Re-Opening After COVID: An Overlooked Perspective on Small Businesses

It's ironic that a leading narrative during the COVID-19 pandemic has been the struggle of small business, yet one that is completely overlooked when it comes to stocks. Small businesses have been struggling to survive or outright shutting down during the pandemic.

Let's assess this with a bit of logic. If small businesses are shutting down, where is all that money going? It's going to large businesses like Amazon, Costco, Walmart, Apple, Microsoft, Home Depot, etc. all of which saw substantial growth during the pandemic. What happens when restrictions subside and life returns to normal? People go to restaurants, bars, tours, ski hills, road trips, souvenir shops, and spend money in foreign countries when they travel. These businesses often don't have tickers, and therefore money spent does not contribute to the growth of public companies.

Absurdly high PE ratios of said companies means the market expects this insane growth over the last few years to continue and that's just not realistic even in a pandemic setting as it becomes more difficult to outpace their lofty benchmarks. This reallocation of spending is something that's not being addressed. Sure, small business might not make a full comeback, but in order for these large companies to grow into their valuations they can't have anything get in the way of their momentum, there is no room for error.

For these reasons I counterintuitively consider the re-opening of the economy bearish.

Recent Positions: from 100% stocks to 90% cash since December 31, 2021 the rest:

  • Short-dated puts: RIVN, LCID, EA (after ATVI hype), SPY, ZS – sold most of these already
  • Long-dated puts: AAPL, COST, SPY
  • Short gambling calls/swing plays mostly for earnings: INTC, AMD, SNAP (after FB fear), NVDA, FB (OUCH!)


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