Investing Thread

[JWags85]

People claiming the Coronavirus is not a black swan event and this is just all the result of an overbought market are the ones who have been bearish and short for 2+ years and getting obliterated.  Now they are vindicated and refuse to acknowledge the outside factor that has justified their view, but rather their innate market savvy and intelligence that did so.

The SPX dropped 13% in 5-6 trading days. Then after a brief respite bounce, it dropped a further 22-23% 7 trading days.  In full a 30% drop in basically 3 weeks.  Contrast that with the crash of 2008 and its insanely sharper.  That doesnt just happen cause a market is overheated.  I buy it with a 5-10% correction, but not with a dive of this scale.

But go ahead Benjamin Graham, keep condescendingly explaining to everyone how much smarter and market wealthy you are than everyone else.

[TSmith34, Inc.]

I will short your under water stock! You trade in the direction of the market. Mr. Smith do you know how to short a stock?

Gosh golly, no!  How does one do that?

[curbina]

Gosh golly, no!  How does one do that?

No commit, I will respect Rocky’s request.

[JWags85]

No commit, I will respect Rocky’s request.

LMAO.  "Commit".  Have fun swimming in your huge room of gold coins McDuck! 

[Chili]

I really hesitate to bring this up but I think its relevant in the context of the investing thread. What are the long term impacts of this pandemic on the following:
-Insurance industry, both health and life
-if the mortality rate is relatively high, especially amongst the elderly, what does wealth transfer look like?
-what is the long term impacts on medicare and social security? More viable or less

The best man in my wedding works for BCBS Corp. and is currently working with one of their actuaries right now on their model for this. It's not pretty from he has told.

[skianth16]

Some manufacturers can convert in days, especially the chemical and process industry. We can't assume this will last weeks at this point, I'd say plan for at least 4 months, so start moving now. Additionally, it will create a stimulative effect as the plants wiill need to "retool" to some extent, their suppliers will need to respond, etc. and then they will need to revert back. And we are going to burn through all of our back log so we're going to have to restock for sure when this ends so this is really at least a 12-18 month event.

I don't see demand changing from consumers for 12-18 months. I expect to see a surge for 1-2 months, then a drop, then slightly higher than average levels for maybe 4-6 months. I'm guess by this time next year sales of these products will be similar to last year. My reference point here is Zika, since I've worked on these numbers for mosquito repellents. I think it could be a big risk for any supplier to over-allocate resources to things like sanitizers and masks given the trends we've seen in Asia.

From a public health perspective, I understand the idea of stopping this at all costs. But with a number of manufacturers available to produce these commodity-type products, I don't see a need for a huge national supply push. This is much different than modifying auto plants to create tanks and bombs that aren't widely produced outside of key events.

[Jockey]

LMAO.  "Commit".  Have fun swimming in your huge room of gold coins McDuck! 

I wonder if Curbina is a new Ners account. A "know-it-all who repeats his argument ad nauseam" is his typical profile.

[mu03eng]

I don't see demand changing from consumers for 12-18 months. I expect to see a surge for 1-2 months, then a drop, then slightly higher than average levels for maybe 4-6 months. I'm guess by this time next year sales of these products will be similar to last year. My reference point here is Zika, since I've worked on these numbers for mosquito repellents. I think it could be a big risk for any supplier to over-allocate resources to things like sanitizers and masks given the trends we've seen in Asia.

From a public health perspective, I understand the idea of stopping this at all costs. But with a number of manufacturers available to produce these commodity-type products, I don't see a need for a huge national supply push. This is much different than modifying auto plants to create tanks and bombs that aren't widely produced outside of key events.

I appreciate the Zika reference point but it doesn't apply here. Zika was an area affect whereas Covid is everywhere. In other words Zika could generally be avoided by not going places that it was and it really only impacted a small demographic.

There will be large term cultural changes from the event even if the event itself only last two months. Demand for medical supplies and the like will be permanently altered for the foreseeable future and part of flattening the curve can be increasing the capacity level of hospitals.

Also the conversion and reconversion of plants (not all just some) has stimulative effects that are part of the appeal.

[mu03eng]

One other long term investment thought....this will absolutely drive yet more automation in everything from customer service to manufacturing. I manage my companies business on remote management(monitoring and support) of OT assets on the plant floor and I'm getting hammered today with queries of what it would take to start deploying.

[LAZER]

I appreciate the Zika reference point but it doesn't apply here. Zika was an area affect whereas Covid is everywhere. In other words Zika could generally be avoided by not going places that it was and it really only impacted a small demographic.

