Grenades

DOUG  By Guest Blogger Doug Rowat

.

Michael Mann is a brilliant director.

I say this partly because his cinematography is often influenced by the incredible Canadian artist Alex Colville (see below). But I also say this because anyone who’s seen the iconic diner scene in Heat with Robert De Niro and Al Pacino knows that this is a director who can get the best from his actors.

Canadian art meets Hollywood

Source: Google Images

However, no director’s perfect and the uneven Miami Vice re-boot is proof of that. But there’s one scene in the movie that oddly reminds me of a key rule of investing. In a meeting with a drug trafficker (what else?), Sonny Crockett (played by Colin Farrell) threatens to set off a live grenade when the meeting goes awry. Eventually, Ricardo Tubbs (played by Jamie Foxx) argues that everyone can decide to splatter themselves against the wall, but “then ain’t nobody gonna make no money.” Tense nods of agreement. End scene.

It certainly wasn’t De Niro and Pacino, but I still appreciated Foxx’s practical outlook and have always taken the scene to represent a great investing lesson: focusing solely on worst possible outcomes means that you’ll never make a profit.

Right now, the forecasts for the coronavirus are loosely divided into three scenarios:

  • Worst case. The global economy will be decimated by the virus with minimal recovery for years. The virus will mutate and the global health care community will ultimately fail to control it. Deaths will be in the millions. Essentially, the exploded-grenade option.
  • Base case. The sheer amount of global stimulus will eventually intersect with a moderation in the global infection rate and, once this inflection point is reached, markets will rally (perhaps this is happening already). Progress in Italy, South Korea and particularly China, and even some of the hardest-hit US states, such as New York and New Jersey, lend evidence that the US will eventually contain the virus. There will be a gradual re-opening of the North American economy in early to mid-summer with something approaching a normal resumption of economic activity (with notable exceptions, such as a continued ban on large gatherings) by the third or fourth quarter. Equity markets will likely start pricing in this re-opening sooner. This is the pinning-the-grenade option.
  • Best case. We’ll all inject ourselves with disinfectants, lie under tanning beds and the virus will be cleansed from our bodies. No one else will die or be infected and the US and global economies will soon resume their upward trajectories, preferably before the November presidential election. Ironically, this is also an exploded-grenade option (put down that bottle of Lysol).

If you’re an investor who assumes the worst-case scenario then the sensible course of action is a flight to safety. But here’s a sample look at some of the safe options at the moment, duration can be decided on based on your own estimate of crisis length:

What safe gets you in 2020

Source: Bloomberg, RBC. *posted rate. RBC is used as a rough proxy for the GICs of all the big banks. I don’t include durations longer than 2 years for GICs because banks, though extremely safe, can’t quite be equated to the government in terms of safety, especially over a long time horizon.

So, the average yield for all of the above is a whopping 0.47%. You earn basically nothing and then have the additional difficulty of correctly timing your way back into the market. Like almost all retail investors (and most professional money managers for that matter), your timing won’t be successful and markets will probably rally by 20% or more before you feel ‘comfortable’ getting reinvested. If you recently moved to the sidelines, ask yourself if this recent rally in the S&P 500 is tempting you to dip your toes back into the market? I bet it is, but again, too bad you already missed the 25-30% bounce.

So, you can certainly assume the worst case for the coronavirus and make a dramatic flight to safety with your entire portfolio. No one’s stopping you.

But then, most definitely, the person who ain’t making any money will be you.

_____________________________________________________

Finally, I’ve put a lot of emphasis on the health care sector in my previous blog posts and noted that it should be a part of everyone’s balanced and diversified portfolio. As it turns out, health care has done its job this year, almost completely recovering to its pre-crisis highs and outperforming the broader S&P 500. Sometimes good defense turns into good offense.

S&P Health Care Index (white line) vs the S&P 500 (orange) – 1 year

Source: Bloomberg
Doug Rowat, FCSI® is Portfolio Manager with Turner Investments and Senior Vice President, Private Client Group, Raymond James Ltd.

 

146 comments ↓

#1 Sue on 05.02.20 at 9:59 am

Early today! Nice for us early birds. I see somewhere between worst and base case. The lipstick on this pig they are applying heavily right now will wear off eventually.

#2 John on 05.02.20 at 10:06 am

Researchers saying Coronas around for another 2 or 3 years, so chances are there will be other opportunities to buy the dip.

