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Tech weenie, that second graph seems to imply that no one recovers.

Let's see where I was at with this. Just curious on my predictions.

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Originally Posted by Wayne 962 (Post 10779435)

Tesla - China factory problems will push Tesla towards cash crunch and BK, late 2020 / early 2021. Look to see them be acquired in a rescue by a much larger company. Maybe Volkswagen, but I would put money on some Chinese company. Elon is a great visionary, and an inspiration to many people, but his track record as a nuts-and-bolts CEO is spotty at best. Steve Jobs had Ives and Cook to back him up – Elon’s best talent seems to have left over the past few years. Model ‘S’ sales were down 40% towards the end of last year – that shows weakness in this segment.

I was quite wrong on the whole BK thing. I didn't anticipate the stock market going crazy. I still think it's nuts. I do like Tesla in general, but I think that the coming competition will be very difficult for them in the future. My overall prediction still stands, but the stock-market fanboys seem to have delayed any day of reckoning well into the future.

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Nursing homes. Huge problem. Health care workers will bring the Corona virus in, and will spread it amongst the older people there. There’s no good solution to this, as these people need younger people to help them out – maybe keep staff at the homes living there indefinitely to avoid outside contamination? I think that this will be the saddest part (it already is in Seattle) of the whole corona affair.

Yup, this one was a no brainer.

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Bad news for Airlines, cruise ship lines, sports arenas and movie theaters. I don’t think movie theaters will recover from this – they’ve been under attack from home theater for over a decade now. Streaming services will thrive, but look to see movie theater chains die off. The death of the mall too will accelerate. This area of real estate was already on life support. I mean, who wants to go to a mall today? We’ll see more of the retail apocalypse, I mean this is the absolute worst-case scenario for traditional retail. They were already predicting record retail bankruptcies for this year (J Crew, Pier 1, etc.), this will only make it worse.

Movie theaters - I don't see these coming back. I see movie theaters becoming like today's drive-ins - maybe one or two will exist in a 10 sq-mile area for die hard fans of the experience, but I think most will close. Malls too - look for 50%+ consolidation of malls. I like malls personally, but I'm not a huge shopper, so my opinion doesn't count.

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Restaurants – boy, that’s a tough one. They will eventually recover because people need to eat, but only the strongest brands will survive. I don’t know what those are right now. Restaurants here in LA are already mostly empty. They will need to hunker down and will need to preserve cash to pay rent until this passes.

I'm buying vacant restaurants right now - I think they are going to come back strong. Pick up good locations with good fundamentals and I don't think you can go wrong.

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Delivery services – yes yes yes. Think Dominoes and Papa Johns. No brainer there. Ordering in pizza will increase big time. Maybe also grubhub and others, but I still think Dominoes and the like are much easier, plus they are already set up for their delivery network.

Dominoes and Papa Johns were a no brainer bet. But I think that Uber Eats and Grub Hub and all of these others are living on borrowed time. They are subsidizing their network (Uber lost something like $8B in the last year, that's $8,000 million, or $22M *per day*). Other delivery services are the same. The cost is expensive, and even at a discount, the charge the customers pay is also expensive. I don't see this lasting - the economics of losing $22M a day don't make sense, even in this wacko stock market environment.

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Amazon - yes. No brainer. Amazon is the clear winner from a virus outbreak. I ordered scotch tape the other day because I didn’t want to go to the store. Amazon delivered it on a Sunday. I still don’t get how they can afford to do that. On the same note, all E-commerce stuff will thrive even more than it has previously. It will really accelerate the move from stores to online big time.

Amazon has been a big winner. This was indeed a no brainer. Any big company with a big market has benefited it would seem.

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NYC will be hard hit. I can’t imagine being in New York and riding the subway with corona virus around. When I worked there, we were back-to-front in the subway cars every single day. Los Angeles - less so. We live in our cars (cocoons) and that keeps us isolated. I think that of the biggest cities around, LA will be the slowest to spread the virus. We’re in a warmish climate, so people are outside more, and we drive everywhere. Different than other cities (public transit is a big problem for other cities with this virus spread). Indeed, outbreak in cities other than NYC will be slower and contained due to lack of human interaction. People have been warned now and will be more cautious and will be more aware, slowing transmission.

