LearningMachine

Gregmal, we don't have to think in extremes, but can try to handicap in a rational manner. I'm not saying NY RE will be trading hands at $300 in five years. I'm also not saying that young people won't like to be in cities for dating, etc. I'm not sure why you are assuming that is what I am saying.

I think Bill Gates probably has the best most-reasonable prediction: https://www.weforum.org/agenda/2020/11/bill-gates-pandemic-covid-coronavirus-work-travel-business-digital/ That has impact on residential housing immediately next to most-desirable office buildings that do survive.

Regarding Zuckerberg, I'm assuming you are referring to office real estate decisions in Bellevue and Manhattan. Things don't have to go back to normal, eventually, for those decisions to make sense for Facebook's desire for young talent. At the same time, I hope you are also not ignoring that Zuckerberg has announced that 50% of Facebook employees will be WFH permanently. From talking to Facebook employees, they are saying 50% doesn't apply to engineering and highly paid folks, all of whom are allowed to apply for permanent WFH processing. Regarding Bezos, I'm assuming you are referring to office real estate decisions in Bellevue, Manhattan and D.C. Those decisions were made at a time when Bezos hadn't yet heard about his competitors offering WFH policies. Amazon has always been the last one to care about employees. The only thing that causes them to care is when they start to lose people to competitors. Now, Amazon is starting to walk away from Seattle real estate. Regarding Flatt, I'm not sure if I would put him in the same bucket as Bezos and Zuckerberg. He has an incentive to pump up things. Not impressed by their head-stuck-in-sand type comments I heard a few months ago about denying anything is going to be different. So, I think saying that everything will go back to normal, eventually, is a little simplistic. We need to look at the reasons driving them, and those reasons may still be consistent with things not going back to exactly the way it was.

Make sense though. Large city with many renters, large population of young and single people and high cost. But I bet Seattle suburbs are white hot. I'm throwing 700k cash offers at 3bed/1bath 1,000 sq ft houses in the east bay of San Francisco. I'm not even competitive apparently... Right. Seattle Suburbs are white hot not only because of the virus but also because of the socialism movement in Seattle, with BLM protesters matching into communities and yelling door to door "Move your white ass out of the house and give your stocks to us, because it belongs to us" Meanwhile in the real world. www.bloomberg.com/news/articles/2020-10-30/brookfield-pays-365-million-for-facebook-office-outside-seattle Facebook's WFH announcements and having desirable office-space are not entirely inconsistent. Younger folks do like to go into office once in a while to socialize. What will be different now is that the younger talent won't be required to come into office every day, and won't pay $3000 rent to be at a walkable distance to Facebook office building. In the meantime, within Facebook in the real world, after the WFH policy announcements, there has been such a tremendous demand for requesting permanent WFH processing that Facebook had to structure it in waves, and put people on waitlist for future waves, which will take months to process even though they are processing as fast as they can. Just imagine what the residential demand next to Facebook buildings will look like once Facebook has gone through all the internal permanent WFH processing waves. Microsoft doesn't require any processing for WFH up to 50%. So, once folks are vaccinated, taking away pressure from people's desire to avoid multifamily, imagine what will happen to residential demand next to Microsoft buildings. If we get vaccinated by March, effects of increased supply of options should start to show up next summer.

