biden Scale for Lying Dog Faced Pony Soldiers.  But this one is better, because I came up with it.

Most importantly, what does W.I.L.D.E.R. stand for?  It’s the:

Wilder Index of Life Disruption and Economic Ruination.

See?  W.I.L.D.E.R.  No, wait . . . W.I.L.D.E.R.™  There.  That looks better.

The scale is broken up into a ten point scale, as described below.  Why ten?  Besides being my mental age, it also describes the number of fingers that I had before using a table saw.  It’s also metric.  So, all of you people who live in countries that haven’t nuked Japan (excluding the Japanese) can have this one in metric.  But you have to keep the soccer.

NOTE:  This is not a comprehensive financial guide or preparedness guide.  Depending on the W.I.L.D.E.R.™  level you’re preparing for, this is only the barest bones of a start. 

W.I.L.D.E.R.™ Level 0:  All Quiet

Everything’s fine.  Life is good.  Life is projected to be good – you have a job, it’s fairly secure and has good benefits and it pays the bills, mostly.  Save money in your 401k, grill some burgers and watch the game.  Go back to sleep.

W.I.L.D.E.R.™ Level 1:  Local Slowdown

What is it?

A W.I.L.D.E.R.™ Level 1 is the lowest level of economic disruption – local job loss, minor and non-chronic civil .  It’s not great if you’re caught up in it, but it’s pretty mild.  There may be widespread local job loss – a factory was closed.  It’s not pleasant for those caught up in it, but the underlying economy outside of that local area is sound – you may have a longer commute, but you can get a job.

What to do?

Have savings.  Have minimal debt.  In many cases, you’ll be able to keep doing what you’ve been doing, but you might have a farther commute or reduced wages.  The nice thing about a Level 1 is that if you’re willing to move to a new city, chances are you’ll find something.

W.I.L.D.E.R.™ Level 2:  Regional Slowdown

What is it?

One thing that was more common in the past in the United States was a regional level of economic slowdown.  Entire areas would remain stagnant for periods at a time, sometimes years.  In the case of New Mexico, no one really knew it was a state anyway, so we’re not even sure if New Mexico has an economy.  As we have been in the “Boom Everywhere, All the Time” mode for the last 20 years (with the exception of that pesky Great Recession), the economy of the United States seems to be far less regional, but more centered in larger cities.

But regional economic slowdowns do occur – an example would be in the Oil Patch when the price of oil first goes up, and then collapses like my resistance to a steak on Friday night.  The good news is that when the oil price collapses, you can buy a small child in Oklahoma for the price of a cheeseburger.  Not a plain cheeseburger, but the fancy one with lettuce and tomato and onion.  Oklahomans have standards.

What to do?

Have savings.  Have minimal debt.  Have a realistic budget and know the difference between what’s really required and what’s nice-to-have.  Have a house that you can either sell or walk away from.  Be prepared to change careers – have an additional skill that people will pay you for if you have to change careers.  Be prepared to sell a kidney – grow an extra one or two if you can for a rainy day.

philoso

Philosoraptor.

W.I.L.D.E.R.™ Level 3:  National Recession

What is it?

Since World War II, most recessions have lasted, on average, a little less than a year.  Recessions mean that, broadly, the economy is shrinking.  Since the entire economic (and banking) system is based on continued expansion and growth, a recession typically kicks people out of work.  During a national recession it’s easier to drive drunk and text Shakespeare from memory while smoking weed than to get a raise.

Even though the economy “recovers” after a year or so, the failures and economic transitions that come from the recession linger in many lives for up to a decade – careers at failed businesses may not be viable anywhere.  If the entire factory is shipped to China, chances are slim that the Chinese will want to import people – it’s not like there are enough bats for everyone.

What to do?

If you are graduating from college, think twice.  People who graduate during a recession and take a job during the recession typically earn less for their entire careers.  Several of my friends went to graduate school instead of into the job market during a recession.  It worked out well for one guy – he became a dictator of a country in the Middle East.  He’s generous, too.  I heard that he last week at the bar he ordered shots for lots of his friends.

If you have a job – do what you can to keep it.  Pay down remaining debt, but understand what bankruptcy might mean if you don’t have six months (or more) of cash to cover expenses.  Stock weeks of spare food, if you can.  If you can’t, start making friends with neighborhood cats.

W.I.L.D.E.R.™ Level 4:  The Great Depression

What is it?

