Letter To an Investor

A client wrote me over the weekend, asking if I thought recent news of apparent flattening of the curve of new infections of Chinese Flu in Italy, Spain and, perhaps, even New York City, portended incipient prevalence over the virus. I responded:

It looks clear in retrospect that the addition of some more information over the weekend reduced market uncertainty and thus might have restored some confidence that civilization is not yet quite altogether over. Items that might contribute to market confidence, in no particular order:

  • The Trump Pill+ concoct – hydroxychloroquine, Zithromax, zinc, and nitrous oxide – has shown terrific clinical success – albeit, so far only anecdotal – in forestalling the worst effects of the virus. I’m not troubled that the data are so far anecdotal. All data originate that way. Experimental data are anecdotal data controlled. That the experimental controls do indeed clean up the raw anecdotal data does not at all vitiate the raw anecdota. On the contrary. Does it change the herd of wild horses when we corral them? No. They remain wild horses. The corral is a change, not to their nature, but to their circumstances. When they are in the corral, we can keep track of them. That’s all. Only a fool would say of a herd of wild horses cresting a distant hill that, because no experimental controls on the data of our apprehensions had yet been established, there were therefore over yonder no wild horses to be seen.
  • The curve does indeed seem to be flattening; and that flattening must have started about 2 weeks ago, if it was to show up now.
  • 98% of patients recover. We never hear that, but it is tremendously reassuring.
  • Trump is President, and Trumpism is on the rise, so we are less likely than in past panics to see the “emergency measures” enacted in response thereto become permanent fixtures of our society, the way that the Fed, the Income Tax, Social Security, and withholding all did.
  • Biden has all but disappeared; in his few appearances, he is less and less coherent. It begins to look as though Trump might run effectually unopposed. Markets gotta love that.
  • China is systematically and pervasively exposed as a national bad actor, and as a nation of bad actors. So much for their hegemony. Watch now as manufacturing massively moves away from them; no one can trust them an inch, any more. That is over. As manufacturing moves away from China and toward cultures that can be trusted to deal fairly, watch for the American national advantage to wax.
  • Likewise globalism: now utterly dead. Watch for the rise of national, state and provincial borders, everywhere.

There’s lots more, but that will do for now. Near term, I’m bearish, because we are not through this yet, not by any means. Long term, I’m more bullish than I ever have been since I hit puberty.



Keynes: In the long run, we’re all dead.
Israel: In the everlasting run, we’re all everlasting.

The first is the basic liberal recommendation of fundamental despair and listlessness, no matter how good things now seem, and no matter what we might do to make them better. The second is the basic traditional recommendation – traditional in the West, anyway – of fundamental hope and thus of energy, no matter how bad things now seem, and no matter how poor the prospects of anything we might possibly do.

If the liberal recommendation were reliable, vis-à-vis reality, then we would all be dead already; for, our parents would not have survived to engender us. We ourselves are the outcome of the Keynesian long run. We are not all dead already. QED.

Turning back to the more practical: if Keynes is right, then it makes no sense to be an investor, properly so called. Keynes was himself a famously successful investor. Nuff said.

12 thoughts on “Letter To an Investor

  1. In other news, Cardinal George Pell’s conviction has been quashed by the High Court of Australia.

    Hail, Help of Christians.

    Should the powers of hell arise,
    and our peace be trampled down,
    in that night of blood and lies
    show us still your twelve-starred crown!

  2. Pingback: Letter To an Investor | Reaction Times

  3. I have assumed bullish positions on various industrials and home grown business at attractive valuations. Much of the market has taken a severe pounding as money flows, counterintuitively, to flashy tech growth stocks. I find this unwise, and Zoom especially a monument to foolishness.

    I think there may be another drop in the S&P from all the tech stocks which refuse to budge, but maybe faith in Amazon is unshakeable. Here is our true god, Amazon Fulfillment over fulfillment.

