Kaegi2011

Bought DNKN, SBUX, NKE, MA, GOOGL, W, ANET, CME, EYE, GOOS, MCO, MSFT, NVR, YETI. Not huge positions but so far the IRR is insane!

I can see that, but the hard part that I can't really grapple my head around is what's the natural earnings power of these businesses going fwd. Every time I hear a boat gets sick I wonder when people will stop going on these cruises. But now... not only can you get sick, you may be stuck floating on the water with no port for weeks! I'm sure there's probably some price to get people to jump on board, but what is that price? Who can really know the elasticity of something like this at this stage? So combined with high opex leverage I'm not sure how to put a fair value here...

Agreed. Think about this - distressed names trade over the counter (really, over the phone). You can't even reliably get a quote on a credit unless you're in the circle. Even those quotes (which a lot comes via email), are usually not tradable. So unless you're incredibly sure that the equity is money good (like Ackman and GGP), I would stay away if your strategy is that the lenders wouldn't let them default.

All true. I bet if there's an announcement that the mkts will close for four weeks on Tuesday close, the market will be up. Anyone who is short will close out the trade, and anyone who's afraid will want to buy. I think if we were all to make a bet here on short vs. long vs. cash **right now** and keeping with that for the duration the majority would go long (I'd be 50% long, FWIW). This virus will pass - we just don't know how painful it'll be until then...

I now know multiple CoB&F board members who have it and/or their families have it. These are fantastic contributors to the board. I won't reveal who, but you would want to help them. The list will grow. It won't happen to all of us at the same time and some of us will live in areas that get lucky. A lot of us are going to be at home for months. While we are cooped up, let's use our skills to benefit each other and society. Here are some of the skills represented on this board: quantitative analysis, contrarian thinking, communicating complicated ideas simply, soothing scared clients and helping them make choices under conditions of uncertainty forecasting and modeling finding unique opportunities or under-recognized opportunities research methods compiling data and reference materials It's time to apply these skills like we are executing a full out war mobilization against this virus. Please identify your unique skills and find a way to contribute by starting a thread or contribute to helping in this fight. I'm convinced we can have an impact. Can we start new threads to help each other out? We are good at analyzing and collecting data. I would suggest: 1) Some forecasts of how much further behind we are relative to Italy. Rank ordering of Seattle, Boston, NYC, LA, etc and the days separations between when the curves will go vertical, the risks for each area of hospitals becoming overwhelmed, etc. 2) It would be great to see some polls created to use the wisdom of crowds to forecast the unknowable 3) New threads that focus on links to the best information on how to take care of yourself in expectation of getting sick and how to treat once sick. It would be great if someone could curate this the way Norm curates the CoB&F Fairfax Lollapalooza thread 4) A thread specifically for analyzing the bellwether town(s), I assume Seattle, but maybe another will emerge. 5) How long lock downs are likely to last 6) When and how long hospitals are likely to be at their maximum capacity, above their capacity or failing 7) What percentage of medical personnel and others will be impacted and at what point will it impact delivery of services 8 ) Brainstorm other, potentially better ways to organize and contribute Finally, if you're convinced this is going to be bad, please contact friends, especially healthcare professionals and essential service providers, you would be surprised how many are still not taking this seriously or they take it seriously but they are not getting leadership from above and they need to be encouraged to speak up for everyone's benefit. If these first responders, medical professionals etc are still in denial in some areas of the country, then it won't go well for people there. Great idea. For one, I would say that anyone who's not on Twitter should use it as a means of research. Not everything you read will be true, so you'll have to put on your BS hat and figure it out, but I have faith for people on this board. I've found it to be an incredible educational tool.

I'm not suggesting that closing down is **likely** - but it has entered my mind as a possibility. Again, the argument isn't an economic one as much as a political one. I don't know if Trump can do it, but if he can, it would be a good move. Shut the markets (all of them) until 6 weeks from now, and when deaths and new cases are declining reopen. If I were in his shoes, I'd at least explore that option. What does he have to lose? The news about the market is drowning out his message, which is that everything is great. Better to get that out of the way so he can dominate the headlines.