Make sense though. Large city with many renters, large population of young and single people and high cost. But I bet Seattle suburbs are white hot. I'm throwing 700k cash offers at 3bed/1bath 1,000 sq ft houses in the east bay of San Francisco. I'm not even competitive apparently... Right. Seattle Suburbs are white hot not only because of the virus but also because of the socialism movement in Seattle, with BLM protesters matching into communities and yelling door to door "Move your white ass out of the house and give your stocks to us, because it belongs to us" BLM protests were just in one block, that too a while back, and overwhelming majority of folks participating were white. Yes, there is a small risk that City of Seattle itself could have a tiny income tax sometime in the future, but so far WA State Supreme Court has been shooting it down, and keeping City of Seattle as well as WA state income tax free. There are two key items impacting decision-making the most currently: #1. Post-Covid WFH policy changes: The crux that is impacting decision-making most is post-Covid permanent Work-From-Home announcements. No-one wants to pay for being 15-minutes to Amazon, Microsoft, Facebook, or Google anymore. Because of announcements by Google, Facebook, and Microsoft that post-Covid, people don't have to come to office every day permanently, folks who used to look for housing within 15-minutes, are willing to look farther out, as much as 60 minutes for their dream house, especially if they have family. People are buying all the way in Kitsap Peninsula, Island County, and farther up North in Snohomish County, even Skagit County. Number of options have gone up by orders of magnitude. 1-mile radius for being able to walk to work used to cover only pi square miles. 30-mile radius covers 900pi square miles. #2. Avoid multifamily due to Covid risk: Currently folks also want to avoid high-density due to Covid risk. However, once we are all vaccinated, this trend will stop. Because #2 trend will stop soon and reverse itself, while #1 trend will continue, there will be a net-effective increase in supply of housing. In Detroit, 20% vacancy/supply caused a huge drop in real estate. The price drop will be felt even in the suburbs immediately close to Microsoft, Google, Facebook and Amazon. Post-vaccine, the only winner I see is exurbs, and that might not be very big either because effective overall supply has gone up for well-paid folks who won't have to go to office every day.

ESRT

If he's buying a basket of pharma stocks, then I wonder has he bought more than the ones listed in this 13F? I would not be at all surprised if he's bought Glaxo (London listed) and Sanofi (Paris listed). Both are good companies and would fit into his basket approach. He has also owned both before, and both are arguably cheaper than when he owned previously. He could have bypassed the 13F listing requirement by buying both stocks on the local exchanges, something he has done before (Tesco). Didn't he own Sanofi before? Yes, he sold out after some time because Sanofi didn't go anywhere in terms of making money for shareholders. Putting politics aside, I think Trump's attempt at taking away pricing power of drug companies is a big negative for drug stocks: https://www.politico.com/news/2020/11/20/trump-drug-prices-overseas-438819. I'm surprised market didn't react as strongly as I thought it would on MRK, ABBV, BMY and PFE today. Yes, it will get challenged in court, but it does bring the issue to limelight. So, it will be harder for next administration to escape it. If politicians start discussing it, it might eventually lead to the crux of the issue about changing the law to give Medicare power to negotiate prices, which currently it is not allowed to do so by law. Wonder who helped draft that law :-): https://www.healthaffairs.org/do/10.1377/hblog20160919.056632/full/ Canada negotiates and is able to get better prices. This has been bandied about before & I believe it will eventually get traction (if politicians can put politics aside). www.policymed.com/2015/09/hillary-clinton-unveils-new-plan-for-lowering-drug-cost.html One thing that gives me a pause is how will some politicians put politics aside if their elections are getting funded by pharma companies (legal bribes). If the issue gets enough limelight, they might not be able to escape it. However, so far they have been able to come up with slogans to pacify the unsophisticated voters instead of doing anything.

If he's buying a basket of pharma stocks, then I wonder has he bought more than the ones listed in this 13F? I would not be at all surprised if he's bought Glaxo (London listed) and Sanofi (Paris listed). Both are good companies and would fit into his basket approach. He has also owned both before, and both are arguably cheaper than when he owned previously. He could have bypassed the 13F listing requirement by buying both stocks on the local exchanges, something he has done before (Tesco). Didn't he own Sanofi before? Yes, he sold out after some time because Sanofi didn't go anywhere in terms of making money for shareholders. Putting politics aside, I think Trump's attempt at taking away pricing power of drug companies is a big negative for drug stocks: https://www.politico.com/news/2020/11/20/trump-drug-prices-overseas-438819. I'm surprised market didn't react as strongly as I thought it would on MRK, ABBV, BMY and PFE today. Yes, it will get challenged in court, but it does bring the issue to limelight. So, it will be harder for next administration to escape it. If politicians start discussing it, it might eventually lead to the crux of the issue about changing the law to give Medicare power to negotiate prices, which currently it is not allowed to do so by law. Wonder who helped draft that law :-): https://www.healthaffairs.org/do/10.1377/hblog20160919.056632/full/ Canada negotiates and is able to get better prices.

