Coronavirus General Discussion

[Smith1776]

Before adopting the PP and passive investing in general, I was the biggest Graham/Buffett advocate. But since I'm relatively young I never really had a market environment when stocks generally had demonstrable bargains.

I'll by coveting my copy of Security Analysis tonight and looking at some 10Ks before opening bell tomorrow.

Through all of that, I know my core position consisting of the PP will keep my finances safe. All the value investing stuff will be done in the Variable Portfolio. The PP/VP split was brilliant on Browne's part.

[Libertarian666]

Before adopting the PP and passive investing in general, I was the biggest Graham/Buffett advocate. But since I'm relatively young I never really had a market environment when stocks generally had demonstrable bargains.

I'll by coveting my copy of Security Analysis tonight and looking at some 10Ks before opening bell tomorrow.

Through all of that, I know my core position consisting of the PP will keep my finances safe. All the value investing stuff will be done in the Variable Portfolio. The PP/VP split was brilliant on Browne's part.

My admittedly limited understanding of Graham is that you have to do the analysis based on actual known information.
Do you know what earnings are going to be?

[Smith1776]

My admittedly limited understanding of Graham is that you have to do the analysis based on actual known information.
Do you know what earnings are going to be?

Your guess is as good as mine.

My analogy is this. If a man walks into a room and is clearly obese, I don't need to know he weighs precisely 370.3 lbs. to know he is obese. You can tell just by looking.

A lot of value investing is similar. I don't know what earnings will be in the future, but looking at the current valuation, one can often readily see that the price is too low relative to even a relatively recovered economy. Many stocks will, of course, not be clear cut and too difficult to tell if they are attractive. Those just go in the "Too Hard" pile.

[pmward]

Holy shit guys. The Dow has dropped 13% today alone.

There are actually some Grahamian bargains that are now popping up with particular hard hit stocks/industries. Cineplex has fallen 80 some odd percent since this all started.

Also, I’ve watched Contagion like 3 times as many weeks at this point.

10 year treasuries are yielding 0.72% and S&P 500 ETF 30 day SEC yields are all around 2.25%. By that metric, stocks in general are a bargain. An inversion of stock yields to bond yields should never happen, and that extreme of a spread is not sustainable.

Stock yields used to be higher than bond yields all the time.
That's because stocks used to be riskier than bonds.
Good thing we're past those old times!

Yeah, bond yields are supposed to always be above stocks. Historically, stocks yielding more than the 10 year treasury have been the best times to buy stocks. Eventually this discrepancy has to close. I also don't think this spread has ever been this extreme before.

[Libertarian666]

My admittedly limited understanding of Graham is that you have to do the analysis based on actual known information.
Do you know what earnings are going to be?

Your guess is as good as mine.

My analogy is this. If a man walks into a room and is clearly obese, I don't need to know he weighs precisely 370.3 lbs. to know he is obese. You can tell just by looking.

A lot of value investing is similar. I don't know what earnings will be in the future, but looking at the current valuation, one can often readily see that the price is too low relative to even a relatively recovered economy. Many stocks will, of course, not be clear cut and too difficult to tell if they are attractive. Those just go in the "Too Hard" pile.

How about if he is wearing an obesity suit?
In other words, I think earnings are going to be horrid for a long time after this is over from a health care crisis point of view.

[Libertarian666]

Holy shit guys. The Dow has dropped 13% today alone.

There are actually some Grahamian bargains that are now popping up with particular hard hit stocks/industries. Cineplex has fallen 80 some odd percent since this all started.

Also, I’ve watched Contagion like 3 times as many weeks at this point.

10 year treasuries are yielding 0.72% and S&P 500 ETF 30 day SEC yields are all around 2.25%. By that metric, stocks in general are a bargain. An inversion of stock yields to bond yields should never happen, and that extreme of a spread is not sustainable.

Stock yields used to be higher than bond yields all the time.
That's because stocks used to be riskier than bonds.
Good thing we're past those old times!

