Cigarbutt

Good recommendation wabuffo. I started the book and may comment on it if something comes up along the way. ---o---o--- For section III (The textile mill 1955-1962) and section IV (The investment 1962-5), i didn't verify with the original BH annual reports and rely on the numbers provided by the author (although some numbers (equity accounts, debits and credits over the years) do not exactly fit with some other references i had; i assume the author's numbers are exact or not materially different from reality). Here's a link that complements the first sections of the book: https://www.globalfinancialdata.com/berkshire-before-buffett/ The investment (and the timing of this investment) made a lot of sense in 1962. The business had entered a poor trend but it was reasonable to assume that the initial investment in 1962 (share price 7.51) was made in a trough, in a company involved in a poor but cyclical industry and with a well established trend in adequate capital allocation of excess capital. It also had a significant and unrecognized tax asset from prior years. The price paid initially was at a very significant discount to liquidation. Derived from the author's numbers, the company had bought back shares at an average price of 11.30 from 1955 to 1962. It's the changing thesis after which is puzzling. Contrary to Blue Chip Stamps, the capital redeployment was relatively low and delayed.

^Event cancellation insurance is indeed more straightforward and may be a somewhat profitable line of business going forward. Return to work guidelines are likely to come from the various states' levels and this will come with some uncertainty and an evolving agenda. For the BI insurance, the present legal landscape looks relatively secure but there's the residual legislative risk. Various states have introduced different types of bills which would tend to shift the burden of proof in favor of claimants. The most aggressive form of this phenomenon seems to be coming from California with the use of the "rebuttable presumption" doctrine. For the workers compensation lines in California, the aggressive nature of this legislation is tempered by administrative criteria with the end result that it's a satisfactory compromise in that specific line of business. However (IMO), the introduction of the rebuttable presumption for business interruption insurance (the insurer would sort of need to prove that the virus was not present on premises (as a "contaminant" that triggered) at the time of the public authority announcement of forced closures) would make it much easier for claimants to "win" in lower courts. Still, at some higher levels, it would be established that this new legislation caused unconstitutional impairment of contracts. So, in the end, not much in terms of actual insurance costs but the legal bill will go up. https://www.natlawreview.com/article/it-s-covid-19-pandemic-it-s-everywhere-new-cal-bill-to-make-insurers-prove-otherwise

https://www.law360.com/articles/1291693/attachments/1 The legal strategy here seems to be based on a two-step process: the virus exclusion clause and then the business interruption from physical damage does not apply aspect. The case they refer to which arose from a State Circuit Court: https://www.natlawreview.com/article/first-covid-19-business-interruption-decision-sides-favor-insurers This is very recent and quite relevant. The judgment, primarily, uses a federal law lens (contracts) and concludes that physical damage has not occurred. The exclusion issue seems to be peripheral. Edit: In a parallel fashion (turning every stone strategy), they are also trying to suggest that the case, if relevant, should be handled elsewhere.

Let's face it, this 'macro' sub-topic could easily turn into an unnecessary and regrettably destructive exchange. i will add another line to my investment credo: Don't fight wabuffo (along certain lines} (at least publicly). :)

