KJP
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Interesting post: https://catalyst-insights.com/the-virus-infecting-mlps/
Here are the fact sheets for the two levered MLP funds discussed in that post:
https://cef.tortoiseadvisors.com/media/1762/tyg-fact-sheet_022920_retail.pdf
They must have been selling at any price, though I doubt they have any assets left at this point.
EDIT: They also hold shares of the publicly traded C-corps. See, e.g., this portfolio disclosure from the Tortoise Fund: https://www.sec.gov/Archives/edgar/data/1268533/000114554920004137/xslFormNPORT-P_X01/primary_doc.xml
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HireQuest
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KMI got cut in half, am I missing something?
I was just responding to your specific question. I agree that all midstream appears to have collapsed, regardless of whether it directly or indirectly relies on domestic oil production. I don't believe we'll be shutting down power plants or no longer heating our homes in the winter. So, I expect natural gas to continue to flow, such as it did in the aftermath of the GFC. So, what's going on with natural gas pipelines?
Perhaps try to invert this, what would have to be true if the market price is correct? That's what I'm trying to think through. Can't roll debt? Don't get paid even if pipes are used?
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Crazy valuations.. are the pipelines a going concern(?)
Which ones? A pipeline that transports Marcellus gas to a power plant in New York versus a gathering system geared to oil.
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Not sure about 100x, but at some point Wayfair will be a winner. Can't imagine many physical furniture stores are going to make it through this alive. So benefit of online shopping + huge selection, but unclear how many of their sellers can survive...
Perhaps after restructuring - have you looked at their balance sheet and cash flow statement?
E-commerce is hard enough to begin with, let alone when you are trying to sell heavy, difficult to ship products at 20-25% gross margins.
Also consider that a company that enjoys a negative working capital cycle when sales are expanding (and finances growth from that) will see that unwind, with declining sales causing a cash drain.
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Shareholders don't need a bailout
I agree with you. But I suspect that airline and cruise line shareholders, among others, will get one.
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minten, thank you for posting. This explains why testing i.e. accurate information is a critical factor in early stage viral outbreaks.
For all we know, widespread testing could show the severity of this virus is totally overblown as critics on this thread have suggested, and therefore the pandemic responses are unwarranted. Our portfolios and emotions could have been spared much stress.
This is incorrect, and dangerous thinking.
It is true: accurate information is a critical factor, but it is not possible for humans to obtain such early in these viral outbreaks.
The pandemic response is warranted - the precautionary principle is the only guide that would ensure the survival of the species.
In these situations, you don't need accurate knowledge of the probabilities in order to know what to do.
Our emotions and stress are wiser guide than our intelligence in deciding how to react.
Strongly agree with this. That's how the precautionary principle works. When there is wide uncertainty with a lot at stake, you err on the side of taking things seriously and overreacting.
I would have thought more people on this board would be fans of the margin of safety, but ¯\_(ツ)_/¯
By the way, I haven't been paying attention to the US election. Did Andrew Yang win? I hear the US Gov't is handing out cash now.
Yes Andrew Young (UBI), Liz Warren (student loan interest rates forgiven) won, Bernie (Medicare for all) is next. It’s free for all, Airlines, Cruise lines are already fed in the soup line. Shale and Energy is begging. I guess the lobbyists for all the industries are working overtime.
Clearly, we have an extraordinary economic situation, but it is still surprising to see much more government intervention than in countries that are called socialist here. I’d be more in favor of something that helps individuals, if we have learned anything from the GFC it should have been that.
Probably the wrong thread for this comment, but I doubt Democrats will go along with handing money to shareholders. Warren has come out with an 8-point "litmus test" for "bailouts to corporations." I like Warren much more than most people on this board appear to, but even I think much of it is misguided, though I expect she's just layout out a bargaining position.
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I'm also interested in orthopa's point: For those who believe the US response was "too little, too late" to avoid overloading hospitals a la Italy, by what date (or range of dates) should we start to see overloaded ICUs in the apparently most troubled areas, e.g., Seattle and NYC?
Approx every week cases double, and it takes about a week until people are hospitalized, so once you reach a large enough threshold of cases, each week gets progressively worse. Going from 1 case to 100 takes around the same amount of time as going from 100 to 100,000 (unmitigated), and the problems become much large in that 100 > 100,000 progression.
If the estimates I've seen hold, that threshold is hitting right about now with around 20,000 estimated US cases as of a few days ago. Clusters will become large enough to impact large city health systems once you have a few thousand cases in the area, and I'd expect in less than 7 days you'll start seeing a crush of patients in Seattle and NYC, and the situation will likely get worse each week from there.