The Great Depression, and, to a lesser extent, the Great Recession of 2008-2009 and the Stagflation of the 1970’s fit here.  These are much greater economic hits than a recession.  They are nationwide, and may threaten the economic collapse.  Expect extreme measures to get the economy working again, many of which will actually be counterproductive, but it’s government, so you expect that.  Banks will fail.  Weird things will happen to the money supply.

What to do?

If you have spare cash, this is the time to pick up great bargains.  As the Great Recession hit, the price of gold dropped significantly.  People who had debt but too many toys had to sell them – it was a great time to buy boats and cars and motorcycles and mistresses and admission for your kid at Harvard®.  Several stocks were selling at ridiculously low prices.

Why was this?  Money had dried up, so there were bargains everywhere.  Of course, I didn’t have enough money then to buy anything.  Except a house.  Before the prices collapsed.  (Spoiler – I got out of that house okay.)

Again, having no debt and cash to cover expenses is key.  Having a spouse who doesn’t work (but could) is also key – in a pinch, they can work, too, or you can sell their kidneys for buckets of wheat.

Diversify your banks.  Diversify how you keep your money – is one currency enough?  Desperate people will be desperate.  Be able to protect yourself and your family.

home

Hey, don’t laugh – I can almost buy two packs of gum in 2024 with the money in that picture.

W.I.L.D.E.R.™ Level 5:  National Collapse

What is it?

Governing structures cease to function in a meaningful way.  This is also known as “Tuesday” in most African nations.  Weimar Germany, and the late Soviet Union are examples.  They didn’t collapse in the same way – Weimar Germany collapsed in an explosion of hyperinflation.  The Soviet Union collapse was the collapse of an entire economic system, and now nobody knew who got to take the cow to the dance on Saturday.

What to do?

When nations collapse, their currency collapses.  This always happens.  In surviving any of those collapses, a pocketful of gold was more helpful than a pocketful of paper.  If the nation collapses, it can be difficult to predict the system that will replace it, but they generally are totalitarian strongmen who take over in the chaos after collapse.  The Soviet Union was a happy departure – as rough as it was on the former Soviet citizens, it could have been far worse.  Chef Boyardee was originally chosen as Gorbachev’s replacement, but they didn’t like that he called his secret police the Gazpacho.

Six months of food isn’t extravagant in a situation like this.  Some means of protection are mandatory.  Realize that changes could happen in a second, so plan.  Have friends.

W.I.L.D.E.R.™ Level 6:  Civil War

What is it?

The American Civil War, the French Revolution, and the Balkans War are examples of civil wars.  Civil wars are probably more vicious than any other type of conflict.  When the Germans started fighting the French and English in World War I, they weren’t really into it – they even stopped the war for Christmas in 1914.  But when the French finally snapped before the French Revolution?  They were ready to throw down like a rabid epileptic cat in a strobe light store.

What to do?

Moveable assets like gold or foreign bank accounts, a second passport, and lots of lead are preferred.  Be in a place (if you can) surrounded by like-minded people.  It helps if you’ve been there for years before trouble breaks out – being an outsider during a civil war isn’t preferred.  Have food – a year?  Have weapons.  Have a supply of necessary pharmaceuticals if you can.  Be aware that your side might lose the war.  What would that mean?  Oh, and don’t forget to floss.

W.I.L.D.E.R.™ Level 7:  International Collapse

What is it?

World War I and World War II are modern examples of this, but earlier examples include the fall of the Roman Empire and the late Bronze Age Collapse (~1200 B.C.) (LINK).  These are collapses that take down multiple nations and re-write borders and history.  They are cataclysmic, and are often followed by the mass movements of people, either as invading conquerors, or fleeing refugees, or in the 2010’s, fleeing conquerors and invading refugees.

target

Some things never change.  Image:  Lommes [CC BY-SA 4.0)]

What to do?

Be away from where the war is happening.  That may be more difficult than it says on the label.  All of the suggestions for Level 6 responses still fit, especially flossing, but finding a place not torn by conflict is exceedingly difficult.  Events have the ability to move very, very, fast.  If you’re in continental Europe, learning German is probably a good idea.  A year of food will likely not be enough.  Lead is recommended.  Gold may or may not help at all.  If you think it won’t, I’ll watch it for you.

W.I.L.D.E.R.™ Level 8:  Regional Extinction

What is it?

