Spekulatius

In Germany, schools and Kindergarten are shut down. The main concern is not to get a repeat of Italy! With too many cases popping up in too short of a timeframe. Lots of companies there are shut down as well. Today, my sons school was shut down for a Clorox 360 cleaning, because of a pot COVID-19 case. Tonight, they sent an email that school is shut down for 2 weeks. I think we are close to a lockdown state, but I still got to go to work next week.

My wife went to the hospital for work today and they are obviously preparing for the storm. Most patient have been moved out and every elective procedure is postponed. The hospital is eerily quiet , she said she has never seen it as quiet before. Even the lights are dimmed. The calm before the storm. Hopefully our system holds better than Italy.

Yeah, I opened a small limit order for GOOGL before the press conference which filled almost at yesterday closing prices and then it ran up 7% during market hours. Mr Efficient market at work obviously. I think I want to own stocks just from 15:30-16:00 in the future. Why bother holding it the rest of time with all the risk that comes with it?

GOOGL and TRV

Cash is roughly 30%. I have various accounts to, I don’t keep track of it too closely. I was at 50% when I went bananas selling more than aweigh about, but then bought back too early. Should have just sat it out. I am Down less than 20% from the peak, but it it feels bad enough. The stock sales are clearly liquidity & index selling driven, so my thesis is that there will be amazing bargains available at some point. Look at 100 year copper prices to get some clues. Oh, the Dr Copper thesis? I guess we still have a lot of air underneath Cu prices, as they were below $1/pound for long periods of time., but I am not sure if that what you are referring too.

Cash is roughly 30%. I have various accounts to, I don’t keep track of it too closely. I was at 50% when I went bananas selling more than aweigh about, but then bought back too early. Should have just sat it out. I am Down less than 20% from the peak, but it it feels bad enough. The stock sales are clearly liquidity & index selling driven, so my thesis is that there will be amazing bargains available at some point.

I am not afraid of the stock declines, but I didn’t sleep well this night (first time) and worried about two things : 1) Health my family and elderly parents. My live in Germany and are around 80 years old, prime targets for the Virus so to speak. Same for my mother in law who live on the Bay Area, CA, which is already crazytown. 2) I am concerned about a deep recession and possibly the financial system cracking. Today’s Fed action was very telling as it seems that banks or other actors are short on cash. We saw already Boeing drawing down their credit lines as an indicator and financials falling like they go outmoded business next week. Looks just like September/ October 2008 to me. I bet banks need all the liquidity right they can get. Same with the energy sector which looks doomed to me and will have many companies blowing up, including perhaps some integrated second Tier players. Was a net seller of stocks today (sold in the mini bump following the Fed announcement ). Not fun. The only sale that Made Green was from my Tequilla Stock (CUERVO.MX) and that stock isn’t even cheap.

Just got back from work (yes I am still going to my office) and hat a chat with our supply chain manager who was back at the office too (he was off Office out last week). He told me that Trump‘s speach last night caused a lot of trouble that he has been working last evening too fix, because of confusion that the ban on flight might also affect trademark good. It seems that our POTUS stated that all to Europe are halted, but what he really meant and apparently later clarified in tweet is that it only affects people traveling and not the trade of goods of course, but many didn’t get that part of the message. Life goes on (he was a lot on the phone this AM), but of course none of this is helping. Tomorrow we have a visitor from France (no idea how we got there ) with a full room of people bd there were some haphazard safeguards (signing a form that you don’t have fever) which seem more like legalese BS, but doesn’t really do anything to make anyone safer. Interesting times.

Risk-free + risk premium. In 2016, it was around 5% at a 2% risk-free rate. Maybe it's dropped to 4% or 3% as risk-free has gone down. Or maybe higher as risk premium goes up. You can run a sensitivity. The same way negative interest rates in Europe and Japan affect equity valuation. Zilch. If rates go negative and valuations do not move, private equity will have a bonanza in the US. I think they will be licking their wounds for years, after we get a downturn.

Sounds like a good idea, but that’s not how it works.

Angling for Darwin awards. I couldn't be more delighted with our fearless leader. Everyone stay healthy, including our president. Potus seemed shattered in tonight’s speech, very atypical for him.

Angling for Darwin awards.

That would be $38. We are pretty close. but then, we also have VNO at 50% of NAV. Choices, choices. Maybe I'm overthinking it, or perhaps biased in the first place, but Im paranoid that forcing everyone to work from home will awaken a sleeping giant. Especially all those dinosaur companies who still currently shun the idea. Once they see how easy it is to make that transition perhaps this presents problems for traditional office assets. Retail will at least see folks come back. Who really wants to go back to the office? Works better for some jobs than others. I also support manufacturing , so I need to be on the floor sometimes. Then there is the informal exchange that happens because people run into each other or keep over coffee even. A lot of these will be missed when everyone works from his little home island. And how do you get to know people even if you only work remotely? I think a combination of both is ideal.

Downwards if I had to bet. Some other news: -March madness 2020 without fans -NBA 2020 season cancelled -Tom Hanks & wife are infected? Yep, even the last holdout got the idea that it’s not just the flu any more. Probably another limit down day.

