Saturday, December 10, 2022
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How To Live Richly – No Matter What

Farnoosh Torabi, Live RIchly

With Farnoosh Torabi, Finance Expert, Journalist, and Author of the book You’re So Money: Live Rich, Even When You’re Not

Steve spoke with Farnoosh Torabi, a journalist and the author of You’re So Money: Live Rich, Even When You’re Not. The pair spoke primarily about differences between generations and the traditional concept of working hard and foregoing pleasures in favor of saving for the future. Farnoosh explained how the old ideas of constant saving, never enjoying your earnings, is slowly being replaced with the idea that we can and should enjoy living our lives (spend what we make on the things we enjoy), while still being sensible.

Talking To Contemporaries

A lot of kids (or the younger part of the population) get advice about money from their parents, the kids of Baby Boomers. But the truth is that they (and millennials) are more likely to listen to the advice of contemporaries—people in the same age bracket.

Let’s be real: in their heart of hearts, they know their parents are giving them sound advice about working hard and saving. Kids know this information comes from experience, that their parents want only the best for them. Still, they tend to be more receptive to hearing the same information from their peers.

A New Approach

So, Farnoosh’s approach when teaching young adults?  Don’t dismiss traditional values and ideas, but consider how you package your message. It’s all about the language you use. It’s about trying to see eye-to-eye with young adults, meeting them at their level, and then expanding on what they already know.

Young adults are struggling, working hard to make ends meet. They have bills. They have student loans, most likely. They may even have credit card debt. But on top of this, they are young and also want to eat out and enjoy doing things with their friends. Social life is a big part of the money equation; learning how to be able to afford it is the challenge.

Messages From The Media

The current generation of young people is being bombarded with a lot of messages regarding saving, spending, and investing. One of the loudest messages, though?  Live beyond your means. Farnoosh’s variation on that message is pretty simple, Live beyond your means but spend within them.” In other words, you should still work towards trying to achieve your goals—buying a home, buying a car, going back to school, starting a business, or starting a family—but figuring out a way to save while still enjoying life might require a little thinking outside the box.

The Issue Of Debt

It used to be the case that you could go to school and take out a modest loan to cover it. After graduating, you’d get a good job in your field and repay the loan without a lot of difficulty. But now? Student loans are massive. Jobs are limited. The values and goals are the same, but the debt is becoming crippling.

Today, debt is a work in progress. People are being more cautious and conscientious when it comes to taking on debt, especially students. They have to be wise; student loans follow you indefinitely and can wreak havoc on your credit score. It’s really important to educate yourself on the nature of debt, the right kinds of debt to take on, and how much debt you can reasonably afford.

A New Way Of Thinking

The up-and-coming generation, Gen Y, is on a different track. The internet has conditioned them for instant gratification. But that doesn’t mean they aren’t willing to work hard. So, it’s about retraining their brains in the way to think about money. One way to do this (and to foster a habit of saving instead of spending) is to get in the habit of “paying yourself first.” Don’t wait until the end of the month to take some of your earnings and put it toward saving and investing because by the end of the month, you’ll have found some way to spend all the money. Instead, take some money for yourself, for your future, either out of your first check every month or out of every check, right off the top, before you spend any of it on anything else. It’s a way of turning around that selfish “me first” thinking so that it serves you in a positive way.

Cutting back on expenses is another crucial part of saving. Have a conversation with yourself by asking, “What’s important to me right now?” Determining what your goals are and what’s important/necessary for your success will help you develop the infrastructure needed to achieve that success. Like I said, kids are willing to work hard but what they often lack is a well-structured sense of direction, of where they want to get to. Establishing goals and priorities is what gives you the power to then examine your spending and say, “Okay, this is necessary, that is frivolous.”

One of the tricks Farnoosh teaches young people to help them enjoy life while still being financially savvy is how to live on a discount. Try to negotiate everything, from your rent to your auto insurance to your cell phone bill and your gym membership. A lot of times, getting a discount is as easy as asking for one.

Capitalize On Your Skills

So cutting back on spending and saving yourself some money is one side of the coin. But what about making more money? The best way to do this is to capitalize on the skills you already have. One obvious way is to ask your current employer for a raise. Present him/her with evidence of what you bring to the table on a daily basis.

But there are likely many other skills you possess that can’t be fully maximized wherever you work. Harness these skills and capitalize on them through doing some freelance work on the side. Start a blog or a YouTube channel; babysit or petsit on the weekends; do freelance writing or graphic design work. Finding ways to supplement your income is crucial to making your life financially manageable. And having some extra, self-employment income may also be a way to lower your tax bill with some extra deductions, which is just another way to put more money in your pocket.

To get more tips on living well while living within your means, visit Farnoosh’s website.

Disclosure: The opinions expressed are those of the interviewee and not necessarily of the radio show. Interviewee is not a representative of the radio show. Investing involves risk and investors should carefully consider their own investment objectives and never rely on any single chart, graph or marketing piece to make decisions. Content provided is intended for informational purposes only, is not a recommendation to buy or sell any securities, and should not be considered tax, legal, investment advice. Please contact your tax, legal, financial professional with questions about your specific needs and circumstances. The information contained herein was obtained from sources believed to be reliable, however their accuracy and completeness cannot be guaranteed. All data are driven from publicly available information and has not been independently verified by the radio show.

Read The Entire Transcript Here

Steve Pomeranz: And now for something completely different. You know, old guys like me, I’m over 65, I think we have a tendency to tell our kids in the younger generations to save, save, save your money for retirement. Give up your current pleasures and defer gratification. And they look at us cross-eyed.

It’s all good on paper but is it actually necessary? If you’ve been listening to the show for a while, you know I don’t really give this advice. I believe in living your life while at the same time being sensible about your money. And so does my next guest: finance expert and author of You’re So Money: Live Rich, Even When You’re Not. I welcome Farnoosh Torabi to the show.

Steve Pomeranz: Welcome, Farnoosh.

Farnoosh Torabi: Thanks for having me. It’s great to be here.

Steve Pomeranz: Your contemporaries, those that you speak with and that you’ve interviewed—and these are people that are also my kids’ age—are they going to listen to people like me when it comes to getting advice about money?

Farnoosh Torabi: Well, I think in the heart of hearts, they know that your advice is solid. They know that their parents only want the best for them and that the older generation is speaking from experience and that it’s valid. But at the end of the day, I think contemporaries want to hear from their contemporaries. They much more value the advice from a peer than an uncle or an aunt or a parent.

And I think that would probably be true when you look back when you were in your 20s and your 30s. You kind of shrugged off what mom and dad said even though you knew it was good advice. It meant more to hear it from a contemporary who was maybe in your own shoes, living through some of the same experiences you were.

And so my approach to educating young adults is not to dismiss the traditional ideas and values that I know work and I see have worked, but it’s all about how you package the message. It’s all about the language that you use. It’s all about trying to get to see eye to eye with young adults and to understand that they’re working hard, but they’re struggling too. They have student loans, they have perhaps credit card debt. They’re not making enough money, and then on top of everything else, they’re young. So they want to go out to eat, they want to hang out with their friends. The social life is a big part of the equation and how to afford that is getting more challenging.

So I think to kind of show some sympathy and to kind of talk to them more one-on-one. I think that goes a long way, and I think that’s what’s more appreciated than what comes from an older parent, which at times just feels like a lecture as opposed to really good advice.

Steve Pomeranz: You mentioned the word messages. What are the current media messages that are being transmitted to your generation with regards to saving and spending? What are the pressures that you guys are under?

Farnoosh Torabi: Well, for me, my message has always been you want to live beyond your means, but spend within them. In other words, try to still achieve the goals that you want to achieve, whether it’s to buy a home, buy a car, go back to school, start a business, start a family. You have to sort of think outside the box.

I think that’s the challenge right now is for young adults working, a lot of the tried and true ways of achieving goals are falling through the cracks. They’re not really working. So it used to be you would just take out a loan for college, and you would finish college and you would pay off that loan easily, and you’d be done with it within 10 years. But now what’s happening is the price of college is escalating, student loan debt is escalating, and then the jobs aren’t really there to support the debt. So what’s happening is that the values and the goals have remained, but the challenge now is how to achieve those very same things that our parents achieved in a way that’s economically feasible.

Steve Pomeranz: Farnoosh, when I was growing up, it was okay to spend on your credit card, to live beyond your means. We’ve seen that kind of come full circle. What is the attitude towards debt these days amongst your contemporaries?

Farnoosh Torabi: Well, it’s a work in progress. I think that a lot of young adults are learning the hard way that you really can’t take on an $80,000 student loan or even, in some cases, I hear hundreds of thousands of dollars, which is just a nightmare situation. But unfortunately, a lot of young adults are learning the hard way that there is a point to which it’s going to be really hard to pay off debt no matter how much you earn and that you really need to take a more measured approach to the kind of debt that you take on and how much debt you take on.

And that’s part of my job is to really educate young adults. I recently spoke with a young woman who graduated from college with about $40,000 in student loans, and before she was even going to figure out how to pay that off, she was looking at law school. I really had to level with her and say, “Why do you want to go to law school? What’s your goal? What’s this going to do for you, and how are you going to pay for this? Because it’s a big undertaking financially, and I don’t want to deter you from pursuing your dreams, but you really need to be practical.”

And so I think when you’re young, you’re very idealistic, it’s very easy to make bad decisions and uneducated decisions that can haunt you for years.

Steve Pomeranz: I think you think that things are just going to kind of take care of themselves and many times, actually many times they do.

My guest is finance expert and author of You’re So Money: Live Rich, Even When You’re Not, Farnoosh Torabi.

Let’s get to some specifics. You talk about the idea of putting yourself first. This kind of sounds selfish, but why is that the right thing to do?

Farnoosh Torabi: Because no one cares more about your money than you. And at the end of the month, I find that a lot of people struggle to save. So why not try to save at the beginning of the month? You should prioritize your savings and put yourself first because between your friends and between all the pressure that you have to spend money in different ways, that money is going to go away before you even know it. And so I say, you know what? This is the me, me, me generation after all. So this is again about packaging the message in a way that they can relate to it.

Steve Pomeranz: Wait. Wait a minute, Farnoosh. I thought I was the me, me generation. You guys are too?

Farnoosh Torabi: I guess it’s a phase, right? We all go through this phase. It’s not really a generational thing.

Steve Pomeranz: Yeah.

Farnoosh Torabi: You know, the Gen Y is characterized very much as like this me, me, me, self-centered generation, which I would argue that it’s not. I think that in every generation, there are some people that ruin the image for everybody else. I think that Gen Y is actually a very hardworking generation. They’ve been raised at a different pace. They expect things to happen instantly because they were raised on the internet.

Steve Pomeranz: Yeah. Oh, how true.

Farnoosh Torabi: They don’t have the patience level of their parents. But that’s not to say that they’re not willing to work hard and pay their dues.

Steve Pomeranz: So you’re talking about paying yourself first.

Farnoosh Torabi: But paying yourself [crosstalk 00:06:35].

Steve Pomeranz: Yeah. What does that do for you? Why is that important?

Farnoosh Torabi: Because if you really want to adapt a savings behavior, you got to address that at the beginning of the month. And think of it as doing yourself a favor. You work so hard, why not save some of that money immediately for you? Again, because this is a very me, me, me generation, let’s use that self-centeredness in a positive way and say, “Here’s your money. Save it first even from yourself because, otherwise, it’s all going to go out the window. Between your friends, socializing, and all this other stuff, all these other expenses that you’re racking up.”

Steve Pomeranz: So are you in favor of creating little buckets like, I guess for women, a shoe bucket or…

Farnoosh Torabi: Sure, yeah. And we talk about this a lot on my show on Yahoo, on Financially Fit, how to budget, how to save, how to save according to your goals. And I think it’s really constructive to compartmentalize your savings. Say, “Okay, this is my savings for retirement. This is my savings for the weekends when I go out.” And with our bank accounts these days you can create various different savings accounts within one account, sort of sub-accounts that you can tap into and manage better that way as opposed to one big pot and it’s a little harder to figure out, “Okay, how much goes to where?”

But yes, certainly I think it helps you stay organized. It’s just another facet of staying organized with your money, which goes a long way in making sure that you’re not compromising your other savings in order to pay for things that you want.

Steve Pomeranz: My guest is Farnoosh Torabi. She’s a finance expert and author of You’re So Money: Live Rich, Even When You’re Not.

I often talk about on this show there’s really only two ways to kind of get this thing fixed, and that’s either you have to raise the bridge or you lower the water. Raise the bridge is get more income, lower the water is reduce your expenses. That’s how you get the ship or the boat under the bridge.

So how do you lower your expenses? How do you compartmentalize your thinking to figure out, I guess, what is necessary and what is unnecessary?