Regional extinction last occurred when the population collapsed after the Europeans brought disease to the New World.  Smallpox, measles, and high cholesterol (eventually) killed an estimated 90% of the pre-Columbus population through either disease or carryover effects.  That amounted to, perhaps, 10% of the world population at the time.

What to do?

Don’t eat bats.  Don’t welcome Spaniards.

mayans

I fell in love with a calendar.  Together we had a lot of dates.

W.I.L.D.E.R.™ Level 9:  Continental or Multi-Continental Extinction

What is it?

This hasn’t happened in recorded history.  There are some scientists that theorize that the supervolcano Tomba that erupted 75,000 years ago nearly eliminated humanity.  How close?  Genetic evidence indicates that it might have been as low as 1,000 breeding pairs of humans.  However, some people think those scientists are bunch of cotton headed ninny mugginses, and say that people were just fine – the restriction in genetic variation shows up because some people were MUCH better at propagating their genes, if you know what I mean.  Also?  Asteroids aren’t your friend.

What to do? 

Be lucky.  Wear clean underwear.  You cannot save enough food for this contingency – it may last years and the task will be nothing less than rebuilding civilization.  Read Lucifer’s Hammer for a lighthearted look at life after a Level 9.

W.I.L.D.E.R.™ Level 10:  Planetary Extinction

What is it?

Game over, man.

What to do?

Save money in your 401k, grill some burgers and watch the game.  Go back to sleep.

 

And there’s the W.I.L.D.E.R.™ scale.  Drop me an email or leave a comment if I missed something.

Focus is a Key to Life and Look a Squirrel!

“Maybe we’re at war with Norway?” – The Thing

norway

The Norwegians have the best parties – Fjord Fiestas, you could call them.

You’ve been there.

There’s a state where you experience full awareness.  But it’s full awareness of a very specific kind.  There is no past.  There is no future.  There is only now – the immediate now.  You cease to be aware of anything but what you are doing.

You have become a verb.  You are lost in the moment.  You are the moment.

This state transcends time.  Minutes, hours can pass.  It seems like an instant.

This state has a name.  It’s not tequila.

It’s focus.  But tequila is a close second.

When I was in athletics in high school, coaches would tell me to “focus.”  That was it.  I think they told me that because they knew focus was important, and or maybe because that was what they were told when they were in high school.  But they could see the impact that focus had on an athlete in a game, or a wrestler in a match.  The difference between a focused player and one that isn’t focused is . . . sorry, what was I saying?

Anyway.

distracted

Well, the string certainly looks alive when it’s on a bikini.

What advice did we get with the command to focus?  Well, in my case, none.  I was expected to figure it out.  I drilled takedowns in wrestling hundreds of times.  Tackling drills for football?  Again, at least hundreds of repetitions.  Sprints?  I think I did thousands of those, or at least it felt like thousands after practice was over.

How much time did they my coaches spend on teaching us focus and mental preparation?

Umm, I just told you.  They told us to be focused.  That’s it.

And I’m not complaining, some of the coaches were outstanding by any definition, and in one case objectively the best coach in the history of the state where I grew up in his sport.  I don’t know, maybe they all thought that focus was second nature to some people.  And maybe it is.  But not to me.  I get distracted by something as small as a bikini.  Heck, if I had a dollar for every time I got distracted, I wish I had a beer.

Gradually, I figured it out, or at least figured it out as best as I could.  Fast forward to this weekend:  I caught myself telling Pugsley to focus before a wrestling match.  I had a moment of epiphany.  What does focus even mean to a kid whose entire life has been distorted by the distraction of technology?  How do you even describe it?  Maybe, perhaps, I could help him figure it out after his batteries died.

aztec

How many Aztecs does it take to change a lightbulb?  None.  The Aztec Empire dissolved hundreds of years before the lightbulb was invented.  For some reason my kids don’t like my lightbulb jokes.

It’s true that in our lives, physical preparation in athletics or training for work often takes precedence for the mental preparation for what we do.  The physical preparation is easy to see.  It’s easy to objectively measure.  How many pushups can you do in one minute?  At work, the training for the job can be measured in certificates and completed coursework and compiled grades.  And don’t ask candidates to prove how many pushups they can do in one minute no matter how amusing you think that might be.  Have them do something like wax your car instead.

But mental preparation is tougher.  You can’t directly see it.  But yet it’s crucial to performance in nearly everything we do.

