Coronavirus

[Jurgis]

I am starting to agree with some of the Democrats though. I think there should be some sort of lifelines established for small businesses. The real coronavirus effects will obviously be on travel and retail. Its a key cog to the economy, but at the same time, not in theory all that different in terms of deriving an assistance program, than what we saw in agriculture during the trade war.

I've been wresting with the idea for a while. But I'm not so sure travel related small (and even larger) businesses will be affected. My thinking goes that if people are cancelling their European and other overseas vacations because there are cases at their destinations or because they're afraid to share a tube with 400 other people they may instead stay stateside and go on a vacation here.

 

Instead of not going on vacation at all, they may get in their car, do a day of driving and spend time at a destination that never saw a Chinese person. It's a lot safer that way. If it actually turns out this way, there may be a bumper year for domestic travel related businesses.

 

Anecdotally, I have friend who is going on a cruise  ::). Also have a friend who's going to GDC 2020.

 

OTOH, there was a scheduled international company-wide event that got cancelled - no travel.

 

I was going to China in May. Haven't cancelled yet. Airlines have cancelled flights to end-of-March only, so I'm waiting for extension of the cancellation to get full money back. Also to see what's China travel advisory level is by the end of March ( https://travel.state.gov/content/travel/en/traveladvisories/traveladvisories/china-travel-advisory.html ). Likely won't travel.

 

Have couple potential international trips in July... we'll see how things go by then.

 

None of these trips will be replaced by domestic travel. :)

[bizaro86]

I am starting to agree with some of the Democrats though. I think there should be some sort of lifelines established for small businesses. The real coronavirus effects will obviously be on travel and retail. Its a key cog to the economy, but at the same time, not in theory all that different in terms of deriving an assistance program, than what we saw in agriculture during the trade war.

I've been wresting with the idea for a while. But I'm not so sure travel related small (and even larger) businesses will be affected. My thinking goes that if people are cancelling their European and other overseas vacations because there are cases at their destinations or because they're afraid to share a tube with 400 other people they may instead stay stateside and go on a vacation here.

 

Instead of not going on vacation at all, they may get in their car, do a day of driving and spend time at a destination that never saw a Chinese person. It's a lot safer that way. If it actually turns out this way, there may be a bumper year for domestic travel related businesses.

 

I own a small travel related business. While my business is very seasonal, my bookings are down 90% this week compared to the same week last year. And my net bookings are zero, as cancellations (most specifically reference coronavirus) have outweighed new bookings. My business is focused, however, on west coast gateway cities and business travel, which are probably the most affected areas. I agree a rural B&B in a pastoral location may see a benefit, but I think it's more likely people just stay home.

[bizaro86]

I am starting to agree with some of the Democrats though. I think there should be some sort of lifelines established for small businesses. The real coronavirus effects will obviously be on travel and retail. Its a key cog to the economy, but at the same time, not in theory all that different in terms of deriving an assistance program, than what we saw in agriculture during the trade war.

I've been wresting with the idea for a while. But I'm not so sure travel related small (and even larger) businesses will be affected. My thinking goes that if people are cancelling their European and other overseas vacations because there are cases at their destinations or because they're afraid to share a tube with 400 other people they may instead stay stateside and go on a vacation here.

 

Instead of not going on vacation at all, they may get in their car, do a day of driving and spend time at a destination that never saw a Chinese person. It's a lot safer that way. If it actually turns out this way, there may be a bumper year for domestic travel related businesses.

 

Anecdotally, I have friend who is going on a cruise  ::). Also have a friend who's going to GDC 2020.

 

OTOH, there was a scheduled international company-wide event that got cancelled - no travel.

 

I was going to China in May. Haven't cancelled yet. Airlines have cancelled flights to end-of-March only, so I'm waiting for extension of the cancellation to get full money back. Also to see what's China travel advisory level is by the end of March ( https://travel.state.gov/content/travel/en/traveladvisories/traveladvisories/china-travel-advisory.html ). Likely won't travel.

 

Have couple potential international trips in July... we'll see how things go by then.

 

None of these trips will be replaced by domestic travel. :)

 

GDC has been cancelled after all the big companies pulled out.

[Kaegi2011]

Really hope that it gets to you and the most virulent kind.

 

This forum has degenerated over the past few years but this is a new low. I would say vitriol like this is inexcusable but that’s up to Parsad. At the very least you should delete that post and apologize like a decent human being.

 

+1 I agree.  That comment was beyond rude.  Deletion and an apology are the right thing to do.