There will be large term cultural changes from the event even if the event itself only last two months. Demand for medical supplies and the like will be permanently altered for the foreseeable future and part of flattening the curve can be increasing the capacity level of hospitals.

Also the conversion and reconversion of plants (not all just some) has stimulative effects that are part of the appeal.

Don't you think this ultimately comes down to the actual product and manufacturing process?  If you don't have a line ready to produce N95 masks, you're probably months away, even if it is just retooling another line.  On the other hand, if you're a personal care manufacturer converting some of your batching and filling equipment over to sanitizer production might be relatively minor.

[TSmith34, Inc.]

One other long term investment thought....this will absolutely drive yet more automation in everything from customer service to manufacturing. I manage my companies business on remote management(monitoring and support) of OT assets on the plant floor and I'm getting hammered today with queries of what it would take to start deploying.

Do you work for a publicly traded company? 

[mu03eng]

Do you work for a publicly traded company? 

Yep, I work for a Fortune 500 company 😃

[skianth16]

There will be large term cultural changes from the event even if the event itself only last two months. Demand for medical supplies and the like will be permanently altered for the foreseeable future and part of flattening the curve can be increasing the capacity level of hospitals.

This is becoming bigger than SARS or MERS or H1N1, but I'm not sold on this changing long-term behaviors or consumer demands. If those events didn't affect large scale change, what's different this time around?

From a healthcare perspective, it's fair that medical supply companies could see some increases as hospitals re-think ICU capacity, but I still see that more as a short-term surge. Longer term, I'm guessing demands plateau at a slightly higher than average level. Investing capital to prepare for long-tail events is a big ask of companies and healthcare systems.

Full disclosure, in case it's not clear, this is not my area of expertise. But thinking through the pros/cons and the decision making process seems to have some parallels to situations I'm more familiar with.

[GooooMarquette]

Are you stating that the market was not very overbought?

Did I say that? No, I did not. I simply said the covid-19 crisis is a black swan event. I did not state an opinion either way on the question you're raising.

RIF

[GooooMarquette]

I wonder if Curbina is a new Ners account. A "know-it-all who repeats his argument ad nauseam" is his typical profile.

Sure acts like Ners.

I wonder if he thinks the market was overbought?

[mu03eng]

This is becoming bigger than SARS or MERS or H1N1, but I'm not sold on this changing long-term behaviors or consumer demands. If those events didn't affect large scale change, what's different this time around?

From a healthcare perspective, it's fair that medical supply companies could see some increases as hospitals re-think ICU capacity, but I still see that more as a short-term surge. Longer term, I'm guessing demands plateau at a slightly higher than average level. Investing capital to prepare for long-tail events is a big ask of companies and healthcare systems.

Full disclosure, in case it's not clear, this is not my area of expertise. But thinking through the pros/cons and the decision making process seems to have some parallels to situations I'm more familiar with.

This event far surpasses any of those events just from an cultural impact let alone an economic one. This will change behaviors, we can't know what all of that looks like but we better start trying shape it instead of react to it.

[Hards Alumni]

One other long term investment thought....this will absolutely drive yet more automation in everything from customer service to manufacturing. I manage my companies business on remote management(monitoring and support) of OT assets on the plant floor and I'm getting hammered today with queries of what it would take to start deploying.

yup

[TSmith34, Inc.]

I mean, you had stocks trading at historically high multiples that were then hit by a black swan event.  Fed rate cuts are a blunt tool that is going to have a limited impact IMO.  I think it would be much more useful to provide stimulus rebates, i.e., checks directly to individuals as was done in 2008.  Businesses don't have any reason to use cheap funds to expand in the midst of this situation, but individuals that are out of work will certainly spend it.

Looks like Mitt just got on board with my plan

https://news.yahoo.com/mitt-romney-just-unveiled-plan-172500906.html
* Sen. Mitt Romney proposed a plan to send a $1,000 check to every American adult during the coronavirus outbreak.
* Romney's striking proposal echoed previous actions undertaken by the last Republican president, George W. Bush back in 2008.
* Economists are increasingly urging Congress to send checks to ramp up people's spending as the virus spreads and leads to mass business closures.

[MU82]

Looks like Mitt just got on board with my plan

https://news.yahoo.com/mitt-romney-just-unveiled-plan-172500906.html
* Sen. Mitt Romney proposed a plan to send a $1,000 check to every American adult during the coronavirus outbreak.
* Romney's striking proposal echoed previous actions undertaken by the last Republican president, George W. Bush back in 2008.
* Economists are increasingly urging Congress to send checks to ramp up people's spending as the virus spreads and leads to mass business closures.

Somewhere, Andrew Yang is smiling.

