Talking Stocks 2.0

[037]

Originally Posted by beshannon

Massive risk off, flight to safety and massive uncertainty.

If there's one thing I'm certain of, it's uncertainty.

[Bryant Park]

In the last 24 hours, various foreign governments have mandated a variety of regulated institutions prepare for business disruptions based upon some relatively dire models. This allows the governments to avoid creating panic and being on record while creating a degree of preparedness to theoretically soften economic impacts.

As these scenarios are played out in corporate board rooms there is a knock on effect. Travel policies are altered, hedging strategies adjusted to anticipate down turns, disaster recovery sites open, etc. All of this doesn't go unnoticed. It has both immediate monetary and psychological impact.

FYI there are a variety of benign sounding articles about this approach to preparedness. "Prepare for the worst, hope for the best" type. When government mandated however those preparations take on a great deal of importance and impact. Typically governments don't deliberately slow economies unless the "threat" is not just plausible but likely.

This "realization" will take time as larger, infrastructure and financial firms are first to be instructed and over time the standard for preparedness finds its level throughout society.

Alternatively there are more sellers than buyers.

[superdog]

Originally Posted by Bryant Park

In the last 24 hours, various foreign governments have mandated a variety of regulated institutions prepare for business disruptions based upon some relatively dire models. This allows the governments to avoid creating panic and being on record while creating a degree of preparedness to theoretically soften economic impacts.

As these scenarios are played out in corporate board rooms there is a knock on effect. Travel policies are altered, hedging strategies adjusted to anticipate down turns, disaster recovery sites open, etc. All of this doesn't go unnoticed. It has both immediate monetary and psychological impact.

FYI there are a variety of benign sounding articles about this approach to preparedness. "Prepare for the worst, hope for the best" type. When government mandated however those preparations take on a great deal of importance and impact. Typically governments don't deliberately slow economies unless the "threat" is not just plausible but likely.

This "realization" will take time as larger, infrastructure and financial firms are first to be instructed and over time the standard for preparedness finds its level throughout society.

Alternatively there are more sellers than buyers.

well that was well said....

and scary as f......

[beshannon]

Just my .02 as of the time of this posting

Valuations are getting really skewed to the downside. How low can things go? Well they can go to zero. Is that going to happen? Not likely.

I just added some DIS as the current price is very disconnected from the fundamentals of their business.

I added more SBUX PFE, AVGO and CVS, averaging down on all those positions. These are long term holds for me (long term for me is 1+ years) and I feel that a year from now we will be looking back at these valuations as past buying opportunities.

AVGO is yielding 4.6% as of this price and is part of a 5G ramp up. PFE is yielding 4.4% and is undervalued with a wide moat.

[Bryant Park]

Originally Posted by beshannon

Just my .02 as of the time of this posting

Valuations are getting really skewed to the downside. How low can things go? Well they can go to zero. Is that going to happen? Not likely.

I just added some DIS as the current price is very disconnected from the fundamentals of their business.

I added more SBUX PFE, AVGO and CVS, averaging down on all those positions. These are long term holds for me (long term for me is 1+ years) and I feel that a year from now we will be looking back at these valuations as past buying opportunities.

AVGO is yielding 4.6% as of this price and is part of a 5G ramp up. PFE is yielding 4.4% and is undervalued with a wide moat.

Interested in your rationale for purchasing names with historically high (although off highs) price to book ratios.

PFE P/B 3.11 with a juicy 4.4% yield I understand but DIS P/B 2.27 with a meager 1.51% yield I don't.

Banks have been hit hard (and likely more to go) but BAC is trading below book at .96 with a 2.59% yield and JPM P/B 1.49 yield 3.08%.

Do you think DIS will have capital appreciation quickly enough to offset the dividend income lost? Will DIS business recover more quickly then bank sector? I would have thought the fear of travel and entertainment will extend beyond the proverbial "all clear" while business activity that will benefit banking sector would be a leading indicator. You also never get visitors back (although their streaming biz would benefit).

Thanks and appreciate your posts and insight.

[Bryant Park]

Originally Posted by beshannon

I have been looking at airlines although that is a group I never touch.

The flight cancellations vs the price of fuel, too much uncertainty for me. Others may disagree.