From an individual point of view and forgetting about second- and third- order effects, why even tax corporate profits? There are the equity and efficiency questions and maybe that's too much to ask for the sake of this discussion. There may be a flaw in your tax receipts analysis. You seem to obtain pre-tax profits by using the statutory tax rate on after-tax profits. The effective tax rate has remained about 50% lower than the statutory basis but has been quite volatile over the years. To asses an effect (a pre-tax income boost after enactment of changes unrelated to fluke), it may be more relevant and valid to look at various forms of NIPA profits. These profits have been flat for years and there is no noticeable effect from the recent (2017) corporate tax changes. If anything, profits have been coming down (started before the virus). One could argue that after-tax profits would have been even lower without the tax "relief" but i won't go down this rabbit hole. From the inter-jurisdiction point of view (tax policy competition), it is interesting to note that the effective corporate tax rate of the US before 2017 Tax Act was within the OECD average and now it is lower than the average which is a good thing if you keep everything else equal but the other criteria (equity and efficiency) are more equal than others. The point i want to make is that context matters. In the 1950s, in the context of initiating an investment partnership, i estimate that conditions were great to be fully invested and more even if the corporate statutory rate was slightly above 50%. Then, corporate tax receipts reached 6% of GDP (vs about 1% now). Now is different on many levels... It has to be recognized that the C-corporation share of receipts has gone down over time because of the rising share of passthrough entities (that ends up as tax receipts at the individual level) but there is no question that the share of tax paid by corporations has significantly decreased over time. Of course, that can matter little when the pie keeps growing. Under usual circumstances, i would entirely focus on the share owner's total return and not worry about the worker but much quality work has shown that the typical American worker has harvested very little (if anything, vs real wage growth) from the corporate adjustment. So, contrary to what's implied in your post, the trickle-down has not occurred after the 2017 Tax Act. And the fiscal context now is somewhat special. Q2 Federal withheld income tax receipts dropped a record 25% from year ago levels and the 2020 deficit looks to be 20%+ of GDP. At a time when very unusual debt is used to buy bread and circus to the masses, it will (IMO) become increasingly difficult to "justify" the corporate's dwindling share of tax receipts. Between mid-March and late June 2020, the Treasury’s total borrowing rose by about $2.9 trillion, and the Fed’s holdings of U.S. Treasury debt rose by about $1.6 trillion and i offer the opinion that this, in itself, is not a way to create long term value. To link with the spirit of the thread (the inflation swindler versus the debt-deflation trap), it seems that more debt is not the answer to too much debt and the overhang will tend to decrease the flexibility to deal with slowing money velocity, growth and, eventually, animal spirits.

Situations similar to this may be quite close to occurring if there is a radical regime change come November. i wonder if the radical regime change theme should not trigger to question the direction of the cause and effect. Both President Hoover and Governor FDR had very similar positions on a strong dollar and a balanced budget. President Hoover in July 1932 expected recovery by the end of the year and before the election. FDR's approach accounted for the possibility of a severe and prolonged contraction. At the time of the devaluation, the US had a positive trade balance and even if the move was a global one, the overriding objective was domestic. The idea was reflation, just like now. Moving away from certain regime changes that still need to be defined: https://www.clevelandfed.org/our-research/indicators-and-data/inflation-expectations.aspx Reflation will happen somehow but it's hard to see how an economic slowdown will not meet negative rates.

You have posted positive views on herd immunity in this thread. With this in mind, it's a real head-scratcher (looking for a rational explanation) as to why somebody (from an individual or collective point of view) would, if given a choice, pick the natural way over the vaccine. ? It's already hard to craft a message for the growing crowd with convictions. How to win when even rational people start to wonder?

In order to figure out if rising accounts receivables is a 'good' thing, one has to look at fundamentals and assess what is happening with competitors in the industry. I agree and the chart then could be effectively compared to a host of other countries showing what happens to the death rates when the test % goes below certain thresholds. It would be easier to evaluate the excess mortality that has occurred, that is occurring and that will likely occur going forward. A 14-day moving average with a 14-day lag would even be more revealing. There is no excess mortality in US presently for past few weeks. Yes, the death rate aggregate curve has been declining in the US and that will eventually be the 'natural' trend in epidemic curves. Given the demographic and risk profile of deaths (also taking into account LC's 'adjustments'), there is an expected reversion to the mean and more in the months following the peak and NY and surrounding areas are now contributing to this movement. However, there are a few states (Florida, Arizona, Texas and many others) that are 'fighting' the trend. The interesting question is why did the US take the 'collective' decision to have a curve (seven-day rolling average of new deaths, by number of days since 3 average daily deaths first recorded) that is intermediate between the European Union (and UK and other similar) and Brazil? Florence Nightingale went to Crimea in 1854 and noted very high hospital mortality. Using a common sense and data-driven approach, she was able to reduce the mortality rate from 42.7% to 2%. Just reducing the mortality by half would have been satisfactory but she aimed to be exceptional.

