Why Some Support Lockdowns With No End

Why Some Support Lockdowns With No End

One of the main reasons why I’ve turned more cautious on stocks is due to a growing number of extended lockdowns around the country. Logically, we can conclude that most lockdowns should end by July 31 given that is when enhanced unemployment benefits are set to expire.

However, investing is all about beating expectations. I had been secretly hoping most of the country would reopen by June 15, after roughly three months of staying at home. The economic destruction so far has been immense. Keeping the economy closed for much longer than three months feels like an extreme overreach by our politicians.

We’ve slowly gone from locking down in order to flatten the curve to locking down indefinitely until there is a vaccine for COVID-19. What happened to locking down until there is enough hospital bed and ventilator capacity? The healthcare system is no longer overwhelmed. Tens of millions of lives are being ruined.

If Congress successfully passes another massive stimulus package with enhanced unemployment benefits extending through the end of the year, we know that lockdowns around the country will be extended. Be mentally prepared for what’s to come.

In an effort to provide different perspectives, I reached out to folks who support indefinite lockdowns to fight the coronavirus. Their stories will also help explain why the stock market has held up so well, in spite of so much economic disaster we hear in the news on a daily basis.

If you’ve been on the fence to support keeping the economy shut for longer than three months, perhaps these stories will persuade you to help minimize the risk to our essential workers. Or, maybe these stories will have an opposite effect and piss you off. Perhaps we’ll find a middle ground.

Survival Of The Richest: Profiles Of People Who Support Indefinite Lockdowns

1) Tech couple making $415,000 combined.

Our company has allowed 100% of our workforce to work from home. Although we went through some job cuts globally, most of the core corporate office remains intact.

We continue to earn our regular salaries and our stock price has rebounded by over 80% from its March lows. I have a base salary of $250,000 + RSUs. I’m busy working on numerous M&A transactions that can help strengthen our position once the economy opens up.

My wife has a $165,000 base salary + RSUs and also gets to work from home. Her company’s stock price is actually up for the year because it is in the digital payments space. The longer the lockdowns last, the stronger her business will grow due to the growth of online payments.

Although we are going a little stir crazy at home, we are doing fine financially. All of our friends are still employed and are able to work from home too. Some of our friends who work at Twitter and Salesforce have been told they can work from home for the rest of the year.

We should probably keep sheltering-in-place past the winter given winter is traditionally the flu season. I’m afraid of a second wave. By Spring 2021, there will hopefully be a vaccine.

2) Hedge fund manager in NYC who makes millions.

As you know, my income depends on my performance. I manage a $1.6 billion risk-arbitrage fund and have a base salary of $500,000. In good times, I’ve earned tens of millions. In bad times, I only earn my base salary. That’s how it should be. Eat what you kill.

We were net short going into the market meltdown in March. As a result, we closed up 2% for the month. But I didn’t cover quickly enough and underperformed in April.

We remain net short in May and will probably increase our shorts the higher stocks rebound. The stock market is so disconnected from the real economy, I think there’s a 35% chance we re-test the lows.

Overall, my goal is to return positive single-digit returns in 2021. If I do, I will be able to earn between $5 – 10 million. More importantly, I’ll be able to significantly raise assets due to my outperformance as investors are seeking security.

I’m currently working from our vacation home in Jupiter Island, Florida. One silver lining is that if we live here for more than six months, we should be able to drastically reduce our NY state tax and claim Florida residency.

New Jersey and New York have been hit hardest by the virus. I’m not returning until the virus is eradicated.

Tiger Woods’ home on Jupiter Island is so sweet

3) Online business owner who makes between $600K – $1 million.

It’s been a wild, wild year. I was on the verge of selling my home workout equipment and nutritional supplement business last year but decided to give it one last go around.

Thank god I did because my site’s traffic and sales have grown by over 300% because everybody is working from home. The only challenge is that it’s been hard to keep up with inventory. The average wait time for delivery has increased by over 100% due to supply chain issues.

Who knows how long my business will be booming. I’m saving 90% of all profits just in case the economy opens up again and my traffic declines. But I’m betting there will be a permanent increase in work from home arrangements that should help my business long term. I’m never selling my business now!

As you may guess, I fully support our politicians for keeping us home for the rest of the year. Not only is staying home saving lives, it’s helping me make more money than I have ever dreamed. Go lockdowns!

Survival of the fittest: why folks support indefinite lockdowns

4) Actively run mutual fund manager who makes over $25 million.

This lockdown sucks. It sucks for my son who is a high school senior and isn’t able to graduate with his friends. The lockdown is terrible for my daughter, a high school sophomore who was nominated to be the co-captain of her varsity basketball team. It stinks for my wife who was doing so well with her non-profit initiative.

The positive is that I’ve gotten to spend so much quality time with my family at our summer house. Selfishly, I’m kind of hoping my son’s college closes for the Fall so that I can spend even more time with him. If his college moves online, I plan to rent a nice RV and go on a West Coast camping trip with him. It’ll be the greatest father-son bonding moment ever!

To cope with the indefinite lockdown, we’re pretending like summer vacation just came three months early. We’ve been playing lots of basketball and tennis on our vacation property in Healdsburg. We also got some really cool jet skis to ride around on our lake.

