What Goes Down, Must Come Up

Is it a V, an L, a Nike Swoosh or some other “recovery” shape? I’m talking about the commercial real estate market, which as we all know, is not the stock market.

Let me start with a little story. In early September of 2008 we got the very scary news about the likely demise of the storied investment firm Lehman Brothers. I can remember the fear being palpable. I am not kidding when I say it felt like the world as we knew it was ending.

In the midst of this tsunami of bad news, I called my investment guy and asked him a simple question: Should I sell my stocks and go to cash?

He answered in an odd way. He took a deep breath and said, “Ken, do you believe the United States of America will continue to exist?” I paused and said, “Of course!” He replied, “That’s great, because if you don’t you need to buy protein bars and water. But if you do believe in our country, know the economy – and your stocks – will recover. Hold what you’ve got and just give it time.”

I reflected on that conversation a good bit last year as the stock market rallied to all-time highs. Boy, was he right.

At the recent Berkshire Hathaway annual meeting, no less than the man nicknamed the Oracle of Omaha, Warren Buffet, addressed the current Covid crisis. He said it seems unlikely that the world will face the doomsday scenarios health wise as compared to the scary models of earlier this year. The U.S. economy will recover with time, he said. “We’ve faced tougher problems and the American miracle, the American Magic, has always prevailed. And it will do so again.”

In commercial real estate, we can take a much more deliberate approach to decision making because occupier deals take a long time and require large capital commitment. Thank goodness we aren’t day traders. I think of the whole affair as a chess game where one move can impact the whole board – and sometimes with unintended consequences.

I thought for a long time about making my own forecast of what will happen in the future. Like you, I read many articles and a lot of research. I have some preliminary ideas, but there are two unfortunate realities; I’m no economist and there are SO many variables that I’m really not sure where we will be in one year. In fact, I would suggest that no one really knows what is coming as badly as we all want to.

I equate the challenge to picking the winning team in college football at the beginning of the season. You have lots of ideas, but injuries and a million other things can happen to challenge conventional wisdom.

So instead of a risky forecast, I thought I would share with you 12 things I’ve learned during the quarantine:

1.      How to spell quarantine

2.      People say “this time is different” in every crisis. Because they are all different.

3.      Government officials can and do change their minds. Remember when masks weren’t required?

4.      Fear is more dangerous than any virus.

5.      We finally learned how to wash our hands.

6.      Getting out of your PJ’s and athletic wear and dressing for work is essential.

7.      Don’t cuss when your technology fails because we may be able to hear you.

8.      The neighbor’s lawn crew is really loud, and do they really need to come twice a week?

9.      You can be absolutely, positively sure that I am on mute.

10.  You don’t have to turn your camera on. I still respect your meme picture too.

11.  I love your barking dogs across the internet.

12.  Speaking of this crazy economy, WHAT GOES DOWN MUST COME UP.

Friends, don’t allow yourself to worry in the abstract. As my grandmother used to say, “Don’t borrow tomorrow’s trouble for today.”

We will make it through this, I promise. And I’m still on mute.