Thanks for the quick and precise response. What contrary data over the next 7-21 days would cause you to change your opinion?
Note that I'm using ICU overload in an attempt to find an objective measure in light of the lack of testing in the US (though I understand that an ICU visit could be 14-28 days days after infection, so if you see ICU overload, then you likely have even bigger problems in the near future unless significant containment measures were instituted weeks earlier.)
If we don't start seeing deaths spike soon, I'd be surprised and would re-assess. Every country hit has been following similar trajectories, so it's within my 90% confidence interval that we will start to see an increase of cases along that trajectory (which is likely a significant undercount), and because the most serious cases will be the ones identified, I'd expect to see a high mortality rate.
Thanks for the response. I suspect that for anyone following this debate it would be useful to write down now and as precisely as possible the data that would cause you to start to change your opinion so you can avoid thesis creep in the future. (A bit of Tetlock's methodology.)
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I'm also interested in orthopa's point: For those who believe the US response was "too little, too late" to avoid overloading hospitals a la Italy, by what date (or range of dates) should we start to see overloaded ICUs in the apparently most troubled areas, e.g., Seattle and NYC?
Approx every week cases double, and it takes about a week until people are hospitalized, so once you reach a large enough threshold of cases, each week gets progressively worse. Going from 1 case to 100 takes around the same amount of time as going from 100 to 100,000 (unmitigated), and the problems become much large in that 100 > 100,000 progression.
If the estimates I've seen hold, that threshold is hitting right about now with around 20,000 estimated US cases as of a few days ago. Clusters will become large enough to impact large city health systems once you have a few thousand cases in the area, and I'd expect in less than 7 days you'll start seeing a crush of patients in Seattle and NYC, and the situation will likely get worse each week from there.
Thanks for the quick and precise response. What contrary data over the next 7-21 days would cause you to change your opinion?
Note that I'm using ICU overload in an attempt to find an objective measure in light of the lack of testing in the US (though I understand that an ICU visit could be 14-28 days days after infection, so if you see ICU overload, then you likely have even bigger problems in the near future unless significant containment measures were instituted weeks earlier.)
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Is it really possible to become and MD without a basic understanding of exponential growth and no understanding of statistics/sampling theory? (This is a serious question, not rhetorical, because I don't know the answer and I'm curious if such big holes are normal in doctors' education.)
Since I'm an MD, I can answer your question. The answer is yes. Probability/statistics is hard. Furthermore, it's probably the worst taught class in medical school, with the least interest for most med students, who are understandably more interested in anatomy, physiology, biochemistry, pathology, etc. The average doctor is no more proficient in formal probability and statistical concepts than the average layman, i.e., CoBF member.
That said, and in defense of us MDs, ordinary clinical decisions are based on intuitive probability judgments that are made implicitly, and without the need for any tricky mathematics. Mathematical probability comes into play only on those rare occasions when the right answer turns out to be counterintuitive. It's not really relevant in everyday clinical practice.
After completing my residency, I did a research fellowship which involved getting an MPH degree in biostatistics. But even if an MD has a good understanding of statistics, a medical opinion is nearly useless in this current coronavirus situation. Clinical decision making is based on statistical inference, whether it's explicit or intuitive. Statistical inference is based on well-designed experiments, clean data, and a well-understood scenario, none of which characterize this pandemic. Statistical thinking is retrospective, based on past data. With coronovirus, we have a whopping 4 months of chaotic short-term data.
Probability judgments are prospective. They can be based on relative frequencies over time, relative frequencies in an actual group of patients, relative frequencies in an imaginary group of patients, or they can be subjective belief. Most of the speculation in this thread is based on the latter two. We're all guessing. Orthopa is clear on that. He is also self-aware because he admits he may be subject to the anchoring bias, having committed to a relatively controversial opinion.
My local experience parallels Orthopa's so far (except for no cases of positive coronovirus tests yet, which is because there has been hardly any testing done around here as of this weekend). I'm in Orange County, California. My hospital's ER has a tent outside for overflow cases. It went up last week and hasn't been utilized. The hospital and ICU census is the usual at this time of year. (I know it's early.) My flow of office patients has actually slowed in the past week, possibly because patients are now thinking twice about coming to the doctor or hospital. (I know it's early.)
(Cobafdek: this is why I'm at the 2% rather than the 70% number for orthopa's theory. If someone doesn't understanding even the most basic concepts of exponential growth or statistics--ideas you'd learn in your first year courses--them, when it comes to a pandemic, their hypotheses about the meaning of anything they observe are likely to be worthless.)