At this rate I'm wondering what's the probability the markets will be shut for a while. Politically I can see Trump wanting to limit the damage, and reopen in 6-8 week when things are on the upswing. I don't know the potential downstream impact would be though when trillions of dollars are tied up and can't be used.

But this is where I'm trying to reconcile. You're saying that you're not seeing it. But evidence suggest that flue like cases are increasing significantly, but we don't know due to what. So I'm wondering if this is just a precursor of things to come, and you might not have seen it first hand. And I can't imagine that we are testing dead people for the virus - I would definitely save the testing capacity for those alive and potentially contained at this moment... So if that's the case, then are we undercounting BOTH deaths and people infected?? I never said I'm not seeing it. I currently don't have testing avail other then the protocol I just said came over from DOH. How can I diagnose someone without a positive Covid-19 test? I am seeing what you posted in that tweet. High increase in flu like symptoms with negative flu. I have made that clear I think multiple times haven't I? No they are not testing bodies at the morgue. You asked about testing people who come in with flu like symptoms. I don't believe I have heard of any cases of DOA(have you?) covid-19. Today, if you have someone on life support/ventilator anywhere in America I would hope to god its known whether or not they have Covid19. I don't mean to put words into your mouth, but I think you have said that a lot of people are infected and we're not seeing the deaths, so the conclusion is that CFR is lower than what's out there. So I'm asking - is the disconnect with what other countries are seeing that both infected and deaths are undercounted (vs. just denominator being undercounted)?

But this is where I'm trying to reconcile. You're saying that you're not seeing it. But evidence suggest that flue like cases are increasing significantly, but we don't know due to what. So I'm wondering if this is just a precursor of things to come, and you might not have seen it first hand. And I can't imagine that we are testing dead people for the virus - I would definitely save the testing capacity for those alive and potentially contained at this moment... So if that's the case, then are we undercounting BOTH deaths and people infected??

I told you earlier maybe I was anchored right? We will see, not only that told you I was willing to eat crow if wrong! Like I have anything to gain arguing with you guys about this. ::) Orthopa - do you have any thoughts on this data? Seems to be in your region. I’m also hearing a lot of people (docs) on Twitter say that they’re seeing the uptick in similar symptoms but without testing they just send people home. So is it possible that people are sick and dying but without tests we don’t know the “cause” definitively? I can give you our update recommendations that just came through from local DOH on fax 5 minutes ago. If pt has suspected Covid19 with mild symptoms pt is to go HOME and self quarantine for 14 days. If pt has high suspicion of Covid19 infection we are supposed to call the local DOH and speak to an epidemiologist, the criteria are: 1. A person who has been in close contact with someone who has covid-19 2. A person who traveled to area with high incidence. 3. Person who has tested negative for flu/RSV A joint decision is then made regarding need for testing. Anyone with life threatening symptoms is to go by ER. Sorry but can you answer the question on the data above? If the uptick that the data is pointing to is related to Covid19 it would suggest something is happening, even if we don't know for sure 100% due to the lack of testing.

I told you earlier maybe I was anchored right? We will see, not only that told you I was willing to eat crow if wrong! Like I have anything to gain arguing with you guys about this. ::) Orthopa - do you have any thoughts on this data? Seems to be in your region. I’m also hearing a lot of people (docs) on Twitter say that they’re seeing the uptick in similar symptoms but without testing they just send people home. So is it possible that people are sick and dying but without tests we don’t know the “cause” definitively?

A few other data points in speaking with a colleague in China. Take it for what it's worth: 1) Wuhan was totally overwhelmed at the beginning, thus building of these massive facilities in 2 days. Even then, the system was over run with demand. A lot of people were asked to go home b/c there was nowhere to house them. Many died at home in front of loved ones. Due to extraordinary demand, cremation people can't even come get the corpse in a reasonable time, and many were put outside on the street for obvious health reasons. 2) Entire families were wiped out (many in China still live with their parents until they have families of their own), so it's not just older people getting sick. Seems like some areas of Europe is seeing this as well in terms of distribution of severe cases vs. age. 3) Lockdown was extreme - you literally cannot leave your building. Every building had a cop in front, and you cannot leave. They also tell you that if you do leave the building through a window or something, you cannot go back through the front door. 4) Groceries were delivered to each household with standard stuff every few days. Don't need tampons? Doesn't matter - you get it. 5) In total ~1% of the Wuhan population was infected and it seem to not have gone endemic.

