2020 - The Year of Reality Distortion
The definition of malleable is: easily influenced; pliable.
Reality is Malleable.
It's best to remember that in the upcoming weeks and months.
One of Steve Job's more memorable quirks was his ability to create a "Reality Distortion Field":
"Steve Jobs’ “reality distortion field” was a personal refusal to accept limitations that stood in the way of his ideas, to convince himself that any difficulty was surmountable. This “field” was so strong that he was able to convince others that they, too, could achieve the impossible. It was an internal reality so powerful it also became an external reality"
2020 is the year of reality distortion for the United States of America.
Internally and externally. Both personally and business-wise. It's happening from all angles.
Every part of the business world is being impacted by COVID-19. Look at the top 12 industries of the US Economy:
Here is a breakdown of what each industry does, with company names, and a BRIEF impact of this crisis.
Every single one of these industries being is impacted right now. This is what makes this dilemma different from crisis' of the past.
Real Estate
All things real estate, ranging from the house you live in to the building you work in, to the shops you shop in. Residential Brokers to Commercial Developers.
American Tower Corporation, CBRE, JLL, RE/MAX, Keller Williams
People are losing jobs, which means its going to be tough to pay mortgagees. Businesses are being forced to close for weeks/months, which means its going to be tough to finish lease agreements.
State and Local Government
All state and local government, Governor top dog for these roles.
Everything from Police Officers to Parks and Recreation
Finance and Insurance:
Take a look at this graph of the major bank stocks:
Banks make money when lending is happening. When businesses fail/can't make payments, they are impacted.
When the buying/selling of business is delayed or doesn’t happen, they are impacted. This is all happening.
Health and Social Care
Huge time for this industry. Hospitals and health care providers, obviously, but there are massive corporations in this space as well
CVS, United Health Group, Cigna
a durable good or a hard good or consumer durable is a good that does not quickly wear out, or more specifically, one that yields utility over time rather than being completely consumed in one use
Can be consumer (cosmetics, cleaning products, footwear)
(Nike, Apple, Sony, HP)
to Industrial (rubber, plastics, textiles)
Siemens, GE
All of this is slowing down as supply chains are disrupted and buying at large is scaling back
Retail Trade
Outlets where you buy goods
Target, Ross, Costco, Your Local Malls
These are getting hammered. They were essentially forced to close. Traditional retail was already suffering due to the increased demand of eCommerce and other factors.
Wholesale Trade
All establishments primarily engaged in selling merchandise to retailers; to industrial, commercial, institutional, farm, construction contractors, or professional business users; or to other wholesalers
Cardinal Health, McKesson Corporation
Supply chains have been and will continue to be utterly disrupted, for all industries.
Non-Durable Manufacturing
Non-durable goods are products that are consumed or are only usable for a short period of time because they wear out or become useless
This is perishable food, groceries, fuel
Nestle, Proctor and Gamble, Coca Cola
Some of these have gone up (Toilet paper, bottled water) others have went down (most everything deemed nonessential)
Federal Government
Everything falling under federal control
President of US top dog here
IRS, FBI, etc.
Information
Technology is tough to lump into 1 sector, as technology/software play a massive role in ALL of the industries on this list
Alphabet (Google), Microsoft, etc
While a handful of these companies will likely benefit long term, the cash flow issues are massive for small businesses.
Many startups fall into this category, which are failing at a rapid rate/downsizing because their revenues have been upended and fundraising has gotten significantly more challenging.
Arts, Entertainment
Self Explanatory
Disney, Comcast, All sporting events, etc.
These were impacted immediately and essentially evaporated overnight
Construction
Building new home/buildings
Bechtel, Turner, etc
If there is no one to lend money, building stops. Construction is an extremely capital intensive business.
If the companies they are building for fail/cease to exist, there will be no construction.
No ones is chomping at the bit to invest in new infrastructure with this much uncertainty and evaporation of liquidity.
We've never experienced anything as wide ranging as this economic impact.
We don't know what the ramifications are going to be.
What we do know is that realities are changing. Rapidly.
The amount of stimulus being brought forth by government's across the globe is unprecedented. Till 10 days ago, pumping TRILLIONS of dollars into the economy was not a reality. Today, it's a necessity.
Till last week, tax day was April 15. Now, it's July 15. You also don't have to make your federal student loan payments for a few months. That wasn't a point of negotiation while I was paying off student loans.
Following these leads, new realities are going to be constructed from corporate standpoints.
Industries and Companies will soon have to face reality (if they haven't already):
Are you a vital part of life? Do consumers really NEED your product?
What are the most VITAL parts of your business? Are you forcing aspects that are unnecessary to your core competency? Are you operating at a loss?
Will retail change forever? Will a brand that we grew up shopping at (ie a Target) go away? Are we no longer going to be able to fly on United here in Denver, and have to choose between American/Delta/Southwest/Frontier instead? Will Hilton no longer be a hotel option for lodging?
These types of questions are already flowing through all of the companies and industries mentioned above + all the other industries that didn't crack the top 12!
This is building a NEW REALITY / NEW ERA moving forward.
PEOPLE are starting to realize the severity of our circumstances, though we will likely have to experience a bit more loss for it to officially set in.
What are the most vital parts of my day?
Realistically, what can I cut out of my life?
What is really important?
Reality Distortion
It's going to be difficult to 1 - understand, and 2- adapt, to this new reality. Frankly, it has not set in just yet. We don't know exactly what it's going to look like. We've only been in this cycle for 35 days. For the past 10 years, everything has been up and to the right.
Up and to the right is not always going to be the case.
THINGS (THINGS GENERALLY/ ALL THINGS/ THE WHOLE WORKS) ARE INDEED NOT WORKING VERY WELL. IN FACT, THEY NEVER DID.
SYSTEMS TEND TO MALFUNCTION CONSPICUOUSLY JUST AFTER THEIR GREATEST TRIUMPH
Reality is malleable. It's constantly changing and adapting. In 2020, it's happening fast.
Reality distortion has become our new normal. What is true and concrete one day is changing the next.
Its hard to adjust to, and will certainly be inconvenient, but the better we understand, are prepared for, and react to these changes will help us both short term and long term.
TAKEAWAYS:
REALITY IS MALLEABLE!
Things are changing fast. Adjust as necessary.
DO NOT SPREAD UNNECESSARY FEAR!
But do wrap your head around what reality could look like moving forward. We're gonna make it through this, but things are going to change, for sure. Let's try to embrace crisis as best we can in the tough times ahead. Help out when able. Go the extra mile for those less fortunate. Do the right thing for humanity.
DO NOT BET AGAINST CAPITALISM!
All of the graphs and simulations being run do not take into consideration how we are going to react to the crises in real time.
3M is manufacturing 30 Million N95 masks / month at this point
Ford, GM, Tesla are mass manufacturing ventilators
Individual states are taking it upon themselves to implement proxies and medical advancements to maximize the healthcare system for the fight against COVID-19
Fiscal and Monetary policymakers are rewriting the rules on what was previously possible.
In closing:
Sometimes life hits you in the head with a brick. Don't lose faith.
- Steve Jobs
This is a big brick - BUT WE CANNOT LOSE FAITH!
Reality is Malleable - let’s make the best of it.
Follow along @itschriskeith for more info in Twitter :)