Coronavirus

[Castanza]

FWIW:

 

Differing opinions from doctors.

 

https://m.facebook.com/story.php?story_fbid=793985471088619&id=100014315194592&_rdr

 

https://m.facebook.com/story.php?story_fbid=793945707759262&id=100014315194592&_rdr

 

The second doctor is a boob. He is making some very interesting logical errors. Firstly, he claims, without proof that covid-19 is widespread - at some points he conflates covid-19 with other strains of coronavirus, which he says represent 10-17% of common colds, and then uses that conflation to claim that covid-19 is probably as widespread as the common cold. Then he takes the unfounded leap that if covid-19 is so widespread, maybe we are mis-attributing mortality. Someone who dies and tests positive with covid-19, according to this guys faulty logic, may have died from something else.

 

Musk made a similar dubious argument regarding the Italy death data on twitter, arguing since the dead often had other underlying conditions, maybe it was those conditions that resulted in their death and not covid-19.

 

This line of reasoning lacks even the most basic understanding of pathology and causation.

 

If an elderly person with heart disease, for example, died and tested positive for covid-19, the cause of death can be reasonably determined. Covid-19 infection serious enough to cause death presents with a severe ground-glass pattern pneumonia, decreased oxygenation, fever, increased white blood cell count (and a myriad of other objective measurements) that are NOT present in a cardiac death. To disingeniously claim that we can not tell the difference is so ignorant of the basic facts it would be laughable in any other circumstance.

 

M.

 

I’m not claiming the validity of eithers arguments. Simply saying it’s interesting to see differing opinions. Hence the (fwiw). What were your thoughts on the first?

[Castanza]

Yep I ask of Facebook poster boy lol, define an epidemiologist, virologist and a doctor.

 

Why do you have an obsession with me? Literally every comment I make you immediately respond. Half the time you say something either extremely cryptic or unreadable as if your in a drunken stupor. My guess is you think my opinion is far different than what it actually is.

[drzola]

K Castanza, our Editor in Chief of poster pasted publications ( sole peer reviewer).

[drzola]

your ignorant of this topic and your symtoms of the Dunning Kruger effect is intolerable to me so I amsigning off.

 

Stay safe my friend.

[minten]

Musk made a similar dubious argument regarding the Italy death data on twitter, arguing since the dead often had other underlying conditions, maybe it was those conditions that resulted in their death and not covid-19.

 

This line of reasoning lacks even the most basic understanding of pathology and causation.

 

If an elderly person with heart disease, for example, died and tested positive for covid-19, the cause of death can be reasonably determined. Covid-19 infection serious enough to cause death presents with a severe ground-glass pattern pneumonia, decreased oxygenation, fever, increased white blood cell count (and a myriad of other objective measurements) that are NOT present in a cardiac death. To disingeniously claim that we can not tell the difference is so ignorant of the basic facts it would be laughable in any other circumstance.

 

Well, to be fair to Musk, while cause of death can indeed be reasonably determined, Italy isn't doing it (or at the very least, their statisticians aren't).

For some mysterious reason, any death in Italy that ever tested positive for covid-19 is reported as a covid-19 death in their statistics regardless of anything else. Source: quite a few, but for example https://www.acc.org/latest-in-cardiology/ten-points-to-remember/2020/03/24/15/33/case-fatality-rate-and-characteristics

[drzola]

I have a slow etherent and . seem to be typing faster then it responds.

P.S  Demographer by career so stay safe Sir.

[mloub]

I know some have complained that this thread has gone off the rails and is of little or no value from an investment perspective.

 

Let me share some thoughts that hopefully have some investment merit, along with my level of conviction.

 

1) We are in the bottom of the third as far as this pandemic is concerned (High Conviction). This pandemic still has a long way to run - maybe 3-6 months (maybe longer), and the worst in terms of headlines and quarantines is in front of us, imho, not behind us. It is clear now that the response has been botched, especially in the United States, and what comes next is likely to have a deep and lasting impact on our collective psyches and the economy. Even now, before the infection rate has peaked, hospitals across the country are running low on personal protective equipment for their health staff. As supplies run out, and HCWs are forced to improvise, the infection rate among them will soar. This will weaken our capacity to care for infected patients even further. Our mortality rate in North America will likely track somewher between Italy and China's, but I would guess closer to Italy. Those who are comforted by the low mortality rate are celebrating too soon. Once the healthcare system starts to creak under the strain, and the new infections of the past weak start weakening their hosts the mortality rates will go up significantly;