Makes sense, rb. In terms of minutes, (1) how many minutes max would you have commuted when you had to work in office every day, and (2) how many minutes max would you be willing to commute if you have to work in office only half the number of days?

Post-Covid, say your company will let you permanently work from home 50% of the time without any manager approval, and WFH 100% of the time with manager approval. Say, to not impact your career in any way, you choose to not ask for manager approval, and pick the 50% WFH option. Now that you will be commuting half the number of days, how much more time will you be willing to spend commuting to live in a house of your dreams, e.g. with water, land, sqft, etc. for the same or lower price compared to the houses you would have looked at before? Assume you're in the market for a new house already. Zillow did a survey recently and found the following (source: https://www.zillow.com/research/coronavirus-remote-work-suburbs-27046/): Do folks agree that it might be acceptable for some folks who can now WFH 50% of the time to increase commuting time by 50% from 30 minutes to 45 minutes? Pre-Covid, total commuting time over 10 days would have been 30x2x10= 600 minutes. With 45-minute commute time, total commute time over 10 days would be 45x2x5= 450 minutes. So, still less total commuting time than pre-Covid. I understand this wouldn't apply to singles, who see downtown as dream location for access to dating market. So, the question is for family folks, who would like other attributes in their dream house, e.g. water view, land, sqft, etc. I also understand this may not apply to family folks who have other strong daily ties within vicinity of their existing location. Maybe for folks who have only weekly ties to existing location, they would be willing to increasing commuting time a little?

The following is submitted for analytical purposes and may have investment implications but political aspects have been sterilized, to the extent possible. FWIW, I think Covid-19 is likely to become endemic, within a year or two, but it will likely be an immaterial kind of endemicity. Below are the key factors considered as well as references used. -Availability of effective vaccines (% and strength of response, duration of protection) This looks promising but longer term duration is still unknown. How many in the population (at-risk and as potential spreaders) will take them is a limiting factor if vaccination rates don’t reach certain levels. Also, it’s still unclear if older and at-risk cohorts will be able to build and maintain sufficient immunity levels (available, on demand for antibodies or from “memory” cells). The typical FDA agreement includes to complete follow-up studies for safety and efficacy for at least two years. -Virus characteristics Many respiratory viruses are endemic, including the four well known common cold (beta family) coronaviruses. Longer term studies point to a very real risk of endemicity. More virulent CVs (SARS and MERS) seem to be associated with longer and more robust immunity. Covid-19 is kind of hybrid so common sense would indicate that endemicity risk is real. CVs tend to mutate less than influenza for instance (because of a very unusual and fascinating proof-reading mechanism during replication and specific to this class of RNA viruses) but this is both good and bad. The good part indicates that covid-19 will tend to be slow to genetically escape existing immunity but the bad part indicates that when a new genomic form with new characteristics is reached, this stable form may bear less favorable characteristics for the host (including for immunity) and may persist longer. Whatever residual immunity (natural or vaccine-related), reinfections are likely to be less severe which opens the eventual possibility of eradication to the same degree that it opens the door to low grade endemicity. -Population and environmental characteristics With the virus impact becoming less significant and with less public awareness or media attention, non-pharmacological measures will tend to be abandoned, not enough to cause major and widespread outbreaks over time but enough to allow endemicity in many populations. The virus has become truly global and the world has grown smaller. Seasonal and various environmental factors (for most areas of the world) may become a feature for Covid-19, following what other common cold coronaviruses have become over time. ----- So, on a weighted basis, it’s likely that Covid-19 reservoirs will persist over time but are unlikely to trigger material events on a global basis. For references, I was lucky to be able to listen to a very strong presentation 8 days ago by various ‘experts’. One of the presentations dealt specifically with immunity, reinfection risks and vaccinations. She covered, in a few minutes, most of the relevant research, some of which is mentioned in the CDC link found below (pages 12-22 for post infection immunity, pages 23-32 for reinfection risk). The study mentioned on page 28 is somewhat interesting (design, implications, despite limitations). Also found below is a link to a site monitoring progress on the vaccine front. The amount of human capital involved is mind boggling. The people involved have obvious financial incentives but there is an unusual amount of drive, especially in smaller operations. https://www.cdc.gov/vaccines/acip/meetings/downloads/slides-2020-10/COVID-Wallace.pdf https://covid19.trackvaccines.org/vaccines/ Thanks Cigarbutt, this is super-helpful. If the covid-19 reservoirs persist over time, even if it doesn't cause a material event on a global basis, would it impact behavior of some percentage of the population, e.g. not travel as much as they did pre-covid, not go to places with lots of people as much, etc.? Maybe the behavior change will depend on the perceived probability of risk, and how readily available are the alternatives to taking risk, i.e. working from home, ordering everything online, etc.? If the perceived risk is as high as it was (1) getting on 737 Max right after two crashes, maybe some would pick an alternative if available but if it as low as (2) driving a car, maybe people will accept. Wondering where on the spectrum between #1 and #2, we'll end up landing. The point on spectrum will probably change over time as well depending on how many covid-19 infections we hear about over time.