#3 Goldie on 05.02.20 at 10:06 am

healthcare? pfft… AYU taking it to the woodshed. Next stop on the bus, blast through $1800, its coming :)

USA UE now at 30 million

GDP shrank the worst since the financial crisis and more to come :

The markets are going to very much look through the first-quarter GDP data,” said Katie Nixon, chief investment officer at Northern Trust Wealth Management. “We know it’s bad. The magnitude is almost irrelevant now as we’re looking at a much steeper decline in second-quarter activity.”

#4 crowdedelevatorfartz on 05.02.20 at 10:07 am

The “juggling hand grenade” option…

Very early this am…..

#5 CanadIain on 05.02.20 at 10:13 am

The coronavirus pandemic of 2020 will be seen as a mass delusion of mankind, perhaps the biggest ever. Books will be written about it, films produced. We all made a very big mistake.

In no time we will be back to work. Pundits suggesting things will be different are utterly wrong. We will have all forgotten about this in six months time. The death rate is minimal.

You can almost understand politicians for shutting everything down. Afterall, they live for power, and as a famous Chicago Mayor once said, you never let a crisis go to waste. And so we see Junior ban automatic guns that were already banned, and grab yet more power as the tinpot dictator he is. And Canadians lap it all up. Can we have some more please sir? We are all Oliver Twists now.

#6 Greg on 05.02.20 at 10:44 am

“make a dramatic flight to safety with your entire portfolio. No one’s stopping you. But then, most definitely, the person who ain’t making any money will be you.”

If you assume markets will go up you are right. But if markets go down and you’re not invested, is it fair to assume the money you didn’t loose is a gain ?

#7 NFN_NLN on 05.02.20 at 10:47 am

The virus is real.

The reaction is fake.

Talk is cheap. Put your money where your mouth is. I hope all the people over-hyping this virus stay out of the market and get what they wanted – devastation. Except isolated to themselves.

By the way, there is no “getting back in” now. SPY was 300 but jumped to 330 right before the virus. Then dropped to 220 at the low and sits at 290. It’s effectively recovered.

Most stocks are sitting at where they were Winter 2019. It’s done. You can eek out some growth, but the bulk has already come back.

#8 NFN_NLN on 05.02.20 at 10:48 am

#3 John on 05.02.20 at 10:06 am
Researchers saying Coronas around for another 2 or 3 years, so chances are there will be other opportunities to buy the dip.

How’d that first dip work out for you? You must have made a killing.

#9 Balanced on 05.02.20 at 10:55 am

Doug, always enjoy your posts. For those nearing retirement, it’s not always about being in or out of the market. If you’re within a few years from retirement, there’s nothing wrong with having 1-3 years of expenses in fixed safe investments to draw from when there’s market volatility like we’re experiencing now (bucket approach). With the balance of funds I would agree with always being in the market with a 60/40 balanced portfolio to live out the remaining years.

#10 SOMETHINGS UP on 05.02.20 at 11:06 am

Grenade will set-off shortly.

Berkshire Hathaway (50 BILLION DOLLAR LOSS)!!!

35 MILLION U.S. & Canadians Unemployed!!

Were just toying with the disconnect between markets & the economy.

2nd Wave is inevitable.

https://www.youtube.com/watch?v=1hul1kuWDKE

#11 Dharma Bum on 05.02.20 at 11:08 am

The fallout and collateral damage from the virus crisis will ultimately negatively affect the segment of the population at large that is always negatively affected by any crisis, health related, economic, or otherwise.

I am talking about the largest part of the population in any society: the weak, the poor, the ignorant, the naive, the indebted, the groupthinkers, the obese, the smokers, the unhealthy, the mouthbreathers, the junkies, the meth-heads, the drunks, the gamblers, the renters, the assetless, the snowflakes, the potheads, the spendaholics, the paranoid, the news addicts, the politically correct, the SJWs, the moisters, the undercapitalized, the sheep, the obedient, the hipsters, the feeble, the hand-to-mouthers, the clubbers, the biblethumpers, the junk food snorflers, the climate change freaks, the CBC watchers, the Trudeau lovers, the lefties, the gamers, and the vegans.

Those that have avoided major debt, lived frugally and saved for a rainy day, stay the course, stay invested, stay liquid, stay diversified, stay balanced, adapt, don’t panic, live their lives in moderation, think logically, ignore the hype, filter the noise, use good judgement, make wise decisions based on prudent analysis of the facts presented, and are already fairly well capitalized, will come out of this thing largely unscathed.

Unfortunately, that’s a small percentage of the people. They will ultimately benefit from this mess at the expense of the former cohort.