Farnoosh Torabi: Well, you have to first figure out what’s important to you, and that’s a conversation that young adults rarely have with themselves. You know, what are my goals, what do I want to do in five years? Where do I want to be professionally, personally?

So you’re going to have to do that soul-searching as early on as possible because it’s very easy to get swept up and start following the pack and not really realizing what’s actually important to me. And as soon as you can identify those things that are really important to you, whether it’s saying to yourself, “I plan to go back to school, or I plan to buy a home, or I want to get married.” All of those things carry price tags, and so once you can identify those goals, I feel like you can then work backward and then look at your expenses and say, “Okay, this is frivolous. This is necessary,” because now you actually have a compass.

And along the way, there are a lot of ways to even maintain your lifestyle, but at a discount. So make sure you’re calling your creditors and you’re calling everywhere that you have an account, your cell phone company, your gym, your you name it. And just call them and ask them about offering you some wiggle room, your cable company. Saying, “I need a discount. I need to save money.” Because at the end of the day, these companies don’t want to lose you. And if it means giving you a break or some breathing room for six months, whether it’s a 10% discount or $10 off or a freebie, that will help you and that will help them. So you have to kind of negotiate these things.

Steve Pomeranz: What about raising the bridge? You talk about promoting your skills, try to monetize your skills, especially in this day when you know if you have any kind of writing ability, you can create a blog, you can take your skills and get it out on the internet and try to monetize it. What are some of the ideas that people can use there?

Farnoosh Torabi: There’s so many ways to monetize your skills. And when I wrote the book, it was actually at a time where there was a lot on the internet, but now there’s even more. And when I go out there and talk about how to monetize your skills, I’m talking about doing it virtually over the internet. You don’t even have to leave your home, and you don’t have to compromise your work hours to bring in more money, whether it’s through pet sitting or tutoring or doing technical tasks over the internet.

There are websites like elance.com, taskrabbit.com, tutor.com. There’s obviously Craigslist, but there are a number of websites out there to help everyday people who just need to bring in a little extra bacon because this is something again that you might be cutting down all your costs and you might have a job, but you’re still suffering. And that’s because the cost of everything is going up. Inflation is running rampant for commodities like food and gas. So you have to figure out another way to kind of feed the beast. And that will probably, for many people, mean bringing in extra money.

Maybe you can ask for a raise at work, but if that doesn’t work out, how about pet-sitting over the weekends or tutoring a foreign language if you’ve got a foreign language skill over the internet? Or if you’re a great writer, freelance writing. That’s what I did when I was in my 20s. I worked at a news station, but I also freelance wrote and I babysat, and that’s just what you have to do. You’ve got to piece together some income so that you can create the life and the lifestyle that you want.

Steve Pomeranz: We have to wrap this up, but I’m thinking about low-hanging fruit here. We’re approaching tax season, right? We’re coming towards the end of the year, and is there something really easy that I can do to save a couple of bucks here and there?

Farnoosh Torabi: Well, it’s really about staying organized and collecting those receipts that will help you lower your taxable income. If you’re somebody who is maybe having a side gig and you’re bringing in some revenue from a freelance job, a lot of the expenses that you might be incurring to help support that job.

Let’s say you’re a freelance writer and you’re subscribing to magazines and you’re making phone calls to sources, and you’re driving around for the job. In a lot of cases, these associated costs, as long as you keep a good track record and you have the receipts and the paperwork to back it up, can help the lower your taxable income. And I think if there’s one tip I could give to everybody, it’s that. Try to itemize. Sometimes the standard deduction doesn’t do you justice. It’s better to maybe keep track of your itemized expenses and do the total, and maybe you’ll probably save more that way.

Steve Pomeranz: All right. Well, that’s a good message here. My guest is Farnoosh Torabi, finance expert, author of You’re So Money: Live Rich, Even When You’re Not.

I understand you had a show on Lifetime, is that right? Did you just wrap that up?

Farnoosh Torabi: That was a while ago, but it was called Real Simple, Real Life on TLC.

Steve Pomeranz: TLC, right.

Farnoosh Torabi: And then later I was doing a show called Bank of Mom and Dad on Soapnet, and now my show is called Financially Fit, and it airs on the Yahoo network on Yahoo Finance and Yahoo Shine. It’s the number one personal finance show on the web. So, please check it out.

Steve Pomeranz: Great. Congratulations. A real pleasure to speak with you, Farnoosh. I hope to have you back.

Farnoosh Torabi: Likewise.

Steve Pomeranz: Thank you. Bye-bye.

Episode 973

Steve Pomeranz, Market Call, COVID-19

Steve’s Market Commentary

Is It Time To Change Your Investment Strategy?

CNBC’s Meg Tirrell Answers The Questions Everyone’s Asking About Cures And Treatments

With Meg Tirrell, Senior Health and Science Reporter for CNBC

 

CNBC’s Meg Tirrell Answers The Questions Everyone’s Asking About Cures And Treatments: Part II

With Meg Tirrell, Senior Health and Science Reporter for CNBC

The Real Estate Industry Adapts To The Coronavirus

With Terry Story, a 31-year veteran with Keller Williams located in Boca Raton, FL

The Laying Of The First Transatlantic Cable Was A Modern Miracle. Here Is The Awe-Inspiring Story

With John Steele Gordon, Contributing Editor at American Heritage, Prolific Author of books on business and financial history including A Thread Across The Ocean: The Heroic Story of the Transatlantic Cable

The Real Estate Industry Adapts To The Coronavirus

Terry Story, CoronaVirus Real Estate

With Terry Story, a 31-year veteran with Keller Williams located in Boca Raton, FL

During this week’s Real Estate Roundup, Steve spoke with Terry Story, 31-year veteran at Keller Williams, about how the real estate industry is adapting to the coronavirus environment.

The Real Estate Industry Keeps on Keeping On

In response to Steve asking about the current real estate market, Terry reported some recent real estate numbers from her neck of the woods—Palm Beach County in Florida: “Over the past 12 days, we’ve brought in 425 new pending sales contracts and a little over 700 new listings. So, basically, there are still new listings coming onto the market, and buyers and sellers are still coming together and bringing homes under contract.”

How the Coronavirus Has Changed the Business

However, Terry freely admits that the real estate market and everything around and interconnected with it has been significantly impacted by the coronavirus pandemic. “Everything is different, due mainly to social distancing and other health safety requirements. We are wearing masks, gloves, and sometimes booties. We cannot be in the home at the same time as the prospective buyer. Zoom and other social media conferencing programs are the new norm,” Terry said. “I’ve gone out and videotaped all my properties so that I can offer buyers virtual walking tours. You kind of just have to develop a new level of comfort with operating almost entirely online and through social media.”

She also mentioned how the pandemic has changed bank policies regarding handling mortgage loans, making banks a bit more cautious because of so many people’s employment status being in jeopardy. As Terry explained, “The day before closing, the banks are re-verifying that the borrower is still gainfully employed, that their income is still the same, and that they don’t foresee any changes in their employment status.”

But the state of the business overall is that Terry and other real estate agents nationwide are proving that when compassionate, creative, and goal-oriented approaches are used, even a worldwide pandemic can’t stop the industry.

There are, of course, some hang-ups. Steve asked about sellers possibly being reluctant to have people traipsing through their homes. Terry said that the level of reluctance varies, mostly according to how motivated the seller is. She explained, “Obviously, the more motivated a seller is, the more willing they are to allow people into their home. It’s a two-way street of consideration: the seller allows us into their home and, in return, we’re taking extra precautions to make sure the home remains clean and safe for everyone.”

Price Point Matters

The pandemic, of course, is hitting every industry across the world, as evident by the millions of individuals filing for unemployment in the United States. Both buyers and sellers are likely to grow concerned about picking up or getting rid of a home during this time.

Still, Terry emphasized that when things are done right—like sellers properly pricing their homes—good deals are getting done. She related the story of one property she handled recently that was put on the market on Good Friday and that had more than 30 showings over the Easter weekend. In the end, the seller got five offers and ended up selling the home for $28,000 more than their asking price. The moral of the story, according to Terry, is that “If the properties are priced right, especially if they’re vacant properties, then they’re moving.” If the house is vacant, then that helps as far as removing concerns sellers might have about a bunch of buyers invading their home and possibly exposing them to the virus.

If you’d like to learn more about buying or selling a home, you can find plenty of help at Keller Williams’ website.

Disclosure: The opinions expressed are those of the interviewee and not necessarily of the radio show. Interviewee is not a representative of the radio show. Investing involves risk and investors should carefully consider their own investment objectives and never rely on any single chart, graph or marketing piece to make decisions. Content provided is intended for informational purposes only, is not a recommendation to buy or sell any securities, and should not be considered tax, legal, investment advice. Please contact your tax, legal, financial professional with questions about your specific needs and circumstances. The information contained herein was obtained from sources believed to be reliable, however their accuracy and completeness cannot be guaranteed. All data are driven from publicly available information and has not been independently verified by the radio show.

Read The Entire Transcript Here

Steve Pomeranz: It’s time for Real Estate Roundup. This is the time, every single week we get together with noted real estate agent Terry Story. Terry is a 31-year veteran with Keller Williams located in Boca Raton. Welcome back to the show, Terry.

Terry Story: Thanks for having me, Steve.

Steve Pomeranz: Terry, what’s going on in your world? The rest of us are quarantined and trying to stay out of trouble. What are you doing?

Terry Story: Well, I am quarantined and I’m looking to get into trouble. The world of real estate, things have definitely quieted down and that’s, of course, across the country. But when we look at the numbers in Palm Beach County, what I’ve been tracking, Steve, is I want to keep an eye on what’s going to under contract and how many new listings are coming on. Let’s just take, for example, since March 31st and today’s the 14th, we’ll just say for a 12-day period of time, we brought in 209 new pending sales of the one week and then 217. You’re looking at, say, 425 new contracts if you will. And about, say, 700, a little over 700 new listings. What am I saying by all of this? There’s new listings still coming on the market and buyers and sellers are coming together and bringing contracts under contract.

Steve Pomeranz: Yeah. But like we talked about last week, the whole way it’s being done has got to be totally changed.

Terry Story: It’s totally changed. We’re doing a social distancing, we’re wearing gloves or, in some cases, booties, masks, depending on the house. If it’s vacant, if we’re…and quite frankly, no one’s supposed to be in the house. The seller’s not supposed to be in the house. We’re not really even supposed to enter the house with the clients. We have certain rules that we’re adhering to and we’re able to do so much now digitally. We can do Zoom conferences, we can write contracts electronically, but we’re finding—and it’s interesting, when we first went into this, we had the shock and awe, okay, how are we going to do our business? And we ran out, I ran out and videoed all my properties, and I’m calling them virtual walking tours, and we have them available for people to take a look at.

And as we kept rolling on, things started off like, how are we going to do our business? Now it’s almost becoming like this is the new norm and it’s starting to feel comfortable in that, you develop a new rhythm in the way that you wake up in the morning, and how you start your day and what you’re doing. How are you going to get in touch with your buyers, your sellers? And it’s an interesting phenomenon.

Steve Pomeranz: Yeah. I was going to ask you, are sellers letting buyers in their homes?

Terry Story: Some do, some don’t. It really depends on their health and their situation. Obviously, the more motivated the seller, they’re allowing it and we’re just taking extra precaution. The homes that are vacant, I’ll give you an example. I took on a vacant property up for sale, and we had priced it aggressively. We had one figure in mind, right before the coronavirus, we were going to go in at 295 which we thought was a good number, pricing it well. Well, when we actually rolled it out on Friday, right before Easter, we put it on the market for 275. Saturday, we had over 30 showings. There were people, agents lining out the door to show this property and we ended up with five offers. We sold it for 28,000 over asking. The moral of the story is if it’s priced right, especially if it’s a vacant property, they’re moving.

Steve Pomeranz: Now, was that a function of the price point? Because I know in months past you said that the price point sales picture is quite different depending upon where you are in, what level you’re at.

Terry Story: Absolutely. And this is entry-level house and there’s such a strong demand for it. And when one is in excellent condition, well cared for and shows well and you’ve got some great pictures and photography and walking tours and everybody is able to see it. That was all contributing factors. And if, quite frankly, if it wasn’t for the pandemic situation that we’re in, I would have sold it just as fast. Not sure that it would have gotten the number that we got, but it’s just all real interesting. It just hammers down the point that if it’s priced properly, it will sell even if it’s a higher price point. We went and showed a house the other day and it was in the 800 range, Steve. And they priced it aggressive. This seller is relocating, has to sell. We were the second person in and they sold it that day to the first person in.

Steve Pomeranz: Oh, boy. Now getting back to this 290,000 house, so what was the final price on that?

Terry Story: 303. We asked 275 and we sold it for 303.

Steve Pomeranz: Now was that a cash deal or was there a mortgage on that?

