COVID 2020

2020 has been an unsual year. It is certainly shaping up to be one of those “what did you do during those times?” moments.

At the time of writing, it is hard to believe that I am only down -14% (market down -17%) from ATH. My largish cash position has cushioned the swings, but exposure to energy and financials has cut meaningfully into that cushion.

Due to the nature of my job, summer months are fallow. I cannot put new money into my investment pot. So my primary goal is to survive and not to do anything too stupid. I’ve added a little DIS, MO, IAC, BRK, CMCSA, and MKL over the past few months, but nothing dramatic. I have puts outstanding on IAC, WBA, and DIS.

Is the worst over? Some smart people definitely think so and make persuasive arguments. On the other hand, a perennial optimist like Warren Buffett (who is privy to Bill Gates’ unfiltered thoughts on the pandemic) appears to be bearish.

Will we revisit lows, or will be break to ATHs? I have no clue. The range of possible outcomes still seems wider than most people acknowledge.

If the second wave is bad, and if it coincides with a major natural disaster, social unrest, or war, then things could get ugly! The longer it takes for us get back on our feet, the longer it will take for us to walk and get our previous stride back.

On the other hand, the possibility of a cheap and effective treatment/vaccine would be a gamechanger. Even without them, perhaps the second wave is not as bad because we have somehow learned to deal with it better (masks, social distancing et cetera). If this happens, energy, financials, and travel/hospitality stocks could snap back really fast.

One way to look like a genius is to bet the house on one of these outcomes. There are fortunes to be made (or lost). But my goal is to muddle through. To survive regardless of how the hand plays out.

 

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