I got a fwd of a letter written by OceanLink Mgmt (a fund that I've never heard of). I won't attach the doc but will paste the important parts. Not supporting the conclusions but I thought it was helpful for the facts (some that I've confirmed with colleagues in China). The letter was dated March 1. Here we go: ------------ Like most Chinese, we have been tracking and analyzing the Coronavirus development fairly closely in the past two months. In fact, most of us spent our entire January physically in China (one of us is still there) and experienced the draconian measures that were taken to halt the spread of the virus. These experiences and a careful analysis of what we view to be the most credible facts helped us reach the uncomforting conclusion that while China has effectively contained the virus, the rest of the world is severely under-estimating its effects and is hopelessly outmatched in the fight against this pandemic. We believe the Coronavirus is unlikely to be contained in most countries; and, unless it conveniently mutates to become less infectious, or a vaccine is magically created in a few months, the virus will soon infect a meaningful percentage of the global population with a fatality rate that is higher than most current predictions. Any effective efforts at containment will necessarily cause a supply shock across the globe, virtually guaranteeing a global recession, even complete economic ruin and political instability for some of the most affected countries. By the time this is over, everyone’s life will be different. --------------------- However, regardless of how the government chooses to deal with data disclosure, it is inevitable that the real number of cases would be under-counted for a virus like the Corona where a meaningful (10%+) percentage of the infected show no symptoms and a further 70% only experience mild flu-like symptoms, right in the middle of the flu season! Many of these people simply never felt the need to get tested at a hospital and recovered from home instead. Wuhan, however, is the only place in the world where government workers are knocking on every door to test every family to ensure that those that were initially missed could be picked up, so the ratio of missed cases to total infected population is likely to be lower in Hubei relative to other Chinese provinces and other countries. Our best case is that 30% of the infected in Wuhan simply recovered without ever getting tested, which brings the total infected population to over 80,000, just under 1% of Wuhan’s population. And all this happened in just a month! Some experts in China estimated that had the government imposed the quarantines just one week later, the number of infected could have easily surpassed one million people. ------------------- What is more concerning is that Wuhan does not represent the worst case for other countries that fail to contain the Coronavirus early on. In fact, it represents the best case. Wuhan is not some random village; it is the most affluent city in Central China. In 2019, Wuhan’s GDP per capita was USD $22,000, and measured in PPP, it was USD $40,000 - comparable to many countries in Western Europe. Wuhan’s healthcare system is the best in the region and highly modern. In addition, Wuhan and all of its citizens were completely quarantined just a month after the virus started mass-spreading, which ultimately limited the number of infected to less than 1% of the city’s population. When the rest of China realized the grim situation there, they acted with unprecedented speed to assist the city, airlifting more than 32,000 doctors and nurses into Wuhan within 3 weeks of the outbreak, building and converting multiple hospitals to create over 10,000 hospital beds within two weeks, all the while keeping medical supplies constantly flowing in. Even then, medical workers were completely overwhelmed. Several were reported to have died from exhaustion and thousands contracted the disease even while wearing protective uniforms. Despite these efforts, the fight against the outbreak is still ongoing in Wuhan. It should then be understood that Wuhan 2.5% fatality rate was achieved despite China’s all-of-society best efforts, and not representative of how high fatality rates could reach in an uncontrolled outbreak which is starting to take place in many other countries. The implications of this are very bad for the rest of the world. Very few countries can provide the same kind of resources that Wuhan obtained from the rest of China. No infected country so far has quarantined every citizen at home the same way Wuhan did. No country other than China is capable of building new hospitals in just days. And almost every country will soon run short on essential medical supplies such as masks and hazmat suits, because China is using all of them! In fact, in countries with poor healthcare systems, we believe the ultimate fatality rate will be closer to 5 – 10%. A recent report written by the WHO investigation team in China reveals that out of all the patients diagnosed, 5% were in critical condition and required artificial respiration, as a result of completely losing lung capacity to pneumonia; another 15% were severe cases that required highly concentrated oxygen to maintain normal breathing. All of this requires intensive care. Unfortunately, most countries only have one hospital bed for every 200 – 1,000 people; most of those beds will still need to be used for other patients (car accidents, cancer patients, etc) and are not designed for infectious diseases to begin with. In a full outbreak where 10% or more of the population becomes infected, most countries will only have enough hospital capacity to provide care to a tiny minority of the severe cases, and that’s assuming the medical workers don’t get infected themselves. In reality, we are already seeing mass infections of hospital employees in places like Iran. By most reports, the Iranian healthcare infrastructure is crumbling and it’s unlikely that anything can be done at this point to prevent a full-on national crisis. In developed countries, the fatality rate may ultimately be lower as effective treatments are found, but these will still need to be administered in intensive care. If large outbreaks occur, hospital capacity will very quickly be in shortage, so a significant part of the severe cases will still go untreated. ------ Worse, the fatality rate itself doesn’t tell the whole story. This is because many among those who developed severe symptoms from Coronavirus but ultimately recovered have lost a significant portion of their lung capacity to fibrosis and as a result have reduced life expectancies. ------------------ Another piece of evidence demonstrating the ubiquitous nature of the Coronavirus is the Shincheonji Church, a local cult responsible for the initial outbreak in South Korea. The church ignored warnings from the government and continued its gatherings after hundreds of cases had already surfaced in its home city of Daegu. It was reported that of the 1,900 cult members tracked down by the government this week, 1,551, or a full 81%, tested positive for Coronavirus. In other words, if no containment measures are taken, given enough time, 100% of the population can and will be infected. That is why the Coronavirus must be contained. The politicians who are arguing for abandonment of containment efforts and the possibility of allowing the Coronavirus to become endemic like the flu, in our opinion, are not properly informed of its ability to do harm. They only need to go to Wuhan to see its devastating effects.

