by Gary Alexander

April 28, 2020

“Adults keep saying ‘We owe it to the young people to give them hope.’ But I don’t want your hope. I don’t want you to be hopeful. I want you to panic. I want you to feel the fear I feel every day. And then I want you to act. I want you to act as you would in a crisis. I want you to act as if our house is on fire. Because it is.”

–Greta Thunberg, 2019 B.C. (Before Coronavirus)

I’ve been promoting – then fighting – Doomsday prophets for the last 55 years. For the first 25 years of my journalistic career, I was one of them, writing about Global Famine, the Population Bomb, the Limits to Growth, our Polluted Planet, the Debt Crisis, the Doomed Dollar, the AIDS crisis, the Coming Crash, Japan’s dominance, Russian nukes, and more. Since 1990, however, I realized how wrong I was, and I have been busily debunking those and other threats for 30 years. Call me a “Recovering Apocaholic.”

As the world has grown richer and arguably safer from the threat of the Four Horsemen of imperialism, war, plague, and famine, we’ve grown more panic-driven. As deaths from all four threats have declined dramatically, the drumbeat of various looming crises have multiplied over 10-fold from 1960 to 2005:

Looming Crisis

Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.

Now, here comes the coronavirus, a very real threat, the Epidemic of a Century – kind of like those Fights of the Century, or Trials of the Century, or Perfect Storms that seem to happen every decade or so. This little bug has crippled the economy due to a threat that is currently killing fewer than annual opioid deaths or accidental poisonings, or the deaths suffered from the regular flu season of 2018. The death toll could have been much higher without social distancing, for sure, but is there a chance we are over-reacting?

Causes of Death

Not counting obesity-related diabetes, or the estimated 480,000 deaths attributable to smoking, half of these 408,000 annual deaths (drugs, alcohol, and suicide) are what Anne Case and Angus Deaton call “Deaths of Despair” and are up sharply: “Deaths of despair among white men and women aged 45 to 54 rose from 30 per 100,000 in 1990 to 92 per 100,000 in 2017”), but the other half of the 408,000 deaths are preventable through greater care – including annual flu shots, which only 37.1% of U.S. adults got before the 2017-18 flu season, a decline of 6.1 points from the previous season, a likely cause of the 2018 surge.

Coronavirus deaths currently fall between suicides (48k) and the 2017-18 flu season (61k). They will likely peak around the number of drug overdoses (70k). With proper care, we can limit virus deaths and keep America working smart. We have little choice. Poverty kills, and total isolation yields total poverty.

Businesses are going bankrupt. Families are without paychecks. Trade is drying up. Hospitals are going bankrupt. Oxford Economics forecasts that 1.5 “non-essential” health-care workers will lose their jobs in April alone – workers who could be tending seriously ill patients with diseases other than COVID-19.

States will soon go bankrupt, since taxes aren’t coming in, needed benefits are rising, and they can’t print money or run deficits. (Texas could go bankrupt over too many months of $10 oil, never mind the virus.)

I’m no doctor, but I am a seasoned observer of the panic of crowds operating in crisis mode. I was duped as a child and young adult (shame on me), but I’ve been repeatedly inoculated against being fooled again.

The Government is Not the Solution – Private Initiative Is

Congress is passing one stimulus package after another, but that money isn’t getting to the people who need it, since the government is not equipped for quick action. Their equipment, quite literally, is trapped in the Information Ice Age. Last week, New Jersey put out a call for Cobol programmers (a language drafted in 1959) to update its unemployment benefits software, which runs on mainframes installed 40 years ago. (The Pentagon’s control of nuclear missiles until recently ran on 8-inch floppy disks from the 1970s). NIH was buying new fax machines until last year. Remember how the Healthcare.gov Website backfired and got overloaded so easily in 2013? The IRS can probably garnish your wages in a day, but such is their paper backlog that manual tax filers shouldn’t expect their $1,200 relief check until August.

