Barron\'s - April 6 2020

April 6, 2020 BARRON’S 35

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Erasing Two

Months of

Fixed Costs

To the Editor:

Most businesses would agree the largest issue is the cash

drain on fixed costs (“The Dow Ignored the Spread of

Coronavirus Last Week. It Won’t Be Able to Anymore,”

Cover Story, March 27). Most consumers would say the

same thing. I say we simply erase the 60-day period.

How would we do this? Phase four could address the

lost revenue, by the government paying two months of

every rent, mortgage, or lease through the banking sys-

tem. This would allow businesses to tread water and be

ready to open when we restart the economy. Time is

money. If we erase the time, we erase the money. We

could add a sales tax and a new national payroll tax to

pay for this. It takes imagination, but we could do it.

David Ginsberg

On Barrons.com

Time to be Bullish on Stocks

To the Editor:

Jack Hough is absolutely correct to be bullish on stocks

(“Put Politics Aside. It’s Time to Buy

Stocks for the Long Run,” Streetwise,

March 27). The Covid-19 pandemic is

creating so much economic uncer-

tainty that making predictions about

the outbreak is nothing more than a

guess right now. However, there are

three things I’m confident predicting:

1. 0% interest rates will be with us

longer than Covid-19.

2. A vaccine will be developed

within the next nine to 12 months.

3. The annualized inflation rate

over the next 10 years will be greater

than 0.67%, which is the current

yield on the 10-year U.S. Treasury.

These three highly probable out-

comes all point to stocks being the

place where investors should be allo-

cating capital. It feels bad right now,

but this is the time to own stocks.

Ben Mackovak

Cleveland

To the Editor:

It was very refreshing to read

Hough’s column reminding us that

investment fundamentals matter

more than politics. Too many are

using the pandemic for political gain

by playing a “what if” blame game.

There are two principles that most

financial experts will agree are the

foundations for wealth: dollar-cost

averaging and compound interest. Both

strategies are almost always in play.

Those who dollar-cost averaged

from 1929 to 1933 made money, even

though the market was up and down

(mostly down). Hough suggested sev-

eral companies for consideration dur-

ing this time of market uncertainty,

and there are undoubtedly many more.

Those who focus on long-term

investments in financially sound

companies and apply fundamental

investment principles will probably

do much better than those who play

the blame game.

Benjamin J. Trichilo

Oakton, Va.

Bridging the Gap

To the Editor:

Thank you, Peter Sands, for bringing

forward a typical problem: communi-

cation among different expertise

(“Former Bank CEO: I Tried to

Sound the Alarm About Pandemic

Risk. Finance Didn’t Listen,” Other

Voices, March 24).

What is needed is an independent

role that understands enough about

each entity [health and finance], and,

if required, can readily learn addi-

tional knowledge of each that is nec-

essary to communicate.

This independent role need not

know the minutia of each entity on

the list, only enough to understand

the role of each and how to communi-

cate it to others. They must be trust-

worthy and keep politics out of the

picture. I am sure there are plenty of

qualified applicants that would jump

at this opportunity. I know. I did it at

a much lower level for many years.

The key is to take the thoughts of one

expert and convert them to language

that the other will understand. Easy?

No. A challenge? Yes. Needed?

Absolutely.

P. Frank Byrne

West Bend, Wis.

Gold Bug

To the Editor:

I agree with the fund managers of the

First Eagle Gold fund that this is the

time to own gold (“A $1.2 Billion Fund

Makes the Case for Gold,” Mutual

Fund Profile, March 26).

There are many factors working in

its favor. First, real interest rates are

negative and short-term Treasuries

have negative rates of return. Even if

gold’s price remains flat, it’s better

than short-term government paper.

Second, the immense size of the

stimulus package will massively in-

crease our debt, which, coupled with

a race to the bottom by the Federal

Reserve, will make the dollar less at-

tractive. A weak dollar is very bullish

for gold, as it removes our currency as

a place to hide.

Third, the quarantining of Ameri-

cans will probably persist longer than

expected, causing the need for more

stimulus that will balloon national

debt to close to $30 trillion within a

few years. Sadly, Democrats will insist

on massive amounts of pork in each

tranche, which will not disappear

with the end of the pandemic.

Bottom line, our economy will be

hindered for years by the virus, and

our credit rating may be in for a

downgrade. Uncertainty levels will

inexorably rise providing the impetus

to seek havens like gold.

Robert M. Sussman

Paradise Valley, Ariz.

“Too many are using the pandemic

for political gain by playing a ‘what

if’ blame game.”BENJAMIN J. TRICHILO, OAKTON, VA.

On Sunday, March 29, Jefferies

Group announced that the invest-

ment bank’s chief financial officer,

Peregrine “Peg” Broadbent ,had

passed away from coronavirus com-

plications at age 56. Broadbent had

worked at Jefferies since 2007, after

16 years at Morgan Stanley. He was

the first senior Wall Street executive

to succumb to the virus.

Jefferies CEO Rich Handler and

President Brian Friedman said in a

joint statement that Broadbent had

helped “build Jefferies from less than

half its current size, and navigate

through hard times and good times.”

They praised him for his “decency,

calmness, and dry wit.” Broadbent

leaves a wife and five children.

COVID-19:IN MEMORIAM