https://www.yahoo.com/news/dont-panic-says-us-woman-recovered-coronavirus-055155667.html Was I a bit early maybe? This was about a week ago. We will see. Ill be sure to check back and quote this when we get a similar narrative above in the media. 8) For an uneducated opinion, this is reasonable. But how do you reconcile with what is happening in Italy? And given how quickly things went out of control in Italy, why don't you think the same thing will happen in the US? So on the other side, what is the outcome if we arent like Italy? Putting some more of this into perspective, in late 2018, the market suddenly fell 20%, for NO REASON whatsoever. Sure everyone has their hind site reasons why, but there was absolutely nothing that changed to warrant that one. Here you have this big scary boogie man plague, the likes of which we've supposedly never seen before, and every financial guy with or without a spread sheet saying "I dont know" and getting quoted, sometimes in context, but a lot of times out of context, as "this is the end". I mean the only thing thats really changed this week, is that basically everything is shutting down even though numbers are significantly lower than where other countries were when they decided to do so. Theres a lot of political narrative driving this. not to condone the job Trump has done. I dont think he's done or even responsible for anything, so grandstanding and trying to take all the credit is preposterous. But how hasn't the approach, especially by local guys I'd normally call hack jobs, such as in SF, WA, and NYC, anything short of commendable? In speaking with friends in NYC/SF/Sea it seems like cities are mostly shut down. HOwever, if you look at pretty much any other city, it's as if nothing is happening. I suspect I'll be told to work from home a week from now, but everyone's in the office, and traffic was just as bad today as any other day. Net of it, I don't think most people are as educated nor have most of middle america gotten the message...

I agree with the comments above. 1) 100% this is not a 1 round game. Hence my ~80% in cash comment previously. I would of course advise against anyone levering up with all their capital because one does need to prepare to face the scenario of a zero on that particular investment. Having said that, it's also not a binary outcome either. At any time prior to the expiry the holder can adjust the position for sizing and go in or out of the position. SPreads are larger vs. stocks generally speaking, but anyone going in I'm going to assume they know that (otherwise they didn't pay attention while entering the trade!). 2) I also agree with you that options are more useful in extreme scenarios, especially the vol is underpriced. Here, I'll admit that I've not encountered many situations where upside is 5-10x vs. downside. I don't know if BAC presented such a situation at some point a few years ago - it looks like it did and I'm glad it worked out for you. I would love to find such situations in this market so if you can share some of the experience I'd certainly appreciate it.