Fascinating. Do Americans even eat that shit? If you have Covid-19, do you want to spend 45 minute boiling chickpeas, or do you want to throw a frozen lasagna or frozen pizza into the oven? Brown rice, lol. SJ Brown rice is easy to make. 15-20 minutes in our small steamer oven or even in the microwave. Healthier than white rice. I went low carb, so switched to granulated cauliflower or quinoa.

Sound like your area is worse off than my area MA/NH border. My wife was at Costco yesterday and noticed that Thai rice was gone , but Indian rice still available. hand sanitizer gone, but most of everything else still available. Our Costco has hired extra people to wipe & sanitize shopping cards and fridge doors etc. constantly. Great idea, imo.

That would be $38. We are pretty close. but then, we also have VNO at 50% of NAV. Choices, choices.

I moved 15% at 2800 and another 5% at 2720. I will add 10% at every 100 point drop roughly. Might move it all when things look clearer. I kind of expect to see the 3018 lows tested. My 401k is a small account worth 2 1/2 years of savings for me. I had moved it all to cash when the SPY went to 3050. My other accounts are way more invested unfortunately.

Risk-free + risk premium. In 2016, it was around 5% at a 2% risk-free rate. Maybe it's dropped to 4% or 3% as risk-free has gone down. Or maybe higher as risk premium goes up. You can run a sensitivity. The same way negative interest rates in Europe and Japan affect equity valuation. Zilch.

Developers seem iffy in this environment. Might be difficult to fill/lease up buildings.

KAR had a nice bounce and position is gone (small loss).

Though it is unfortunate, I think it is less odd considering the following factors related to how people process information: I think part of the reason why watching the developments with caution doesn’t really apply here is be Successful in investing you need to anticipate movements rather than just react to it. In the current situation, the ground is rapidly shifting and the outcome is quite unclear. It is a situation that is somewhere in between the GFC and 9/11 in my opinion, but others think that it’s just a flu. The divergence of outcomes and opinions is immense and there I are lot of type A personalities here (typical for finance), so this quickly gets very heated.

sorry to hear that. Do you know their ages? Both in the 50s. @Muscleman , very very sorry to hear. Reoccurring infections have been reported in China (my wife told me about it) and so far seem inexplicable and scary. Probably different strains of the Virus ( solely my conjecture).

While that is a good point, as presumably the go forward economic effects are similar, I think the starting valuation matters as well. The US markets were considerably more euphoric than the Italian ones, so a larger fall doesn't necessarily seem disproportionate. I thought of that, but then which economy is more tolerant of shocks? I thought the US had a stronger economy and that should count for something. A lot of the Italian companies aren’t really “Italian” , they operate Pan-European or even world wide. I bought bit of LEO.MI (Leonardo), which is a defense companies (and helicopters). Has a strong US business (DRS). European defense should do well, since government are practically to raise defense spending as % of GNP. LEonardo has one issues running the business (weak FCF) but that should be fixable. Pirelli ( high end tires ) a bit similar. Quite cheap considering their almost best in class profit margins (close to Nokian) due to being mostly in the premium segment. This is a world wide operating company (albeit in a crummy sector currently) that just happens to be trading in Italy.

Yes, that was a pretty good press conference. No sugar coating, stating what is known and admit was it not. Simply factual and forward looking. Compare this to Trump’s press conference yesterday. It was a clown show with a bit of campaigning and boasting thrown in. Spek, I was thinking the exact same thing about Trump. It really is mind boggling. PS: I also owe you a thanks. When you posted about 2 weeks ago that you were busy selling a bunch of stuff due to your concerns it aligned with what i was thinking at the time and likely helped with my decision. :-) Thanks for sharing. An act of leadership by Inslee, hoping actions will speak louder than words. I'm not sure if you were being sarcastic - I don't think a US epidemic is priced in. Clusters in some states yes, but if they have 1000s of infected patients in more than a couple of states moving freely across the country, I don't think the kind of interventions that will be needed and economic disruption that will ensue are priced in. I think it was Vikings comments that near term developments are priced in, it mind. This is most likely correct. I am not sure it is priced in that we may have large scale lockdowns, airports shut down, schools shut down (already happening) some of this possibly nationwide. Also if this peters in summer, it doesn’t mean it is over either, but that we need to prepare for a second wave that most likely is going to hit next winter. It is unclear if we have a vaccine by then and even if, it will most likely to be only partly effective. So I think this is going to be a big deal, similar than 9/11 but most likely worse in terms of economic outfall. Sounds pessimistic, but I tend to be optimistic. I just want to get rewarded for risk taken. valuations are getting better and there are some cheap stocks around, but overall markets haven’t priced in these risks yet. I am about 75% invested (from 50% when I sold, since I rebought a bunch of stuff cheaper ) and I think it’s still too high. I can easily see us breaking the lows from 2018. More importantly, me and my wife both have elderly parents we are worried about. My wife wanted to visit her mom this spring break in CA, but she cancelled this trip, out of concern about travel risk and exposing her, as well as the risk of getting stuck in a lockdown.