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COVID-19 & Crude: Crisis or Opportunity? - TranscriptHello everyone. This is Neil George and welcome to the March webinar for Profitable Investing. So, we have multiple topics to get to today, including between the Covid-19 spread and the dramatic impact on every facet of the financial markets and economy. And of course at the same time, we've had the crisis in crude oil and related natural gas markets stemming from the more recent OPEC plus meeting and the major disagreement between the kingdom of Saudi Arabia and Russia, which has seen the crude oil price plummet. So what I'm going to discuss today is the crisis or opportunity. So I'm going to go through some of the various details that has brought us here.I'm going to tell what has been occurring at each facet of the market. I'm then going to go through what I've been doing as far as the analysis of status of the holding in the model portfolios and look at where things are and what will be the likely outcome post-crisis. And then more importantly, I will also walk you through some of my analysis as far as the sustainability of each of the holdings and including how I've been going through the analysis for the companies as far as being able to sustain themselves through the crisis and then looking forward as far as outcomes. And at the end, I'm going to go through each of the holdings and give a quick synopsis as far as how each one is perceived by me at this time as far as what I see the risks and rewards going forward.And then of course, I've been getting a bevy of questions and comments. So, I’m addressing those at the very end of the presentation. So, thank you very much and again, thank you for subscribing. And I hope that my work will entice you to continue to renew because again, I know this is a very challenging time for all of you and again, I hope you value the work that I continue to do for you.I've been providing the daily updates via email in addition to the weekly journal and the Income Investor’s Digest. I'll be sending one of those again this afternoon. So again, if you have a comment about the format or want to see some changes in my daily updates—and this is for you during the crisis—again, please pass those along. And as I am doing, I've asked my team both in editorial and customer service, we're in constant contact so if you have specific questions I'm not actually addressing where you have other concerns, again, reach out to my team at 800-219-8592 or the email and I'll do my best as far as getting answers back to you as swiftly as I can.So that being said, let's look where things are going. So, Dec. 2018 in Hubei province and the local capital of Wuhan, which I have written and mentioned to you in the past. I have business and traveled there, going back to the early 1990s. A lot has changed back then up to now. But again, it's still despite a lot of the development and building, and advancement of China as a whole, many sectors including Wuhan and Hubei province and other sections of China beyond Shanghai, Beijing, Shenzhen still are developing. Of course, I mean now at this point in time believe we've pinpointed the origin source of the virus more likely coming from bats. Likely the bat meat effectively being sold in markets allowed the coronavirus to initially make its initial spread.So, it has done quite a bit of damage in China and then spread into South Korea largely—but the key thing and gives us sort of a roadmap going forward is that it is now appearing to be passing. We are now seeing the information coming out of China that the number of new diagnosis is now dropping to negative and we are seeing recovery. We've seen Wuhan, which had it largely blocked down as well as sections Hubei province now are now seeing that the population is now freely moving about and getting back to normal and back to business. We've also seen in other areas in China, particularly in some of the major industrial zones, particularly down in the Southeast, in Shenzhen, outside of Hong Kong, we've seen production and basically the economy coming back quite strongly, including of course for Apple products and the assembly line of Apple products as being sort of indicator of course.Also, some of the initial look at the economic damage to China in which the GDP growth is down dramatically. And that's largely come from so much of the production facilities literally shut down. And so, the idea that China has gone through a major significant pullback, but now with people going back to work, factories reopening and so forth, we're looking for the Chinese economy to start its rebound. The key thing of course to look at what's been occurring is that the virus itself has spread predominately through the Northern hemisphere, both as far as bringing folks back from infected areas. We had the cruise ship, which was docked off the coast of Japan—which those basically then became part of the number of US cases.We've also seen a major break in Northern Italy in which we saw in Modena, as well as in Milan. And more crucially around Venice and also in other areas in the North. This largely from my perspective and my investigation has been in my firsthand knowledge, which is there is a tremendous number of highly skilled Chinese workers, particularly in some of the fashion houses, the leather goods and so forth because of the skill sets that they have that Northern European, Northern Italians that really had sort of losing that sort of skillset labor population. And therefore, it's my assertion that this largely came from workers that had gone back for holiday celebrations back in China. And the infected then brought the virus with them into Northern Italy and therefore allowed to spread through the general population.And then we've also seen, because of other travel and so forth, many nations were slow to sort of catch on to the spread of the virus and weren’t ready to restrict travel and restricts the movement of folks. Again, it rapidly has spread predominantly there in Europe.Now, the key thing of course, is that we're now getting information, which I mentioned in my update that assigned studies that are now being posted both from Chinese research organizations, US research, European research organizations in which they are looking at some of the data for the identified cases. And again it seems to be very temperature and humidity dependent. And therefore, if you look at the spread of disease within Northern Europe versus Southern Europe where it is, as you start moving further South, the further South you go, you're getting less of the spreading of the coronavirus cases. Fewer and fewer of the identified confirmed cases.And then even in Iran—where we have very cryptic data—now there is evidence to suggest that, the country, which is quite large geographically, but it's split between, sort of different climates from the North to the South, the Northern part seems to be having more of the problem versus the Southern part. So, where I'm going with this is the studies that I have been reading—again, this is not my area of expertise, but I'm an analyst and a that's what you pay me for is to read and analyze.And so what I am suggesting as others have as well as in the US as we now are into spring officially today and we're starting to see expectations of warmer weather and a higher level of humidity that effectively the Corona, the SARS (COV-2), or COVID-19, whatever we're going to be titling it—whether it's officially or colloquially, the actual virus itself might very well look to subside in its spread. Now, the next thing of course to look at it is that if we look at the date coming out of the Chinese Center for Disease Control as well as South Korea health officials that have had a jump in time from the original identification and confirmed cases and have seen the cases sort of progress and so forth including the severity of the impact on health as well as the spread of disease, there is genuine and very accurate data identifying that there's a very large division between young and old folks in populations.Those that are 70 and above have a higher proclivity for having more severe health implications more than the young. And the younger you are and the healthier you are, we're finding that we are either getting much more mild cases or perhaps symptoms that might be sort of non-existent. Any case of more severe cases, being able to overcome them has been quite strong in which the number of deaths particularly if you're looking at the under 10, the 10 to 20, to 20 to 29, the 30 to 39—you're seeing very few, no deaths historically from the past couple of months of data from China and South Korea where we've seen significant number of confirmed cases. As you start moving into the 40 to 49, 50 to 59, again, small uptake in the deaths, but we start to see that start to move higher when you get to the 70 to 79 and the 80 plus is where we've seen a number of more severe symptoms and of course the greater number of deaths.The other part of the equation is we also have been compiling data in some of the reports which shows that health is a major determinant as far as the symptoms as well as the survivability. Those that have existing conditions, particularly the respiratory system as well as even in other things including diabetes in which folks that exhibit these conditions, it can amplify the symptoms and the severity of the illness and also the number of deaths per demographic group.We've also seen reported that cities in Europe as well as in the US and elsewhere, that those in the younger part of the population are starting to also gather this information—both anecdotally as well as in reports in the data that I just discussed in which it shows that in many cases, if the younger folks again, in the under 70 and then of course particularly under 50 and under 40 of the symptoms ranges from non-existent to minor or at worst sort of moving into symptoms—that makes a more of a severe cold or a mild traditional flu virus impact. And therefore, they're starting to go out and effectively just sort of deal with it and move on.This has in the past couple of days caused some political discussions, particularly with the daily briefings from the virus response team put together by administration in their daily briefings, including of the state departments administrator for AIDS that's been brought over to sort of head parts of dealing with the US response from the health standpoint and management, which they're trying to caution younger folks from going about their daily lives because they could impact the old. This suggest is two things from my perspective. One, if those that are older or have other health challenges, they should basically be more inclined to shelter in place. But at the same time, those that are healthy in which the vast number of those that have been affected by the Corona, it points to the expectation that as we start to see this subside that the vast majority of the working population in the US economy will very much get past this, and we should easily be able to get back to work and get back to some level of a new normalcy, which should bode well for the economy as we move further in the coming months and for the rest of the year. And therefore, my expectation is that while we might not necessarily see a V shaped recovery, but the U shaped recovery, I think, will be a more narrow in its process. And I think that basically holds some promise for the market. Now, of course the other part equation is the Chinese very quickly were able to DNA map the virus. It is quite small. Again, the way to sort of describe this at the length of the DNA strand of SARS (COV-2) is about 300 units or carriers and putting 30,000 it is. Put in that perspective humans typically have some 3 billion characters or units in our DNA map. So it's quite small.In addition, using the CRISPR technology of being able to readily edit the DNA as well as RNA, which is more of the instruction part of the equation for how the DNA molecules seem to operate. We've been able to see vaccines that have been developed and those vaccine testings are underway throughout the world. It has as been in China for some time now. It has been deployed and approved by the FDA and the initial rollout of the virus vaccine testing has been occurring… But the other part of the equation to look at is that we are getting more and more information and it has been said that this virus might very well continue like a traditional virus. If you go back to another coronavirus, the original SARS that largely sort of evaporated and went away. The MERS that affected largely many of the middle East again sort of dissipated.But this SARS might very well continue. It might subside. As I mentioned earlier, the Northern hemispheres into more temperate and more humid weather as we move towards and deeper into spring into summer, it might very look to resurface in the winter like the traditional flu. The expectations are that the vaccine testing will be successful and very well might get vaccines as part of a later year process that might actually be incorporated in the traditional flu shot. It might become more available for US persons later this year.So again, where I'm going with this is that the impact for the general working population of more healthy young to middle aged folks is not as bad as if it were the older of those with health challenges and that points to the idea of a recovery from this, perhaps in the workforce, getting back to work and there is going to be a resolution going forward of the vaccine that will set this aside going forward.Now, let's look at the cases and this is something I put in the journal on Tuesday in which we can basically look at the confirmed cases again this number has been adjusted a bit higher, which is in the white line. But we also look at the confirmed recovered which is also climbing and we expect that line to climb further. And the number of deaths has been relative modest terms. Now, there are a couple things I want to talk about in looking at this chart. One is the number of confirmed cases with testing