NOT A Conspiracy Theory
We’re not feeling this most-recent market rally. The market is certainly happy about the Pfizer vaccine’s success rate of 90%, which indirectly makes investors put faith into Moderna’s upcoming results, but we’ve done some digging into this subject and it’s not as simple as Wall Street would like to present it to its clients; NOT AT ALL.
The first obstacle that governments will face is distrust. We, for one, are so skeptical of vaccines at this point, that it would require seeing evidence, many months after the fact, of the first wave of recipients and their reaction and progress to make us even remotely open to the idea of injecting any fast-tracked vaccine, short of a life-and-death situation.
We’re not alone; over 40% of Americans have objected to taking a vaccine. Many Americans, over 100M of them, according to surveys and polls, have Covid-19 fatigue, which means that they are fed-up with hearing about it all day. They want the government to stay out of their lives and the most they will do is wear a mask (85% of Americans wear one in November).
Here are a number of issues with a vaccine, which no one knows at this point, not Pfizer and certainly not Dr. Fauci:
* For one, there are two types of vaccines – one sterilizes the disease completely. In simple terms, this is the kind of vaccine in which the antibodies fight the disease and you don’t contract it again and can’t infect others. You might need a booster once in a while, but for the most part, you’re good to keep living your life.
The second type doesn’t quite sterilize the disease and you can actually still contract it and infect others. We don’t know which type the Pfizer vaccine is. In other words, even if millions take the two doses and return to their church, choir or socializing, in general, they might actually be super-spreaders.
The vaccine might also have only a short-lived effect on your body; its durability is questionable. Let me summarize it by saying that I believe 2021 will not be normal at all – the markets are getting ahead of themselves.
* Side-effects: In a few months, the first wave of recipients might begin to report having severely damaging ailments, resulting from the body’s reaction to the vaccine, thereby cancelling or freezing the vaccination program. Don’t discount this possibility. Many vaccines are linked to autism and other problems, including cancer.
So, what are we doing?
We;re raising cash levels wherever we can. In our estimation, no stimulus plan is coming before the end of the year. On top of that, if Biden ends up being president, the threat of long lockdowns will serve as a catalyst for a sell-off. It won’t be like the one in March, but certainly it is within the realm of possibility to see a 10% – 15% correction in the indices.
Between the probability of higher taxes on the wealthy, 30-45 days of shutting down the economy, the complexity of the vaccine and the low likelihood of a fat stimulus plan, we’re bearish on general equities and are only willing to take small bites out of the gold equities, which have fallen 20% – 50% since early August. These offer relative value, which is worth the risk, in our opinion.