New spending by all levels of government, including the Fed’s QE, is reaching epidemic proportions. As of April 15, according to Phil Gramm, former chairman of the Senate Banking Committee, and Michael Solon, partner of U.S. Policy Metrics, “New spending commitments already equal almost twice the gross domestic product loss incurred in the 2008 recession, and 20% more than all private wages and salaries paid in the last quarter of 2019. Yet only a sliver of the money has reached the intended beneficiaries.”

In the average postwar year (1945 to 2019), Gramm and Solon wrote, the federal government borrowed 2.1% of GDP each year. This year, the federal government will borrow 20.6% of GDP – 10 times the average. “That is more than all private investment expenditures in 2019.” We need to ask if we want the federal government to decide which businesses are to survive and which businesses are to fail this year.

In Europe, Sweden is the outlier, choosing to live a fairly normal life, keeping the economy going. Their death rate is higher than other Scandinavian nations but far lower than most European nations (see chart).

Daily Confirmed Deaths

Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.

We need our 50 states to be laboratories as well. The bulk of America is not as densely populated as New York City. We can let sparsely populated Midwestern states remain relatively free to work smartly, with social distancing, wearing protective masks, and sanitizing surfaces, but basically going back to work. Let the brave business owners and workers find solutions and show us the way. America is made up of such brave pioneers. We can’t afford to stay locked up for six to 18 months until perfect solutions are obvious.

The rest of the world has started working. Why don’t we? They even played ball after flu struck in 1918:

Players With Mask

The Roaring 20s followed the last major flu epidemic. How about America stand up and Roar again?

All content above represents the opinion of Gary Alexander of Navellier & Associates, Inc.

Please see important disclosures below.

Also In This Issue

Global Mail by Ivan Martchev
It’s Often Darkest Before the Dawn

Sector Spotlight by Jason Bodner
What’s Next: Bounce or Bust?

View Full Archive
Read Past Issues Here

About The Author

Gary Alexander
SENIOR EDITOR

Gary Alexander has been Senior Writer at Navellier since 2009.  He edits Navellier’s weekly Marketmail and writes a weekly Growth Mail column, in which he uses market history to support the case for growth stocks.  For the previous 20 years before joining Navellier, he was Senior Executive Editor at InvestorPlace Media (formerly Phillips Publishing), where he worked with several leading investment analysts, including Louis Navellier (since 1997), helping launch Louis Navellier’s Blue Chip Growth and Global Growth newsletters.

Prior to that, Gary edited Wealth Magazine and Gold Newsletter and wrote various investment research reports for Jefferson Financial in New Orleans in the 1980s.  He began his financial newsletter career with KCI Communications in 1980, where he served as consulting editor for Personal Finance newsletter while serving as general manager of KCI’s Alexandria House book division.  Before that, he covered the economics beat for news magazines. All content of “Growth Mail” represents the opinion of Gary Alexander

Important Disclosures:

Although information in these reports has been obtained from and is based upon sources that Navellier believes to be reliable, Navellier does not guarantee its accuracy and it may be incomplete or condensed. All opinions and estimates constitute Navellier’s judgment as of the date the report was created and are subject to change without notice. These reports are for informational purposes only and are not a solicitation for the purchase or sale of a security. Any decision to purchase securities mentioned in these reports must take into account existing public information on such securities or any registered prospectus.To the extent permitted by law, neither Navellier & Associates, Inc., nor any of its affiliates, agents, or service providers assumes any liability or responsibility nor owes any duty of care for any consequences of any person acting or refraining to act in reliance on the information contained in this communication or for any decision based on it.

Past performance is no indication of future results. Investment in securities involves significant risk and has the potential for partial or complete loss of funds invested. It should not be assumed that any securities recommendations made by Navellier. in the future will be profitable or equal the performance of securities made in this report. Dividend payments are not guaranteed. The amount of a dividend payment, if any, can vary over time and issuers may reduce dividends paid on securities in the event of a recession or adverse event affecting a specific industry or issuer.

None of the stock information, data, and company information presented herein constitutes a recommendation by Navellier or a solicitation to buy or sell any securities. Any specific securities identified and described do not represent all of the securities purchased, sold, or recommended for advisory clients. The holdings identified do not represent all of the securities purchased, sold, or recommended for advisory clients and the reader should not assume that investments in the securities identified and discussed were or will be profitable.

