Get Long America

While we continue to need more data about Covid-19, we’re finally reaching a point where investors can generate and implement thoughtful strategies, whereas I think that was pretty difficult to do a couple of months ago. It’s not a new lesson by any means, but we’re certainly seeing why the United States of America is the most resilient economic force in the history of the world.

We now know that, sometime in late November, it was known at the highest levels of the Chinese Communist Party that something awful was brewing in Wuhan, and it wasn’t much later that it became clear to them that they had a new type of coronavirus on their hands. We now know that the Chinese government hid all of that information from its own people and especially from the rest of the world. This allowed for more than 10,000 Chinese residents a day to fly directly to the United States for a period between late November and Trump’s travel ban on January 31, with a large proportion arriving in California and Washington.

We can also see now that America is on a much stronger footing for handling disasters than just about anywhere in the world. It may not feel like it right now, as we’re in the throes of the strictest quarantining, isolation policies, and social distancing in our history, but transparency and an open market economy-- the exact things missing in China-- are encouraging tens of millions of Americans to figure out creative ways to squash this epidemic politically, medically, and economically. What we have learned is that the United States of America, the world’s foremost immigration destination that has thousands of major tourist attractions, has suffered fewer virus fatalities than some European nations with a fifth of its population.

A movement is already underway here at home to adopt policies of keeping key U.S. industries such as medical supplies, pharmaceuticals, and military technology here in America. No country is going to want to outsource its chemotherapy drugs, antibiotics, and heart medicines to a government that has proven over and over that it simply cannot be trusted.

I appreciate that we’re a ways off from this, and it’s particularly difficult to see right now, as we’re all locked up in our homes with our children who will likely be out of school until August, but it seems likely that we’ll experience spin-off effects from the current state of affairs that will eventually fuel more economic recovery. We expect record-low oil prices to provide cheap gas for American drivers for the remainder of the year, just as we expect cheap mortgages and car loans to spur buying. We’ll also have a newfound appreciation for those Americans who grow food, transport it, and provide us energy and sanitation while protecting us from danger. It doesn’t feel very good right now, but our citizens in these industries have made it possible for millions of Americans to stay at home, sequestered and quarantined but safe, with plenty of food, water, and uninterrupted sanitation and public safety.

When it comes to one’s investment portfolio, I’d say we’re about to see one of the greatest buying opportunities of all time. It has always paid to “get long America” during these types of drawdowns, and while we may not be at The Bottom, our suspicion is that we’re getting awful close. For the time being, we continue to recommend buying dips and selling rallies, but recent market action will ultimately provide a unique opportunity for long-term investors to re-balance for the coming decade. Prepare to get long America.