Covid 19

March 1, 2020

Covid 19

Thought you may want some comments on Covid19.  Well, it’s way worse in people’s heads than in reality.  But…reality rarely is used in these types of situations.

The SARS breakout sent the market from about 8400 to 7400.  That is a 16.6% correction, (we are not quite there yet for COVID19.)  In May, just 2 months after the SARS induced bottom, the Dow crossed over 9,000 on its way higher.  So a lot of people just couldn’t hold on for 2-3 months. 

They got out and locked in their losses in March.  It is hard to watch clients who want to sell, when they probably should be buying.  We have almost no one who sold during the downturn in 2008.  Remember, if you buy more, you don’t have to catch the bottom!  The media is stuck on this.  All you need to do is look for good companies that are now at outstanding low values. 

The market really tanked today because California started monitoring 8400 people.  Wow!  This was a non-event I believe.  As of right now I can’t find out WHY California suddenly realized they had to monitor flights inbound from China.  I thought everyone was already doing that.  Not sure.

Like SARS and many other “crisis du jour” events this is way overblown IMO.  The mortality rate is now estimated at about .07 for the US.  Way down from initial projections of 2-5% Globally.  Also, many of these deaths are from pre-existing conditions, smokers (Half of Chinese men smoke), compared to the US at about 15%, and questionable care in some parts of the world.

There also a lot of infected people with no symptoms.  It seems the stats are all over the map on this.  One source said around 40% are asymptomatic.  But, really this will all come out in the wash, and I believe way sooner than most think.  This is just what panic looks like.

Also the market was richly valued, overbought, etc.  When that happens everyone looks for reason to sell.  The Virus provided a reason.

“I get fearful when people are greedy, and I am greedy when people get fearful.”  Warren Buffett 

See you soon,

Craig Verdi