Grow Your Portfolio the Intelligent Way

Your Pandemic Solution Revealed

By Jim Woods

When it comes to figuring out a solution to the global pandemic that is COVID-19, our experts would be well served to listen to the wisdom of crowds. That’s especially true if the experts were privy to your pandemic solutions, with “your” being the nearly 300 respondents to last week’s survey on how best to deal with the coronavirus pandemic. 

Recall that in last week’s issue of The Deep Woods, I asked for your opinion on this issue, and you did not disappoint. The response was overwhelming and far more than I had anticipated. So before we dig into the detailed results, I want to thank those who took the time to complete the survey.

I am both honored and profoundly humbled that you would spend time interacting with me here. The way I see it, a person’s time is the most precious of all commodities. That means your choice to spend time engaging with me and your fellow readers also is precious to me, and I will always hold that choice as a sacred bond to be respected and honored. 

Now, here’s a recap of the questions I asked in the survey:

Which of the following statements best describes your view of how best to deal with the coronavirus pandemic:

1) Hard Quarantine. This pandemic is serious enough to justify the government imposing an economic lockdown, closing schools, restaurants, gyms, concerts, conventions, travel, and non-essential businesses.  

2) The Middle Ground. This pandemic is serious, justifying the wearing of masks, social distancing, limitations on large gatherings, but without closing businesses, schools, restaurants and travel.  

3) Laissez-Faire Position. This pandemic is not that serious, and should have been handled by individuals, institutions and businesses deciding for themselves how to respond without government mandates.  

4) None of the above reflects my views.

Perhaps not surprisingly, the overwhelming majority of respondents chose option “2) The Middle Ground.” I say not surprisingly, because based on the best scientific consensus information we have, this middle ground position does seem to be an eminently rational choice. Option 2 was chosen by 65% of respondents.

Of course, for free thinkers and those with a more libertarian orientation (like myself) Option “3) Laissez-Faire Position” also has a lot of appeal. That response captured 25% of those who took the survey, and it was here where I found some very interesting comments sent in by readers. 

Only 5% of respondents were in favor of option “1) Hard Quarantine.” The remaining 5% of respondents chose option “4) None of the above,” but many of those respondents wrote in to say they either favored a hybrid position between option 1 and 2, or as one reader put it, “My view is 1.5.” 

My own response is also reflective of the majority of opinions here, and it is a combination of options 2 and 3. 

Here is my own response to the survey, the one that I sent to Dr. Mark Skousen when he originally sent me the survey questions:

“I would say somewhere between 2 and 3. 2 In the sense that I think it is serious, especially for vulnerable individuals. I have no issues with the social distancing and large gatherings limits. However, I am more in the 3 camp in that I think people, not government, should be deciding for themselves how to rationally respond to a medical situation.”

My thoughts on this matter were very similar to a number of respondents. For example, one reader wrote the following: 

“The prescriptions in the Middle Ground should be guidelines, not mandates. We need to restrict the power of the state to declare emergencies and usurp powers. Any such declaration should be very temporary and require legislative approval to extend.”

I concur with this assessment, as did many other respondents. Some took that view a step further and were much more libertarian:

“This is less serious than the annual flu and the results are less than deaths due to legal prescriptions. The restrictions imposed are preparing us to be controlled.”

One reader who favored the Hard Quarantine used this valid point to support their selection: 

“We have tried the Middle Ground and Laissez-Faire and we still have cases and deaths increasing.”

While cases and deaths continue to rise in some areas of the country, I think a hard quarantine at this point would do more damage to the economy than Americans could handle. As one reader put it:

“I think it’s nearly criminal the damage that has been done to the economy. Having said that, I can see the benefit in following some logical guidelines.”

I agree with that assessment as well, although I am sympathetic to the notion that a true hard quarantine at the beginning of the pandemic would have reduced the number of cases substantially, and that would have likely put us in a better position to deal with the virus now. Of course, we can never know that for certain. 

Here’s yet another very good reader comment that I received on the issue of businesses and government shutdowns:

“I think businesses should be smart enough to figure out what they need to do to safely service their customers, particularly restaurants. The government has no right to shut down restaurants.”

The reason why I like this response is because it reflects my views that businesses, and individuals, are smart enough to figure out solutions to this, and just about any other, problem we face. 

Indeed, figuring out solutions to problems is what human beings do best. That is, in fact, the one thing we do better than any other species — and that is why we are the dominant species on Earth. 

It is my opinion that our ability to come up with creative solutions to problems, even problems as gigantic as a global pandemic, is what makes our species so beautiful, and so successful. 

