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Thoughts on investing in a pandemic:
(Disclaimer: Not investment advice, Not medical advice)
(Disclaimer: Not investment advice, Not medical advice)
1. Popular Narrative: “Look how bad unemployment numbers are. How can the market go up? It is totally irrational”
Wrong!
Equity and asset prices benefit from monetary inflation.
Market prices future trends.
Learn adaptive expectations and ABCT.
Wrong!
Equity and asset prices benefit from monetary inflation.
Market prices future trends.
Learn adaptive expectations and ABCT.
2. Popular Opinion: “This is looking exactly like great depression or 2000 or 2008”
Wrong!
Those were monetary phenomena due to collapsing money supply/credit after rapid expansion (classic ABCT).
This is a sudden demand shock/supply shock.
Wrong!
Those were monetary phenomena due to collapsing money supply/credit after rapid expansion (classic ABCT).
This is a sudden demand shock/supply shock.
3. Popular Narrative: "The secondary effects of unemployment etc will push us into a depression"
Wrong!
There will be a period of readjustment as the shock ripples through the economy, but it will be like 2008-2010 on 20x fast forward.
Wrong!
There will be a period of readjustment as the shock ripples through the economy, but it will be like 2008-2010 on 20x fast forward.
During that short period, it will be too much money chasing too few goods (hello stagflation). Then, another crack up boom right after resumption of production.
4. Popular Narrative: "Our life will change permanently"
Partly Correct!
The longer this lasts, the less likely we go back to exactly living like before.
But this will end faster than popularly believed.
Partly Correct!
The longer this lasts, the less likely we go back to exactly living like before.
But this will end faster than popularly believed.
5. Popular Narrative: "There will be no demand and so all businesses will close, deflation"
Wrong!
In stagflation, production falls below demand.
Money will rapidly lose purchasing power, and assets that benefit from inflation (including equities) will gain in terms of Dollar
Wrong!
In stagflation, production falls below demand.
Money will rapidly lose purchasing power, and assets that benefit from inflation (including equities) will gain in terms of Dollar
6. Popular narrative: “This Corona virus is going to stay with us for a long time”
Wrong.
First there will be effective therapies that dramatically bring down the mortality rate in the short term (my personal candidates early antivirals eg:Remdesivir/neutralizing antibodies)
Wrong.
First there will be effective therapies that dramatically bring down the mortality rate in the short term (my personal candidates early antivirals eg:Remdesivir/neutralizing antibodies)
7. Popular Opinion: "Vaccines are incredibly hard to make against corona viruses, it'll take 18-24 months at least"
Wrong!
We are much closer to effective vaccines that do not cause antibody-dependent enhancement. Even production at scale seems to be close.
Wrong!
We are much closer to effective vaccines that do not cause antibody-dependent enhancement. Even production at scale seems to be close.
8. Popular Opinion: "Complete uncertainty. Utterly unpredictable"
Wrong!
This time in history of financial markets is unusually more predictable than 2008 or 2000.
This is the only time in history when the feedback loop between biology and macro has been this tightly coupled.
Wrong!
This time in history of financial markets is unusually more predictable than 2008 or 2000.
This is the only time in history when the feedback loop between biology and macro has been this tightly coupled.
9. For the rare few that understand Austrian Business Cycle Theory and Biology, you are living through a once in a lifetime opportunity to leverage your cross-domain expertise.
10. The obligatory Bitcoin tweet.
Bitcoin is not a store of value yet. In the short term, it is a speculative asset that will be more correlated with the stock market than believed.
"Uncorrelated asset class" it isn't yet. Sorry to burst the fantasy bubble.
Bitcoin is not a store of value yet. In the short term, it is a speculative asset that will be more correlated with the stock market than believed.
"Uncorrelated asset class" it isn't yet. Sorry to burst the fantasy bubble.
