Free (Market) Toilet Paper

Because sh*t happens... 💩

Written by Jimmy Mengel
Posted March 19, 2020

I’ll start by saying that I’m not one to panic...

I didn’t go out and hoard toilet paper, hand sanitizer, canned goods, and bottled water. You know why? Because I always keep a steady supply of those things. I sleep safer — regardless of what’s happening — if I know that I can survive weeks in any event.

Snow storm? Power outage? Global pandemic? At least I know I can make it long enough to let things return to normal.

As moral philosopher David Hume once wrote, “Stercus accidit.” That’s the fancy Latin way to say “Shit happens.”

Of course, the shit comes in very different-sized piles. Sometimes it oozes up slowly from the sewers, and sometimes it's dropped right on your head, all at once.

This is what has just been dropped on investors, and humanity at large...

bucket up

I will admit, the coronavirus outbreak has been trying my resolve. Watching Donald Trump address the nation last week did nothing to ease my concerns. I have never seen him address an emergency without blaming someone else or branding the problem with a snarky nickname.

His expression would befit an ashen face but, you know...

That is all to say he honestly looked scared. That made me a bit scared. On the heels of his speech, other dominoes began to fall, starting with an EU travel ban. 

Perhaps the most visible and alarming came from the sports world:

  • The NBA shut down the season ($8 billion annual revenue)
  • The NHL shut down the season ($5.09 billion annual revenue)
  • The MLB delayed opening day ($9.9 billion annual revenue)

March Madness was the next shoe to drop. Not only will workers in offices — if they’re even open — lose the chance to gloat about their brackets with coworkers, but $10.4 billion in gambling wagers has gone out the window.

Another $1 billion in ad revenue will be lost.

I won’t even get started on the music festival circuit, which has been all but abandoned. The global concert industry weighs in at $20 billion and even small club events are being canceled. I had tickets to a concert last week, in fact, and despite it being held at a 300-capacity club in Baltimore — where there had not yet been any cases of the virus — it too was canceled.

Now restaurants, movie theaters, and gyms have all been shuttered. Life as we know it has been "canceled".

I'm currently sequestered at home with my wife and kids, like so many others in the country. The school system says it's for two weeks, but I know damn well it will extend far beyond that.

So it’s easy for me to sit here and say not to panic. But I’m sure you are; it's only human.

Back to stocks...

Avoiding panic is one reason I constructed my Crow's Nest portfolio the way I did, and focused mostly on long-term dividend stocks. Just like stocking up on boring, yet crucial products like toilet paper and canned goods, these stocks will anchor your portfolio for years to come. They'll be there when you need them.

So please, do not panic. Selling now would be like dumping precious cargo overboard in the middle of the storm. Once the squalls stop and the hurricane subsides, you’ll be left sitting with an empty boat.

This too shall pass.

Let me share some information from our latest Crow's Nest dispatchHere are two of our portfolio stocks that should be steady during this gale…

Hormel Foods (NYSE: HRL)

You can’t have a canned food discussion without Spam…

The much-maligned canned meat got our soldiers through World War II, and would make an obvious addition to any quarantine-ready cupboard.

Hormel Foods Corporation produces and markets various meat and food products in the U.S. and internationally. It produces everything you could imagine. And I bet that you have at least one of its products in your pantry…

Aside from Spam, the company produces non-perishable staples like Skippy Peanut Butter, Dinty Moore Beef Stew, and Hormel Chili.

Most importantly, Hormel is a dividend king and has raised its dividend each and every year for 54 years. It currently yields 2.15%

This is a solid long-term stock for panic and for a possible recession.

*Here's a fascinating podcast about the history of Spam, if you're into that sort of thing.

Essential Utilities (NYSE: WTRG)

Essential Utilities is the second-largest publicly-traded water utility based in the U.S., and serves more than 3 million people in Pennsylvania, Ohio, North Carolina, Illinois, Texas, New Jersey, Indiana, and Virginia.

Last year the company invested nearly $60 million acquiring eight water and wastewater systems, which added approximately 12,000 new customers to its books. Essential has also signed three purchase agreements for other municipal wastewater acquisitions. In total, these acquisitions will serve more than 200,000 customers.

It has just announced its 28th dividend increase in the past 29 years. Even more impressive, Essential Utilities has paid a consecutive quarterly cash dividend for more than 74 years. It currently yields 2.34. Essential Utilities will also give you a 5% discount if you buy the stock directly through its DRIP (dividend reinvestment program).

Utilities always stay strong during times of trouble. Regardless of what is happening in the markets, people still pay their electric and water bills above all else. These companies also tend to be de facto monopolies.

These are the kinds of investments that have kept Crow's Nest readers afloat during all types of markets. We're still up double digits while the world crumbles...

Since I'm stuck in my house, I've been sending my readers regular video dispatches and asking for their questions, comments, and concerns. The feedback so far has been amazing. We're sticking together and figuring this mess out in real-time.

I hope you'll join the discussion. Unlike the virus, we have safety in numbers and the crew could use all of you to weigh in on what you're doing to get through these trying times. 

Please join us here.

There will be plenty more to come as we navigate this stormy market. In the meantime, paratus mane (stay prepared).


Jimmy Mengel

follow basic @mengeled on Twitter

Jimmy is a managing editor for Outsider Club and the investment director of the personal finance advisory, The Crow's Nest, and cannabis stocks advisory, The Marijuana Manifesto. For more on Jimmy, check out his editor's page.

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