 

+2.  Forums like this where people can discuss and debate, but doing so respectively, are far and few in between.  Let's try to keep it that way. 

[SharperDingaan]

Most investors are just gambling, rationality is way down the list.

 

Were it easier to borrow stock to short; the headlines of the day would be how great this is!, how much money can be made, and how easily!! The gambler just needs pieces of paper to trade, a liquid market, and a stream of bids. He/she really could care less about the underlying companies that those pieces of paper represent.

 

But even if you have the means, the investment horizon, you like the stock, and the price is right, why throw out a bid?

Isn't it just better to collectively starve the order book? panic the monetary authorities, panic the gamblers even more, and simply force market makers into an order-balancing daily clear of sizeable blocks at a significant discount? That even Uncle Warren has been offering to buy, if the individual deal is good enough...

 

The Coronavirus is unfortunate, and sadly, contracting it is almost a given at this point.

What do you think happens when the virus sweeps through US retirement holmes? In an election year?

All those guns, weapons, military muscle ... and it didn't work.

 

Most would expect the market correction(s) to become a lot worse.

Why buy shares tomorrow, when next week they will very likely be cheaper still?

At best, buy a few options/futures to benefit from volatility ... but the underlying shares themselves? ... why bother?

 

SD

 

 

 

 

[Gregmal]

First US death

 

https://www.nytimes.com/2020/02/29/world/coronavirus-news.html

 

Should take another 1,000 off the futures when they open tomorrow.

[Viking]

First US death

 

https://www.nytimes.com/2020/02/29/world/coronavirus-news.html

 

Should take another 1,000 off the futures when they open tomorrow.

 

The key problem for investors right now is ‘headline risk’. Fundamentals are not going to matter for a while.

 

Everything i am reading right now tells me the US is failing badly in how it is handling this developing crisis. And the key factor in how severe the outbreak gets is how it is handled in the initial stages. This tells me the ‘headlines’ are going to get much worse in the US. And political leadership are going to make it even worse. We may ge at the early stages of a slow moving train wreck....

 

Equity investors are going to see their resolve severely tested as we see 1,000 point swings (both ways) in the coming weeks and months.

[no_free_lunch]

Viking, what country IS handling this well?  In Canada they kept telling us there was nothing to worry about. Then they pivoted to , well maybe there will be disruptions, be ready to self quarantine.  That isn't going to work, too many selfish people.

 

I have family in health care. They are not prepared, no way.  For small volumes sure, but a mass infection with large numbers needing respiratory help. That is the bigger issue, which is under played by the media. It's the 4 or 5 people for every fatality who survive but need round the clock acute care for an extended period. 

 

Let's not politicize what is clearly a global phenomenon.

[Dalal.Holdings]

https://www.businessinsider.com/how-much-does-coronavirus-treatment-cost-cdc-health-insurance-2020-2

 

Testing for COVID-19 (the disease caused by coronavirus) is free, according to a new report.

But Americans could be stuck paying for other medical-related costs for suspected coronavirus treatment, like a $1,000 hospital stay.

 

U.S. Healthcare System is a Joke though and that will become so much more apparent to everyone as this unfolds. Americans who don't (or can't) pay the healthcare bills will not get tested/treated and instead spread this in the community compared to just about every other developed country where the cost of healthcare visit is low.

 

This, along with the revelation of what happens when a marketing guy conman President faces a true crisis, may very well lead to the United States electing its very first socialist president in 2020.

[Gregmal]

First US death

 

https://www.nytimes.com/2020/02/29/world/coronavirus-news.html

 

Should take another 1,000 off the futures when they open tomorrow.

 

The key problem for investors right now is ‘headline risk’. Fundamentals are not going to matter for a while.

 

Everything i am reading right now tells me the US is failing badly in how it is handling this developing crisis. And the key factor in how severe the outbreak gets is how it is handled in the initial stages. This tells me the ‘headlines’ are going to get much worse in the US. And political leadership are going to make it even worse. We may ge at the early stages of a slow moving train wreck....

 

Equity investors are going to see their resolve severely tested as we see 1,000 point swings (both ways) in the coming weeks and months.

 

True, but is this not one of, if not the biggest argument in favor of active managers and astute capital allocators outperforming?

 

The saying "fundamentals dont matter" is valid on the way up and on the way down if you are rationalizing cash yielding zilch. But on the way down, how is people not caring about fundamentals not a huge advantage? The worst thing that can happen, when people dont care and fundamentals dont matter, is multiple contraction, however history has plainly shown us that this only really sticks to things that deserved it. IE who suffered long term from 08? Probably only the financials. Everything else went back to normal and received healthy multiples. Here? Its probably retail and travel stuff. Except retail already carries a shitty multiple, unlike say, financials did in 06.