Yeah, bond yields are supposed to always be above stocks. Historically, stocks yielding more than the 10 year treasury have been the best times to buy stocks. Eventually this discrepancy has to close. I also don't think this spread has ever been this extreme before.

Before the 1950's, stock yields were always above bond yields: https://seekingalpha.com/article/46288- ... ar-history
Is that a long enough time ago to mean it can never happen again?

[Smith1776]

How about if he is wearing an obesity suit?
In other words, I think earnings are going to be horrid for a long time after this is over from a health care crisis point of view.

Yup! I could very well be absolutely dead wrong.

[pmward]

Before the 1950's, stock yields were always above bond yields: https://seekingalpha.com/article/46288- ... ar-history
Is that a long enough time ago to mean it can never happen again?

Not the entire time "before the 1950's" it was from the Great Depression through to the 1950s. We had the recovery from the Great Depression and WWII in there. Especially of note is that the government locked the ceiling on bond interest rates in the 1940s for the war. We currently have no ceiling on bonds themselves, the Fed is just sticking to trying to control the overnight rate and leaving the rest up to the market. And to my point, those were great times to buy stocks. As was 2009.

[WiseOne]

Today was definitely the "come to Jesus" day in NYC. The virus is hitting hard. The city is practically shut down.

Over the weekend, my hospital/med center had us suspend almost all research (animal & human), mandated that everyone who wasn't "essential" must work from home, cancelled all elective procedures/admissions, closed all public spaces e.g. the library, and had various other communications about logistics. I heard through the grapevine that our hospital is being inundated with COVID-19 cases.

I was in the hospital today for clinical reasons (not COVID-related), then stopped by my office/lab space to essentially shut it down, then headed home for a conference call with collaborators about winding down animal experiments. The streets are practically empty. I stopped at a grocery hoping to grab some eggs and a couple of other things I forgot to buy over the weekend, and there was a LONG line...forget that.

Feels so surreal. I saw the stock market crash and the headlines about the economy headed for worse than 2008, but I haven't digested it yet. On the plus side, I've got a gaggle of enthusiastic students communicating over Slack - it's working very well, so far.

[Smith1776]

Today was definitely the "come to Jesus" day in NYC. The virus is hitting hard. The city is practically shut down.

Over the weekend, my hospital/med center had us suspend almost all research (animal & human), mandated that everyone who wasn't "essential" must work from home, cancelled all elective procedures/admissions, closed all public spaces e.g. the library, and had various other communications about logistics. I heard through the grapevine that our hospital is being inundated with COVID-19 cases.

I was in the hospital today for clinical reasons (not COVID-related), then stopped by my office/lab space to essentially shut it down, then headed home for a conference call with collaborators about winding down animal experiments. The streets are practically empty. I stopped at a grocery hoping to grab some eggs and a couple of other things I forgot to buy over the weekend, and there was a LONG line...forget that.

Feels so surreal. I saw the stock market crash and the headlines about the economy headed for worse than 2008, but I haven't digested it yet. On the plus side, I've got a gaggle of enthusiastic students communicating over Slack - it's working very well, so far.

Fascinating to hear a first-hand account from someone on the front lines of NYC.

Here in Vancouver things are similar but decidedly less dramatic. The community centres all shut down. Many stores on the streets have shut down, and the ones that haven't will likely follow suit due to dead traffic anyway. 7/10 social media posts I'm seeing are about people needing food, supplies, and help with financing. My music teacher has had all her gigs dry up, and is just praying that her students don't start cancelling lessons on top of it.

Some of the privately owned gyms are still open (as opposed to the city rec centres), but after some arm twisting my family convinced me not to go today.

This is, of course, a cascading problem that we are all familiar with. Group A immediately gets hit and lessens spending. This causes the next guy to lessen spending and so on. Next thing we know it's full blown recession -- maybe even depression.