Right about NYC - that was a no brainer. Less right about Los Angeles. I guess my yodelhead neighbors here in LA like to party and spread the pandemic. Also, lower-income families live in close quarters and a lot of them couldn't stop working. That was something I didn't see at first as being a vector.

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Disney parks - no go. Universal too. Man, who wants to ride a roller coaster that has been ridden by 1,300 different people in just the last hour? No thanks. I know six people who have cancelled theme park vacations that were set to happen over spring break. I think the ski mountains too will suffer, although I’m not sure I would equate them the same as the theme parks. I’m somewhat insulated from stuff on the lift, although my next door neighbor – her brother-in-law has corona, and so does seven other people in his party that just came back from skiing in Italy (one is in the hospital on a ventilator, and they are also taking experimental Ebola anti-virus drugs!).

Disney will be fine, eventually. The smaller parks might close and go under without Mickey's deep pockets. Ski resorts are open, but limiting their tickets. They will struggle through the season, and the strong ones will survive - weaker ones will close.

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No need to stock pile water, this is not an earthquake. I don’t get the whole bottled water thing, I don’t think the water supply will be affected. This shows me that people are not really thinking. Also toilet paper? I mean, in a virus outbreak, I’m not going to be terribly concerned about how I wipe my ass – it’s really low on my priority list. Then again, I might change my mind if I “need a spare square.”

Yup, none of that hoarding meant anything.

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Grocery delivery services - take advantage of this! These guys have been trying to succeed at this for two decades now (think WebVan from 2000). Man, I still think this done right will be a success. Maybe now that people don’t want to head to the grocery store, the delivery services can actually charge what their service is worth (instead of giving it away for free). Amazon Fresh will do well (my wife signed up yesterday!), and also Wal-mart with their huge store footprints. If they screw this up, it’s an unforced error.

Walmart - I think they may have screwed this one up. Target seems to have been the go-to place for curbside pickup - haven't heard much about Walmart being a leader in this area.

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China supply lines - problems in March/April. This is the big one that will affect the economy. The average car has about 30,000 parts, many of them made in obscure areas of China. If just one of those parts is missing, the car is incomplete and can’t be finished. The US car makers have ample supply of parts to build the cars, but this will last only a few months. China’s been shut down since January – the supply chain shocks have not been fully felt yet. We’ll probably see tons of semi-complete cars just parked in lots in Detroit waiting for parts. I have friends who are scrambling right now to get material (Velcro) from China to complete their products. It’s happening right now.

This has been a factor, but less I think because China (apparently) has not had any huge disruption from the virus. I guess welding people's doors shut in Wuhan back in January really helped.

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Owner occupied real estate - tap or sell for equity. So, here’s a golden opportunity. Assuming that the economy tanks (headed there right now), all of these small businesses will be suffering and in trouble. If they owners happen to own their own real estate, then they will tap their equity for funds by borrowing against the building. But, banks aren’t stupid – when there’s uncertainty in the markets (any markets), the banks pull back on lending and tend to get more conservative. So, if a business is doing poorly and wants to borrow against their building, they might have a difficult time with the loan covenants. Look for opportunities here in the space to purchase real estate from struggling owners – they will want to sell and do a lease back (we did two of these types of deals in 2019). This corona recession will be temporary – the real estate will always have value, and with constant uncertainty, the ones with cash and few cajones will be able to pick up some nice properties (with built-in tenants, although they might be shaky).

Seen this a bit, but not yet. The PPP programs and other government assistance has been working hard to keep struggling businesses afloat. Look for a big reckoning in 2021 if owners can't work deals out with landlords on stuff...

Part II

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This will get worse before it gets better. Maybe the summer heat will deter contagion. Our doctor friends are hoping for this. I’m also hoping that we’re cleaner (aren’t Americans obsessed with hand sanitizer?). We also have the advantage of knowing what is coming (by watching China, Italy, South Korea). We might be dumb enough to ignore the lessons learned there, but at least there’s some guidance from things that worked and did not work. The lockdown in China may have worked for now. That and additional care / knowledge of what is going on.

This was a somewhat obvious statement, it will get worse before it gets better. Back in early March, everyone was blowing this off. I was thinking of canceling the open house at Pelican - instead I just stayed locked inside of my office (this was at the end of February). Nearly everyone I knew thought I was a worry-wart and the "sky is falling" kind of person. In general, I carry a flashlight and water when hiking nearly everywhere - I've been stranded in the past, and the right equipment and right prep could be worth it's weight in gold (literally).

