October 22, 2020

No Fun Allowed

I do not know the provenance of this, but it didn’t come from me.

Here is a list of five things—you get to choose three.

That is life. You want to do all of these things, but there are trade-offs, and you can’t simultaneously have your cake and eat it. You can only choose three.

I choose work, sleep, and fun. I love to work, I love to sleep, and I love to have fun. For me, the fun part is music. At age 46, fitness is no longer a priority. I don’t have any children, and my wife is a bit of a workaholic too, so we don’t do much in the way of family stuff.

Most Wall Street guys choose family, fitness, and work. They don’t sleep. They get up at three in the morning to work out in their basements. When they come home, they spend time with their kids. They don’t have hobbies, and they’re not out partying.

There are 24 hours in a day, and the most important decision you will make in your life is how to spend those 24 hours. We make this decision on a daily basis. And I choose the same things over and over again: work, sleep, and fun.

Except now, there is no more fun—because of COVID-19. Everything that was fun has been banned. Like nightclubs, about the worst possible business that you could have during a pandemic. Except the clubs are open again in Miami! Good old DeSantis.

Restaurants are fun too, and in some parts of the country, they are barely open.

Travel is fun—I’m contemplating a trip to Las Vegas in March. But do I really want to go if I can’t sit in the sportsbook with a sandwich, or go to Hakkasan, or sit by the pool?

We still have vestiges of a puritanical society. Americans like to deny themselves things that they enjoy as a matter of principle. It is a national pastime to see who can be the most miserable.

In the great state of California, Governor Gavin Newsom recently banned singing. Every Who down in Who-ville.

I get the concerns about disease transmission—say it, don’t spray it—but common sense is not prevailing here.

One thing I have written about extensively in The Daily Dirtnap is that COVID-19 is a Republican-killer. In a crisis, you have to do something. It actually doesn’t matter how ludicrous that something is—you just have to be seen doing something.

The counter argument is that restrictions on activities and movement impinge on personal freedom, and there is a balance to be struck between disease transmission and liberty. But no Republican in a position of power has articulately made that argument yet.

As a consequence, the Republicans look like a bunch of yee-haw yahoos that want to kill everybody.

The optics are terrible. There is a perceived indifference to human suffering, though it has nothing to do with indifference. It is simply a matter of trade-offs, which those on the right understand better.

Our response to COVID-19 has identified a relationship between disease prevention and fun. If you’re having fun, it must mean that you’re not taking the disease seriously. So fun is not allowed. There has been a significant decline in happiness worldwide. That is the part I am concerned with.

Happiness

What does happiness mean in investing terms? In simple terms, when there is not a lot of it around, stocks are about to go up.

I am thinking of the post-recession period in the early ‘90s, when George H.W. Bush-era pessimism was at its peak. The jobless recovery and all that. That period of time preceded one of the biggest stock market booms in history.

And then, of course, at the peak of that stock market boom, the social mood was deliriously happy. That was the peak of happiness, and the stock market.

If I am thinking about stocks strictly in terms of social mood—and taking nothing else into account—I’d say that we’re on the cusp of an enormous stock market rally. Once we get past the election, and once we get past the virus, we’ll have an explosion of happiness.

It’s hard to see right now, since we’re in the midst of this collective depression, but it will happen. And you will see a corresponding explosion in economic activity.

All the concerns about debt and deficits and taxes aside, the stock market seems to like the idea that a hypothetical Biden administration will spend lots of money. Let’s go with it.

Whatever money we think it will spend, we should probably double or triple it. It will be an orgy of spending, and it will feel good.

I’ll leave you with a tweet from my friend Jawad Mian, who said what is probably the most profound thing on Twitter in the last five years:

Actually, I’ll leave you with one more tweet about people’s expectations for 2021:

To quote R.E.M., “It’s the end of the world as we know it, and I feel fine.” Because my colleagues and I know how to profit from all of this—and I suspect you would like to know how, too.

So, don’t miss your chance to grab one of our elite VIP memberships. It’s the cheapest way to gain access to all seven of Mauldin Economics’ premium publications, plus a bunch of VIP-only bonuses. Click here for more.

Jared Dillian

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