There is a lot going on right now and this blog is broken into a markets section, a challenge, and a section on the Swedish response.  I have spent hours cultivating what I find to be the most interesting information that you probably aren’t getting exposed to.  If anything I have written is interesting to you, please click the link and take the time to view the source.

What if Swedish Herd Immunity is the Only Answer?

I visited Sweden and Denmark in the Fall of 2018 to get some answers.  I wanted to see for myself why these countries were some of the happiest countries in the world and were so wealthy despite their insanely high taxes.  While I didn’t get all the answers I wanted, I came home particularly impressed by the success of the Swedes.  10 million people have created the great global brands of IKEA, H&M, Volvo, Electrolux, Ericcson, Skania Trucks, Skype, Spotify, and Abba.  I even saw two self-driving electric Husqvarna lawn mowers cutting a palace’s lawn.

You probably have heard that Sweden and Iceland have implemented a very different response to Corona than the severe lockdowns that other countries had.  I believe their approach to dealing with Covid-19 is much more reasonable and that once we have a year’s worth of data, we will see that the lockdowns were one of the biggest errors in judgement in human history.  I could certainly be proven wrong, but I am thankful that the Swedes were willing to try a different solution so that we can compare their results to other countries and make better evidence-based decisions for the next pandemic.

Their strategy is to isolate and protect the elderly/at risk, work from home if you can, keep schools open for children less than 15 or 16, and no gatherings of 50 or more.  Bars, restaurants, and gyms remain open with distancing restrictions.  I think they would have done even better if they mandated masks in public gatherings.  Statista has an interesting chart that compares deaths per million of different countries.  Sweden looks to be fairing better than many countries who have gone on severe lockdowns.  While this data is interesting now,  it is going to be very telling to see how other countries compare AFTER they reopen.

A lot of people are expecting a vaccine in 12 months to 18 months.  Did you know that the fastest vaccine ever developed was for the mumps and it took four years?  We still don’t have a SARS vaccine from 2003!  Once the shelter in place restrictions get lifted, the cases are going to go back up.  What then?  Are the governments going to force us back in our homes from September to December?

There is a lot of peer-reviewed evidence that masks work.  With so many asymptomatic people walking around, they are even more important.  I am disgusted by the “authorities” that told us not to wear them early on.  We have to do a better job protecting the high-risk citizens and people in nursing homes.  While it is impossible to put a value on a life, there has to be some kind of balance.  Nobody makes it out of here alive.  We should be focusing on saving lives.  That is the seen.  The unseen is the children trapped at home with molesters, the future economic suicides, the debt and currency destruction to come, and the starvation of the poor all over the world because the rich nations quit buying their products.  The strict lockdowns are devastating the poorest people on earth and many of the world’s poor aren’t getting a $1,200 check from their government.  I am hopeful that with the help of the “Swedish Experiment,” government stockpiles of masks, and better data we will never see a global lockdown again.  I don’t the best strategy, but I want to share some views from intelligent people who could turn out to be correct while the rest of the world could only panic.

Professor Johan Giesecke, an advisor to the Swedish government, and one of the world’s most senior epidemiologists has a smart discussion on why Sweden chose their path on UnHeard.com.

Knut M. Wittkowski, Biomedical statistician, challenges narrative on benefits of social distancing.

Santa Clara County reported 1,000 cases in early April, the Stanford researchers estimate the actual number was between 48,000 and 81,000, or 50 to 85 times greater. (In time, I think we will see that a lot more people have already had Covid-19 and never had symptoms.  If correct, the mortality and R_0 would be much lower than current guesses.)

At least 11% of blood donors in Stockholm had Covid-19 antibodies.

Sweden could have herd immunity by next month claims its infectious disease chief.

Anders Tegnel, Swedish Epidemiologist, explains his “trust-based” approach to handling Covid-19.

What’s Wrong with Models? (Peter Attia) It is amazing how sensitive these models were to tiny change to the R_0.

Simple statistics show the spread of the coronavirus declines to almost zero after 70 days — no matter where it strikes, and no matter what measures governments impose to try to thwart it-says Professor Isaac Ben-Israel. Doesn’t the seasonal flu peak naturally each year without a shut down?

Jury Still out on Swedish Corona Virus Strategy.  “Death rates per million is not the only datapoint in this difficult equation.”