Terry Story: No, there’s actually a mortgage and that brings up another interesting topic. I didn’t have any cash buyers, the investors weren’t looking at it. It was all end users, and we had the five offers and we had to decide who was the strongest financially. And what I’ve come to realize in all of this, what’s really important is where is the income being derived? The offer that we ended up accepting was a person who is on disability and part of his income is from the government. We know that his income is constant, where if we had accepted another person’s offer where they have a job, we don’t know that their income is going to remain constant in the next 30 days. And what’s happening, Steve, is the banks are, the day before closing, re-verifying that the borrower is still gainfully employed, that their income is still the same and that they don’t foresee any changes in their employment status.

Steve Pomeranz: You have a situation where a buyer may be preapproved for a loan or approved, not preapproved.

Terry Story: Approved for their loan. They’ve already gotten mortgage commitment.

Steve Pomeranz: And now because of the virus, the day of closing or the day before, the bank is checking their source of income to see whether they have a job or will have a job?

Terry Story: Yes, that’s correct. A couple of days before closing they’re re-verifying everything. They’re re-verifying proof of income, money in the bank. Interestingly enough with our contracts, if you’ve already been approved for your financing, you have 30 days to get a mortgage commitment, you get your mortgage commitment, you’re locked and loaded. If the deal were to fall apart, the buyer loses out, the money is forfeited to the seller. In this particular case, if that were to happen, which really isn’t fair, the deposit money can go to the seller. And no fault of the buyer.

Steve Pomeranz: Yeah. That brings up all kinds of problems, which we’ll get to next week, but unfortunately, we’re out of time. My guest, as always is Terry Story, a 31-year veteran with Keller Williams located in Boca Raton. And she can be found at terrystory.com. Thanks, Terry.

Terry Story: Thanks for having me, Steve.

CNBC’s Meg Tirrell Answers The Questions Everyone’s Asking About Cures And Treatments

Meg Tirrell, CoronaVirus

With Meg Tirrell, Senior Health and Science Reporter for CNBC

To get a good idea of what drug companies are doing to create tests, treatments, and vaccines for the coronavirus, Steve spoke with Meg Tirrell, the Senior Health and Science reporter at CNBC. Meg has tracked public health emergencies from Ebola to Zika, so she has plenty of experience with pandemics.

Testing For The Coronavirus

Steve and Meg first talked about where we are on testing for the coronavirus. Meg reported that “testing capacity has ramped up dramatically in the United States from where it was. Now commercial companies have come in and the US is running something like more than a hundred thousand new tests per day. That’s still not enough. What everybody says is we need to have a much greater testing capacity if we’re going to be starting the economy back up again. We need to be able to know who’s infected, where the outbreaks are.”

But there are still problems with the testing infrastructure, such as shortages of supplies needed to do the tests, things like swabs and protective equipment for people doing the testing. There’s a lot of variation in how well different states are doing as far as testing (Meg noted that Florida has done an excellent job so far on testing and on reporting test results) and, in Meg’s opinion, there needs to be more national coordination and guidance from the top.

Steve noted he had read one of the problems was hospitals’ reluctance to switch testing platforms. Meg agreed that that is one of the problems. Roche tests were available in the early stage to the hospitals, so when Abbott came out later with a large supply, many facilities were slow or reluctant to make the change.

Steve also pointed out that getting the economy open and running again is probably going to be heavily dependent on increased and better testing abilities, including the ability to do multiple tests and get fast results. According to Meg, “One of the new areas of technology that’s emerging is antibody tests—that’s a test to determine if you’ve been infected in the past and have developed antibodies that make you immune to the virus. But it still needs to be proven that you can’t be re-infected right away with this virus. Abbott just announced that it’s going to be launching an antibody test and that it’ll be supplying millions of tests in the U.S. by June. A lot of people are very hopeful that that will be kind of a passport showing you have immunity, so you can be back out in the world.” Steve had the idea that people could possibly have something like a QR code on their cell phone showing that they’re clear of infection.

Coronavirus Treatments

Steve asked Meg to do a quick recap of an earlier conversation they had about a possible treatment or vaccine drug being developed by the biotech company, Regeneron. Here’s the latest on Regeneron’s efforts from Meg: “Regeneron has a couple of different approaches and they’re moving incredibly quickly. The first is an antibody approach where they’re actually developing a brand-new drug for COVID-19. The way they’re doing that is with these mice that they’ve genetically engineered to have human immune systems. They essentially expose these mice to the novel coronavirus to get them to develop an immune response. They’re taking those antibodies that the mice generate and sifting through them to find the best ones that could be a potential medicine. This is an approach that they used successfully for Ebola and there is a lot of hope they’ll be able to do it again here. And they’ve accelerated their timelines on being able to get into doing human trials by early summer. Regeneron is also doing another thing, using an existing drug for rheumatoid arthritis to treat the most severe patients with COVID-19 for the inflammation in their lungs.”

Steve also asked for Meg’s comments on the drug that’s been widely touted as a treatment, hydroxychloroquine. Meg relayed that it’s continuing to be studied in a number of trials, but that there are still questions about how effective it really is. More data is needed.

Another drug showing promise is Gilead’s Remdesivir, which it discovered during the Ebola virus outbreak. Although it turned out that the drug didn’t really work very well for Ebola, it’s showing promise as a treatment for the coronavirus.

Vaccines In Development

Steve next turned the topic of conversation to vaccines in development for use against the coronavirus. Meg informed listeners that there are around 80 different vaccines currently in development. One particularly promising one is from a small biotech company, Moderna. Partnering with the National Institutes of Health, Moderna was the first US company to start human trials on a possible vaccine. Meg says that “They dosed their first patient in the middle of March, and we should get the data on how safe their vaccine is probably by early summer. Moderna says that if all goes well, they could have a vaccine to use in high-risk groups like healthcare workers by fall. That’s incredibly fast. It normally takes years to get vaccines ready to be used.” She added that “The FDA is being pretty flexible here because we need to move so quickly.”

Inovio Pharmaceuticals also has a possible vaccine in phase one trials, and a Chinese company has a potential vaccine in phase two trials. The final phase of vaccine testing, phase three, is where a vaccine is thoroughly tested for both how effective it is and how safe it is.

One of the questions yet to be answered in regard to vaccines is whether they would need to be administered in multiple doses or only once. We just don’t know yet.

Meg has written several articles on the coronavirus that you can find at CNBC’s website.

Disclosure: The opinions expressed are those of the interviewee and not necessarily of the radio show. Interviewee is not a representative of the radio show. Investing involves risk and investors should carefully consider their own investment objectives and never rely on any single chart, graph or marketing piece to make decisions. Content provided is intended for informational purposes only, is not a recommendation to buy or sell any securities, and should not be considered tax, legal, investment advice. Please contact your tax, legal, financial professional with questions about your specific needs and circumstances. The information contained herein was obtained from sources believed to be reliable, however their accuracy and completeness cannot be guaranteed. All data are driven from publicly available information and has not been independently verified by the radio show.

Read The Entire Transcript Here

Steve Pomeranz: With coronavirus all over the news, I wanted to get a good idea of what drug companies may be doing in order to create new treatments for this virus, so I’ve asked Meg Tirrell from CNBC to join me. Meg has tracked public health emergencies from Ebola to Zika, so I think she has something to add to the discussion, and she’s with me on the phone right now. Hey, Meg, welcome back to the show.

Meg Tirrell: Hi, happy to be here.

Steve Pomeranz: Happy to have you. Last we spoke on February 19th when at that time the virus had not truly entered the US on a large scale. So I wanted to get caught up with regards to medical research, possible vaccines or cures, and where you see us today. Let’s start with testing, actually.

Meg Tirrell: Sure.

Steve Pomeranz: There seem to be different kinds of tests from antibody tests to tests where you can be swabbed and have the results back in a week or so. What’s the state of the art with that right now?

Meg Tirrell: Well. Testing capacity has ramped up dramatically in the United States from where it was. It got off to a really rocky start, of course, with the CDC-provided tests having some issues. Now commercial companies have come in, commercial labs have come in, and the US is running something like more than a hundred thousand new tests per day. That’s still not enough. What everybody says is we need to have a much greater testing capacity if we’re going to be starting the economy back up again. We need to be able to know who’s infected, where the outbreaks are.

Even though we have the tests themselves, there are a lot of reports of shortages in the materials needed to run the tests from even the simple things like nasal swabs, those long Q-tip like things they stick really far up your nose to be able to take the test. Also, the protective equipment for the people who are administering the tests, they need to be protected because when they stick those things so far up your nose, sometimes you can cough or sneeze.

Steve Pomeranz: Yeah, oh boy.

Meg Tirrell: So they have to be protected from that. So just a lot of issues. There’s a real clunkiness in our testing infrastructure in this country being revealed by the great need we all have for tests right now.

Steve Pomeranz: Well, there’s also a reluctance, I’ve read, to switch platforms, meaning that once a hospital or a group starts using some kind of tests, whether they’re the most efficient or not, it’s hard to get them to switch to another test. Have you seen that?

Meg Tirrell: Yeah. That was something that Dr. Debbie Birx mentioned in one of the coronavirus taskforce briefings from the White House—she’s one of the coordinators of this response. She pointed out that there are all of these tests provided by Abbott that can be run, millions of tests out there, but they’re not getting run because a Roche test was available first. And so, people were just used to ordering the Roche test. But there are backlogs, not making the switch to where the capacity is. And that just goes to more of that sort of clunkiness in the system. We need to be swifter because the capacity is there, but we’re not optimizing it.

Steve Pomeranz: Does this process require strong top-down leadership or is bottom-up leadership, county by county, state by state, the way to handle this?

Meg Tirrell: Well, it seems like what a lot of people are pointing out is that there just isn’t visibility into where the capacity is and where the shortages are happening. So if there were a top-down oversight of this, there could be coordination to try to say, “Hey, this site has shortages of this, but here we have capacity over here.” So I think a lot of people are kind of calling for more of a national coordination that could help a lot to just iron out these kinks that are causing backlogs.

Steve Pomeranz: Are you seeing that coordination and it’s just taking a little bit longer to get going or does there seem to be a lack of coordination?

Meg Tirrell: People I’m talking to definitely cite a lack of a national plan. You do see states having some successes. New York is doing incredible amounts of testing. Louisiana has done a lot of testing as well. In California, in Los Angeles, the mayor just said anyone in LA County can get a test if they have symptoms the same day or the next day. So trying to understand why did they have that capacity, whereas other places you have to be hospitalized in order to get a test. So there’s certainly a lot of inequity around the country.

Steve Pomeranz: Well, I know in my area—I live in Palm Beach County, Florida—there are two testing facilities. One is brand new and it just doesn’t seem like enough to me. I was wondering, I’ve been quarantined myself for five weeks now. It’s not as if this is something we’re just hearing about. We’ve seen it coming on, and yet again, the testing facilities are just… They don’t seem to be as available as I would have guessed that they would be. How do you think Palm Beach County public services are handling the situation?

Meg Tirrell: Well, certainly you want to be at a place where everybody who needs a test can get one. So, if that’s not the situation, then we’re not where we need to be. I will say, as an outsider, a reporter who is depending on the public health reporting from different municipalities around the country, I have actually found Florida’s to be really great, at least in terms of the state’s reporting of their cases. They provide these amazingly comprehensive reports of the characteristics of every case in the state.

They also provide really comprehensive reporting on who’s doing the testing and how much, and it’s just a really great source of information that you don’t see from every state. And I’ve just been really impressed by Florida in that way.

Steve Pomeranz: Oh, it’s good to hear.

Meg Tirrell: Florida also does a lot of great public health work on mosquitoes and mosquito-borne diseases. So I’ve just been impressed by Florida over the years in terms of that public health response.

Steve Pomeranz: Well, we sure do get mosquitoes down here. No lagging of those. Also, when we spoke last in February, we mentioned biotechs, giant biotechs that are trying to come up with vaccines. And I know a lot has transpired. One company we talked about is a Regeneron, and they have such an interesting business model, an interesting testing model. I’d like you to tell us a little bit about that and tell us what the latest results are from what they’re finding.

Meg Tirrell: So Regeneron has a couple of different approaches, and they’re moving incredibly quickly. The one we probably talked about in February was this antibody approach where they’re actually developing a brand-new drug for COVID-19. The way they’re doing that is they have these mice that they’ve genetically engineered to have human immune systems, and they essentially expose these mice to one of the proteins on the novel coronavirus to get them to develop an immune response. The same way when we are infected with the coronavirus, we develop antibodies to those.

What they’re doing is taking those antibodies that the mice generate and sifting through them to find the best ones that could be a potential medicine. And this medicine could work either to prevent the disease if you give it to somebody in advance, possibly a healthcare worker who’s at high risk, or it could also be used to treat the disease. And this is an approach that they did successfully for Ebola. So there is a lot of hope they’ll be able to do it again here. And since we talked, they’ve accelerated their timelines on being able to get into human trials.

