2 Steps Forward 3 Steps Back…

A huge week of corporate earnings is coming up (Google, Apple, Amazon, Facebook, etc.). We are also on the verge of election week.

And on top of all that, sadly COVID-19 new cases are surging again, hitting more than 80,000 new cases the past two days. This surge cannot be just attributed to more testing. Parts of Europe (Italy and Spain) are locking down again as they combat new surges in infections.

Instead of trying to write similar words again, I will be lazy and quote myself from a previous post on September 1, 2020:

But right now, the general public seems too eager to declare the virus beaten and the recession over.

I understand where this is coming from. We all want our old lives back. We want to go to the gym, attend a concert, sip on a mocha at a cafe without a mask. Our eagerness to leave these bad times behind and the fact that this pandemic has gone on so long has rendered us numb to it. 40,000 new positive cases a day should not feel like nothing, but at this point it barely makes the news anymore. 10% unemployment feels the same way — no big deal as long as stocks and other assets continue their upwards surge.

Both those in power with the ability to effect change and a large portion (the stock owning portion) of the general public seem to be drunk on a dangerous cocktail of complacency and apathy. Instead of doing what’s necessary to beat back COVID-19 once and for all, we’re too busy celebrating paper gains.

The risks to this complacency are a third wave of infections (compounding the already dangerous flu season) and more economic pain as hotspots are forced to close their economies again.

The longer we maintain this 2 steps forward, 2 steps back pattern, the more likely it is that businesses close permanently, jobs are lost forever, and economic stagnation and high unemployment become ingrained. If we’re not careful, we may even get a whiff of deflation (despite the Fed’s best efforts) — that would crush credit demand and consumer spending.

I was hoping to be proven wrong. I hoped for more stimulus to prevent bankruptcies, vaccine progress, and good decision making by the general public. But things seem to be going the other way (fingers still crossed for a vaccine).

Less Depressing Stuff Starts Here

Sorry to start off on such a depressing note, but it is a worrying time. As always thanks for subscribing, reading, and supporting me. I would love to hear from more of you so please don’t hesitate to drop me a line (on Twitter or here in the comments).

Sincerely,

Tony and Everyone from Alpha Beta Blog

Recommended Reads To Start Your Week

• A framework for analyzing and thinking about consumer Internet companies — Useful vs. Entertaining.
• Part one of a new series on inflation. This post looks at why central bankers historically have been so scared of excess inflation.
• A piece I wrote for Towards Data Science about how abnormally high implied stock volatility seems to be the result of the market anticipating a binary coin flip type outcome.
• A big link-fest to a lot of my past writing (some on TDS, some on Alpha Beta Blog) on finance and investing.
• The iBuyer business model within real estate is a fascinating one to me. I write up some thoughts and results of my research in this post.
• Tai Lopez, meme extraordinaire, is back and attempting to rope investors into a questionable business model!