Thanks gfp. You are right. I forgot that the 10-Q did say "Approximately 70% of the aggregate fair value was concentrated in four companies (American Express Company – $15.2 billion; Apple Inc. – $111.7 billion; Bank of America Corporation – $24.9 billion and The Coca-Cola Company – $19.7 billion)." Given BAC closed at $24.09 on Sep 30, BRK owned about 1.03 billion BAC shares as of then. There is no confidentiality statement in 10-Q either.

Thanks CassiusKing1 for starting this :-). I think almost 0% probability that he is buying TSLA :-). I was puzzled when BAC was trading below his earlier purchases for many weeks, but there were no SEC filings showing up. This might explain the mystery, i.e. the statement in the latest 13F that "Confidential information has been omitted from the public Form 13F report and filed separately with the U.S. Securities and Exchange Commission." So, my guess is BAC. It is possible it is not that because banks are riskier than other companies for concentration, especially if the probability of Covid becoming endemic materializes. If not that, then maybe something in the energy sector.

I can understand your point of view better now. I do think working from home more (not 100%, but >0%) will be permanent now. Besides preventing the spread of diseases, there are many benefits that people have now recognized and will convince the companies to allow people to work from home more. I'm invested in a number of enterprise software/digitization companies for this reason. Regarding the transmission rate, I think that R0 for the typical flu is much lower because the larger portion of the population has already built immunity and some of them are vaccinated. If the same virus was novel like Covid-19, I'm pretty sure the R0 would be higher, although not high as Covid-19. My understanding is that Covid-19 coronavirus strains are more contagious than flu coronavirus strains because former survive outside the host longer than latter.

https://www.biorxiv.org/content/10.1101/2020.11.15.383323v1 100% certainty that Covid-19 will mutate but at a much slower rate than influenza viruses (we should be grateful this isn't "just the flu"). To simplify, let's assume the rate of mutation is related to mutations during the following: 1. Replications within a host (human or animal) 2. Jumping between hosts 3. Jumping between species This suggests that rate of mutation will be highest at the peak of the pandemic when the virus is replicating rapidly in people and jumping rapidly between hosts. We've had perhaps trillions of replications, yet vaccines are showing 90% efficiency. This shows that the virus is not mutating rapidly (which is also shown in genetic tracing). You could foresee some random mutation that allows Covid-19 to evade the vaccine, but the probability is related to the number of mutations. So the likelihood of a dangerous mutation occurring after June 2021 is much lower than one occurring in 2020. Edit to add: So that suggests you won't need a yearly vaccine solely due to mutations. You might still need one for waning immunity, but the preprint above suggests immunity could be reasonably long-lived. Thanks KCLarkin, this is helpful. Based on this, looks like probability of Covid-19 coronaviruses becoming an endemic is much lower than flu coronaviruses.

