Three Things Revisited

Back on September 14th I posted an article called "Three Things" which was a review of consensus opinion at that time.   What I wanted to do back then was have my readers consider what the alternatives might be to the prevailing views of the moment.  This week I thought I'd look back on that column and see how I did versus popular thought.  I'll also try and be fair on what percentage of accuracy I achieved on each view.  My updates to each point are in green.  

Here are three things everybody seems to know right now.

1.  The election is going to be a disaster.  No way we're going to know who wins on election night and the whole thing is going to devolve into a repeat of Bush v Gore back in 2000.  Besides the President is supposedly laying the groundwork for a massive challenge to practically every state he loses if the results don't go his way.

Could be....but....

If the election were held today Mr. Biden would likely win with more than 300 electoral votes.  He only needs 270.  What's more he's leading in practically all the swing states that he'll need to win in order to to capture the election.  In many of those states the lead has grown in the past few weeks.  Now the election isn't today and this isn't a political commercial.  It's taking a look at the data as it stands right now.  Certainly things can change in the next seven weeks.  For one thing the debates could go poorly for Mr. Biden.  But assuming they don't then the numbers currently don't look in the President's favor.  If he loses by what the numbers currently indicate then it would be hard for him to claim the election was either rigged or stolen.  Certainly it would be hard for him to make a convincing argument for that beyond his base.  Time will tell.

Well.....the election was almost a disaster but in the end Mr. Biden prevailed.  We won't rehash here what happened after we voted except to say that it was a closely held thing, full of much drama, court challenges and other unprecedented events.  Mr. Biden won with 306 electoral votes.  He won all the swing states with the exception of Florida and Ohio.  It was Mr. Trump who stumbled badly in the debates and it is highly probable that there are very few people beyond Mr. Trump's base that believes the election was either rigged or stolen.  However, there is a sizable majority of his voters who feel that way.  At the  moment it is unclear what awaits Mr. Trump on legal fronts and with his 2nd impeachment trial.  

Score: 90% accurate.

2.  We are in for another miserable fall/winter/spring because of the virus.  Things are going to look just like they did back in March and April.

Could be....but....

I think the virus is here to stay.  Even if we get a vaccine I don't think there's any hope of completely eradicating it.  Instead I think eventually it will be more on par with the flu.  Maybe not this winter but in future years.  In the meantime while I don't think this year will look like a normal winter season, I don't think it will be as bad as last year.  Three quick reasons for that.  First, a vaccine is coming.  Maybe not till sometime this winter but something will be on the market by spring I think.  2nd, we have better therapeutics today than when this thing first hit.  We know more today than we did last March and we'll know more in six months than we know today.  Better therapeutics means a better chance of you not dying or potentially getting really ill.  3.  Mass testing is coming.  I'll have more to say on each of these in a future post but just understand that these three along with human adaption likely means that while life won't seem like it's back to normal come the winter, it will likely be better than last year.  Again time will tell.

Too soon to tell about this winter versus last.  In some ways we may be worse off if only because we have more months to be locked up and the death tolls are higher.  Vaccination is coming, but at a slower pace than many expected back in the fall.  Therapeutics are definitely improving as is testing.  

Score:  Incomplete but so far 60% accurate.

3.  The stock market is overvalued and must have a major correction.

Could be...but....

There are a few sectors of the market that are overvalued by traditional metrics but much of the market, as the economy, is still significantly lower than where it began the year.  One could argue that for the main street economy we are more likely approaching the point in a recessionary cycle where things are just starting to turn positive.  If that's the case then these sectors are possibly the next leaders in the markets even if the high flyers take a breather. 

The market as measured by major indices is significantly higher than when this original post ran.  What has started to outperform since the beginning of this year are many of the sectors in the market that were heavily impacted by the virus.  While some of the stocks that outperformed last year have marched in place or struggled since the fall, it has in many instances been these other sectors that have taken up the slack in the indices.  In terms of valuation, I'll stick by my call back then that we're more towards the beginning of an economic recovery than its later stages.  If so then one can make the argument that we might not be as overvalued as some popular gauges of these things might suggest.

Score: Incomplete but so far 85% accurate.

Anyway maybe we'll check back on this column at a later date to see how I'm doing on points 2 and 3.