In order to figure out if rising accounts receivables is a 'good' thing, one has to look at fundamentals and assess what is happening with competitors in the industry. I agree and the chart then could be effectively compared to a host of other countries showing what happens to the death rates when the test % goes below certain thresholds. It would be easier to evaluate the excess mortality that has occurred, that is occurring and that will likely occur going forward. A 14-day moving average with a 14-day lag would even be more revealing.

i don't see it that way. Let's say BRK buys a (re)insurance entity. They could boost reserves even if they have capital to support the business going forward. It may have to do with financial conservatism a building a goodwill account with regulators. If you look at BH Energy (see below, page 21 and especially page 14). They are building while deleveraging and retaining capital. This may come handy if a consolidation (like railways, airlines (oups)) of the midstream energy sector is triggered somehow by a higher cost of capital. Building "partnerships" with regulators and credit rating agencies makes a lot of sense from a long term perspective. https://www.brkenergy.com/assets/pdf/2019-eei-presentation.pdf

i think this is misinformation and perhaps disinformation. https://www.scientificamerican.com/article/how-covid-19-deaths-are-counted1/ https://www.cdc.gov/nchs/covid19/coding-and-reporting.htm Given the evolving evidence (balancing reasons that could lead to over- and under- reporting) and excess mortality inputs, at this point, some underestimation of reported deaths is likely. Disinformation from a public health source? Here's the excess mortality graph provided by the CDC: https://www.cdc.gov/nchs/nvss/vsrr/covid19/excess_deaths.htm Saw a peak in early April that has since subsided. For the last week, it has fallen below the trend line. Agree that there's probably an undercount, but there's also a general acceptance that deaths from cold and other influenza-like illnesses are undercounted as well. Plus, how do we separate that from the increase in deaths that we've seen as a result of lockdown (people delaying treatments and not going to the hospital when they should, deferment of elective procedures, overdoses, suicides, etc) How do we understand the true lethality of this virus when there's this level of ambiguity? Btw, it doesn't look like it's just Toronto either - seems like the standard practice is to list all deaths for which the deceased tested positive as a COVID death. Here's Illinois's Department of Public Health explaining how they count: "Technically, if you died of a clear alternate cause, but you had COVID-19 at the same time - it's still listed as a COVID death," Dr. Ezike answered. "Everyone who's listed as a COVID death doesn't mean that was the cause of death, but they had COVID at the time." https://www.wandtv.com/news/why-and-how-covid-19-deaths-are-tracked-in-illinois/article_2085ddaa-93e8-11ea-b1c2-7fd058d907cf.html Florida and Texas never had excess deaths more than once a while Flu season. Its NY, NJ and surrounding states that contributed to much of the excess deaths. The CDC excess mortality "dashboard" adds weight to the hypothesis that the overall reported COVID-19 mortality number is somewhat correlated to the excess mortality and while the excess mortality has been relatively uneven, most states appear to report significant excess mortality. If this excess mortality is an "adequate" price to pay or if it is felt that lockdowns actually worsened the overall excess mortality (?) are different questions. But the excess mortality is what it is. There is noise and there are mitigating factors but, just like in investing, uncertainty is the name of the game and decisions have to be made. The following is interesting as it gives some perspective on the amount of underreporting that may be occurring (the data stops in early May). Since then, many states have been reporting excess influenza deaths with an unusual pattern, suggesting that some influenza-related deaths were in fact misclassified COVID-19 deaths. They suggest that the under-reporting may lie between about 2 and 20%. https://www.medrxiv.org/content/10.1101/2020.05.04.20090324v4.full.pdf Follow-up: The graph is not as ominous as it looks because it is a summation of heterogeneous data (some good and some bad) but it feels like a company increasing leverage while entering the zone of insolvency. It could work out OK but there may be collateral damage.

i think this is misinformation and perhaps disinformation. https://www.scientificamerican.com/article/how-covid-19-deaths-are-counted1/ https://www.cdc.gov/nchs/covid19/coding-and-reporting.htm Given the evolving evidence (balancing reasons that could lead to over- and under- reporting) and excess mortality inputs, at this point, some underestimation of reported deaths is likely.