Now they’re saying, by early summer, they hope to be testing this drug in people. But Regeneron is also doing another thing, which is using an existing drug for rheumatoid arthritis to treat the most severe patients with COVID-19 because they get that inflammation in their lungs that can really be terrible. And so, what they’re doing is running clinical trials to see if this rheumatoid arthritis drug, which tamps down that inflammation, can help those patients. And we should see those data within the next couple weeks. Pretty soon.

Steve Pomeranz: Speaking about clinical trials, there’s been talk from the president about chloroquine. I don’t know if I’m saying that correct or hydroxychloroquine. I read that news recently in a trial in Brazil indicated that they had to stop the trials because the high dose was associated with an irregular heartbeat. I think that’s a pretty controversial drug, but where do we stand on that?

Meg Tirrell: Yeah. We know that drug is being very widely used both in clinical trials and just in patients who have COVID-19. The heart side effects are known about that drug, so it’s not a completely benign drug. Doctors are warning if you have heart issues, that wouldn’t be a good patient to try to use this drug for. There are other questions about just, is this doing anything? And what a lot of experts have said is that it is being so widely used, if it were really a silver bullet, we’d probably be seeing that, and we’re not.

But there are clinical trials ongoing. And what Dr. Anthony Fauci keeps saying is everything’s anecdotal until you see the results of these controlled clinical trials that can really tell us if the drug’s working.

Steve Pomeranz: Right. Now, there are other companies that are at work at this. I’m just going to name a few: Moderna, Johnson and Johnson, Sanofi, and Gilead Sciences, and I’m familiar with Gilead Sciences. Tell us what they’re producing and what stage their particular antiviral is at right now.

Meg Tirrell: Right. So Gilead has this drug called remdesivir which it discovered basically during Ebola and tested for Ebola. Well, it didn’t really work very well for Ebola, but they have seen promise in it for the novel coronavirus. They just reported results from 53 patients who had received the drug on compassionate use. So that’s for very sick patients who weren’t included in clinical trials. So you have to take that data with a grain of salt because it was not a controlled clinical trial.

But what doctors are saying is that the data looked hopeful. It showed that 68% of the patients who received the drug showed clinical improvement in terms of how much oxygen support they required. 17 out of 30 patients who were intubated on ventilators in the study were able to come off that support, but seven patients included in this group did die. So we’re waiting to see the clinical trial data, which Gilead says should be coming later this month. That’s the first clinical trial data.

Steve Pomeranz: That is a drug that is a hope to cure the virus or cure the person who has the virus and kill the virus while they have it. There’s also a lot of talk about vaccines, of course, which are prophylactic in nature. Where do we stand? Now, you mentioned Regeneron and their antibody approach. What other studies, what other drugs, are out there to try to solve the vaccine issue?

Meg Tirrell: There are about 79 vaccines in development for COVID-19. That’s according to the Milken Institute, which has this great tracker of all the treatments and vaccines in development. But only a couple of started human clinical trials already. Moderna is this young biotech company that’s using a totally new approach called messenger RNA to develop a vaccine. They’re partnered with the NIH. They were the first to start human studies. They dosed their first patient in the middle of March, and we should get the data on how safe the vaccine is probably early summer.

Then they’re going to be starting the next stage of trials to determine whether the vaccine is generating an immune response to be able to protect people against infection. So Moderna says if all goes well, they could have vaccine to use in high-risk groups like healthcare workers by the fall. And that’s incredibly fast. It takes years normally to get vaccines ready to be used. And that would be before you would get a broader FDA approval. That they think could come potentially in 2021.

Steve Pomeranz: You mentioned these trials, and I know these trials go in phases—phase one, two, and so on. Describe those phases for us.

Meg Tirrell: Typically, phase one is a really small study just to look at safety, so you’re enrolling healthy people. Although when you’re doing a vaccine trial, everybody is healthy and you’re just trying to prevent them from getting sick. So that’s phase one. And then, typically, phase two you’re starting to try to determine the correct dose. You’re trying to make sure there’s actually an effect that you want to be seeing that is a greater number of patients. And then, typically phase three is that gold standard clinical trial, sometimes multiple clinical trials, that the FDA wants to see to ensure the drug is both safe and effective and that can involve thousands of patients. It really depends on the indication. So if it’s a big thing like a cholesterol drug, that’s thousands and thousands of patients. If it’s a rare disease, it can be fewer. But the FDA is being pretty flexible here because we need to move so quickly. So a lot of these timelines are getting overlapped and abridged, and a big question is going to be, how long do we need to be evaluating these vaccines to really be sure that they’re safe?

Steve Pomeranz: I’m speaking with Meg Tirrell. She covers the pharmaceutical industry and health emergencies and the like for CNBC. Now, of those 70 or so companies that are trying to create a vaccine, three companies are in trials. There’s one large Chinese company that’s in phase two, now that we know what phase two is, and then there’s two US companies in phase one. So that phase one is very, very early. Moderna is the one that you just mentioned. And Inovio Pharmaceuticals is also in phase one. It seems like so few have gotten really not that far. Why is it taking so long to get even into phase one trials?

Meg Tirrell: Well, they need to develop these new vaccines and get them to a place where they feel comfortable injecting them into a human. So I would say the timelines are faster than we’ve ever seen before. I mean, I think for Moderna, it was something like 41 or 42 days between when they had the sequence of the virus and between when they shipped the first batches to be dosed into humans. That’s amazing. Johnson and Johnson is another giant company working on this, and they plan to be in human trials in September,and that’s an accelerated timeline from what they initially saw too.

But what they have to do is design the vaccine, the thing that they’re going to inject into people, to show the immune system this protein that they want to train it against so that when it encounters the virus, it already has its antibodies, its immune soldiers all primed up and ready to be looking for it, to be able to neutralize the virus.

Steve Pomeranz: Wow. It does sound like a war. Actually, the terminology is warlike as well, right? Get the soldiers ready. Now, I have also read that these vaccines… we’re used to getting a vaccine maybe for life, like the polio vaccine, those kinds of vaccines. But these vaccines would have to be administered quite more frequently. How would that work?

Meg Tirrell: Well, it’s not totally clear yet how often that would have to be done. But for Regeneron’s, for example, it’s not a typical vaccine. So it’s creating these antibodies, and they don’t know how long the antibodies will last yet. I mean, it’s another question that we’re trying to understand about our own immune response to this virus, how long will our immune response last? And if we’re exposed, does that mean we’re really immune? We don’t know that yet.

But for Regeneron’s, George Yancopoulos, the chief scientific officer was saying perhaps a month, then you’d have to be dosed again every month. They’re figuring that out now. In terms of the other more traditional vaccines in development, we’ll have to see that too. How long do these antibodies last that we generate in response to this vaccine? We just don’t know yet.

Steve Pomeranz: You also interviewed a CEO of a German company, Qiagen, that seemed to be working on a different kind of program. Tell us about that.

Meg Tirrell: Well, Qiagen is a testing company, and so they provide the tests to see if you have the coronavirus. They also provide the materials to run the test, and that’s been a really big question because we hear from labs that the materials are in shortage and that’s one of the reasons why we can’t get these tests.

Steve Pomeranz: What kind of tests are they? Is there something about the test that makes them more attractive? Is the results time shorter? Is the administering of the test a little bit easier on the patient?

Meg Tirrell: Well, so there are all kinds of different tests out there. The Qiagen ones, in particular, you don’t hear about them being as widely used as things like the Abbott test, for example. The Qiagen test, it’s a PCR test used to determine whether you currently have the infection. I believe that they can do the turnaround time in about an hour, so that’s good. You don’t hear that these tests are as widespread as tests like the Abbott tests. Abbott has these instruments in tons of labs around the United States, and they’re providing thousands or millions of these tests. So those are a little bit more accessible.

What’s kind of interesting about some of the Abbott ones is, of course, we’ve heard about this point of care test that can give you a result in five to 13 minutes. That can be really amazing for people who need to know right away. For example, in the doctor’s office, trying to make a decision about what to do with somebody.

Steve Pomeranz: So much of reopening this economy, I think, is going to have to be a factor of testing, of being able to get tests often. I was thinking maybe even having a QR code on your phone, which shows you when you were tested and that you were cleared, in order for businesses to open up for people to do transactions again. Are we seeing anything coming on that strongly. You mentioned the Abbott labs. I think five to 15 minutes turn around is fantastic. Any more technology being used in this particular area to get us up and running again?

Meg Tirrell: Well, that’s a really great question. When it comes to the test to determine if you’re currently infected, the problem is the capacity, that we just don’t have the ability to run enough of these tests to be able to do what you said, which would be amazing. One of the new areas of technology that’s emerging is antibody tests. So that’s a test to determine if you’ve been infected in the past and you have these antibodies. A lot of people see that as basically an immunity test. Like if I’ve already had the infection, I’m immune. We just don’t know if that’s true yet.

It’s expected it will be true, but it needs to be proven that you can’t be reinfected right away with this coronavirus. But again, Abbott, a huge test maker, just announced today that it’s going to be launching an antibody test tomorrow, and it’ll be supplying millions of tests by June to the US. So I think a lot of people are very hopeful that that will be kind of a passport showing you have immunity, you can be back out in the world. And we all hope that’s the case.

Steve Pomeranz: So the timeline is June, early summer. We heard earlier when you were mentioning Regeneron. So really probably talking fall or maybe later this year before anything of consequence happens. Finally, one point you wrote about was that Massachusetts plans to hire a thousand people to conduct coronavirus contact tracing. What is contact tracing?

Meg Tirrell: Yeah, this is really interesting. So contact tracing is public health 101, figuring out who has come into contact with people who’ve been infected and getting in touch with those people and assessing their risk, and telling them if they need to, to potentially isolate or get tested themselves

So, Massachusetts has hired or is hiring, along with partners in health and nonprofit group, up to a thousand of these contact tracers, essentially trying to put into place what could be a surveillance system that a lot of public health experts say we need for when we are starting to come out of this, being able to keep an eye on who might be infected and making sure people stay home if they’re at risk and really just trying to keep a lid on potential outbreaks. You’re hearing people saying we’re going to need hundreds of thousands of these kinds of folks doing this in the US, so it would be a really big effort.

Steve Pomeranz: Well, I want to thank you for coming on today and giving us such a comprehensive look at the state of the art. Hopefully, we can have you on in another 30 days or so and we can kind of keep track with this. My guest is Meg Tirrell. Thanks, Meg. Appreciate it.

Meg Tirrell: Thank you.

Steve Pomeranz: Okay. Thank you so much. Thank you for your time. It was great.

Mystery Solved! The Toilet Paper Shortage—It’s Not What You Think

Steve Pomeranz, Toilet Paper Shortage

I’m sure you all noticed the empty store shelves of toilet paper at the very beginning of this coronavirus crisis. My reaction at the time was astonishment. Why are people hoarding toilet paper? It’s not as if there’s a hurricane coming? I couldn’t understand the bottled water shortage either for the same exact reason.

I wrote it off as a demonstration of those certain kinds of people who don’t think about what they do and just react emotionally to unexpected things in their lives. They have a herd mentality, doing whatever everyone else does. In the meantime, we “smart” people are thoughtful and rational in the way we live our lives. Right?

Well, alas, I have been forced to rethink my conclusions after reading an article by Will Oremus from the online business magazine, Marker.

So, getting back to the question: Were the empty shelves a product of hoarding or was there something else going on? And by the way, this phenomenon wasn’t just a U.S. thing; this was happening in Hong Kong, Australia, the United Kingdom, as well as in the United States

Now I’m pretty sure there was some panic-buying. All you had to do was look at all of the pictures of empty shelves in your news feed and something got unleashed in your primitive brain, scattering your wits to the wind. I mean who doesn’t suffer from FOMO occasionally (FOMO is the fear of missing out, in this case having NO toilet paper).

But maybe it’s not irrationality at hold here. Maybe it’s something entirely different—something entirely…..boring. Maybe it’s just a supply-chain issue.

A couple of things we know for certain. A lot more of us are staying home so we are using more paper at home. Fine. And if we’re home, we are using less paper in the office and in restaurants which would normally take up the slack.

It turns out that there are two separate markets for the toilet paper that is produced in the U.S. There’s the consumer market (our homes) and there is the commercial market (our offices, restaurants, and schools). I mean, think about it—if 75% of us are staying home, we are using our own facilities not someone else’s.

Actually, according to Georgia-Pacific, maker of Quilted Northern, the average household will use 40% more toilet paper than usual.  That’s a huge jump in demand especially for an industry that is mostly boring and extremely stable. Toilet paper manufacturing is a stable, volume business with thin profit margins, and producers crank out rolls from factories that run 24/7. If there is a large change in one market over another, it creates disruption.

