What are you buying today?

[lnofeisone]

EPD and KMI

[alwaysdrawing]

Today was a tremendous buying opportunity.  This thing is worse than flu, but not by all that much.  In many ways it's not as scary as flu because children are not dying.

 

I thought today of searching for a largish population where everyone was tested for the virus and where healthcare access was poor.  Here it is:

 

"Of the 705 passengers who tested positive for the virus on the Diamond Princess, six died -- which is a death rate of less than 1%. All of the patients who died onboard were more than 70 years old."

 

https://abcnews.go.com/Health/early-mortality-rates-covid-19-misleading-experts/story?id=69477312

 

Funny, ERICOPOLY, as you were a big influence to me the past few weeks.  When you made a bag back in the day spending $30k on options or whatever it was, you saw that the world was not what it seemed.

 

Italy is totally locked down.  Iran is in chaos.  China was on full lockdown and still largely is.  South Korea is doing well and testing, and will still have a brutal time.  Oil fell 25% in a day, and treasury buyers are flocking to safety.

 

The US is so clearly following the path of the worst hit places, that by the time we get around to quarantines our problems will be enormous.  Italy had 3 confirmed cases a few weeks ago!

 

Look what happened to Asian tourist locations after SARS.  This is 10x as big and still growing extremely fast.  We are just getting started.

 

I actually can't believe the market LACK of reaction the past few weeks.

[sundin]

BRK.

[alpha]

brkb

[Broeb22]

AMOT

[wisowis]

BRK.B, CSU, BAM.A, TD

[Spekulatius]

Bought back some of my BRKB and GOOGL shares , more BWEL, FOX, PINS, starter back into DD as well as several other positions (industrials, real estate -  VNO) and even some MA (AH)

 

I stay clear of banks and energy related despite what looks like tremendous bargains. I hate everything where politics determines the price.

[petec]

Bought back some of my BRKB and GOOGL shares , more BWEL, FOX, PINS, starter back into DD as well as several other positions (industrials, real estate -  VNO) and even some MA (AH)

 

I stay clear of banks and energy related despite what looks like tremendous bargains. I hate everything where politics determines the price.

 

Um...that’s *everything*.

[KCLarkin]

Today was a tremendous buying opportunity.  This thing is worse than flu, but not by all that much.  In many ways it's not as scary as flu because children are not dying.

 

Hard disagree. There are pockets of "interesting". But the most obvious ones, financials and energy, have material risk. Good stocks are still selling at a premium. Booking.com is going to see revenue freefall this year to COVID, but it outperformed the indices today. This correction is not about COVID.

 

What I think people are missing is that corrections are normal. Covid is not material for most companies. True. Life will return to normal in 12-18 months. But SPY was up 30% last year. The value of SPY didn't increase 30% in one year. There was enormous complacency built into valuations. Covid is just the trigger for a necessary correction.

 

I raised a bit of cash today. Hoping to raise a bit more tomorrow. I am still expecting a few more pockets of opportunity.

[petec]

Today was a tremendous buying opportunity.  This thing is worse than flu, but not by all that much.  In many ways it's not as scary as flu because children are not dying.

 

Hard disagree. There are pockets of "interesting". But the most obvious ones, financials and energy, have material risk. Good stocks are still selling at a premium. Booking.com is going to see revenue freefall this year to COVID, but it outperformed the indices today. This correction is not about COVID.

 

What I think people are missing is that corrections are normal. Covid is not material for most companies. True. Life will return to normal in 12-18 months. But SPY was up 30% last year. The value of SPY didn't increase 30% in one year. There was enormous complacency built into valuations. Covid is just the trigger for a necessary correction.

 

I raised a bit of cash today. Hoping to raise a bit more tomorrow. I am still expecting a few more pockets of opportunity.

 

Agreed - but the key point is “pockets of interesting”. I wouldn’t be buying the S&P here, but there are some great opportunities around.

[Viking]

Today was a tremendous buying opportunity.  This thing is worse than flu, but not by all that much.  In many ways it's not as scary as flu because children are not dying.

 

Hard disagree. There are pockets of "interesting". But the most obvious ones, financials and energy, have material risk. Good stocks are still selling at a premium. Booking.com is going to see revenue freefall this year to COVID, but it outperformed the indices today. This correction is not about COVID.

