Spekulatius

Can you imagine if Obama or W. Bush gave this job, during a pandemic with 70k deaths so far, to his cousin or brother-in-law or whatever? Deep state is to blame. It's a witch hunt - nobody wants to work for El Presidente. Only some true patriots like Jared-boy are sacrificing their lives and working 24 hour days covering the holes left by the evil apparatchiks who are gleefully pushing for Trump's downfall! Shame on deep state! Go Jared-o! Make vaccine great again! In my opinion, Trump is just Chavez with a better starting point in terms of institutions and economy. Chavez was roasted early on for running the country “like his hacienda“, that’s exactly what Trump does. Chavez even had his own news show on TV where he would endlessly blabber nonsense without script just like Trump “Coronavirus show”. Both are populists . They are really two sides of the same coin. Given enough time ( which he won’t have because of term limits) we would end up at the same point.

For the coagulation part, it's been suggested that anticoagulation could be associated with a better outcome for more severe presentations but most people admitted in ICUs these days typically get anticoagulation anyways so this does not seem promising in terms of more than a possible marginal improvement in some cases. The more promising treatment options will likely directly interfere with the viral load itself and not with the consequences of the virus. Yes, my wife works with dialysis patients exclusively and there are a lot of them them need dialysis to due to COVID complications (kidney shutting down). She noticed right away during the week in late March with COVID patients that here dialysis machine was jamming up and something was wrong with the blood of these patients. It is true the the doctors now right this with blood thinners and also clot busters. It is tricky for my wife, because if something goes wrong these patients can bleed out in minutes. Still, the prognosis for these patients doesn‘t seem that great, from what I am hearing from my wife. The real breakthrough for outcome will be to prevent this Complication of organs shutting down to begin with, imo (talking as a layman here).

There a certain age bias in this current situation , both on terms of health as well as financial risk. Zell has a lot more to lose than to win at this Point than let’s say a 30 year old private equity guy. First, he has a much higher chance to get killed by this disease, second with this being an unprecedented situation l he really doesn’t know how this plays out economically. So he won’t play until he sees it, plain and simple. Compare this to a 30 year old private equity guy who probably is willing to roll the dice with other people’s money and if it doesn’t work out, he is just going to try again a couple of years later with a different shop. The different starting situation and incentives lead to different decision making bias.

Please get back on topic - nasty disease, death, ventilators , lack of testing. Plenty to discuss without each other calling names.

Thank you for elaborating, Spekulatius, What does that imply in this particular context? It means they depending on the goal of the QE, the ECB actions are Not consistent with the German constitution. It’s seems that the ECB can do QE (buying sovereign bonds) to stabilize the monetary system, but they wouldn’t be allowed to buy bonds with the stated goal to bail out a foreign ECB member government. What happens with this verdict depends on what the German politicians do with it. I see it more likely thwt after this verdict, the “whatever it takes “ policy of the EVB could run into resistance from German politicians. This verdict is a result of a lawsuit from the CSU (the conservative sister party from Bavaria ) which have been critical of Draghi in the past. This all dates back to the time the Bundesbank was governing the Deutsche Mark and per German constitution, their only goal was monetary stability, not low unemployment or increasing growth, at least not when monetary stability would be impaired.

Are you going to get tested now? I am not eligible per prevailing criteria apparently, so no. I've heard that you can pay some doctors $100 for an antibody test. Probably depends on locality and availability though. Dr. Scott G mentioned something about it yesterday. The easiest way for me would be to lie about symptoms on the application form. Antibody Tests only work a while after exposure when your body had time to produce antibodies, which probably wouldn’t show either way for me yet, assuming the exposure was just a couple of days ago. In addition, there is the issue with the false positives, when your presumed risk is small .

The problem is as follows: if mall/whatever reopened, I would go there if I knew I'd be the only person in the mall. But then store(s) don't get enough business. OTOH, if everyone rushes in, then I wouldn't go there. So likely you can't get many people there. It's also possible that there will be a bad feedback loop: people don't go to malls, cases don't rise, people think that it's safe and go to malls, then cases rise again, rinse, repeat? Restaurants are more complicated than stores. Even if I'm the only customer there, there is a risk of getting infected from the staff. More risk than if I ordered for delivery. So screw going to restaurant. Most people can’t conceptualize risk from something not visible, so they will conclude that Malls are safe, because other people go there, which ironically makes them less safe.

