Spekulatius

Aren't we trading where the economy is in 6-12 months instead of where it is now? Not saying we won't go down further or anything (who knows), but obviously the market is forward looking. Yes, I understand that. The market also doesn’t really care about death and so forth, it’s a cold calculating machine. But my thinking is that the economy in a year will looks substantially worse than it is right now. I am just not buying into the V recovery. In any case, even if you buy the V recovery, it seems already priced in. The longer L shaped or U shaped recovery like we had in the GFC is by no means priced in. This is worse than the GFC in my opinion. Possibly way worse.

If someone had told me 3 years ago, that the economy is where it is right now and the SP500 at almost 2600, I would have thought this someone would be crazy. Not wanting to sound super bearish , but that’s how I see it.

I trimmed my positions substantially. Too many to mention. I am basically making a call this rally won’t last. I also shorted some SPY at the close for a short term trade.

No the government cannot bailout the entire economy. While the headline number of $2T is large, a lot of this is jut loans and liquidity bridges, it has to be paid back. The US economy is ~$22T in size, so $2T is roughly equivalent to one month of GNP. It is too large to bail out. The $2T is just a stopgap measure to prevent dominos from falling. They pro half will still fall, but slower and more controlled. Also as you noted, a lot of folks will fall though the crack, have no health insurance, might get sick from the virus. How to restart this is going to be a difficult task and a fine line to walk. The Eastern get back to business date seems quite unrealistic to me, but numbers will dictate what is going to happen. Infection rates need to be way doen in order to open up again and even then, it will partly feel like quarantine. As it imagine a lot of measures still remain in place like no large crowds etc. I think this year you can forget about sports for example. might actually be a golden time for esports - Formula 1 did already an esports race they found quite an audience. Another thing, think about litigation risk. You go to work, get infected though a colleague and go into the ICU. Sue the company and then get a good lawyer who proves that the companies practices were endangering employees, which I I can guarantee you almost any company does. Examples - Dirty door handles which are not cleaned, no contactless entry possible, no contactless operation of bathrooms, shared microwaves in cafeterias. In litigation friendly America, that’s going to be a feast for lawyers.

Nice to see you back and thank you. Good thing I didn't have to hold the puts anywhere close to a year for payoff. And don't forget my selling out large chunks and going to cash a month ago because of "precautionary principle" and "11 year bull market and >30% S&P return in 2019, no need in being greedy at this point". More "Twitter worthy" drivel you have no need to pay attention to (but with little in carrying costs for me). Actually, BRK was never trading below book, if you used fluid book value numbers based on the current value of their stock holdings. I don’t disagree it is cheap though. One thing that is interesting though through the epidemic episode that big tech as become the safe haven while value investments utterly collapsed . NFLX, AMZN and even FB and GOOGL are outperforming the greater stock market. Even the SAAS stocks to a great extend have outperformed. Real estate gets utterly destroyed and what seemed cheap just go cheaper and looks partly impaired.

I've been thinking about masks. I'd be ramping up mask production as fast as possible. But, I've never worn one in my life as far as I can recall, and I'd need one or two a day. Same for the rest of my family. A billion or more a week in the US. I figure it would take many multiples of current mask production. How possible is that? Regardless, I'd push hard on masks. Absent a treatment, this will at the least be around in the fall. I agree on masks. It’s the only stopgap measure available and it seem to be proven to work. That’s what the government should be working on, production capcityfor hundred millions of mask/ month.

Yeah, bailing out at the right time certainly was a good decision. I made a half hearted decision to bail on stocks, but then got in too early. Well it saved me some grief, so there is that. Now is the question where do we go from here? The news on the epidemic continues to look grim, but Germany and even Italy have turned the corner, but Spain is getting worse. The economic news will look very grim and even the GFC looks pale to what we are going to be seeing. Turning the economy back on needs to happen, but how and when? County by County downs really when people are commuting from one too the other. I live in MA on the border to NH and while MA has shelter in place, NH is still open for business. many live in NH and work in MA. Also how do you turn air travel back on when cop some cities are still under siege while others are more or less free and clear. Tough decision and I don’t have the answer. You can’t seal of states either, they why most states eventually apply the rules nationwide because nobody know how to make it work otherwise. Italy tried in the beginning the piecemeal thing and it didn’t work. Right now, it’s a traders market because the economic impact is not known yet, it we know it will be huge. At some point the picture will be clearer, but the economy might be looking way worse than many are expecting , so volatility will be lower, but stocks may grind lower just like they did from January to March 2009. I my opinion, the implied timeline that by April we turn on the economy and by May or June this is over just isn’t correct. I can’t see a reasonable secondary where this will be the case. I can see already when I venture outside they the behavior of people has changed. So I think even if restaurants re open again, people might not go back and eat out as if nothing has happened. For once, the economic situation went from being secure to record uncertainty and second, people are scared that Coronavirus infections are lurking and we have no way of knowing. Invisible Enemy are the worst. I did post a short while ago, that the president really should challenge the industry to make a gain leap in testing. It is the only way to make the invisible enemy visible. I am taking about test capacity not in the ten thousands, like we have right now and get results back in couple of days, but thousand times higher and fast - within minutes., so we can test millions and ideally every American many times over. That’s probably the flying a man to the moon project for this decade.

