Is this a buying opportunity? Poll

[shhughes1116]

I'm bemused by this entire situation. 

 

I spent the bulk of late-January and early-February trying to convince people in my area that COVID-19 would be a significant problem, and we needed to batten down the hatches, close schools, ramp up testing, and halt international flights for a few weeks.  I was laughed at. 

 

Now, these same folks are in pure pandemonium, looking at this event like the end of the world, buying 15 Costco-sized things of toilet paper, massive packs of bottled water, and MREs.  And here i am, trying to point out the "green shoots" (e.g. therapeutic treatments that seem to be working, rapid diagnostics that are being rolled out, rapid work on promising vaccine candidates, effective use of existing drugs on off-label uses, substantial fiscal stimulus to households).  And I am getting laughed at again. 

 

Don't get me wrong, small business is getting squashed from this.  But, for the first time in a long time, there is a genuine desire, at least in this area, to go out of your way to support small business (e.g. take out food, take out beer).  I suspect that will continue as folks realize how many small businesses are impacted by this issue, and how "local" that impact is.   

 

Medically, this will be a v-shaped recovery.  Rapid diagnostics + quarantine/isolation will bring this virus to an end pretty quickly, likely before a vaccine candidate is widely-available. 

 

And while the economic recovery will likely be slow, it will happen.  Life will resume, business will resume, people will get on with their lives and spend money.

 

My biggest concern from all of this is the failure to implement "complete Keynesian economics".  I have no objection to the fiscal stimulus, i think this is exactly what is needed in this situation.  However, as the economy recovers, I can only hope that people use this opportunity to raise taxes, or expand the tax base, in a way that enables us to pay down the debt from this fiscal stimulus.  Then we have some dry powder, as a society, for the next COVID-19 event - asteroid?   

[shhughes1116]

This situation is proving fruitful for the simple fact it’s bringing to light to the average Joe, just how cucked the US is by China.

 

And rightly so - if there is one thing this President has been right about for 3 years - it's dependence on China.

The haters will never give the man an ounce of credit during a crisis obviously, but the average Joe will do so.

 

Seems like this crowd is real critical of Trump handling of this crisis. Too bad really.

 

I mean the President is ALWAYS fair game for criticism given his position - but the "open border" crowd

and all the folks that don't want border security and fences - want to have it both ways.

No screening or profiling - let any body in at any time. Remember all that crap?

 

The crowd that loves China - and detest how Trump was out to destroy China. Yet China covers this shit up and

causes a world-wide disaster. LeBron James and Trump critics must be happy now...

 

Oh, right crowd, our REAL enemy is Russia, not China - remember?

 

But now you have your armchair quarterback reasons to really bring Trump down - instead of band together as

real citizens should do under their leader during a crisis. Very patriotic.

 

And of course, President Trump is a bigot for being the first to impose a travel ban on January 31 from China:

https://www.whitehouse.gov/presidential-actions/proclamation-suspension-entry-immigrants-nonimmigrants-certain-additional-persons-pose-risk-transmitting-2019-novel-coronavirus/

The first world leader to have to balls to do it - yet his liberal critics condemned him as a racist and xenophobe.

 

Too bad some of you want to have it both ways...I would love to see how the Dems would have handled this crisis.

 

In the end, President Trump's 3 year effort to distance us from dependence on China is looking more and more brilliant.

 

But perhaps, Corona virus will accomplish what your beloved Russia Hoax, Mueller Investigation and countless other

feats of Presidential backstabbing didn't accomplish for you:  Bring down this President for good.

 

I have found quite the opposite.  Most of my friends and family lean hard left.  They despise just about everything about Trump, much of which i think is warranted.  But not once have I heard any of these folks give Trump a hard time for the trade war with China.  Quite the opposite, this has been one of the few aspects of the administration that they have supported.  They are educated, and see China for what it is, and see Trump as the one person willing to take them on.

[Castanza]

Something I am not sure markets are pricing in is the possible long lasting effects of this crisis. Much of Europe, for example, was in pretty bad (economic) shape before the virus. This may just precipitate whatever was going to happen eventually. Several of the points Dalio has been mentioning in the last few years come to mind: income inequality and unemployment, the need to live off subsidies and what that does to peoples morale, resulting populisms and nationalist movements vs globalisation trends, social welfare systems arguably broken, the conflict between the US and China (far from just an economic issue), etc, etc

 

ps Now that I mention Dalio... If you read his books, you will remember that some crisis where markets went down a lot saw periods in between where they also raised a lot. 30%, 40%, and sometimes even with accompanying good macro economic data that supported the rallies fundamentally. So we may think that all is good at some point, and actually be just in the middle of the way down.

