These are tender times. The system we live in is being questioned. As any system always should be.
This newsletter issue takes a look at exactly where we are right now on the virus, lockdowns, stimulus, protests, and opportunities. Based on hundreds of conversations with healthcare officials and experts, economists, government members, investors, and entrepreneurs, I want to summarize as concisely as possible some thoughts on the New Abnormal.
Questions are welcome and I will answer. Also, suggestions for future newsletters. This newsletter comes out every Monday. Subscribe because I will always be as topical as possible.
A) There will NOT be another lockdown. We know too much now about the fallacy of mathematical models. We know too much about which healthcare methods work and which don’t. We are also starting to know the effects of lockdown on mortality….
B) The mortality rate of homeless people is 9x the mortality rate of non-homeless. No leader will risk 40 million jobs lost again. The collateral fatalities are too great among the impoverished and those needing other non-virus treatment. Plus, mental illness effects. It’s this statistic that will help govern future decisions about lockdowns. The collateral fatalities are too great.
C) There is $2.2 trillion in stimulus and only about 20% has affected the economy, with 80% to go.
D) There will likely be a second stimulus. Plus the Federal Reserve is using trillions to buffer different parts of the economy.
To put in perspective, the economy is about $15 trillion a year. So trillions in stimulus will radically change/grow the economy.
If the pandemic cost the economy about $2–3 trillion in immediate spending, then $4–5 trillion in stimulus or Federal Reserve actions could account for about a 30% increase in GDP off of the lows. Compare that with an annual rise of about 2% normally. This means the economy will come back V-shaped. There will be opportunities but a lot of them are unknown (as they should be) at the moment.
Change will happen in ways we can’t predict but this is the OPPOSITE of what happened in the 1930s with the Great Depression.
During the Great Depression, the government used “reverse stimulus” (e.g., RAISING interest rates) because they thought speculation was to blame. NOW, they are increasing speculation, which encourages innovation, creates prosperity, and increases employment.
Many people are worried that this “printing of money” will lead to hyperinflation. This will not be the case:
1) Currently we are in a massive deflationary environment. Inflation is often caused by high employment. This is NOT an issue now. We’ve gone from 3% unemployment to 13% in a few short months. We are a long way from full employment, and even when we were at full employment, there were no issues of inflation for reasons I describe below.
2) Inflation is often caused by too much supply of currency — which is an issue — BUT… there is so much demand for U.S. currency around the world (what other currency can replace the dollar?) that this still creates deflationary pressure. It’s nearly impossible to have hyperinflation when our debt is in the same currency we raise taxes in. See examples: Zimbabwe, Germany in the 1920s, Asian Default Crisis, South America in the 1980s…
VIRUS
Life is not going back to normal.
- We will be constantly on alert for second waves, second seasons, new viruses.
- A vaccine will take longer than we think. We’ve been working on a vaccine for another coronavirus, the common cold, for 50 years, and there is none. There are too many unknowns to expect a vaccine for COVID-19. Instead, expect medicines for symptoms but not vaccines.
- The next wave of the virus will not have as many fatalities. We know more about ventilators, we know more about contagion rates, possible cures, we know more about who is susceptible. Expect 1/10 the fatalities or even less.
- Testing and tracing is possible but brings up civil rights issues that could negatively impact society. If you google “Jobs + Trace Force,” you see positions for Lead Investigators, whose job is to ensure your safe isolation in case you were near someone who has the virus. This is clearly not going to be allowable for the majority of Americans. This is a version of the movie “Minority Report” by Tom Cruise. I’m not expressing an opinion here on whether this is a good or bad thing. Just that it’s not realistic in the U.S.
- Expect the media to scare people about second waves, deaths, etc. This is what the media does and they won’t change. The media has been built up into this quasi-fourth branch of government over the past 200 years. But now the mainstream media is too hungry for page views and does not present a fair check or balance on our system of government. I’m not sure what does. People need to find sources of data they rely on and not just sources that confirm one’s bias.
On coronavirus modeling and data, I have been resorting to:
- USC professor Gerard Tellis. Here’s a recent paper modeling the coronavirus that turned out to be the only one that was accurate.
- Worldometers.info for actual case data.
- Using my podcast to reach out to: epidemiologists, virologists, healthcare officials, Federal Reserve officials, economists, etc. to find out the real truth. I will always gather that data and present here in this newsletter.
Ignore media articles that say “new cases at all-time highs.” Cases will always go up. The more testing, the more cases. There are still millions of undiscovered cases.
The data that is relevant: new hospitalizations (which is a lagging indicator of infections by 10 days)… And daily new deaths, which has several problems:
- It’s s a lagging indicator by 15 days.
