Sunday morning reading

So we have passed another week of COVID-19 lockdowns, market turmoils, good- and bad- news on the ongoing fight with viral spread, and the worst mass shooting in Canadian history. I have seen this quote a couple of times this past week, so I think I’m not alone in the sentiment:

“There are decades when nothing happens; and there are weeks when decades happen.” Vladimir Ilyich Lenin

I have decided that, for the most part, I am going to depart from the format that this letter has taken for the last several weeks to instead highlight some of the writing of others. I think it is vital in portfolio management as in other pursuits that we draw inspiration from realms outside our own. Too often we find ourselves in echo chambers, and when we take in varied points of view we come out with a more nuanced opinion.

The first piece I will highlight is an astonishingly beautiful (and inspiring, and heartbreaking, and candid) essay in the New York Times by Gabrielle Hamilton, the owner of Prune, a restaurant in New York City. As a professional, my life has been relatively (operative word) unaffected by COVID-19. Sure, I am working from a home office instead of my 31st floor suite, but I did that on occasion, anyway, and I have enjoyed the lack of commute and extra time with Leila. It’s easy, especially in the literal isolation we have all created for ourselves, to forget about the more direct human costs of the lockdowns. When we come out of this, we will likely not be so changed by it in the broad sense, but individuals are being harmed right now, and their lives won’t just restart where they left off.

The line of credit I thought would be so easy to acquire turned out to be one long week of harsh busy signals before I was even able to apply on March 25. I was turned down a week later, on April 1, because of “inadequate business and personal cash flow.” I howled with laughter over the phone at the underwriter and his explanation. Everything was uphill.

Restaurants are the lifeblood of any city. They are our meeting place. They are where celebrations happen. They are where we go for a good bite of food, or when we’re just too tired to cook, or when we have something to commemorate. They are there when we just want a quiet bite and a space to do some reading. If you have a favourite place to eat, support it as much as you can—we need these places when life turns around to remind us what fellowship feels like.

The second piece, by Karl Taro Greenfeld writing in The New Yorker, remembers what it was like when SARS wracked Hong Kong in 2003, and what it was like as life returned to normal—ever so slowly, then all at once. His memoir of that time is eerily similar to what we seem to be going through now, and perhaps illustrates what we might be coming into next.

The government didn’t tell us to go out—and, in any case, it couldn’t have legislated away our fear. Instead, some internal calculation seemed to show that the benefits of living our lives newly outweighed the risks of catching SARS. I know as I write this that it sounds ridiculous, but it felt as though the virus itself had grown weaker—as though it had been wounded. It seemed like a miasma had lifted from the city.

There seems to be a rising belief—in everyday media and in financial writing these days—that the experience of COVID-19 is going to change everything about how we live our lives from now on. I think it’s important that we realise that society as a whole is pretty resistive to change. We have institutions, built up over centuries, that dictate how we interact with each other. Life truly does seem like some sort of fever dream right now precisely because we are being forced to live it so unnaturally. When it’s safe again, we’ll slowly recommence “regular life,” likely in stages. There will be remnants of today, to be sure. I suspect that, as in China, you’ll see masks in public become more prevalent as those who are sick (with anything) see it as a duty to shield others from your germs. No longer will it be socially acceptable to be on a plane, coughing on your seatmate.

Jonah Goldberg, writing in The Dispatch, reminds us that this the experience of the pandemic will be more profound and its effects more indelible than anything any of us have experienced in our lifetimes.

There’s a huge psychological difference between watching and participating, and I don’t think anyone is appreciating the difference. For decades after the Great Depression and World War II, the question wasn’t “Where were you ...?” It was “What did you do?” or “What happened to you?” During World War I, not everybody served, but nearly everybody knew someone who did and felt the effects of war mobilization—the censorship, the hysteria, the rationing of food, etc. The consequences of those shared experiences were profound, changing our politics and culture in countless ways.

I think office life, too, will be affected as many of the professionals realise that while they miss spending time with colleagues, they also relish time at home. I suspect all of us who are able to will shift to a more flexible workweek, aided by the fact that we have all now gotten a crash-course in remote work. This shift probably doesn’t bode well for commercial property values, and from an investment standpoint will bear consideration. Why spend $1,000 / sq. ft. for every single employee to be in the office 100% of the time when 20% don’t need or want to be there at all, and the other 80% would prefer to be there half the time? Instead, I imagine a lot of us, working from kitchen tables or too-small and badly-configured offices are right now contemplating the renovations that are needed if we are planning to spend more time. Companies like Home Depot would stand to benefit from that. In a more extreme sense, residential real estate, in general, could benefit as we buy houses that incorporate more robust offices than the 80 sq. ft. I currently find myself sharing with Aveeve.