 

The middle was between 2009-2020

[sleepydragon]

Of course this is a buying opportunity if you have a 5-10 years horizon.

No idea about 6-12 months but you don't need to care because you are not managing other people's money and you have no need to compete and beat others on the external score board.

 

My prediction: I don't think we are heading into a long recession. Mkt will hit new high by year end.

 

I have become 100% invested during the last two days (this exclude the money I will need for 1-year expense)

 

[cubsfan]

I have found quite the opposite.  Most of my friends and family lean hard left.  They despise just about everything about Trump, much of which i think is warranted.  But not once have I heard any of these folks give Trump a hard time for the trade war with China.  Quite the opposite, this has been one of the few aspects of the administration that they have supported.  They are educated, and see China for what it is, and see Trump as the one person willing to take them on.

 

Great - but the long knives in the media are out and so is a majority of the group in the Coronavirus thread.

They're entitled to their opinion. I'm just voicing mine as to the convenient short term memories.

[Guest Schwab711]

 

Goldman predicts -24% GDP print in 2Q 2020

[Cigarbutt]

Something I am not sure markets are pricing in is the possible long lasting effects of... Dalio...

The middle was between 2009-2020

Are you suggesting the economy is living on borrowed time?

Of course this is a buying opportunity if you have a 5-10 years horizon.

No idea about 6-12 months but you don't need to care because you are not managing other people's money and you have no need to compete and beat others on the external score board.

My prediction: I don't think we are heading into a long recession. Mkt will hit new high by year end.

I have become 100% invested during the last two days (this exclude the money I will need for 1-year expense)

Of course, your prediction could be right.

In the process of getting back to a fully invested status, did you look at RH? I'm asking because I remember you had mentioned that you liked their products and their negative working capital profile. In a way, RH (the stock) has been on sale lately and is even spotted by old-style value filters. Somebody thinks RH will do great, if you have a two-year horizon or more:

https://www.prnewswire.com/news-releases/the-incredible-transformation-of-restoration-hardware-301027175.html

FWIW, I'll give you an unsolicited opinion: the likelihood of going down versus going up has improved along several time horizons but I'm not a buyer. Quantitative financial rationale unrelated to what GS predicts for Q2 GDP: toilet paper retailers may continue to outperform for a while.

[Castanza]

Are you suggesting the economy is living on borrowed time?

I think the coronavirus is giving everyone a glimpse into central planning. I'm not saying this is the end or anything. We will probably see massive bailouts, printing of money, and stimulus after stimulus to kick the credit/debt can down the road further. At the end of this I think we will see massive permanent government intervention as the Constitution gets tossed to the side.

 

I'm buying though, I mean what else can you do? Companies and services will still exist after all of this. Cash cows are imo the safest place to put money.

 

 

[no_free_lunch]

Are you suggesting the economy is living on borrowed time?

I think the coronavirus is giving everyone a glimpse into central planning. I'm not saying this is the end or anything. We will probably see massive bailouts, printing of money, and stimulus after stimulus to kick the credit/debt can down the road further. At the end of this I think we will see massive permanent government intervention as the Constitution gets tossed to the side.

 

I'm buying though, I mean what else can you do? Companies and services will still exist after all of this. Cash cows are imo the safest place to put money.

 

Given the vast quantity of printing that we are seeing at the moment, and that it is now accepted across the political spectrum, the dollar does not feel as safe of a refuge as it once did.  I am sitting close to 90% stocks  (80% pre covid) and it has more to do with lack of confidence in the dollar (cad or usd) than confidence in stocks.

[Cigarbutt]

Are you suggesting the economy is living on borrowed time?

I think the coronavirus is giving everyone a glimpse into central planning. I'm not saying this is the end or anything. We will probably see massive bailouts, printing of money, and stimulus after stimulus to kick the credit/debt can down the road further. At the end of this I think we will see massive permanent government intervention as the Constitution gets tossed to the side.

 

I'm buying though, I mean what else can you do? Companies and services will still exist after all of this. Cash cows are imo the safest place to put money.

This is not the end. But I wonder if this is the end of the beginning.

In English: There's a possibility of a long transition with a lot of movements up and down and that scenario can be challenging, in terms of defining entry and exit points. I'm trying to balance the "what else can you do?" with "there may be little place to hide".

