Just like you, the Fox family has had to hunker down as we go through this crazy time. I haven’t been able to write a post lately because of a little thing called . . . homeschooling.
Since we’re fully invested, we’ve lost about one third of our net worth, in line with the overall market decline. In addition to homeschooling we’ve been on pretty much full lockdown in North Carolina. A bit more trivially, I am missing out on the NCAA tournament which I had tickets to and I’m totally bummed that the NBA season is done since I love watching basketball.
With all that negativity, it’s important that we do try to stay positive and embrace the upsides that might come from all this craziness. Here are my top 5 investing/financial benefits that could come from the coronavirus experience.
5. The internet: Everyone knows the internet is bigger than ginormous, but it has really shined. With homeschooling I’ve made a lot of lessons by using the limitless free resources other parents and schools have made available online. The cubs and I do science and geography lessons everyday and youtube is an amazing resource for that.
Foxy Lady and I have been watching shows on Amazon Prime. Given how much we order off Amazon, Prime would be a given anyway, but with the shows we’re basically getting Netflix-lite for free. As it is, Prime comes out to about $8 a month which seems a screaming bargain.
Pretty much every public library in the country offers access to download an enormous collection of books for free. I haven’t bought an actual book in probably 10 years, and I haven’t read a physical book in over a year; I just get any book I want for free on my tablet through my library.
Of course, we knew all this, but I think the pandemic has really highlighted how much is out there and how much is for free. It’s truly astonishing. INFLATION KILLER.
4. Online grocery shopping: When we moved down to Charlotte we were near a Walmart that allowed for online grocery shopping and then you would pick up your order at the store. It’s not home delivery (I think they were just going to start this before the pandemic hit), but it’s still pretty sweet.
I love this way of shopping, and Walmart loves it too. Our grocery bill has actually gone down because we don’t have impulse buys and we don’t buy things we already have (I am terrible with that when it comes to cucumbers for some reason). Walmart loves it because it cuts down on people they need in the store, theft, damage to merchandise, and a lot more. Everyone wins.
With all the social distancing, I’d like to see this promoted more. Think of all the infected people who come shop, touch different stuff, and get others sick. A grocery store is the most necessary of stores right now so we can’t shut them down, but they are also one that is infecting people the most. Why can’t states say if you buy online and pick up without going into the store your order won’t be charged sales tax? That would be a helluva bargain compared to shutting down entire swaths of the economy.
Long-term if more and more people do that, grocery stores can turn into distribution centers that run much leaner—less space, less people needed. They save money and pass that on to us.
3. Euthanizing zombie retail: The pandemic will bankrupt a lot of companies. Broadly, that’s a sad thing, since some of those are going to be good companies that just got swept up in this tsunami.
But there are a lot of companies that will go under that should go under. They are crappy companies with crappy business models selling something that customers don’t want. Go to a local mall and you’ll see a ton of them. Right now they’re dying a slow death and the chances of them making it are zero.
This business cycle will “put them down” and free up that space, those workers, that capital to be used on businesses that do make sense and can work.
2. Changing teaching: Schools closings have forced us to use a completely new paradigm for teaching our students. Actually, the approach to teaching has largely been unchanged for a couple thousand years—students go to a school, listen to a teacher who stands in the front of the room, and there you go.
Sure, in my lifetime, technology has made some inroads, but compared to other industries the impact has been pretty muted. Look at the role technology plays in your kid’s classroom (pre-virus) compared to the role it played when we were kids. Now look at how technology has totally transformed other industries—purchasing airline tickets, watching movies at home, consuming breaking news, listening to music, trading stocks, looking up any possible bit of information you’d ever want to know, and on and on.
I’m not saying schools in their current form should be abolished, but there is absolutely a compelling case to make major change. Should there be more home learning? Better distance interaction (see #1)? I don’t know the exact answer, but I do know that this experience will show that there is a ton of opportunity for improvement—better educational outcomes costing less money. Like always, those that drive that improvement will make tons (the US spends about $700 billion on education).
1. Video-conferencing: As I mentioned here, I think there is a ton of potential for video-conferencing to really transform the world in a positive way. Most of corporate America has been told to stay home and telecommute. We still have meetings, still need to interact with people, and still need to get business done. Now we just need to do it remotely instead of face to face.
This is the major opportunity for video conferencing. Right now the technology is kludgy. It’s no where close to what is necessary to make it a seamless substitute for those in-person meetings. A few of my nerd friends and I got together for some Dungeons and Dragons action, and it was not ideal (I’d give it a C-).
However, once the technology comes in the demand seems unlimited. It will create so much value (think about not having to take a two hour, $500 flight for a 60-minute meeting). It will also make collaboration SO MUCH more productive. I said this could be a trillion dollar opportunity, and now in the teeth of coronavirus, I think I might have underestimated it by 2-3x.
So there you have it. It sucks what we’re all going through, but we will get through it as a society, no question. More specifically, as investors we’ll come out of this stronger than before; I absolutely believe that.
Great ideas. It’s fascinating how something “bad” can be the catalyst to bring “good” changes to things like commerce and public education. I thought your idea about grocery stores becoming huge distribution centers was brilliant. It’s going to be very interesting to see how society runs with this.
Silver lining indeed. Thank you Stocky