In athletics, the mind must be ready for the task at hand.  If you’re wrestling, you’re going to war.  You’re preparing to try to spend the next six minutes making the other guy regret he ever stepped on the mat with you.  A bad place to be is to focus on what can go wrong before a match.  A better place is to focus on the moment – to understand that no matter what happens, there is a way.

If I focus on what happens if I lose, I will wrestle not to lose.  If I live life focused on what could go wrong, I will live life not to lose.  My entire life would be spent in damage control, defending against failures that may not even exist.

focus

Whoa!  This is most excellent and triumphant!

The solution is focus.  I wasn’t born with it.  But focus can be taught.  There’s even John Wilder’s Patented Focus List®, presented below with only limited commercial interruption thanks to a generous sponsorship by the MacArthur Foundation™ (hint, hint, I’m still waiting for my #GeniusGrant).

  • Know what you want. This is basic, but yet there are hundreds of people walking around who don’t know what they want out of life.  In sports, it’s easier – people want to win.  Some more than ever.  But we’ll talk more about that next Wednesday.
  • Believe that it’s possible. I had a boss that was exceptional at this.  He often had more belief in me than I had in myself.  But if you don’t believe that what you’re doing can be done, you’ll find ways to make sure that you’re right.  Plus believing it’s not possible is one way of making an excuse for failure before you start.  Heck, most things are impossible, right up until someone does them.  But enough about me losing my virginity.
  • Know every second counts. Clocks are unrelenting.  0:00 is coming.  Every second that passes without you taking action is a second that can never come back.
  • Give everything, right from the start. Closely tied to using every second, is using every bit of you for every second.  It’s your force multiplied by your time that is your momentum.

calc

See, it’s so simple a fifth grader could derive it.

  • Prepare relentlessly. That means working through every detail you can, and as close to the real thing as possible.  I guarantee your opponent is.  Well, one of them is.  When his iPhone® battery is dead.
  • Focus on winning, not losing. Reasons eloquently established above.

ccamp

Too soon?

  • Lock out distractions. Everyday life tends to intrude in your brain.  Push it back.  Like an ex-wife it will be there after you’re done.
  • Avoid feeding your ego. Your ego, that part of you that holds all of your self-importance?  The ego that thinks that people remember silly mistakes you made?  It will fight with everything it has to be protected – it will sabotage you to prevent you doing your best.  Sure, in rare circumstances people will remember your silly mistake (putting hydrogen in that dirigible, for instance), but that’s not the norm.
  • Have confidence in yourself.
  • Have faith. I’ve been lucky time and time again.  I know the old saying that “luck is what happens when preparation meets opportunity” – but that was the Roman Stoic philosopher Seneca who said that.  And where is Seneca, hmm?
  • Remember why you’re here – not a specific way to win, but to win.
  • Focus on now, not the next game. Nor the next match.  Nor the ride home.
  • Use your tension to build focus. Being nervous is okay, and can, if used properly help your preparation.
  • Use music. There is nothing that so impacts emotion and sets mood than music.  Good rock music helps a workout.  Appropriately aggressive music helps focus – Come Out And Play by the Offspring, or Electric Worry by Clutch or even Shoot to Thrill by AC/DC come to mind.  Please feel free to suggest your favorite music that psyches you up below.  I promise not to make too much fun of your choice, unless you pick something like Madonna or Justin Bieber.  Yes, that includes that odious little man, Phil Collins.  He knows what he did.
  • Have a routine, once you get it right. Play the same songs every time.  Play them in the same order.  Spend the same amount of time warming up each time.
  • Be ready physically. We’ve spent all this time getting your mind ready.  It would be a shame if your body weren’t ready, too.
  • Have a strategy. Execute it.  Having a strategy is important.  Having the courage to execute it is important, too.  Will it have to be sufficiently broad to account for surprises?    But why do you have to bring broads into it?
  • Don’t deviate from the strategy too soon. There may be a time to give up on your plan, but it’s not immediately.  Unless it is.  This is more of an art – there is absolutely a time when Plan A will fail, and you’re stuck with Plan B.  Or Plan C.

Okay, I never said it was a short list.