Disclosure: i just erased a sarcastic comment and reformulated this post. i also have an interest (an interest to understand the interest) in conspiracy theories. i think the phenomenon may have played a role in the recent relative virus performance in the US. -How do you deal with commitment and confirmation bias? Its not a theory. It is a simple question of asking for a randomized controlled clinical trial that studied HCQ (with Zinc) that studied in proper patient population, that is a population with early infection or prophylaxis. This after I gave four retrospective studies showing big mortality death decreases of 40-80%, adding Zinc giving better results and administering early giving better results and a large decrease in infections with a prophylactic study from India. For example, the Beth Israel study had 6800 patients with HZ ratio of 0.53 (1 being no effect) of mortality with Hydroxychloroquine. This is not a theory. Humble opinion: There has been growing evidence (weighted appraisal and odds point of view) that hydroxychloroquine is 1- unlikely (alone or in combination) to cause a significant improvement in CV contexts (treatment and prevention), 2- likely to cause significant side effects in a small number of cases, especially when used in combination and 3- focus on the CV group will cause difficult supply or even shortage in the patient population that benefits from it. Isn't it reasonable then for researchers to face a higher burden of proof when looking for funding? Recently, Hertz tried to issue shares post chapter 11 filing and the burden of proof was so high that the SEC caused the process to derail. The unacknowledged goal was to protect the investor against his or her biases. Do you think there is anything else going on with the WHO and other government organizations?

Disclosure: i just erased a sarcastic comment and reformulated this post. i also have an interest (an interest to understand the interest) in conspiracy theories. i think the phenomenon may have played a role in the recent relative virus performance in the US. -How do you deal with commitment and confirmation bias?

Thanks for the reference; i will check it out. It seems Heinz was a pioneer (like Henry Ford) in plant productivity and Milton S. Hershey spontaneously knew that corporate responsibility was not a bland statement in the proxy documents. Both firms have evolved and now sell leveraged and edulcorated sugar. --- Productivity gains along the food chain (from agriculture through efficient supply chains and to the end plate) have been amazing over the years but, like many other things, seem to have reached some kind of plateau. Food inflation is a recurring (and sometimes very relevant) theme as people tend to note when prices go up while overlooking the fact that price inflation overall has shown a very favorable trend. About 100 years ago, the share of food (in-house and out) expenses vs total expenses was 40% and it has settled now at around 9.5% (2019). (Note: the degree of disposable income is an important ingredient here) https://www.npr.org/sections/thesalt/2015/03/02/389578089/your-grandparents-spent-more-of-their-money-on-food-than-you-do Notice the plateau since the dot-com era. An interesting side effect of these productivity gains is that the typical American, in comparison to when a rocket was first sent on the moon, eats 400 more calories per day while adopting a more sedentary lifestyle. You can follow paleo, keto or Gwyneth Paltrow but, for the large majority of people, Lavoisier's conservation of energy applies. So, adjusting for inflation and wages, over the last 100 years, the price of bacon has decreased 83% (according to a conservative source). Bacon to the masses and God Bless America.

This study is a nice example of what patience_and_focus is doing in this thread. The idea started in early May with a publication and the thesis was tested (destroyed to a significant degree) when exposed to a peer review. https://www.eurekalert.org/pub_releases/2020-07/cp-htp070220.php Viruses may be our 'ancestors' and the application of the evolutionary theory remains controversial: https://www.nature.com/articles/s41564-020-0690-4.pdf?proof=true1

Pre-civilized humanity was pretty interesting in terms of life expectancy. It was essentially a tri-modal distribution: lots of deaths around birth/infancy, around 25-30 (usually dying of tooth infections), and the remainder actually living into their late years (50s, 60s, 70s). Sources? 8) I'm not gonna dig it up for you, but I know that Sweeden has kept good mortality tables going back a long time. I was really surprised when I first found out. Big surprise, life expectancy isn't really increasing by much and it isn't increasing more than before. I did dig a bit, see my edit. And it's not as good as the "ancient humans lived to old age just fine" crowd presents. Sweden mortality tables clearly do not cover pre-agricultural society either. Edit: I have to acknowledge that I'm not an expert in this and 5 minutes of Google may be uncovering as much mis-information as information. Unfortunately, I am not sure anyone else on this thread is an expert either. So knowing what's true and what's debunked by scientific community would take much longer. I think I'm gonna cede the podium and not try to reach a definite conclusion. Have fun. Edit2: Actually, screw it. I pretty much believe these folks: https://ourworldindata.org/life-expectancy And they show it's not just child mortality that affects life expectancy. They don't cover the pre-agri societies though and they only have long data from England (and the data you mentioned from Sweden in another graph). So FWIW. 8) Life expectancy, it seems, started to improve with the industrial revolution but urbanization conditions were very poor and a significant part of the improvement (on top of more available calories and general conditions) simply came from better (water) sanitation. https://scholar.harvard.edu/cutler/files/cutler_miller_cities.pdf TL;DR version: The gist of this thread is how to deal with excessive dietary affluence but a real game-changer happened when people stopped drinking their own feces and i shit you not.