Are you going to get tested now? I am not eligible per prevailing criteria apparently, so no.

Are you being quarantined? Or tested? Or made to work from home? Or was it just a social call of "you might be screwed, but please continue comrade"? It‘s the latter. I don’t meet the criteria for testing apparently. For the time being, business as usual.

Bloody hell! How much power does this court have? It‘s the equivalent of the US Supreme Court in Germany. There is nothing above it.

Finally, the “invisible enemy” (Trademark pending) hits close to home. Our HR gal called me about my contact exposure with one of my close colleagues last week. His wife tested positive and he is likely too (test results pending). Luckily my own exposure with him was pretty limited because I kept at social distancing at work too and have my own office. His cubicle neighbor next to him likely is not that lucky. My colleagues wife most likely got it through an outbreak cluster at her workplace according to my colleague (I texted him). Both are doing fine so far, his wife only symptom is losing her sense of smell.

Added both of these and a touch of RTX, VZ I abused RTX for a trade, but trying to wrap my head around this, RTX really is BA with a better balance sheet and less baggage, But it’s still half commercial aerospace and I expect this sector to lose 50% of their revenues probably for a couple of years. It will come back, but the path to get there won’t be pretty for a while. I think a lot of these stocks in commercial aerospace are most likely overvalued.

Bought back some BRKB. I felt like swimming naked without owning some. Also added a tad more GD.

Normal human psychology. The guys buying at $600 were the ones selling at $350-400! This exchange made me smile. If there was value then there is extreme value now, even if covid-19 has permanently reduced the value of Eurobank, Recipe, Atlas, Bangalore Airport, etc. to a point below their current share prices. Context is important. All insurance stocks have been crushed in the last 10 weeks. Chubb was trading over $160 in Feb and now it is trading below $100. WRB has fallen from $79 to $51. The declines have been 35-38%. Fairfax has fallen from $625 to $350 a 44% decline. It also had a much larger Q1 loss and hit to BV. So compared to other insurance stocks the decline in FFH looks reasonable. The question moving forward is if you want to put new money into the insurance sector where do you do it? My vote, given the broad based sell off, is to put it into the highest quality names. My current picks are WRB and CB (two that i have followed for years and like). I agree - better risk rewards than FFH with other insurance stocks. I just bought some TRV yesterday and bought back some BRKB today. I don’t like the extended financial leverage that FFH shows at this point. We are looking at the biggest I Insurance even in history and you do t want to go into this with a leveraged balance sheet . We Heard- WEB very clear about this. FFH might not have liquidity issues (insurance companies rarely have those anyways), but regulators closely look at solvency of subs. Not to divert the thread, but I like CB as well. What I don’t like about them is they they have 1/3 of their equity (roughly ) in BB rated junk bonds (Vietnam ?) . I am not sure what their rationale for owning these is and I really don’t like insurance cos stretching for yield.

Very unusual. My ex-wife was raised by politicians and from a young age she was coached by her father to "admit nothing, deny everything, and never put anything in writing". This raises a child who cannot take responsibility. I think it's common in a lot of these powerful families and nurtures narcissism and sociopathy. Meanwhile Trump is talking about how unfair this whole situation is to him and how badly he's being treated in front of the Lincoln monument... Everyone is concerned about him suffering.

Pretty good article about NM dealing with COVID-19 https://www.nytimes.com/2020/05/01/opinion/new-mexico-coronavirus-curve.html

China has high speed trains. I have a pic with me on a Chinese maglev train going 431km/h. With such a speed and counting boarding etc, you are better off going 1200km in a train rather than an airplane if you have a direct train connection. The German ICE trains go 250 km/h. Those are good for 700km and they covers most of Germany. The US still needs air travel for coast to coast, but you could connect the East coast north East with trains, if you could create a high speed rail network.