Our fund performance is in line with the market. We get paid mainly by assets under management, and so far our assets are only down about 7%. As long-only fund managers, the main thing we can do to protect shareholders is raise cash and buy defensive positions.

I’m in support of locking down for another couple months to beat the virus. The government and businesses need more time to figure out safety arrangements before millions of people return to work.

5) Friend of a mayor who has a salary of $297,386.

Survival Of The Richest: Why Some Support Indefinite Lockdowns

I’m proud of our mayor for quickly enforcing shelter-in-place rules to save lives. History will look back on her kindly. She and the governor are very much in-line with keeping the city and the state under shelter-in-place for as long as it takes to beat the virus. Enhanced unemployment benefits will last at least until July 31, 2021, therefore, she has no problems keeping the shelter-in-place rule until then.

Maybe the rules would be different if she and her fellow politicians weren’t paid so much. But someone has to lead, and I think her salary is well-deserved given her city’s budget is over $12 billion. She has aspirations to do greater things and I think she will.

6) Mother and wife of a tech startup founder who is worth $25 million on paper.

Before the lockdowns occurred, my husband was seldom home. He would leave for the office by 7:30 am and regularly stay until 9 pm. If it wasn’t long hours in the office, it was business trips to see clients.

We have a two-year-old who has barely seen him. It made me so sad.

Now that my husband is forced to work from home, I’m happier because he gets to play with our son more and help out more around the house. It’s still hard to get him to make time given the business is now under stress. However, it’s so much better having him at home than not.

Honestly, I wouldn’t mind if the lockdown lasts for another 3-6 months. Toddlers grow up quick. Being able to share our toddler’s milestones will be priceless.

For people who are in strong support of longer lockdowns, I stand with you. Stay home and save lives!

7) 56-year-old retiree with a ~$8 million net worth.

If the stock market didn’t rebound off its lows, I’d be much more in favor of opening up the economy quickly. But since the stock market is looking to recapture its all-time high thanks to tremendous government stimulus, I support continued lockdowns.

Think about it. If we can save lives by staying at home, not have to work as much while still getting paid, receive government support, spend more time with family, and not see our investments plummet, supporting an extended lockdown makes sense.

I’m using this time to learn about baking sourdough bread. I’m also catching up on all these books I promised to read but haven’t. Let’s continue to shelter in place until there is a cure.

workers who could work from home by income

8) Preschool teacher who used to make $65,000 a year.

I’m by far the poorest person here. But thanks to unemployment benefits, I’m able to make about 80% of my full-time salary without having to work. Teaching 2-5 year-olds is stressful. Not only that, I was constantly sick.

Since the lockdowns began in March, I haven’t been sick. My immune system is healing after so many years of strain. If called upon, I will go back to work before the enhanced unemployment benefits runs out. But, I’m happy to keep supporting our essential works and fighting the virus by staying at home.

In the meantime, I finally started my own website. It feels great learning about design and utilizing all these features the internet has to offer for free.

9) Journalist who makes $120,000 while working from home.

Lucky for us, traffic to our website has boomed as people have become addicted to the news. As they say in news industry, “if it bleeds it leads.” The more fear-inducing the headline, the more people want to read it. It’s like luring a moth to a flame. I feel for people losing their lives and livelihoods, but I’m thankful me and my colleagues are doing well.

Survival of the fittest, why people are OK with indefinitely lockdowns

Don’t Rely On The Government

Hopefully, these examples have provided some perspective on why some people are OK with indefinite lockdowns. Although the livelihoods of lower-income workers and certain minority groups are being decimated by shelter-in-place extensions, a whole other portion of the economy is doing just fine.

I’m assuming that our politicians believe that stimulus checks, enhanced unemployment benefits, and PPP money should be able to support those who are suffering the most until the lockdowns end.

Further, the lockdown situation is ideal for politicians looking to gain more power by having more people depend on politicians for financial support. After all, if you can give over 50 million people enough money to survive comfortably without having to work, there’s a good chance they may vote for you in the upcoming election.

The tricky thing is, what if there are no businesses or jobs to return to once the lockdowns and the elections are over? Politicians are bumping up against their power limits before citizens start revolting. Just like how airline counter staff don’t announce another delay on an already delayed flight until the last minute, politicians are smart for doing the same with the lockdowns.

Be A Rational Citizen

As rational citizens, it is dangerous to rely too much on the government to survive. Governors and mayors unilaterally decided to destroy livelihoods by closing the economy for months. Instead, it’s much better to rely on yourself. If the government so happens to send you some stimulus money or keep their Social Security promises when you’re in your 60s, then great. If not, it won’t matter because you never relied on them in the first place.

The more wealth you can build and the more defensive your income and wealth, the stronger you can support keeping the economy closed. We can do our part to support essential workers who do not have the luxury of staying at home.

After all, as the media, the politicians, and the wealthy like to say, “We’re all in this together! “

I hope we find a middle ground.

Readers, should we keep the shelter-in-place rules going until there is a cure? Why can’t the rich understand why tens of millions of people want the economy to open sooner? After three months of lockdowns, what’s wrong with a middle-ground where the young and healthy go back to work following new safety precautions and the sick and old stay home?


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