Skate to Where the Puck is Going to Be

By Chris Beringer

Wayne Gretzky, the greatest hockey player of all time, never skated to the puck, he skated to where the puck was going to be.

That level of anticipation made for a great hockey player, but also makes for a great investor. Analyzing trends and determining which new technologies are here to stay and which ones will fade away has created fortunes and toppled empires.

COVID has created a unique environment and world. Our firm has been built on cautious optimism and we believe that in five years the global economy will have recovered and the U.S. will be strong. A new normal will emerge.

What that new normal will be, however, remains to be seen. Under any scenario, the world is going to be forever changed. Even if a miracle vaccine appears overnight, the next time we have a new virus nations will immediately revert to social distancing, mask wearing and distance learning.

Every industry will be altered in some ways. Some industries will fail, others will be under threat of nationalism. Currently, no free market economist thinks U.S. airlines have any risk of being nationalized. I am not so sure. The airlines were the first industry hit by this and they will be the last to recover. It is in our country’s best interest to have strong airlines. Billions of tax dollars will go to keep the airlines afloat. Even if nationalization is not forthcoming, a complete restructuring is unavoidable.

How will Disney safely open its theme parks? How long until people feel it is safe to go to a baseball game, or a concert? Can a bar be successful if all the patrons have to be six feet apart? Will people head back to the casinos if they are forced to wear a face mask on the gaming floor?

There are many, many questions to be answered. Where do we see the puck going?

  • Low interest rates are here to stay
  • Cheap stocks are as likely to be value traps as valuable companies
  • The recovery will be long as even strong companies will work to strengthen their balance sheets
  • Unemployment is going to take a long time to get back to reasonable levels
  • Modern Monetary Theory is actually a thing that policy makers look at seriously
  • Diversification across asset classes and sub asset classes is more important than ever for people who are looking for slow and steady growth

This is a horrible disease and has impacted many people’s health, but all of our daily lives. By no means do we wish to minimize the health consequences of COVID and by no means do we wish to appear shallow by writing an article on investments during this period of time as people are dying and 36,000,000 are unemployed. But we are not doctors, we are investment professionals. And as investment professionals our job is to shore up client portfolios. Every day we are evaluating trends and asset classes. If you would like to have a more in-depth discussion on your portfolio, please give us a call.