Covid-19 | Why this Medical Crisis is not the 2009 Financial Crisis.
10 Year Treasuries sub .5%
DJI sub 24,000 in a bear market, down 20% from the peak……
Oil @ $30 / barrel
We have lots going on, and its happening at a faster and faster pace. Its Internet pace and this is the first time we have had a crisis at real internet pace. The news spreads faster than the virus and lots of investors are heading to cash…..
What does this mean for our investors, and what happens from here.
Our Core Beliefs
When the world starts to spin like this, I think it’s vital to recognize base values and core beliefs. The health crisis is very real, and a 2 month period of controlled interactions and self-isolation seems inevitable for Ireland, but this state of crisis will pass as it always has, and this Covid-19 financial crisis is no different.
Software Eats the Worlds
Marc Andreessen A16Z explained in his 2009 article that software domination would continue to grow with the Internet and that the new companies formed through this would move to dominate global business. He was right and he continues to be right. More and more of these companies need to build out a global network of offices and Dublin has its place within this supply chain.
Dublin Digs Software
Dublin has positioned itself within this digital economy and will continue to grow and prosper form Andressens Law. We are the USA in Europe.
Everything that can be digital will be digital
Covid-19 underpins the need and necessity for more digital assets, and a bigger digital economy. Andressen’s Law is driven by Moore’s law.
The Two P’s
People and Pipes. Dublin draws from a massive pool of English speaking Irish, and European talent. This is a pool of people that cannot be compared to any other market in the world. The services and products created by these people and delivered to the world through our data centres (50+ and counting), and the internet pipes, are the backbone to the Irish economy and the backbone of the future world economy.
Winners: the environment, remote working, the internet, software, video conferencing, everything digital.
Losers: anything physical and social, hotels, restaurants, bars, shopping, physical retail.
Central Bank Intervention
The medical crisis has already triggered massive central bank intervention around the world, ranging from rate cuts (US), suspension of mortgage payments (Italy) to helicopter money (Japan) with intervention likely to dramatically expand in scope . We believe that the crisis will NOT be deflationary for assets after the dust has settled from the initial shock.
Conclusion
Covid 19 in Ireland and Europe will have a massive effect on certain sectors of the economy, but the core digital backbone to the economy will be strengthened by it because of the reasons above.
For those who can rise above the emotion and panic, this crisis will present a buying opportunity. Warren Buffett is already living his famous sentiment of “be fearful when others are greedy, and greedy when others are fearful”. Actively increasing stakes in various sectors, most notably airlines - article link. For RQtwo, it is an investment opportunity to continue to position our capital inline with our beliefs - to meet the property needs of the technology sector and its staff. To provide the space where they live and work.