[Castanza]

Are you suggesting the economy is living on borrowed time?

I think the coronavirus is giving everyone a glimpse into central planning. I'm not saying this is the end or anything. We will probably see massive bailouts, printing of money, and stimulus after stimulus to kick the credit/debt can down the road further. At the end of this I think we will see massive permanent government intervention as the Constitution gets tossed to the side.

 

I'm buying though, I mean what else can you do? Companies and services will still exist after all of this. Cash cows are imo the safest place to put money.

This is not the end. But I wonder if this is the end of the beginning.

In English: There's a possibility of a long transition with a lot of movements up and down and that scenario can be challenging, in terms of defining entry and exit points. I'm trying to balance the "what else can you do?" with "there may be little place to hide".

 

Time narrative is something that most underappreciated on the macro level. Historically speaking, it takes a long time for effect of first second and third order to play out.

[Viking]

I don’t know if this perspective is useful or not.  I used to lurk here a lot, but I’ve sort of lost interest in equity markets for the last few years.  Obviously I’m interested now which is why I’m back.

 

The reason I mention this is because I am coming to you guys with an outside perspective.

 

Here’s the thing: people on this forum seem much less pessimistic than people on other general interest forums.  There are various ways to interpret this, but mine is: for whatever reason, people who are into investing (I.e. the type of human beings that drive market prices) are much more complacent.  But I don’t think that complacency will last.

 

I’ll be curious to see what the markets look like next week when panic is more widely held among the investor base.

 

Me, I think this is the single most unpredictable moment in the last hundred years.  I don’t think we have ever seen a GLOBAL shock to supply and demand.  Global will really complicate our ability to address the shock and stimulate the economy.

 

Given that uncertainty, I like cash right now.

 

I am still cautious. The virus has not hit the US yet. We are likely 7-10 days away from starting to understand the damage the virus will inflict (from a health perspective). What we do not know is if parts of the US experiences a humanitarian disaster like what Italy is currently going through.

 

We also have not seen the reality of unprecedented numbers of people getting laid off and the suffering that is going to cause. We have seen some severe economic damage. But we are in the very early stage and much more carnage is coming.

 

I think there is a good chance the virus is going to be with us longer than people think, the lockdown is going to be longer than people think, the health and economic impact is going to be more severe than people think.

 

There is too much we still do not know. so i am happy to remain defensive until i know more :-)

 

PS: its kind of like we are on the beach, the water went out, we know a tsunami is coming, we run in to our hut on the beach for safety and crawl under the table and wait. The problem: we have no idea how big the wave is that is coming and how far inland it will go. Sometimes the smart thing is to get to high ground and wait for the wave to come in before returning to the beach. Most investors are not running for higher ground (cash) but instead are in their hut huddled under their table hoping the coming tsunami is not ‘the big one’ (holding equities or buying the dip).

[clutch]

Not sure why many people expect US to be another Italy. It could have been that Italy was an exception with the combination of an aging population, the first breakout among western countries (and hence not ready), the cultural norm, population density, etc.

[ERICOPOLY]

Not sure why many people expect US to be another Italy. It could have been that Italy was an exception with the combination of an aging population, the first breakout among western countries (and hence not ready), the cultural norm, population density, etc.

 

https://www.macrotrends.net/countries/ITA/italy/smoking-rate-statistics

[TwoCitiesCapital]

Not sure why many people expect US to be another Italy. It could have been that Italy was an exception with the combination of an aging population, the first breakout among western countries (and hence not ready), the cultural norm, population density, etc.

 

I can tell you that NYC is definitely NOT ready. Their hospitals are already overwhelmed and we're only like 2-3 days into it. A week my, the nurse I knew in NYC was still comparing this to the flu....

 

I heard second hand from another friend saying her contacts were confirming that hospitals were already running out of everything that people were concerned hospitals would run out of.

 

NYC, at the very least, will be just as bad as Italy IMO :/

[LC]

https://finance.yahoo.com/news/airline-ceos-promise-to-eliminate-dividends-and-stock-buybacks-if-congress-passes-29-b-coronavirus-bailout-175925540.html

 

Airline CEOs promise to eliminate dividends and stock buybacks if Congress passes $29B coronavirus bailout

CEOs from America’s largest publicly traded airlines sent an urgent letter Saturday to Congressional leaders promising to stop stock buybacks and paying dividends in exchange for a multi-billion dollar coronavirus bailout.