- “Deaths” seem to be different state by state.
- Some deaths are the fault of treatment.
PROTESTS AND REFORM
Why protests WILL occur again:
- When trials happen in MN, if one of the officers is acquitted, there will be more protests, more questioning of police credibility, more Antifa and other groups getting involved in the message so important to young people.
- More police brutality videos will surface in the coming months and we are not prepared as a society to answer the questions these videos pose.
- If the coronavirus comes back, are police departments ready to handle an increase in crime in a non-lethal way?
- The protests are a collage of groups: peaceful protestors, angry protestors, other groups trying to infiltrate for their own agendas. There is no real leadership and there are questions but no agreement on solutions.
Compare current protests (or earlier “Occupy Wall Street”) to the 1960s with MLK and Malcolm X… the 1980s with Solidarity in Poland and Lech Walesa… Nelson Mandela with South Africa… Gandhi with India…even 1992 with Rodney King, etc.
As an amazing guide for what leadership in the midst of protests look like, please look at Martin Luther King’s early speech in Montgomery:
(From the speech.)
Clearly reform is needed. But to get proper reforms you need leadership that knows how to negotiate the nuances of those reforms. It would be horrible after all of this despair and anger that as a society we go adrift and don’t get the reforms that are needed.
A) CRIMINAL JUSTICE REFORM
- Legalization of many non-violent crimes, drug-related crimes, sex worker crimes, etc.
- Release of prisoners convicted of non-violent crimes.
B) JOBS / LICENSING REFORM
- Why does CA require licenses for over 177 occupations? (The average among U.S. states is 92 occupations.) This is a regressive tax on the poorer third of society.
- State licensing slows job growth by up to 20% per year.
C) BANKING REFORM
Over 10 million adults are “unbanked.” Meaning they don’t have bank accounts so they resort to pawn shops and payday lenders.
Allow companies like Square and Venmo to provide basic banking services like checking accounts and saving accounts.
The quickest way to get rid of unfair treatment of any group is to have economic and banking reform. But related to that is education reform and criminal justice reform.
D) LAW ENFORCEMENT REFORM
- Revise vetting procedures for officers.
- Strict penalties and reduced qualified immunity laws.
- Review operating procedures to create more emphasis on usage of non-lethal or non-violent devices.
E) EDUCATION
- Give accreditation for full degrees to online schools, reducing the time and money it takes to get a STEM degree.
- Reward apprenticeship (with credits towards degrees).
- No more government backing of student loans.
F) VOTER REFORM
Make voting standards federal and not state by state.
ENTREPRENEURSHIP AND OPPORTUNITY
Remember these four words:
ACCELERATION: If something was going to happen in 10 years, it will now happen in one or two years.
If you thought automation was going to replace workers in 10 years, it’s going to happen much faster.
If JC Penney was going to go bankrupt in 10 years, it will happen tomorrow.
If you were going to get divorced in five years, start calling lawyers tomorrow.
REMOTE: Automation, telemedicine, telelearning, drones, robotics, Big Data, AI.
LOCAL: Voter turnout will go up for local elections, services for local businesses will be in need (for instance, make and sell stickers to be placed on the ground for lines to retail stores to help people line up six feet apart).
SAFETY: Law enforcement, operating procedures for health safety.
ANY stimulus now needs to go direct to consumers and not be used to bail out industries that will die anyway.
The fastest way money gets into the economy is if you directly hand a check to a consumer. The way you can measure the political mismanagement of any future stimulus bill is what percentage of the bill is to industries and not consumers.
This is not meant to be anti-business. It’s just reality: If you want to increase spending NOW, give it to the people who spend now.
Businesses use the money to pay down debt, or put in the bank, but not to directly spend.
Some side hustles that can turn into businesses (each Monday newsletter will include ideas like this):
- Create an online course at Teachable.com.
- Create an online newsletter (paid or free) at substack.com.
- Create an online store (Use Shopify).
- Learn copywriting. Copywriting is different than writing. Copywriting is a long ad that is designed in this attention-glutted age to get you to buy a product.
Mini-course on Copywriting
Copywriting makes use of cognitive biases to sell products. Some basics that you will recognize from emails you get all day long:
The “long letter”: The conversion rate on a half hour letter is higher than the conversion rate on a letter that just takes one minute to read. How come? Because your brain doesn’t like to think it’s stupid. Your brain will say to you: “Hey, I just read this letter for a half hour so it MUST be important. I better buy this product in order to justify all the time I wasted reading this letter.”
I write the above sort of cynically but if you have a message and product that you believe in then you will use this technique.
The six “U”s: Sometimes this is called “The four ‘U’s,” but there are two more that you must include in any copy-written letter.