California's strategy does not make sense from an enclaved-community-discretionary-spending point of view. The idea was to optimize containment (up to early March) and then to optimize mitigation. From that point of view and given the circumstances they can control, i would offer the opinion that they're doing quite well. Houston (who chose a different mitigation strategy) is showing signs of strain whichever school of thought you adhere to: https://www.msn.com/en-ca/news/us/houston-hospitals-transferring-covid-patients-we-re-running-out-of-icu-beds/ar-BB16fYE4?ocid=msedgntp The phrasing of the above bolded seem to imply a causal relationship which, IMO, is a stretch. In general, the reunion of certain criteria, including rising tests numbers and improvement in other relevant criteria means that community spread is under control. In all other significant regions in the world apart from the US, this constellation of good criteria was always accompanied by a decreasing % of positive tests. The US is testing younger people but current evidence points to significant excess mortality going forward. It may be considered a price to pay for "success". (?) Today, i listened to a recent interview with Mr. Lindsey Laurence, a former director of the National Economic Council. He basically said to stop worrying. Using simple math and basic inputs such as the Fed balance sheet expansion, the automatic effect on asset prices, he suggested that the S&P500 should get to 4000 very soon. Just use extrapolation, he said. If your assumptions are: 1-this is just the flu and 2-Arizona gets it right as far as the economy is concerned, you may want to take a look at the following. Taking Arizona as a poster child, so far, there have been twice the number of COVID deaths as typical flu-related deaths per year. In addition, using the last 7 day-average death rate (conservative assumption), going forward, the time it will take for COVID deaths to reach an additional flu-year milestone, is about 3 weeks. A part of the spread is in the "young" who can take it more on the chin but, in Arizona these days, 40% of CV-hospitalized beds are occupied by people aged between 20 and 54. i think we both belong in that age group. It's been widely reported that the part of the population bearing the brunt of the disease don't occupy a corner office on an elevated floor. There's been recent work showing that education also makes a difference: https://www.frbsf.org/economic-research/files/el2020-17.pdf It seems that you've read The Count of Monte Cristo so you may know about Victor Hugo's position on ignorance and the importance of education. Dumas focused more on the revenge part and i've always had the feeling that the main character regretted his actions in the end. What is less discussed (even in popular social medias it seems) is that people who go to hospitals for COVID care don't get the same universal treatments. Even controlling for population-specific variables (which makes the personal-collective-responsibility discussion irrelevant), evolving data is pretty convincing that people most exposed to the virus tend to go to certain hospitals and end up sicker and dying more often. But who cares if the index keeps going up? The reasons mentioned to explain this phenomenon include more staffing, more access to equipment and drugs, more timely application of protocols in more "affluent" hospitals etc --- In 1928, the Nazi party harvested 3.5% of the votes and, for the life of me, it's very hard to understand how the disconnect can be allowed to stretch this far. And, obviously, it's China's fault. Note: The "Spanish" flu likely originated from the US and we're not in Kansas anymore...

Fingers crossed that this is a trend. https://propertycasualtyfocus.com/two-early-rulings-in-favor-of-insurers-in-covid-19-insurance-coverage-litigation/ Obviously, legal intermediates are looking at every angles and this means higher legal costs but, in substance, this should not result in inappropriate retroactive coverage but, as the judge seems to be pleading, the risk is political. There is presently unusually high activity levels in drafting projects that may have retroactive consequences. IMO, this is soo un-American but what do i know? --- Irrelevant addition: In Doodiligence's link, there is a photo of, presumably, the strength of pillars of justice in the US. FWIW, concerning concrete cement infrastructure, it could be argued that the US government has vastly underestimated the depreciation expense (and eventual actual negative cash flows) related to such infrastructure. Of course, governments don't apply this kind of accounting. The use of reinforced concrete has allowed cheaper costs and more elaborate architecture but it contains an inherent flaw whereby the significant rot happens within the reinforced mesh and metastasizes like a cancer before the spalling occurs, revealing the true extent of the useful life of the structure. A temporary way to deal with the issue is to put a safety net. Signed: a foreign and stupid observer who hopes (with usd-backed fire power) that there are embers behind the potential to make your country great again. --- Back to Berkshire, general news

