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VIRTUAL DAN

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Monthly Archives: March 2020

Dispatch From VFS HQ – Stock Market Update

As with most people in Washington State, I have been self isolating most this week working from home, and watching the financial headlines roll through like thunderstorms. I have spent so much time in my office chair this week I am looking for backup chairs in case my main steed fails.

This market drop and has been sudden and spectacular. Record breaking volitility, massive economic shutdowns, and pandemic fears make data driven investing extremely difficult. I have been asked by several friends over the last few days for market opinions, and gladly respond to anybody who cares to hear my amateur-status opinion. In past months, you could have looked at invest.vfsystems.net to get my rough view of the market, but in this enviroment, its moving too fast for that data-view of the world. So please feel free to email me any time you have market questions – I am full of free advice and opinions.

In summary, I do believe this will be a more significant event that the 2008/09 great recession. The worldwide supply and demand shock in this highly levered world is going to cause severe economic damage and change. Perhaps this quote from Warren Buffet is the most appropriate now:

Only when the tide goes out do you discover who’s been swimming naked.

The tide went out very quick in this case, and indeed, a lot of companies are scantily dressed (I am looking at you Boeing).

Having said all that, I thought I would post these thoughts, giving you an overview of what I have seen this last few weeks and what I am thinking:

GDP Estimates – It was fascinating to watch the GDP estimate revisions for 2020 come out this week. On Monday, Goldman Sachs forecast a 5% drop in Q2 GDP, then a 4% rise in Q3 GDP. When I saw that I knew that was still way too optimistic. As of this writing at the end of the week, Goldman is now down to -24% (!) Q2GDP and looking negative all year:

Ouch!

To be fair – nobody knows – past data is pretty much useless now, so everybody is just guessing. But it cant be good.

The Speed of the Market Drop – Speaking of data, the speed of this drop is what was most unique about this downdraft. My investment models look at economic data and predict expected prices based on that data. We have no precedent for such a sudden global economic stoppage. And the economic data we have is in many cases too old. For instance, Housing Start data came out on Wednesday this week, and the survey was for February, which by now is ancient history. The number was down slightly from the all time high. Typically Housing start data has been a good predictor of slowdowns, but because of the speed of news we wont see Housing start data tank until we get the March numbers in late April. So I have some work to do to figure out how to get more timely data or otherwise deal with fast moving markets.

Investing By Hand – Because the market is moving faster than my data, I took my investing strategy off autopilot, and am now investing largely on untested theories and headlines in this turbulent market. This is extremely dangerous. However, I am working to repair my models, and every day I think I get better data to help drive decisions in this new environment. I am gravitating to strong companies I know, with smart management. Going into this crash I was fairly defensively positioned, and as this market has dropped, I have gotten more defensive. My model is still fairly positive on the market, but again, the lack of timely data makes that opinion near worthless. The most important thing is to keep my emotions in check and look at the data coming in rationally.

Bet Against Commercial Real Estate – One non-data related trade I made was to by a Sept 2020 70 strike price put on the VNQ. The VNQ is the Vanguard REIT Index. This was a trade I had been thinking about, but was triggered largely by the news that our local high end mall was closing for two weeks. This mall, like many malls, has been increasingly opening restaurants in place of stores closing due to the retail apocalypse. As the coronavirus hit, all the stores and restaurants immediately emptied out. When this local mall closed, it was enough for me to act on my thesis that the impact to commercial real estate will be devastating from this point forward. We already had too many restaurants opening. We had massive building of commercial offices built downtown (now and in the future to be empty due to working from home). Finally, in our town we have had thousands of new hotel rooms built in high rise hotels built in the last couple years alone. I am confident in the next few months, we will find out which hotel chains have been swimming naked.

Regarding working from home, yes I think people will return to offices after all this. This event has caused me to use on a regular basis teleconferencing software, and I must admit, it works pretty well and once a home office is set up, you can be at least nearly as productive as in the office. I think businesses can adapt to this new paradigm on an ongoing basis. Yes I believe employees still need central meetings periodically, But I think this will kick off a large shift of offsite rotation. Maybe this will lead companies to reducing office space needs by 1/3? If so, that is a lot of nice empty office buildings.

In summary, I do not think this market drop is over. In 2008/09, the market dropped by ~55% peak to trough, and as of this writing we are down ~32%. I see no reason why we shouldn’t drop less than ~55%, and I think there are a lot of bad headlines coming our way in the next few weeks.

With the lack of data, I think many people are having to invest on emotion. I was talking with a neighbor, and we agreed at this point it may best to close the markets for a couple weeks because of the trillions of dollars being traded purely on headlines and emotion. Lets take a couple weeks to gather data, get a bearing on the economy, then re-open the markets. Maybe that’s not possible with global markets, but I feel that would help.

Regardless of the Coronavirus’s ultimate health toll, I don’t see this as a quick economic recovery. With a 2020 government deficit now projected to be over 3 trillion after all the stimulus being discussed, I think the economic impact of this event will last for years. In the coming days, we will see many corporate losers, surprise bankruptcies, as well as a few winners in this new digital economy. And I still don’t think we are near the market bottom.

March 21, 2020 Dan Leave a comment

Blazor and WordPress

For an update to this post – check out my update – Blazor and WordPress – The Story Continues

As I mentioned in my previous post, I have been tinkering with Blazor, seeing how it will fit into my application development pattern. When I first saw that Blazor web assembly can run on Linux servers, it occured to me that this might be the best tool to be able to build applications that run inside WordPress. So one of the first things I did was to see if I could get that working.

Naturally it wasn’t as straightforward as I was hoping, and I ran into a few pre-release issues with Blazor that slowed me down, but I think I have done enough to see that Blazor will be my tool of choice to build apps inside WordPress.

As you might of figured out, this blog runs on WordPress, and it runs on a Linux host. WordPress is a great tool to through up a reasonably good looking ‘brochure’ website quickly. A Brochure site gives your company or product a Web presence and acts as an online version of a business card. WordPress comes with a simple registration/login system, and a zillion plugins to make site development productive and efficient. I have been using AngularJS inside WordPress to build applications, and that has worked pretty well. But I made the decision to wait on migrating to full Angular until I learned more about Blazor. After using Blazor a bit, I have decided I will not be moving to angular X – and start migrating my angularJS code to Blazor.

So here is my first application written in Blazor for WordPress. the dottet box below is a little app that pulls the most current weather forecast for Seattle from the US Weather Service (this may take a while to load):

Loading…

Adding this application to WordPress was much simpler that I expected. All had to do was publish the application from Microsoft Visual Studio to a file on my development machine, then FTP the files up to a folder I added in the WordPress root directory. Then I just added the following script to this blog post:

After a few failed attempts (which really helped me understand some concepts of Blazor and Web Assembly), it all came together in my head and magically appeared on the page. I must admit the first time I got this working I felt the same way Dr Frankenstein felt

The Frankenstein analogy is not too far off, piecing together disparate technologies to create a web application platform, is somewhat amazing. My favorite feature of this approach is I wrote the application in the familiar confines of Microsoft Visual Studio, all in C Sharp, and no javascript. It’s a thing of beauty.

If you haven’t had a chance yet to look at Microsoft.net Blazor, check it out here. It is still in pre-release until May of 2020, but its worth experimenting with now. The more I work with it, the better I feel the dark days of javascript front end scripting frameworks and packages and transpiling are behind us. This is such a better model.

March 11, 2020 Dan Leave a comment

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