kits being expanded in a dramatic fashion, particularly in the US marketplace—the expectations will be the number of confirmed cases are going to start to climb at a very rapid pace. As you see the initial sort of started to climb it was very slowly, it was somewhat level into the weeks in February. And then as we're moving into the middle of March, it starting to advanced quite quickly. Therefore, you might be inclined to think that it is spreading much more rapidly, and I would argue that while it might very well be spreading, but because of testing we're getting more confirmed cases and with more tests we're getting more numbers. And that the other part of the equation is the number of recovery has been climbing somewhat steady. I think we're going to see that number starting to climb as well.And therefore, the number of deaths as we are identifying who is the most susceptible to more severe impacts from this and who is more susceptible severity resulting in death is going to be much more confined towards older parts of the population with more health challenges. And therefore, from a triage standpoint, as far as dealing with this and the ramp up of what has been occurring within the US healthcare sector, both in the private as well as the ramp up by the Veterans Administration as well as FEMA and other federal responses, being able to work more closely with more of the at risk demographic groups, I think we're going to see the number somewhat under control. And as a result with the number of confirmed cases, I think is going to climb very sharply and the deaths remaining more under control, the overall percentage of deaths to cases is going to be less than what we were seeing in the past weeks because the number of cases of being identified was fewer because of fewer testing being done. And therefore, I'm looking at this as a takeaway is that the numbers are going to be better than some of the more severe numbers that have been discussed in the past couple of weeks. So, what have been the responses not necessarily from the health side, but back in the economy and markets?Well, let's look at the fiscal side of the equation. We've had the so called phase one and two basically taken care of. Number three is being fast tracked. And I'm expecting much more coming. Initially, we're seeing federal sick leave support as well as additional cash and others state and local authorities. We've always seen the treasury has effectively provided the delay on income tax payments that would be due on April 15th 40 days. I would expect that that 90-day window might very well be further expanded and therefore for all of us that file income taxes, the idea that even if you would traditionally file delay for April and filing include your tax filing in October, we still obviously still must make estimated payments, but those estimated payments are put on hold at least for 90 days.That provides a cash infusion into the economy because individuals don't have to write checks. Of course, if you're getting a refund, the refunds will be made. But this also buys to a lot of sole proprietorship and then those that file under schedule C as well as LLCs and other individual pass-throughs that are structural in many professional and tradesman and so forth. This will provide a good shot in the arm not having to write checks to the treasury via the Internal Revenue Service.In addition, we're seeing delayed quarterly payment is part of the fiscal response. So for businesses as well as for pass through entities, being able to delay quarterly payments is part of the fiscal response. So again, not having to write those tax checks is going to provide a good amount of additional cash infusion by not having to write those other things.Payroll taxes as part of the phase three. This will provide relief on two fronts from the employer not having to pay their side of the payroll taxes as well as from the employee side not having to pay those. So everyone that is still working, still operating businesses or operating remotely, that also will provide a good amount of additional cash that can be made available for household spending and then for businesses that cash savings will effectively allow them to be able to sustain themselves longer.In addition, we're seeing movement within the Small Business Administration, the SBA, as being able to allow a delay in service for small business companies looking for SBA loans as well as be able to provide some additional facilities and cash for the SBA to make credit line and other lending for small business. We're also seeing the idea of to suspend debt service for student loans. So, those that are early in the workforce or currently those that are late in the workforces still have student loan debt being able to suspend that debt service again allows for more cash on hand. And therefore, that'll I think should provide sustainability for the economy. And of course, the other thing that you probably all have been hearing and reading about is the idea that helicopter money through direct payments that I foresee as getting passed with bipartisan support in Congress.Oh. The Treasury has been identifying different mechanisms and amounts, but we're looking at thousands of dollars per individual or household which will be making its way into the economy in the coming weeks. That will provide some relief for those that are not able to work remotely, or those that are in the process of being laid off. And of course, we just received the first real data for jobless claims. They were about 70 some odd thousand greater than more normal levels.And the prognostications for the coming weeks, which we should very well look to expect not just a couple hundred thousand on any given week, but potentially in the many hundreds of thousands as those are basically any workers that are furloughed or laid off. And of course, as we also are getting reports from some of the manufacturing sector including the automobile sector with Ford, General Motors and Fiat effectively moving to suspend their production of vehicles in the US, all of the UAW members since the UAW have been pushing each of the manufacturers to do this. They effectively will be a part of that next wave of those filings for the initial claims and therefore that basically will be part of those statistics.So as far from a statistical standpoint and the data we haven't really gotten much yet. Everything really is more pre the crisis and some of numbers we're going to be getting in the coming weeks is going to look bad to worse before we start to see some better information.Now, what's responses from the monetary policy side? Well, the Federal Reserve Bank and the open market committee effectively have brought their target range for fed funds down to zero to 0.25% or 25 basis points. Now fed funds is the market rate in which banks charge each other for overnight and short-term lending as part of their reserve balances. This effectively creates deposit and loan rates within US retail and commercial banking. And is that sort of the guide for where interest rates both on the asset and the deposit rates go. And therefore, this starts the process of bringing things down quite dramatically. In addition, the fed is increasing massive treasury agency bonds and mortgage backed security buying. This is a resumption of and extend a dramatic expansion of the portfolio. The buy activity that had been done and initially rolled out in response to the 2007-2008 mortgage and financial market problem in which, in effect, the Fed built up a multi-trillion dollar portfolio. They initially started to allow the roll off of that. We saw it in late 2019… But now they are buying and buying in large sums. And then we come to the next wave, which is a Commercial Paper Funding Facility. The CPFF.Now, this is a little more complex, but generally what commercial paper is, the commercial paper market, is one that my banks used to participate in this, in which businesses basically have excess cash in which they effectively will invest and buy overnight or very short term in what is known as commercial paper, effectively, or business loans in which they are paid for those balances while other businesses that need a very short overnight or short-term credit to make payments or to deal with cash and treasury management. Banks effectively will take in commercial paper deposits and then they will place that in commercial paper lending.And what is happened leading into the virus problem is that with bank reserve requirements and other capital requirements, many commercial banks, effectively their cost of capital had gone up dramatically. And therefore, the idea of being able to allocate that capital to this short term liquidity financing part of the US economy for businesses and financials was getting kind of an expensive use of that capital and therefore a lot of banks or effectively not necessarily wanting to be as open and expansive in commercial paper operation. And that that became exceedingly the case of recent as there is a real dearth of liquidity in the market and more companies and financials seeking a short term overnight funding in the international paper market.Now in order to have the fed do this, they effectively had to set up a standalone special entity, much like they did in the post 2008 in which was what was then called Maiden Lane. This is where an additional facility was established and effectively credit was extended to back up the fed directly by the US Treasury. And this is exactly what the US Treasury has done in the creation of the CPFF. So the Fed is not allowed to take credit risk. The Treasury exclusively establishes that credit line to the Fed and the Fed effectively does its operations through the CPFF. I would expect that other areas will be established as part of this. One of the other major liquidity problems has been in the foreign exchange swaps.This is where multinational and foreign banks and corporations effectively will do exchanges for dollars versus other currencies both buying and selling for overnight over a period of days or months in order to facilitate financial transactions, facilitate stock and bond purchases, or facilitate other commercial related transactions. This market effectively has been drying up and has been creating a lot of even more friction for cross border transactions in and out of the US, but for US Corporations, US financials and for foreign financials and foreign corporations. And the Fed is very well aware of this and they are doing their best to provide some additional liquidity to US participants as well as to foreign participants that have access to the Federal Reserve System. And again, the idea will be to be able to establish an additional facility to make this occur, much like they've done for commercial paper, is something that is a good probability.Another facility which is now being discussed and is being negotiated with Treasury Secretary Mnuchin would be a facility that would be focused on business lending. Sort of look at this as being sort of a Federal Reserve version of the Small Business Administration in which effectively businesses would have access to lending. The facility might very well to participate in collateralized loan obligations (CLOs) and other business loans and other credit facilities which would have a gain from a credit standpoint by the Treasury. This has not occurred, just the FX swap facility hasn't occurred, but is I think very much in the work to provide liquidity and provide cash for business, corporations, financials, and so forth, as well as providing stability for the business loan market.And of course all this cash is going to come with a tremendous amount of additional borrowings, the phase three part of the fiscal stimulus as well as the cash flows necessary to deal with the expansion of the Fed. The Fed's balance sheet comes from the idea of looking at something that has been long around and has been debated quite a bit of recent modern monetary theory, which poses effectively the Treasury has a lot more leeway to be able to issue debt given that it's denominated in US dollars of domestic currency and the Treasury effectively can print US dollars and therefore the US can effectively expand its debts in a dramatic fashion, particularly during times of crisis or extreme need. And that is certainly where we are now.And therefore, know this might very well be tested, but from my perspective, given the low rates of yield in the Treasury market and given where the dollar has been trading and the cash and capital flows, it's just really confirming that modern monetary theory does have some basis in reality when it comes to the US, specifically. Now, the key determinate of this is that here we're looking at the US dollar. The US dollar has, again, from year to date had been quite steady as we saw initially sort of a little bit of a weakness as it started to hit the financial market with the stock market. We're starting to feel some duress in mid February into early March. But again, from you know from early March to now, the dollar has soared by nearly 8%.Again this has come all along with the credit crunch, all along with expectations of a massive uptick in the deficit spending as part of the fiscal response in phases one, two, three, and therefore this is a good sign that the US effectively has the tools in its quiver to be able to amp up monetary conditions that will facilitate the economy, facilitate businesses, financials as well as individual households.And therefore, this all is very, very positive and effective, and again as a good indicator as the dollar remains strong during all of these developments and roll-outs that this, it means that the US is still basically are the destination for both the store of value as well as for it's economic progression.Now, let's get to the yield curve. Here we're looking at the current active US Treasury Bonds, and the yield curve effectively plots the yield in which you see the one month yield is pretty much near zero. And as you had out further, the six month, the 2-year, the 5-year, the 7-year, 10, 20, 30 year, we're seeing the yields