 

2) The effects of the pandemic on unemployment, consumer spending, and credit will be long lasting (Medium Conviction). Just because case rates start to fall in the spring/summer doesn't mean we will be economically out of the woods. If we look at the number of folks who will be financially wrecked by this pandemic - service workers, small business owners, uber drivers, hair stylists, plumbers, construction works,... - it is not a stretch to say that the impact will likely be as large as the GFC, if not larger. Those who think everyone will pick up where they left off, and the damage will be minimal need to think more about human behaviour, and the typical household's balance sheet.

 

So actionable investment insights:

 

1) It's not too late for Cash or Hedges - There is a lot of talk of lifting hedges and starting to buy out there. In my opinion, that talk is premature. If you are the sort of person who is inclined to hedge or buy long-dated puts in the first place, there are still opportunities to do so out there. For example, Shopify (SHOP) trades at a 48B market Cap ($46B EV) currently and is about 20% off of it's all time highs, even though it had operating losses of $141m in 2019 (and as far as I can tell, has never turned a profit). In fact, operating losses in 2019 increased by 53.5%, while revenue increased by 47%, a modern 2020 business miracle, which of course explains why the market has wisely priced it at 30.5x its 2019 Sales even in the middle of the worst global pandemic in living memory.

 

2) Wait to make new investments, or if you just can't help yourself, buy Berkshire - If you think all the bad news re: covid-19 is already priced into the market, refer to SHOP above. The vast majority of the market seems to believe the worst is behind us and happy days will be here again very soon. I would not be inclined to jump in to hotels, airlines, cruise lines or any of the battered names until we have more clarity on covid-19's course. Prices remain too high if you assume we are entering a recession or even just reverting to mean valuations. Of course there maybe some truly under-valued gems out there, but I would stress test even these ideas against a very bleak potential demand situation. And, ofcourse, YMMV.

 

TL;DR - We still have along way to go before this thing is over.

 

M.

 

Edited: SHOP is 20% off of it's all time highs

[mloub]

FWIW:

 

Differing opinions from doctors.

 

https://m.facebook.com/story.php?story_fbid=793985471088619&id=100014315194592&_rdr

 

https://m.facebook.com/story.php?story_fbid=793945707759262&id=100014315194592&_rdr

 

The second doctor is a boob. He is making some very interesting logical errors. Firstly, he claims, without proof that covid-19 is widespread - at some points he conflates covid-19 with other strains of coronavirus, which he says represent 10-17% of common colds, and then uses that conflation to claim that covid-19 is probably as widespread as the common cold. Then he takes the unfounded leap that if covid-19 is so widespread, maybe we are mis-attributing mortality. Someone who dies and tests positive with covid-19, according to this guys faulty logic, may have died from something else.

 

Musk made a similar dubious argument regarding the Italy death data on twitter, arguing since the dead often had other underlying conditions, maybe it was those conditions that resulted in their death and not covid-19.

 

This line of reasoning lacks even the most basic understanding of pathology and causation.

 

If an elderly person with heart disease, for example, died and tested positive for covid-19, the cause of death can be reasonably determined. Covid-19 infection serious enough to cause death presents with a severe ground-glass pattern pneumonia, decreased oxygenation, fever, increased white blood cell count (and a myriad of other objective measurements) that are NOT present in a cardiac death. To disingeniously claim that we can not tell the difference is so ignorant of the basic facts it would be laughable in any other circumstance.

 

M.

 

I’m not claiming the validity of eithers arguments. Simply saying it’s interesting to see differing opinions. Hence the (fwiw). What were your thoughts on the first?

 

I know. I appreciate you posting it. It's helpful to see the divergent view points. The first guy is using numbers that don't correlate with anything I've read from any other reputable sources, and of course does not cite his sources. I would not consider him a reliable source either. They're both trying to reassure folks. An understandable impulse, but one not supported by verifiable facts. For example, his assertion that 99.5% of cases are asymptomatic. Where does that assertion come from?

 

M.

 

[vinod1]

Relax guys. Some relief on the way. A drive through strip club.