 

What I think people are missing is that corrections are normal. Covid is not material for most companies. True. Life will return to normal in 12-18 months. But SPY was up 30% last year. The value of SPY didn't increase 30% in one year. There was enormous complacency built into valuations. Covid is just the trigger for a necessary correction.

 

I raised a bit of cash today. Hoping to raise a bit more tomorrow. I am still expecting a few more pockets of opportunity.

 

The virus has not hit the US yet. At least in people’s minds. Testing is still not being done in large numbers, especially in hot zones like Washington. So the reported numbers are low and everyone feels good.

 

Think of where Italy was about 2 weeks ago. Think about where their stock market was and what people were saying. Look at what is going on now... big change. What a surprise!

[Gregmal]

Today was a tremendous buying opportunity.  This thing is worse than flu, but not by all that much.  In many ways it's not as scary as flu because children are not dying.

 

Hard disagree. There are pockets of "interesting". But the most obvious ones, financials and energy, have material risk. Good stocks are still selling at a premium. Booking.com is going to see revenue freefall this year to COVID, but it outperformed the indices today. This correction is not about COVID.

 

What I think people are missing is that corrections are normal. Covid is not material for most companies. True. Life will return to normal in 12-18 months. But SPY was up 30% last year. The value of SPY didn't increase 30% in one year. There was enormous complacency built into valuations. Covid is just the trigger for a necessary correction.

 

I raised a bit of cash today. Hoping to raise a bit more tomorrow. I am still expecting a few more pockets of opportunity.

 

The virus has not hit the US yet. At least in people’s minds. Testing is still not being done in large numbers, especially in hot zones like Washington. So the reported numbers are low and everyone feels good.

 

Think of where Italy was about 2 weeks ago. Think about where their stock market was and what people were saying. Look at what is going on now... big change. What a surprise!

 

So far Viking, out of everyone, I have to give you the most credit for your prescience with respect to timing. You've been adding modestly it seems, but still mostly cash. Regardless of what the reason was, you've been right about exit/entry so far. What do you see as the driving factor though? It still sounds like corona, but earlier you indicated, with which I agree, that today was predominantly an oil related shellacking. Last week we seemed to have swings because of the Sanders defeat. But overall I think most merit is given to the "we just needed an excuse to correct" reasoning? Curious to your thoughts going forward.

[meiroy]

 

Sold various options, people threw money at me, so I took it. Let's hope things calm down while staying down here so we could purchase some LEAPs...

 

 

[Lance]

New positions - BX and MMP

 

Adds - BP, OXY, RDSb, VIAC, VIACA and WMB

 

Trimmed - IAU and TLT

 

Sold - FXY

 

Options - wrote puts on EPD, FOX, IVZ and TPR (unfortunately all the puts save for EPD were Friday)

 

Fkd around in an IRA and bought Vanguard small and midcap value index funds.

 

Thanks

Lance

 

 

[james22]

There was enormous complacency built into valuations. Covid is just the trigger for a necessary correction.

 

Yep.

[dpetrescu]

The way I see it, it’s long overdue for a 30% to 40% market correction from the top along with an official recession call at some point. With that said....I just bought some 2 year calls on a few airlines. Figure I can buy more for every next 10% drop.

 

Also got some Disney. Would get more Simpson if it fell more. Thinking about Google.

 

Any other 30 year, large-moat investments people recommend?

[ERICOPOLY]

Today was a tremendous buying opportunity.  This thing is worse than flu, but not by all that much.  In many ways it's not as scary as flu because children are not dying.

 

I thought today of searching for a largish population where everyone was tested for the virus and where healthcare access was poor.  Here it is:

 

"Of the 705 passengers who tested positive for the virus on the Diamond Princess, six died -- which is a death rate of less than 1%. All of the patients who died onboard were more than 70 years old."

 

https://abcnews.go.com/Health/early-mortality-rates-covid-19-misleading-experts/story?id=69477312

 

Funny, ERICOPOLY, as you were a big influence to me the past few weeks.  When you made a bag back in the day spending $30k on options or whatever it was, you saw that the world was not what it seemed.