So, why can’t they just shift production from the commercial side to the consumer side? That’s a natural question and it’s a good one.

The problem—and this is the gist of the whole mystery—the two markets are very different. The commercial market is geared to make large rolls that fit on large special dispensers; the rolls are thinner and too big to fit in our houses. They’re delivered on big pallets quite different from the individually wrapped rolls of 6 or 12 we get at the supermarket.

Also, the paper is not normally produced at the same paper mill. Some companies focus on the consumer, like Proctor and Gamble which makes Charmin, and some focus on commercial and some on both. But the markets are, in a sense, like oil and water and can’t really be mixed.

In theory, if this virus turned into a long-term problem, the mills would try to retool to meet consumer demand, but at this point, they are probably thinking, like most of us, that life will get back to normal relatively soon, though I know some of you will disagree with that assumption. Considering the low margins and the high cost of retooling, they’re probably reticent to start making the switch as of yet. There’s just too much uncertainty to justify the expenditure right now.

And toilet paper isn’t the only industry going through these types of challenges. For example, there is a commercial market for fruit as well as a consumer market—think school lunches. If schools and restaurants are canceling their banana orders, and supermarkets can’t keep them on the shelves, a problem arises because commercial bananas are smaller and come in boxes of 150, while consumers like bigger bananas in smaller bunches. I think consumers would adapt pretty easily to smaller bananas, so there probably won’t be the sort of shortage we have with toilet paper.

Beer companies have a similar problem as well. They serve commercial establishments like bars where they sell kegs and serve consumers where they sell bottles and cans.

So, I’ve decided to stop blaming those crowd-following, cliff-jumping lemmings who have made me worry about my supply of toilet paper. Actually, I have to hand it to them. How did they know they would be spending so much time at home, so early on? I admit—I was totally clueless, and my ability to predict the future a scant 3 weeks ahead was dreadful.

There you have it, a mystery solved. Now I’m going back to watching reruns of Agatha Christie on the Acorn Channel.

Investing involves risk and investors should carefully consider their own investment objectives and never rely on any single chart, graph or marketing piece to make decisions. There are no investment strategies that guarantee a profit or protect against loss. Content provided is intended for informational purposes only, is not a recommendation to buy or sell any securities, and should not be considered tax, legal, investment advice. Please contact your tax, legal, financial professional with questions about your specific needs and circumstances. The information contained herein was obtained from sources believed to be reliable, however, their accuracy and completeness cannot be guaranteed. All data are driven from publicly available information and has not been independently verified by the radio show.

Is It Time To Change Your Investment Strategy? 

Steve Pomeranz, Investment Strategy

You probably don’t want to talk about this right now after having seen your investments squiggle up and down 10% every week, but today I do want to share some thoughts on investing that could help you make the right decisions going forward.

In times like these, when there are big market drops and increased volatility, you may think you need to suddenly change your investment strategy. This started me thinking about the many investment fads that come and go over an investor’s lifetime. And I have seen many of them.

To paraphrase the famous Nobel Laureate, Eugene Fama, who once said something to the effect that, “There’s one significant new idea in finance maybe every 10 or 15 years, but there’s a new marketing idea every week.”

So, a marketing idea as opposed to an investment idea? What do you think he’s saying? I think he’s saying that great investment ideas are normally evolutionary, taking years to perfect and bubble up through the noise. Ideas like value investing, the idea of mutual funds so many years ago, ETFs, quantitative investing, and modern portfolio theory took decades to develop and become part of the mainstream. And even with all those years, professionals still argue about their merits all the time.

Marketing ideas, however, are borne out of the commercial need to drum up new business, and some American companies and many so-called investment advisors slickly specialize in this area.

Is It Time To Change Your Investment Strategy?

Should you be looking to make major changes to your portfolio, make sure you’re sticking to the tried and true and don’t jump into the latest investment fad of the day.

And maybe don’t do anything at all, but if you must, realize that it’s a bit like locking the barn door after the horse is already gone. It would probably have served you better had you done that before the market dropped more than 10% in just a few days. Changing your investment strategy to try to fit an event that’s already occurred doesn’t usually work out well.

The History Of Investment Fads

Let me tell you about the history of various investment fads, so you can easily see how many of them have come and gone. In the 1960s and ‘70s, the great rage of the time was an investment in the “nifty fifty” stocks, a group of large-cap, blue chips, which were often described as “one-decision” stocks because they were viewed as extremely stable, even over long periods of time.

Of course, that stability came at a high cost as most of them sold at sky-high PE ratios resulting in valuations that were far in excess of the true value of the businesses.

Many survive to this day and many do not, but all in all, the returns were less than stellar. And if you missed just a few of the good ones, the returns were a complete disaster.

The late 1990s and early 2000s saw a lot of focus on the “BRIC” markets (Brazil, Russia, India, and China), which did well for a while then lost a good deal of money. There was also the dot-com bubble fad, followed by the bubble burst when many investors threw money at any stock that was even remotely connected to the internet. The idea was kind of right, but the investments were awful. I remember the Biotechnology fad in the ‘80s when the potential of a new world of eradicating disease was the marketing promise of the day. As with all of these, the ideas have merit, but which companies succeed and when is always the great unknown. The 2008 financial crisis spawned plenty of new strategies, such as “Black Swan” strategies. (For those of you who may not know, the coronavirus is not, according to Nassim Taleb, the creator of the term, an example of a Black Swan event, meaning that it was an event that was predicted but could not be timed. A typical Black Swan episode is a totally unforeseen event.

Now today, the current popular investing trends continue to be strategies that aim to profit by identifying (or guessing, if you will) who the ultimate winners will be among cryptocurrencies or the cannabis companies.

Often an investment fad explodes onto the scene and glows like a Super Nova, flaring-out once reality sets in. We saw a great example of this with the Cannabis company Tilray which IPO-ed at 17, soared to $300 and now currently sits at $6.50

Why don’t trendy investment strategies usually work? In large part because most of them are aiming to do something that’s simply nearly impossible to do—outguess the collective wisdom of tens of millions of investors whose actions ultimately determine the prices of stocks. Also, investors are operating under the “greater fool” theory in which investors have the hope they will sell their stock to a greater fool than they are.

Yes, there are stories of someone occasionally “outsmarting” the overall market for a period of time, but such stories—the true ones anyway—are few and far between, and they don’t tend to remain true over the long haul. For example, I know of one seasoned investor, whose advertisements today tout that he bought Microsoft at 3 and Amazon at 10 and so on. What he doesn’t advertise is that he ran a hedge fund that blew up because his overall investment performance was so miserable.

Smart Moves To Make Now

So, what are some smart moves you should consider making right now in regard to your investment portfolio? It’s certainly a good time to sit down with your financial advisor and do a normal review of your portfolio. If you’ve been hiding your head in the sand, it’s safe to come out now.

If you are considering adding some new assets or strategies to your investments, the first thing to check is whether they will actually add something to your portfolio that’s not already in there. Then you can discuss with your advisor or your dad or mom, whoever knows more than you, whether making some changes is likely to help you better achieve your goals and be in line with your risk tolerance. It’s also a good time to consider offsetting any gains you may have by selling some losing stocks and taking your losses. Also, consider the relative tax advantages of one investment over another and review your fees and transaction costs to make sure those are as fair as possible.

In the end, most investors do better simply by staying disciplined during times of increased volatility and market uncertainty, rather than by making rash, impulsive changes to their overall strategy. What I like to say is that both you AND your portfolio should be quarantined right now.

Just as in the world of fashion, investing fads come and go, but if you’re going to invest in individual companies, please make sure you understand the business, the balance sheet, their competition and the possible future rate of return based on the current stock price and a reasonable forecast of future earnings. If you can’t or don’t want to do that, stick with getting just the right funds to satisfy your long-term goals.

Investing involves risk and investors should carefully consider their own investment objectives and never rely on any single chart, graph or marketing piece to make decisions. There are no investment strategies that guarantee a profit or protect against loss. Content provided is intended for informational purposes only, is not a recommendation to buy or sell any securities, and should not be considered tax, legal, investment advice. Please contact your tax, legal, financial professional with questions about your specific needs and circumstances. The information contained herein was obtained from sources believed to be reliable, however, their accuracy and completeness cannot be guaranteed. All data are driven from publicly available information and has not been independently verified by the radio show.

The Laying Of The First Transatlantic Cable Was A Modern Miracle. Here Is The Awe-Inspiring Story

John Steele Gordon, First Transatlantic Cable

With John Steele Gordon, Contributing Editor at American Heritage, Prolific Author of books on business and financial history including A Thread Across The Ocean: The Heroic Story of the Transatlantic Cable

Today, at the touch of a button, we can instantly communicate with family, friends, and business associates across the globe.  Steve’s guest, John Steele Gordon, walks us through the hundreds of years of technological advancements and refinements that made today’s lightning fast communications possible.

John Steele Gordon is a full-time writer on business and financial history.  His books include An Empire of Wealth, The Great Game, Hamilton’s Blessing, The Scarlet Woman of Wall Street, and A Thread Across the Ocean: The Heroic Story of the Transatlantic Cable.

A Brief History Of Transcontinental Communications

In the mid-19th century, communication between the United States and Europe was as quick as the fastest ship crossing the Atlantic.  At this time, Europe was the center of world affairs.   Ships traveled from America to England in about six weeks.  They made the return journey anywhere from eight weeks to three months, depending on the weather.  This isolated the United States from the rest of the world, making it vulnerable.

Moreover, when people left Europe to come to America, traveling back and forth between the Old and New Worlds was impossible.  The only exception was for certain business or wealthy elites.

In parallel, Britain expanded its empire across the world and was keen to hasten communications with its colonies.  These two purposes drove the tremendous desire to hasten communications across far lying lands, which Gordon describes in detail in A Thread Across the Ocean.

In the United States, the Industrial Revolution began in the early 19th Century.  By the middle of the 19th Century, more efficient steamships cut travel time to about 10 days with the fastest ships. However, it still took weeks for news to travel across the Atlantic.

The Morse Code Laid The Foundation For Modern Communications

By the early 1800s, scientists in the U.S. knew that electricity could be transmitted long distances down a wire.  Then, in 1838, Samuel Morse developed the Morse Code.  Thereafter, it took him five long years to obtain financial support from Congress for the first telegraph line in the United States.  The first line was completed in 1844.  It connected Baltimore to Washington, and on May 24, Morse sent the first message, “What hath God wrought.”

By the 1850s, overland telegraph lines reached all the way from New Orleans, to Canada, and across Europe.  People then started laying underwater cables to bridge small seas and straits.

Cyrus Field Builds Transatlantic Cable

After a cable was successfully laid across 25 miles of the English Channel, an American named Cyrus Field seized on the idea of laying a cable across the Atlantic Ocean.  But implementation of his idea was easier said than done.  Unsurprisingly, initial attempts to lay a cable ran into a host of problems.  These problems ranged from wire insulation and weight to having ships big enough to lay the long and heavy cable.

After several failed attempts and a lot of money spent, Field’s Atlantic Telegraph Company finally connected the two continents.  The transatlantic cable was officially opened on August 16, 1858.  Queen Victoria sent the first message to President James Buchanan in Morse code.

This breakthrough was met with much jubilation.  Unfortunately, the historic cable broke down three weeks later.  Field then enlisted technical assistance from William Thomson, a physics professor from Scotland.  After key design changes, the cable was finally made secure in 1866.

As an aside, Thomson honored Baron Kelvin for his work and had the Kelvin scale of absolute temperature named in his honor.

Thereafter, transatlantic communications boomed, laying the foundation for much of the modern telecommunications technology that we take for granted today.


Disclosure: The opinions expressed are those of the interviewee and not necessarily of the radio show. Interviewee is not a representative of the radio show. Investing involves risk and investors should carefully consider their own investment objectives and never rely on any single chart, graph or marketing piece to make decisions. Content provided is intended for informational purposes only, is not a recommendation to buy or sell any securities, and should not be considered tax, legal, investment advice. Please contact your tax, legal, financial professional with questions about your specific needs and circumstances. The information contained herein was obtained from sources believed to be reliable, however their accuracy and completeness cannot be guaranteed. All data are driven from publicly available information and has not been independently verified by the radio show.

Read The Entire Transcript Here

Steve Pomeranz: Today in a world in which news flashes around the globe in an instant, time lags are inconceivable. In the mid-19th century, communication between the United States and Europe (which was the center of world affairs back then) was only as quick as the fastest ship could cross the Atlantic, making the United States isolated and vulnerable. But in 1866, the Old and New Worlds were united by the successful laying of a cable across the Atlantic.