Rich get richer. Poor get poorer.

Always did. Always will.

Crises only serve to ultimately exacerbate that reality.

#12 MF on 05.02.20 at 11:11 am

The virus won’t be contained, it will just keep spreading in waves and eventually become a reality for everyone. It may be milder at that point, or not. No one knows. People are knocking Trump but he was correct yesterday when he was asked why the US has more cases than everyone else? His response was because they aren’t testing. That, and/or, they are simply lying about their stats. It’s obvious.

So almost no one is surprised that the market rallied, or that it will continue to rally. The sheer amount of stimulus the FED released is hilarious, and that seems to be the main driver of the stock market.

The worry is what is next? During the next crisis (inevitable) will the FED spend 4 trillion next time? 8 trillion? What about the time after that? Don’t debt levels matter?

This expected relief rally is nice, it’s what comes after that everyone should be thinking about.

MF

#13 Figure it Out on 05.02.20 at 11:12 am

This is odd. Government bonds have been yielding nothing or less (after inflation and tax) for quite a while now. The capital gains have provided the rewards.

So why look at current yields NOW? If you think things will be worse than the market currently thinks, the ZROZ ETF does the job. Up 33% YTD.

No position myself, as this isn’t the way I think things will go. But if I WAS looking to put on a position, I wouldn’t let low current yields stop me. It’s still a long way to zero. And zero isn’t a hard end point, as we’ve seen.

Heat was great, but to say Michael Mann’s career has been uneven is perhaps to give him too much credit.

#14 IslandLife4Me on 05.02.20 at 11:15 am

The world definitely won’t be the same but I think we will be closer to pre-Covid than not. For all of April I could do anything I could ever want to do except get a haircut and watch the one sport I watch. I am a front line worker and feel grateful for the steps my employers took to ensure my safety and the safety of the public I deal with. A bonus was that our financials took an initial beating but we are $893 shy of the high water mark set before all this began!

#15 Dharma Bum on 05.02.20 at 11:23 am

The GREAT Frank Zappa – a genius ahead of his time – wrote about this exquisite little virus over 40 years ago:

In the dark
Where all the fevers grow
Under the water
Where the shark bubbles blow
In the mornin’
By yer radio
Do the walls close in t’ suffocate ya?
You ain’t got no friends…
And all the others: they hate ya!
Does the life you been leading gotta go?
Well, lemme straighten you out
About a place I know…
(Get yer shoes ‘n socks on people
It’s right around the corner!)

Out through the night
And the whispering breezes
To the place where they keep
The Imaginary Diseases
Out through the night
And the whispering breezes
To the place where they keep
The Imaginary Diseases, hmmm…

This has to be the disease for you!
Now scientists call this disease
Bromidrosis
But us regular folks
Who might wear tennis shoes
Or an occasional python boot
Know this exquisite little disease, as:

STINKFOOT!

#16 MF on 05.02.20 at 11:29 am

#8 NFN_NLN on 05.02.20 at 10:47 am

It’s possible there will be more down days, but it will be generally up for the stock markets.

Why? There is a weird dichotomy:

The virus is far from over. It will just keep spreading and the death rate, complication rate, and infected numbers will keep rising = bad news, market down for a bit.

The stimulus will have an effect. 0% interest rates, trillions of stimulus, central banks buying billions and trillions of bonds, stocks, and mortgage backed securities (where have we heard that term before?) =market up.

The stimulus is clearly what the market pays attention to most. And there is a lot of it. We went through years of bad news = good news for stocks in the mid 2010’s. Same thing going on here. It’s what the markets have been accustomed to since 2008.

MF

#17 Negative or positive they sure attract investors on 05.02.20 at 11:29 am

Thanks Doug
It is a persistent problem we are overloaded with news and information. One minute head for the hills and next minute full steam ahead.
The problem I see is that every day there is a different news item that makes you wonder what really will happen. One minute you cannot give oil away next minute
Oil stocks are flying higher with news the economy is fine long term, then it drops with 20 tankers with no where to put the stuff.

One minute no planes are flying and now AC trading $17 for a company that earns no money? Because they will be flying at Christmas. Really why is a stock worth $17 with no income?

Personally I do not understand why Bank stocks swing two dollars a day who the heck is trading these puppies? Obviously not long term investors?
And this is what keeps me awake a nights market manipulators?
Speaking of Banks
We know they will not go under
We know they are under stress Garth points out a billion a quarter nose bleed but they earn 9 billion.
Dividends will not be cut.
But we cannot make up our minds banks either they are
Worth nothing or worth allot.
And they fluctuate two dollars a day? Why? Because we cannot make up our minds. Because every day is a different news story? Or something I just don’t understand.
Have a great weekend
Negative or positive pick your poison.