Good call both United and AA down 10%+!

[superdog]

Thoughts on this.

https://www.marketwatch.com/story/ma...of2&yptr=yahoo

[beshannon]

Originally Posted by superdog

Thoughts on this.

https://www.marketwatch.com/story/ma...of2&yptr=yahoo

Schiff could be right, he was last right in 2008. He has been calling for this each and every time the markets have gone down.

Is he right this time? The overwhelming evidence and the number of analysts who say no are legion.

[smohr33]

Schiff has been calling for a collapse for years. Eventually he'll be right again. But he's been wrong more times than right. A sampling:

https://www.businessinsider.com/schi...lection-2016-1

https://www.forbes.com/sites/afontev.../#328f4a6f1c9d

[1st amg]

With the Bond market taking a tumble for the last week, it played out in our business favor as we had a refinance on a multi res site that we were able to lock into today at 2.2% for 10 yrs.....unbelievable.

[scarlet knight]

I got nothing. I presume business will grind to a halt unless the number of Coronavirus cases go down.

[beshannon]

Originally Posted by scarlet knight

I got nothing. I presume business will grind to a halt unless the number of Coronavirus cases go down.

No, the stay at home economy will do fine, Amazon, Netflix, Dominoes etc.

[JasoninDenver]

Originally Posted by beshannon

No, the stay at home economy will do fine, Amazon, Netflix, Dominoes etc.

But I wonder what will happen if the Amazon distribution center workers and drivers cannot work. I have been considering buying for some time, but need to see how this plays out a little more.

[Tha Baron]

I’m in on SPY puts in my trading account... been quite the ride last few weeks. I think playing the volatility is good and my guess the market gets worse before it gets better. Disclosure, I don’t touch my long term positions as my horizon is 20 plus years on that

[Tha Baron]

Originally Posted by beshannon

No, the stay at home economy will do fine, Amazon, Netflix, Dominoes etc.

Where do you think amazon gets all the shit they sell? Stay at home worker factories?!?!

[beshannon]

Originally Posted by JasoninDenver

But I wonder what will happen if the Amazon distribution center workers and drivers cannot work. I have been considering buying for some time, but need to see how this plays out a little more.

Originally Posted by Tha Baron

Where do you think amazon gets all the shit they sell? Stay at home worker factories?!?!

And yet Costco just reported a blow out quarter, sales are through the roof at Kroger, Home Depot is doing very well.

https://www.cnbc.com/2020/03/05/beyo...ronavirus.html

Beyond busy’: Costco gets a sales boost from the coronavirus The company told analysts Thursday it has been receiving deliveries daily

If you want to believe that no one will leave their home ever and that we will all starve to death, that is your choice.

Factories, business, sales are fine in many areas

[smohr33]

Originally Posted by Tha Baron

Where do you think amazon gets all the shit they sell? Stay at home worker factories?!?!

I’m in manufacturing. China is not closed as the media would have you believe. They cannot afford to be. Most factories I deal with had a few week production delay and lost some employees. They are all back at normal capacity by now.

[beshannon]

Originally Posted by smohr33

I’m in manufacturing. China is not closed as the media would have you believe. They cannot afford to be. Most factories I deal with had a few week production delay and lost some employees. They are all back at normal capacity by now.

Exactly, thank you!

[locutus49]

You are what I call a rationalist. They are rare. People forget the bird flu and all the other flu's that were supposed to wipe out humans.

Originally Posted by beshannon

And yet Costco just reported a blow out quarter, sales are through the roof at Kroger, Home Depot is doing very well.

https://www.cnbc.com/2020/03/05/beyo...ronavirus.html



If you want to believe that no one will leave their home ever and that we will all starve to death, that is your choice.

Factories, business, sales are fine in many areas

[m j b]

Originally Posted by beshannon

As far as something with a 150% gain, have you considered trimming the position? When I get to that point I take my cost out and let the profit continue. Just a thought

Absotively! When it doubled (or nearly) I sold half of it. My buddy that recommended it, did not. He kept riding the gravy train up until it went off the cliff. He probably still has it, but hasn't been answering emails lately. Too busy with life, I guess. I sold the other half when it crashed, and it's fallen more since, so I'm not regretting it at all. Hey, I still made money.

