Let's talk about consumerism...
Last year, Melissa and I moved from a 2900 square foot home to a 1700 square foot home. The process of downsizing by 41% was difficult but liberating. We found many things that we both didn’t use or didn’t need. We had to decide what were the essentials.
The stay at home orders have really solidified our decisions on what is essential. When we think about shopping, the question we ask is what is necessary. (I’m sure one could make a joke about toilet paper hoarders here.) The point is that we’re not randomly shopping and buying things we don’t need. We’re directed - the mission is make the list, go to the grocery store and return while making sure to stay 6 feet away from other shoppers, wear our masks, don’t touch our face and make sure to wash our purchases and our hands when we return home.
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So, the question is – will our economy shift once we get through the pandemic? Will there be shopping sprees or will people take a more thoughtful approach to consumerism? I certainly know the answer I’d like to see – that our shopping habits will evolve, that we’ll be more conscious about our choices.
Unfortunately, our economy is driven by consumerism. I don’t shop at Wal-Mart, but I know that a good portion of the store is dedicated to selling goods that most people will never need, much less use. Take a look in your cabinets or your closets. Do you remember buying that unique item that remains in the package or has only been used once or twice?
Being home for about a month now, it feels like I’ve really been able to focus on what is important, what is needed and what is frivolous. My hope is that others will have this same realization about consumerism and that economic growth coming out of the pandemic will be based more on a sustainable economy versus the growth-at-all-costs economy. Our planet will be better for it as well as our closets and pocketbooks.
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On to business…
We’ve seen the markets recover some over the past several days as traders try to anticipate the progression of the COVID-19 pandemic. Traditionally, the markets are leading indicators, but it seems like for the time being, they’re misled by unsubstantiated optimism. We still do not know the full extent of the infection in the United States and countries like China and Russia cannot be trusted when reporting their numbers. There still is considerable risk ahead of us, from corporate debt to federal debt associated with the bailouts. Widespread testing is still not available in the US. The list goes on…
An excellent article in Barron’s today from Ben Levisohn where he reflects on past market disruptions in 2008 and 2000. He says that during times of recovery, often there is an initial bounce followed by more volatility. I think that is what we’ll see in the near term.
Our portfolios continue to function as we designed them – to reduce volatility and focus on capital preservation. There is still much uncertainty and until we see that uncertainty wane and visibility improves, we will remain in capital preservation mode.
Please let us know if you have any questions or concerns. We’re grateful for your business, friendship and introductions. Keep your comments coming – we love to read them! And, of course, please feel free to share this with your friends and family.
My Best,
Peter Krull
CEO & Director of Investments
Earth Equity Advisors, LLC
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