How is the transmission rate, that is, R0, going to go down for mutations of Covid-19 coronavirus with vaccine and better treatment. Flu has an R0 of about 1.3, i.e. one person can spread it to 1.3 people on average. Covid-19 coronavirus strains have an R0 as high as 5 or higher. Do we know of other ways of lowering R0 for Covid-19 strains other than behavior change? We cannot say with 100% certainty that herd immunity will continue to provide immunity for mutated strains of Covid-19. We do know that herd immunity does not provide immunity for mutated strains of flu coronaviruses. Vaccines. The transmission rate will go lower if more people are immune to it. Isn't that obvious? If the virus mutates and presents a serious threat again, I'm sure that we will develop another vaccine that works. Hence, my question at the start of the thread, i.e. what is the probability that we would need a vaccine every year? So, you agree that the probability of that is non-zero? Yes, but it won't change our behaviors to the point that the industries you pointed out will significantly change. We get flu vaccines every year. Thanks clutch, it is a very fair point that we get flu vaccines every year, and don't worry about flu that much while going on about our lives. Let's also assume that we will eventually be able to treat covid-19 without requiring hospitalization for a big percentage of people. One difference that will likely stay is that Flu coronaviruses have an R0 of about 1.3, i.e. one person can spread it to 1.3 people on average, while Covid-19 coronavirus strains have an R0 as high as 5 or higher. Where that difference might play out is in some people's behavior while they are waiting to get the vaccine for new strains. With flu coronavirus strains, because the transmitability is lower, we don't worry too much about the risk and go about our usual behaviors. With Covid-19 coronavirus strains, because of higher risk of catching it, our behaviors might be somewhat more constrained than with flu while waiting for vaccine for new strains of the year. Look at some of our behaviors currently while we are waiting for the Covid-19 vaccine. I agree with you once treatment without hospitalization is possible for a big percentage of people, we probably won't restrict our behaviors as much as now while waiting for vaccine for new Covid-19 strains, but we might not relax our behaviors all the way to how we act while waiting for flu vaccines because of increased transmitability with Covid-19 coronavirus strains. If the probability of Covid-19 coronaviruses becoming endemic like flu coronaviruses materializes, there will probably be some effect on our behaviors longer term, which will probably have some impact to whether 100% of people will go back to working from office 100% of the time.

How is the transmission rate, that is, R0, going to go down for mutations of Covid-19 coronavirus with vaccine and better treatment. Flu has an R0 of about 1.3, i.e. one person can spread it to 1.3 people on average. Covid-19 coronavirus strains have an R0 as high as 5 or higher. Do we know of other ways of lowering R0 for Covid-19 strains other than behavior change? We cannot say with 100% certainty that herd immunity will continue to provide immunity for mutated strains of Covid-19. We do know that herd immunity does not provide immunity for mutated strains of flu coronaviruses. Vaccines. The transmission rate will go lower if more people are immune to it. Isn't that obvious? If the virus mutates and presents a serious threat again, I'm sure that we will develop another vaccine that works. Hence, my question at the start of the thread, i.e. what is the probability that we would need a vaccine every year? So, you agree that the probability of that is non-zero?

How is the transmission rate, that is, R0, going to go down for mutations of Covid-19 coronavirus with vaccine and better treatment? Flu has an R0 of about 1.3, i.e. one person can spread it to 1.3 people on average. Spanish Flu had an R0 about 2.2 to 2.9, and effectively lowered further due to less travel sometime after World War I was over. Covid-19 coronavirus strains have an R0 as high as 5 or higher, exacerbated further by dense populations and travel. Do we know of other ways of lowering R0 for Covid-19 strains other than behavior change? We cannot say with 100% certainty that herd immunity will continue to provide immunity for mutated strains of Covid-19. We do know that herd immunity does not provide immunity for mutated strains of flu coronaviruses.