are down significantly. The 10-year a little above the 1% handle and the 30-year in towards the 1.60 handle. And again, this has shown the dramatic movement thanks to the Fed finally stepping in and driving down the Fed funds rate and injecting a tremendous amount of liquidity in the system both for direct actions as well as their behind the scenes actions in the Open Market Committee as well as from the initial facilities I just discussed.I would expect back that the yield curve, while it should remain quite low in the shorter term maturities, this should provide a lot of relief for banks and other financials from their balance sheet standpoint. But at the same time as long as liquidity is down, I'd also draw your attention to while we do not have direct exposure to the commercial banks in the US since I liquidated those positions many, many months ago. The net interest margin is going to be very poor for US banks for some time. That interest margin measures the cost of their interest, in other words, what they're borrowing through deposits and so forth and what they earn on their loan assets and therefore that has basically been squashed. Therefore, banks themselves from my perspective remain very challenged.Many of them are going to be sustained because of monetary policy as well as fiscal policy. But from a profitability standpoint, I would be much less optimistic for the coming months, as long as these conditions remain. And again, we don't have the commercial banks, having sold those out some time ago. Now, we come to the obvious, the S&P 500 has dropped precipitously. We were down some 20 some odd percent from the year to date standpoint. It's just gut wrenching, sickening to see the daily movement. Again, my perspective, I've regularly been up in the early, wee hours of the morning checking the futures markets and again, just immediately getting to my screens to evaluate what's going to be the next problem. And that's been sort of a reoccurring. We're getting a little bit of a bounce today with some of the first discussions of the fiscal and monetary policies.And again, the daily briefing at the White House appears to be being well received at the very moment. I'll check in on that a little bit. But again, we pretty much are down around the levels from the lows in December 24th of 2018 with that big sell off we had then under expectations of slowed corporate sales and were correlated with slowing corporate earnings which did not take place. And as people recognized that the companies were actually going to be much better off than the doomsayers and the capitulating sales that occurred particularly in the days leading up to December 24th. The market rallied and really rallied back resulting in the huge success in the market for 2019 and then leading into 2020—again at some point where you're looking for sort of a sustained turn and I'll talk about that thematically in a little bit.But again, I think for right now it's very difficult to be able to see where we're going to get the bottoming out in the marketplace. The bond market of course, one of the other challenges we're seeing in the current environment is that just about every asset class has seen selling. Looking at the Bloomberg Barclays US Aggregate Bond as this takes the universe of US bonds, treasuries of course is a very significant part of this equation, which seems to basically prince in the rally. Corporate bonds, particularly in the junk and low credit rating risks, so we're looking the single B, triple C, double C, single C bonds. Those have been significantly harmed primarily because of the valuation apparatus of the underlying borrowers are more. Looking the issuers of the bonds are basically in much more of a precarious credit standpoint and for those issues then you start looking into the investment grade corporate credit.Again, we've seen some selling even from the triple B, which is the base of the investment grade group off corporate bonds, even up into the single A, double A area, which we've seen top tier credit, low bar, low amounts of borrowed debt to asset issuers have also seen sellings. And then you get to the municipal bond market even though the municipal credit is again a best second to the treasury market as far as the historical performance. From a credit standpoint, even municipal bonds have been sold. A lot of discussion has been coming about that there's simply investment funds as well as institutional investors, trading houses and so forth just need to raise cash to make margin calls... And then for fund managers, a lot of redemptions in asset management.A lot of investors are simply going to cash and exiting and that means they need to raise cash. And therefore, they're raising cash by selling stuff that has not necessarily fallen as dramatically. And that has meant that the bond market has been a place where there's been harvesting of cash, not because there's a major crisis there, with the exception of the precarious nature of the lower grade corporate credit, but because that's where some of the losses have been lesser and the gains have very well still been there. So again, looking at the bond market on a year to basis, we're only down on the aggregate standpoint about 4%, so it's significantly less than the stock market, but it's still in the negative territory.And I'll talk a bit about the bonds and more specifically in a few moments. Then of course gold. Gold effectively should be doing really well, but again, we've seen in the last week or so that the price of gold has dropped quite precariously. And again, this is largely due to the need to raise cash and therefore the idea that gold should be doing well for some specific reasons. Those specific reasons are coming from: A, the idea that people are looking to sell. B, the idea that the volatility part of the equation, but let's look at the positive parts of gold. First of all, the interest rate environment. As I just showed, the yield curve is down dramatically. Interest rates are basically around zero. That should be a major stimulus since interest rates on deposits are generally zero or negative outside of the USGold effectively should be bought as a parking place for cash type assets and therefore that's not necessarily being the case. The Dollar of course, as I showed you, is up and therefore that is a negative, [pardon me] for gold in US dollar terms, but the interest rate environment is much more compelling than the Dollar over the last week or so. And of course the total uncertainty in asset classes and stocks and bonds should mean that gold should be, again, something that people should be parking their money. Again I think it comes down to, just like for bonds, people are simply raising money for cash. Now, we come to the crude oil market. Now, even before, we're looking at the initial sort of slide in the first part of the year, which we were seeing if Corona COVID-19 would impact the Chinese economy.China started to restrict movement. It also caused many factory operations to slow down or cease operations and therefore demand forecasting for crude is related to China, which is a major importer from around the globe. That started to put some pressure on pricing, and again you saw that I did the pretty heavy lifting on sustained supply and demand in the issues as it related to some of the petroleum investments that we had in more portfolios. I'm going to deal specifically with those holdings a little bit later in this presentation. [Pardon me.]Then we get to the OPEC-Plus meeting in which Saudi Arabia wanted to restrict production and increase those backs in agreed levels from the OPEC-Plus, Russia and others. Russia basically was reticent of this and as a result, Saudi wanted to effectively put right Russia in its place. And in addition, it's argued, that they would look to be able to take control back as far as the supply and demand models for crude oil. And that means effectively taking out US shale producers. Since the US effectively became the world's largest oil producer and increasingly a significant exporter of crude oil and also in natural gas, the Saudis have been concerned about this process and therefore they basically have been turning on the taps on their wells, which as I discussed in past issues, they really are post-production capability in their major fields.That being said, their lift costs are very low, meaning the equipment it costs them to pump a barrel of oil out of the ground. But even to make things even more painful for what they perceive now as their competitors, they have been releasing reserves that they have in storage and therefore that basically just pushed the price of oil significantly lower. Then add in what is now a significantly changed demand schedule with the US effectively shutting down or closing some manufacturing, travel is basically being cut back dramatically as well as those that are even driving their cars. They're staying at home and so forth.All of that is as very quickly change the demand part of the equation. Same thing for the European marketplace. While China is now turning themselves back on, we would expect to see other parts of Asia turning themselves back on. Again, it's still being offset by the slowing down demand and usage here in the US for the time being as well as in Europe. This will very well look to change, but again, given the very precarious nature of the marketplace, I have also, in looking at some of the analysis that might very well see crude oil on the spot market trading into the teens or some or have even made argumentation that puts it closer to $10 a barrel. This is again very unprecedented that we are dealing with the economic problems from the Corona on top of a supply demand battle between the Saudis, Russia, and the rest of the producers and consumers from around the world.That being said, I will draw your attention to the forward curve for West Texas Intermediate Crude Oil. This effectively plots the price of WTI, West Texas Intermediate Crude Oil in the futures markets for delivery in the future. Now, as you can see in the short dated thing we're looking at roughly in the $20 barrel. As you start moving out in the ensuing months, it starts climbing into the $25 range, up into the $30 range. And as you move into 2022 you're looking at the $35 range and then going up much further you start to see even further. Effectively, the market is pricing oil for future delivery at ever higher prices the further you go out. And so effectively, the market is saying that this is going to be somewhat short order in nature and that in turn has led to a tremendous amount of storage of crude oil in which a lot of traders and refiners and other consumers of oil have filled all of the storage facilities around the planet to the brim and then some.In addition, there has been a real surge in demand for various tankers to be able to effectively fill up and anchor. And therefore, the argument goes that there is a certain rate of return by simply buying crude oil spot market and effectively storing it. Then as the market starts to return to more normalcy or as time progresses, there'll be a built in either a price savings for those that are consuming it or there'll be a price advantage for those that are investing in it. And therefore, that that poses a bit of an improvement… Also for companies that are in the hedging business being able to lock in slightly higher prices from the current spot market. It does provide some modeling to be able to make estimates as far as how they're going to deal with the market.And again, I'll talk about our specific companies in a few moments. So how are we basically expected to deal with the individual stocks as opposed to effectively watching the other reports of the S&P 500 or the Dow Jones or the NASDAQ Composite on any given day plummeting or popping up? As I mentioned earlier in this presentation, I think it all comes down to status. Where do the companies stand now? How are they able to deal with this right now? Therefore, that to me starts out with looking at debts of the companies. So companies effectively have credit line as well as loans from banks and other financials. They have bonds and they have preferred securities, all of which have to be serviced.And so the idea of what I've been doing is looking at the individual companies, looking at where their credit lines are, how much they have in those lines that they tap to make payments or to be able to utilize to cushion the blow in near term, where they have their bonds, what are their service requirements to pay the bond coupon rates or interest, and bonds when are maturities and what is the risk of if maturities are coming due this year and next, what is going to be the possibility or probability of rollover of those bonds?And of course for those that also have preferred securities, which are bond like, again, the debt service of those preferreds as well as being able to roll over or issue additional preferreds to fulfill those debt levels. And therefore, the companies effectively can see the ability for them to service those debts and be able to continue those credit lines and with the credit markets from banks to all financials and so forth being aided dramatically I perceive by Fed Reserve as well as Treasury as well some of the fiscal activities that were discussed a moment earlier. Again, I think I'm seeing more that we should be getting through this process from a debt standpoint than those that are going to be more at risk.Now, we also have to look at what's going forward post the crisis. So the key thing is that I'm also looking at business models of the airline companies. It's not just about getting through this, paying their employees, paying their suppliers, making good on their credit obligation, but what could happen for their business model going forward. In many cases there might very well be a catch up from sales of goods that were limited in production or limited in distribution.Of course some of the companies that are in some of the consumer goods, like our Proctor and Gamble with its Charmin toilet paper business, again they're basically trying