 

The letter says “If loans and or loan guarantees are enacted, equaling at least $29 billion, participating passenger and cargo air carriers commit to placing limits on executive compensation; eliminating stock buybacks over the life of the loans and eliminating stock dividends for the life of the loans.”

The letter signed by CEOs from Alaska, Atlas, American Airlines, Delta Air Lines, FedEx, Hawaiian, JetBlue, Southwest, United Airlines, and UPS was sent from the trade group Airlines for America.

 

“The breadth and immediacy of the need to act cannot be overstated,” the CEOs warned. “It is urgent and unprecedented.”

 

 

[Guest]

https://finance.yahoo.com/news/airline-ceos-promise-to-eliminate-dividends-and-stock-buybacks-if-congress-passes-29-b-coronavirus-bailout-175925540.html

 

Airline CEOs promise to eliminate dividends and stock buybacks if Congress passes $29B coronavirus bailout

CEOs from America’s largest publicly traded airlines sent an urgent letter Saturday to Congressional leaders promising to stop stock buybacks and paying dividends in exchange for a multi-billion dollar coronavirus bailout.

 

The letter says “If loans and or loan guarantees are enacted, equaling at least $29 billion, participating passenger and cargo air carriers commit to placing limits on executive compensation; eliminating stock buybacks over the life of the loans and eliminating stock dividends for the life of the loans.”

The letter signed by CEOs from Alaska, Atlas, American Airlines, Delta Air Lines, FedEx, Hawaiian, JetBlue, Southwest, United Airlines, and UPS was sent from the trade group Airlines for America.

 

“The breadth and immediacy of the need to act cannot be overstated,” the CEOs warned. “It is urgent and unprecedented.”

 

I don't see Spirit on there. Interesting.

[Castanza]

https://finance.yahoo.com/news/airline-ceos-promise-to-eliminate-dividends-and-stock-buybacks-if-congress-passes-29-b-coronavirus-bailout-175925540.html

 

Airline CEOs promise to eliminate dividends and stock buybacks if Congress passes $29B coronavirus bailout

CEOs from America’s largest publicly traded airlines sent an urgent letter Saturday to Congressional leaders promising to stop stock buybacks and paying dividends in exchange for a multi-billion dollar coronavirus bailout.

 

The letter says “If loans and or loan guarantees are enacted, equaling at least $29 billion, participating passenger and cargo air carriers commit to placing limits on executive compensation; eliminating stock buybacks over the life of the loans and eliminating stock dividends for the life of the loans.”

The letter signed by CEOs from Alaska, Atlas, American Airlines, Delta Air Lines, FedEx, Hawaiian, JetBlue, Southwest, United Airlines, and UPS was sent from the trade group Airlines for America.

 

“The breadth and immediacy of the need to act cannot be overstated,” the CEOs warned. “It is urgent and unprecedented.”

 

I don't see Spirit on there. Interesting.

 

They have been excluded from pretty much all coverage. It is kind of strange.

[Spekulatius]

https://finance.yahoo.com/news/airline-ceos-promise-to-eliminate-dividends-and-stock-buybacks-if-congress-passes-29-b-coronavirus-bailout-175925540.html

 

Airline CEOs promise to eliminate dividends and stock buybacks if Congress passes $29B coronavirus bailout

CEOs from America’s largest publicly traded airlines sent an urgent letter Saturday to Congressional leaders promising to stop stock buybacks and paying dividends in exchange for a multi-billion dollar coronavirus bailout.

 

The letter says “If loans and or loan guarantees are enacted, equaling at least $29 billion, participating passenger and cargo air carriers commit to placing limits on executive compensation; eliminating stock buybacks over the life of the loans and eliminating stock dividends for the life of the loans.”

The letter signed by CEOs from Alaska, Atlas, American Airlines, Delta Air Lines, FedEx, Hawaiian, JetBlue, Southwest, United Airlines, and UPS was sent from the trade group Airlines for America.

 

“The breadth and immediacy of the need to act cannot be overstated,” the CEOs warned. “It is urgent and unprecedented.”

 

I don't see Spirit on there. Interesting.

 

They have been excluded from pretty much all coverage. It is kind of strange.

 

I guess the other airlines can afford better lobbyists. I also think that the Delta, AAL, LUV, Alaska gang would love to see them go under. Be careful out there, it’s Calvinball time:

https://www.nytimes.com/2020/01/06/crosswords/heck-calvinball-crosswords.html