Marc Andreessen is the billionaire co-founder of venture capital giant Andreessen Horowitz. His essay, “IT’S TIME TO BUILD”, was likely the most widely circulated and read essay in North American finance circles over the weekend.
It’s basically a call to action. Mr. Andreessen’s sees the lack of preparation for the COVID-19 pandemic as symptomatic of a broader culture of low inertia and destructively powerful status quo.
“The things we build in huge quantities, like computers and TVs, drop rapidly in price. The things we don’t, like housing, schools, and hospitals, skyrocket in price”, he writes, “We need to break the rapidly escalating price curves for housing, education, and healthcare, to make sure that every American can realize the dream, and the only way to do that is to build.”
Mr. Andreessen also sees the offshoring of labour as a failure. He notes that “We know how to build highly automated factories. We know the enormous number of higher paying jobs we would create to design and build and operate those factories.”
The author correctly identifies the entrenched interests in the way of his proposed ‘reboot’ of western economies. Wealthy NIMBYs quash plans for affordable housing, parents and teachers oppose externally driven education reform, large corporations with dominant market positions utilize political lobbying to prevent competition, domestic transportation dreams costing hundreds of millions of dollars are botched.
History provides ample reason for pessimism where the re-energizing of western economies is concerned, but the current pandemic may provide a silver lining for investors, a motivating force driving Mr. Andreessen’s vision.
In health care, for one, investment is almost certain to surge. Vaccine research, intensive care and protective equipment capacity expansion should provide opportunities for portfolio gains.
The potential for de-globalization offers the largest investor upside. The disruption in global supply chains caused by the virus is expected to incentivize more developed world manufacturing investment. The fully automated North American factories mentioned in the column could become reality, with all of the revenue opportunity for engineering and robotics companies this entails.
The response to the coronavirus epidemic has required a degree of policy and social co-ordination that investors can hope won’t be squandered, and that a fresh impulse towards growth and innovation arises from the crisis.
-- Scott Barlow, Globe and Mail market strategist
This is the Globe Investor newsletter, published three times each week. If someone has forwarded this e-mail newsletter to you or you’re reading this on the web, you can sign up for the newsletter and others on our newsletter signup page.
The Rundown
The stock market recovery has a downside: It is stoking fears of another selloff
The stock market’s impressive recovery over the past four weeks in the face of surging unemployment and vanishing economic activity is making a number of influential observers concerned about what comes next. It’s arguably the most urgent question facing investors today: Is there a bigger sell-off in the works? David Berman looks at some possible answers.
In these unpredictable times, here’s how your portfolio should look right now
Stock markets continue to flounder as investors try to figure out where we are going economically. Although we’ve seen a rally since the March lows, volatility still reigns with indexes posting big gains one day and then turning upside down the next. What should you do in these circumstances? Gordon Pape shares his thoughts on portfolio construction.
Amid a long bear market for preferred shares come glimpses of why you might want them in your portfolio
The slow accumulation of companies cutting their dividends is taking some of the stink off an investment category that has been frustrating investors for years. Preferred shares have been in a bear market of roughly 10 years in length and were utterly savaged in the March stock market crash. They’ve rebounded a fair bit since then, but that’s only part of the reason why investors should reassess them right now. In uncertain times, preferred share dividends offer more security than dividends paid on the common shares that fill most investor portfolios either directly or through exchange-traded fund and mutual funds. Rob Carrick takes a detailed look at the asset class.
Digging deeper into the Brookfield Infrastructure unit split
John Heinzl’s inbox has been full with readers questions on Brookfield Infrastructure Partners’ split to create Brookfield Infrastructure Corp. He has more answers this week to several of them.
Others (for subscribers)
Monday’s analyst upgrades and downgrades
The highest yielding stocks on the TSX, plus risk data
Monday’s Insider Report: CEO of this large-cap dividend stock cashes out nearly $700,000
Insiders buy as Corus Entertainment slides on COVID-19 fears
Others (for everyone)
How to profit in a stock market downturn
Investors much less confident about market outlook, Trump re-election chance: survey
What’s up in the days ahead
For strong long-term returns, you don’t need to time the market perfectly after a major selloff. Norman Rothery will have an analysis that may provide encouragement on staying invested during these volatile times.
Click here to see the Globe Investor earnings and economic news calendar.
More Globe Investor coverage
For more Globe Investor stories, follow us on Twitter @globeinvestor
Click here share your view of our newsletter and give us your suggestions.
You may also be interested in our Market Update or Carrick on Money newsletters. Explore them on our newsletter signup page.
Compiled by Globe Investor Staff