The Wall Street Journal - 21.03.2020 - 22.03.2020

B2| Saturday/Sunday, March 21 - 22, 2020 **** THE WALL STREET JOURNAL.

THE SCORE

THE BUSINESS WEEK IN 7 STOCKS

FORD MOTOR CO.

Detroit’s auto makers are temporarily shutting

down factories in the U.S., Mexico and Canada to

limit the spread of the new coronavirus. Ford, Gen-

eral Motors Co., and Fiat Chrysler Automobiles NV

came to the decision Wednesday after discussions

with union leaders. The companies are required to provide

affected employees with extra pay to supplement unem-

ployment benefits. Ford sharesfell 10% Wednesday.



F

10%

PERFORMANCE OF AUTO MAKERS THIS PAST WEEK

Source: FactSet

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Ford

Motor

General

Motors

Fiat

Chrysler

Mon. Tues. Wed. Thurs. Fri. Automobiles

tinkering, bickering, guesswork

and luck.

Don’t let yourself be fooled into

believing it’s unusual that nobody

knows what’s going on right now.

The past makes sense only in ret-

rospect, after our minds burnish it

to our liking. The present almost

always defies our efforts to make

sense of it.

In a classic experiment in 1972,

researchers asked people to esti-

mate the likelihood that various

positive and negative outcomes

might result from President

Nixon’s upcoming trips to China

and Russia that year. We now call

those visits “historic” because

they thawed decades of hostility

between the U.S. and the commu-

nist powers. In advance, no one

knew whether the trips would ac-

complish anything.

About two weeks after Nixon’s

visits, 71% of people recalled put-

ting better odds on his success

than they had at the time. Four

months on, 81% remembered being

more sure Nixon would succeed

than they had said beforehand.

In short, learning whatdidhap-

pen impedes you from retrieving

what you thoughtwouldhappen.

Children as young as the age of

3, asked what’s in a candy box, will

say “candy.” Show them it contains

pencils instead, then ask what they

had thought would be inside—they

will say “pencils.”

One week after the verdict in

the 1995 murder trial of O.J. Simp-

son, 58% of people in a study re-

called predicting he would be

found not guilty; a year afterward,

68% remembered saying he would

Sure enough, investors looking

back on their own decisions often

recall more gains and fewer losses

than they racked up in reality.

To combat hindsight bias, tune

out economic and financial fore-

casters who don’t share complete

track records of their predictions.

(If that leaves you with no one to

listen to, well, them’s the breaks.)

Next, track your own forecasts.

If, as I have often urged, you kept

an investment diary during the fi-

nancial crisis, go back and read it.

How accurately did you predict

how far stocks would drop and

how long they would take to re-

cover? If you were wrong about

the past, how likely are you to be

right about the present and the fu-

ture?

Finally, take what psychologist

Daniel Kahneman calls “the out-

side view.” Rather than try to fig-

ure out exactly how bad this crisis

will be, look at the broader set of

historical precedents.

Since 1929, the S&P 500 has

suffered 14 bear markets, defined

by S&P Dow Jones Indices as

losses of at least 20%. The short-

est and shallowest was the 20%

drop that lasted less than three

months in late 1990. The deepest

was the 86.2% collapse from Sep-

tember 1929 to June 1932; the lon-

gest, the 60% plunge from March

1937 to April 1942. On average,

bear markets lasted 19 months and

dealt a 39% loss.

Staring the past honestly in the

face, rather than letting your

memory play tricks on you, is the

best way to form realistic expecta-

tions of the future.

We’ll All Look Back at This and Lie

Your memory of the crash of 2020 won’t be a recollection. It will be a reconstruction—an imperfect one.

THE INTELLIGENT INVESTOR|JASON ZWEIG

of their smaller suppliers are be-

ing affected because local offi-

cials aren’t following federal

guidance. Defense companies also

have called on the Pentagon to re-

lax contractual requirements that,

for example, halt funding if a fac-

tory has to close for a period be-

cause of local travel restrictions.