You're right, my mistake. I usually have options on things that don't pay a div vs. the index so this was overlooked. Thanks for pointing it out.

Has anyone found data yet on weather vs. transmission? I'm looking at Singapore and it's like 90 degrees F right now, and it's spreading.

You weren't asking me, but I will answer anyway. 1) If there were 1,000 undetected cases in the USA 4 weeks ago, some of them could have easily presented to the hospital by now. Since our healthcare system would have been functioning extremely well, they would have received excellent care and the chance of any of them dying would be less than 1%. So even if it is possible that there was 1,000 cases a month ago and severe cases had enough time to progress to death, we would expect to see less than 10 deaths at this point across the entire nation of 370 million people. Plus doctors who know that they are dealing with COVID-19 are flummoxed by how to respond. What are the odds that it catches their attention if they don't realize it's COVID-19? 2) There will definitely be a wide range of regional outcomes and population density is just one of many factors that will influence it. Wuhan is definitely on the less desirable end of the distribution of population densities if you're shopping for a nice condo with a low chance of epidemic. 3) There are believed to be two different strains already with differing virulence. But the most important thing to understand is the bimodal distribution of outcomes depending upon whether local hospitals are overwhelmed or not. A system that could have a CFR < 1% in the best of times, could have a CFR of 15-20% during the worst of times. 1) I agree. That's why I was trying to see if there's a national deaths count database we can watch going forward for upticks. Unless there were tens or hundreds of thousands infected four weeks ago I'm not sure we'd really see the signs just yet. I think this is the most reasonable way to bridge Orthopa's view of there being a lot of cases a while ago and the fact that hte system isn't collapsing. 2) Yup, one of my hypothesis as well given our spread out we are in the US, but I haven't heard anyone talk about R0's relationship with density. 3) Good point, esp as it relates to point #1.

Could you share the logic please to those who are less informed? :) If you've studied operations management or even just managed a team or operation, you will know that you want to focus on the bottleneck. As soon as you eliminate that bottleneck another will appear, so then you need to deal with that. So a fast way to identify that we could have a problem is simply identify the bottlenecks and then see how easy it is to exceed capacity. Obviously the easiest healthcare capacity numbers to come up with are aggregate numbers for the whole country and things will vary a lot by region, but capacity is so easily exceeded that doesn't really matter (even those making television appearances for the Trump administration have started saying that in the past 24 hours). Here's a logic problem that's even faster. Another way of looking at it is that the USA's population is growing and healthcare capacity has been declining, in large part due to legislation and administrative action or inaction. The USA has less capacity per capita than China or Italy. China is historically ground zero for this type thing and has more experience with it than the USA. Why would we handle it better than them and what are the odds of that happening? P.S. The WHO finally declared it a pandemic. Got it, thanks. I thought you were talking about the modeling that SJ was referencing, so was curious to see if there was another approach. Appreciate you typing it out.

I think you have an excellent understanding of this at this point, and apparently able to put it down on paper better then me. Thanks. Just trying to make sure I fully understand the various perspectives. Again, apologies again for the comment before re: the profession you've chosen. It meant no disrepect. I do want to ask you - if you were to take a step back and think about your position, where could you be wrong? I could be wrong by how much of a hit this will be to the ICU/need for respirator, ie breakdown of health system. I can only think back to working during the H1N1 outbreak and the 17-18 flu season and that volume load which was ~15 million cases if I recall correctly. The system was stretched, but did not collapse, My opinion is the virus has been here for 6 weeks/months and cases are vastly under reported. So in my mind we are currently in an environment of where many think we will be from documented patient 1 say 4-6 weeks from now, already! Its in this mind frame I have a hard time rectifying a wickedly high death rate and medical system collapse if we are operating in this environment currently. I certainly could be wrong on this, I hope I'm right of course. We will see. The fact of the matter is if the cases are severely under estimated and we are handling it now maybe we are further along on the curve then we think, and handling it fine. Thanks, that's a helpful perspective to understand the disconnect given your view. So a few follow up questions / thoughts: 1) If it's been here for that long, is it possible that people are dying in smaller numbers and we haven't been seeing them due to the deaths being dispersed and thus not counted as COVID19 related deaths? Is there a national database to check real time death rate (regardless of cause of death)? 2) Is it possible that the density of our cities decrease R0 vs. other countries (along with an advanced heads up from seeing what happened in Wuhan)? 3) Is CFR lower than what we have been told? Or maybe virus has mutated? I don't know what else could cause a disconnect between your hypothesis that it's been here for a while, and the lack of impact we are seeing. Either you are wrong about the date of arrival and the number of people in the population, or the R0/CFR rates are wrong or changing significantly, or we're not capturing the impact somehow. What else could it be?