#18 Doug in London on 05.02.20 at 11:30 am

@Dharma Bum, post #12:
There’s a hole in your argument big enough to fit the entire universe through, including all the dark matter and dark energy we can’t even see. I am a CBC watcher and listener, as well as someone who has the common sense to see climate change as a problem not only in the future but right now. Because of my sensible nature, I have lived frugally and saved money for a rainy day. I not only stayed invested during the big drop in stocks back in March, but actually dove in head first and scooped some AWESOME BARGAINS! That’s why I am not only coming out of this crisis unscathed, but am ahead of the game because of the high yield I’m making on those DIRT CHEAP investments I scooped up in March. You need to get your facts straight. Speaking of which, I plan to tune into Quirks and Quarks on CBC after leaving this site and checking my investment account to see the generous dividends I was paid last week.

#19 GrumpyPanda on 05.02.20 at 11:31 am

After 9/11 both political parties worked together for about 4-6 months. Then partisan politics and special interest groups began to assert their positions. We are seeing the same now. Unions are pressing for the extra $4 an hour to include well compensated professions. Climate change is back in the news, the virus is racist but only in countries with diverse populations. And of course unemployment is a women’s issue.

#20 Doug Rowat on 05.02.20 at 11:55 am

#10 Balanced on 05.02.20 at 10:55 am

Doug, always enjoy your posts. For those nearing retirement, it’s not always about being in or out of the market. If you’re within a few years from retirement, there’s nothing wrong with having 1-3 years of expenses in fixed safe investments to draw from when there’s market volatility…

Yes, I’m speaking mainly about all-in (or, more precisely, all-out) wagers on the market. We see it sometimes–a full liquidation of a portfolio. Here an investor is assuming God-like insight: 100% certainty of the market’s next move and 100% certainty of the correct market re-entry point. It’s a doomed strategy.

Also 3 year’s worth of living expenses in safe investments is excessively conservative. If you think a crisis could last 3 years then you shouldn’t be invested at all.

–Doug

#21 Sail Away on 05.02.20 at 12:18 pm

BTW: a grenade should never be held that way. Not ever. Not even a fake one. Not even as a photo.

#22 mountain guy on 05.02.20 at 12:24 pm

#114, #125, #133, Friday May 1
As noted by #144, the UBI provides a substantial safety net for many. UBI provides that to all of us, without the government interference and bureaucratic costs and incompetence. Just eliminate those bureaucracies, i.e. less gov’t. It’s been shown to reduce crime, reduce mental health costs, reduce medical costs, reduce policing costs, increase adult participation in job retraining, and reduce high school dropout rates. (UBI experiment in Dauphin MB)
Furthermore, the reduced risk of a universal social safety net leads to increases in entrepreneurship & creation of small businesses. It shifts the risk/reward calculation, encouraging people to start businesses less worry about covering rent and food for their families. Those small businesses are the greatest job-creation engine of capitalism.
Less government interference. Lower cost of government. Better social outcomes. Increased incentives for capitalism. Not bad. Sure beats the current system.

#23 Ponzius Pilatus on 05.02.20 at 12:25 pm

Sailor Boy.
Late night postings.
Tesla keeping you awake?

#24 Tony on 05.02.20 at 12:31 pm

The once most overpriced house in the GTA is now back on the market.
https://www.zolo.ca/east-gwillimbury-real-estate/18947-mccowan-road

N3713744 Mar 13, 2017 Removed $1,050,000
Feb 24, 2017 Listed $1,050,000

#25 Linda on 05.02.20 at 12:36 pm

Good post for talking people off the ledge:) The efforts to minimize the infection/death rate are laudable, though the economic cost of doing so will doubtless be used by many an academic in future years as the inevitable post Covid studies, papers & theses are published.

In regards to China, I find their data to be highly suspect. I do not think it unreasonable to believe the reported infection & death rates have been edited to reflect party policies on the matter. Something to keep in mind regarding the resumption of trade & especially the movement of people.

#26 akashic record on 05.02.20 at 12:45 pm

Berkshire is 137 billion in cash.

George Soros proposes that in order to save the EU and “human civilization”, the EU should take 2000 billion EU never ending loan at 0.5% rate, where no payment would be made to pay off the capital, just servicing interest. He argues this was done before in the UK in 1751, later during Napoleon’s war, then to finance WW1.
Sounds like the financial version of “inject ourselves with disinfectants, lie under tanning beds”.