 

https://www.usatoday.com/story/travel/news/2020/03/19/coronavirus-las-vegas-drive-thru-strip-club-open-pandemic/2878856001/

 

While much of Nevada has closed in compliance with Gov. Steve Sisolak's 30-day shutdown order to fight the spread of COVID-19, a Sin City strip club called Little Darlings remains open with a new menu of coronavirus-inspired options.

 

“We’re going to offer drive-up window strip shows,” Ryan Carlson, director of operations for Little Darlings, told the Las Vegas Review-Journal and KSNV-TV. “Guests can drive up to the front door and we’re going to have dancers separated by the 6-foot separation rule and they can enjoy a totally nude show right from the seat of their car.”

 

The drive-up shows last 10 minutes and cost $100. They will begin at 8 p.m. Saturday, according to the Review-Journal.

[Spekulatius]

Relax guys. Some relief on the way. A drive through strip club.

 

https://www.usatoday.com/story/travel/news/2020/03/19/coronavirus-las-vegas-drive-thru-strip-club-open-pandemic/2878856001/

 

While much of Nevada has closed in compliance with Gov. Steve Sisolak's 30-day shutdown order to fight the spread of COVID-19, a Sin City strip club called Little Darlings remains open with a new menu of coronavirus-inspired options.

 

“We’re going to offer drive-up window strip shows,” Ryan Carlson, director of operations for Little Darlings, told the Las Vegas Review-Journal and KSNV-TV. “Guests can drive up to the front door and we’re going to have dancers separated by the 6-foot separation rule and they can enjoy a totally nude show right from the seat of their car.”

 

The drive-up shows last 10 minutes and cost $100. They will begin at 8 p.m. Saturday, according to the Review-Journal.

Human ingenuity at work.

[Dalal.Holdings]

I know some have complained that this thread has gone off the rails and is of little or no value from an investment perspective.

 

Let me share some thoughts that hopefully have some investment merit, along with my level of conviction.

 

1) We are in the bottom of the third as far as this pandemic is concerned (High Conviction). This pandemic still has a long way to run - maybe 3-6 months (maybe longer), and the worst in terms of headlines and quarantines is in front of us, imho, not behind us. It is clear now that the response has been botched, especially in the United States, and what comes next is likely to have a deep and lasting impact on our collective psyches and the economy. Even now, before the infection rate has peaked, hospitals across the country are running low on personal protective equipment for their health staff. As supplies run out, and HCWs are forced to improvise, the infection rate among them will soar. This will weaken our capacity to care for infected patients even further. Our mortality rate in North America will likely track somewher between Italy and China's, but I would guess closer to Italy. Those who are comforted by the low mortality rate are celebrating too soon. Once the healthcare system starts to creak under the strain, and the new infections of the past weak start weakening their hosts the mortality rates will go up significantly;

 

2) The effects of the pandemic on unemployment, consumer spending, and credit will be long lasting (Medium Conviction). Just because case rates start to fall in the spring/summer doesn't mean we will be economically out of the woods. If we look at the number of folks who will be financially wrecked by this pandemic - service workers, small business owners, uber drivers, hair stylists, plumbers, construction works,... - it is not a stretch to say that the impact will likely be as large as the GFC, if not larger. Those who think everyone will pick up where they left off, and the damage will be minimal need to think more about human behaviour, and the typical household's balance sheet.

 

So actionable investment insights:

 

1) It's not too late for Cash or Hedges - There is a lot of talk of lifting hedges and starting to buy out there. In my opinion, that talk is premature. If you are the sort of person who is inclined to hedge or buy long-dated puts in the first place, there are still opportunities to do so out there. For example, Shopify (SHOP) trades at a 48B market Cap ($46B EV) currently and is about 10% off of it's all time highs, even though it had operating losses of $141m in 2019 (and as far as I can tell, has never turned a profit). In fact, operating losses in 2019 increased by 53.5%, while revenue increased by 47%, a modern 2020 business miracle, which of course explains why the market has wisely priced it at 30.5x its 2019 Sales even in the middle of the worst global pandemic in living memory.