keep their factories on fire and their contracted companies on fire to make as much toilet paper and get it to stores as quickly as they can so they can be emptied the next hour. But again, there are other businesses that also have to look at what's going on with their goods and is their business effectively going to be as successful as we pass this and start to return to the level of normalcy. And it also means what's going on with their customers, what are they going to be expectations and their customers and their suppliers. I mentioned earlier about the automakers' auto sales around the world heave really been under stress for other reasons and, again, while the customers might not necessarily be coming back because they were already sort of slipping away, or not being as interested in a lot of the products, therefore that would be kind of an example of a business model that might very well be more in jeopardy.Yeah, so look at the suppliers. A lot of the supply chain from manufacturing to services and so forth, a lot of the smaller end might be put under more duress, and therefore they might fail, and therefore that supply chain, or the services chain that are part of business models might have to be resolved, some chinks in that, or gaps that have to be filled. And therefore that's what I've also been sort of thinking about and looking at, as far as getting us through and passed this problem.Then, now let's look at sort of the debt and credit analysis. I'm going to give you a little bit of a snapshot, in as far as some of the stepping stones from a credit standpoint. Now as you might recall, or if you look at the bio, I was in banking in which my old credo is, when I'm looking at a transaction from the bank, you can get paid. In other words, how are we going get our interest and debt service? And how are we getting our money back? And therefore that's always been sort of the credo. So when I'd be sitting in an asset and liability committee at an ALCO, looking at the credit side evaluation, whether we should go no-go or go on a transaction.Again, I've had a great deal of experience in looking at this sort of an evaluation and I've presented arguments for why transactions should occur. Now what you're looking at is for Viper Energy. VENOM is the ticker symbol . This is the oil land owner primarily in the Permian Basin, which is the shale. This company, of course, has seen its stock decimated and therefore the company itself has some significant challenges. Its concerns as I've been mentioning before the Corona, that the real risk to this company is that it's counterparty. In other words, the production companies that are leasing its land, if they basically produce less and or the price of oil and gas is lower then the revenue that they receive for royalties is going to be lower. And part of the equation is if their production companies are challenged and effectively stop producing, then first of all with no more oil coming out of the ground that means no more royalty. It also means that their lease payments also might be put in jeopardy. And the next part of the equation is what occurs on their lands by their producers and what has been... And the bonds and other security guarantees from their lease producers, as far as how they operate and deal with their wells. A lot of production companies in shale production in the U.S have been moving to, what is known as, maintenance mode in which it is the lowest level of production of a well to keep it operating. This means effectively that a well can continue to move along, pumping out oil, gas or allowing the oil to come out and have the gas effectively flared off or burnt off as part of that process.In other words, just to keep it operating, that the idea that if you keep it operating it will allow that well to be more productive, as the markets start to turn or improve or head back to some level of normalcy. And therefore, if they continue to operate from a maintenance mode standpoint, then that basically is fine. That allows that Viper effectively might receive minimal royalty payments but they'll keep their lease payments and their operators will, their tenants effectively will stay in place.If wells are effectively shut down and/or kept, that incurs costs to those producers. And those costs will vary on the number and the different type of well that's in place. But those costs can be significant, if they're in great numbers. Therefore, if the producers go through a bankruptcy process or they effectively shut down, depending upon the guarantees and the collateral, what's been posted to Viper to protect them against that, the real downside I'm looking at for Viper is that, a producer might effectively fail, guarantees might be put in question and therefore Viper might have to step in, in order to protect their land and pay for costs of capping those wells and/or potentially selling off parts of their land portfolio to effectively raise that cash.So those are what I perceive are some of the primary risks to the company. So that being said, let's look at where we stand from a cash management standpoint. And here we're looking at, is the ongoing current ratio and the ongoing quick ratio. So the quick ratio is also known as the asset-test in financial terms, in which if you took all this sort of the current liabilities, that's roughly about a year against the cash and cash equivalents that could be liquidated immediately, Viper effectively has a low quick ratio at roughly 0.26%, 0.27% of their overall current liabilities.But if you look at the current ratio, which looks at all their current assets including cash, cash alternatives and other parts of their very short-term balance sheet, you'll see that they have a great deal of coverage in which the current ratio is sitting at 5.40 times what their current liabilities are. So this provides a significant... It effectively backs up the coverage for the coming months of challenges. That and I think a fairly good history of being able to identify good tenants and operators. Because as you know Viper was created and still has its direction from Diamondback Energy, which has been a highly successful operator in the oil and gas space.And therefore the vetting process for the exploration or EMP companies, they have a very deep bench as far as their evaluation. So from my perspective, I think looking at it from a current standpoint, meaning the coming weeks and months, I think Viper has really good level of credibility. But what I'm watching for is what's going to be occurring going forward, as far as the fallout in the exploration and production companies and how successful they are going to be on maintenance of wells versus the absolute downside risk of capping their wells and not coming forward to pay for those caps.So that's where we're looking at it, from the sort of the immediacy part of the credit look like. And this is what, and again, looking at again this is what I've been doing for each of the companies that we have in the model portfolios, is getting a handle on again that status of where they are from a company standpoint and be able to deal with what they need to pay.Now, let's look at it from the bigger credit perspective. Again, the idea of looking at it from the debt to the asset part of the equation. And Viper has always been a fairly low leveraged company.Again, we're looking at the most current data, as far as valuing the assets, which of course is if we're going forward, those assets are going to have to be reduced in their evaluation. But still, we're looking at a very low debt to assets and only about 21% of debt to assets. So again, their capability is quite good. So the idea that between the cash and cash on hand to be able to service their current liabilities. So their interests and other debt payments, other obligations they have is significantly good, much better than other companies. And that if they had to be more dramatic, again, it has a lot more capability because of its assets and its low level debts, to be able to deal with it.So again, the idea of looking at how leveraged are each of our companies and how that plays out, if in fact the virus impacts on the economy and the impact on the various parts of the economy and businesses. I've been doing this for each of our holdings and again, even for Viper, while it looks dire from a stock standpoint, from a company standpoint, there's still a lot that the company still has in capability. That being said, again, I'm still looking at the counterparty risk and that really is the primary risk, and I'm looking at it from a stat standpoint in the company. I'm not saying it's not totally out of the woods and I'm not saying there's not a risk that this company will be in a dire duress, but again, it does still have capability and from a credit standpoint, it looks like it's being managed to deal with the crisis before the crisis occurred.Now, the next part of the equation. Again, what I do is I look at where the debts are and when they're coming due and the types of debts they have. Now, as I just mentioned, Viper Energy doesn't really have a whole lot of debts and therefore you're not seeing a lot of the distributions as far as what they have, as far as their corporate, their loans and they don't have the preferred shares out there.So here we're looking at the debts of the company. You have a corporate loan, which is up in 2027 so having to roll that over is going to be, it's out into the future. We're looking at the first thing of that, appears at for the time deemed to be, to have some coverage levels. As I talked about earlier, we also have the loans and their credit line, the credit line is significantly high and therefore that allows them to tap into that to be able to make payments, if necessary, it buys them some space and time, if we go into further duress in the oil market and if the company goes into and seems duressed from their counterparty risk that they're producers and therefore the overall corporate loan into 2022, again seems to be in pretty good shape.So the bottom line is yes, the company is feeling a lot of stress, like a lot of companies are and it's right smack in the middle of one of the worst parts of the sectors for the market, being the oil and gas producers because those are their tenants. But again, it appears to be managed to deal with this for the time being. It's not completely without risk, that's why I put it on hold. But again, I don't see reason to sell at this moment in time but I'm keeping a close eye on it.Now, and again, one more thing is again, I've been doing this for all the different companies, whether it's Proctor & Gamble or NextEra Energy or W.P. Carey. Again, each one of these companies I can dig into and then in addition to that, also look at who actually owns the bonds, how the bonds are being priced and that gives me an idea as far as how the credit market is perceiving each company. So I'm just giving you a snapshot of some of this that I do in the background.Now, next part of the equation is again, looking at the business model, today and post-crisis. So again, I want to look at the core operations. Now employees, either remote or onsite, how are they making it work? What sort of challenges do they have and are they able to demonstrate that they're able to deliver their services or their products? And so again, even though we do not have, the company Amazon is a prime example in which they have stepped up and being able to make their deliveries, keep their warehouses humming, they've been changing their makeup and their priorities within their warehouse space and so forth.That's a prime example of making something work. Other companies continue their upgrades. So you look at Covanta—again I was near their facility in Alexandria. So the facility basically is doing its fast appeal the process, the incoming waste and excess recycles and turning around and making power. And so again, each one, each company has its own makeup of how they're dealing with the employers, how they're working with their suppliers, what's going on with their customer bases, as far as are their customers at risk? Are their customers basically on the sidelines and how that's going to play out for their cash generation? So the idea of looking at, and again a lot of this is anecdotal or we're getting some reports or statements out of companies.Other things I'm looking at are sort of guesses, as far as how companies are dealing with this and till we start to see some further genuine data and it's going to be more challenging. So again, having to rely on some of the statements and some of the general observations of what happens in each sector or segment in the various businesses, that's how I'm basically doing some of this. And again the statements from the healthy companies, I think the greater the detail, it provides more certainty that companies are doing well. More information is always better than less information.And then of course the future expectations. Is going to be back to the same or are we going to see a changed landscape for the business? So if oil and gas is this the idea that the transportation needs have dropped dramatically. That might further look to rebound, how quickly, what that rebound will be. That basically leads to the oil and gas even it through the pipeline system and so forth might be somewhat changed. There's also discussions within the real estate sector because of a lot of employees that have been working remotely. They might very well continue to be able to work remotely, while discussions have been made in the financial markets and Bloomberg of course with a good number of their customers that utilize their terminals, they can utilize their terminals at home. So a lot of traders, investment bankers and asset managers that used to be regularly traveling to make transactions, to raise capital, raise cash and so forth, pickup customers are recognizing that they can do it remotely through online presentations, video or audio chats and just the good old phone calls.The idea that they might have less of a need to have so many people onsite and therefore that might