I posted yesterday about the likely bubble territory ZM is in and how AYX and others are temporarily discounted, but let me expand a bit.
Here’s an except from an email I got from Schwab today that I very much agree with.
What’s Schwab’s point of view? Since the Chinese government announced the outbreak of a novel coronavirus in December, our perspective has been that the virus’s containment and duration would be key to its impact on the markets. Today’s volatility reflects the realization that the virus isn’t as contained as was previously thought, which could affect economic factors from earnings to interest rates. We continue to believe that if countries with meaningful outbreaks can control them, the long-term market impact of the coronavirus will be relatively benign—like that of previous epidemics. We are continuing to monitor developments and will keep our clients updated.
I bolded that line above because all the medical folks I know believe it isn’t “if” but when. Also that “when” is getting closer all the time.
So definitely don’t do anything silly like selling out of the market and trying to wait for the bottom, because no one knows what tomorrow’s, or next week’s, news will be. This mini-panic could be over at any point.
This is volatility, and with volatility comes opportunity.
“The 1968 flu took roughly 70 000 lives in the US alone and some 2 millions world wide. The S&P 500 Index rose by 12.5% in 1968 and by 7.4% in 1969.”
And in 1968 how many corporations were truly global and where was China in the world of capitalism. No where. It’s a very different world.
As for the coronavirus the only person in my personal universe that has info I trust is my brother in law who’s one of the top dogs at Cedars Sinai here in Los Angeles. His view? Next flu season this virus will be wide spread in the US. So it’s all about developing a vaccine because at this point you are not going to stop it.
My wife is Korean. One of her sisters is flying in from South Korea. She’s getting on a plane with hundreds of other people coming from South Korea. Think about that. If one of those people is contagious then what happens on that flight. All those people on that one flight of many flights each day coming here and then spreading out all over to their families, friends, restaurants, cab rides, on and on. You aren’t going to stop the spread of this. FYI a Korean Air pilot tested positive yesterday.
I’d wait until they come out with an actual vaccine to put up the all clear sign. In the meantime add slowly on big dips, but be very patient.
All those people on that one flight of many flights each day coming here and then spreading out all over to their families, friends, restaurants, cab rides, on and on. You aren’t going to stop the spread of this.
That’s certainly what those selling and hoping for a cheaper re-entry point would like to think, but market timing is off topic for this board, and speculation on how a virus will affect the markets, probably more so. I’m sorry I brought it up. I gave Schwab’s take which I agree with, and TMB gave a very opposite take. Let’s leave it at that.
I’m not going to post about this anymore because it is OT, but read it again: 70 thousand US citizen died, a quarter of the working population in the US got sick!
I just want to share this news 2 days ago that in Phils the President just fired 80-93 Immigration Officers for running a scam in allowing Chinese Nationals to get through the airports undetected and getting a fee in return. Imagine a few getting through and not being detected or reported.
Now, so far, Phil govt is reporting only 3 cases of people infected with this Coronavirus, 1 had since passed. No reasonable person can believe the number they’re reported. No way I believe the cases are this low.
I have to speak up about the assertion here that Zoom is in a bubble. Look they were up 85% last quarter and people are perhaps expecting up 80% on the quarter ending in January, thinking there wasn’t really that much time to sign up that many coronavirus related customers. The year before they had $106 million and up 80% will be $191 million. But let’s say the panic just increased their revenues 10% and they thus added $19 million to that. Then they are at $210 million and they are up 98%!!! That will catch attention when all these old economy companies are talking about falling revenue due to the epidemic. (I think they will actually be up a little more than that and hit up 100%.
But the real difference will be in the April quarter when companies all over the world are already cutting out travel and going to video meetings. Zoom will guide low of course and people will be looking for 80% again. Again up 80% from $122 million is $220 million. They will beat that by at least 15% and hit $255 million, which will be up 109% (And it will be without big S&M expenses because companies from all over the world will be coming to them and asking how fast can you set it up). They will be quite profitable. I think they could do better than those two examples.
And I’ve been saying that when commerce craters because of the coronavirus, people will look to our companies because their sales won’t crater. Today all the indexes were down 3.0% to 3.5% except the Nasdaq which was only down 2.8%. The averages are now all in negative territory for the year, even the Nasdaq. The S&P is down 3.2% year to date. My portfolio, which you are all familiar with, was down 0.8% today, and is still up 21.0% for the year. So tell me, how is it better to stay out of our “overvalued” stocks and stay in the “safe” S&P ETF’s or equivalent??? Explain it to me!!! “Overvalued” has sure been safer, and our companies look like a safe haven in a storm! In fact, they have been! a safe haven in a storm.
Peloton stock has also risen the last two days during the coronavirus selloff. I’m guessing traders think people will ride an exercise bicycle at home rather than go to the public gym.
Sorry I’m going a little OT here but it’s useful to realize some things regarding COVID-19 as it relates to investing. I did a lot of research the last few days and I’ll say I’m not too concerned.