 

2) Wait to make new investments, or if you just can't help yourself, buy Berkshire - If you think all the bad news re: covid-19 is already priced into the market, refer to SHOP above. The vast majority of the market seems to believe the worst is behind us and happy days will be here again very soon. I would not be inclined to jump in to hotels, airlines, cruise lines or any of the battered names until we have more clarity on covid-19's course. Prices remain too high if you assume we are entering a recession or even just reverting to mean valuations. Of course there maybe some truly under-valued gems out there, but I would stress test even these ideas against a very bleak potential demand situation. And, ofcourse, YMMV.

 

TL;DR - We still have along way to go before this thing is over.

 

M.

 

Nice post. Those of us who see it in this fashion should acknowledge valid arguments from the other side, but we have no obligation or burden to educate them, especially when broken theses are repeated ad nauseam or if confronted with thesis creep (moving of the goalposts).

 

I will add that the course of this illness (5 days from catching it to symptoms and 2 weeks from symptoms to potential mortality or 1+ week on a ventilator managing ARDS) seems to be throwing a lot of people off -- especially those who are looking at mortality data in the U.S. to draw conclusions. Mortality is a lagging indicator, it would be like forecasting if we are in a recession by looking at the current unemployment rate. By the time the unemployment rate reflects recessionary conditions, you are already in recession.

 

Thus far, we have seen this play out pretty much the exact same way in every place--the places that drag their feet about locking down are eventually forced to lock down. Hundreds of thousands may be at risk of dying or maybe just tens of thousands. Doesn't matter. This isn't 1918. Today's human beings have a much lower threshold for hardship and death around them. It's what comes with a much higher standard of living. They will not tolerate even what was standard 100 years ago. The economic effects will inevitably follow -- and you are seeing that. People will stop going out/traveling even if it only puts grandma/grandpa at risk. And they will shame other young folk who choose to ignore and party (social proofing) and shame the companies that choose to come back online and put people at risk.

 

Some may say "100k deaths so what", but they have not considered the second/third order economic effects. Hard to say if it will be as deep or prolonged as GFC since big banks are well capitalized, but S&P @ 2500 does not seem to adequately price it.

 

So even the people who say "this is no big deal" and throw all their weight behind arguing that will not be able to fight the strongly (negative) economic reaction that is occurring in response to this pandemic.

 

"Fear spreads instantaneously. Confidence comes back through the door one at a time." -WEB

[mloub]

Musk made a similar dubious argument regarding the Italy death data on twitter, arguing since the dead often had other underlying conditions, maybe it was those conditions that resulted in their death and not covid-19.

 

This line of reasoning lacks even the most basic understanding of pathology and causation.

 

If an elderly person with heart disease, for example, died and tested positive for covid-19, the cause of death can be reasonably determined. Covid-19 infection serious enough to cause death presents with a severe ground-glass pattern pneumonia, decreased oxygenation, fever, increased white blood cell count (and a myriad of other objective measurements) that are NOT present in a cardiac death. To disingeniously claim that we can not tell the difference is so ignorant of the basic facts it would be laughable in any other circumstance.

 

Well, to be fair to Musk, while cause of death can indeed be reasonably determined, Italy isn't doing it (or at the very least, their statisticians aren't).

For some mysterious reason, any death in Italy that ever tested positive for covid-19 is reported as a covid-19 death in their statistics regardless of anything else. Source: quite a few, but for example https://www.acc.org/latest-in-cardiology/ten-points-to-remember/2020/03/24/15/33/case-fatality-rate-and-characteristics

 

Covid-19 (SARS-CoV-2) is a severe respiratory virus whose closest analogue is the 2003 SARS (SARS-Cov). That argument by Musk is a red herring, and he knows it.

 

Every death in Italy will have an official death certificate completed by the pronouncing physician where they will record a cause of death. The statisticians may be using covid-19 infection status as a proxy because it will take time to compile all the paper death certificates. I will bet almost anything that when they do compile the official paper records - you know after they've finished dealing with this pandemic - the numbers between laboratory reported infection status and cause of death will be remarkably similar.

 

It's telling that Musk, who has down-played Covid-19, and then latched on to a questionable study about chloroquine and azithromycin says his conversations with Bill Gates, the person who years ago warned we should prepare for a global pandemic, were "underwhelming" - https://twitter.com/elonmusk/status/1229568241552502784

 

M.

 

 

 

 

 

[arcube]

I know some have complained that this thread has gone off the rails and is of little or no value from an investment perspective.