One other piece of advice:  Be as outcome independent as you can be.  The poem If by Rudyard Kipling makes this point well (The Chinese Farmer, Kipling, Marcus Aurelius, and You). Winning everything you try, every time you do it is impossible for everyone.  But after the victory or the loss, you will remain.  Yes, losing sucks.  But the outcome of any specific event in your life is much less important than the input that got you there, which is (more or less) something Seneca also said.

homer

I swear, I got lost for 20 minutes looking at Bill and Ted related information while writing this post.  The Internet is the devil.

Yes, you read that right.  You can’t control every outcome.  But you can control your attitude.  You can control your effort.  You can control a large part of your preparations.  You can control the virtue of your actions.  If you do all that and still lose?

Winning is still better than losing.  Winning is always better than losing.  Losing sucks, and you should never really be proud of it – it will become a habit.  But look for the lessons you can pick up for next time.

More next Wednesday when we look at how this impacts the rest of your life.

(And don’t forget to leave your psyche up to be aggressive music suggestions in the comments.)

The Funniest Post You’ll Ever Read About Alternative Investments

“Well that’s fantastic.  A really smart decision, young man.  We can put that check in a money market mutual fund, then we’ll re-invest the earnings into foreign currency accounts with compounding interest aaaand it’s gone.” – South Park

cat

I’ll have you know there are at least three things that you can use an empty potato chip bag for.

I was reading Bison Prepper (LINK) (and you should, too) last week when Lord Bison mentioned that stocking up on things that you used regularly as consumables was a survival strategy.  It is.  Beyond that, it’s also an investment strategy.

In the world of investment, when you buy a stock thinking the price is going to go up, it’s called “going long.”  If you were to buy Apple® stock thinking that the world hadn’t had enough iPhones®, iPads©, or iCrap™, you would be “going long.”  For this strategy to pay off, when you finally decided to sell Apple©, it would have to be worth more than when you bought it.  Buy low, sell high.

Duh.

But I started this post by writing about consumables.  What’s the deal?  Those aren’t investments, right?

I recalled reading another article a few years ago about a financial writer showing up on the Tonight Show™ with Johnny Carson, so I looked for the interview and found it – a whopping 200 people had watched it, even though it had a glimpse of Susan Sarandon while she was still cute and before her eyes popped out of her head like they were trying to escape.  The writer that Johnny was interviewing was Andrew Tobias.  Johnny said in passing:  “I like how you said that if you had $1000, you should invest in tuna.”

fonzi

I was really shocked when he said, “Sit on it.”

Tobias responded:  “If you want to make 40% tax free on $1000 you can . . . if you buy tuna fish . . . and shaving cream on sale, and get a case discount.”  The audience didn’t laugh – they were living in pretty uncertain times and the advice was serious.

Andrew Tobias posted this clip on YouTube®, and was really irritated with himself – since his jacket was buttoned it looked like he was forming a human air scoop as he sat down with Johnny.

Back when this clip was filmed was in the late 1970’s, and the economy was in trouble.  The interest rate was high – a mortgage (if you had great credit) would charge you really high rates, between 10% and 14% . . . compared to a tiny 4% or so today.  Inflation for nearly everything you could buy was running around 10%.

The entire key to making this odd investment strategy work is that you have to buy things that you’ll actually use.  Sure, Wal-Mart® sells five-gallon troughs of flaming pickles soaked in Cheeze® Ballz™, but will you actually eat that?

walm

It was even worse when she flipped off people we passed.

What’s a list of things that most people buy that this would work for?

  • Tuna (and long shelf life canned food) – especially good if you need to keep your mercury intake up.
  • Shaving cream and razors – buy extra if your wife is a Kardashian or you’ll look like you’re married to a Chia Pet™.
  • Various condiments – mustard keeps forever, and can be used to slow Kardashian hair regrowth.
  • Laundry soap – I have to keep this on the list, my hands are Tide®.
  • Paper goods – I’ll make a toilet paper joke, since I’m on a roll.
  • Wheat, rice, and other grains (properly stored)
  • Honey – They’ve found 5000 year old honey that is still edible, so it probably gets the nod as the most stable food ever. Plus it’s really handy to have local honey if you’re in Russia – I hear it’s made there by cagey bees.
  • Ammunition – Don’t be like JFK and have this be the last thing on your mind.

Now, you should be smart about this – if your family won’t eat cans of clams, buying them when they’re super cheap won’t really help you because then you have cans of clams that no one will eat, until there’s a food drive, and then you give them the clams.  If this sounds oddly specific, well, we don’t have canned clams anymore.  Likewise, if you decide to grow a beard, six cases of shaving cream suddenly become worthless until you decide to shave again.

shopgirl

The Mrs. didn’t buy the line, “But she looked so lonely, like she could use a good home.”