COVID-19 is not the flu. Not even close. So far the worldwide mortality, or death rate, is 2.1%. That is far less than any influenza outbreak that reached “epidemic” or “pandemic” status in history. The rate is likely far less than that given many infections are either subclinical or mild and go unreported.
I have taken advantage of the hysteria the last couple of days and bought shares of great companies at a discount. Not that it isn’t important but the mortality rate of this disease does not move the needle to warrant the hysteria I’ve seen in the media. The epidemiology just isn’t concerning. That’s my opinion as an MD. However, I’m not an ID physician or virologist so I reserve the right to be incorrect
COVID-19 is not the flu. Not even close. So far the worldwide mortality, or death rate, is 2.1%. That is far less than any influenza outbreak that reached “epidemic” or “pandemic” status in history. The rate is likely far less than that given many infections are either subclinical or mild and go unreported.
The spanish flu of 1917 also only had a death rate of between 2-3%
Does any body know distinctions between that flu and the coronavirus that make this outbreak less threatening?
COVID-19 is not the flu. Not even close. So far the worldwide mortality, or death rate, is 2.1%.
Most likely, the real mortality rate (given the large number of undiagnosed cases) is somewhere below 1%. But that’s with intensive medical care for around 5% of the infected population. How many people can receive such care in the US simultaneously? Without ventilators and/or oxygen, the death rate is going to be substantially higher.
And even at 1%, if half of the US gets infected, that means 1.5 million deaths. This is not a small number.
The last time the flu killed that many people in the US was during the 1918-1920 pandemic.
The spanish flu of 1917 also only had a death rate of between 2-3% Does any body know distinctions between that flu and the coronavirus that make this outbreak less threatening?
The case mortality rate from the Spanish Flu was much higher than 2-3%. Wikipedia gives it as 2-20%.
The Spanish Flu also mainly killed the young, while Covid mostly kills the elderly.
Most likely, in 1918, the older generations had been exposed to a similar flu strain decades earlier, and had some resistance.
For the Coronavirus, there is no such latent resistance in the population at all.
Most likely, the real mortality rate (given the large number of undiagnosed cases) is somewhere below 1%. But that’s with intensive medical care for around 5% of the infected population. How many people can receive such care in the US simultaneously? Without ventilators and/or oxygen, the death rate is going to be substantially higher.
It is the above that is causing the WHO and medical professionals such concern - hence the efforts being made to contain the virus.
Some public health systems in Europe are already struggling to cope with the day to day. They could not cope with a mass influx of patients requiring intensive care.
Note also that a number of young (presumably healthy) doctors in China also died from the disease. That is also causing concern.
The spanish flu of 1917 also only had a death rate of between 2-3% Does any body know distinctions between that flu and the coronavirus that make this outbreak less threatening?
I think the difference is that a century later mass travel makes the same virus much more dangerous than back then when confinement was easier. Modern medicine might have the opposite effect. I think the “system” is just too complex to make accurate predictions.
I wasn’t too worried living in Portugal until the outbreak in Italy where I have cousins in Milan. The virus can hopscotch with ease. A South Korean airline pilot was discovered to be infected – how many in how many destinations did he infect.
Some public health systems in Europe are already struggling to cope with the day to day.
Yes. The US has its own issues, in particular the fact that copays, deductibles and just lack of insurance incentivise people not to go to the doctor. Also, many jobs don’t offer sick pay, so many infected will show up to work.
Diabolical, can you keep your doom and gloom comments off this board unless it pertains to the Companies we discuss here or valuable information on new up and coming prospects that adhere to the rules of this board. What you state may or may not have validation but as has been frequently stated in the Monday morning rules, it’s OT and not appreciated here.
All this nervousness bewilders me because over the years, I’ve learned that the most successful investors don’t do panic selling. It’s an opportunity to select the quality stocks selling low because of all those panic sellers.
Things are always going to happen that shakes investors confidence in the market as a whole but really, if they sell everytime something happens, they are better off in a ETF or mutual fund and have an advisor hold their hands away from the sell button.
“A South Korean airline pilot was discovered to be infected – how many in how many destinations did he infect. “
And that Korean Air pilot was in Los Angeles, specifically hanging out in Korea town in the restaurants and bars. Eating, drinking, laughing with friends, touching glasses, dinnerware, plates, shaking hands, so how many people has he contaminated here in LA.
There is a list of restaurants already out that people are banning here. My wife is Korean, her parents and 4 sisters and their kids are all now avoiding many places. We were supposed to go to dinner last night in Koreatown and cancelled. People here are starting to freak out a bit. So yea this virus is scaring people close to home. You start having a breakout in the states, you’ll see the same panic you are seeing in China, South Korea and Italy, and it will effect “our” stocks as well.
My wife’s cousin was flying into LA from South Korea Monday and cancelled, and her entire family is somewhat relieved that she did.