 

Let me share some thoughts that hopefully have some investment merit, along with my level of conviction.

 

1) We are in the bottom of the third as far as this pandemic is concerned (High Conviction). This pandemic still has a long way to run - maybe 3-6 months (maybe longer), and the worst in terms of headlines and quarantines is in front of us, imho, not behind us. It is clear now that the response has been botched, especially in the United States, and what comes next is likely to have a deep and lasting impact on our collective psyches and the economy. Even now, before the infection rate has peaked, hospitals across the country are running low on personal protective equipment for their health staff. As supplies run out, and HCWs are forced to improvise, the infection rate among them will soar. This will weaken our capacity to care for infected patients even further. Our mortality rate in North America will likely track somewher between Italy and China's, but I would guess closer to Italy. Those who are comforted by the low mortality rate are celebrating too soon. Once the healthcare system starts to creak under the strain, and the new infections of the past weak start weakening their hosts the mortality rates will go up significantly;

 

2) The effects of the pandemic on unemployment, consumer spending, and credit will be long lasting (Medium Conviction). Just because case rates start to fall in the spring/summer doesn't mean we will be economically out of the woods. If we look at the number of folks who will be financially wrecked by this pandemic - service workers, small business owners, uber drivers, hair stylists, plumbers, construction works,... - it is not a stretch to say that the impact will likely be as large as the GFC, if not larger. Those who think everyone will pick up where they left off, and the damage will be minimal need to think more about human behaviour, and the typical household's balance sheet.

 

So actionable investment insights:

 

1) It's not too late for Cash or Hedges - There is a lot of talk of lifting hedges and starting to buy out there. In my opinion, that talk is premature. If you are the sort of person who is inclined to hedge or buy long-dated puts in the first place, there are still opportunities to do so out there. For example, Shopify (SHOP) trades at a 48B market Cap ($46B EV) currently and is about 10% off of it's all time highs, even though it had operating losses of $141m in 2019 (and as far as I can tell, has never turned a profit). In fact, operating losses in 2019 increased by 53.5%, while revenue increased by 47%, a modern 2020 business miracle, which of course explains why the market has wisely priced it at 30.5x its 2019 Sales even in the middle of the worst global pandemic in living memory.

 

2) Wait to make new investments, or if you just can't help yourself, buy Berkshire - If you think all the bad news re: covid-19 is already priced into the market, refer to SHOP above. The vast majority of the market seems to believe the worst is behind us and happy days will be here again very soon. I would not be inclined to jump in to hotels, airlines, cruise lines or any of the battered names until we have more clarity on covid-19's course. Prices remain too high if you assume we are entering a recession or even just reverting to mean valuations. Of course there maybe some truly under-valued gems out there, but I would stress test even these ideas against a very bleak potential demand situation. And, ofcourse, YMMV.

 

TL;DR - We still have along way to go before this thing is over.

 

M.

 

Great post. Thank you.

[ERICOPOLY]

Relax guys. Some relief on the way. A drive through strip club.

 

https://www.usatoday.com/story/travel/news/2020/03/19/coronavirus-las-vegas-drive-thru-strip-club-open-pandemic/2878856001/

 

While much of Nevada has closed in compliance with Gov. Steve Sisolak's 30-day shutdown order to fight the spread of COVID-19, a Sin City strip club called Little Darlings remains open with a new menu of coronavirus-inspired options.

 

“We’re going to offer drive-up window strip shows,” Ryan Carlson, director of operations for Little Darlings, told the Las Vegas Review-Journal and KSNV-TV. “Guests can drive up to the front door and we’re going to have dancers separated by the 6-foot separation rule and they can enjoy a totally nude show right from the seat of their car.”

 

The drive-up shows last 10 minutes and cost $100. They will begin at 8 p.m. Saturday, according to the Review-Journal.

Human ingenuity at work.

 

Nude hand-sanitizer wrestling!  Hahahaha

[drzola]

Morbidity rates may be the denominator ( thermometer of your dashboard ).

[RichardGibbons]

I think a better way to look at it is that social distancing/lockdown started 6 days ago in Washington and the deaths went from 52 on 3/14 to 175 total now. Stay at home order was on 3/22 and essential services was on March 15, as a result we should just be seeing the results now and the growth should slow down ever more so now.  I would have expected much much more by now. Wouldnt you?