[Coleman]

Looks like Mitt just got on board with my plan

https://news.yahoo.com/mitt-romney-just-unveiled-plan-172500906.html
* Sen. Mitt Romney proposed a plan to send a $1,000 check to every American adult during the coronavirus outbreak.
* Romney's striking proposal echoed previous actions undertaken by the last Republican president, George W. Bush back in 2008.
* Economists are increasingly urging Congress to send checks to ramp up people's spending as the virus spreads and leads to mass business closures.

It is a sound idea, economically.

[DegenerateDish]

Is that really necessary at this point?  We aren't fighting a lengthy war here.  We are fighting a virus that could rise fast and overwhelm our medical system - but in the short term. If you look at China, Japan, etc., the new cases level off and the health system can manage.  I fully expect that by and large people are going to be back to their normal routine in less than a month with only items only like "less than 50 at a public event" remaining.

That's what I don't understand about helicoptering cash in right now.  A lot of people aren't spending because they've been told to stay home.  But unless something compromises their underlining employment, they are likely just delaying big purchases and going to hit restaurants again when the everything lifts.  I think its the same for business spending as well.

Maybe I'm being too optimistic, but I think most of this stimulous would be better off a month or two from now when the health crisis lessens and the financial implications are more known.

I'm glad you said this, because I've been thinking this as well, and I didn't know if I was the only one with this mindset. I think if this is a two month window of crap (where we see the worst, the virus doesn't go away, but the curve is flattened, long term progress is made scientifically) I think there would be a flood of cash with pent up demand to be spent. Small businesses, entertainment venues, restaurants will get crushed in the next two months, but for people that don't lose their jobs, people are likely to spend like mad men if this is short term. It's two fold, people will have been sitting on cash because there's no where to spend it, and people will be sick of being quarantined.

I could be an utter fool for thinking this, but if you asked me what type of recession this was going to be, I'd say V shaped.

[TSmith34, Inc.]

What I mean by all this, where piratical start converting manufacturing capacity to make things like masks, respirators, medical supplies, hand sanitizer, soap, lab equipment, materiale for testing, etc. Whereas in WWII we converted auto manufacturing to build plans, tanks, and trucks we can convert Food & Bev, etc manufacturing to health care focused manufacturing until the crisis passes.

https://twitter.com/MCappetta/status/1239608804666417152
Good Business: First look as owner of @LouisVuitton @MoetUSA changes all perfume factories to mass produce hand sanitizer to be distributed for Free in France (Video: @LVMH)

[MU82]

If you think about it, Amazon is in almost perfect shape to benefit from this.

People aren't going out to shop -- hello, Amazon!

People aren't going to the movies, sporting events or other entertainment venues -- hello, Amazon Prime TV!

Plus, there's the highly profitable AWS for corporate clients and other services.

I don't own AMZN. I'm mostly a dividend investor, and the shares have always seemed too pricey. But EPS growth is estimated at 22%, 40% and 37% the next three fiscal years, and that's pretty darn attractive. Might even be an understatement.

Hmmm.

[jesmu84]

If you think about it, Amazon is in almost perfect shape to benefit from this.

People aren't going out to shop -- hello, Amazon!

People aren't going to the movies, sporting events or other entertainment venues -- hello, Amazon Prime TV!

Plus, there's the highly profitable AWS for corporate clients and other services.

I don't own AMZN. I'm mostly a dividend investor, and the shares have always seemed too pricey. But EPS growth is estimated at 22%, 40% and 37% the next three fiscal years, and that's pretty darn attractive. Might even be an understatement.

Hmmm.

Bonuses:

They pay very little in taxes

They treat their workers poorly

[TSmith34, Inc.]

If you think about it, Amazon is in almost perfect shape to benefit from this.

People aren't going out to shop -- hello, Amazon!

People aren't going to the movies, sporting events or other entertainment venues -- hello, Amazon Prime TV!

Plus, there's the highly profitable AWS for corporate clients and other services.

I don't own AMZN. I'm mostly a dividend investor, and the shares have always seemed too pricey. But EPS growth is estimated at 22%, 40% and 37% the next three fiscal years, and that's pretty darn attractive. Might even be an understatement.

Hmmm.

I bought AMZN, AMGN, DLR, and a touch of SPY on the 12th.  AMZN has held up OK (down about 5%) while AMGN and DLR are up.  SPY, not so much.

AMZN, DLR, and BABA on my list for tomorrow, possibly small adds to GOOGL and CSCO.

I have a plan that I am trying to have the fortitude to stick to.  In two years we can revisit whether is was brilliant, idiotic, or somewhere in between.