Do we know why there was such a lag between coastal city outbreaks -> Red states? I'm surprised it took this long to arrive. There are seasonal and climate factors but the main part is behavioral (collective) IMO. Let's invert: How would you devise unique circumstances that would reproduce what has happened and the "delay"? First, allow the virus to spread in a major city (area) that is the major landing spot for international travelers (ie don't contain well), then overshoot to major distancing and restrictions on mobility and then eventually reopen (don't mitigate well) before criteria for opening are met. From genomic preliminary results (virus signature), most viral outbreaks now in the US had their origin in New York (this appears to be true also for California!). The virus is patient and opportunistic and will tend to reach its destination, if given the chance.

The problem with that is that people can collectively panic and react in unpredictable ways. This epidemic has the potential to kill perhaps 0.5% of the population or ~1.7M people based on current data If you just remove 1.7M people from the economy with a large skew toward older people, then you could conclude it’s not a big deal. However if you think it through and consider that those 1.7M people collectively have a lot of money and perhaps don’t want to die and there are ~30M people with a lot of money in the same risk group, Who will behave very differently then it starts to matter. Florida and Arizona might be good examples of this. Are older people still going to move there (these states are big destinations for retirees) while they let the Virus circulate freely? If they are already there, will those people spent money in restaurants etc? Unlike the millennials, those folks tend to have a lot of money, so it does matter what they think and how they feel. Florida has a big tourism industry on top of the retirees l so how this will be going? Even if you aren’t scared for your life, it’s not a great prospect to contract a disease that is far worse than having a flu for 2-3 weeks? Worth going to Disneyland for? Then there are European and Asian travelers which at this point are going to be a zero, as they will require quarantine upon coming back most likely. Most folks from these countries won’t bother visiting the US anyways for a while. So, I think the economic impact of this delayed wave in these states will be significant. The good news and the reason why Mr. Market hasn’t panicked yet, is they death rates are still low. I think they will go up somewhat but hopefully we will never seen the levels seen in the NE from March/April again anywhere. Exactly—you can’t just look at deaths and ignore the second/third order effects. Certainly not in a consumption oriented economy like the U.S....airlines, restaurants, retail, hotels—many of these are low margin businesses and even a 10-15% revenue hit can be devastating. To think that “isolating seniors” will somehow spare the economy pain is nuts. The best thing that could have been done for the economy was to act early—January/February—we did not. Then the next thing was to ensure it did not rise again in the U.S. once you stop the initial surge...as you are seeing we also did not achieve this. So now we have EU countries mostly moving past this because they did what was needed and U.S. stuck in viral quagmire with even R governors scaling back reopening now and closing bars... As was said way back—an ounce of prevention would have been worth pounds and pounds of cure, but our federal leadership is at best uninterested in being proactive and and worst exacerbating things by denying and holding indoor rallies in AZ, TX, OK...if you think it’s political, then oh well ---) policy-political part Letting the pandemic run its course will create noise but an improved demographic profile would result in more potential growth in standards of living for the remaining population (evolutionary perspective). WWII did wonders for economic growth for the victors, even if your country's infrastructures were devastated by war. It's the transition that matters. Countries like Brazil (and a few others) have limited real capacity to limit the spread, Sweden tried to formulate a "sustainable" approach which limitations have become obvious over time, the area where i live had significant spread because mostly of competence and governance issues and it looks like the US has collectively (?) chosen a unique way to muddle through, with excess mortality. In the Houston area, it's been reported that 15% of CV-dedicated ICU beds are occupied by people in their 20s and 30s. This is not enough to show in the aggregate statistics but the excess mortality is real. I get it that greed is good and is part of the equation. It's just that increasing levels of greed has met marginal declines in overall utility in the US and the CV episode triggered another inequity notch up, taking the entire population closer to non-linear changes. Even if one adopts the evolutionary perspective, an argument can be made that the drift may have reached a point where imbalances will correct somehow with potential negative impacts on most portfolios. Debt-fueled temporary UBIs are unlikely to do the trick IMO. An argument could be made that the US delayed its entry into WWI and WWII in order to minimize the impact (casualties) on its population and to maximize the domestic economic benefits at large. This time around, aiming to maximize the economic benefits will tend to concentrate in the few and the burden will fall on a group large enough not to stay silent. ---)fundamental part A key aspect of this pandemic is the significance of asymptomatic carriers (CV+). It appears that this aspect has been underestimated, to some degree, and many asymptomatic carriers carry high viral loads, can spread the virus and show significant lung disease (as shown on test images). It's a real challenge. https://www.nature.com/articles/s41591-020-0965-6.pdf @Gregmal, Figure 2 adds other evidence that the Ct-level does not show a significant difference between symptomatic and asymptomatic carriers. One of the challenging messages is that asymptomatic carriers also develop antibodies that don't stick around, meaning that the key to resist this disease is to have the inherent ability to mount an immune response, an ability that is distributed very unevenly in the general population.