Information presented is general information that does not take into account your individual circumstances, financial situation, or needs, nor does it present a personalized recommendation to you. Individual stocks presented may not be suitable for every investor. Investment in securities involves significant risk and has the potential for partial or complete loss of funds invested. Investment in fixed income securities has the potential for the investment return and principal value of an investment to fluctuate so that an investor’s holdings, when redeemed, may be worth less than their original cost.

One cannot invest directly in an index. Index is unmanaged and index performance does not reflect deduction of fees, expenses, or taxes. Presentation of Index data does not reflect a belief by Navellier that any stock index constitutes an investment alternative to any Navellier equity strategy or is necessarily comparable to such strategies. Among the most important differences between the Indices and Navellier strategies are that the Navellier equity strategies may (1) incur material management fees, (2) concentrate its investments in relatively few stocks, industries, or sectors, (3) have significantly greater trading activity and related costs, and (4) be significantly more or less volatile than the Indices.

ETF Risk: We may invest in exchange traded funds (“ETFs”) and some of our investment strategies are generally fully invested in ETFs. Like traditional mutual funds, ETFs charge asset-based fees, but they generally do not charge initial sales charges or redemption fees and investors typically pay only customary brokerage fees to buy and sell ETF shares. The fees and costs charged by ETFs held in client accounts will not be deducted from the compensation the client pays Navellier. ETF prices can fluctuate up or down, and a client account could lose money investing in an ETF if the prices of the securities owned by the ETF go down. ETFs are subject to additional risks:

  • ETF shares may trade above or below their net asset value;
  • An active trading market for an ETF’s shares may not develop or be maintained;
  • The value of an ETF may be more volatile than the underlying portfolio of securities the ETF is designed to track;
  • The cost of owning shares of the ETF may exceed those a client would incur by directly investing in the underlying securities; and
  • Trading of an ETF’s shares may be halted if the listing exchange’s officials deem it appropriate, the shares are delisted from the exchange, or the activation of market-wide “circuit breakers” (which are tied to large decreases in stock prices) halts stock trading generally.

Grader Disclosures: Investment in equity strategies involves substantial risk and has the potential for partial or complete loss of funds invested. The sample portfolio and any accompanying charts are for informational purposes only and are not to be construed as a solicitation to buy or sell any financial instrument and should not be relied upon as the sole factor in an investment making decision. As a matter of normal and important disclosures to you, as a potential investor, please consider the following: The performance presented is not based on any actual securities trading, portfolio, or accounts, and the reported performance of the A, B, C, D, and F portfolios (collectively the “model portfolios”) should be considered mere “paper” or pro forma performance results based on Navellier’s research.

Investors evaluating any of Navellier & Associates, Inc.’s, (or its affiliates’) Investment Products must not use any information presented here, including the performance figures of the model portfolios, in their evaluation of any Navellier Investment Products. Navellier Investment Products include the firm’s mutual funds and managed accounts. The model portfolios, charts, and other information presented do not represent actual funded trades and are not actual funded portfolios. There are material differences between Navellier Investment Products’ portfolios and the model portfolios, research, and performance figures presented here. The model portfolios and the research results (1) may contain stocks or ETFs that are illiquid and difficult to trade; (2) may contain stock or ETF holdings materially different from actual funded Navellier Investment Product portfolios; (3) include the reinvestment of all dividends and other earnings, estimated trading costs, commissions, or management fees; and, (4) may not reflect prices obtained in an actual funded Navellier Investment Product portfolio. For these and other reasons, the reported performances of model portfolios do not reflect the performance results of Navellier’s actually funded and traded Investment Products. In most cases, Navellier’s Investment Products have materially lower performance results than the performances of the model portfolios presented.

