Grow Your Portfolio the Intelligent Way

Time for a Candid COVID Conversation  

By Jim Woods

 

Nerves are frayed, tensions are high and the country seems to be at an inflection point in this microscopic war. As the COVID-19 death toll mounts, so too does the number of Americans unemployed. On Friday, we’ll find out just how grotesque the jobs picture is, but at this point there’s no question it will be reminiscent of the works of Hieronymus Bosch.

On an individual level, I know we’re all struggling to make sense of how best to conduct our lives during this pandemic. And if you’re a thoughtful person (and I know The Deep Woods readers are), then you’ve probably wrestled with the macro and micro issues and complexities surrounding these unprecedented circumstances.

Macro issues such as when and how the economy should reopen are crucial questions, and both praise and criticism can be levied at those in political power at various levels for their handling of the matter. On a micro level, we all face questions such as when and how we should return to interacting with the world, what kind of safety precautions we should take and what course of action is in our own self-interest.

There are no easy answers to these questions, at least not from my perspective. But, fortunately, there is a way to help figure out the best way to conduct ourselves, and that is to talk to people whose opinions we trust, love and respect.

For me, a person who fits that description is my longtime friend, writer/filmmaker/intellectual activist Stewart Margolis. After reading some of Stewart’s thoughts on these issues, both macro and micro, I reached out to him via phone to discuss things. I found the conversation so fruitful that, with his permission, I decided to share some of the highlights of our discussion here.

Jim Woods (JW): Stewart, I know that many people are struggling with the best way to deal with this whole COVID-19 mess. How are you dealing with it, and what are your thoughts on the best approach?

Stewart Margolis (SM): I’m trying to gather as much objective evidence as I can on what is actually going on, but that’s not as easy as you might think. Because even with the best intentions, the reporting of the data out there is incomplete. And, it’s still very early on in terms of us dealing with this virus, and there are still so many unknowns it’s hard to know what the truth is out there.

JW: I’ve found the nature of this virus troubling in that there are so many unknowns regarding how it can cause death and/or severe damage in one person and how it can cause very little damage in another. Then there are those who are asymptomatic carriers of the disease and who most likely don’t even know they have it unless they’ve been tested. So, in the face of this uncertainty, knowing what to do isn’t easy.

SM: It is a bad situation, and especially because we all have to make decisions based on limited information. For me, the issue of how to act in the face of this pandemic comes down to the best assessment of what is in my rational self-interest. I am fortunate enough to be able to work from home and still do my job, so for me the best course of action might be different than if I had a profession or business that required me to be out there interacting with people. 

JW: I’m in that same fortunate situation, as I’ve worked from home for most of the past two decades. And while I miss going out to restaurants, the pub, the gym, concerts, etc., I don’t miss it enough to put my health at risk.

SM: In my hierarchy of values, my health is very important. So, for me, regardless of what the government is telling me, I am going to take sensible precautions. That means I am going to avoid big gatherings and not go to concerts or movies. Now, that said, I think people should be allowed to take on their own level of risk as it pertains to their hierarchy of values.

JW: I consider life to be the standard of value. That means that acting in a manner that jeopardizes my life is antithetical to my top value. So, I therefore won’t eat poison when I could eat healthy food. It also means I wouldn’t choose to visit a COVID-19 hospital ward without protective gear. Yet somewhere in between is where the struggle comes in, and knowing how to navigate that struggle is a hard problem. It also is a hard problem when you extrapolate that out to the question of what society should do.

SM: I have mixed feelings on that, as I know you do as well, because as an advocate of liberty and free markets, I am very sympathetic to people out protesting who want to reopen their businesses and the economy. They should be allowed to reopen their businesses. However, if you are out there protesting without a mask and screaming in a police officer’s face, then you don’t seem to be someone who is cognizant of the reality of this disease.

JW: As you know, I am an advocate of limited government, and specifically a government whose basic role should be limited to the protection of individual rights. And while I understand the need for civil disobedience here, I think an in-your-face, aggressive approach is counterproductive. It gives the side arguing for more government control reasons to exercise that control and reasons to portray the protesters as anti-science extremists.

SM: I have a wide variety of friends in the liberty movement, and really all over the philosophic map, and there’s a subsection of people who are referring to COVID-19 as a “faux-pandemic,” or who think this is some kind of hoax. What I have pointed out to them is that this time of flippant dismissal of the crisis when tens of thousands of people are dying is not helping the cause of opening up the economy. It is making people who argue for opening the economy seem like callous, anti-science dolts. I think that if we want the economy to reopen, and we do, then we have to be reasonable about the reality of the situation. 