What I or you think is irrelevant. How do the financial markets value an 80 year old with a 3-5 year further life expectancy? How much do they contribute to the economy? If we are talking about investing, and penalizing markets/GDP/company multiples, these figures dont exactly move the needle. However, completely shutting down everything, does. Is it surprising that we continue to see improving economic figures, even in states with rising cases? Is it possible the economy can run better than expected even with a pandemic, as long as governments do not interfere? These are the investment ramifications I think one needs to look at. Whereas my parents/grandparents or yours can die, and we'd be effected, but the guy down the street doesnt care, and neither does Mr. Market. On the Ct-value upper threshold, intrinsic characteristics of the test and evolving data in the US show that using lower cutoff values at this point is either irrelevant or inadequate (asymptomatic CV+ may carry similar viral loads and may have similar contagiousness). "Again, part of the problem with this. Too much data and enough to support any narrative one wants." Is that your analysis grid? From a purely evolutionary standpoint (adaptation through physical changes or behavioral changes (inherited and non-inherited behavior)), this virus should be allowed to run its course as it preferentially kills the old, maimed and weak. End of story for an investment thread if the end point is personal discretionary spending. But, sometimes, an evolutionary perspective requires a long term outlook. ---o---o--- Additional thoughts: There is a story going around saying that a long time ago, the nomadic Inuit populations living in the Arctic, when crossing certain rivers and following the hunt, would leave the older part of the group behind...If true, did they have a choice for immediate community survival? "if most are not major cogs in the economy anyway" It's interesting that the concept of a cog is used. I hear that you're Jewish so you may know that this is the theory that Adolf Eichmann (person in charge of exterminations) brought up at his trial; he asserted he was just a cog in the machine. "What I or you think is irrelevant" In an investment thread maybe but not in my book. ---o---o--- @RichardGibbons We're pretty much on the same page. I just wanted to modulate the expectations. Longer term studies have a habit of showing less than impressive results even after marvelous beginnings. It may be an incentive thing. Interestingly, it's also a typical feature of investment funds, in the early years.

The question of the upper cutoff value is worth looking into. Looking for disconfirming evidence (specific to COVID-19) but, so far, this does not seem to be some kind of conspiracy. -the upper and lower Ct-values are determined on best-evidence and based on the specific assay used (different assays are used globally). -there may be some conflict when deciding if for individual or population-based protocols, but the goal is to optimize the reliability of the test. -an assumption for CV: most of the cases become positive during the log-linear phase, well below the max Ct-value -an assumption for CV: the distribution of test results has a "normal" pattern and changing the upper Ct-value (ie from 40 to 38 or to 35) has relatively little effect on the reported numbers -an assumption for CV: the upper cutoff value used in the US has not changed and then the theory does not fit with the very unusual rise in positive test rates reported recently -adjusting the upper Ct-value (before use of test at large) has an effect on the sensitivity and specificity parameters (artefacts, contamination etc) but small changes are unlikely to greatly impact larger trends Conclusion (so far): If looking for an explanation for recent trends in many states, many variables appear potentially significant but a suboptimal control (suboptimal if you adhere to a certain school of thought) of community spread is a concerning one. To bridge with an investing theme, changing a leverage ratio (as a cutoff) from 4.0 to 3.5 will reduce your investing universe but is unlikely, by itself, to change much the outcome of investing decisions. @RichardGibbons i don't want to choke your enthusiasm and results are improving but the "breakthroughs" haven't happened yet. It's the same ingredients and people are simply coming up with the better recipes under the circumstances (large numbers of infected have 'helped', in an opportunistic way) but it's still, more or less, the same dish.