And the worst part is that the Fed is out of interest rate bullets in its gun. The only other thing is QE and fiscal stimulus, but I suspect that will be like pushing on a string. The animal spirits just aren't there.

[Xan]

I don't understand the theory that lowering interest rates will help. So rather than giving money to the people who are suddenly hurting REALLY HARD for money with no end in sight, we give money to banks hoping that those people will then borrow money. I guess a loan is better than nothing, but why not just give the money to those folks rather than banks?

Now I sound like Moda! :-)

[pmward]

Yeah they can literally do infinite QE and Fiscal (aka MMT). These things have a lag time before they make it into the market... but they eventually make it into the market none the less.

[Dieter]

I don't understand the theory that lowering interest rates will help. So rather than giving money to the people who are suddenly hurting REALLY HARD for money with no end in sight, we give money to banks hoping that those people will then borrow money. I guess a loan is better than nothing, but why not just give the money to those folks rather than banks?

Now I sound like Moda! :-)

Ditto.

Demand issue. Get consumers spending more. Yeah, I might refinance, but not many are in a situation to do that.

[dualstow]

Where is Moda anyway? We haven’t had any reports from the Midwest.

I imagine the hoarding in Canada is still polite: I’ll give you one pack of my toilet paper, eh?

NYC: Saw Times Square on the news. Mostly empty. Really must have been weird, WiseOne.

[Kriegsspiel]

Where is Moda anyway? We haven’t had any reports from the Midwest.

I imagine the hoarding in Canada is still polite: I’ll give you one pack of my toilet paper, eh?

NYC: Saw Times Square on the news. Mostly empty. Really must have been weird, WiseOne.

I think Minnesotans prefer "the North" now.

[vnatale]

I don't understand the theory that lowering interest rates will help. So rather than giving money to the people who are suddenly hurting REALLY HARD for money with no end in sight, we give money to banks hoping that those people will then borrow money. I guess a loan is better than nothing, but why not just give the money to those folks rather than banks?

Now I sound like Moda! :-)

Romney is with you. Today he proposed giving every man, woman, and child in the country $1,000. After writing that I realized he's not totally with you as you seem to be proposing something more targeted. I'd favor your approach over the typical politician shotgun approach.

Vinny

[Smith1776]

What consumers need right about now is Andrew Yang's Freedom Dividend.

[dualstow]

Where is Moda anyway? We haven’t had any reports from the Midwest.

I think Minnesotans prefer "the North" now.

upper midwest and that’s my final offer.

[Dieter]

What consumers need right about now is Andrew Yang's Freedom Dividend.

$1,000 / mo. I wonder if that's where Romney got the idea, as his one time $1,000 matches.

Is a nice round number though, so coincidence likely as well.

[Kriegsspiel]

What consumers need right about now is Andrew Yang's Freedom Dividend.

Pfftt. Can't even spend it anywhere. They just closed down the liquor stores here, for fuck's sake!

[Kriegsspiel]

Where is Moda anyway? We haven’t had any reports from the Midwest.

I think Minnesotans prefer "the North" now.

upper midwest and that’s my final offer.

We accept.

[Smith1776]

That's something of an exaggeration. It's better than the traditional methods of stirring up animal spirits.

[Smith1776]

Tomorrow I am thinking of sneaking out of the house to hit one of the few gyms in town that are still open. I'm willing to forgo social gatherings, concerts, and all that other junk.

But gym time is precious.

Dumb or no?

[Kriegsspiel]

That's something of an exaggeration. It's better than the traditional methods of stirring up animal spirits.

I see where you're going with this, and no, I haven't tried homebrewing since my botched rhubarb-wine attempt.

[Dieter]

What consumers need right about now is Andrew Yang's Freedom Dividend.

Pfftt. Can't even spend it anywhere. They just closed down the liquor stores here, for fuck's sake!

Food. Rent. Online entertainment. Not everyone has secure jobs or emergency funds. And even those that do, maybe not as secure as thought for many.