 

I think if we talk about bias, the big one here is a lot of people who have thought valuations where out of line for a long time see the market crashing and think "I was right, and its about time" and then anchor to that in assessing how much more it "should" go down. But the two are totally unrelated. I mean theres people in that crowd who have thought valuations where out of line since 2013.... Its similar in thought to what I experienced in YE 2018. Everyone I talked to about why the market crash there made sense, at least the ones with semi intelligent rationalizations, gave some kind of derivative spiel about "the Feds been propping things up and oh we were in a bubble all this time", but at the end of the day the market didn't just wake up in November 2018 and go "shit, today we're going to abandon everything thats mattered for the last decade or so and now only consider "this"...thats just not how it works.

 

Further, as far as spread goes, I am curious to see how many cases are found in warmer weather regions. Typically these are much lower. Which could create opportunities in those areas. Particularly places like Florida and Texas. And then for the rest of us, Spring is 3 weeks away, which may bring on some weather related relief, but who knows. Its not hard to see, if say containment is successful at least until warmer weather, there being a vaccine by October/November of next year. Thats often more time than it takes to generate one for the annual flu.

[kab60]

kab60,

 

Have you had the time to follow how this has evolved & has been handled by the public authorities over the last few days here in Denmark? [i'm appalled and in some kind of state of shock because of it.]

 

For info to all : We now have three confirmed cases here in tiny Denmark, which all track back to Northern Italy.

Yeah, I know people at TV2. Obviously suck to be guarantined (well with small kids it might be nice with 2 weeks "off" binge watching Netflix solo and eating takeaway), but I'm not the least worried about Coronavirus. I can see why people are on the sidelines due to knock on effects (supply chain disruption, weak stock market getting Bernie elected - though I think he's needed), hoping to catch a bottom, but the virus seems pretty harmless unless old and weak - like the flu.

[John Hjorth]

https://www.businessinsider.com/how-much-does-coronavirus-treatment-cost-cdc-health-insurance-2020-2

 

Testing for COVID-19 (the disease caused by coronavirus) is free, according to a new report.

But Americans could be stuck paying for other medical-related costs for suspected coronavirus treatment, like a $1,000 hospital stay.

 

... This, along with the revelation of what happens when a marketing guy conman President faces a true crisis, may very well lead to the United States electing its very first socialist president in 2020.

 

No POTUS sweat here, the task - and the political risk related to it - is already delegated to Mike Pence. If things go severely wrong and get out of hand, naturally, he will be to blame & take the fall, as a "failure", "incompetent person" & what do I know [honestly, I don't think my English active vocabulary suffice here] - like for so many other persons before him.

[Dalal.Holdings]

We will learn the true cost of not having socialized healthcare with this crisis. As with a lot of things (e.g. climate change), we are not very good at anticipating and protecting against complex, nonlinear phenomena that pose 2nd and 3rd order effects.

 

As Churchill said: "Americans will always do the right thing--only after they have tried everything else"

 

Or Munger: We'll have single payer healthcare as soon as Dems take WH and Congress. Or "America's healthcare system is a disgrace".

 

Let's see how fattening up the pharmaceutical company bottom lines over the years help us with this black swan. Let's see how much they put into R&D and how long it takes to get treatment/vaccine out. Prepare to be disappointed.

[Guest cherzeca]

We will learn the true cost of not having socialized healthcare with this crisis. As with a lot of things (e.g. climate change), we are not very good at anticipating and protecting against complex, nonlinear phenomena that pose 2nd and 3rd order effects.

 

As Churchill said: "Americans will always do the right thing--only after they have tried everything else"

 

Or Munger: We'll have single payer healthcare as soon as Dems take WH and Congress. Or "America's healthcare system is a disgrace".

 

Let's see how fattening up the pharmaceutical company bottom lines over the years help us with this black swan. Let's see how much they put into R&D and how long it takes to get treatment/vaccine out. Prepare to be disappointed.

 

genomic sequencing being done in real time.   

[Liberty]

Really hope that it gets to you and the most virulent kind.

 

If that's not a forum-banning offense, I don't know what is.

[Guest]

Really hope that it gets to you and the most virulent kind.

 

If that's not a forum-banning offense, I don't know what is.

 

I'm not even sure why this was said (I looked through and didn't really see anything harsh to get that kind of response) but yeah, that's not good.

[Liberty]

Really hope that it gets to you and the most virulent kind.