My opinion that Orthopa's theory has a 70% probability of being correct is pure subjective belief, partly based on my local anecdotal scene. It's just a feeling. I don't think it's any more or less valid than any of the counter-opinions in this thread. We're all fooled by randomness. And I have not expressed my opinion in my community because I think people would misinterpret it and not do the right thing, which is to use the precautionary principle.
In fact, I think it is a major mistake and dangerous to think that heavy speculative computation - seen on this thread - is at all helpful in these cases. For unknown unknowns like this novel coronovirus, the worst case scenario is bad enough. Put down the calculator and run like hell.
Thanks for increasing my confirmation bias. That being said I also find it interesting no comments on your contribution. How can everyone else blame me/you I guess. Seeing is believing until it changes.
Question for the math guys as Im learning a great deal. Ill leave the computation up to you guys.
Again we know first infection Jan 20th, whether it was here before is up for debate and unknowable. At what date in the future do you start to say, wait a minute. This death rate is way over blown, maybe this isn't as bad as we thought it was. We should be looking at a significant exponential increase here soon right? Its been almost 2 months, lots of untested people and asymptomatic walking around.
Social distancing and shut down just started. Going by quarantine guidelines that train left the station 14 days ago. The snowball is still growing for 14 more days. Increased death should follow.
What are you guys looking at?
I'm also interested in orthopa's point: For those who believe the US response was "too little, too late" to avoid overloading hospitals a la Italy, by what date (or range of dates) should we start to see overloaded ICUs in the apparently most troubled areas, e.g., Seattle and NYC?
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Theorizing about sunshine-hours in various locations and lethality (based on little data, but interesting line of thought since Vitamin D supplementation is inexpensive and not-risky, so very asymmetric): https://simonsarris.com/sunlight
Vitamin D deficiency has also long been theorized as one of the factors causing influenza seasonality. See, for example, this paper: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2870528/
On the other hand, some studies have suggested that Vitamin D supplementation doesn't do much to present viral respiratory tract infections: https://www.ncbi.nlm.nih.gov/pubmed/28719693
https://www.ncbi.nlm.nih.gov/pubmed/26951286
As you note, Vitamin D is very cheap. You can also google to find recent evidence regarding the levels of supplementation that might lead to toxicity (tl;dr -- there appears to be plenty of room to supplement without causing any significant problems).
Based on this research, I've been supplementing with Vitamin D since last fall with good results re common cold symptoms (which are an issue with two small children in the house). Of course, n=1 doesn't provide much evidence of anything.
Just FYI, there is some evidence that very high doses of Vitamin D can cause/contribute to kidney stones:
http://www.vitamindsupplement.com/vitamin-d-and-kidney-stones/
So, don't overdo it, don't mega dose thinking it can't have negative effects.
(Anecdotally, I've had kidney stone symptoms that seemed to be correlated with high Vitamin D doses. YMMV.)
Yes -- my understanding is that Vitamin D encourages calcium formation, thus the side effect you're talking about.
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Theorizing about sunshine-hours in various locations and lethality (based on little data, but interesting line of thought since Vitamin D supplementation is inexpensive and not-risky, so very asymmetric): https://simonsarris.com/sunlight
Vitamin D deficiency has also long been theorized as one of the factors causing influenza seasonality. See, for example, this paper: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2870528/
On the other hand, some studies have suggested that Vitamin D supplementation doesn't do much (or anything) to prevent viral respiratory tract infections: https://www.ncbi.nlm.nih.gov/pubmed/28719693
https://www.ncbi.nlm.nih.gov/pubmed/26951286
As you note, Vitamin D is very cheap. You can also google to find recent evidence regarding the levels of supplementation that might lead to toxicity (tl;dr -- there appears to be plenty of room to supplement without causing any significant problems).
Based on this research, I've been supplementing with Vitamin D since last fall with good results re common cold symptoms (which are an issue with two small children in the house). Of course, n=1 doesn't provide much evidence of anything.
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even if transmission is substantially slowed within the small area during the local partial lockdown.
But this is one of the most important thing we can do - to buy as much time for both research into treatment, and to ease the burden on the healthcare system.
I understand. My point is that if partial lockdowns are a good idea, why aren't they being more broadly imposed? To take the Philadelphia region as an example, why not impose the same restrictions across the entire metropolitan region, or the tri-state region (I realize this would require multiple state governments)? Montgomery County is full of commuters and has the busiest commuting train line in the area (it runs essentially along the old Main Line). If you need to lockdown Montgomery County, then why don't you need to lockdown Philadelphia and every place that is closely connected to it?
I see the internal logic in "This is all overblown and lockdowns are an overreaction" and the internal logic in "We need widespread partial lockdowns to nip this in the bud before it gets out of hand." I don't see the internal logic in partially locking down only Montgomery County, but, again, I'm not a medical professional; I've only watched ER on TV.