- UNIQUE: What does your product have that no other product has ever had or ever will have?
- URGENCY: An example is, “Buy while supplies last!”
- USEFULNESS: “Lose 40 pounds on the ‘What Would Jesus Eat?’ diet.”
- ULTRA-SPECIFIC: “This skin-tightening formula uses sea moss discovered off the coast of St. James Kiln, Ireland that was irradiated during the last polar shift and has special features that reduce the cell distance to the level of nanometers on your cheekbones.”
- UNQUESTIONABLE SOCIAL PROOF: “Janet Sacks from NYC used this formula to generate in 127% per year buying tax liens and flipping homes.”
- USER FRIENDLY: “Just apply the cream in three seconds.”
And I will add one more:
- AUTHORITY: “Dr. Jonas Salk injected this into his own body and cured himself.”
Learning copywriting can allow you to create and sell your own products or help others sell their products and then you can scale.
Example: Write copy for a local dentist to up his number of customers. If it works, you could scale by selling “Dentist in a Box” services to 10,000 other dentists.
I call this IDEA MULTIPLICATION.
ONLINE STORES WILL REPLACE BRICKS AND MORTAR
This is already obvious but just repeating it.
VIRTUAL ASSISTANT
Use Zirtual to find opportunities.
I am not recommending being a virtual assistant forever.
Here’s how I would attack it:
Become a virtual assistant for a few high-net-worth executives.
- Assist with travel.
- Assist with scheduling and reminders, etc.
- Assist with social media.
Then, remember this mantra: “Your best new customers are your old customers”.
If you help an executive update their LinkedIn page, then also suggest: “Hey, you should have a presence on Instagram, TikTok, Facebook, Twitter, etc. I can help you with all of those.”
Hire people to help you do constant updates for all of your clients. Get more clients.
Now your time as a virtual assistant has turned into a social media agency you can build and ultimately sell for millions.
CLOUD KITCHENS vs. RESTAURANTS
When you think of the word “restaurant,” you usually think of a location with good food, tables, waiters, hosts, bartenders, busboys, cleaning people, etc.
That period of our lives is now over.
A restaurant is a menu. If I were starting a restaurant today I would google “Local commissary kitchens” (i.e., a legal kitchen that can serve food for charged delivery).
I would create more than one menu. James’s SushiRitos, GenZ Pizza, etc.
Rent space in a commissary (or cloud) kitchen. Create multiple menus. Upload them to DoorDash, UberEats, and GrubHub. See which menus get the most orders. Double down on those menus and shut down the other “restaurants” that you started.
In a recent podcast with Sam Parr, we were brainstorming what sorts of specialty restaurants might work:
- Combine two ethnic foods (SushiRitos).
- Take one side dish and make a menu out of it. In NYC, there is a restaurant that sells all sorts of different rice pudding dishes.
- Take one dessert and make it unusual sizes: James’ Big Cones.
- More ideas welcome in the comments.
CONTENT CREATION
With everyone working remotely, more emphasis on content creation will be rewarded.
Here is how I view monetization of content creation:
SPOKE & WHEEL: The wheel is the core values and content you want to create. For instance, “investing” or “fantasy sports” or “dieting” or “dating.” Whatever you feel strongly passionate about and want to create content around.
How do you find a passion? I don’t mean this in a life-changing sense, since one will have many passions. But how do you find something that makes you happy right now that you would love to create content around?
- Scroll down your Instagram. What do you take photos of? Ditto for your search history.
- What did you love to do at age 12 that has “aged” well? For instance, Matt Berry was a Hollywood screenwriter and very unhappy. So he quit this career, which made a good amount of money, and returned to his childhood love: sports. He wasn’t an athlete, so he focused on fantasy sports. Most fantasy sports sites were written by dry, numbers-based enthusiasts. He combined his skills as a professional comedy writer with his interest in sports and for $100 a blog post, built up a huge audience for his fantasy sports writing. Now he is the ESPN anchor for fantasy sports.
- Advice Tim Ferris gave me: If money or “likes” were not the goal, how would you structure your day? I ask myself this question often and act on the results.
Again, Your WHEEL is the core of what you want to create content around. The SPOKES are the ways you monetize it: podcast, book, blog, course, newsletter, speaking, consulting, Patreon, social media, affiliate deals, etc.
If there is interest (please email and tell me), I will write newsletters about how to monetize and maximize each of these spokes.
SUMMARY
- The virus is not solved. But we understand it better.
- The economy is not solved. But it will bounce back fast and there will be opportunity.
- Protests will happen, but reforms also.
- SUCCESS will belong to those who can live in the land of “not knowing.” Inquiry > certainty.