Start of a New Investment Series: Pandemic Profits
DISCLAIMER: Of course this is an uncertain and scary time for everyone, with our entire global health and economy in extreme risk. While many may consider at first read the term ‘Pandemic Profits’ as distasteful, the reality is that major world problems are solved by efficient and ethical capitalism.
The most accurate definition of capitalism that I can find is, “Capitalism is an economic system based on the private ownership of the means of production and their operation for profit. Characteristics central to capitalism include private property, capital accumulation, wage labor, voluntary exchange, a price system and competitive markets.”
If we, as a world, are to climb out of this situation, entrepreneurs and investors must take calculated risks which primarily provide incredible solutions to our current pandemic. The side effects of these solutions include those entrepreneurs and investors being rewarded in proportion to the size of the problem they are solving.
Just as private companies throughout the US, and the rest of the world, are scrambling to figure out vaccines, supply chains, and numerous other problems, we can and should jump into this opportunity to help the world and be rewarded for our efforts.
“I am a firm believer in the people. If given the truth, they can be depended upon to meet any national crisis. The great point is to bring them the real facts.” -Abraham Lincoln
“In a time of domestic crisis, men of goodwill and generosity should be able to unite regardless of party or politics.” -John F. Kennedy
“The pessimist sees difficulty in every opportunity. The optimist sees the opportunity in every difficulty.” -Winston Churchill
You knew it was coming. The best investment opportunities resulting from the COVID-19 pandemic.
However, I’m going to do this a little bit differently. Normally I’d just pick an investment idea and run with it. The problem is that we are currently at the very early stages of not only a deadly pandemic, but also a significant economic correction. The rate and reversal in trend of both of these events are not directly correlated to each other.
Of course the pandemic was the catalyst for the downturn, but going forward, we don’t know what will unfold next. Will this pandemic end in a month or two, with a then three year economic recovery? Or will both the pandemic and economic change happen at the same time, one year form now?
Also, will this pandemic expose other structural problems within our financial system? Will high corporate debt levels, zero interest rate policies, and fiat currency printing be proven as disastrous? No one knows for sure. But, there will be different solutions for different problems.
So, this is how I’m going to do it: I’m going to write a variety of these posts for the foreseeable future as if I was making investment decisions at that exact point in time.
So, for example, if I were to list a variety of things to invest in right this moment, I might pick N95 masks, hand sanitizer, and gun manufacturers. These opportunities have to do more with the current health crisis, instead of underlying issues with our financial system. Obviously, six months from now there are going to be completely different opportunities.
For clarity, the ideas for investment opportunities that I share does not mean that I am personally doing them or that I even know it will be successful. Often times, in the past, the ideas I write about are things I’ve done before or are in the midst of doing… but this series of articles will probably just be ideas. (Unless I find a really good opportunity to pursue, and we’ll invest in it. And then I’ll tell you all about it afterward.)
This first group of ideas is pretty shaky, considering that today, March 16, is the day that Trump has first announced a 15 day isolation period (not a full enforced lockdown, yet). Also, today, the market fell by 12%, making it the worst day for stocks since 1987. Nonetheless, there are some obvious investment and entrepreneurship opportunities right now:
- Cleaning Companies – This is obvious and almost not worth putting on the list. However, I’m just curious what some of these public companies will be posting when they file next quarter. Huge blow out numbers? Or are there other products in their lineup that haven’t moved, or have even declined, causing for an anti-climatic result? We’ll find out soon.
- Food Delivery (and really, any delivery service) – Again, this is obvious. However, I’m still curious if some of those ridiculously valued startups out of Silicon Valley will finally be able to justify their valuation based on a non-stop flood of at-home delivery requests. Again, we should find out soon.
- Survival Gear, Emergency Food, and Weapons – Although this one is also obvious, there is one important thing to remember about our last economic downturn in 2008. Several years after the actual market crash, the whole survival/prepper industry was thriving, as people thought there would be another economic crash right away. And they thought it would be much worse. Survival gear companies absolutely crushed it, with many of them still around today, having pivoted to be major manufacturers with large government contracts. So, this opportunity in the SHTF gear category will probably last quite a while.
- Plastics – Although plastics have gotten a bad wrap for a while, due to their eco-non-friendliness, the reality is that plastics solve a lot of problems. Most notably, cleanliness, safety, and convenience. When it comes to a potentially deadly virus, most people are going to put their eco-conscious mind behind them to focus on what’s going to keep them alive. The plastics industry will probably see a boom of manufacturing demand that ranges from medical equipment to new sanitary devices and tools. This could be approached from an investment side or as an entrepreneur.
- Remote Working Management – Think about it. Lots of companies have been forced to send their employees home, but still expect the work to get done. While managing an office with everyone in front of you is already difficult, managing multiple teams that aren’t physically together can be disastrous if you don’t know what you’re doing. A friend and investor of mine, Andre, is an expert at this, as he has built companies utilizing overseas teams, while based in the United States. He mentioned the possibility of starting such a company, “putting together an offering to help with remote project management. To help companies that previously didn’t need that formal level of management as their team was all sitting next to each other.” That’s a copy/paste message he sent. Get in contact with him. Or start your own if you know what you’re doing. There are a lot of companies that need serious help managing their newly remote teams.
That’s it for now. I can think of about one hundred more opportunities, but I’ll share those once we figure out what is going to happen here in the short term. I’m sure that you have some incredible ideas and also some different perspectives, depending on where you are located. Feel free to share what you’re doing.
Interesting times, indeed.
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