samwise

1782 is down back to its lows, cheap on p/e, p/b, decent dividend, still decent ROE, which I don’t understand in the construction business. They recently reorganized their organization, and published it, down to local sales who were reassigned. Is this usual in Japan?

Isn’t the modelling fairly basic here? Cases double every week, 10% get hospitalized, 1% die in 4 weeks. The rest are cured. Let’s start with a thousand cases today, and only count deaths of these cohorts. You could vary any of these assumptions. Why did I choose 1%? It’s the only estimate I heard which came with a 95% confidence interval of [0.4%, 3%]. Here at minute 16 in this academic lecture. https://m.youtube.com/watch?v=mYTQI2DvAfo, Ok, so let’s run this simple model. Not saying it’s right, but I’d like to hear which assumption to change here, and even better if there is a prediction model developed by epidiomologists which actually can be compared to future outcomes. According to this model, deaths should match the flu in 18 weeks. Week 1: 1000 cases Week 2: 2000 Week 3: 4000 Week 4: 8000 cases, 10 deaths (1% of the 1000 from week 1) Week 5: 16000 cases, 20 deaths Week 6: 32k cases, 40 deaths Week 7: 64 k cases, 80 deaths Week 8: 128k cases, 160 deaths Week 9: 256k cases, 320 deaths Week 10: 0.5 million cases, 640 deaths Week 11: assume a miracle and no new cases, 1280 deaths Week 12: no new cases, 2560 deaths Week 13: 0 new cases, 5000 deaths Week 14: happy days Total cases ~1 million Total deaths ~ 10k Hospitalization~ 150k total Seems very manageable at this point. Hopefully the infections start decreasing around here, but I have no idea when that will happen, so i’ll just extend this simple model until there are almost no humans left to infect. If the miracle doesn’t happen for 5 more weeks , deaths double every week as well, following the infections with a four week lag. So deaths continue as 10k, 20k dead, 40k dead, 80k dead, 160k dead. Now the total deaths cross the flu at 320k approx, and the infected number are about 32 million (100 times the dead, remember this model is with a 1% mortality assumption). Doesn’t seem too bad compared to the flu. But hospitalization is now, 3.2 million, so outcomes may be worse than 1%(or whatever number you assume, as long as a 10% hospitalization rate holds). Another 4 weeks without a miracle and you get, deaths per week of 320k, 640k, 1 million. But now the deaths are 2 million total, and infected are 200 million. The series cannot go on much longer as there aren’t many un infected humans left in the USA. Let’s bookend the worst case at 1% mortality at 3.2 million deaths. Lower if some people escaped infection. Very basic model, but tells me some numbers I can track in the future. If anyone has seen a published predictive model like this somewhere, please share. To be clear, I am not making a prediction, just modelling outcomes with numbers that get thrown around. I’ve tried to use the best estimate for those numbers that I remember, but please correct them if I got them wrong. Economic costs: In 1918-19, there were no long term economic effects. As per a fed study. https://www.stlouisfed.org/~/media/files/pdfs/community-development/research-reports/pandemic_flu_report.pdf Of course there were permanent effects on certain people, but society as a whole bounced back. Extinction: I see a lot of people got riled up by my extinction joke in the jokes thread. You guys are way to serious if you can’t take a joke. I obviously don’t believe this is the extinction event. But I do find reasoning of this type funny: “if something has never happened so far, it can never happen in the future.” To me it’s as funny as “I won’t join any club which will have me”. Others in this class are “house prices never go down”, “I don’t believe I can die, show me”, “humans will not go extinct. I won’t believe it until I see it”. On the possibility of extinction by some other pandemic: we have been lucky so far as all the viruses that emerged so far are not that deadly, or not easy to spread, or turned out to be easy to contain. I certainly hope there is some natural law that prevents the emergence of a virus that spreads like measles and kills like Ebola. Yours sincerely Extinction dude Signature: “Cold never bothered me anyway” /

Yes, this seems to make sense and I think the author is correct and overall mortality rate will come down. The mortality rate varies a lot from country to country. Korea’s mortality rate is fairly low while Italy’s is surprisingly high. I guess age distribution and the detection/testing rate account for the difference. The virus is also mutating, with possibly different mortality. https://nextstrain.org/ncov?m=div&r=country

So the political decision is this: would you shutdown for 2 weeks (perhaps 4% of gdp hit) to save 1% of your population? What if it was a 6% hit? What if the deaths were 4% of population? 0.1%? What if the deaths would be only among the old and sick who are not productive anymore? What if it could be either 0.1% or 4% and you didn’t know which? There is also the fact that the competing “costs” will be borne by different groups. GDP loss affects the working people. The deaths seem to be focused on the retirees. I don’t envy the decision makers here. They are implicitly coming up with the price for a life, under conditions of high uncertainty, in a one time (unhedgable, undiversifiable) decision where the “right” decision based on odds might not work. The right decision is about as clear as mud to me currently. However incentives are more clear. Put yourself in the politician’s shoes. Action 1: take strong action now, before people believe they are in danger. Outcome 1a: turns out this was just the flu and you over reacted. Outcome 1b: this was pretty bad, but you saved the nation. Political outcome: 1a and 1b look the same to most observers. Most people never saw any danger, think you over reacted, they make jokes about the virus that never was and what a scaredy pants you are. You probably lose the next election, even if you are actually the hero here, because you are not perceived to be the hero. Action 2: you wait until it’s obvious how dangerous it is Outcome 2a: it becomes obvious there is not much danger. Outcome 2b: everyone sees the danger, probably in the news about deaths per day. Political outcome: 2a you are the hero for saving people from panic. Big win. 2b: you are the idiot who didn’t take action in time. Big loss. Action 3: between the above two choices. You wait until the majority of your base starts sensing some danger, but it’s not absolutely obvious. Now you ride to the rescue as the big saviour. Doesn’t matter what happens next, as you will be the wartime leader. Huge win possible here. I think we see 3, just because of the incentives.

Convert CAD to foreign currency. It seems you are not using margin then why keep the margin loan?

Here is what the quant told me (more generally about pandemics). “I don’t believe in human extinction events. There is not one in our back test which covers all of human history.”

Banks have full recourse. They will most likely be fine in a real estate crash. I believe losses in the 1990 crash were < 10 bps. Yes their mortgage books probably don’t grow much, and multiple to book might compress, but this is not an existential crises.

Were most of your no brainer ideas in real estate?