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Medical facilities will become overwhelmed crowding out other ailments. Our doctor friends all agree on this. Don’t break your leg anytime soon – you’ll be in the ER with 100 other coronavirus patients. Get your teeth cleaned asap, as you won’t want to get that close to *anyone* in a few weeks.

Still accurate. Keep in good health and don't do anything stupid while working on your car.

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Schools? Some might close. This virus appears to be weird in that kids don’t seem to be affected by it. But they are probably big-time carriers of it. My kid constantly spits on me when he talks – I think I’m doomed if he gets it, I’ll have to wear my welding mask around the house!

All the schools closed after I wrote this. Seemed like a no brainer statement now. The kids haven't been on campus in about 10 months, and it doesn't look like they will be going back any time soon.

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Stock market will continue to decline big time. In 2000, the market dropped 78%. In 2009, the market dropped 50%. Right now, it’s dropped about 20% from what many considered to be a peaky bubble. At first glance, this corona virus outbreak is going to be much worse than anything we’ve seen before. After 9/11, airline revenue dropped 7% and numerous airlines took a big hit. For this outbreak, they are predicting revenue drops of 23% right now. I think the CEO of United mentioned that if that size of a drop happens, then United will have to declare BK by the end of the year. No ****, that’s serious.

Wow, big time wrong on this. I failed to predict the HUGE bailout packages that changed the look of everything and injected trillions of cash into the economy. Even after that happened, I didn't realize that most people, instead of spending their money at restaurants and on vacations, would instead sign up for a Robin Hood account and bet on the stock market, using their stimulus checks! My predictions on how this will all play out? With this much debt now hanging over the US, the outlook is not super rosy, but it's impossible to see what will happen here. The whole world is in similar straights (except for maybe China), so we may still come out of this ahead or at least on a similar plateau as before.

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Election – In this situation, the Trump administration can’t win and will be criticized if successful or not. If they succeed in keeping the virus at bay, the Dems will say they spent too much. If the virus spreads everywhere, it will be Trump’s fault. The CDC has fumbled the ball once already, but it appears they might have control of it now. Who knows, too soon to tell. On the other hand, if the **** hits the fan, we may see a rallying effect like GWB saw after 9/11 but I’m not sure. One thing you can bet on – the media will spin and use every opportunity to bash the Trump administration.

This wasn't really a prediction at all, just a wafflely statement. Came out to be true, but wasn't too much there to nail on. The election was close, that's for sure - no mandates in sight.

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Vacations- like 2009, look for people to go on “staycations” with immediate family. Big drop in airline travel. RV rental and sales will be big. Cruise line traffic will be down 50% (it probably already is – even Pence is saying “don’t go on a cruise right now.” That’s really bad for business.). There will be a lot of people in the national parks this summer.

Yes, this happened, but less than I thought. I was in the national parks and campgrounds over the summer quite a bit, and they were pretty full but most were not sold out every night. I was surprised - we were able to find spots every single time we tried, at the last minute. We were on the road for about 45-50 days over two separate trips, and it was pretty consistent.

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Work from home will accelerate and perhaps offices will never recover. We work - done for. I never liked the concept of “sharing germs with other people in a co-working space”. Now, this just won’t happen. Shared offices? Not likely. The office market has been on a decline for a long time now, look to see this accelerate it. Home video apps and tools will do well of course. More people will work from home and like it, and will not want to return to the office.

A lot of people disagree with me, but I think people will come back to the office. I have a lot of experience with remote employees, having used that strategy for years at Pelican. It's good, but has a *lot* of disadvantages too, that make most jobs incompatible with the concept. I think companies in 2-4 years will reverse the "work from home" trend and bring people back. Right now, they don't really have a choice, but productivity really does suffer with most people (about 10-20% thrive in the home environment from my own experience).

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Health clubs – will be quiet, although some people are just addicted to working out. Bicycle sales might increase as people head outdoors more. Here in LA you can do that, but you can’t bike in the winter in NY. Still, I can’t think of a more germy place than a health club. I actually get a little nauseous just thinking about it.

These will come back, although probably many with new ownership.

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Churches - big problem. This is how it spread in South Korea, probably Iran, and New Rochelle. Religious people don’t want to give up their services. Even the Iran imams disobeyed the ayatollah and kept licking the statues. This one is going to be tough to give up. Meeting in church on Sunday may be difficult for people to give up.