change some demographics for that industry. It might change some of the real estate needs for some of the companies. So those are some of the things I'm thinking about, when looking at some of the REITs that we have in the portfolio.So again, right now the key thing is getting through this, what's happening with core operations now, how our company's servicing their debts, what are the further risks to their debt service? So that we can get through this process and then going forward to make sure that, we want to be owning these companies, post-crisis, what's going to happen to their businesses as we emerge from this problem.Now, one of the things that, again, I showed you last week in one of my daily updates as I took a look at the stock market modern day major plunges. So I went back and showed you what happened in October of '87, in which that was really the first downturn I had dealt with in professional life. And then of course the recovery that happened and ensued from that. Now what I didn't show were some of the non-U.S. downturns and crises that I worked through in Asia and Europe and so forth, but it really focused on the U.S. market. So again, moving forward through the dot com disaster in the 2000s and again, the recovery in the general market, although the NASDAQ composite took significantly longer to recover after the decimation of that index.Again, we saw a general recovery, you look at some of the initial hiccups in '05 and of course the '08 fourth quarter of '08, when that relayed to the general stock market. And then the rapid turnaround that's really started to have its underpinnings in February of 2009 and running all the way up into the early part of this year.And again, the decimation in 2018 in the fourth quarter and then the rapid turnaround and strong performance in 2019. Where I'm going with this, is that every major downturn has come from different reasons, but the companies that make it through, they’re part of the index and so forth, there is basically a way forward and investors that need to maybe reduce or keep their allocations a bit and therefore can ride out some of the big drops, they typically are rewarded over and over again. What I was thinking about when I was coming up to this webinar was, I've been thinking about when the economy effectively just sort of, at least the private economy, shuts down and the potential of a full shutdown in the marketplace.And so here I'm looking at not the S&P 500, this is the Dow Jones Industrial Average, and I'm looking at 1939 through 1946 and so this basically takes us into World War II and the U.S. participation in that and the overall downturn, which are from that hive, that period of time in 1939 through the addition of the downward drop into 1942, that was largely a drop in the Dow Jones of about 39%. And of course, post the end of World War II, we saw the companies go from wartime, footings of wartime in production, back to the private sector in rapid formation, whether it's the auto industry, led by Ford and others and of course the return of soldiers and the baby boom, and the story. Again, major expansion in the U.S., so it's not quite apples to apples, but I at least wanted to show you that leading into World War II and during World War II, that was pretty bad stuff.And there was a major household shortages and sacrifices and so forth and consumers were largely ground to a stop. And yet, the economy was able to be sustained and it would go on to see some further improvements. And what I'm advocating, well it's again not apples to apples, we're still apples to oranges, but again, it's just another example that even some of those dire things in the U.S economy ends with some further improvement.So let's now turn to the portfolio and I'm going to start with the Total Return. And again, I'll start with what I've been discussing in the updates and in the journal, as well as in the issue, in which even before this and all through 2019, I still stayed much more conservative than the traditional 60/40 split of a modern, balanced portfolio, in which I suggested that you keep 56% of your portfolio in stocks and only 44% in fixed income.So that is lower in stock, it's higher in fixed income and out of the fixed income, keeping up at 11% of the overall portfolio in cash. And I know that a lot of folks did not like that as much as particularly as 2019 was doing so well. But as I reminded in my writing that fourth quarter of 2018, that cash and that fixed income saved a lot of carnage and provided that base that got us through along with a lot of the conservative stocks in the portfolio, including the utilities and so forth that we have either an indexed form in ordinary form, as well as other heavy cash cow type companies.So again, we're looking at some of the individual holdings right now, I'm going to jump right to the growth and income plays and with AllianceBernstein that's ticker AB, it of course is down quite a bit in price. Again, this is the asset manager and so it's got, basically from a cost of operations view, you have to pay the fund managers, you have the custody costs of the assets and you still have the sales force, you're forced to pay their salaries and so forth, they can continue to work.I'm expecting, based upon what I've been seeing, that the assets under management will be down in the current quarter for two reasons. One, the value of the assets, stocks and bonds are down in price and therefore that means that overall assets are going to be naturally down. Two, given what I've seen in discussions about a lot of withdrawals from asset maturity and the best one from folks that are raising cash, I think that AllianceBernstein will see some withdrawals that are taking place.So I would expect fee income will be put a little bit more under duress. But again, from a credit standpoint, I think we're looking fairly good. I also have been looking at some hedge funds and private equity that I've been looking at buying challenged asset managers because the business model is still the same going forward. In other words, asset managers are a great way to make money in generally good or bad markets, in which all they have to do is keep the assets under management and be able to collect the fees on those assets and therefore I think the way forward is pretty good for pass Diversified (CODI), this is the holding company of a collection of individual companies. I think some of these individual companies are basically seeing some stresses in their businesses, the goods and services both from an employee standpoint, as well as the supplier standpoint. I think that's going to hinder some of the cashflow that's going to be coming to the parent company. But I also look at, from a credit standpoint, both the underlying companies as well as Compass itself. I think they are still in a fairly good position. I also look at the company has a lot of access to cash and credit. Therefore, that buys them a lot of capability. Leading into the crisis, they were cash heavy because the management team was looking for opportunities to buy and just wasn't seeing something where they could deploy cash, capital to acquire companies because they had liquidated some, taking some profits last year and therefore post the crisis, I think Compass has a lot of opportunities that can buy companies to add to their holdings. So I think they're going to make it through, and I think there's going to be some good opportunities going forward.Covanta (CVA), I should've done this earlier, this is energy from waste company we have. Its basic operations is still the model works. Forward, the model works as the push for clean energy is very much a good business model. Also looking at the amount of trash and excess recycling is still very much the case. So I see the argument for it. It basically has been relying on, on external investment in partnership, led by Macquarie Group, and Macquarie Group I think has some of its own stresses because of its footprint but being largely separate from some of the direct impact, I think Macquarie is in good shape. And I think if Covanta were put under more dire duress, I see a potential, there's a potential, I'm not advocating it and so forth. I could see Macquarie taking an equity stake in Covanta as part of its cooperative and financing arrangement. So again, I see a potential workout if we were to see further downside.FMC Corporation (FMC), again, food demand is not abating, is if you visit your local store. It's grocery stores and so forth, and we've seen that meat and other producers are moving as quickly as they can to ramp up production. And that means that those that are producing livestock and grains and so forth, that will continue to need FMC Corporation's herbicide and pesticide crop protection. And again, the basic business model is quite good, not very leveraged, been around for more than a century, I think they're going to be in pretty good shape.Franco-Nevada Corporation (FNV), of course, this is the gold company. And again, gold prices were down, as I talked about a few moments ago. That's going to put a little bit of the pressure on Franco-Nevada's, as it's been a leader. It still has an historic outperformance, which is quite good. It does have some downsides because it's similar to Viper Energy in the oil patch because Franco-Nevada basically relies on others to pull all the oil out of the ground as well as the platinum, palladium, and so forth. Therefore, if those underlying mining operations are put in duress because of a lack of employees or having to shelter employees that might put some strain on it. I am not seeing some of this. There's risks, but I see it as one of the big risks.There also is, because again they recently went through their quarterly reporting, in which they do have a minor interest in some oil royalties as part of their resource planning. Those oil royalties are already modeled out based on where they were in the prior quarters and those royalty payments and with oil down to current levels and seeing that sustained, that basically will be a minor drain on their revenue and more than offset from the revenue from gold. Even with the recent drop from the recent peak, it's still significantly better, and therefore overall I look for revenue for Franco to be much higher. Again, being much more of a static company, in other words, just managing their book of royalty interests and other receivables, there's a low operational cost to run the company.Hercules Capital (HTGC). This is the technology investment company. It's going to be benefiting from very low interest rates and ease of credit that I think is going to be in the market now and getting even stronger. So, that provides a good credit base for them. From a tech standpoint, from a company standpoint, a lot of the tech space can, a lot of employees, can work remotely, and therefore that bodes well. A lot of the companies they've invested in are in some of the alchemy of technology, and a lot of their companies are in the life sciences business, which gives them a leg up as sciences gets more attention as being lifesavers and opportunities. And so, Hercules, effectively, I think it will be a beneficiary of some of the virus problems.Hormel Corporation (HRL), of course, is a provider of meats and other food products. It was already getting some poor... Because of the African swine fever knocking out a lot of the pig populations around the world, particularly in Asia. Hormel now is finding itself, like a lot of other purveyors of food, have very strong current demand base for their products. At the same time having to be able to shelter and deal with protecting their employees as they hustle, get more of their product to the marketplace.Microsoft (MSFT), of course, under strain. But again, if anything the remote workers, it helps the argument for Microsoft. The Azure cloud business, I think, will be a big beneficiary as more people recognize that being able to not be in an office is a positive, and companies realizing that if they can deal with being able to hedge themselves, having different locations that helps their credibility during a crisis. Again, not a credit problem from what I see. Customers, they've got a wide variety. It's difficult for me to see a pure cross-section of potential challenges to their subscription model or to their software model. I think, they're in pretty good shape. Again, I think it's a pretty good value from a stock standpoint looking at it post the crisis.Nestle (NSRGY), of course, food business, coffee business, a strong demand for their products immediately. Again, they basically have to deal with employee protection as well as some of the shortfalls in the near term from employees. That's some of the risk. Good capital base. Again, I see the through argument for owning Nestle at depressed stock prices.NextEra Energy (NEE). You've got two parts of the equation. The regulated business. This provides, even if we see businesses are scaling back their operations in Florida and residences, more people staying home, again, household consumption should be steady to increasing, provides a little bit of an offset. But remember, with the regulated utilities, regulators basically make allowances to make sure that there's profitability and cashflow for the utility to keep them operating. So again, that provides a strong backstop for NextEra as well as other companies.Then on the unregulated side, the wind and solar business. One of the biggest on the planet. Again, wholesale demand is, I think, it's going to be down, particularly with some of the idle manufacturing facilities. I just mentioned the auto sector and so forth. Other businesses either temporarily limiting or shuttering some offices, that might put a little more squeeze on some of the wholesale rates for wind and solar. Of course, with natural gas on the floor, as far as price costs, and solar is not as competitive. But the same rules that there were before the COVID, meaning mandated alternative energy for electricity, means that they've got a captive market. So, I think they're going to be fine between the base of regulated and the