My guest is John Steele Gordon, who has written many books chronicling the growth of America. The Scarlet Woman of Wall Street: A History of Wall Street in the 1860s, Hamilton’s Blessing: The Extraordinary Life and Times of Our National Debt, The Great Game: The Emergence of Wall Street as a World Power: 1653-2000, and A Thread Across the Ocean: The Heroic Story of the Transatlantic Cable. Now I read A Thread a few years ago, and it seems I’m going through a phase of understanding the historical context of our world today, and John Steele Gordon’s book chronicles this extraordinary achievement that changed our world forever. I have him on the show with me right now. Welcome, John.

John Steele Gordon: Thank you, I’m glad to be here.

Steve Pomeranz: John, it’s a great book.  I’ve now just recently re-read it.  And again it holds up really quite well. What was the state of communications between the old world and the new?

John Steele Gordon: Well, they had been improving throughout the 19th century. In the 1800s, a ship could …the average time going from America to England was about six weeks and going the other way was about eight weeks, but if the weather was really lousy, it could be three months.

By the middle of the 19th century they had steamships, and the timeframe was going down and down and down. By the 1860s, it was about 10 days for the fastest ship.

Steve Pomeranz: All of the news that was happening in Europe, any wars, or volcanoes like Krakatoa, and so on, nobody really knew about that for quite a long period of time, correct?

John Steele Gordon: Yes, and it could be two weeks before you heard some big news that happened in Europe.

Steve Pomeranz: You wrote in your book that when people came to the United States, they basically had to stay here. There was really no going back, except for a few business people and elites, traveling back and forth between the Old and New World was literally impossible.

What was the kind of person, I’m not—and this is rhetorical. I have to ask myself, what was the kind of person that would make that one-way trip knowing …not what faced them in the New World at this early period time in our country’s history, but the fact that this was basically it, almost all ties to the Old World were cut? And there was this tremendous desire now to try to bring the two worlds together.

Now a lot of things were happening both in England and in the United States in the early 1800s. New England was going through a tremendous upsurge in manufacturing in the industrial revolution. Tell us a little bit about that.

John Steele Gordon: Well, the industrial revolution began in England in the middle of the 18th century. Historians are forever arguing about exactly when; it’s just not very important ,which is why they argue about it.

In the United States, the industrial revolution began very early in the 19th century with cotton mills in New England, where they had quickly flowing rivers that could power it, and that became a very big industry and it was growing quickly in the United States, but England was still by far the industrial powerhouse of the world.

Steve Pomeranz: They were expanding their own empire to faraway lands and climes, and so on, right? So England reached how far?

John Steele Gordon: England reached around the world. It was literally true that the sun never sets on the British Empire. It was the biggest empire in the history of the world.

Steve Pomeranz: Also, we were starting to create electricity through the use of steam and other technologies, which started to improve manufacturing of cotton and other things as well. Tell us about that.

John Steele Gordon: Yeah, well, the steam engine was what really powered the industrial revolution because it was the first new form of work doing energy since the windmill, which was invented in the 7th century A.D.

Here was…you turned a low-value energy, heat, into something that can move things and it transformed the world and rapidly developed with new kinds—the Watt steam engine was obsolescent by early the 19th century. So they had a new kind of steam engine, often called a puffer engine because it exhausted the steam in both the upstroke and the downstroke. So it made a puff up, puff up, puff up noise, and that was powerful enough to move railroads. And that meant that you could move freight over land cheaply and quickly.

Steve Pomeranz: Right.

John Steele Gordon: And that was a big revolution.

Steve Pomeranz: It was also the harnessing of electricity at that point in time. I mean, we all know about Benjamin Franklin and the kite experiment with the key. Electricity was discovered early on, it was not understood early on, but this idea that you could actually move electricity through a cable was important, or through a wire, was important. Tell us about that.

John Steele Gordon: Well, indeed, at that time electricity was not well understood, although we understood much better by the 1840s than we had in Franklin’s day.

Steve Pomeranz: Yep.

John Steele Gordon: But we knew that it could be transmitted long distances down a wire, and the trick was to find a way to use that as a signal. And it was Samuel Morse who—lots of people, they wanted England and stuff—but Morse came up with the Morse Code, which was a marvelously simple way to transmit information through a wire. Once you learn Morse Code, if you’re good at it, you can interpret it by ear.

Trained telegraphers would simply…they’d listen to the Morse Code and just write it down. So this could move information, and it started in 1844, when he had a … from the Capital Building in Washington, he telegraphed to his partner up in Baltimore, “What hath God wrought?” And it then took over, and by the 1850s, telegraph lines were reaching all the way down to New Orleans and up into Canada, and what have you. And of course, also in England and Europe.

Steve Pomeranz: These were overland wires in which the electricity traveled pretty easily, very fast, and there was a lot of talk about trying to lay some underground or underwater cable, in order to bridge straits and small seas and other things, and that was actually happening on the European continent by this point, right?

John Steele Gordon: Yes, well, they wanted to lay a cable under the English Channel, that’s only about 25 miles or even less than that. And actually the first time they did it, a French fisherman accidentally caught it in his net and pulled it up and didn’t have any idea what it was so he cut a piece out to take home and show people, and that was the end of that cable. But pretty soon, it was working.

Then it was Cyrus Field who, he said, “Boy, that’s a great idea. Why don’t we lay a cable across the Atlantic Ocean?” And he said later that if he had known anything about it, he would never have started because it was sort of like somebody reading about Sputnik in 1957, and saying, “Hey, let’s send a manned expedition to Mars.” I mean, it was just an order of magnitude more complex and probably two orders of magnitude more expensive.

Steve Pomeranz: Cyrus Field is the main protagonist in the story, who was he?

John Steele Gordon: Cyrus Field came from a remarkable New England family. One of his brothers, Stephen Field, sat on the US Supreme Court, another was David Dudley Field, who was probably the greatest lawyer of the 19th century and wrote the “Field Code of Civil Procedure,” which is now used around the whole English-speaking world.

Steve Pomeranz: Right.

John Steele Gordon: So Cyrus Field went into business, and he became a paper manufacturer and made a fortune. He was one of those people who always had to be doing something new. Once the paper company was up and running and throwing off money, just running, it was boring.

Steve Pomeranz: Yeah.

John Steele Gordon: So he went to South America with a great artist— sorry, I just can’t think of his name off of the top of my head—and then he read about the cable, and he said, “Let’s do that.” And he started, and he was … once he got the bit in his teeth, he just wouldn’t stop until he succeeded. Frederic Church is the artist I was thinking.

Steve Pomeranz: Sure. There’s a quote in your book that he had the desire to own the means of instant communication, which I thought it sounds like a very modern phrase, this idea of instant communication. He wanted to be the first, and obviously, there were many drivers, but not the least of which was to continue to build his fortune. He basically put together a consortium of pretty well-known people at the time.

I know Samuel Morse was involved on his board, or in this initial group. Peter Cooper, who formed the Cooper Union, if you know of New York, you’ll know the Cooper Union. It’s actually where Lincoln spoke and basically, became noticed by the world after the Cooper Union speech. Who else was involved in this consortium that we may or may not be familiar with?

John Steele Gordon: They were a bunch of New York businessmen, most of whose names are now pretty much forgotten. It was the head of the city bank, it was the head of one of the gas companies that was supplying gas for lighting. People like that, they’re names are now no longer in current use. But they were a group of the richest men in New York, which meant they were the richest men in the country.

Steve Pomeranz: What were the difficulties? I mean, there were numerous attempts. Let’s talk about the first attempt, it seemed very naïve looking back at this thing. What was the cable made up of, how did they insulate the cable? There’s all these considerations, and really, how did they roll the cable out through all of this 2,500 miles they were trying to cover?

John Steele Gordon: Well, the first cable was very badly designed because they didn’t know how to design it, there was a steep learning curve to climb here. It was heavy in terms of its volume. What it was, it was strands of copper wound around each other, then there was iron used to armor the cable, and then it was insulated with a stuff called gutta-percha, which came from a tree in Asia. Basically, it’s a kind of plastic.

It was used for lots of things, they made…it would harden and they used it to make walking sticks, and they also discovered that it made much better golf balls.

Steve Pomeranz: All right.

John Steele Gordon: Basically, it was the first plastic. It came from a tree, I mean it wasn’t created chemically. But still, it was functionally a plastic.

Steve Pomeranz: The quality of the ships back then also were a problem as well, right?

John Steele Gordon: Well, they simply weren’t big enough. There was no ship in the world that could carry 2,500 miles of cable. So the British used one of their warships and we used the Niagara, which was one of America’s biggest and best warships. And the original theory was that the British would start in Ireland, and we would start in Newfoundland, and we’d meet in the Atlantic and splice the two together.

Steve Pomeranz: The first attempt, there was a lot of celebrating, a lot of newspaper accolades, but it was an utter failure, right?

John Steele Gordon: Yes, they got about 400 miles and dropped the cable, and they couldn’t find it again, and that was the end of that.

Steve Pomeranz: The cable broke. 400 miles of cable irretrievably lost.

John Steele Gordon: Yep.

Steve Pomeranz: So, they went back-

John Steele Gordon: And so they did it the next year.

Steve Pomeranz: Yeah, okay.

John Steele Gordon: They tried again the next year, and this time they decided to start in Ireland and go to the mid-Atlantic, and then they would meet up, splice the cable there and then continue to Newfoundland.

Unfortunately, they ran into a horrendous storm and both ships barely survived. So they had to abandon. The next year, in 1858, they actually succeeded in getting the cable across to Newfoundland. And Newfoundland had already been connected by telegraph to Nova Scotia, across what’s known as the Cabot Strait at the entrance to the St. Lawrence River.

Once they got to Newfoundland, then they were connected to the American telegraph network, and everything was supposed to be fine. And they had a huge celebration; they had a big parade up Broadway; they set off fireworks from New York City Hall; burnt the cupola on the top of City Hall. They almost lost the whole building. Then Queen Victoria sent a message to President Buchanan, it was 99 words, and it took 16 hours to transmit.

Steve Pomeranz: Which they didn’t tell anybody. They didn’t tell anybody that they were having problems transmitting.   They just said, “It’s working.”  The Queen Victoria message actually got across.  What happened then?

John Steele Gordon: Well, what happened was, they kept having to repeat it. Basically, the guy at the other end kept saying, “What? Re-transmit,” because it was barely detectable. And then after about, I think it was 10 days, the cable just stopped. It was dead as a doornail.

Steve Pomeranz: All the celebration, all of this, the newspaper accolades, and then it stopped.  And then actually everything just turned against the whole plan. There were claims of fraud. Cyrus Field was scorned, and yet he said we’ll do it once again. And in, what was it, 1865?

John Steele Gordon: One thing is very important, this is 1858. In 1857, the great Indian Mutiny broke out.  The greatest crisis of British India in the 19th century. But by 1858, it was winding down. A regiment that was stationed in Canada had been ordered to India, and during that 10-day timeframe when the cable was still working, Britain was able to send a message to Canada saying, “Don’t send that regiment, we don’t need it.” And thereby saving about 300,000 pounds, which was a lot of money in the mid-19th century.

So Britain realized the extreme utility of undersea cables because they had a worldwide empire to run. We needed it just because we’d like to get the latest news from Europe more quickly.  However, Britain needed it to run their empire.  So they were willing to continue. And what they did, actually, was they sat down and figured out what had gone wrong. What had they done wrong, so they won’t the mistake again? This is how we’ve done this ever since.

Just like when an airplane crashes, we go to a great deal of trouble to figure out exactly why that plane crashed.  And how can we stop another such accident happening again? That’s what they did this time, and it greatly improved. They also got help from a man named William Thomson, who was a Professor of Physics in Scotland.  He later became Lord Kelvin.

The Kelvin scale of temperature is named for him. He was one of the greatest physicists of the 19th century, and he helped design a new cable that was … it was fatter around, but it was lighter. It came closer to floating than the old one had, which was very important. It made it less likely to break.

Steve Pomeranz: This is a great story, unfortunately, we’re out of time. The final part of this story is that there was substantial success in 1866.  Money transactions were now being equalized between London and New York.  There were two worlds that were starting to come together.

My guest is John Steele Gordon. The book is A Thread Across the Ocean: The Heroic Story of the Transatlantic Cable. If you have a question about what we just discussed, ask us. Go to Stevepomeranz.com, ask us anything you’d like at Stevepomeranz.com, and while you’re there, sign up for our weekly update where we will send you the weekly commentaries and interviews straight to your inbox. John Gordon, thank you so much for joining me today.

John Steele Gordon: Thank you.

Episode 972

Steve Pomeranz, Market Call, COVID-19

Steve’s Market Commentary

Steve’s Special Call-In Update About What’s Next

Steve’s Market Commentary

Steve Answers Your Questions!