Yes, this has been one of the biggest problems during this pandemic.

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Hand sanitizer and masks will continue to be in demand. No brainer there.

Less so than I thought. Turns out the coronavirus is spread mostly through the air and not-so-much through surfaces.

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This will be a Big hit to economy and will cause a recession if it hasn’t already. No way this can’t happen at this point. It’s not like I would be predicting anything, it’s already here, right now. All one needs to do is look inside a restaurant or the airport. This one will go down in the history books right next to the dot-com crash, 9/11, the financial crisis of 2009, and the big market crash of 1987.

I didn't anticipate the MASSIVE bailout / assistance packages that have transpired - they didn't happen during the Spanish Flu Pandemic. We'll have to see how this all pans out. Whether we become like Venezuela or more like Japan, it's difficult to predict.

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Conclusion? I don’t think it will be as bad as the most dire predictions (10 million dead), but the major damage will be economic.

We're at 2.03M as of today according to Google, so not as many (so far) as predicted and the vaccine is currently rolling out. I would guess it unlikely that it would reach 10M deaths, but one never knows. Indeed, the biggest disruption does seem economic, although this pain seems to be shared world-wide.

So, how did I do? I called it pretty well I think. I missed on stock-market related issues (Tesla and the overall performance of the market). Seeing how I suck at predicting the market (as evidenced by my limited entries into the market over the past 30 years) that is at least consistent!

-Wayne

I wish you would have predicted I, and others wouldn't have had to deal with it. It's the ***** man.

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Originally Posted by mattdavis11 (Post 11186289)

I wish you would have predicted I, and others wouldn't have had to deal with it. It's the ***** man.

As much as 2020 sucked pretty much big time, I have to count my blessings. I've had the opportunity to spend more time with my family, we're all pretty healthy. Last night me and the two boys were all in the garage together - one working on robots, the other cleaning his airsoft guns and myself wrestling with the Probe 16. So, yes, while 2020 was a really terrible year for many people, I tend to look at it as just a very *annoying* year for myself personally. Unpleasant, but I do know that a lot of people have had it a lot worse, so I'm thankful and appreciative of that.

-Wayne

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Originally Posted by Wayne 962 (Post 10779435)

I noodled this out the other day on my phone and then just expanded it. This seems like common sense to me. Here you go:

From March 9th:

Tesla - China factory problems will push Tesla towards cash crunch and BK, late 2020 / early 2021. Look to see them be acquired in a rescue by a much larger company. Maybe Volkswagen, but I would put money on some Chinese company. Elon is a great visionary, and an inspiration to many people, but his track record as a nuts-and-bolts CEO is spotty at best. Steve Jobs had Ives and Cook to back him up – Elon’s best talent seems to have left over the past few years. Model ‘S’ sales were down 40% towards the end of last year – that shows weakness in this segment.

Nursing homes. Huge problem. Health care workers will bring the Corona virus in, and will spread it amongst the older people there. There’s no good solution to this, as these people need younger people to help them out – maybe keep staff at the homes living there indefinitely to avoid outside contamination? I think that this will be the saddest part (it already is in Seattle) of the whole corona affair.

Bad news for Airlines, cruise ship lines, sports arenas and movie theaters. I don’t think movie theaters will recover from this – they’ve been under attack from home theater for over a decade now. Streaming services will thrive, but look to see movie theater chains die off. The death of the mall too will accelerate. This area of real estate was already on life support. I mean, who wants to go to a mall today? We’ll see more of the retail apocalypse, I mean this is the absolute worst-case scenario for traditional retail. They were already predicting record retail bankruptcies for this year (J Crew, Pier 1, etc.), this will only make it worse.

Restaurants – boy, that’s a tough one. They will eventually recover because people need to eat, but only the strongest brands will survive. I don’t know what those are right now. Restaurants here in LA are already mostly empty. They will need to hunker down and will need to preserve cash to pay rent until this passes.

Delivery services – yes yes yes. Think Dominoes and Papa Johns. No brainer there. Ordering in pizza will increase big time. Maybe also grubhub and others, but I still think Dominoes and the like are much easier, plus they are already set up for their delivery network.

Amazon - yes. No brainer. Amazon is the clear winner from a virus outbreak. I ordered scotch tape the other day because I didn’t want to go to the store. Amazon delivered it on a Sunday. I still don’t get how they can afford to do that. On the same note, all E-commerce stuff will thrive even more than it has previously. It will really accelerate the move from stores to online big time.