 

Cool, this is misunderstanding #2 on my list of misunderstandings. (#2: It takes weeks between infection and hospitalization and death.)

[mloub]

Yep, another Trump guy with his "This is like the flu take". Thank you!  ::)

 

Yeah, I think the people that have this view are basically misunderstanding five things:

[*]Exponential growth

[*]It takes weeks between infection and hospitalization and death

[*]Hospitals are not infinitely expandable--if enough people come in, hospitals run out of resources

[*]If you're in the ICU with this, you are likely in there for weeks

[*]That without ventilators, the death rate increases dramatically

Everyone I've seen who's taken a "there's no problem" position seems to have basically missed at least one of these points.  In that post, he's certainly completely misunderstanding points 1 and 2.  He'll probably miss points 3, 4, and 5, but hasn't got to that point yet, because he's so busy missing 1 and 2.

 

If only I had read this earlier it would have saved me so much grief. Great summary!

 

I want to turn this into a printed cue card and just give it to folks when we discuss covid-19 with the appropriate misunderstandings checked off. I don't know what I'll do with all the time I'll save!

 

M.

 

[drzola]

Ground Hog Day revised here; Lower Morbidity rates lower exponential growth ( i.e. flatten the curve ).

[RichardGibbons]

4 or 5 labs outside France really need to duplicate this experiment.

 

https://techstartups.com/2020/03/27/coronavirus-cure-new-results-french-study-shows-combination-hydroxychloroquine-plaquenil-azithromycin-successfully-treated-80-coronavirus-patients-significant-dr/

 

If this works, I think this is hugely important, not just because it would reduce deaths, but because it would greatly reduce loads on hospitals.  Heck, Trump would even be able to claim he discovered the cure, since one of the two drugs is hydroxychloroquine.  :)

[Dalal.Holdings]

Yep, another Trump guy with his "This is like the flu take". Thank you!  ::)

 

Yeah, I think the people that have this view are basically misunderstanding five things:

[*]Exponential growth

[*]It takes weeks between infection and hospitalization and death

[*]Hospitals are not infinitely expandable--if enough people come in, hospitals run out of resources

[*]If you're in the ICU with this, you are likely in there for weeks

[*]That without ventilators, the death rate increases dramatically

Everyone I've seen who's taken a "there's no problem" position seems to have basically missed at least one of these points.  In that post, he's certainly completely misunderstanding points 1 and 2.  He'll probably miss points 3, 4, and 5, but hasn't got to that point yet, because he's so busy missing 1 and 2.

 

Great list. Dynamic processes with these complexities thrown in are not very straightforward to understand.

[Dalal.Holdings]

https://www.nytimes.com/interactive/2020/us/coronavirus-us-cases.html

 

More than 2,100 people with the coronavirus have now died in the United States, according to a New York Times database, a figure that has doubled since Thursday and continues to rise sharply as deaths are reported by the dozens or hundreds in New York, New Jersey, Louisiana, Michigan and elsewhere.

 

2 day (!) doubling time of mortality in the U.S....the lagging indicator is matching (!?exceeding) exponential growth rate of cases, just delayed by several weeks. Obviously a limited sample of 2 days, but mortality data is anything but reassuring.

[Uccmal]

I know some have complained that this thread has gone off the rails and is of little or no value from an investment perspective.

 

Let me share some thoughts that hopefully have some investment merit, along with my level of conviction.

 

1) We are in the bottom of the third as far as this pandemic is concerned (High Conviction). This pandemic still has a long way to run - maybe 3-6 months (maybe longer), and the worst in terms of headlines and quarantines is in front of us, imho, not behind us. It is clear now that the response has been botched, especially in the United States, and what comes next is likely to have a deep and lasting impact on our collective psyches and the economy. Even now, before the infection rate has peaked, hospitals across the country are running low on personal protective equipment for their health staff. As supplies run out, and HCWs are forced to improvise, the infection rate among them will soar. This will weaken our capacity to care for infected patients even further. Our mortality rate in North America will likely track somewher between Italy and China's, but I would guess closer to Italy. Those who are comforted by the low mortality rate are celebrating too soon. Once the healthcare system starts to creak under the strain, and the new infections of the past weak start weakening their hosts the mortality rates will go up significantly;

 

2) The effects of the pandemic on unemployment, consumer spending, and credit will be long lasting (Medium Conviction). Just because case rates start to fall in the spring/summer doesn't mean we will be economically out of the woods. If we look at the number of folks who will be financially wrecked by this pandemic - service workers, small business owners, uber drivers, hair stylists, plumbers, construction works,... - it is not a stretch to say that the impact will likely be as large as the GFC, if not larger. Those who think everyone will pick up where they left off, and the damage will be minimal need to think more about human behaviour, and the typical household's balance sheet.