This report contains statements that are, or may be considered to be, forward-looking statements. All statements that are not historical facts, including statements about our beliefs or expectations, are “forward-looking statements” within the meaning of The U.S. Private Securities Litigation Reform Act of 1995. These statements may be identified by such forward-looking terminology as “expect,” “estimate,” “plan,” “intend,” “believe,” “anticipate,” “may,” “will,” “should,” “could,” “continue,” “project,” or similar statements or variations of such terms. Our forward-looking statements are based on a series of expectations, assumptions, and projections, are not guarantees of future results or performance, and involve substantial risks and uncertainty as described in Form ADV Part 2A of our filing with the Securities and Exchange Commission (SEC), which is available at www.adviserinfo.sec.gov or by requesting a copy by emailing info@navellier.com. All of our forward-looking statements are as of the date of this report only. We can give no assurance that such expectations or forward-looking statements will prove to be correct. Actual results may differ materially. You are urged to carefully consider all such factors.

FEDERAL TAX ADVICE DISCLAIMER: As required by U.S. Treasury Regulations, you are informed that, to the extent this presentation includes any federal tax advice, the presentation is not written by Navellier to be used, and cannot be used, for the purpose of avoiding federal tax penalties. Navellier does not advise on any income tax requirements or issues. Use of any information presented by Navellier is for general information only and does not represent tax advice either express or implied. You are encouraged to seek professional tax advice for income tax questions and assistance.

IMPORTANT NEWSLETTER DISCLOSURE:The hypothetical performance results for investment newsletters that are authored or edited by Louis Navellier, including Louis Navellier’s Growth Investor, Louis Navellier’s Breakthrough Stocks, Louis Navellier’s Accelerated Profits, and Louis Navellier’s Platinum Club, are not based on any actual securities trading, portfolio, or accounts, and the newsletters’ reported hypothetical performances should be considered mere “paper” or proforma hypothetical performance results and are not actual performance of real world trades.  Navellier & Associates, Inc. does not have any relation to or affiliation with the owner of these newsletters. There are material differences between Navellier Investment Products’ portfolios and the InvestorPlace Media, LLC newsletter portfolios authored by Louis Navellier. The InvestorPlace Media, LLC newsletters contain hypothetical performance that do not include transaction costs, advisory fees, or other fees a client might incur if actual investments and trades were being made by an investor. As a result, newsletter performance should not be used to evaluate Navellier Investment services which are separate and different from the newsletters. The owner of the newsletters is InvestorPlace Media, LLC and any questions concerning the newsletters, including any newsletter advertising or hypothetical Newsletter performance claims, (which are calculated solely by Investor Place Media and not Navellier) should be referred to InvestorPlace Media, LLC at (800) 718-8289.

Please note that Navellier & Associates and the Navellier Private Client Group are managed completely independent of the newsletters owned and published by InvestorPlace Media, LLC and written and edited by Louis Navellier, and investment performance of the newsletters should in no way be considered indicative of potential future investment performance for any Navellier & Associates separately managed account portfolio. Potential investors should consult with their financial advisor before investing in any Navellier Investment Product.

Navellier claims compliance with Global Investment Performance Standards (GIPS). To receive a complete list and descriptions of Navellier’s composites and/or a presentation that adheres to the GIPS standards, please contact Navellier or click here. It should not be assumed that any securities recommendations made by Navellier & Associates, Inc. in the future will be profitable or equal the performance of securities made in this report.

FactSet Disclosure: Navellier does not independently calculate the statistical information included in the attached report. The calculation and the information are provided by FactSet, a company not related to Navellier. Although information contained in the report has been obtained from FactSet and is based on sources Navellier believes to be reliable, Navellier does not guarantee its accuracy, and it may be incomplete or condensed. The report and the related FactSet sourced information are provided on an “as is” basis. The user assumes the entire risk of any use made of this information. Investors should consider the report as only a single factor in making their investment decision. The report is for informational purposes only and is not intended as an offer or solicitation for the purchase or sale of a security. FactSet sourced information is the exclusive property of FactSet. Without prior written permission of FactSet, this information may not be reproduced, disseminated or used to create any financial products. All indices are unmanaged and performance of the indices include reinvestment of dividends and interest income, unless otherwise noted, are not illustrative of any particular investment and an investment cannot be made in any index. Past performance is no guarantee of future results.