Sunday morning ramblings. 1-Visual and nonpartisan summary https://www.scientificamerican.com/interactive/inside-the-coronavirus/ A nice and short summary. The topic of virulence was raised before in this thread and it seems there is even difficulty defining what viral virulence means although tribal debates shine an interesting and polarizing light. The last section has a short part on the genomic aspect. The virus has an unusually long sequence. Coronaviruses typically don't mutate rapidly and even possess a proofread mechanism to get rid of errors that occur during replication. 2-On the regional heterogeneity of response (and results) https://jamanetwork.com/journals/jama/fullarticle/208354 It's an old study and contains very obvious limitations, but still quite helpful. Even under high uncertainty and baked-in-the-cake "features", it seems that doing the right things tends to result in good outcomes even if nothing is guaranteed. Figure 3 is interesting. The study was published in 2007 and since then trust in institutions has worsened and maybe that's the most important issue to deal with. One advantage of regional variations is the possibility to learn from others. 3-Long-term homes, impact and consequences in an aging population https://www.cihi.ca/sites/default/files/document/covid-19-rapid-response-long-term-care-snapshot-en.pdf In my area, the results were very poor. At the critical period, when the ill-defined wave was coming, focus (human and physical resources) was put on acute hospital capacity while attention slipped for the protection of chronic care facilities. This is giving rise to private opportunities to get rich slowly as it has become clear that a void needs to be filled and public players are looking for partners. In general, you won't hear much about chronic care for the old but it's a growth story in the making.

bizaro86, not taking a shot at your thoughts on the float liability, but rather want to see if you can poke holes in how I think about it. I'll use a hypothetical company that is 100% capitalized by float as my example. Let's assume we issue a $1.0m policy at the beginning of every year that gets paid out at the end of the year. We take that $1.0m and invest it into Treasury bills at a 10% rate (day-dreaming over here, I know). Well at the end of the year we would have $0.1m in the bank, $1.0m in a Treasury bill, receive cash inflows of $1.0m for the new policy issued, and pay out $1.0m of insurance claims/expense for the beginning of the year policy (assuming cost of float is zero). In this situation, the equity holder would be able to receive a dividend of $0.1m, unencumbered by the float liability. We can have this same situation occur forever into perpetuity, collecting $0.1m every year. My question becomes, why knock something off of the equity value if we never have to truly pay back the float and it doesn't cost anything in interest? That's $0.1m in my pocket every single year, just as if I funded the company 100% with my own money. Well, good way to think of it is- would you rather have $1 m in equity or $1 m in float, all else being equal? The real liability amount of float is less than, perhaps substantially so, then what is on the balance sheet but it is of course greater than zero. Personally, I think I would prefer $1.0m in float. I don't have to lay out a dime of my own money to earn $0.1m per year. If I'm laying out my own money to purchase the business from someone else, I would certainly prefer float if I wanted to grow the business - I would be able to distribute all earnings and grow them by using float instead of my own equity. I would also prefer float if it was profitable (i.e. essentially borrowing at a negative rate). Waiting for bizaro's more sensible and practical answer but here's a perspective. Float can be free or can even have negative cost but it's conditional on a cushion of equity. One way to see it is if the characteristics of the insurance business allow you to discount the insurance reserve liabilities. Take the following (simplified) and consider the ends of the spectrum: Assets (float)=240, Liabilities (reserves)=160, equity=80 Scenario #1, poor business You buy the business to put in runoff and pay about book value or a slight discount to BV (say 0.9 BV). So you pay 72 and record 8 as negative goodwill. A way to appraise the negative goodwill (as an equivalent) is to augment the value of the reserves (often done post-acquisition with a hit to acquired equity when such a business is acquired). Scenario #2, great business, expect underwriting profit and growth (other end of the spectrum) You buy the business, pay a premium to book value (say 2 BV). So you pay 160 and record 80 as goodwill. A way to appraise the goodwill (as an equivalent) is a contra-account to decrease the value of the reserves. When you look at float as a source of financing (from policy holders), you can't choose it above other sources of financing but its value can be modified by the type of business you're running or acquiring. Historically, insurance companies have behaved closer to scenario #1, which is a reason why reserves are not typically discounted and high premiums to BV are not the norm.