 

If that's not a forum-banning offense, I don't know what is.

 

I'm not even sure why this was said (I looked through and didn't really see anything harsh to get that kind of response) but yeah, that's not good.

 

He's been insulting people without provocation in a few threads lately, but this is way beyond the pale... don't know what's going on ¯\_(ツ)_/¯

[Guest]

We will learn the true cost of not having socialized healthcare with this crisis. As with a lot of things (e.g. climate change), we are not very good at anticipating and protecting against complex, nonlinear phenomena that pose 2nd and 3rd order effects.

 

As Churchill said: "Americans will always do the right thing--only after they have tried everything else"

 

Or Munger: We'll have single payer healthcare as soon as Dems take WH and Congress. Or "America's healthcare system is a disgrace".

 

Let's see how fattening up the pharmaceutical company bottom lines over the years help us with this black swan. Let's see how much they put into R&D and how long it takes to get treatment/vaccine out. Prepare to be disappointed.

 

If America finds a cure faster than other countries then perhaps the fattening of the pharmaceutical companies has been worthwhile. Do you think another country (socialized medicine or otherwise) has a better chance?

[Dalal.Holdings]

We will learn the true cost of not having socialized healthcare with this crisis. As with a lot of things (e.g. climate change), we are not very good at anticipating and protecting against complex, nonlinear phenomena that pose 2nd and 3rd order effects.

 

As Churchill said: "Americans will always do the right thing--only after they have tried everything else"

 

Or Munger: We'll have single payer healthcare as soon as Dems take WH and Congress. Or "America's healthcare system is a disgrace".

 

Let's see how fattening up the pharmaceutical company bottom lines over the years help us with this black swan. Let's see how much they put into R&D and how long it takes to get treatment/vaccine out. Prepare to be disappointed.

 

If America finds a cure faster than other countries then perhaps the fattening of the pharmaceutical companies has been worthwhile. Do you think another country (socialized medicine or otherwise) has a better chance?

 

Sure there are good actors out there who might deploy capital more favorably, but there are many more co's out there with behavior not too dissimilar to Valeant. They rip off American taxpayers (by overcharging Medicare) and relocate headquarters off shore to some low cost country so they cut down on U.S. tax bill--screwing American taxpayers both ways (Pfizer, et al). Congress (McConnell, et al) make it so Medicare has no power to negotiate drug prices. Mylan used political influence to convince schools to buy $600 epi pens

 

Abbvie has somehow extended its humira patent in the U.S. (hey, maybe you can be a lucky patient and apply for a "rebate" from Abbvie, still doesn't spare our healthcare system tho)--Europeans didn't indulge them in that though. These co's fatten their bottom lines and then use that capital to do mega mergers (often with an overseas co so they can relocate their HQ to cut U.S. taxes: Pfizer was going to pay $160B for Allergan in 2016--that's money largely reaped from overcharging Americans that would not have gone to R&D but into Allergan equity/debt holder pockets for a tax inversion)--they don't plow it all into R&D. Waste. Waste. Waste.

 

*If* America finds the cure--there is no evidence that American co's will (not to mention a lot of these are no longer American co's bc they moved out to dodge our taxes)--why is the burden for funding the world's pharma R&D being put on U.S. taxpayers???

 

[vinod1]

I have not bought as many stocks as I have in the last couple of days since Jan 2016. Some of them are based on valuation work that I had done last March and have not updated since, but the price are at such a discount to IV that I do not even need to make an update. Yes, they are at the epicenter of the investor fears. 

 

I'd be interested to hear what long term compounders are trading cheaper than last March and at substantial discount to IV.  8)

I guess EXPE is but it was cheaper in November and without virus overhang for near term business.

 

Me too. Even summer 2019 was cheaper and Dec 2018 was much cheaper. In Addition, we now have a Real problem with the economy that we didn’t have last year. A selloff always offers some bargain, thats true, but it was way more true in Dec 2018.

 

I agree Dec 2018 it was much cheaper. It is mostly due to my portfolio allocation. I had sold a bunch of stuff in Nov/Dec of 2019 as the expected return on many of my investments went down to mid single digits and I am sitting on a lot of cash going into this week. I was looking at O&G and other dreadful things to invest and still did not find much.

 

So last week is a life saver. Nothing new. A bunch of banks that I sold became at least reasonable enough to start adding back. Also bought Booking. Smaller positions in Rolls Royce and Carnival.

 

Vinod

[John Hjorth]

We will learn the true cost of not having socialized healthcare with this crisis. As with a lot of things (e.g. climate change), we are not very good at anticipating and protecting against complex, nonlinear phenomena that pose 2nd and 3rd order effects.