What if the Lockdown was a big Mistake? (Ron Paul)

What can you do to Prosper During the Lockdown?

I was recently listening to a Tim Ferriss Podcast and they mentioned that Shakespeare was in quarantine for the Bubonic Plague when he wrote Macbeth.  He was a shareholder in two theaters that were shut down and instead of succumbing to depression, he wrote a classic that is still with us today.  In the podcast, Ferriss asked “How can you make the next 3-6 months some of the most enjoyable and productive of your life?”  What a great question.  Instead of binge-watching Netflix, stress eating, and feeling like a victim—I have decided to use this time to improve two areas of my life:

1. Provide great advice and service to my clients to help them through this difficult time.
2. Lose the weight I have been talking about losing forever.

I am not going to spend much time on the first one.  Kim and I have been working longer and harder than we can remember.  We have spent dozens of hours looking for planning opportunities in the SECURE and CARES Act and have been deluged with opportunities to help people refinance, fund IRAs, and make Roth Conversions.  The volume of work has made it difficult to reach out to clients individually.  If you need something or have concerns please raise your hand and click the link on www.domestiquecap.com and you can schedule a time directly in my calendar.

When markets started crashing and work got overwhelming, I found it was easy for me to turn junk food into a reward system for a hard day’s work.  It was depressing to not play basketball at the gym, miss out on Springtime events, and not see many of my friends or family.  Since there was less to do, I rewarded myself with pizza and craft beer.  That was a mistake.

You hear that seniors are at risk of dying of Corona, but I don’t think the average person understands the close relationship between chronic inflammation from a bad diet and not being able to fend of Corona.  More than 60% of adults in the U.S. and U.K. are overweight or obese.  Many of the people who are dying from Corona have metabolic syndrome—this means they have a combination of insulin resistance, high blood-pressure, obesity, and a bad triglyceride/HDL ratio (you want this ratio less than 1.5 for optimal health).  Metabolic syndrome eventually leads to developing cardiovascular disease and/or diabetes.

As scary as this sounds, I have great news!  You can dramatically reverse metabolic syndrome and therefore your risk of dying from Covid-19 in a matter of weeks.  In fact, Virta Health is helping loads of patients reverse type 2 diabetes.

Metabolic syndrome is not only found in overweight people.  Some people don’t have the ability to store much fat in their legs and belly and they store their fat close to their organs.  These people are called TOFI or thin on the outside, fat on the inside.  The only way to know if you have metabolic syndrome is to get your blood work done.  You should ask your doctor to test your insulin, leptin adiponectin pair, and get your Trigs/HDL Ratio.  Here is an excellent interview with Dr. Steven Horvitz discussing what blood tests he recommends.

There has never been a better time to reduce your insulin resistance and improve your health.  If you have non-alcoholic fatty liver, high blood pressure, diabetes or pre-diabetes, YOU are at high risk of dying if you get Covid.  The chronic inflammation in your body from an inappropriate diet will make it much harder for your body to fight the virus.

To reduce your risk, all you have to do is remove the vegetable seed oils, highly processed foods, and added sugars.  You can improve your health and chance of survival within a month!  You can improve your blood markers quickly.  For most people, replacing the processed garbage with meat, eggs, and non-starchy vegetables is all they need to do.  Get your blood work done and come up with a plan with your doctor for how you can improve your metabolic health.  Our modern diet of foods we weren’t designed to eat, is a disease of modernity that can be reversed.

I think you should assume that you will eventually be exposed to Covid-19.  You may have already had it and never realized it.  Did you see that in Northern Italy, 60 volunteers who felt no symptoms were tested and 40 of them had anti-bodies in their blood.  It is likely to be with us for awhile and I am no longer going to be mad that it is illegal for me to play basketball at the wreck center.  I am falling in love with my bike again and doing what I can to improve my chances of surviving Covid.  As a result, I will lower my chances of developing  cardiovascular disease and diabetes (two things much more likely to kill me).  Win-win.

Here are some resources for those interested in the link between metabolic syndrome and Covid.

Fat Emperor Podcast-Dr. Ron Rosedale “How to Avoid Serious Viral Impacts”

Fat Emperor Podcast-Dr. Paul Mason “Crucial Info on Avoiding Viral Impacts”

European Scientist- Covid 19 and the Elephant in the Room.

