Texas Governor Greg Abbott gave in last week and announced guidelines for all Texans to remain at home. He didn’t call it shelter-in-place, or self-quarantine, but that’s a semantics game. Non-essential businesses are shut and traffic is light.
But life goes on.
We still have to eat, and there are plenty of golfers wandering the course outside my house. And our hair still grows, which recalled television during my childhood.
Before QVC, the Home Shopping Network, and way before the internet, there were commercials touting all sorts of products for do-it-yourselfers. As a kid, I thought Ron Popeil was the Einstein of our time, inventing everything from the bottle-cutter that would turn Coke bottles into drinking glasses to the pocket fisherman. Genius! Of course, he was just a pitchman, but that didn’t register with a 10-year old.
There was one product that I was sure I didn’t want to see in my house… a Flowbee. The vacuum cleaner-hair trimming device allows you to cut your hair at home, pulling the hair into a protective shield of whatever length you choose before clipping it. Even as a youngster I recognized the danger, including the not so small fact that my mother would be determining the length of my hair and responsible for the outcome. No thanks.
But with the economic shutdown in response to the coronavirus putting hair salons and barbers on ice, many of us are watching our appearances grow shabby. As one writer noted, it’s just three weeks until we know everyone’s true hair color. The Flowbee came to mind. I looked it up, and to my surprise the company has shut down for the virus! How could maintaining our appearance be deemed non-essential?
With any luck, we’ll have bars, restaurants, and hair salons, open soon. We could use it. And the faster we reopen, the more of such businesses we save.
With fewer mortalities reported in New York City over the past couple of days, and declining mortalities in Italy, France, and Germany, investors are starting to look past the virus to the eventual economic reopening.
From major restaurant chains to chipmakers, investors appear to be loading up as they try to figure out which companies will rebound the fastest, and if we’ve already seen the bottom.
We were buying selectively in the depths of the downturn, without trying to get too fancy. We added a broad semiconductor ETF and the QQQs, which I still think are good ideas, as well as an investment bank.
Don’t forget about income. The bond market is moving back to normal, but it’s a long way from steady. Yields on high quality corporate bonds and municipal bonds remain out of whack compared to U.S. Treasury bonds, especially in closed-end funds, ETFs and other vehicles.
Dividend stocks are a gamble, but one I think worth taking. No one knows which dividends will be cut, or which dividend-paying stocks will suffer as companies reduce or eliminate stock buyback plans. If you’re buying cash flow, look for companies with dedicated payouts and attractive stock prices.
When we emerge from this self-imposed economic immolation, we’ll have to deal with higher unemployment, devastation among mom-and-pop businesses, dramatically reduced stock buyback programs, and a general election.
Think turmoil. Think low interest rates. And think cash flow.
As we look to brighter times and the markets regain some of their lost ground, consider using any quick equity gains or available cash to lock in interest and dividend payments that can provide a good bulwark against volatility as we go through the summer. With the Fed likely to hold rates at historical lows for months or even years to come, this could be the best opportunity of the decade to grab income streams.