wind and solar.Procter & Gamble (PG). I mean, they got the Charmin as well as other products. They already went through a lot of cost controls in the company, and I think really improved on that quite a bit. That's why I stuck with them and recommended buying them. I think they're going to get through this.United Technologies (UTX), we're still going through the merger and the spinoff of the process. That is still going to make its way through the marketplace. And again, from the defense contract standpoint, I'd make the argumentation that it would make sense to pull back on defense spending and reallocate that to some of the funding for the fiscal viral response in the US, but I don't think that's going to happen. So United, like other defense contractors, is going to stay the course.As far as construction, even though mortgage applications have dropped in more recent reporting, which makes some degree of sense, refinancing has really increased quite a bit. Construction permits were still showing up pretty strong. That means that the HVAC systems that they have are still going to be going out the door. While I would see a pause in some commercial construction projects that might limit some of the Otis products and their commercial HVAC, again, that's still a smaller part in what the defense contractors.Now, on the aviation part of the equation, the counterparty risk is that Airbus, and Boeing, and other manufacturers might pull back from their purchase in the near term. That will impact United Technologies. So, I'm looking at that as far as how it plays out in the coming weeks. But again, I see that Boeing is, at worst, is going to... Let me rephrase that. Boeing is going to get some assistance directly as part of the virus response. It's a vital strategic company for the US, and therefore, I don't see that going away. Therefore, I think United Technologies has a backstop with that alone.I talked about Viper Energy (VNOM) a moment ago. Zoetis (ZTS), of course, the vaccine and inoculation, again, even though it's focused on pets and livestock, that's a primary focus. All of us have asked the question, is my dog, or cat, or hamster at risk from the virus? And therefore, I see Zoetis as being, again, in a good place right now.The real estate investment trusts. Again, they sold off more than they've done traditionally in down markets. But again, I think we see there's a lot of good things and there are some challenging things.Let's start off with a challenge, which is American Campus Communities (ACC) effectively has college dorms and apartments, and this is a problem. It's a problem because a lot of universities, colleges, have shut down. They've sent students home. They're doing online courses. It's difficult to see the turnaround, whether it's going to tell the students, okay, now come back as we're getting to the end of the semester. Again, I'm looking at what is happening with existing dorm contracts and payments, if in fact students are going home rather than staying in around campus in their rented facilities. But I think that is a potential problem.But again, I'm looking forward and looking at their business model, and we've seen online education continues to increase. My own university, Webster University, has expanded that dramatically with a great deal of success. I think the online model is going to continue from a cost saving standpoint, from a customer, student standpoint, I mean. Therefore, that might put some stresses on what was a strong demand for housing and also the reliability that this sector had, which a great deal of these public companies, or all of them, went private, with American Campus being the only remaining sole focused on the dorm market. I'm concerned on this, and therefore you're going to see my writeup in the issue, which I am working on right now. But that's one I think is mostly risk.Digital Realty Trust (DLR). This is the data center company. Again, as I mentioned with Microsoft, with cloud computing, and remote workers, and so forth, this is a good space to be. Limited need for onsite employees, just to keep everything humming along and the grass cut outside.And then we come to Hannon Armstrong (HASI). This is the company which is really a financier of largely government guaranteed green energy projects. Therefore, it's in my position was in good shape ahead of this. If funding costs are going to be lower with lower interest rates, and credit abound in the US economy, government credits for projects might only expand even beyond the desire to have more green energy or green products. But on top of that, the idea that the government I think is going to continue to throw money at anything, and therefore more guarantees. And then, from a credit standpoint with government guarantees for their existing loans and financing, I see them as being comparatively lower risk.Life Storage (LSI). This is the temporary storage facility company. Anytime you go through gut wrenching changes in the economy and market, temporary storage, it tends to benefit. People get tossed around. They lose their job. They have to move, or they need to downsize, or change things, do something and they’ve got to put their stuff somewhere. So, I think Life Storage has some potential upside during this crisis, and in general terms I think is going to be able to make it through.Medical Properties Trust (MPW). Again, everybody is seeking out, tends to seek out health. Its downside is the costs of being able to keep their facilities clean and deal with all of that. But remember, a lot of it's done on a net operating basis. So they're just watching their counterparty risk of the companies that lease their properties. But again, I think that the healthcare sector is very good in general terms, and therefore I think we're going to be fine.W.P. Carey (WPC). You got everything and the kitchen sink when it comes to real estate in this thing. Again, big strong history of making it through various parts of very bad markets, including '07 and '08, and other marketplaces. Again, there’s going to be stresses in some of the companies that lease their properties around. Again, I see them making it through but not without some duress in the near term.Then we come to MFA Financial (MFA). MFA Financial, this, of course, is a company that invests in and manages mortgage securities portfolio. Now, this stock has been pummeled in the process, and yet at the same time insiders have been reporting heavy buying at large stakes, including one of the executive vice presidents of the company just bought a block of shares, reported on March 16th just a few days ago. That brings his take to, I think it was over $3 million, which again, even if you're a well-paid executive, $3 million is $3 million. Therefore, if you thought the portfolio was going away, he wouldn't be adding. If anything, he would not be subtracting, but he'd be concerned.The key thing to look at this is what it is. What it is, is that it finances itself in the near term, so therefore, its line of credit, its borrowings are going to be low to lower with the credit markets as we've discussed earlier. It then, in turn, buys and owns mortgages, securities for mortgages. Now, mortgages of course are dealing with refinancings, which, with lower mortgage rates people are refinancing, and therefore they're paying off their mortgages. Some of the higher interest mortgages are going away, and therefore MFA is getting principal back, and therefore having to turn around and reinvest it. That means that they might see a little bit of a drop in their portfolio. I also know that they don't just stand around and watch it. They are active in their positioning of their portfolio, and therefore making change. Changes in their allocations.And then, some folks I think are thinking about with a rising amount of potential near term unemployment, are people going to default on the mortgages? And again, the key thing is, is that the mortgage market is largely government guaranteed. Freddie and Fannie have the backup, which they're still completely under the wing of the federal government having not been re-privatized. Therefore, MFA, from its portfolio standpoint, has a credit backing of underneath its portfolio. Again, remember this company went through the worst parts of the Bible in the mortgage market from the summer of '07 through '08 and made it through with the positive results from their operations. And therefore, I still think that there's good credibility there. The toll takers, so the pipes. All right. I talked earlier about the oil and gas shock in the market, independent of COVID. So now, let's talk Kinder Morgan (KMI) and Enterprise Products (EPD). Both of these companies have good capital structures, and I think will be able to make their way. What I'm looking at is the way forward. Now, the way forward is that we're not going to see oil and gas going away in the near future. I also see, whether we're looking at the V recovery might not be appropriate. I'm still looking for a narrow U, and therefore the idea of keeping the taps humming along. Are we going to see some of the wells potentially maintained at maintenance levels? Are we going to see some of the wells capped, and therefore losing some of the potential flow? That's the risk of that I'm looking at right now. Again, they've been in these markets even of recent, '14 through '16. Again, I still think that there is room for them to still deliver.Pembina (PBA), this is this the Canadian company that is still getting support from the Canadian government. The major gas line that is part... It's called GasLink that is taking gas from western Canada out to the coastline for export. We're seeing the constant protests from Indian tribes, even in eastern Canada, that have been basically trying to shut down train lines and everything, protesting these lines. Trudeau has been dealing with this, I think, a little too slowly, but I think it's going to get done. Again, there is a lot of pent up support to get this working. I'm also looking at, if in fact gas and oil goes through more of a sustained sort of problem that we might see some of the non-utility users of their pipe network might basically be going away. While there's a lot of support by the government, there's also some customer and supplier risks that I'm looking at right now. Again, I still think there's enough government support that they don't want to see this run into any sort of extreme duress. But I'm still looking at the risks.Then, let's look at the... Moving to fixed income. Synchrony, the high yield savings account, we're down to 1.5%. I didn't check it this morning but again, through their own cash management part of the business they're keeping the rate artificially high. I think they also are paying, using it sort of as a loss leader to attract business. Again, as I've written, I would expect to project that we're going to see the yield dropped to 1% and into sub 1%. Again, I'm going to be looking at some alternatives. Again, given the complete instability in the markets, I'm less likely to want to switch. If you're parking cash, it's a good place to be for now.And then, moving on to the multisector bonds, BlackRock Credit Allocation Trust (BTZ). This has government bonds. It has a lot of corporate bonds and so forth. I'm looking at the holdings and so forth. It does have a few pipeline companies in there that are prominent. As I mentioned, I think those are pretty good credit prospects. The key thing of course is that bonds were sold off with everything. Therefore, that's put some pressure on the portfolio, but the portfolio has still done better than the stock market by far. The key thing is, because it trades like a stock, because it's a closed-end fund, it effectively dumped, and so we've got the discount to the net asset value is 16%. It's a screaming buy, in my opinion.DoubleLine (DLTNX), that basically is another version of MFA. As an open-ended fund, they participate primarily in mortgages and mortgage securities. Again, I talked about those a moment ago with MFA. If MFA was going to go under, DoubleLine should be more reflecting of this. Again, well-managed. Again, I think it's a good place for income generation during this process.Vanguard Intermediate Corporate Bond ETF (VCIT), I showcased this in the update yesterday. Again, I think the corporate bond market has a lot still going for it. Yes, there are some challenges in the lower spectrum of credit, but for the core part of the market, I think corporate bonds, well, still represent a good way to power through the uncertainty and the stock market's problems.For the preferred shares with Seaspan, Seaspan effectively was taken under the wings of Atlas, which is ATCO.PH, which is the new ticker. Therefore, it operates under that company. It continues to have its boats out on lease. So it's a landlord of ships. Again, I think that, with trade effectively, I think, limited from what's been happening with the virus stuff and so forth as well as it's a supply chain and consumers, its customer base might be a little bit more at risk. I basically, I put it on hold pending the credit review ahead of the overall market extreme fallout from COVID. Again, I'll have my final call on that in the issue. But again, prior to that, I saw them as still being a credit attractive place in the preferred space.Teekay LNG Partners (TGP.PA). LNG demand with a slowed or recessionary European economy, which was a slow China economy that basically put a little bit of strain, I think, on demand for their LNG products. But again, China coming back online, South Korea coming back online, that should provide a little more improvement. Again, being some of the preferred side, I think that Teekay might suffer a little bit from an operating standpoint, but I don't see them defaulting on their preferreds. Therefore, I think that's still a decent place to participate.NuStar Energy (NS.PA), a similar status from the common stock part of the equation. I think there's some major challenges, but I still see from a credit and the servicing of their preferreds, I see that it's still a pretty good risk at this