 

 

Nathan’s Famous Hotdog: The First 100 Years

With William Handwerker, Grandson of Nathan Handwerker, Author of Nathan’s Famous: The First 100 Years, An Unauthorized View of America’s Favorite Frankfurter Company

The New Rules Of Real Estate In The Time Of Quarantine

With Terry Story, a 31-year veteran with Keller Williams located in Boca Raton, FL

The Real Economic Impact Of Covid-19

With Rick Newman, Senior Columnist for Yahoo Finance

Steve Answers Your Questions!

Steve Pomeranz, Market Call, COVID-19

All right, now let me get to some of your questions. By the way, thank you so much for all of these great questions. I’ve combined them in terms of topic to make things a little bit easier to answer everyone as efficiently as possible. So, here are the answers, in general, to these questions. Of course, I don’t know your particular personal situation, so these answers are generic.

401(k) Contributions And Portfolio Allocations

Q: Mercedes says she currently contributes 15% of her paycheck to her 401k and asks if she should lower her contributions. She’s lost $30,000 so far, as of the writing of this question, and she’s planning on retiring in 17 years. And Lorraine asked me about rebalancing her 401k and Harving just says, “401k?”

A: Unless you’re retiring within the next three years, you should be rebalancing your 401k and increasing your allocation to stocks. Mercedes, you should not lower your 15% deduction from your paycheck. I mean, if you have a steady job and you’re not afraid of losing it, and you have excess money in the form of an emergency fund, keep the 15% deduction. Keep plowing that money into the plan. Lowering your deduction is a classic mistake. Do not do that. You have 17 years until you’ll need the money.

Q: Anne wants to know about rebalancing a portfolio and the frequency of doing so. And Jill asked, “Should I be buying now? Should I be changing my asset allocation?”

A: As far as rebalancing, everybody should be rebalancing now, getting back to whatever the rebalance percentage was—60/40, 80/20—get back to that now because it’ll force you to buy stocks at lower prices. And this is all advice with the idea that you’re thinking long-term with this money. This has nothing to do with short-term money that you might need. That money does not belong in the stock market, it belongs in CDs, money markets, things that hardly yield anything but that are there for a specific purpose.

Possible Negative Interest Rates And Bonds

Q: Robert asks the question, “Please cover negative interest rates for treasury bills, notes, and bonds. How to make money in Treasury securities if interest rates go negative.”

A: Well, Robert, it’s an esoteric question, but the answer is easy. If you buy bonds, you buy Treasury bonds especially, they will do extremely well if rates go negative.

Social Security And Annuities

Q: Talibah asks, “Am I at risk for income loss with retirement funds coming from Social Security?” Or, she went on, from her FRS, which is a pension plan with the state and a medical annuity.

A: Talibah, Social Security will not be in danger. Generally, immediate annuities are very safe. And your pension plan should send you an annual report where you can check to see if they’re adequately funded.

Q: Karen asks about annuities, fixed annuities, variable annuities: “Do you think that this is a good economic climate to invest in those, especially with interest rates falling?”

A: My personal opinion is that investing in fixed annuities now would be a mistake. Rates are just too low, but I also want to make another point, and I have seen this time and time again. When markets get bad, insurance companies start to advertise, promoting safe investments. Buying “safe investments” right now is like closing the barn door after the horse has left the barn. It’s too late.

If you want safety, you would do it when the markets are up very, very, very high, and then you can look for something safe. But right now, you have to ride through this and not get sucked into this idea that you’ve had this terrible decline and now you’re going to sell everything and lock into low rates. It’s a way of selling low. And then in terms of buying the annuity, you’re buying high with the annuity.

You’ll see advertisements for people talking about life insurance, annuities, wanting you to come to a seminar because they are preying on your fear. And by the way, when things are really good, they’re advertising going into the stock market because then they’re preying on your greed.

Tax Harvesting

Q: Ted asks, “Are all managers tax harvesting now?”

A: Tax harvesting is a term meaning they’re taking losses for tax purposes. Well, I don’t know about what most managers are doing, but your advisor should have a plan to do this. And I know a lot of advisors are actually buying more stocks now in order to increase the stock allocation, and they’ve got a whole year to do some tax harvesting. But it’s a good way for you to move to action now if you feel frozen about doing something. Tax harvest, buy something that’s very similar with a different name, or wait 31 days and you can buy the same thing back.

Preferred Dividends

Q: Martin wants to know, “What is my forecast for preferred stock dividends from large US banks?”

A: It’s a good question, Martin. I think large banks are in very good financial shape. However, Jamie Dimon of JPMorgan Chase was quoted the other day that if things got very bad, they would cut the dividend. Now, he was talking about the dividend on the common stock. Preferred stock dividends have preference over that, and it’s very, very rare for companies to cut the preferred stock dividend. So I think the preferred stock dividends from large banks are good, but I would diversify them through buying a mutual fund or an ETF, so I would have many of them in my portfolio in case some of them get into trouble.

Keeping Cash On Hand

Q: Fred asks, “Does Steve believe in having a cash bucket in retirement?”

A: Fred, yes, I do believe in having enough cash or bonds to see you through a serious recession—generally, 12 to 24 months of living expenses after you consider the other sources of income like social security.

Q: Donna posed some good questions: “What is the best course of action for those already in retirement in this unusual situation? I have a cash position that will hold for about three years. When the markets begin to bounce back, should I invest that cash back into the market or maintain my cash position, and if the answer is to invest in equities, which area would be best?”

A: Well, Donna, these are very good questions, and ones that should be answered by your financial advisor who knows your personal situation well. But generally, if you’re conservative, I would continue to keep 12 to 24 months of living expenses available to support you. If you have excess funds greater than that 24 months, then you can start putting money back into the market. As far as what to invest in, I’m surely not going to give you investment advice. Talk to your advisor about that.

Banks And Investing

Q: Tom says, “I know very little about investing because money matters intimidate me. I rely on my bank to do the right thing with my money. In other words, I expect them to act in my best interest. The question is, can banks be trusted?”

A: Part of my answer is that, generally, banks are not investment advisors, so they are not subject to the fiduciary rules. Fiduciary rules require an agent to act in the best interests of the client, so you should realize that first.

But getting beyond that, the answer for banks is yes and no. Banks are in the financial services business, and they’re in the business of selling products. They sell mortgages, they sell CDs. Those are products that earn commissions for the bank. So, when you meet with an advisor at a bank, they will want to put you into a product. That’s not bad in itself, but there is a conflict of interest if one product pays them more than another. I would ask them about that before taking their advice. And make sure you get a straight answer with a dollar number. Don’t let them say, “You’re not paying the commission. The insurance company is paying it” or some other product manufacturer is paying it. Believe me, you’re paying it, so you need to get a straight answer as to what the commission is and how much the bank will earn, and this will help you make a good decision.

Life Insurance Is Not A Retirement Vehicle

Q: Sandra says, “I went to a financial planning BUS.”—(I’m not sure what that is. Maybe a seminar)—”and the advice was to invest in a life insurance policy and withdraw that during retirement. There is a reduced tax load on such an investment. Is that better than other pre-tax retirement accounts?”

A: Well, Sandra, life insurance is not a retirement vehicle. It is never a retirement vehicle. Don’t let anyone convince you otherwise. They are not better than pre-tax retirement accounts. You have to borrow money out of the plans in order to get the money that has built up, and it takes many, many years because of the high commissions. Plus, borrowing that money puts that policy in a more precarious position. It’s just not a retirement vehicle.

Sheltering From Volatility

Q: Charles asks, “If you didn’t take action early to shelter your money from volatility, is it too late now?”

A: Well, Charles, it is a little too late, I think. If you don’t need the money in the next few years, wait until the market rebounds before lowering your exposure to volatility. That time should come. But really take a close look at the kind of return that you need to get and the kind of portfolio allocation that could give you the possibility of those returns. That’s what you should stick with. But again, you don’t want to take action after the horse has left the barn.

Income Needs

Q: Harvey asks, “As someone who needs current income and the fear of companies cutting dividends, how can I get the 4% return I need?”

A: Well, Harvey, S&P 500 dividends are currently at two and a quarter percent. If you’re looking for 4%, you need capital appreciation in the amount of another one and three quarters. That shouldn’t be very hard to get. And, hopefully, if you’re counting on 4% income from dividends, you have something other than stocks because stocks don’t pay you the 4%. Maybe you have bonds in the portfolio. Maybe you have the kinds of stocks that pay a higher rate than the average of the S&P—utility stocks, the Verizon and AT&T types of stocks that pay higher dividends. All I can say is make sure that your money managers are doing a good job there, that they’re looking at those kinds of stocks and making the calculations to make sure that the S&P gives you enough diversification to protect you, but I think you should be patient and have faith. If you have a diversified portfolio, I don’t think you should worry too much.

Paying Down Debt And Keeping Cash Safe

Q: Jaclyn asks, “Should I continue to pay extra toward my credit card or my car loan debts or sit on cash that earns zero interest or do a bit of both?”

A: Jaclyn, that is a great question because any reasonable person looks at the yields on these money markets and thinks, “Couldn’t I be doing something better?” My answer to you is that if you don’t need the money to live on, keep paying down your debt, especially if you have a job that’s secure. Now, if you think you may need it, keep your money in a money market fund. If something bad happens, you will be less interested in the return ON your money than the return OF your money, so that’s the reason to keep it in a safe place.

All right, well, that’s all the questions, folks. That wraps up today’s call. I hope I’ve given you some perspective for making better decisions in today’s topsy-turvy market environment.

If you haven’t already, please sign up for the Steve Pomeranz show update, which will be delivered to your inbox every single week. And as I said, we will be sending you the recording of this show, and if you want to get in touch with my former partner, the information will be there.

For more information, just go to StevePomeranz.com, that’s StevePomeranz.com and thanks for listening to me every single Sunday and being such loyal followers. Good luck to you all.

Investing involves risk and investors should carefully consider their own investment objectives and never rely on any single chart, graph or marketing piece to make decisions. There are no investment strategies that guarantee a profit or protect against loss. Content provided is intended for informational purposes only, is not a recommendation to buy or sell any securities, and should not be considered tax, legal, investment advice. Please contact your tax, legal, financial professional with questions about your specific needs and circumstances. The information contained herein was obtained from sources believed to be reliable, however, their accuracy and completeness cannot be guaranteed. All data are driven from publicly available information and has not been independently verified by the radio show.

The Real Economic Impact Of Covid-19

Rick Newman, Economic Impact, COVID-19

With Rick Newman, Senior Columnist for Yahoo Finance

Steve spoke this week with Rick Newman, Senior columnist for Yahoo Finance and seasoned author, about the economic responses to the current COVID-19 pandemic and what they imply for world and personal finances.

Ignoring The Horrific Economic Numbers

Everyone is panicking a little in light of the current coronavirus pandemic, and this panic has been reflected in the economy. But Rick has recently written an article which encourages people to ignore most of the horrific-sounding economic numbers being circulated. “The terror really began with Goldman Sachs predicting a 24% decline in the second-quarter GDP,” Rick said. But the truth that we really need to pay attention to is that history is the greatest of teachers. “The Great Depression is really our benchmark for how bad the economy can get, and the worst decline our country experienced in GDP during that time was 14% in 1932,” Rick continued.

Morgan Stanley predicted an even greater decline of 30%. But what both Goldman Sachs and Morgan Stanley are talking about is a change in the GDP from the first fiscal quarter to the second fiscal quarter on an annualized basis.

“But it’s that annualized basis that’s screwing everything up,” Rick pointed out. There are reasons to annualize a quarterly figure under normal circumstances: it identifies an economic pace to give an indication of what the rest of the year will look like. But during this coronavirus pandemic, things are just not normal. “We could see significant GDP declines, but no economist thinks that the entirety of 2020 is going to decline by 24% to 30%. That would require the GDP to fall that percentage for four quarters in a row,” Rick said. He noted that the general consensus is that 2020’s GDP will fall by about 5% compared to 2019, which is terrible but not as bad as some of the figures make it seem.

Steve pointed out that skewed numbers affect the investment world, too. “You could look at your returns and be up 10% for the quarter. But that doesn’t mean you’ll be up 40% for the year.”

Putting Annualization Into Context

Rick used the auto industry as a good example of annualizing numbers. The idea is to get the pace of sales. “In February, the pace of sales was 16.6 million vehicles. But what most forget to say is that auto dealers didn’t sell 16 million vehicles in February. That figure is the seasonally adjusted annualized rate or SAAR. It gives everyone an idea of how sales are paced this year versus last year. In 2019, the figure was 17.1 million vehicles. This means the pace of sales slowed a bit. But it’s not helpful to use annualized figures during dramatic world changes and the reference point is totally out of whack.”