If he's buying a basket of pharma stocks, then I wonder has he bought more than the ones listed in this 13F? I would not be at all surprised if he's bought Glaxo (London listed) and Sanofi (Paris listed). Both are good companies and would fit into his basket approach. He has also owned both before, and both are arguably cheaper than when he owned previously. He could have bypassed the 13F listing requirement by buying both stocks on the local exchanges, something he has done before (Tesco). Didn't he own Sanofi before? Yes, he sold out after some time because Sanofi didn't go anywhere in terms of making money for shareholders.

Thanks KCLarkin, would it be possible to share the link to the source? Which one of the below are you saying? (a) 100% certainty that Covid-19 coronavirus will not mutate, unlike the flu coronaviruses, or (b) 100% certainty that the same vaccine we get once for Covid-19 coronavirus will be able to provide immunity against all mutations of Covid-19 coronavirus, unlike the vaccine for flu coronaviruses.

From Barron's article at https://www.barrons.com/articles/why-warren-buffetts-berkshire-hathaway-fell-out-of-love-with-jpmorgan-51605629567: Not sure if they have take into account NEAM figures in that $9 billion total purchase amount.

Hi petec, would it be possible to share your reasoning? If I count up their debt, and do an EBITDA/EV earnings yield, I'm not getting anything remotely close to 15% earnings yield, that is, before corporate and personal income taxes. Are you thinking their EBITDA is going to go up a lot with their pricing power during inflation, or that their expenses include a lot of R&D expenses that need to be amortized not expensed directly, even though they have patent expirations coming that will need R&D almost as sustaining capital expenses?

Day trading is the new value investing? Here is what Buffett and Munger said in 1999 about buying a group of pharma stocks at below market multiple: Yes, they might be trading at below market multiple, especially if you compare to some tech stocks, but these pharma stocks are not cheap.

Wondering if he is still thinking there is a non-zero probability that Covid will become an endemic, requiring a vaccine very year. Another interesting thing to note is that all the pharma stocks he bought (ABBV, MRK, BMY, PFE) seem to be looking into Covid vaccines and treatments. Wonder if it is going to be another pump and dump scheme like BRK seems to be doing for GOLD and might do for Snowflake, i.e. get some attention to these stocks, and ride on a high probability that one of them could have a vaccine or treatment take off, and then dump them.

Some folks in the medical and academic communities believe that there is a good chance Covid will end up becoming an endemic like the common cold or the flu, which needs a new vaccine every year. Wondering if anyone in the group has looked into credible sources to help figure out the probability range for this happening. Once we know the probability range, if the high end of the probability range is high enough, we can talk about potential implications to airlines, remote work, density in cities, etc. Here are some articles I've run into: * https://www.huffingtonpost.co.uk/entry/covid-19-endemic-pandemic-epidemic_uk_5f99a2abc5b6aab57a0eb788?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAAFY2D4Q9zh3-O_LifL8Km8l7eait0vUsQ5u9Sxy6bWucWEPwkcijmsuJlk64j2OaBsW8pgUSJLPoqSvXmyaze-412bD9YFU55UvwlZJnlWgodlmVyuMuVErL-iV3MShTAg32rSybeVNwo5lX7mQs8x9perwMjJ9083wvT0KzdJGZ * https://science.sciencemag.org/content/370/6516/527 * https://www.publichealth.columbia.edu/public-health-now/news/will-covid-19-virus-become-endemic * https://www.sciencedaily.com/releases/2020/10/201015101820.htm#:~:text=Evidence%20suggests%20COVID%2D19%20could,temperate%20regions%20similar%20to%20influenza.