point. Although thinking I'm still going through my analysis on that as far as, if they could suspend that. Again, we'll want to be out of that ahead of time. I'll have my full call at issue.iShares U.S. Preferred Stock ETF (PFF) and Flaherty & Crumrine Preferred Income Opportunity Fund (PFO). Again, great. Just patient in a wide variety of preferreds. Again, selling in general terms, but I think that provides some opportunities to buy.The mini bonds, JMP Group (JMPNL), that's the brokerage company. Again, well run company. Again, I think that their debt service capability is quite good. I can say the same about Cohen & Company (COWNL). Of course, US Cellular (UZA), again with more people working remotely, demand for cell phones is not going anywhere. Again, I think that their service capability is quite good.Municipal bonds. I mentioned earlier that muni bonds had been, along with the corporates, even treasuries from now and again. Like yesterday. This has meant that the closed-end funds saw a bit of a dip in their underlying portfolios, because they trade like a stock. Because they're closed-end funds, they got sold more. So, discounts have abounded, and that makes these very, very, good buys in my opinion and really strong bargain buys.Now, the two-year treasury bond, I initially put that in, in later part 2018, because I wanted to have an alternative to get cashflow. Yields were in the upper 2% range back then, and there was expectations that we might see a further increase in the yield curve a bit more. The Fed was not being cooperative as you might remember, and therefore, as a bond guy, I looked at the yield curve, and I said the two year provides limited risk and most of the yield of the treasury market. So that was the way to park money for safety. If you go back to the January issue, which was dated back in late December, you'll see the rationale for it was, if you want to park money with absolute safety, because remember we're coming off of the major downside from the fourth quarter of '18, the two-year treasury bond is a super safe parking place.Now, yields have basically plummeted. Therefore, if you owned them back then, you're actually sitting on a little profit, because the bond price of the two-year is going to be a bit higher. I'm evaluating the idea that, at this point with yields, it doesn't really make sense to buy that. So again, I'm going to have a rationale for that in the issue. If you've owned it for some time, you got a little gain. Look for the idea that I'm probably going to suggest one of two things. If you own it, you can keep it and continue to earn your yield from the treasury, which is higher than the current market rate. If you want to take a small gain and redeploy in the Synchrony Bank savings account, that might be another alternative for a little more yield. Otherwise, I'm thinking I might look to pull it, or I'll come up with another alternative for you. You'll see that shortly.Now, let's move on to the Incredible Dividend Machine. Here, we're looking at... I'll start off a Cycle A, BCE (BCE), the telecom operator in Canada. Like what I mentioned with US Cellular, I think this is going to be fine.Now, let's move on to EPR Properties (EPR). This company is under duress. It has leisure and recreation properties. With people staying away from that for the time being, that's a problem. Now, I've been looking at their credit servicing and their debt, so forth, and I think they're okay. Again, I'll use okay with an asterisk. I mean, it's just a matter of looking at how much stress they can have. That's what I'm doing is I'm looking at how much more stress and how that plays out on their cash, on their cashflows, and on their debt servicing, and how that relates to the dividend, because even though they have to pay out the majority of profits, if in fact they start to see any sort of a pullback from the servicing of their leases, or their operations of their properties, that might mean that the dividend might be somewhat at risk. Outside of American Campus Communities, that's the one read that I have some of the greatest concern about right now.Merck (MRK), you're in the healthcare drug business. That's a good market to be in right now. Mondelez (MDLZ), people are raiding the store shelves for cookies and everything else. Good cost controls. I think it's a good place to be. PPL Corp. (PPL), utility, a lot of support from its regulated business. Again, good shape. South Jersey Industries (SJI), again, some of these things have sold off, bounced around, but again, well heavy regulated part of the business. Yes, you're going to see Atlantic City, noone's going to go to the casino. That's going to put a little bit of strain on some of the receivables, but the regulators know that, and there's going to be changes in some of their contracts to support them. And then you move to TPG Specialty Lending (TSLX). Again, alt financial, makes business loans. But again, it's tied to what used to be Texas Pacific Group (TPG). So again, it's got a lot of very bright guys that knew what they were getting into when they acquired or bought or made the various business loans.So far, I've seen some pretty good management skills there. Again, I think from a credit standpoint, they're in pretty good shape. And again, a lot support from the Fed and the fiscal side. I think it's going to be fine right now. I think it's going to be fine. And again, that represents a bargain. The Alerian MLP ETF (AMLP) is on hold. Again, the pipeline sector along with the general oil market has been hurt badly. Again, made worse, with the OPEC mess. Again, the primary parts of the ETF or synthetic representation by some of the ones we already have, which is the Kinder Morgan ... well, not Kinder Morgan because that's not a company. But looking at the Enterprise Product and some of the others and so forth that are from a credit standpoint, good. Again, it's heavily concentrated in the top tier. It does have some downmarket synthetic risk. Again, I still have it on hold. AT&T (T), again, I think you'll find lower funding costs. People are at home, they're getting a taste of their streaming and content services. That's good. People are using their phones. Again, I think AT&T is going to be fine. Colgate-Palmolive (CL), soaps, consumer goods, other stuff, good market to be in. I think they're going to be fine.Magellan Midstream (MMP) I talked about. The pipes are having trouble. They do have some customer risk. They do have some counterparty risk. And in the near term, because so much of what Magellan pumps is refined product, meaning gasoline, diesel, jet fuel, that's a problem. And therefore, I'm looking at how much stress it can take. And right now, again, I think it can take a lot, but I'm really eyeing that stress to see how long I'm expecting the lack of flying, driving, and shipping that might put on a company.ONEOK (OKE), this is primarily in gas feedstock for chemical manufacturing and others. Again, it's much more insulated from the general natural gas marketplace. And so I think ONEOK does have a lot more going for it in that space. Realty Income Corporation (O), again, being in the general broad reach standpoint, I think it's in okay shape. Verizon (VZ), being in the phone business, less content advantage than AT&T has. But again, everyone's using their phones. And I think it's seen as a good defensive stock right now.And if you go into Cycle C, BlackRock (BLK), asset manager. Like I discussed with AllianceBernstein, BlackRock is going to see a drop in its assets under management. Stock market's down, bond market's down, that means their assets are going to be down. Withdrawals, I think as I've been seeing, not officially reported, but anecdotally in other discussions so for those two reasons, assets under management might drop for the current quarter. And therefore, you might see a pullback in some of their fee income. But again, from credit and a sustainability standpoint, I see them getting through this without significant distress.Dominion (D), as with the base of their regulated business and unregulated business, I think they're in good shape. Their gas pipeline, including the Atlantic, which is under legal duress for various protests and so forth. That was a problem before we got to the current mess. But again, I still see that being resolved, and therefore I see the company getting through this. Duke Energy (DUK), it's actually one of the better performing of the utility side. Again, I think it's a good defensive company. Easterly Government Properties (DEA). Again, much lower counterparty risk from their tenants, which is the government. So I think that's going to be in good shape.Main Street Capital (MAIN), again, this is like TPG, which they make loans in middle market part of the equation. And again, I think a lot of middle market companies are going to get a lot of support from the fiscal stimulus, as well as Main Street will continue to get access to easier credit, lower credit funding costs. So right now, I think they're going to be fine. Public Service Enterprise Group (PEG), again, being able with the regulated of the equation, I think they're going to be fine. Ventas (VTR) because the senior part of the sector was already challenged prior to this, I have them on hold. I'm going to give you my resolution on that in short order. Now let's take a look at the Niche Investments. Now we've got Alliant Energy (LNT). Again, utility space, heavy regulated, a good defensive stock to buy at bargain prices. B. Riley (RILY), I wrote about this yesterday for InvestorPlace, the main website for the publishing company. Again, the retail stores have closed temporarily because of the virus fears. That's going to put more stress on those retailers.The retail storefront model is drastically changing, which means their store closings, I think the store closing argument is going to last even longer after this crisis. So B. Riley's Great American business unit and its other businesses that do appraisals and forensic accounting, I think is going to be up to their eyeballs in work. And also, the CEO of the company and the guy whose name is on the door, he basically had been adding and buying more shares. I think this is a good one. Corporate Office Trust (OFC), the REIT and so forth. Between the data centers that it has, including Amazon's and so forth, I think it's in generally good shape. There is some risk that there might be some movement to remote. Some of the workers that might put a little stress in other parts of the business, but there is a lot I like quite a bit. Ericsson (ERIC), again, they’re in the 5G market. Again, it's super cheap. It's going to get sales. People are going to continue to work on the network, are going to buy their equipment. Again, I'll reiterate that it's very inexpensive. It will have a lot of European credits for it if necessary.Eversource Energy (ES), again, a good part of its regular business is going to continue. Gray Television (GTN), the stock is down heavily. And again, I think it's largely a market related equation. People are home, they're watching more TV, they're going to the website. And at the same time, presidential ratings on the democratic party side might be slowing down. Therefore, that might put a temporary pause on the ad spend blitz, particularly with Bloomberg at least out of the market directly.But it won't take long before we get into not only the presidential race and all the deluge events that will be coming sooner or later, but you also have all the state and local stuff. And therefore, that's going to be a big benefit. But the core business model, independent of the political ads, is still very much there. Again, I think there's value there, and I think the stock has been too beaten down. KAR Auction Services (KAR), again, along with Ritchie Brothers (RBA), the auction business is good during the good times, and during terrible economies, people got to liquidate stuff.They go in and deal with auctions, with KAR Auction Services. Again, it's a constant stream of dealing with excess supply of cars, both wrecked, off lease, and used. I think there's a lot of good cash flow that it can defend itself. Samsung Electronics (SSNLF), again, it took the hit with South Korea. But again, South Korea's victims of the COVID were much more concentrated, and then Samsung's factories in China and elsewhere are back online. Again, hugely capitalized, very little debt. Again, there is a lot to defend it. And again, I think it's a good bargain.Waste Management (WM), again, stressed with employees and so forth. Anybody that's having to go out in the neighborhood and deal with interacting with people, there's some risks there. But again, if anything, household waste is going to be up strongly. So again, I think they're a tremendous beneficiary of this. Xcel Energy (XEL), again, generally defended in the utility space.The mutual funds. Now again, whether we're looking at the Fidelity and Vanguard portfolios or we're looking at the general Fund Portfolio, which is largely in the Vanguard allocations. Again, the high dividend ETF was a little more defensive than the general S&P, a little more of a dividend yield. It had been slammed. I know that. But again, our investment scheme has been to have exposure to the general stock market. And again, if we were doing something more in the shorter term and not for the invest, buy, and continue to own over time, I might have started to reduce some of the holdings in the last couple of weeks, but that's not the mechanism for Profitable Investing.So it's down. I've made my arguments that we're going to see the recovery in the stock market. It has been historically the case. Then the real estate side, real estate was a little more defensive, but not as defensive as some of the downturns in the past, including the fourth quarter of '18. But again, I think I went through the holdings of most of the real estate sector, with few isolated examples, like leisure properties or college campus properties, I think are in pretty good shape. The utilities is the most defensive part of the market right now, with regulated utilities