  4. Many countries are going to be faced with mass unemployment. These pressures will likely convince many politicians that opportunities arise in substitution of products hitherto imported from China. Medical equipment and antibiotics not only come under this category, but are essential for national health security as we have learned the hard way.

  5. From what I know of Keynes, his religion was the epicurism typical of Bloomsbury intellectuals, but it is possible to redeem his famous quip by giving it a “vanity-of-vanities” interpretation. The epicurean response to the manifest evanescence of worldly things is “eat, drink and be merry, for tomorrow we all shall die.” The religious response is “give not your heart to worldly things.” Presuppositions change the meaning of the evidence.

    • One of the great things about that quote is that it can be taken in so many ways. Most of them are counsels of true wisdom, of one sort or another. One such is the Epicurean interpretation you notice. Another is the reflection that, in the long run properly construed, the crisis du jour is nothing really to fash about, because there is in the end no escaping death anyway; so, don’t panic, keep your head, aim small, squeeze don’t pull, chop wood, carry water, buy low.

      In economics and finance, the quote is often taken as an ironic rejoinder to investment sages who recommend taking just that sort of long view: in the long run, your portfolio will certainly recover from the crisis du jour, sure; but you may be dead by then, so you can’t afford to invest as if you are going to live forever without needing the money. I.e., not everyone has the long time horizon needed to suffer through the recovery from a severe downturn.

      Investment sage: In the long run, we’ll get out of this crisis, so don’t worry.
      Keynes: Yeah, but in the long run, we’re all dead, so don’t stop thinking in the meantime.

      Wise though they be, all such interpretations end at last as counsels of despair, mutatis mutandis – unless they be baptized by confidence in the ultimate, permanent redemption of man and his world. Only as thus baptized does any human act make ultimate sense, or have any ultimate reason (taking reasons to be different from urges). As thus baptized, any interpretation of the aphorism renders it a counsel of serenity.

  6. “China is systematically and pervasively exposed as a national bad actor, and as a nation of bad actors.”

    I am seeing more of this here on the Orthosphere lately and now that it comes from you, I have to ask, why? I am aware of the pervasive finger-pointing in the media, but I doubt you take it seriously, so I wonder what am I missing?

    • There’s lots of blame going around, to be sure; everyone wants a scapegoat. Some of it seems fair, some not. It seems pretty clear that the Chinese lied to each other and then the rest of the world about the corona virus. I’m not blaming the Chinese for the virus – we don’t know enough yet to tell whether their disgusting agricultural practices and revolting culinary choices are at fault, so that this virus – like almost all its predecessors, almost all of which originated in China – may be laid to their culture. But I do lay responsibility for their lies at their feet.

      • If we start counting which virus came from where, it really doesn’t look particularly bad for China, especially concerning the deadliest ones. Specifically regarding the current situation, it looks like they did everything right. Information was shared and on time, the whistleblowing and the bat soup turned out to be nonsense, the supposed cover-up of deaths is exactly what the US is doing right now and is nothing more than the difficulty of gathering accurate data.

        It is our “developed” world that seems to have no issue lying through its teeth, countries and people stealing masks from each other, denigrating help coming from countries under our sanctions.

      • It appears that you have not read much of the news that I have read, but rather the media that have been defending China – the same media that want to blame Trump for the virus, and for everything else. You are operating on a radically different data set. That being so, there’s no point in our controverting the questions under discussion; neither of us can be convinced not to see something he cannot but see.

      • But how come we have such different data sets? I am not from the US. When I say “our”, I mean the Western world in general.
        Saying that someone is lying without any proof is really about those saying it. When the bat soup which “official” media were more than willing to squeeze for clicks turns out to be shot in another country three years earlier, that’s on whom? Same as these Russian submarines that seem to be everywhere. That’s how a sentiment is created.
        In any case, I have nothing to work with here, so I agree with your last sentence. It’s also not really the place for this here. But I have to admit that after reading almost everything from you here, I am surprised by your position. Which is of course my own problem.


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