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When the 'music' stops . . .

Howdy folks,

This is for green light discussion.

This too shall pass and we'll be stronger. What we, as investors, need to do is figure out where to invest when we attain some clarity. First of all, we're looking at a completely different reality and economy post virus. Life will NOT ever be the same. That means we want to avoid bottom fishing when all that's on the bottom are dead fish.

Dead fish include travel, tourism, airlines, stadium events, all things face to face. Am I predicting peeps won't travel? Of course not, but even with some insane bailout package, the airlines and Boeing will never recover. Boeing will face a triple whammy of Max800, virus and a massive reduction in defense spending. Bring the troops home and defend the shores and save $500B a year.

Another sector is private health care. Toast. It took Korea 12 years to convert to universal health care and that's why they handled this virus so well. We will not because we have no public health system. Our health care system will break badly and several million are going to die. You think NYC and California are going to be bad. Wait for the heartland where there are no rural hospitals. Private sector closed them all because they weren't profitable. This health care for profit idea has to die. The heartland will be like some Mad Max movie.

Shopping. F2F will never recover. Malls are dead. Those vendors with online sales and delivery are and will thrive.

Sports: no big events, no stadiums, no F2F.

And folks, I'm not trying to be gloomy but anticipate what the future will look like so that we can target our buying op.

and so it goes,

peace,

flatten the curve,

rono

Comments

  • edited March 20
    ^ What he said ^. Not totally out of the realm of possibility but I hope not. I have far to many friends and family in the service sector to just shrug it off.

    I think the entire country may be on lockdown soon. All non-essential activity will halt until the curve starts to flatten. The death toll is going to be beyond what you expect. We are about 11-12 days behind Europe in the progression of the disease. The US which seemingly shrugged off CV is going to look more like Italy than South Korea. Therefore expect to hit 2000 deaths per day inside of two weeks. This is the possible reality and does not mean that the US will not emerge from this. Of course it will, and hopefully far stronger. The incoming Biden administration will begin to address our glaring inequities in healthcare and income distribution. It will lead toward a better and stronger nation where people take human life and each other more seriously and we begin to discuss vs. fight.
  • edited March 20
    Hi sir...thx for glimpses news...when do you folks think these madness will end. At least usa deaths holding / rates apoears compared to Italy spain
  • +1 @Mark and @rono. I wonder if quant funds like DSENX are going to work at all, or if they have to rejigger their models for a new world.
  • From thoughts above it would seem that I should sell everything & go with HSGFX. I second thought , I'll pass.
    Derf
  • Howdy folks,

    We'll get through this but plan on it getting ugly.

    The service sector and hospitality and tourism will survive. They will be different. Less of a sit down restaurant and more takeout and delivered. Entertainment will be virtual rather than in person.

    For tourism and travel, demand will be depressed for a while, perhaps multiple generations, but it will come back. Some venues will have a hard time - Vegas Florida Cabo . They'll go virtual but feh.

    Travel? 6 feet on an airplane or train car or bus. Yeah, right.

    Energy? It's all toast or carbon if you will. Geez, demand is almost zero and the Sauds are taking advantage to squeeze both Russian and US producers. Long run I'd go with the economics and the people and play wind and solar. Cancel the costs and wind and solar are always cheaper as you don't have to pay for the raw material.

    Hotels and casinos? Are you shitting me.
    Good money down the rat hole. Money to be made if you're nimble and know Don.

    Winners so far are internet sales and delivery vendors. Amazon Walmart Costco etc. The restaurants that are selling curbside.

    Video conferencing. I'm an idiot but wow. Things that facilitate working at home.

    Network services . . . Remember Lag?

    To consider is what might result from this calamity. We're about to see the best and worst of America but what problems and shortcomings will manifest themselves. How will we respond.
    .
    And so it goes

    Peace and Flatten the Curve,

    Rono<
  • edited March 20
    @Rono. Yes. When my home state of CA ordered everybody to stay home yesterday, that got my attention. Factories like Tesla closed. At first I thought this would be like 1987 or 9/11. Quick because it is event driven. But the nation's fragmented response brought uncertainty from the on-set and now panic. Sam Lee recently shared that he's come around to thinking this bear (if not recession) will be worse than 2008. And because of all the things you listed, I am inclined to agree. Especially good time for younger investors, as long as they keep their jobs and keep contributing to their 401s. When we do get through CV-19, trust the world will come together and figure-out best way to respond to the next unknown virus ... more pragmatically and better communicated.
  • edited March 20
    “Entertainment will be virtual rather than in person.” I hope @rono’s wrong on that one. What I live for - live theater.