and regulated businesses being the bulk of the offensive part. Again, if you're adding to stuff on a conservative basis, utilities is where you need to be if you're adding money to be on the conservative rmation technology space, again, technology is taking hits with the general market, but again, the alchemy of the process is still very much there. I see a swifter recovery once we start moving into the V or the U part of the other recovery. Vanguard Health Care, again, I think you're going to see more attention paid to health care companies from drugs and other providers, and therefore I think it still has a good case to be made for that.Fixed income, I’ve already addressed some of the fixed income funds in the return portfolio. I still think that the quality corporate bonds are a good defensive way to buy, and buy at bargains right now. And same for the preferred and income securities. Again, this is a good area which has sold off a little bit but offers some good yield to carry you through. And the municipal bond market, again, sold off I think when people were just raising cash. And again, I think it represents, I think a good value to be buying in the muni fund, including in the fund portfolios.So now we're looking at the questions, and we've got some answers, and I'll try to get through these as swiftly as I can. I know I've taken a lot of your time, and if you were going or tuning out, note that we will be posting the recording as well as the slides from the presentation on the Profitable Investing website. And then in the ensuing days we'll have the transcript for you as well, and have that if you've missed the intro or if you had to step away during this extended presentation. So I started off with Paul. Paul asks, "Please address strategies for retirees' portfolio and income. Seniors are vulnerable both medically and financially."Well, Paul, again, the current crisis is something that is difficult to really plan for just a couple of weeks of plunge with the economy shutting down because of a virus. Again, every downturn is slightly different. Again, I looked at the virus, the response in China, and I saw much greater numbers, and the aftermath and the downturn as being less likely to be as dire in the U.S. However, from a media and a population response and the investment market's response in the U.S. being arguably more dire than in China, given the numbers and so forth, that’s brought us to where we are. I think where we are now is that again, I think we have mostly sustainable companies that we'll basically get through this and then be successful post the COVID mess.The fixed income part of the equation, I think will continue to generate cash payments, so forth. So I think the general allocation, which was already more conservative going into this, I think will be able to be sustained going forward. And I wish you the best of health in the process. And then Neil asks, "Should we start adding portfolios at these low prices?" Neil, again, I've been reticent to go through and completely update the pricing through the alerts and so forth because everything has gotten way out of whack.In the issue which I'm working on, you'll see the buy prices for everything. I think if you're looking at deploying cash, I think there's a lot of value. I think if you're looking at putting cash to work and you're eyeing the various stocks with the prices, given any given day's activity, I would be stepping into stocks in smaller sums on significant down days. Because again, with commissions largely low, no fees, that gives the easier way of dealing with that.Anthony asks, "Why are preferred shares so sold off?" As I mentioned, funds, golds, treasuries, everything has been dumped on any given day. And that makes them a pretty good value right now, particularly on the open and closed-end funds we’ve got in the Total Return. Bruce asks, "Are the dividends safe and secure for the stocks in the Dividend Machine and the Total Return?" Bruce, I just went through every holding in this, and I think in the vast majority of cases, I think the dividends are going to be fine. EPR Properties I think does have a slight risk, and I'm evaluating that right now, and going to be presenting my risks. That's the one where I do see that there is a potential for a drop in the dividend.John says, "Buying opportunities in an ongoing bear market?" Well, as I mentioned for Neil, the idea that I will have the full update of the buy under prices, and therefore the idea of, if you have cash to deploy, I think there's a lot of opportunity here, and I do think that the general market is going to go through its recovery and advancement. Whether it's weeks or months, I feel fairly confident that we're going to do both. We're going to go through this and emerge better on the other side.And then Richard asks, "What is Russia trying to do with the oil market? Spread chaos?” Richard, I think the key thing is that Russia was in the perspective that they needed the cash flow, and they didn't see the advantage of making the cutbacks. And again, I think they were looking at it from a rational standpoint that, leading into the meeting of OPEC+, that the market was already pretty much in a stabilizing sort of a basis, already kind of through and past the Chinese dip in energy consumption. And therefore, they didn't necessarily see that they needed to take such a draconian method, and didn't necessarily need to try to take out U.S. shale producers. It just didn't seem to make sense to them, rather than trying to literally stomp on everything, as the leadership of Saudi Arabia is attempting to do.Peter asks, "Highlight risks as well as opportunities inherent in business development companies at this stage." Well Peter, I mentioned, whether we're looking at Hercules Capital or others. Again, I think the idea that they're going to get benefits of lower funding costs and easier credit conditions. And I think that will provide a lot of opportunities. I think you're also looking at a lot of companies are going to be looking for either equity participation, or they're going to be looking at funding opportunities for VCs to effectively be able to buy into new transactions at some attractive rates.William asks, "How to begin with new money?" William, I think the idea is that if you're starting looking at it from the Total Return Portfolio, again, I start to get some of the core things I have in each of the sections. So the Growth and Income plays, the real estate investment trusts, and also in the fixed income side, buying into the funds. And so the general guide is if you look at the Fund Portfolio, as far as, you see the allocations you have from an index standpoint, or if you look the index section on top of the Total Return, you'll see the stock index allocations.Those are the basic themes that I think you should have over time. And therefore, pick some of the individual companies that are in each one of those themes in the total return. That would be the way to start. If you're starting with the funds and the Fund Portfolio, or the Fidelity or Vanguard if you're in those companies, that's the easy way to step in. But I also would advocate, I would step in day by day by day. Since commissions are low to zero, you can afford to buy smaller transactions and do it on any given down day that I think will provide you some good opportunities over some time.And then Richard asks, "I'm surprised by the behavior of gold. Any comments." Well, Richard, I talked about gold, and gold largely was dumped because people needed to raise money. And I think you're going to see it respond. Interest rates are super low to zero outside the U.S. The dollar is going up, so that basically is putting a little strain, but the interest rate I think is much more positive. And again, I think there's some upside to gold right now. And then DL asked, "Do you think we should continue to reinvest dividends or have them paid out to reinvest the cash?" DL, I have always advocated, and there are some reports on the website, and it's also in the book, Income For Life, where I talk about reinvesting of dividends, which I always advocate that you take the dividend in cash so it's in your account, and then use the market to either reinvest and buy more shares, or buy other shares in your portfolio that might be down on any given day. Muhammad asks, "What about corporate bonds like high yield, risks of default?" Muhammad, I would largely stay away from high yield right now. Even though there's of appeal, there's a lot of credit work going on. I mean, I'm having to do that even with good quality companies. And when you get down to the lower quality companies, you're having to make bets and assumptions, which I don't think are worth taking right now. If you stay in corporate bonds, I'd stay in the quality corporate bonds. So the BlackRock Credit Allocation fund, the ETFs we have in the fund portfolio. I think that represents a better, lower risk, better return prospects with good cashflow now. Jonathan asks, “VNOM and the price of oil. Could this kill the business?" Again, like I said earlier, and I went through, I think from a credit standpoint, I think they have some sustainability. The income from their gas and oil royalties is going to be lower. And I'm also looking at, I think they're going to be sustainable. And therefore, I think they've been really oversold.Steven asks, “Please discuss the decision to sell Plains GP Holdings.” Well again, I sold this ahead of the pipeline crash. It wasn't timing per se, it's just I was seeing that it was the most at risk within the pipeline and toll taker segment because it's really a pure Permian play. And therefore I just wanted to reduce our exposure to the pipelines and focus more on the rest of the quality side. I think the company is going to make it. It does have a lot of counterparty risks, but again, it's the general partner of the Plains All American Pipeline, MLP, and therefore that's where the underlying risk comes, in which their underlying interest in that is going to I mean, I think somewhat reduce cash flows.Mel asks, "86 years old, wise to sell REITs like Medical Properties, oils, or BDCs, for some of the healths?" Mel, again, I look at whether someone is 26 years old or 86 years old. I still look at the investment markets the same way, and therefore I've done the allocation, I went through every single holding. Again, I think Medical Properties looks good. AMLP, again, it's really been hurt badly. And again, that's where I've seen some big assumptions and counterparty risks. Main Street I think is going to be pretty well supported from the customer standpoint as well as its capital structure. MFA, I talked about the mortgage portfolio business. AT&T is going to be absolutely fine. It represents a value at the downturn, the overall general stock market. And then Denyse asks, "Are Hercules Capital and MFA vulnerable?" I talked about that, Denyse. And Enterprise Product and MMP, I just talked about. Magellan does have some challenges with the drop in refined demand, with less travel. But I think Enterprise Product has been in depressed markets before, and I think they're going to do fine. And then, let's see what else we have.Barbara asks, "Are you confident buying the big staple companies like Procter & Gamble, the Microsofts, NextEnergy, and Merck?" Yes. I think that they are susceptible to the general market. Anything out of that list, I think the utility in NextEra I think represents good values. Procter & Gamble represents a good value stock in this market, defensive. Microsoft, I think good defensive, a good value at these levels. And Merck, being in the drug business, is again, a good place to put money.And then David asks, "Specifically, is BlackRock Credit Allocation Income Trust still worth keeping?" And again, David, I've looked at the portfolio, I think the credit and the performance of the underlying portfolio I think is doing pretty well. Again, corporate bonds were just sold off with everything. But again, trading at a 16% discount to NAV I think is too excessive.And then we have, let's see. "Should we continue to hold the BlackRock Taxable Muni fund?" Well, I touched on the closed-end muni funds. Again, we just added that to the portfolio. I think the municipal space is very strong. I think the taxable space has its own characteristics, which I've presented in the issue. And again, I think at a discount, it represents I think one of the better buys in the bond market right now.And then, let's see, the last one we'll cover is, John asked about Waste Management in the Niche Investments. And again, John, I think they do have an employee risk as far as with the COVID that I think they seem to be dealing with it. I think the demand for hauling waste and recyclables continues to be stronger, and therefore I also look at it being a big heavy capitalized company that it's defensive during the time of crisis, and therefore I think is one of those companies that will make it through to the other side.So with that, I think we're going to close. I greatly appreciate your participation. Again, if you want to review this, it will be posted with the audio and the PowerPoint presentation on the Profitable Investing website in the live section. We'll have a transcript in a few days if you want to read through it or review it. Again, always looking for comments on what you think about what I'm doing. If you have suggestions, please bring that forward. If there were questions that you had that you didn't present to me or I didn't address fully, again, send them to my team. I'll address them as quickly as I can and get back to you.And thank you all for being subscribers of Profitable Investing. Again, I'm very grateful that you've subscribed. I hope my work justifies you staying with it, reading it, both the daily updates in the weekly journal as well as the upcoming issue. And again, please renew so I can continue to do this for you and for others. This is Neil George, and we are closing the March webinar for Profitable Investing. Thank you very much. ................
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