I have a hunch that Value investing in the truest Graham sense may make a comeback. The only place where you can do this now is Japan’s, where you find companies trading for cash and often less than that. Perhaps there will be more markets where this is possible. I know little about the new deal, probably should read up on this. One thing I know is that it lead to more regulation, laid the foundation for social security, but also lead to much higher taxes. It seems to me that over the long run, the higher taxes are a near certainty. The experimental approach is interesting. Try things out on a limited scale, to see if they work, if they do go ahead, if not abandon. Seems to make sense to me, except whoever runs the administration looks stupid most of the time. But it seems to be better to cut losses than to keep doubling up, which tends to be what most governments have been doing the last few decades.

Value investor: Covid-19 is just a minor flu. Flu infects 10-15% of the population and kills 40-50k for a 0.1-0.15% morbidity rate. Covid-19 kills 700 1000 people. It’s just a rounding error. Yawn. Growth investor: Huge addressable market -330M people. no known limit. Doubles every 4 days. Morbidity 0.5-10%. Lollapalooza effect for morbidity when case numbers exceed a certain local density and the health care system breaks down.

Based on how people on Florida behave (Spring, full beaches) I think that state will have its moment too. Lots and lots of old people as well. Perhaps the warm weather will help, but it doesn’t seem to play as much of a role than thought, based on the countries the epidemic is spreading too. So if Trump says that the country is open for business, does it means that people actually will go back into stores, to their hairdressers or the coffee place around the corner. Certainly I wouldn’t. Went for a grocery run yesterday and put mask and a gloves on. I wasn’t the only one either, some Asian family even had the good N95 on it. The GwaiLo’s did will lesser surgical masks or some used their scarfs. I have got one handmade by my wife with some leftover med tech materials. It has some chinese letters on it, which helps with social distancing. ;D

I would agree. We are still up from the low late 2018 and the economy is much much worse. I am personally lightening up, but who knows what is happening next.

Some comments regarding the relatively low death rate for Covid-19 in Germany (article is in German) https://www.spiegel.de/wissenschaft/mensch/corona-krise-virologe-liefert-erste-erklaerungen-zu-niedrigen-todeszahlen-in-deutschland-a-c8fef5d1-9c8e-4e9d-b8cc-3f85c6b00282 Short summary: 1) lots is testing (~0.5M Tests at this point) increases the denominator and leads to lower morbidity rate 2) Health care system is holding up (even supporting the French in Alsasse in proximity) 3) Initial cases seems to have a higher percentage of young people. The initial outbreak was traced partly to folks traveling back from Ischgl (a skiing town in Austria, known for partying) which were predominantly younger people. As the disease spreads into other groups, the fatality rate could well increase. So far the trends seem to have stemmed the rise in exponential growth for infections so I think the health care system in Germany will hold up.

Yeah, the better estaimate would be to calculate how many people were infected 3 weeks ago and use that as the denominator to calculate morbidity. As far as the two strains are concerned, there are report of people who got infected by Covid-19 twice, perhaps by the two differently strains subsequently. Which also implies that getting infected by one strain doesn’t make you immune against the other. This is similar to the Spanish flu, where two strains existed and it was the second wave that killed a lot of people with a more deadly strain. Also, how do you explain Italy and now Spain?

I think that’s correct. If you are concerned about the economic domino effect, prevent the demons from starting to fall rather than go at the end of the domino line and prevent the last big ones form falling. I think that was the issue with the GFC. Of course the central banker was from GS so he would let the big banks fail, but millions of individuals and small business weren’t so lucky.

LOL, more streetsmart than the government. These guys know a bit about surviving.

Furlough without pay whatsoever? isn’t it better to get laid off and get some unemployment benefits, as long as you have a spouse covering health insurance?

LOL, it's kind of ridiculous, but also kind of true. Do you remember in late 2007/early 2008, when a bunch of people on this board were saying "all this crap is happening, and the market is barely reacting negatively. Are we insane, or do we just not get it?" Then in summer 2008, everything collapsed. This felt the same way in February--all this bizarre stuff was happening in the world, but the market remained high for no apparent reason. I could've put 5% percentage of my portfolio in VIX calls and doubled my portfolio. I wouldn't do more than 5%, because you don't need to, timing is hard, and I could be wrong. But it was really obvious from around mid-February that we were in trouble (basically, once containment failed and the virus started popping up all over outside China.) I think it's also a case of nobody wanting it to be true. "Oh, maybe it just stays in China and never even reaches Europe". "Oh maybe it's just a flu that will blow over" "Oh we can't trust China's numbers anyways" "Oh once the warm weather hits this will all be forgotten" "Oh we have a much better healthcare system". Etc. etc etc. New rule: When some weird shit is going down on the other side of the world, actually try to quantify the probability of it occurring globally and take an appropriate hedge, even if it seems minuscule. For a lot of Americans the simple fact applies that if it it doesn’t happen on US soil, it simply doesn’t matter. It a bit of a mixture between ignorance and exceptionalism. To some extent, you find they view everywhere in the world, but you certainly find it US much more then anywhere else. That’s why an event like 9/11 was so scaring.