 

As Churchill said: "Americans will always do the right thing--only after they have tried everything else"

 

Or Munger: We'll have single payer healthcare as soon as Dems take WH and Congress. Or "America's healthcare system is a disgrace".

 

Let's see how fattening up the pharmaceutical company bottom lines over the years help us with this black swan. Let's see how much they put into R&D and how long it takes to get treatment/vaccine out. Prepare to be disappointed.

 

Dalal.Holdings,

 

My point is merely, that every health care system in situations like this will eventually fail, if it's not saturated [by setup & design] by personal integrity, professionalism [professional independence [ <- ? ]] & intellectual honesty.

[vinod1]

I was also holding S&P 500 puts for last 10 weeks or so and sold them on Tuesday for a tiny profit.  Then it promptly doubled in value over next 3 days.

 

If my timing skills are any indication, you would probably get better opportunities in next couple of days.

 

Vinod

[Guest]

We will learn the true cost of not having socialized healthcare with this crisis. As with a lot of things (e.g. climate change), we are not very good at anticipating and protecting against complex, nonlinear phenomena that pose 2nd and 3rd order effects.

 

As Churchill said: "Americans will always do the right thing--only after they have tried everything else"

 

Or Munger: We'll have single payer healthcare as soon as Dems take WH and Congress. Or "America's healthcare system is a disgrace".

 

Let's see how fattening up the pharmaceutical company bottom lines over the years help us with this black swan. Let's see how much they put into R&D and how long it takes to get treatment/vaccine out. Prepare to be disappointed.

 

If America finds a cure faster than other countries then perhaps the fattening of the pharmaceutical companies has been worthwhile. Do you think another country (socialized medicine or otherwise) has a better chance?

 

Sure there are good actors out there who might deploy capital more favorably, but there are many more co's out there with behavior not too dissimilar to Valeant. They rip off American taxpayers (by overcharging Medicare) and relocate headquarters off shore to some low cost country so they cut down on U.S. tax bill--screwing American taxpayers both ways (Pfizer, et al). Congress (McConnell, et al) make it so Medicare has no power to negotiate drug prices. Mylan used political influence to convince schools to buy $600 epi pens

 

Abbvie has somehow extended its humira patent in the U.S. (hey, maybe you can be a lucky patient and apply for a "rebate" from Abbvie, still doesn't spare our healthcare system tho)--Europeans didn't indulge them in that though. These co's fatten their bottom lines and then use that capital to do mega mergers (often with an overseas co so they can relocate their HQ to cut U.S. taxes: Pfizer was going to pay $160B for Allergan in 2016--that's money largely reaped from overcharging Americans that would not have gone to R&D but into Allergan equity/debt holder pockets for a tax inversion)--they don't plow it all into R&D. Waste. Waste. Waste.

 

*If* America finds the cure--there is no evidence that American co's will (not to mention a lot of these are no longer American co's bc they moved out to dodge our taxes)--why is the burden for funding the world's pharma R&D being put on U.S. taxpayers???

 

The burden for world security and r&d is on America's tax payers. Overall, I agree with you. The healthcare system is highly bloated. Insurance is a big waste too. A lot of physicians make surprisingly little (especially when you factor in hours worked, high rates of suicide/depression, etc). I would say that if America pharmaceuticals don't come out with the cure (and I'm not talking about a university), then it'll be perfect fodder for the Sanders of the world to hit them hard (and rightfully so).

[no_free_lunch]

On the private/public health-care debate, correct me if I am wrong here but aren't most drugs developed specifically for the US market?  Either by US companies or international companies for the US.  I hear of other countries re-producing drugs but I don't hear of many break-throughs.  It seems self-evident because if my statement was false there would be this huge assortment of free generics and there would be no market for the "evil" pharmaceuticals.

[Gregmal]

Good general info on past "issues".

 

https://www.marketwatch.com/story/heres-how-the-stock-market-has-performed-during-past-viral-outbreaks-as-chinas-coronavirus-spreads-2020-01-22

 

Seems like we get one of these every few years. Also seems to have been blown hugely out of proportion due to the unfortunate timing of the Chinese New Year and all travel surrounding that, coupled with the fact that reports are the Chinese government knew about this in December and tried covering it up to prevent hysteria around the festivities.

 

There would also IMO, be a race amongst all drug companies to come up with something for no reason other than to showcase the necessity for their pricing models as they fund R&D necessary to save the world....or so the pitch Id imagine would go.