 

Italy is totally locked down.  Iran is in chaos.  China was on full lockdown and still largely is.  South Korea is doing well and testing, and will still have a brutal time.  Oil fell 25% in a day, and treasury buyers are flocking to safety.

 

The US is so clearly following the path of the worst hit places, that by the time we get around to quarantines our problems will be enormous.  Italy had 3 confirmed cases a few weeks ago!

 

Look what happened to Asian tourist locations after SARS.  This is 10x as big and still growing extremely fast.  We are just getting started.

 

I actually can't believe the market LACK of reaction the past few weeks.

 

I am in the camp that every single one of us will get this virus in the coming years if we live full lives.  I have had the flu several times and most of us have.  We will call it cold, flu, and coronavirus season and many people will still ignore the free annual vaccine program.

 

I just don't see how all of that translates to WFC and BAC at tangible book.  Why?  Get a grip Mr. Market.

[Casey]

Another realistic number is South Korea case fatality rate (0.6%). They did a lot of testing.

 

Taking that to the U.S.

 

330 million people * .006 gets you in the area of 2 million deaths. Multiply by whatever percentage of the population you think gets the virus.

 

- 4% and we'll be at 80k which was 2018 flu deaths (a bad flu year)

- 20% of population, 400k deaths

- what scares me is epidemiologists throwing around estimates that 20-60% of the population potentially getting this.

 

Anyways, it can get pretty bad even if the death rate is only in the area 1%.

 

 

And I suppose on the topic, since I thought this was the Coronavirus thread, I bought some BRK, US banks, and SBRCY today.

[Viking]

Today was a tremendous buying opportunity.  This thing is worse than flu, but not by all that much.  In many ways it's not as scary as flu because children are not dying.

 

Hard disagree. There are pockets of "interesting". But the most obvious ones, financials and energy, have material risk. Good stocks are still selling at a premium. Booking.com is going to see revenue freefall this year to COVID, but it outperformed the indices today. This correction is not about COVID.

 

What I think people are missing is that corrections are normal. Covid is not material for most companies. True. Life will return to normal in 12-18 months. But SPY was up 30% last year. The value of SPY didn't increase 30% in one year. There was enormous complacency built into valuations. Covid is just the trigger for a necessary correction.

 

I raised a bit of cash today. Hoping to raise a bit more tomorrow. I am still expecting a few more pockets of opportunity.

 

The virus has not hit the US yet. At least in people’s minds. Testing is still not being done in large numbers, especially in hot zones like Washington. So the reported numbers are low and everyone feels good.

 

Think of where Italy was about 2 weeks ago. Think about where their stock market was and what people were saying. Look at what is going on now... big change. What a surprise!

 

So far Viking, out of everyone, I have to give you the most credit for your prescience with respect to timing. You've been adding modestly it seems, but still mostly cash. Regardless of what the reason was, you've been right about exit/entry so far. What do you see as the driving factor though? It still sounds like corona, but earlier you indicated, with which I agree, that today was predominantly an oil related shellacking. Last week we seemed to have swings because of the Sanders defeat. But overall I think most merit is given to the "we just needed an excuse to correct" reasoning? Curious to your thoughts going forward.

 

Greg, in a nutshell as much as possible I have tried to let science, real world examples and probabilities inform my decision making. And to focus on the big picture / big rocks (not get stuck in the weeds).

 

The road ahead: I think there is a good chance that Washington State has a cluster of virus cases (many still undetected due to lack of testing). If true, a lock down in Washington State is very possible. We will know in about another week or two. Given the lack of testing being done for weeks now there is a good chance that other clusters may be seeding in more US states. We will only know more in a couple of weeks as testing ramps up nationally. If more clusters are found more lock downs are very possible. And the economic consequences if this happens are severe. The virus has a head start and it does not look good.

 

With respect to Coronavirus:

The science - what i quickly learned is how little we know about the virus (and this is still true today). But we do know enough: it is highly contagious and it spreads very easily if precautions are not taken; and it is very bad for seniors or people who are deemed ‘high risk’. And, with great leadership, planning, coordination, effort and sacrifice, the spread of the virus can be slowed greatly.

