Permanent or Temporary?

We thank everyone who participated in last week’s call. In particular, we would like to thank Doctor Ross. His expert explanations and expectations regarding Covid-19, as well as doing an impromptu Q&A, greatly added to the value of the conference call. Ross has been an invaluable source of information for GreenPort during this pandemic. We are grateful. We apologize for the annoying beeps every time someone joined the call, although admittedly we were impressed by the number of annoying beeps. That was an operational error on our end that will not happen again.

Is life as we know it forever changed, or will society eventually return to the way things were before the pandemic? Our expectation is the latter, although the time frame is highly uncertain. The key point is, we believe the economic impact will be temporary, not permanent. Our expectation that the economic downturn will be temporary brings little comfort for many. The current economic impact of isolation is creating financial hardship for millions of Americans. Workers who rely on their weekly paychecks for basic necessities are currently not working or receiving their paychecks. We accept health experts’ recommendations. We are not questioning the need to effectively shut down the economy to avoid a far more dire consequence. Personally and professionally, we are following all the recommendations and precautions - of course, health is currently the primary concern associated with Covid-19. Hopefully, the fear and response to Covid-19 will lead to an earlier than anticipated containment of Covid-19. It is possible that prioritizing the health benefits of containing the virus will eventually become secondary for many people. We expect relief from the economic pain being inflicted by the virus may eventually become the priority. Simply put, while we are all hoping for containment of the virus, at some point containment may become secondary as financial pressures mount.

We are continuing to err on the side of overcommunication until there is more clarity around the markets and the economy. It’s difficult to properly analyze markets during this current situation. Last Thursday stocks sold off 10%. Friday, stocks went up 10%. Yesterday, stocks were down 11%. As of this writing, stocks are up 5%. Our belief is that an investor’s success will be reliant on sticking to their longer-term investment plan. We believe the current economic displacement will be temporary, not permanent. The likelihood of a recession is much higher than it was a few weeks ago. Markets are much lower than they were a few weeks ago. It’s impossible to say what “fair value” is right now. Currently, our expectation is that 40% of 2020’s GDP is lost forever. Sporting events, ski vacations, etc. can’t be pushed off into the future. We expect 60% of demand will be pushed off until the second half of Q3 and into Q4. 70% of the American economy is the American consumer. For some, lost wages will mean they won’t be able to afford consumer durables (new washing machines, used cars, etc.). For others, it means these purchases will be pushed off until later. This has been an angst-ridden and difficult time for everyone. We are all in need of some more positive and uplifting thoughts. Perhaps there is even some good that can come from all of this. Here are some musings from GreenPort looking for that elusive silver lining.

• GreenPort is not a virtual company. We are also not a brick and mortar company. We fall somewhere in between. Our office space is at the Wheelhouse in Concord. It's a quirky but quaint community of shared office space that many of you have visited. More often than not our days are spent there. Each of us also has the flexibility of working remotely when necessary. The Wheelhouse is part of the rapidly emerging shared space model that encourages strangers to work closely next to one another. Needless to say, the shared office space business model is in need of rebranding. Until further notice, we will be a 100% virtual company.

• As a temporarily virtual company, we are exploring, implementing, and encouraging the use of technologies that we previously under-utilized. Specifically, we are ramping up our ability to interact with each of you virtually. Join me is a cloud-based software that allows us to discuss your portfolio while we “share” a computer screen and speak to each other through the microphones on our computers. Since we will likely be in this period of self-distancing for some time, we encourage anyone interested in learning this technology to please reach out to us. We can set up a portfolio review, review your current positioning, and discuss your strategy. Please be patient with us while we come up the learning curve, there is bound to be some initial bumps with the technology.

• Perhaps the most common complaint in urban areas is traffic congestion. Despite the advances in technology that create the ability for many workers to work remotely, the traditional workplace still places a stigma on telecommuting. Perhaps Covid-19 changes this. Workers can avoid their commute which will lead to less traffic, more productive time working, more time with family, and perhaps most importantly, more sleep. Americans don’t get enough sleep, imagine how pleasant everyone would be in a well-rested society.

• Our kids are all home from school. At GreenPort, our children’s ages range from college to grade school. Like everyone, we are paying exorbitant prices for our children’s college education. The universities have written to let us know they are not canceling the semester (or returning our money) but that virtual classes will take the place of traditional classrooms. We are assured the impact on our children’s education is minimal. If this is indeed true, the capacity of a virtual classroom is infinite, this greatly increases supply, meaning college costs should drop dramatically. While this is not likely to happen anytime soon, much like the traditional workplace, removing the stigma of online education might be the tool that makes college affordable for most everyone. On a more serious note, be mindful that returning children should forego visiting grandma and grandpa while home.

• Undoubtedly, we will all be watching a lot more T.V. over the next few weeks. For starters, let’s be grateful for Netflix and the many other streaming services that have become available over the last few years. Being forced to watch only network T.V. would indeed be cruel. Fortunately, GreenPort also moonlights as T.V. and movie critics. We will be able to guide your viewing experience with our insightful critiques; Spencer Confidential is a recently released Netflix original movie. It stars Mark Wahlberg and is directed by Peter Berg. It is a Boston based movie with all the usual stereotypes of South Boston, complete with the overly accentuated accents. Yet it still works. Much like we never tired of watching and enjoying Clint Eastwood in spaghetti westerns overcome insurmountable odds and defeat the bad guys, somehow the street kid from Boston standing up to authority never seems to get old.

Please stay healthy and isolated. This too shall pass, The GreenPort Team