I am pretty sure you are correct. The first victims seems to be Airbnb entrepreneurs that use the Wework model - lease apartments long term then rent them out short term as AirBnB properties and earn the spread. Now with AirBnB basically down for the time being and those apartment empty, they hurts quite a bit. Kind of new to me that this model exists. Some Fintwit folks talk about it on twitter. These things always become wider known after they blow up.

Ferrari at 40x P/FCF and Kinsale Capital (Insurance company at 6x BV) Not my original idea, but it just looks pricey. Ferrari factory is also shut down for at least 2 weeks. Also million $ collector cars may be less important when folks are short on cash.

More likely. The optimal outcome for the economy is to get everyone sick over the next 2-3 months, let all the old people die (they don't contribute much to the economy anyway), and then have life revert to normal when everyone has herd immunity. Life revert to normal after that? lol Other than the US becoming a 2nd world country basically. The second order effects of this would be quite unwelcome, I think. That said we need to think when and how the US is going back to work and tentative timelines for this. It’s got a be a step by step process, because if everyone rushes into a church on Easter to sing kumbajah in each other faces it pretty much guarantees another epidemic. I think what needs to be created is massive amount of rapid testing capacity they can be available in short order. he should get a task force to get this I talked in short order, with folks working 24/7 on this. maybe use his 1950 war req. law to get companies to do this or offer billions in contract. Whatever it takes. The quicker we have this system in place and the more we know exactly what we are dealing with epidemically, the faster we can turn on the economy and get people to work with minimal risk and fight flare ups.

So...it looks like this guy held CDS and went on CNBC last week and had a meltdown about the crisis. Then unloaded the CDS Monday and went long stocks and back on CNBC (edit: Bloomberg on Tuesday) touting that everything is going to be ok. How is this remotely allowed/ethical? He brought talking his book to a new level. Lol...makes you respect people like WEB and Munger that much more because they don't engage in such despicable antics and still outperform these scumbags. He was totally transparent about his position at all times. You are allowed to have an opinion - and I have agreed with his opinion all along. Doesn't matter if his opinion was right or wrong. He has a long track record of taking positions and then going on media outlets pounding out his thesis. One big example is Herbalife short position. So, taking a short and then going on CNBC and trashing it repeatedly. May not be illegal, but certainly not noble behavior. There are many investors out there who do not resort to such tactics that outperform this guy significantly. Could not agree more. This guy is a complete turd ball...comes on TV ..starts crying about his Dad and shows concern and all that...I can't believe how pathetic he is. Where was the crying when he was trying to fkover a lot of diseased patients when he was all in on Valeant...he is just a pathetic human being. I agree, he has shown questionable character all along- just look up Gotham Partner blowup. Then his fake moral display is just to much. He is just a guy talking his book.

Choice B: https://imgur.com/2aHggpX

I am a little bit concerned about the debt covenants. My stomach is weaker than yours, I puked this out when it was 0.57AUD, now at 0.175AUD. It trades like an option now.

So...it looks like this guy held CDS and went on CNBC last week and had a meltdown about the crisis. Then unloaded the CDS Monday and went long stocks and back on CNBC (edit: Bloomberg on Tuesday) touting that everything is going to be ok. How is this remotely allowed/ethical? He brought talking his book to a new level.

You're kidding right - did you watch the democratic presidential debates? - Joe Biden AND Bernie Sanders said those bans to China and Europe were xenophobic, if not racist - and they WOULD not have imposed them. Go back and listen. https://www.redstate.com/jeffc/2020/03/14/biden-insists-on-opposing-coronavirus-travel-ban-despite-the-advice-of-experts/ https://thefederalist.com/2020/03/19/neither-biden-nor-sanders-would-have-saved-american-lives-with-travel-bans-like-trump-did/ https://nationalfile.com/flashback-biden-opposed-trumps-chinese-coronavirus-travel-ban-as-xenophobia/ https://nypost.com/2020/03/01/criticisms-of-trumps-coronavirus-response-are-sickening-devine/ 2 points on this: 1. None of the articles you included have Biden or Sanders criticizing the travel ban. The very, very politicized articles twist words to imply that is the case. They called Trump xenophobic but didn't say anything about the travel ban being wrong or inappropriate. 2. Just the publications you have used to try and prove the point....well kinda proves all the points being made here. You are so caught up in Trump-fever and reinforcing views that you have lost all capability to think logically for yourself. At least the people here can admit fault in democrats and hold independent views of their own. Not the case on your end. Yeah sure - tell me about it - and go listen to the debates - it's all on tape. In the end, believe what you want to. I recall this debate too. It is correct that the travel ban was criticized by several democratic candidates at that time. The travel ban was a correct decision and bought us about 1 week and perhaps 2 weeks of time in term of epidemic progression. Unfortunately this valuable time was not used, but the value is that the epidemic exploded in Italy first, which really forced the hand to actually do something because we would see the same thing. Credit where credit is due.