NYT- How Poor Diet Contributes to Coronavirus Risk.

Was March 23 “THE” Low?

Last month, I mentioned that I was seeing things I never thought I would, like the 10-year treasury dropping below 1%.  After bouncing to 1.2% it is back to .62% as I type.  Unreal!  Now the storage facility in Cushing, OK is full and oil futures went negative on Monday.  Economic books will have to be rewritten.  What six-sigma event will we witness next month?

With people dying in mass and many countries on lockdown, it is amazing that the Nasdaq is still up over the last 12 months. Foreign stocks have been terrible for the last ten years compared to U.S. stocks and don’t look unreasonably valued to me even after their bounce. The FANGMAT giant tech stocks appear immune to Covid, while U.S. Small Cap value has been destroyed.  Below is a chart of the Vanguard Small Cap Value ETF.  One month evaporated almost seven years of gains!

After the huge bounce, the S&P 500 is trading where it was in August of 2019.  I know the Federal Reserve is printing money as fast as their digital printers will allow and that we have already had a huge stimulus bill and more are stimulus is coming.  When I think back to how I felt about the world last Summer and compare it today, I can’t help but think the S&P 500 is prices wrong.  But keep in mind, I never thought we would see negative interest rates or negative commodity prices either.

 

What do we make of the markets from here?  A month ago, I was having many conversations with terrified clients.  It was impossible for them to see that we were about to have one of the biggest and fastest bounces in stocks market history while under lockdown.  Despite their beliefs, the Federal Reserve started printing and buying everything from treasuries, to mortgage bonds, to corporate bonds, to municipal bonds.  They will probably (illegally) buy stocks one day.

I have spent hours thinking about where we go from here.  The bulls trust the Fed and the government to save us.  The bears say you can’t kill a virus with money.  The biggest thing to watch is when and how governments begin to open society back.  The problem is you can pay attention to the dates they give (Trump: We will open by Easter), but dates change and then Covid cases could come back higher than Governments are willing to stay open and lockdowns could return.  The governments actions are a huge unpredictable wildcard.

Reading The Fortune Sellers changed my life.  It was the push I needed to be comfortable with uncertainty.  It gave me the freedom to ignore the gurus on Business Television, the Climate Alarmists who are confident that the world is going to burn us alive in 12 years, and the political experts telling me who will win the next election.  Once you realize that humans are terrible at predicting the weather, the economy, the stock market, and major changes in society, you get to a place of freedom.  The CDC originally told us not to wear masks and they were at least sensible enough to change their position.  As recently as April 8th, I read an article where the WHO says healthy people should not wear masks in public and the CDC says you should.  What do you do when the experts disagree?   (I think you should wear a mask in public)

There is a battle going on right now between lockdowns that are causing businesses to lose billions per month and money printing by the central banks and deficit spending to try to keep things together.  Nobody knows when everything will be open and how people will act when they are free to travel and eat inside a restaurant again.  I fully expect to go to Alaska in July, but I am not normal.  Will some businesses chose to stay closed for worry about the costs of rehiring and opening again if they are concerned the government will lock them down again in the fall?  Who knows?  We can’t know how billions of people are going to react.

After the huge month-long rally, the S&P 500 is poised at a reasonable place to expect sellers to come in.  After crashes, markets bounce and often “test” their lows.  A successful test of the 3/23 low would bounce have the S&P 500 bounce around 2,170 and markets would go up and not look back.  Unfortunately we are about 28% higher than the 3/23 low.  It is going to feel pretty cruddy to watch stocks drop back to those levels even IF “the” bottom is in.

My recommendation is to mentally prepare for a test of the 3/23 low so that you don’t start to lose your sanity when downside volatility returns.  We may not test the lows and we could even break them and find a new low.  By setting your expectations that we should go back to where we were a month ago, I think you will be better prepared emotionally.  The governments’ reaction to Corona was a huge surprise to most and so was the enormous snap-back rally in the midst of terrible news.  Timing these markets is futile and the best strategy remains to buy-hold-and-rebalance a diversified portfolio (that wasn’t all in energy stocks!).  As boring and unnatural as that may feel, it is the time-tested winning approach, especially since NOBODY KNOWS NOTHIN’.