Mark Sullivan in Fast Company has compiled the responses to the question “What will COVID-19 change forever?” in a very informative piece full of varied views across a number of industries. Being Fast Company, the article skews heavily towards tech and startups. Still, it is a good window on what some of the most innovative minds out there think, people whose success depends on them staying at the leading edge of a changing world.

“Going forward, investors’ mindsets and qualifications about what constitutes a truly 'valuable' company will change. Rather than focusing on the quantitative aspects like funding rounds and revenue, investors will place a greater emphasis on the qualitative aspects, such as an organization’s structure, team, culture, flexibility, and profitability.” David Barrett, CEO and founder of Expensify

What I don’t think is that we will stop going to movies, or stadiums, or any of the countless activities I have seen lately declared never to be coming back. I do think that a lot of buying habits are being shifted right now, not because of contagion fears, but because contagion fears have forced many of us to find workarounds to life, and in many cases we have found those workarounds to be better than what we were doing before. Prior to COVID-19, we had Amazon Prime and used it for all sorts of random purchases (that computer cable, children’s toy, book, or houseware). Post-lockdown, we have started having all of our staples delivered to the house, venturing to the grocery store for just the fresh produce. And it’s nice to have those cans of tuna, rolls of paper towel, and boxes of crackers just show up on our doorstep instead of trudging up and down the centre isles of the grocery store. Americans, holdouts in the world of cash payments, are being forced to finally figure out tap-and-pin or Google Pay right now, and companies like Mastercard and American Express benefit from that. Companies like Etsy and Shopify are helping connect boutique shops which normally rely on foot traffic with the consumers of their wares, and TradeDesk and Google Adwords serve the right product to the right now-captive eyeballs. Companies across the tech space like Zoom Media, Microsoft (makers of Teams), Facebook (makers of WhatsApp) are already benefitting from new customers and captive eyes as parents and grandparents have been forced to figure out digital ways to connect with their families. All this to say that COVID-19 isn’t going to radically transform us into a society of mysophobic shut-ins whose only entertainment is whatever Netflix has on that week. What this experience is doing is rapidly accelerating some of the trends that were already building steam, and the other side of COVID-19 will see us turn many currently-extraordinary adaptations into ordinary life.

We are going to come out of this pandemic into a world that has the mark of the experience here in everything we do, even as we return to normal interactions. As we eat out with friends at a crowded restaurant, we might have a friend travelling for work joining us via iPad at the end of the table. When we go to our next Jets game, we might be cheering from behind red and blue facemasks and the security screening could include a temperature check. But the world’s societies will continue to prove that innovation will get us past virtually any challenge, as they have in the past and will in the future.

Here are three other great things I read this last bit:

• The Pandemic, Our Common Story, Anna Badkhen in Granta

“I cannot see the mourners in the valley below, but I know they are there, just as I know the rest of the world is there, all of us living and dying and worrying and loving at the same time. I check my phone. The death toll from coronavirus has risen to 187 people in the United States, 372 people in France, 3,405 people in Italy, each person precious and singular.”

• Here’s What You Do With Two-Thirds of the World’s Jets When They Can’t Fly, Anurag Kotoky, David Stringer, and Ragini Saxena in Bloomberg

Aircraft can’t simply be dusted back into action. They need plenty of work and attention while in storage, from maintenance of hydraulics and flight-control systems to protection against insects and wildlife — nesting birds can be a problem. Then there’s humidity, which can corrode parts and damage interiors. Even when parked on runways, planes are often loaded with fuel to keep them from rocking in the wind and to ensure tanks stay lubricated.

• When Real Life Turns Surreal, Leo McKay, Jr. in Macleans

As for this mass shooting, I think it’s a bit much to expect a devastated community to start some sort of learning process. Hurt people must grieve. The immediate lessons in this event will doubtless be emotional: How to keep loving each other. How to rebuild trust in others when that trust has been violently breached. How to heal communities when the people in them, for the time being, cannot even be in the same room with each other.

If you are a podcast person, here are a few good episodes I have listened to recently:

• From Tree to Shining Tree, Radiolab. I was reminded of this great podcast from 2016 the other day and re-listened to their fascinating story of the interconnectedness of forests.
• Meditations on Loneliness, Ted Radio Hour. Isolated in our homes, this is a timely collection of thoughts from a number of speakers on being alone.
• The Priests of Plague, Behind the Batsards. This is a pretty light listen on some of the worst grifters in this plague and past ones.
• Hozier – Nina Cried Power (feat. Mavis Staples), Song Exploder. This podcast is one of my favourites. The host, Hrishikesh Hirway, interviews artists about the making of one song.
• The Wolves, This Is Love. This is actually one part of a two-podcast-spanning series on wolves in Yellowstone National Park. The other half, Criminal’s Wolf 10, is equally good. Phoebe Judge, the host, has an amazing radio voice.

I should also remind you that we have a blog on our website where I post fairly frequently.

Have a great rest of your weekend,

Sam