And don’t be nutty.  If you live in a tiny house, putting several thousand cubic feet of tuna and wheat might not be the greatest idea.  Unless you like sleeping on cans of tuna.  There’s a limit.  When Tobias gave that advice, he suggested that it could be used for $1000 worth of stuff.  Today that translates into about $4,500 worth of stuff, if the inflation calculator is to be trusted.  That’s certainly a lot, and would translate into 20 or so tons of wheat, but you’d probably have to stack hide some of it under the bed.

One dangerous point:  if you buy something, like, say, wine and get a 10% case discount, it doesn’t really help your cause if you drink the wine twice as fast.  Or if when you see a Ding-Dong®, you immediately rip open the silvery plastic sleeve and try to suck out the “cream” filling until you are sitting in the corner in a sugar coma.  So you might want to reconsider stocking up on things where your self-control will turn a savings into a disaster for your liver or waistline.

catnip

9 out of 10 doctors recommend water over alcoholic beverages for health reasons.  The other doctor is from Flint, Michigan.

In the 1970’s, you could do this strategy with nearly anything since prices were going up on everything, as long as you didn’t have to borrow the money – interest rates on credit cards were 18%.  As opposed to the 18% today.  Hmmm.

Regardless, if you have high-interest debt, get rid of it.  The sooner the better.  The future is uncertain, so getting rid of debt is a certain way to be in better financial shape.

In the last decade, inflation is most prominent in two things that you can’t collect like tuna:  health care and college tuition.  Oh, sure, you could pre-injure yourself, but who has the time?  Likewise, you could avoid steep college tuition hikes by sending your three year old to college, but that would make congress unhappy.  They hate competition that’s smarter than them.

The best information that I can find is that 401k plans returned an average of 7% for the last five years.  Better than a jab in the eye with a sharpened terrier, and probably still a smart thing to do.  I have one.  The beauty of mine is that my company kicks in an instant match – and whatever match I get is an immediate return – if the company matches dollar for dollar, it’s an immediate 100% return.  If it “only” matches $0.50 on the dollar, it’s still an immediate 50% return.  I’ll pay taxes on it after you begin to pull it out, assuming that it hasn’t been confiscated by Bernie Sanders to fund his “waterslides for the poor” initiative.

But the 401k immediate return is hard to say no to.

sanders

For me?  I’ll take belt sanders over Bernie Sanders any day.

But I can easily make 30% to 40% return tax free on toilet paper, if i buy it on sale, and in bulk.  And I’ll never pay taxes on that return.  It’s just free money – again, assuming I don’t have any debt.

If I have a mortgage of $100,000 at 4%, and I pay it off, I’ll make a $4,000 return before taxes.  Not bad, but after taxes, it’s really as low as $2,000 depending on the rest of my income.  But if I get a sweet deal on non-dairy gluten-free vanilla creamer, I get all of the money I save.

There is one other advantage of putting some of your money into stuff that you’d use – you’re making yourself more resilient.  If the dollar (the United States one, not one of the phony dollars they use in places like Zimbabwe or Philadelphia) were to weaken, you have investments in things other than dollars.  I heard a story of a German boy who got a gold coin as a tip while working at a hotel.  After the hyperinflation of the Weimar Republic, that same German boy was able to buy the same hotel for that same gold coin.  Of course then it became a target for B-17 bombers, but who’s keeping score?

Oh, yeah.  Everybody.  Except the French – they’re waiting for their record to improve.

tanks

A French border guard was questioning a German.  “Occupation?”  “No,” replied the German.  “Just visiting.”

The idea that I’m trying to convince you of is that you should think of your average daily purchases as if they were investments – because they are.  It’s not only stocks, bonds, precious metals and a 401k that are investments – what you buy on a day to day basis and how much you pay for it can also be an investment.

The other thing that many people overlook when they think of investments is their time.  How are you spending yours?  You can, like me, spend your time in a PEZ®-addled haze, watching Bojack Horseman™ on an endless Netflix© loop, or you can spend it productively, making yourself better.  That’s tax free, too.

Remember, investment means more than stocks and bonds.  It’s the things you buy, the way you spend your time, and avoiding B-17 bombers by not buying German hotels.