JW: You and I aren’t afraid of the “extremist” moniker when it comes to ideas, but our ideas are not extremist in the sense of advocating for people to take reckless chances with their lives and also putting other people’s lives at risk in the process. I also think a rationally self-interested approach such as the one we advocate is not extreme, but rather should be the standard. And I agree with you on the counterproductive nature of ignoring the science and ignoring the reality of this virus. The only true victory that can be won here is through a rational exercise of our best judgement given the objective reality of the facts as best we can ascertain and evaluate them. 

SM: Letting ideology crowd out reality is never a good thing. Reality always has to come first, and then you can figure out how it fits into your ideology. You simply cannot be editing reality because it doesn’t fit your narrative.

JW: You see, it’s a quotable gem like this that I wanted to make sure I share with The Deep Woods readers, and I think that’s a great place to leave it. Thank you, Stewart.

SM: Thanks, Jim. I always enjoy our discussions. 

If you’d like to listen to a conversation I had with Stewart Margolis prior to the coronavirus, then I invite you to check out the podcast we did together from last year’s FreedomFest conference. 

P.S. The Las Vegas MoneyShow, which was scheduled for mid-May, will unfortunately not be held as a live event. Yet just because we have to hold off a little longer for conferences doesn’t mean we can’t get together online in each other’s homes. 

I will be doing just that on Wednesday, May 13, from 2:50 p.m. to 3:20 p.m. EDT, where I will be joining the FREE MoneyShow Virtual Event to give the presentation, “How To Always Know When to Sell Your Stocks.”

Hey, even though we can’t be in Vegas to “press the flesh,” we can still get together virtually and learn how best to deal with this COVID-19 market. So, just click the above link and sign up for your FREE MoneyShow Virtual Event. 

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ETF Talk: A Popular Preferred ETF With Strong Liquidity

Preferred ETFs are a smart way for income-oriented investors to gain not only share price gains but a 5-7% yield while weathering the COVID-19 market volatility.

One such ETF is iShares Preferred and Income Securities ETF (NASDAQ: PFF). This fixed-income ETF provides exposure to U.S. corporate bonds and focuses on broad credit securities.

As a result, this ETF has strong liquidity and tight spreads, making it cost-competitive with its peer funds. PFF is especially recognized for strong block-trading liquidity, which makes it an appealing fund choice for large traders.

PFF currently is the most popular preferred stock ETF with $14.86 billion in assets under management, according to ETF.com. The fund has an expense ratio of 0.46% and has a dividend yield of 5.70%.

Though its year-to-date performance is at -7.37%, PFF is making an upward climb after dipping significantly in mid-March. The fund’s May 6 open of $34.07 still was well within its 52-week range. This specific fund targets preferred securities regardless of credit rating, providing a broad and diversified portfolio.

Chart courtesy of www.stockcharts.com

The majority of PFF’s holdings are allocated to the utilities sector which currently consumes 70.92% of the fund’s portfolio. PFF’s top holdings include preferred shares of Broadcom Inc. (AVGOP), 2.02%, Wells Fargo & Co. (WFCPL), 1.63%, Bank of America Corp. (BACPL), 1.48%, Crown Castle International Corp.(CCIPA), 1.38%, and Citigroup Capital (CPN), 1.27%. 

In summary, preferred ETFs may be the way to go for investors seeking some additional income, as it provides potential upside and a strong yield. PFF is a popular open-ended fund that was chosen by FactSet as an “Analyst Pick.” It is a competitive fund among others in the same sector, and its strong liquidity is helping it to navigate the uncertainties of the current COVID-19 market.

iShares Preferred and Income Securities ETF (NASDAQ: PFF) is an ETF that may be worth inspection as a possible consideration to add to an income-oriented equity portfolio.

As always, 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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What Makes a Renaissance Man Tick?

At the risk of sounding embarrassingly self-serving, I’ll first let you know that many readers and listeners to my podcast have asked me how I came to be called “The Renaissance Man.”

Well, it’s a nickname that was given to me by my friends in college, and ever since then, the moniker has just stuck. But what is a Renaissance Man, how does one become a Renaissance Man and what is it that makes a Renaissance Man “tick”?

In the new episode of the Way of the Renaissance Man podcast, the tables get turned, as I go from interviewer to interviewee, courtesy of my friends and “Position To Win” authors John Paul Mendocha and Gabe Bautista.