Thomas Gibson, president of

the American Iron and Steel Insti-

tute, a trade group, welcomed the

federal designation for metal

makers. “Now, it is important

that the states follow this federal

lead,” he said.

The Pennsylvania order ex-

cluded companies including

United States Steel Corp. and

other metal manufacturers with

plants that are difficult to quickly

idle. The Pennsylvania Manufac-

turers’ Association on Friday

urged the governor to widen

those exemptions.

“This is going to badly disrupt

all of our production,” said David

N. Taylor, the association’s presi-

dent. Even some manufacturers al-

lowed to stay open, the association

said, face a shortage of supplies

from companies ordered to close.

The National Association of

Manufacturers this week asked

governors and mayors to desig-

nate every U.S. manufacturer as

“essential infrastructure.”

Edward Kangeter, chief execu-

tive of scrap metal recycler CASS

Inc., said Friday that he would

continue to operate his Oakland-

based collection-and-processing

business under the California’s al-

lowance for suppliers to steel-

and-aluminum producers.

“If you don’t have recycling

like ours, that would be an envi-

ronmental catastrophe,” Mr.

Kangeter said.

Retailers from Abercrombie &

Fitch Co. to Nike Inc., have closed

thousands of stores this month.

Some retailers beyond the gro-

cery business have also asked of-

ficials for clearer national guid-

ance on whether their stores can

remain open.

Arts-and-crafts retailer Mi-

chaelsCos. said in a memo to em-

ployees Thursday that its stores

would remain open because it

sells to teachers giving lessons

virtually and people stuck at home

and looking for distractions.

More than 5,000 people have

signed a petition calling for its

stores to close, however.

“That doesn’t seem to me to

be an essential service,” said one

hourly employee at a Michaels

store in Ohio. “You can still order

stuff off of Amazon.”

Michaels didn’t respond to a

request to comment.

The Trump administration’s

guidelines for essential business

included automotive-repair-and-

maintenance facilities.

“We have to make sure that we

can continue to provide Ameri-

cans with the ability to move

from place to place,” said John

Bozzella, president of the Alliance

for Automotive Innovation, an in-

dustry association.

Newspapers have pushed to

have their operations deemed es-

sential as well.

Continued from page B

COMCAST CORP.

Theater closures aren’t stop-

ping Universal Pictures from

showing its movies. The film

studio, owned by Comcast,

said Monday that recently

released films like “The In-

visible Man” and “Emma” will be avail-

able for digital rental for $ 1 9.99 in the

U.S. Paying the rental fee will allow cus-

tomers 4 8 hours to watch the movie.

The move is a massive change from

Hollywood’s long-established business

model that could upend the industry if

other studios follow suit. The decision

comes amid closures of movie theaters

as the coronavirus pandemic spreads.

Comcast sharesfell 8.4% Monday.



CMCSA

8.4%

BOEING CO.

Boeing workers are bracing

for possible cuts as a cash

drain ravages their company.

The Wall Street Journal re-

ported Thursday that Boe-

ing is considering a dividend

reduction and laying off workers at its

jetliner plants. The coronavirus-driven

collapse in passenger traffic has

forced airlines to park hundreds of

planes and left them unwilling to

make orders for new ones. Earlier in

the week, Boeing said it was seeking

at least $6 0 billion to aid the U.S.

aerospace industry, asking for support

from private and public sources. Boe-

ing sharesfell 4.1% Thursday.



BA

4.1%

GENERAL MILLS INC.

U.S. consumers are stocking

up on food to ride out the

pandemic, meaning more de-

mand for Cheerios cereal, Yo-

plait yogurt and Progresso

soup. The company that

makes those products said Wednesday

that retailers have started buying more

and its factories are running at near ca-

pacity to keep up. Over the past week

people have started stocking up on es-

sentially all foods, not just staples like

soup and flour, Chief Executive Jeff Har-

mening said. General Mills said it has

contingency plans to keep factories run-

ning if workers stay home. General Mills

sharesfell 3.2% Wednesday.



GIS

3.2%

MARRIOTT INTERNATIONAL

INC.