    The dour tone here reminds me of lines from T. S. Eliot, “This is the way the world ends. Not with a bang but with a whimper.“
  • Well, it most likely isn't ending, but it sure will be whimpering for quite a while.
  • It seems gloomy yes, but don’t discount the psychological impact of a vaccine. People love their football stadiums, racetracks, casinos, trips abroad....etc.

    It will take some time, but the effects will dim. I had to cancel an April trip to Italy, but my objective is to reschedule when the dust clears.
  • CA has double the number of COVID-19 positive patient overnight. Think the spreading is far from being contained. To make the matter worse there is not enough test kits available so there may be many undetected carriers that continue to infect others.

    We canceled our spring break trip. Will see if the lockdown ease up by June/July. Please see Bee's posting below.
    https://mutualfundobserver.com/discuss/discussion/55642/first-layoff#latest

    More specifically, Fergerson study predicted over 2 millions fatality in US.
    https://imperial.ac.uk/media/imperial-college/medicine/sph/ide/gida-fellowships/Imperial-College-COVID19-NPI-modelling-16-03-2020.pdf
  • Howdy folks,

    We'll get through this and we'll be stronger. My mother used to say, 'if it doesn't kill you, it'll make your stronger' and she worked at Oak Ridge during WWII.

    I'm extremely pessimistic about our gov't in Washington. Sorry, but they've been lying to me since Vietnam. But my lesson then - that I hold dear today - is that the American people are tough as nails (when you give them no alternative). That's where my patriotism lies - with the people. That's what will save the day - the people. Once they stop looking to DC for any sort of help and realize that it ain't coming.

    We are on our own. Each and every one of us. Please let that sink in and digest it.

    What we have to do is take care of ourselves and families, our neighbors and friends, our coworkers and employees.

    Order take out from your favorite local watering hole. Buy something from the neighborhood convenience or party store. Call your neighbor and see if they need anything.

    This is going to be a few weeks before we have any sort of clarity.


    And so it goes,

    peace and flatten the curve,

    rono
  • "This is going to be a few weeks before we have any sort of clarity."

    Exactly.
  • Boeing will definitely 100% survive. This is an icon of American industry and much more significantly, we need airplanes. We will never cede this to Europe, and who will service the existing fleet? The stockholders may be wiped out but the company will survive. I think there is a decent chance Trump even makes good on his comment that he is in favor of the government buying stock. If he does and if the govt doesn't demand the commons to be wiped out in turn for a bailout then Boeing will soar, literally and figuratively. No way Boeing disappears.
  • @wxman123
    Boeing will definitely 100% survive. This is an icon of American industry...
    People said the same thing about Lehman. There is no definitely 100% in finance.
  • GE was an icon too.

    But, I'm inclined to agree.

    These days, I find myself speaking with more humility.
  • edited March 21
    80 years ago America asked it's citizens to go to the other side of the world for years to storm beaches under fire for the common good of mankind. Now it's asking you to stay home and bingewatch some TV and do some housework for a couple weeks. Think you can manage it?
  • How does it end well? We start to see other countries come back online. We start to see leveling off of CV-19 cases. We see less death than feared. We give subsidies, extend loans and restructure debt ... slip payment due dates. Maybe outright forgive some debt. Months? I like May Day, but in my reassessment this week, that seems way optimistic. The markets will recover, but I now believe in the near-term it will get worse. Hope I'm wrong. Always hard to see past current crisis ... the morning after.
  • @wxman123

    Boeing will definitely 100% survive. This is an icon of American industry...
    People said the same thing about Lehman. There is no definitely 100% in finance.
    Lehman wasn't a defense contractor.

    When Boeing is bailed out, I hope they apply Mark Cuban's rule. No more stock buy-backs ever, for the rest of time.

    If the rule lasted half as long as Glass-Steagal it would be a good outcome.
  • Lehman wasn't a defense contractor.

    When Boeing is bailed out, I hope they apply Mark Cuban's rule. No more stock buy-backs ever, for the rest of time.

    If the rule lasted half as long as Glass-Steagal it would be a good outcome.
    Agee. There has to be tangible terms attached to these bail outs. After all bail-out $ are taxpayer money. Stock buy-back is one of the instrument that corporations use to goose their own stock prices through manipulating the supply-demand equation. Had a finance professor who was a comptroller for a large company said "reported earnings are not reliable when one analyzes the balance sheet since the numbers are typically heavily massaged so to fit their projected earning #". Market advances in recent years are the results of stock buyback instead of true improvements on earnings from new products and services. And that is just from observing the daily news on stock buy backs. Q1 earning is coming in March, we will see how many companies will beat their projected earning numbers given the current market conditions.
  • Solid points Sven. The market has been sketchy for a while. Corona just lifted the blinders. Violently.

    The analogy that has stuck with me over the years is to avalanche conditions. The snow is on the mountain. We're just waiting for the sound in the valley. I wish I could remember where I picked that up.
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