This Too Shall Pass

Well it looks like another day to review your holdings–I did it multiple times yesterday, but didn’t find anything to sell. I will do it again today–probably twice.

No doubt the economy will be hurt by the corona virus reaction–and the odds that you will find me buying any preferreds from lodging REITs in the next few weeks is pretty small, BUT for those with a bit more taste for risk than I have we may be seeing some good bargains out there.

With the lodging REITs and many of the shippers I don’t think there is a reason to rush into any bargain buying–I would suggest that folks ‘leg into’ new positions (this really goes toward everything right now). If your normal full positions is 500 shares buy 200 shares first and wait a few days or weeks before committing new funds.

I realize that at this point in time in the market drop there are some folks that think the ‘world is going to end’–and they may be laying awake at night with worry. There is a point–and each and every investor is different–where you raise more cash. Investors don’t have to make any excuses to anyone on this website if they feel the need to do a bit more selling. For the same reason that I don’t make buy or sell recommendations, I don’t tell folks they should be holding securities in difficult markets. Everyone needs to do what is best in their mind for themselves–if that means 50% cash–so be it.

Keep your cool, stay sane and protect your ‘stash’ in the best way that you know how.

24 thoughts on “This Too Shall Pass”

  1. My comments are probably not worth anymore than others’, but we are now in the window of ‘wait for the really bad news’ . One anomalous case in Calif so far, and as this virus spreads in the US, on some fronts there will be over-reaction, and in others dumbfounded disbelief and inaction.
    You can gauge the concern by trying to locally purchase any of the N-95 respiratory paper masks. I can tell you, you probably find that the run has occurred, they’re out. Amazon & Walmart online- almost out & any available are running $10 to $30 for one mask, that a few weeks ago would have been a couple bucks. One HomeDepot had a fellow come in and buy their entire stock- probably for resale on eBay.
    If interested, the best I’ve seen are the full rubber gasket Milwaukee brand N-95. Our other HD had them in 10 pks for 34.97 and no gasket 22.97
    I live in northern NV, not Reno, so not overly concerned, but my Boy Scout training and my RN training kicked in.
    While at HD, a woman was grabbing several boxes, and said her kids were med students in Las Vegas and were getting concerned with LV being a destination city. She sent them $500 to buy non-perishables.
    One case in the right place in a town, and schools will be closed as well as many workplaces. Several mayors in major cities are planning for just that.
    – Almost forgot- I think worsening / delays, will cause a series of dead cat bounces, so I’m done buying for now- prices could be much lower as this thing burns and burns out.
    I hope it is a non-event and life stays normal- be safe & healthy.

  2. Here was a good comment on Yahoo this morning
    Academy Securities’ Peter Tchir said on Yahoo Finance’s The Final Round. “All of a sudden, that behavior changed a little bit into the close yesterday. And making it even more dangerous to me, you saw oil fall off into the close. Commodities were selling off. Even Bitcoin was selling off into the close.”

    Typically when uncertainty spikes in financial markets, traders and investors will rotate out of risky assets like stocks and into ‘safe haven’ assets like bonds or perhaps gold. When this happens, risky asset prices go down and safer asset prices go up.

    But when market participants are panicking, they begin to cash out of everything. And that can lead to even more panic.

    In a note to his clients titled “Did Someone Hit the ‘Sell Everything’ Button?,”

  3. The market deserves to sell off, Coronavirus or not. The stock market valuation is too high for a country that only averages about 2% gdp growth.

  4. Thank You to everyone who answered my question. I did go to the j3sg site so hopefully no one stole anything from me. I have had a subscription to Morningstar for over 20 years but most of the holders are institutional holders. Another really ugly day out there. For those that have balls of steel some of these oil companies are starting to look really cheap. There’s probably some really great buys out there but you really need to have courage and conviction. I always think of Old John Templeton at times like these. Blood in the streets.

  5. Thanks Tim, this would be a logical area for Spx to bounce as it’s getting to the 62% retracement level and the 10 year yield has reached the lower trend line. Although I have zero confidence in that. ATB.

  6. Stay the course folks – I have been 40-45% cash now for a while with the rest in preferreds, some baby bonds and some DGI stocks (JNJ, MMM, PRU, VZ, T, UNH, UPS, DOC, CSCO and XOM). CSCO and XOM I was way too early on but the others were only small taters until now as I get the opp to add tranches as this thing corrects. Most of my preferreds/BBs, I am in at less than $25 with a couple at $25.25 but that is my max…retirement in 3.5 years so this correction is right on time.

      1. I think XOM can go to 40, looking at its charts, figuring a worst-case scenario with oversupply and low demand. The yield is great now and they are a div. aristocrat but i don’t have the stomach for the volatility of these oil plays.

        1. Franklin, the 20 year low for XOM is around 31-32. The way I read that 20-year chart there would be significant price support in the area of 45-46. At a little under 50 it would yield 7% in dividends, provided it is not reduced. Is there a sweet spot in there somewhere? Your guess is as good as mine.

  7. The corona virus fear trade seems to me to be the stupidest reason for a big sell-off. My wife, father, and brother-in-law are doctors and from what I know I personally, as a healthy adult, am not worried about catching it. Only around 40% of the population in the US even bothers to get a flu shot each year. I wouldn’t be surprised if all the publicity associated with this virus results in fewer flu deaths because sick people will now be more likely to stay home from work and school.

    1. Agree. 80% of people who get this have mild symptoms — like a bad cold or mild flu. If you don’t have another health issue — like diabetes, hypertension, cancer, etc. your death rate here is probably well under 1%. If you’re above 70 you’re at more risk, but you already are with the flu that will lead to 20-40,000 deaths this year. I believe there will be a recession in Q2, but once it blows over, which it will one way or another, either with some tens of thousands of deaths (not being callous, speaking from an investment perspective only) or not, the economy will come roaring back by the summer. Lenders are not going to force companies into BK just because they had a bad quarter or two due to virus, so I think this is not a big worry either. Other than travel related issues, I would strongly recommend staying the course, and would look to well covered BDC baby bonds as bargain opportunities.

  8. Thanks Tim. I hit 50% cash a few weeks ago and yesterday made a few small buys per the “legging in” strategy.

    1. Thanks Tim for your words of wisdom. It seems that it is best to hold on to the SWANS and like you said, make a test position to first find out if there are tons of sharks in the water. Some trashy positions with high yield seem to hold. The odds of finding new hidden value is not good.

      Mikeo, you are wise to be 50%. For me I will just sit collect dividends/interests. Like Tim said, this shall pass (someday).
      ,

  9. Does anyone know of a site where a person can find out who the top 10 or 15 shareholders are of any given public company???

    1. Careful…this came up when I tried to go to j3sg.com

      Warning: Potential Security Risk Ahead

      Firefox detected a potential security threat and did not continue to j3sg.com. If you visit this site, attackers could try to steal information like your passwords, emails, or credit card details.

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