In this revealing interview, I talk about my educational and professional background and how my experiences have shaped my approach to life. I also tell you why I love doing so many different things.

Most importantly, you’ll discover why the key to becoming a Renaissance Man is to focus on the ideas you love and then integrate those ideas into action. The combination of focus and integration is what allows one to celebrate those integrated ideas in action.

If you’ve ever wanted to find out what makes a Renaissance Man tick, then this special reprise interview from the “Position To Win” podcast is what you’ve been looking for.

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In case you missed it

Let’s Quarantine Like Isaac Newton

You’re locked in, shut in and shut down — welcome to the quarantine club. And in this club, membership requirements basically consist of being an American during the age of COVID-19. So, what are you doing during this quarantine? Are you binge watching Netflix, lying around on the couch eating junk food and drinking more adult beverages than you should? Or, are you using this time to organize your life, read more books, spend more quality time with family and learn a new skill?

The truth for most of us is that we are doing a little bit of all of the above. Yet, what if we could really use this quarantine as a time to become great and to offer the world the best within us? What if there was an ultimate example of a person we all could aspire to that used his quarantine time to reinvent our understanding of the world?

What if we could quarantine like Isaac Newton? 

The year was 1665. That also was the year that bubonic plague ravaged England, extinguishing an estimated 100,000 lives. It’s also the year that Isaac Newton, then just a 24-year-old student at Cambridge University, was forced to leave campus and enter quarantine at his childhood home in the English countryside.

That quarantine lasted more than a year, but what Newton accomplished during that period is considered one of the world’s greatest feats of human achievement. In fact, this period has been called “Annus Mirabilis,” or the “Year of Wonders.”

And just what were those wonders? (Warning, do not attempt to compare your accomplishments to these, as doing so will no doubt make you feel like a total slacker).

He invented the modern field of optics. Conducting experiments with prisms, Newton was able to demonstrate that white light was made up of component colors we see in a common rainbow. At the time, it was thought that a prism altered light’s color. But Newton showed light was made up of these component colors. 

He identified the Laws of Motion and Universal Gravitation. The genesis for these theories came from Newton’s attempt to answer the question, “How does the universe work?” Here is where Newton’s apple comes in, as he once recounted the story of watching an apple fall from the tree outside his window and wondering why it fell to the ground and why it didn’t ascend into the sky. This observation ultimately resulted in the theory of Universal Gravitation, i.e. everything in existence is attracted to everything else — and that this force ties the universe together.

He invented calculus. I know that many high school students hate him for doing so, but in addition to greatly furthering the field of optics and identifying the laws of motion and gravity, Newton also wrote several papers on mathematical theory on what was then called “fluxions.” Those papers later became the base of the field of mathematical study known as calculus.

Now, of course, I am not suggesting we can duplicate the magnitude of Newton’s achievements during our hopefully much shorter COVID-19 quarantine. Yet what I am suggesting is that we use our quarantine time to attempt to achieve what we haven’t been able to in the absence of our usual life distractions.

In my own case, I have used this time to focus my professional life on identifying the investable sectors, stocks and exchange-traded funds (ETFs) that I think will thrive during this pandemic, and also when the economy returns to “normal.” In my recreational life, I have been playing piano, composing music and writing songs more than I have at any time in recent years. There’s something soothing about creating art during this lockdown, so if you’ve ever been inclined toward developing your artistic side, I submit to you that now is a fantastic time to do so.

Finally, I understand that now is a time for sadness and for pain. This viral quarantine is something that no one really has a sense of how best to cope with, so we are all just winging it the best way we know how. Yet what we can do is what we should do, and that is to try to use this time to help ourselves be the very best humans we can be.

So, starting right now, think of ways you can unlock your potential. Think of ways you can enhance your flourishing and, by extension, ways that you can help the world to flourish along with you.

Be creative, be productive and be inspiring. Channel your inner Isaac Newton and focus your mind on achievement. Make your COVID-19 quarantine your very own year of wonder. 

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Right in Two 

Repugnant is a creature who would squander the ability

To lift an eye to heaven, conscious of his fleeting time here

–Tool, “Right in Two” 

There’s nothing that focuses the mind like a global pandemic, and it is incumbent upon us all to do so for our own sake and for the sake of our fellow man. So, if you haven’t done so already, open your mind to this situation and think of ways to get through this tough time — and don’t squander your ability to think things through. 

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.

 

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