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Is now the time to do this nationwide? Should Trump issue that recommendation to all governors? Or is that an overreaction?
Yes, it's time. Wait until you see what happens in Seattle in the next two weeks.
We can't have that happen all over the country.
I'm far from a medical expert, but it seems to me that the virus is probably all over the place by now. Based on that assumption, locking down small areas for two weeks seems like a half-hearted solution, because new cases will just come in to the small area after the two weeks are up, even if transmission is substantially slowed within the small area during the local partial lockdown.
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My home county in the Philly suburbs (Montgomery County, Pennsylvania) has just been partially locked down by the Governor. All schools, universities, gyms, entertainment venues and community centers ordered closed until March 26: https://www.msn.com/en-us/health/medical/coronavirus-updates-pa-orders-montgomery-county-schools-to-close-state-has-22-cases/ar-BB116dhZ
How long did that take?
Is now the time to do this nationwide? Should Trump issue that recommendation to all governors? Or is that an overreaction?
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My home county in the Philly suburbs (Montgomery County, Pennsylvania) has just been partially locked down by the Governor. All schools, universities, gyms, entertainment venues and community centers ordered closed until March 26: https://www.msn.com/en-us/health/medical/coronavirus-updates-pa-orders-montgomery-county-schools-to-close-state-has-22-cases/ar-BB116dhZ
There are currently 13 confirmed cases in Montgomery County out of population of roughly 825,000. Of course, we don't know how many actual cases there are.
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I think there will be many, many opportunities for sure thing multiple bag winners on the long side before long
You may well be right. I agree with you that most people mental models of what is likely going to happen are just beginning to change from minor disturbance to full Italy-like shutdown.
I hope you post your long ideas when they arrive.
EDIT: Rather than "most people," I should have said the expectations of the people in my social circle -- mid 30's - mid 40's professionals with youngish children in a large northeastern city and its surrounding suburbs. They are either ready to or willing to accept closing all schools and public venues for weeks. But they are also the type of people who can handle childcare on their own and don't depend on wages and tips to put food on their table and gas in the car every week.
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FRP has largely moved on from the warehouse business, which it sold at a great price. I believe the DC and other residential projects they're funding will be quite valuable over the next few years and, most importantly, they've got a great balance sheet and apparently quite patient and competent capital allocators in charge. The timing of my purchases and sales has historically been rather poor -- I have no talent for trading, so I can't vouch for the timing of buying (or selling) right now.
KJP, you've been helpful to me in the past....don't you think there will be better opportunities than this over the next few months???
Yes, I do. But for various reasons unrelated to any efforts at market timing, I was around 75% cash in February. I've been way too early to start buying, but I'm not close to all in right now, nor would I recommend anyone doing so. I also have the luxury of not investing other people's money and not needing for decades any of the money I have invested.
I'm looking to collect companies with good businesses and solid balance sheets and pick up shares in dribs and drabs, without any real effort to call the bottom, which I cannot do. But I am going to get even more patient and discerning in what I want to own and take the opportunity to high grade my portfolio if I can.
Your warnings have been spot on so far, so your approach may well be smarter than mine. But I'm curious what you think about something like Williams (WMB). It's hard to discern any decline in U.S. domestic natural gas usage, even during the GFC. So, what would you pay to own it now?
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Rosetta Stone
FRP Holdings
Developers seem iffy in this environment. Might be difficult to fill/lease up buildings.
FRP has largely moved on from the warehouse business, which it sold at a great price. I believe the DC and other residential projects they're funding will be quite valuable over the next few years and, most importantly, they've got a great balance sheet and apparently quite patient and competent capital allocators in charge. The timing of my purchases and sales has historically been rather poor -- I have no talent for trading, so I can't vouch for the timing of buying (or selling) right now.
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Rosetta Stone
FRP Holdings
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HireQuest
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Rosetta Stone
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BMJ letters posit theory that ACE inhibitors (prescribed for HBP) could be the factor. Studies show that ACE inhibitors upregulate ACE2 expression in cardiac tissue. Could also be upregulated in lungs thus giving SARS-COV-2 more binding targets.
Could you kindly translate this for us, please?
A class of drugs commonly prescribed for high blood pressure may (just a theory) increase susceptibility to COVID-19. There is, of course, a correlation between age and high blood pressure medication.
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Ericopoly, this is an extinction level event.
"Extinction" of what?
Elizabeth Warren's wish list of bailout conditions
in General Discussion
Posted
House Dems pandemic response plan: https://financialservices.house.gov/uploadedfiles/fsc_covid-19_legislative_package_-_03.18.20.pdf