Steve concluded, “I think Morgan Stanley and Goldman Sachs should have reported those numbers differently.” In reply, Rick pointed out, “But the fact is that those two giants were talking to each other. It’s Wall Street research for Wall Street analysts. That’s why we feel it’s important to provide context. With context, it’s not as bad as some of the numbers would make it seem.”

Employment Numbers

Steve asked Rick about another article he’s written, ominously entitled, “We May Have Lost 21 Years of Job Growth.” The coronavirus pandemic is really hitting employment numbers the hardest. “Some employment numbers are out-of-date because it’s a government survey that comes out about two weeks behind the survey. Under normal circumstances, this gives us a decent picture. But with the way things are now, with such dramatic changes, we need information from forecasting firms. For the month of April, economists believe well over 20 million jobs could be lost,” Rick shared.

The hardest hit industries are those in restaurants, food service, hospitality, and other non-essential roles. According to Rick, “Oxford Economics thinks around 24 million people are or could be out of work by the end of April. And the numbers could get far worse before anything gets better,” he continued. And subtracting that many people from the workforce puts the U.S. back to the same employment levels as 1999. “That means we’ve lost about 21 years’ worth of job growth in just two months,” Rick said.

On a more optimistic note, he added, “But it’s important to not lose sight of the fact that no matter how bad it gets, we can bounce back. There have been terrible depressions and periods of economic uncertainty before. We always end up getting the jobs back.”

Signs Of Recovery To Watch For

“The degree and depth of the problems in this country have a lot to do with the timing of the coronavirus outbreak and what it’s going to take to get the virus under control so that we can get back out and normal life can resume,” Steve said. He asked Rick for his best guess on what it’s going to take to make that happen.

“The stimulus plan the government put out was a great start,” Rick said. “But the ultimate stimulus plan isn’t financial, it’s public health. I’m just following the epidemiologists on this and, basically, they say we need massive widespread testing before we have a vaccine. I mean, we know we cannot speed a vaccine as much as we would like. That’s going to take probably a year or more. Before we get to that point, we need massive testing. Let’s say that we develop billions of tests that have rapid results. People can use these tests once a week. This offers them the certainty that they’re not sick and shows they’re safe to head back to work, that widespread testing is really the thing that is going to allow us to go back to work and start reopening restaurants and movie theaters and things like that. And, for everybody who’s interested in this, the best authority on this is Scott Gottlieb. He was the FDA administrator from 2017 to 2019. He has written a terrific pathway to recovery study that’s at the American Enterprise Institute. I’d like to tell people, go find it. It’s at aei.org.”

You can learn more from Rick at Yahoo Finance.

Disclosure: The opinions expressed are those of the interviewee and not necessarily of the radio show. Interviewee is not a representative of the radio show. Investing involves risk and investors should carefully consider their own investment objectives and never rely on any single chart, graph or marketing piece to make decisions. Content provided is intended for informational purposes only, is not a recommendation to buy or sell any securities, and should not be considered tax, legal, investment advice. Please contact your tax, legal, financial professional with questions about your specific needs and circumstances. The information contained herein was obtained from sources believed to be reliable, however their accuracy and completeness cannot be guaranteed. All data are driven from publicly available information and has not been independently verified by the radio show.

Read The Entire Transcript Here

Steve Pomeranz: I’m very happy to have back a guest that I’ve had on many times. His name is Rick Newman. He’s a columnist for Yahoo Finance, and he’s always insightful, provocative, and takes on many of the biggest stories of our time. Always love to have him on the show. Hey, Rick, welcome back.

Rick Newman: I always enjoy being on. Thanks for having me.

Steve Pomeranz: My pleasure. So before we get started, I mentioned that you’re with Yahoo Finance. What is Yahoo doing in these times when everybody is quarantined in their home? I know I’m talking to you in your home. I’m recording this in mine. And I know that Yahoo does video pretty much all day. What are they doing?

Rick Newman: Well, we’re based in the East Village in Manhattan. That’s where our headquarters are. We have beautiful TV studios there. They’re brand new and nobody’s there right now. We are all working from home, and we have managed to broadcast eight hours a day live and sometimes a little bit more than that, through Google Hangouts, which is kind of a video conferencing service that Google offers.

So, we have engineers who are working the magic to get all the slides up on the screen and transition from one guest to another guest. But, we’re all just looking at each other on Google Hangouts, looking into webcams, and amazingly it works. We’ve had some flubs and some technical difficulties, but we think the audience gets it and they don’t care. And, we’re kind of just powering on.

Steve Pomeranz: So, Google Hangouts is like Zoom. Everybody knows about Zoom these days.

Rick Newman: Yes, similar to Zoom.

Steve Pomeranz: Yeah. Okay. Well, I contacted you because I wanted to discuss a couple of articles that you’ve written recently. And, one is entitled, “Ignore Those Horrific-Sounding Economic Numbers That We Read About All the Time.” And, you start with saying, “The terror began with Goldman Sachs predicting a 24% decline in the second-quarter GDP.” Take us through that.

Rick Newman: Well, I’ve read enough economic history that I was thinking back, I mean the Great Depression in the 1930s is our benchmark for about as bad as the economy can get in modern times. And I was thinking to myself, hold on a minute. I don’t think GDP fell by as much as 24% during the Great Depression, as bad as it was back then. So, I went back and looked. The worst decline in GDP occurred in 1932 where it’s ranked by 14% for the entire year. So, I went and said, what are they talking about—a 24% decline? Morgan Stanley’s was even worse; they’re saying 30% decline in second-quarter GDP. So, here’s the nuts and bolts of that. They are talking about the change in GDP from the first quarter to the second quarter on an annualized basis, and it’s that annualized basis that is screwing things up here.

So, there are reasons. I mean, in normal times, there are reasons to annualize a quarterly figure because it tells you what pace you’re on as if this were to be the rate of change over an entire year. But, in this instance, economists do not think that the change in GDP from the first-quarter to the second quarter is going to go on for an entire year. So, when they’re talking about a 24% drop in second-quarter GDP on an annualized basis, that’s saying if it happened every quarter like that for four quarters in a row, that’s how bad it would be. And no economists think it’s going to be that bad. So, just to wrap this up, how bad is the whole economy likely to do this year? So, I called Moody’s Analytics forecasting firm. They think GDP for the year 2020 compared to 2019 will fall by about 5%. That’s bad.

Steve Pomeranz: That’s very bad.

Rick Newman: That’s actually terrible.

Steve Pomeranz: Yeah.

Rick Newman: But it’s not as bad as 25%, so you know just how to understand these numbers everybody’s talking about.

Steve Pomeranz: Well, you know, these numbers can be skewed in the investment world too. So, for example, you can look at your return and you could be up 10% for the quarter. That does not mean that you’re going to be up 40% for the year. And on the reverse, if the market, let’s say, in the first quarter of this year was down 25%, we’re not going to say that the market’s down 100% for the entire year. So, it doesn’t make any sense whatsoever when talking about returns to annualize. But you mentioned that in some cases annualizing does make sense. And, you use an example of monthly car sales. Tell us about that.

Rick Newman: Right, yeah. So, I do cover the car industry, and this is the language everybody uses. So, what was the pace of car sales in February? The pace of sales was 16.6 million vehicles. Now, what everybody forgets to say is that the auto dealers did not sell 16.6 million vehicles in February but that was the seasonally adjusted annualized rate or SAAR, S-A-A-R. And, that’s the shorthand everybody uses. And that tells you how sales are doing this year compared with last year.

So, in 2019… now this is the actual number for the year… automakers sold 17.1 million vehicles. So, that’s the real number. And then you annualize that on a monthly basis to see how you compare. So, if the car sales in February were 16.6 million at an annualized basis, the pace of sales slowed a little bit from the total of 17.1 million in 2019. That’s when it’s useful to annualize. But, to my mind, it’s not helpful when you’re going through dramatic changes and your reference point is completely out of whack, which it is right now.

Steve Pomeranz: It seems to me that Goldman Sachs and Morgan Stanley and those others should have reported those numbers differently, in my view.

Rick Newman: Well, they’re talking to each other. I mean, this is Wall Street research for Wall Street analysts. But reporters, like us at Yahoo Finance, we see a lot of this research and we report it. And, we’ve actually had discussions internally at Yahoo Finance. Let’s make sure we provide the context on stuff like this because, I mean, you should panic. If you think real GDP is going to fall by 24%, I mean, you should panic.

Steve Pomeranz: You should panic, yeah.

Rick Newman: But it’s not. It’s not that bad.

Steve Pomeranz: Okay, so, even a 4% or a 5% decline in real GDP is incredibly painful. And, we’re seeing that a lot of employers are laying off workers more and more. The question then comes to actually your second article I want to discuss, which is, you write, “We may have lost 21 years of job growth.” Take us through some of those numbers.

Rick Newman: So, we know that some of the employment numbers we are getting are, they’re just out of date because, like the government’s major employment survey, for instance, it doesn’t come out until two-and-a-half weeks after they do the survey. It’s literally a survey. So, normally that’s helpful because the economy’s not changing as dramatically as it is now. It’s not real helpful right now. So, I’m looking at what some of the forecasting firms think is actually going on right now in the month of April with regard to employment. And the economists think we could have lost well over 20 million jobs.

Steve Pomeranz: Wow.

Rick Newman: This is all the restaurant workers that we’ve been hearing about, the people who are not lucky enough to be in a salaried job such as mine, where you might be able to work from home. And these are people who, once the cash flow stops, they’re just out of work. So, Oxford Economics thinks 24 million. They think that’s how many people are out of work right now. And, that’s just in the month of April. So, it could get worse.

If you actually take those 24 million away from the employed labor force in the United States, that puts us back to the same employment level as in 1999. So, that means we would have lost 21 years of job growth in two months. That is astonishing.

Steve Pomeranz: Our economy is nothing like what it was in 1999. It doesn’t even seem possible in terms of the job mix, but also in terms of the size of the economy and the size of the population and all of that.

Rick Newman: It really doesn’t seem possible. I mean, just for comparison, during the recession in 2007 to 2009, we lost a lot of jobs then and that only added up to 11 years of job growth. So, it went back to about the same time. We’re going to get the… We always get the jobs back.

Steve Pomeranz: Yes.

Rick Newman: I mean, every single time in history. And there have been terrible depressions in U.S. economic history. We always get the jobs back. But this just gives you some idea of the scale of what’s going on. And it’s not showing up yet in the official numbers. The official unemployment rate I think is only 4.4% now. It’s going to skyrocket above 10%. And, by the way, 10% is the highest it got during the 2009 recession.

Steve Pomeranz: The degree or the depth of this problem has to do with the timing of the virus and the ability for us to get the virus under control and for us to get back out again. What is your best guess? What is your scenario for us getting back on our feet? What are the first signs that you would expect to see of the economy starting to heal?

Rick Newman: Congress, I think, did a good job with that giant stimulus plan. I think that was much better than some of the bailouts back in 2008 and 2009. But you know what the ultimate stimulus plan is here? It’s not an economic plan. It’s a public health plan. And I’m just following the epidemiologists on this and basically, they say we need massive widespread testing before we have a vaccine. I mean, we know we cannot speed a vaccine as much as we would like. So, that’s going to take probably a year or more. Before we get to that point, we need massive testing. And then, we also need these antibody tests.

So testing, first of all. If everybody can get a test and everybody can get repeated tests, you can check once a week. Let’s say—I’m just making this up—but in order to go to your job, you need to get the coronavirus test, let’s say, once a week. And, you need to know within a half-hour that you’re healthy and, yes, you can go to work, or you’re not healthy and you need to stay home. I mean, what’s happening right now because we have not had enough availability, a real shortage of these tests. It’s basically governors at this point, they’re just assuming everybody has it. That’s why everybody has to stay home because they’re assuming everybody has it because they have no way of telling.

So, that widespread testing is really the thing that is going to allow us to go back to work and start reopening restaurants and movie theaters and things like that. And for everybody who’s interested in this, the best authority on this is Scott Gottlieb. He was the FDA administrator from 2017 to 2019. He has written a terrific pathway to recovery study that’s at the American Enterprise Institute. I’d like to tell people, go find it. It’s at aei.org. And, I think he’s got the best thinking out there in terms of how we get out of this.

Steve Pomeranz: That’s beautiful. That’s exactly why I like to have Rick Newman on the phone with us. Rick, take care of yourself. Be safe. You’re located where?

Rick Newman: I’m in Westchester County, just north of New York City.

Steve Pomeranz: So, kind of the epicenter, not in the city… But Westchester, wasn’t that one of the first counties earmarked?

Rick Newman: Yes. Yeah, we had one of the first outbreaks a couple of miles from me. And we’re dodging the virus every day, man.

Steve Pomeranz: Yeah, we are too. Very good. Stay safe, and thank you for joining me today.

Rick Newman: Thanks for having me on, Steve. Always enjoy it.

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