The world’s largest hotel

company is starting to fur-

lough workers as economic

damage from the coronavi-

rus pandemic mounts. Mar-

riott said Tuesday that the

company expects to temporarily lay off

tens of thousands of employees as it

ramps up hotel closings around the

world. The employees at these proper-

ties won’t be paid while on furlough

but the majority will continue to re-

ceive health-care benefits. Marriott is

also trimming staff through furloughs

at properties that are still operating.

Marriott sharesfell 13% Tuesday.



MAR

13%

AMAZON.COM INC.

Amazon.com is going on a

hiring spree as millions turn

to online deliveries as a

way of limiting the spread

of the new coronavirus. The

tech giant plans to hire an

additional 100 , 000 employees in loca-

tions across the U.S. and is raising

pay for all employees in fulfillment

centers, transportation, stores and de-

liveries in the U.S. and Canada by $ 2

an hour. The decision shows the dual

challenge Amazon and its peers face

as they try to meet surging demand

and also take care of employees at

the front lines of the pandemic. Ama-

zon sharesgained 7% Tuesday.



AMZN

7%

ALTRIA GROUP INC.

Altria’s CEO has contracted

the coronavirus illness, be-

coming one of the first lead-

ers of a major U.S. company

to be hit by the fast-spread-

ing outbreak. Howard Willard,

the tobacco giant’s chairman and chief

executive officer, is taking a temporary

medical leave of absence and Finance

Chief Billy Gifford will assume his re-

sponsibilities. Altria also announced a

two-week suspension of operations at

the Richmond, Va., manufacturing center

where it makes Marlboros after two

employees tested positive for the virus.

Altria sharesfell 7.6% Friday.

—Francesca Fontana



MO

7.6%

Businesses

Plead to Be

‘Essential’

ALEX NABAUM

It’s springtime in

the year 2030. You’re

looking back at the

crash of 2020, the

devastation it dealt

your portfolio and

how you behaved as

an investor.

What will you say?

If human nature is any guide—

and, let’s face it, it is—your ac-

counts of what happened will be-

gin with such words and phrases

as “Clearly...” or “It was obvious to

me that...” or “Everybody knew

that...”

In the future, your memory of

the crash of 2020 won’t be a recol-

lection. It will be a reconstruction,

built partly from what is happen-

ing now and largely from what you

learn later about what hasn’t hap-

pened yet.

I’m describing hindsight bias—

the belief, after something hap-

pens, that we foresaw that it

would occur.

That intuition keeps you from

learning from mistakes, leads you

to pay too much attention to unre-

liable forecasts and makes you

mismeasure your tolerance for

risk.

Fortunately, you can work

around it.

Some commentators have ar-

gued that the coronavirus panic is

nothing like the financial crisis of

2008 and 2009 because, unlike to-

day, policy makers knew exactly

what they were doing back then.

That’s nonsense. Monetary and po-

litical leaders navigated that time

not with foresight but with a jury-

rigged blend of bluffing, analysis,

be acquitted. In fact, only 48% of

them had said so before the ver-

dict. Likewise, people distorted the

odds they’d placed in advance that

President Clinton would be con-

victed in his 1999 impeachment

trial.

In 2002, psychologists asked

nearly 1,000 Americans to recall

how likely they had expected ter-

rorism-related incidents—and

other risky events—to be in the

immediate aftermath of Sept. 11,

2001. After a year in which fears
      had mostly subsided, they remem-
      bered being much less pessimistic
      than they had been at the time.

So that pundit predicting doom

on financial television right now

will get to say “I told you so” if

the economy collapses. But if

things improve, he—and his audi-

ence—will end up remembering

his forecast as sunnier than it was.

“We’re biased to see ourselves

in a positive light,” says Deborah

Small, a psychologist at the Whar-

ton School at the University of

Pennsylvania. “We want to believe

that we’re rational and smart.

We’ll recall our past actions as

more sensible than they were. We

also give ourselves too much credit

and don’t remember our mistakes

as well as we do our successes.”

Looking honestly at the

past is how you can form

realistic expectations of

the future.