Kingsmill's Investment Miscellanea: Friday, December 25, 2020

Dec 25, 2020 | Joshua Kingsmill


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Who could have imagined that from the beginning of the year, where we were highs in equity markets, unemployment record lows, and a near-certain second term for the incumbent president of the U.S., to enter the worst drop in economic production, and highest employment rates in the history, enter into a faster “bear market correction,” only to recover again, and again return to all-time highs.

As we go into 2021, I have thought that we are possibly set up for another “Roaring 20s”:

  • In the 1920s: the world was recovering from a pandemic that was the order of magnitudes larger than the current COVID-19: with over 20% of those getting effected dying, and an estimated 50 million deaths globally (which was an astonishing 5% of the then global population of 950 Million). Not to minimize this COVID-19 in any way, but it is estimated that there have been less than 2 million deaths globally directly attributed to COVID-19.
  • In addition, the world has just emerged from the devastating 1st World War: the similarity though between now and then, however, is that the massive amount of global spending, as people returned to work and rebuilt their economies, and tremendous growth and debt and inflation began.
  • The pent-up demand and consumer spending that will be unleashed as vaccinations are administered will likely set us up for an unprecedented economic boom: with a far larger impact on global spending than the devastating combination of WW 1 and the so-called “Spanish Flu.”

As a side note, it is interesting that the influenza outbreak of 1918 was dubbed the “Spanish Flu,” even though it didn’t originate in Spain, while the use of the term “China Virus” has been widely (and correctly, I believe) derided.

So all these themes will be explored in more detail in the months and years to come. Should we indeed be entering another “Roaring 20s”, there will be many implications for investing and strategies as we advance.

A final note, this story really was amazing, a nice holiday read (LINK). In life, we should always strive to do the right thing and treat others how we would want to be treated. One client received the final payment for an error from his agent that cost him $3MM, almost 20 years ago this holiday season. Anthony Carter, a basketball player, was planning to exercise a $4.1 player option to remain with his team. His agent forgot to file the paperwork.

The mistake cost the player at least $3 million. The player had to settle for a minimum contract of $750,000, rather than the $4.1MM he would have locked in by exercising his option. The agent flew to meet with Carter and work out their financial arrangement: a series of payments — a sort of annuity lasting until 2020 — that would make Carter whole. This week, the player received the last of those payments: I liked this quote: “He was there for me from Day 1,” Carter said. “I just knew I was going to stick with him regardless, and to this day, we have a close friendship.”

It’s a good story worldwide: The player eventually signed a life-altering $17 million contract and had a successful career. The agent's business survived the mistake, too. Today, he has a stable roster of N.B.A. clients and is widely regarded as one of the most upstanding and principled agents in the game.

So I wish all of you happy holidays, it will be a strange one indeed. Our traditions and gatherings with friends and families will certainly be challenged this year, but I do not doubt that one day we will all look back at this year and be thankful for all we have and all we did.

Happy Holidays to Everyone Card!

I look forward to being in touch through the new year.