Real world examples - the focus of much of my reading has been what the virus is doing to other countries and economies. Here we already have lots of examples and good information. What I quickly learned is every country where it surfaced made the decision that it had to be contained regardless of the economic cost. Read this last sentence again. The sooner the country comes to this decision the lower the economic cost. And the effort the first 2 or 3 weeks is a key (clusters, if allowed to form, make containment much more difficult).

 

The virus did not hit every country in the globe at the same time; it started in Wuhan, China, and then spread to Asia and Europe and then (I think… this is my guess) to North America with a 2 or 3 week lag (perhaps due to Trump’s travel ban?). My view is we can see the future here in North America. History does not repeat but it rhymes (I think Mark Twain said this). China and Europe can provide us with lots of examples of how our future will likely turn out. It has so far.

 

Two weeks ago we know 2 cases of ‘community spread’ were discovered in the US. Cases of community spread mean the walls have been breached and are a big red flag. What I also learned 2 weeks ago was the US had completely screwed up the testing for the virus. Testing did not happen (test kit was faulty). Then when the testing did start it was much too restrictive (so much so it was almost useless). And even today, two weeks after community spread was discovered the US is still not testing everyone who need it.

 

Testing… who cares? Testing is at the core of the whole virus response for a country. Facts drive the response. Without testing, as the doctor on CNBC said a week ago the US is ‘flying blind’. Bottom line, the US has given the virus a 2 or 3 week head start. In addition to testing, the US has messed up in some other important areas but this is already too long.  We will only know more in 2 or 3 weeks; until then, everything people say about everything (eventual response, magnitude, economic impact) is simply an uninformed guess. As Mark Twain said: "its not what you know that gets you in trouble, its what you know that ain't so."

 

The guy driving the bus (Trump) said today that the US only has 500 positive tests... and that informs him that the US response has been perfect. The number of positive tests is what has been driving the administrations response to date.

[btgmf]

Today was a tremendous buying opportunity.  This thing is worse than flu, but not by all that much.  In many ways it's not as scary as flu because children are not dying.

 

I thought today of searching for a largish population where everyone was tested for the virus and where healthcare access was poor.  Here it is:

 

"Of the 705 passengers who tested positive for the virus on the Diamond Princess, six died -- which is a death rate of less than 1%. All of the patients who died onboard were more than 70 years old."

 

https://abcnews.go.com/Health/early-mortality-rates-covid-19-misleading-experts/story?id=69477312

 

Funny, ERICOPOLY, as you were a big influence to me the past few weeks.  When you made a bag back in the day spending $30k on options or whatever it was, you saw that the world was not what it seemed.

 

Italy is totally locked down.  Iran is in chaos.  China was on full lockdown and still largely is.  South Korea is doing well and testing, and will still have a brutal time.  Oil fell 25% in a day, and treasury buyers are flocking to safety.

 

The US is so clearly following the path of the worst hit places, that by the time we get around to quarantines our problems will be enormous.  Italy had 3 confirmed cases a few weeks ago!

 

Look what happened to Asian tourist locations after SARS.  This is 10x as big and still growing extremely fast.  We are just getting started.

 

I actually can't believe the market LACK of reaction the past few weeks.

 

I am in the camp that every single one of us will get this virus in the coming years if we live full lives.  I have had the flu several times and most of us have.  We will call it cold, flu, and coronavirus season and many people will still ignore the free annual vaccine program.

 

I just don't see how all of that translates to WFC and BAC at tangible book.  Why?  Get a grip Mr. Market.

 

Ericopoly, this is an extinction level event. Why did China put its whole country lockdown, risking serious unrest and the end of the CCP (as people can't go out, businesses are under great stress, etc.)? Why did democratically elected Italy put its whole country on lockdown, cancelling all sports, weddings, funerals, travel? This is an awful disease that has overwhelmed healthcare systems everywhere it's been with enough time so far (China, Iran, Italy). How many businesses are surviving with no people going out for months?

 

I agree that everyone is going to get it, except that it's not going to be "over our lifetime." It's going to be in the next three months. If healthcare systems don't get overwhelmed, it's probably a 2M+ people dead and 30M+ people hospitalized just in America. And then, like other viruses, it can come back again and again.