 

So actionable investment insights:

 

1) It's not too late for Cash or Hedges - There is a lot of talk of lifting hedges and starting to buy out there. In my opinion, that talk is premature. If you are the sort of person who is inclined to hedge or buy long-dated puts in the first place, there are still opportunities to do so out there. For example, Shopify (SHOP) trades at a 48B market Cap ($46B EV) currently and is about 20% off of it's all time highs, even though it had operating losses of $141m in 2019 (and as far as I can tell, has never turned a profit). In fact, operating losses in 2019 increased by 53.5%, while revenue increased by 47%, a modern 2020 business miracle, which of course explains why the market has wisely priced it at 30.5x its 2019 Sales even in the middle of the worst global pandemic in living memory.

 

2) Wait to make new investments, or if you just can't help yourself, buy Berkshire - If you think all the bad news re: covid-19 is already priced into the market, refer to SHOP above. The vast majority of the market seems to believe the worst is behind us and happy days will be here again very soon. I would not be inclined to jump in to hotels, airlines, cruise lines or any of the battered names until we have more clarity on covid-19's course. Prices remain too high if you assume we are entering a recession or even just reverting to mean valuations. Of course there maybe some truly under-valued gems out there, but I would stress test even these ideas against a very bleak potential demand situation. And, ofcourse, YMMV.

 

TL;DR - We still have along way to go before this thing is over.

 

M.

 

Edited: SHOP is 20% off of it's all time highs

 

That was a really good post.  I have had a conference I was to be at in early July Cancelled.  It was to have 30000 - 50000 in attendance.  July... think about that for a minute.  Hundreds of full time jobs for months eliminated.  Multiply that across the globe out to July and August now.

 

Even if Covid were bought under control tonight, it would take months for the economy to recover.  And it doesn't matter what the public is told in terms of social distancing, the damage is done.  It doesn't matter if a President says everything opens back up in three weeks, he will be ignored.  The 24 hour news cycle will keep feeding the hysteria whether it is justifiable or not. 

 

The economy and the markets are going way down.  Last week was just a head fake. 

 

Eventually, some semblance or normalcy will assert itself either due to better treatment, protections, or an outright vaccination, but it will still take months to recover after that. 

 

And Elon Musk should stick to his circle of competence, which is building great companies, with exciting vision, not opining on public health. 

 

 

[Spekulatius]

So if I shoot a bullet through the head of a fellow with hypertension, the cause of death is:

 

1) bullet wound

2) Hypertension

3) Hard to tell

[no_free_lunch]

4 or 5 labs outside France really need to duplicate this experiment.

 

https://techstartups.com/2020/03/27/coronavirus-cure-new-results-french-study-shows-combination-hydroxychloroquine-plaquenil-azithromycin-successfully-treated-80-coronavirus-patients-significant-dr/

 

If this works, I think this is hugely important, not just because it would reduce deaths, but because it would greatly reduce loads on hospitals.  Heck, Trump would even be able to claim he discovered the cure, since one of the two drugs is hydroxychloroquine.  :)

 

This is encouraging. In particular the 2 drugs are already widely prescribed so it would seem that will reduce approval times.  The FDA is saying there is not enough evidence behind it but what do they have to lose?  Hopefully they can find a way through the red tape.

 

It will lead to a huge rally if true.

 

I have never before seen the world stock market reduced to such a single issue. I really feel this could be a huge opportunity if you can stay ahead of the markets.  We all saw it in January and some at least were smart enough to get out of equities. Perhaps now you can front run the cure.

[SHDL]

It appears that some people are now seriously looking into whether (certain strains of) the BCG vaccine could “work” against Covid-19. See, for instance, the following blog post and the referenced links:

 

https://www.jsatonotes.com/2020/03/if-i-were-north-americaneuropeanaustral.html