Originally Posted by austinp

Any opinions on some I should add or dump?

Of that list, I like Costco. I may be a buyer today. Great company. The stock is too expensive (P/E) for me, but it doesn't seem to be affected by the recent excitement.

Originally Posted by beshannon

Factories, business, sales are fine in many areas

True. In fact, I'd suggest that they are fine in most areas.

[RyanO]

I think this level of hysteria is downright awful. Any guesses on how long it will take before things settle down?

I'm hoping sooner rather than later.

[locutus49]

I'd answer you but my mask and duck tape are getting in the way.

Originally Posted by RyanO

I think this level of hysteria is downright awful. Any guesses on how long it will take before things settle down?

I'm hoping sooner rather than later.

[beshannon]

Originally Posted by locutus49

You are what I call a rationalist. They are rare. People forget the bird flu and all the other flu's that were supposed to wipe out humans.

Thanks, I try to be

[beshannon]

Originally Posted by RyanO

I think this level of hysteria is downright awful. Any guesses on how long it will take before things settle down?

I'm hoping sooner rather than later.

Sadly, no

Looking at the bond market things are completely disconnected from the fundamentals and reality. It is all momentum trade. Just like the equity markets have been trying to snap back, the bond market will do the same.

I hate to guess but my sense is that we will see some return to normalcy when reported cases level off or decline worldwide. Until then, everything is an algo/headline hostage.

Watching the futures at 8:30 for an 800 point down open, this is the flush we need to begin to bottom. Already through 2940 on the S&P we need to see 2850 hold next for support.

[beshannon]

Originally Posted by m j b

Absotively! When it doubled (or nearly) I sold half of it. My buddy that recommended it, did not. He kept riding the gravy train up until it went off the cliff. He probably still has it, but hasn't been answering emails lately. Too busy with life, I guess. I sold the other half when it crashed, and it's fallen more since, so I'm not regretting it at all. Hey, I still made money.



Of that list, I like Costco. I may be a buyer today. Great company. The stock is too expensive (P/E) for me, but it doesn't seem to be affected by the recent excitement.



True. In fact, I'd suggest that they are fine in most areas.

I will pickup some Costco today myself

[beshannon]

Not sure if this is behind a paywall, this is one of the sites that I use

https://realmoney.thestreet.com/inve...ughts-15259441

RealMoney.com is a subscription service with many writers and good info. I also belong to Jim Cramers Action Alerts PLUS club https://subscription.thestreet.com/a...lus?OID=037527

[SMD]

One macro thing I have not yet seen is the impact on state and local public sector pension funds. This is going to have huge knock on effects locally, cutting spending or raising taxes. Think of how underfunded Chicago and Illinois were, for example, when the markets were at all time highs and how they couldn’t fund the shortfalls. Unless there is a miracle v shaped recover before they have to fund the shortfalls, it’s going to be ugly.

[beshannon]

Originally Posted by SMD

One macro thing I have not yet seen is the impact on state and local public sector pension funds. This is going to have huge knock on effects locally, cutting spending or raising taxes. Think of how underfunded Chicago and Illinois were, for example, when the markets were at all time highs and how they couldn’t fund the shortfalls. Unless there is a miracle v shaped recover before they have to fund the shortfalls, it’s going to be ugly.

Agreed, read an article in the Wall Street Journal today saying exactly this, many plans were too over weight equities

[beshannon]

VIX at 48 on a Friday, maybe the capitulation bottom???

[BushWhacked]

Not a day trader by any means, but this thing has definitely not hit bottom yet. As others have pointed out, the coronavirus and all the effects it can have on a nation's psyche has really just gotten started in the United States. People where I live in the midwest are making runs on costco, etc. I would brace for a large recession the magnitude of which we haven't seen in at least a decade.

Also, bonds are pretty overblown at the moment as well- yields are in the gutter... this is an even worse sign as people have already fled to "safe" investments, meaning there is little opportunity if you still have cash out there and are looking for opportunties. A high yield savings account is probably the best bet at the moment when it comes to that.

Glad I got out of stocks a few weeks ago- this is turning into a mess.