How much intrinsic value will evaporate in those 2 years for shareholders? Yes, airlines may take on lots of debt and then keep paying those debts in the next 5-6 years. Just because they survive , will shareholders get richer? If yes, then by how much and what risk they are taking? I don't think he is thinking short-term here. I think range of outcome is wide. It’s not a matter if air travel comes back. It surely will. It’s a matter of duration of the current and if current shareholders will get impaired and what the economics of the business will look like. Buffet doesn’t know then answer and he realized that he didn’t get the deal that he thought he get when he bought into this. His process might have been correct and have worked out well in a parallel universe without the Coronavirus showing up, but it did not. So he makes the best guess and moves on. It is what it is.

The problem with anchoring valuation on interest rates is that stocks are a long duration assets and while you know rates are low now and perhaps for the next 2 years, you do not know what they will be in 15 years. If rates go up In due time any owner of stock or real estate for that matter to looking at significantly compressed valuations upon exit.

I am not sure that increasing prices at a time of lower demand is going to work. If that were to happen, I bet someone takes advantage of the combination of surplus cheap planes cheap capital and furloughed pilots and starts a new airline unencumbered by legacy issues. The industry being rational depends on capacity restraints , lack of new entrants and lack of competition. Also, how much business travel is really essential and cannot be done by other means? Business travel is one of the first things to get cut when the economy is slowing down or goes into a revision. Now ad rising prices to this and the incentive to save costs becomes even larger. I think the real essential travel will go on Netjets and private business jets, as you can avoid crowded airports and planes

So, here is Boris Johnson’s account: https://www.bbc.com/news/uk-52517996 The average guy in the UK would have had a different experience in the same situation. I think it is likely that the UK will invest more in their health care system going forward. Nothing convinces better than personal experience.

I liked this annual meeting too Less frills, more substance. I also noticed how long he dwelled on the Great Recession. And while he said, “Don’t bet against America, he didn’t bet on American stocks either. As always, watch what they do more so than what they say. In Buffets case it’s actually quite congruent.

How are you getting 15% with portfolio investments returning 2.5%? I understand you are using $255 stock price as your capital base, but are you taking into account interest expenses, corporate expenses, preferred dividends? Even 3.5% pre-tax return does not get me to 15%. Vinod Not portfolio investments. Fairfax has $1500-1600/share in float/equity/debt. A net 2.5% return in those figures is $37.50/share at the low end. On a $260/share price, that's 14.4% annualized. I'm not talking about portfolio returns, just that they need to net only 2.5% on the total of float/equity/debt after expenses. It doesn't seem like that should be a high bar, particularly if insurance (what the equity/debt supports) is performing well. If people don't seem convinced of 2.5% net on those various forms of funding, then who the hell was buying this at $500-$600/share when the various forms so funding were the same, but the bar for acceptable performance far higher? Normal human psychology. The guys buying at $600 were the ones selling at $350-400! We just heard from Prem in the annual letter that Wade Burton has averaged 19.8% annualized since 2008 for Fairfax, and we all know what Brian Bradstreet can do...yet we're worried that they won't be able to achieve 3-4% annualized on the portfolio over the next 10 years! The only concern would be if we see a massive LA earthquake or the worst hurricane in history in the Gulf Coast this year on top of everything going on. I'm betting against those two happening! Cheers! Ever so optimistic. I haven’t seen many great things coming to shareholders of financials after they drew down the credit line. Better allocation on the investment side would be great, but first they need to get rid of the existing stuff, which is mostly impaired.

I think he pretty much said as much, either this meeting or in the interview he did prior. I also agree here, he did seem exceedingly worried. But he made it clear that he knows just as much about this virus as we all do - so perhaps he is more worried about the economic fallout vs. the virus itself? But that view doesn't make total sense either in the context of buffetteer's point #2: "2. Berkshire at 185 is now equally as valuable as at 220 a few months back therefore impairment of actual long term value of 15% more or less so far from corona. " I feel like the value of a lot off business has been impaired and while prices are a bit lower, they are not cheaper. He also mentions a lot of uncertainty and a wide range of outcomes. So with a margin of safety concept, the threshold to actively buy something is higher if you can’t really estimate the value of what you buy. I really enjoyed this online only shareholder meeting more so than all the others before. The question were much better on point and there was much less cheerleading and more substance.

Every defense business or even supplier to defense business is essential.