NYC will be hard hit. I can’t imagine being in New York and riding the subway with corona virus around. When I worked there, we were back-to-front in the subway cars every single day. Los Angeles - less so. We live in our cars (cocoons) and that keeps us isolated. I think that of the biggest cities around, LA will be the slowest to spread the virus. We’re in a warmish climate, so people are outside more, and we drive everywhere. Different than other cities (public transit is a big problem for other cities with this virus spread). Indeed, outbreak in cities other than NYC will be slower and contained due to lack of human interaction. People have been warned now and will be more cautious and will be more aware, slowing transmission.

Disney parks - no go. Universal too. Man, who wants to ride a roller coaster that has been ridden by 1,300 different people in just the last hour? No thanks. I know six people who have cancelled theme park vacations that were set to happen over spring break. I think the ski mountains too will suffer, although I’m not sure I would equate them the same as the theme parks. I’m somewhat insulated from stuff on the lift, although my next door neighbor – her brother-in-law has corona, and so does seven other people in his party that just came back from skiing in Italy (one is in the hospital on a ventilator, and they are also taking experimental Ebola anti-virus drugs!).

No need to stock pile water, this is not an earthquake. I don’t get the whole bottled water thing, I don’t think the water supply will be affected. This shows me that people are not really thinking. Also toilet paper? I mean, in a virus outbreak, I’m not going to be terribly concerned about how I wipe my ass – it’s really low on my priority list. Then again, I might change my mind if I “need a spare square.”

Grocery delivery services - take advantage of this! These guys have been trying to succeed at this for two decades now (think WebVan from 2000). Man, I still think this done right will be a success. Maybe now that people don’t want to head to the grocery store, the delivery services can actually charge what their service is worth (instead of giving it away for free). Amazon Fresh will do well (my wife signed up yesterday!), and also Wal-mart with their huge store footprints. If they screw this up, it’s an unforced error.

China supply lines - problems in March/April. This is the big one that will affect the economy. The average car has about 30,000 parts, many of them made in obscure areas of China. If just one of those parts is missing, the car is incomplete and can’t be finished. The US car makers have ample supply of parts to build the cars, but this will last only a few months. China’s been shut down since January – the supply chain shocks have not been fully felt yet. We’ll probably see tons of semi-complete cars just parked in lots in Detroit waiting for parts. I have friends who are scrambling right now to get material (Velcro) from China to complete their products. It’s happening right now.

Owner occupied real estate - tap or sell for equity. So, here’s a golden opportunity. Assuming that the economy tanks (headed there right now), all of these small businesses will be suffering and in trouble. If they owners happen to own their own real estate, then they will tap their equity for funds by borrowing against the building. But, banks aren’t stupid – when there’s uncertainty in the markets (any markets), the banks pull back on lending and tend to get more conservative. So, if a business is doing poorly and wants to borrow against their building, they might have a difficult time with the loan covenants. Look for opportunities here in the space to purchase real estate from struggling owners – they will want to sell and do a lease back (we did two of these types of deals in 2019). This corona recession will be temporary – the real estate will always have value, and with constant uncertainty, the ones with cash and few cajones will be able to pick up some nice properties (with built-in tenants, although they might be shaky).

Pretty damn good Wayne. It looks like you missed a few but, for the most part I think you did a pretty good job so far. Don't tak this the wrong way but I wish you were wrong.

Very well done, but I think a lot of gyms will not be coming back. People have seen the light. And that light is fitness at home.

One of the saddest parts for me is some long time family owned restaurants are closing for good. One place I loved was right on R-66, in business since the early 1970s, and they just closed for good. Someone likely will buy the place, and reopen it with a new name and menu as it has a good location. Some of the employees had worked there for 25 years or more.

Quote:

Originally Posted by Wayne 962 (Post 11186263)

Let's see where I was at with this. Just curious on my predictions.

I'm buying vacant restaurants right now - I think they are going to come back strong. Pick up good locations with good fundamentals and I don't think you can go wrong.

Keep your head when everyone else around you is losing their head. This is how people with capital and a long-term investment horizon make material leaps ahead economically. Wayne is combining that principle with the primary maxim in real estate - location, location, location. I predict this will turn out very well. Congrats.