The Only Thing Harder Than Change Is No Change

There are a lot of self-help and management books about dealing with change. Some humans find "change" very difficult, whether it's moving to a different state or changing jobs or reorganizing a business unit. And there's always a given assumption: change is hard.

But what about no change? 

I could be wrong but not as much is written about monotony, or the lack of change. Whenever the subject of monotony comes up, the advice probably centers around ... change. Feeling stuck? Make a change! Unhappy with some part of your live? Change it for the better!

It strikes me that the lack of change might be even more difficult than change. Think of situations where change is severely limited: prison, immobility, a dead end job ... a pandemic shelter in place.

My family enjoys change. Travel, new restaurants with new foods, a variety of activities. These are the things we miss while sheltering in place. We've almost resisted roots by design. We live in a small apartment and part of the reason we went that route is to avoid being tied down to one location for several years.   

The virus is changing everything. 

We're thinking of buying a house because, well, if you're a prisoner in your own home it's better to have some space and a yard. Does this go against our apartment-loving values? Hard to say. Although the virus is pushing us in this direction, we understand that the virus lockdown will likely (hopefully, for Pete's sake) be over by the time we buy a house (sometime in 2021). 

Maybe this is just our way of effecting change when so much of life right now is a daily rerun. 

On the bright side ...

We were never going to save for a house without the virus. We're not savers. Our highest spending categories (besides rent) are usually travel and food. But now, we can probably save a ton of money and turn this monotony to our advantage. Rates are low, and I anticipate some interesting pricing as people either can't move or need to move, and realtors seek to move inventory. I'm already seeing some price drops in our area. 

We'll see. There's a small chance we will save a bunch and then decide not to buy, and that would not be a bad outcome either.

[Somewhat unrelated side comment: universal basic income (UBI) is gaining steam. I don't have a strong opinion on it, and I'm generally in favor of social safety nets. A hefty UBI would concern me though. Right now, some people are basically receiving UBI, being paid without much regard for production. I'm not sure it "works" psychologically. There's something about earning that paycheck by putting in time or producing that is better and more satisfying for the worker. I think.]

Time To Hedge

I bought stocks on the way down and now I have several winning positions. But, the market is at a risky junction. The mega-cap FAANGM stocks of Facebook, Apple, Amazon, Netflix, Microsoft, and Google are reporting earnings, and they make up an astounding 25% of the S&P 500's market cap. Historically, this type of concentration in a few companies has been a bad sign. Combine that with the fact that we are way off the lows, and a pullback would make sense.

As I've said before I don't want to get too bearish here and sell good positions. So, I'm going to hedge. Today, I bought puts on the Nasdaq 100 and the S&P 500. If the market pulls back, I can hold my other positions and profit fro the puts. If the market breaks out even more, my positions should do well and I can sell the puts at a small loss. 

I've made and lost money using options and I don't recommend them to anyone. This is a trading move and I expect to be out of them soon because options can decay quickly even if the directional bet is correct. It's very easy to lose, so if the trade works I'll take profits and move on.   

There is a bright side of course to the market's extreme concentration in the mega caps. Many other companies are still well off their highs and represent good value here. Thus, even if the mega caps slow down, other stocks could still run higher.

A couple positions right now that are finally moving are CRSP and CGC. CRSP is a gene editing company and CGC is a cannabis company (the world's largest). Both were way down and may be forming decent bottoms. Again, there's a big contrast between these beaten down stocks and the mega caps. 

If stocks roll over to the downside and the bear move resumes, everything could get crushed. But, if we continue to stabilize, it could be a stock pickers market for a while. Eventually I think this ends badly, but it remains to be seen if this week is the beginning of phase 2 of the bear market or phase 2 of the rally off the bottom.