October 26, 2020 BARRON’S 35
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2021 Will Be
A Challenge
For Investors
To the Editor:
Someone is clearly dramatically wrong (“U.S. Money
Managers Like the Outlook for Stocks, According to
Barron’s Poll,” Cover Story, Oct. 16).
On the one side, we have all of these institutional
investors who at current price levels are very bullish
on equities. That would imply that either they think
the market is priced about right and there is very little
risk of a substantial decline, or they accept that there is
a substantial risk of decline, but it is offset with a mate-
rial probability of a large percentage increase in stock
prices from the current 180% of gross-domestic-
product valuation level.
I say this because on the other side are purchasers
of options to protect against downside price moves
who seem to think that risk is so high that the VIX is
about twice the level of a calm, low-risk market. That
30 VIX would imply a 30% to 40% market upside
from here in the next six to 12 months to justify the
market risk that the VIX level implies.
There are no such thing as bad market prices; there
are only bad market prices relative to
the risk/reward ratio of the security
or investment.
Douglas Colkitt
On Barrons.com
To the Editor:
The major takeaway from this year’s
Big Money poll is that there is no
consensus. With continued lack of
certainty in the markets, investors’
best course of action is to focus on
items that they can control.
This “investor’s alpha” includes
focusing on taxes through proper
asset allocation, increasing one’s sav-
ings rate to compensate for poten-
tially lower future returns, minimiz-
ing unnecessary portfolio fees, and
instituting automation within the
investment process. These are all
methods to grow one’s wealth even if
the markets don’t cooperate. Imple-
menting these items is always recom-
mended but can be even more benefi-
cial in an uncertain world.
Jonathan I. Shenkman
West Hempstead, N.Y.
Vote for Infrastructure
To the Editor:
No matter who wins the presidential
election, infrastructure spending is
sure to surge next year (“Wall Street
Is Preparing for a Biden Victory,
Higher Taxes and All,” Up & Down
Wall Street, Oct. 16). Buy the stocks
that will benefit, such as Caterpillar,
steel, etc. Expect a rotation from high
price/earnings growth stocks (the
FANGs) into industrials and value.
But I do anticipate that the next few
weeks before the election could be
rocky, with a correction of at least
10%to15%.
Albert Nyberg
On Barrons.com
Risks and Rewards
To the Editor:
Andrew Bary’s excellent article
(“Preferred Stocks’ Yields Are Drop-
ping. These 5 Are Still Worth Buy-
ing,” Oct. 16) reminds investors that
these “perpetual” securities are sensi-
tive to rising interest rates.
However, many of these shares with
higher yields tend to trade back at par
when an issuer’s five-year option to
redeem is exercisable. If an investor is
patient and purchases preferred shares
when prices drop below par, he or she
can better manage the risk of future
interest rate hikes. In this low rate
environment, the risk/reward of pre-
ferred stock is quite attractive for retir-
ees and other income investors looking
for higher yields without taking on
excessive credit risk. And the Federal
Reserve continues to signal that there
will be a long runway before interest
rates spike up again and significantly
impact share prices.
Niels Holch
Annapolis, Md.
EV Issues and Solutions
To the Editor:
Regarding “More EV Companies Are
Coming to Market. None of Them
Have Any Real Revenue” (Oct. 16),
there are currently four fundamental
issues with electric vehicles: 1) They
need more charging stations, 2)
Charging time should be less than
the time it takes to fill up a gas tank,
- One charge should drive 500-plus
miles, and 4) EVs and their battery-
replacement costs should go down.
Brian H.
On Barrons.com
To the Editor:
I was in Norway years ago, and in
Oslo there were charging stations
readily available. The Norwegian
government doesn’t tax EVs, so I saw
a lot of Teslas.
Bruce Finne
On Barrons.com
Arming America
To the Editor:
I’ve been in the firearms and ammu-
nition business for going on 47 years,
and I’ve never seen anything like this
(“It’s a Golden Era for Gun Sales.
Here’s How to Play It,” The Striking
Price, Oct. 16).
Our want book is exploding with
people on waiting list for about every
gun we get in. The guns are sold be-
fore we can even display them. Smith
& Wesson Brands’ guns and ammo
are so red-hot that the distributors
don’t even call us to see if we want
them; they just send them.
The manufacturers have also come
out with EZ models, and women are
going nuts over the fact they can now
easily pull back the slides on their
semiautomatics, which has been a
huge hit.
Dennis Salem
On Barrons.com
Chasing Yield
To the Editor:
Taking a flyer on risky debt is not like
taking a flyer on risky stocks (“Try
Emerging Market Debt for Attractive
Yields,” Income, Oct. 15). Make a mis-
take on a stock for $10,000 and you
may be down 10% or 20% before you
head for the hills. Make a mistake on a
risky bond for that same $10,000 and
the bond defaults, then you’ve risked
$10,000 for a couple of hundred extra
dollars in income. The old saying
“never chase yield” always seems to
come back to haunt.
Peter Brooks
On Barrons.com
“The old saying ‘never chase yield’
always seems to come back to haunt.”
Peter Brooks, On Barrons.com