I think you have an excellent understanding of this at this point, and apparently able to put it down on paper better then me. Thanks. Just trying to make sure I fully understand the various perspectives. Again, apologies again for the comment before re: the profession you've chosen. It meant no disrepect. I do want to ask you - if you were to take a step back and think about your position, where could you be wrong?

Do you have some sort of obligatory quota which demands that you issue at least one insult or an otherwise denigrating comment per post? SJ SJ, I think he was joking. DH, Next time try one of these ;) so people will know you were joking. For me all it took was a piece of paper, a calculator and less than three minutes to scare the crap out of me, but of course I know a bit about healthcare and I've done enough bootstrap modeling in the past that I didn't think building a statistical model was worth the time. I could see it in my head. Could you share the logic please to those who are less informed? :)

If you have a model done already I'd appreciate you sharing it. I don't have a clue on the variables at play here, and quite frankly I don't want to get to false precision. What you're saying makes sense, but my question is if one has no symptoms or mild symptoms how would they know to self isolate? There's the example above of the NJNY Port Authority person who is asymptomatic - if he wasn't who he was I'm sure he wouldn't have been tested. Lastly, I don't know if hte last comment was meant for me, but I don't think it's constructive to the conversation...

There appears to be several points that are being debated, so I’m putting this down as much for me to clear my thinking as much as anything else. My thinking has evolved so I appreciate those who have contributed to the topic (sometimes in a passionate way). Points of agreement (I believe): 1) Initial R0 and CFR are significantly higher for COVID19 vs. “normal” flu 2) CFR significantly higher for older / immune compromised individuals 3) The dormant period for the virus is potentially up to two weeks or more 4) There are no cures or vaccines Points of debate: 1) Is testing useful? If so, when? If not, why not? 2) What methods could stop or slow down the spread of the virus, and their effectiveness & cost? 3) What resources do we have to cope with the disease? 4) What are the economic implications, and indirectly the impact on security prices? On the points of debate: 1) I think there’s probably a stage when testing would have been helpful. I’m increasingly coming around to the view that that time has passed. Regardless if you think there are 5mm people infected in the US or 50k or 5k, it seems like there are more than enough cases out there given the dormant period to start the epidemic. All the data is backward looking, and we won’t know the number of cases anyway since we didn’t test, so if you disagree with this conclusion, could you outline why you disagree? 2) So far it looks like several methods are being advocated for, and nobody is disagreeing on the what could be done (e.g., hygiene, social distancing, etc.), but rather what is practical. For example, could travel be limited in a country like US? It’s possible, but we’d have to get way worse before we see that. However, if everyone worked from home (I think a non-controversial method to deal with the spread) a large swath of the economy goes into a tailspin. Google is already asking everyone North America to work from home for a month. a. I’m also coming around to the view that we will all get this at some point. The Singapore resurgence example is instructive. If there are sufficient carriers in the wild, I don’t think containment is going to work. So the question then becomes how long can we spread out the transmission and “bending the curve” vs. eliminating the virus forever. b. Also, buying time allows for potential defenses like vaccines to be developed and commercialized. 3) I was under the impression that there was potentially more to be done for folks who are sick from the disease (and flu), but from the conversation here it appears that after a certain point, those who are older / immune compromised will have a hard time recovering period. However, some could be treated, and the question then goes back to how do we maximize the resources available for the largest amount of people (e.g., spreading out the transmission over a longer period. 4) As far as the economic impact my opinion is worth just as much as the next guy’s, and I’m not even sure so who knows… Did I misinterpret or misrepresent anything here?

sorry to hear that. Do you know their ages? Both in the 50s. Which area, if you're ok disclosing?