 

Any business that is levered and / or dependent on funding markets is in great danger. Like the banks, all of them. Already, airlines, hospitals, events, etc. are laying people off. Next will be oil and gas, retailers, etc. Have you seen what happened to bond yields and how the Fed has greatly increased its repo facilities? No bank wants to lend to anyone at any price. They'd rather hoard 30Y government bonds at under 1% per year than lend.

 

There are three separate, 80%+ likelihood events that would each be enough to cause a serious recession:

1. The biological effects of a disease that will kill millions in the US and hospitalize tens of millions. Who is just going back to their normal routine after that? Even if you think you are, I guarantee a large portion of consumers will not.

2. The already baked in vicious cycle effects of layoffs (airlines, hotels, cruise ships, oil and gas, retailers, port workers, truck drivers, etc.), lower business investment (no one is going to buy planes, class 8 trucks, build factories, etc.), etc. This is already happening -- you don't even need to predict it

3. The banking system shutting down and refusing to lend. Again, this is already here. The banks are saying (through yield curves, FRA / OIS curves, the Fed desperately upsizing repo offerings) "We won't lend at any price to anyone."

 

Together they will likely cause a depression. Buying the market down 10% in 1929 didn't work out well then, and it's not going to work out now.

 

Your 2009 successes were an inspiration and great example, which is the reason I'm writing this post. In some weird way, I feel like I owe you. But this time, there's nothing we can even do to stop the pandemic -- not that we're doing anything anyway (schools remain open, planes arrive from Seattle, NYC, Europe, etc. every day, events and sports go on uninterrupted, etc.). We will be lucky to get Italy's experience, and that will be enough to destroy many businesses and banks.

[alwaysdrawing]

Thanks Viking and btgmf.  I couldn't agree more.  Even if things do not end up as bad as the worst case, the worst case is clearly depression level, and the best case looks something like Italy, where the whole country is on lockdown.  Italy has voluntarily guaranteed a recession to prevent something even worse. 

 

And even lockdown may only slow the progression so the healthcare system can manage it--there will likely be future waves of spread, and that will mean longer term effects, not returning to an ex-ante level of flying and going to restaurants, conferences and theme parks.

 

The US will not look like South Korea, where aggressive testing and contact tracing were able to reduce the spread.  At a minimum, the US will be Italy, and possibly as bad as Iran (where the facts on the ground show a situation much more dire than official stats).

 

Buying banks at tangible book during a pandemic is wild.

 

Happy to see the market is up today, as I will continue to buy puts in what I see as one of the clearest asymmetric trades of my life.

[KJP]

 

 

Ericopoly, this is an extinction level event.

 

 

"Extinction" of what?

 

 

 

[Castanza]

 

 

Ericopoly, this is an extinction level event.

 

 

"Extinction" of what?

 

Was thinking the same thing haha

 

Since I typically derail threads I'll be a hypocrite and say lets move the conversation here https://www.cornerofberkshireandfairfax.ca/forum/general-discussion/coronavirus/msg399288/?topicseen#msg399288

 

;D

[Castanza]

MAXR starter under 13

[krazeenyc]

Today was a tremendous buying opportunity.  This thing is worse than flu, but not by all that much.  In many ways it's not as scary as flu because children are not dying.

 

I thought today of searching for a largish population where everyone was tested for the virus and where healthcare access was poor.  Here it is:

 

 

"Of the 705 passengers who tested positive for the virus on the Diamond Princess, six died -- which is a death rate of less than 1%. All of the patients who died onboard were more than 70 years old."

 

https://abcnews.go.com/Health/early-mortality-rates-covid-19-misleading-experts/story?id=69477312

 

It's been a while since I've posted and while I was buying in the market yesterday... VNO in particular.

 

What seems to make coronavirus different (and we know very little as of now) is it seems that young healthy adults are MOSTLY fine... however they can be carriers and transmit the disease to those who are "at risk".  How governments, society, and individuals manage this problem  is very very tricky. What kind of economic toll will governments and people be willing pay?

 

Also, not to be alarmist, but decades ago the Spanish flu of 1918 (yes medicine, hygiene, etc are all much better) went away, and came back mutated and more deadly -- killing many healthy people. This is not my base case, but there is some small % possibility of this.