What are you buying today?

[bizaro86]

We have a coronavirus thread  (in fact multiple) it would be great if we could leave this one for it's intended topic

[shhughes1116]

Bought some PBA and EPD. 

 

I've been waiting for sometime to buy PBA.  And I am re-buying EPA (sold around $28 in Summer 2019).

 

Let's see how much I regret this buying. 

[plato1976]

If the 10y stays at today's level, what's the fair value of a big bank? 1x tangible? 1.5x?

 

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

[ERICOPOLY]

If the 10y stays at today's level, what's the fair value of a big bank? 1x tangible? 1.5x?

 

Priced in.

[Read the Footnotes]

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.

There are a couple of issues with extrapolating from this data.

First, it has been very well managed in S. Korea. The efficiency of testing alone undoubtedly resulted in better outcomes.

Also, at this point a better estimate of the ultimate CFR is probably provided by dividing the number of deaths by the number of deaths added to the number of recovered cases. The problem is that there has been a long lag between presentation of symptoms and death.

[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.

There are a couple of issues with extrapolating from this data.

First, it has been very well managed in S. Korea. The efficiency of testing alone undoubtedly resulted in better outcomes.

Also, at this point a better estimate of the ultimate CFR is probably provided by dividing the number of deaths by the number of deaths added to the number of recovered cases. The problem is that there has been a long lag between presentation of symptoms and death.

 

Let's take it to Coronavirus thread. I agree that they have done well w/ managing it.

[Read the Footnotes]

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

So far I have bought equities and sold none, but . . .

 

The article you referenced in your post was from March 9. The final disembarkation from the Diamond Princess was March 1. I don't know the current medical condition of the passengers, or when the last risk of inoculation was, but many reports are that on average it takes five days to present symptoms with less than 1% expected to take more than 14 days, and I believe the majority of patients took three to five weeks to progress to death in China's experience. It is probably too early to get too excited by this data.

 

Here's a different take on the issue:

 

https://www.medicalnewstoday.com/articles/why-are-covid-19-death-rates-so-hard-to-calculate-experts-weigh-in#Why-calculating-the-death-rate-is-so-tricky

“It is surprisingly difficult to calculate the ‘case fatality ratio,’ or death rate, during an epidemic,” says John Edmunds, a professor in the Centre for the Mathematical Modelling of Infectious Diseases at the London School of Hygiene & Tropical Medicine in the United Kingdom.

 

This difficulty is due to the long period between the onset of the illness and the fatality, explains Prof. Edmunds.

 

For COVID-19, this length of time is 2–3 weeks or more, he says. Therefore, to calculate the case fatality rate, we should use the number of confirmed cases from a few weeks ago, rather than at the present time.

[orthopa]

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.

 

No offense but this is one of the most ridiculous things I have ever read. Honestly. Absolutely ridiculous .

[Guest cherzeca]

 

 

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 hypocrit and say lets move the conversation here https://www.cornerofberkshireandfairfax.ca/forum/general-discussion/coronavirus/msg399288/?topicseen#msg399288

 

;D

 

I watched Terminator Dark Fate last night.

I think I'm being followed.

 

@btgmf

 

extinction event is a new way to saying you are paranoid.  but just because you are paranoid doesn't mean someone is not out to get you.

[writser]

 

 

Ericopoly, this is an extinction level event.

 

 

"Extinction" of what?

 

Common sense.

[gary17]

  my personal view was the economy is hurt by over-reaction

much like the virus itself... some of the fatalities are due to the body 's immune response...

 

  anyway... i thought it is interesting S Korea did many tests and their death rate is at 0.6% -  don't disagree it is many times higher than  flu  but much less than the WHO figure of 3.4%.  this is based on  how many tests are checked.    so may be Trump with his dumb luck had it sort of right that this was a bit like flu and for most young health adult it is not any different.

 

https://asiatimes.com/2020/03/why-are-koreas-covid-19-death-rates-so-low/

 

 

[BG2008]

If the 10y stays at today's level, what's the fair value of a big bank? 1x tangible? 1.5x?

 

Priced in.

 

Eric,

 

Just wondering what level of concentration is the BAC position for you?  I have followed your investments in the past and when you put more than 50% into a position (even if it is fully hedged), I noticed that I should be paying attention. 

[Gregmal]

Topped off MSG to about a 15% position. Always been overweigh this one, but what is value investing if buying the entire thing for less than the value of the Knicks isn't a margin of safety.

[KJP]

Rosetta Stone

[Lance]

CMCSA, CXW and WFC

 

Thanks

Lance

[Lance]

VLGEA

 

Thanks

Lance

[CorpRaider]

SLG, I guess.

[bilo]

TPB

[no_free_lunch]

Bought some CFG.  Basic thesis is we have a small regional bank selling for less than 1/2 book value with a 6%+ dividend.  I know the economy is going to be a mess but I am betting that the feds provide some sort of relief to keep the banks from going under.

[rb]

BAC, EPD

[hobbit]

FIH,FAH

[Gregmal]

PCYO

 

Edit: also just grabbed some GOOG

[Castanza]

MSG

[Lance]

GEO

 

Thanks

Lance

[Artha158]

JETS