It is this creativity that is going to get us through this pandemic, and back to the upward slope of progress that Harvard psychologist Steven Pinker calls the “Enlightenment Now” era. 

Finally, once again, a huge thank you to those who participated in the survey and who have helped me gain a deeper sense of enlightenment on this crucial issue of our time. It’s proof positive that there is indeed a “wisdom of crowds,” provided that the “crowds” are as smart as The Deep Woods readers. 

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ETF Talk: Kicking Back and Profiting from Leisure and Entertainment

(Note: second in a series on post-pandemic boom ETFs)

There are many possible investment strategies to use within a single market segment, including leisure and entertainment.

This exchange-traded fund (ETF), Invesco Dynamic Leisure and Entertainment ETF (PEJ), focuses on leisure and entertainment with a different strategy. Many funds tend to be composed of the largest companies in the industry that they track, leaving out lower market-cap stocks.

However, this fund is different. It holds entertainment stocks based on a combination of factors, including growth, valuation and timing. In practice, this has meant that it is not heavily weighted on the largest companies, but rather on other factors. 

There are usually about 30 holdings in PEJ. Currently, its holdings are more weighted toward smaller public companies, compared to other ETFs.

PEJ currently has $318 million in assets under management, making it a relatively small ETF. Its expense ratio of 0.63% is a bit pricey, but it offers a current dividend yield of 0.56%. As this industry has not fully recovered from the COVID-19 crash and shutdowns earlier this year, it is no surprise that PEJ is substantially down by 25.58% so far this year. However, it is up 11.39% in the last month, so hope exists.

Chart courtesy of StockCharts.com

In terms of leisure and entertainment subindustries, the largest allocation is to restaurants and bars. Other strongly featured themes in this ETF include broadcasting, leisure & recreation and entertainment production.

PEJ has nearly half of its assets in its top 10 holdings. These include Chipotle Mexican Grill, Inc. (CMG), 5.90%; ViacomCBS Inc. (VIAC), 5.89%; Yum China Holdings, Inc. (YUMC), 5.83%; The Walt Disney Company (DIS), 5.06%; and Hilton Worldwide Holdings, Inc. (HLT), 5.02%.

For investors who are looking to invest in a differently determined basket of leisure and entertainment stocks, the smaller and growing companies represented in Invesco Dynamic Leisure and Entertainment ETF (PEJ) may provide an interesting investment thesis, along with potential profits.

Remember, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an email. You just may see your question answered in a future ETF Talk.

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Protect Yourself in Style 

Okay, so we all have to wear masks to help prevent the spread of COVID-19.

That’s just good science, and I am a big fan of good science. But I also like to look good while promoting good science. That’s why I’ve decided to make my own masks, and to make those available to you with my new Way of the Renaissance Man masks.

Protect yourself and those you care about in style with these handmade, 100% polyester masks that come with a sleeve to insert a greater level of protection with an N95 filter insert (not included).

Combat coronavirus in style, and always have a clean one handy by getting two or more now! The masks retail for $19.99 each, but today I’ve discounted the price to $14.99.

And as a special bonus offer for The Deep Woods readers, take another 20% off your order when you buy two or more.

Simply use the promo code: DEEPWOODS20 to get your special subscriber pricing.

Hey, protect yourself and look good doing it. Now, what could be cooler than that?

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The True Measure of Wisdom

“Yesterday I was clever, so I wanted to change the world. Today I am wise, so I am changing myself.”

–Rumi

Okay, I have a joke for you. It’s one that I call the “Buddhist hot dog vendor.” 

Man: “Can I get two hot dogs with mustard?”

Buddhist Vendor: “Sure, that will be $16.”

The man hands the Buddhist vendor a $20 bill, and the Buddhist Vendor puts the money in his pocket, and then just stands there quietly. After about a minute of uncomfortable and silent inaction, the Man asks the Buddhist Vendor: “Can I please have my change?”

The Buddhist Vendor pauses for a moment, then replies: “My son, change only comes from within.” 

Ok, once you’ve stopped laughing, you can start to see the actual lesson in this joke. That lesson is that “change” in the personal sense can only occur inside an individual. And as the 13th-century Persian poet Rumi writes, undertaking the project of changing from within is the true measure of wisdom. 

Wisdom about money, investing and life can be found anywhere. If you have a good quote that you’d like me to share with your fellow readers, send it to me, along with any comments, questions and suggestions you have about my newsletters, seminars or anything else. Click here to ask Jim.

In the name of the best within us,

Jim Woods 

 

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