#27 Bruno Mars on 05.02.20 at 12:50 pm

DELETED

#28 crowdedelevatorfartz on 05.02.20 at 1:17 pm

Interesting research stat out of France.
95% of the infected were non smokers…

In a country where 25% of the population smokes.

Is nicotine or the smoke the virus killer?

#29 Sail Away on 05.02.20 at 1:33 pm

#24 Ponzius Pilatus on 05.02.20 at 12:25 pm

Sailor Boy.
Late night postings.
Tesla keeping you awake?

—————–

Haha. With excitement, maybe.

I am long and strong Tesla and will remain so. Elon is furious about the spurious lockdown because he understands statistics and risk management. He and I agree that this Corvid reaction is sheer idiocy. We’re tight, me and Elon.

#30 Russ on 05.02.20 at 1:34 pm

So, there were no Covid deaths amongst the group who ingested (or injected) disinfectants.

Stats are fun eh.

#31 Sail Away on 05.02.20 at 1:38 pm

Berkshire AGM streaming online in a few hours. Worth attending. Even the great unwashed can attend for the first time this year. Looking at you, Ponze. See you there?

#32 Steven Rowlandson on 05.02.20 at 1:38 pm

Then again may be the powers that be should come to their senses and end this foolishness and open up the economy and public spaces and let nature and business do its thing. That 252 billion dollar deficit needs to be quashed and strict austerity needs to be introduced to walk back the federal debt and any law or person preventing that needs to be quashed and squashed. Failure to do this is the real disease that will kill the country.

#33 Andrew on 05.02.20 at 1:47 pm

Plot twist bitcoin enters the room and absorbs all the value.

#34 Flop... on 05.02.20 at 1:48 pm

Just got back from Burnaby Walmart, pretty quiet but this is not a toilet paper post, although it will probably give Garth the shits.

I’ve been trying to get my drivers license renewal done in the COVID 19 manner over the phone.

They keep giving me a date to call, I call on that date and they say the system is overwhelmed, and to call back later.

The renewal form states to get a license renewal you have to do it over the phone and no office will currently process you.

Yesterday my services card renewal came in the mail, and because of ICBC’s inability to keep their story straight as there were discrepancies each time I talked to them, I called the B.C service card helpline to double check they had the story straight.

Your service card and drivers license is processed at the same time by different entities, for those out of province.

The lady stated that I could in fact go to a drivers license processing centre in person and skip all the temporary paperwork and the inevitable backlog, if I was o.k to exit my residence.

Exit my residence?

I’ve been going to work everyday, haven’t missed a beat, I can hardly walk and have two hernias, I’m not going to let a pandemic get in the way of having a good year.

I was the only person at the licensing centre, took about five minutes to surrender my cards, sign some papers and get my mugshot done.

I was asked a few questions about recent travels and such before entering, also.

The Burnaby one is open on Saturdays from 8:30 to 4:30

Besides Walmart being quiet, and my presence on this blog being a hemorrhoid on Garth Turners bum , I hope this helps someone…

M45BC

#35 ImGonnaBeSick on 05.02.20 at 1:49 pm

#2 Stone on 05.02.20 at 10:05 am
Finally, I’ve put a lot of emphasis on the health care sector in my previous blog posts and noted that it should be a part of everyone’s balanced and diversified portfolio. As it turns out, health care has done its job this year, almost completely recovering to its pre-crisis highs and outperforming the broader S&P 500. Sometimes good defense turns into good offense.

———

The main question though is, how has the balanced and diversified portfolio done YTD so far?

——-

If you take XBAL or VBAL as a proxy, YTD -5.35%. Seems a balanced portfolio has held up exceptionally well. What were you trying to infer exactly? This is pretty easily researched..

#36 Doug Rowat on 05.02.20 at 1:55 pm

#14 Figure it Out on 05.02.20 at 11:12 am

This is odd. Government bonds have been yielding nothing or less (after inflation and tax) for quite a while now. The capital gains have provided the rewards.

Correct, the capital gains have provided some of the rewards. But the total returns for US Treasuries and GoC bonds have been meaningfully diminishing for decades.

And, for simplicity, I’m assuming the most basic of zero-risk strategies: government bonds held to maturity.

Technically, if your view was negative, you could also short the market, but this gets into market timing and added risk, which we avoid. Besides, the main impulse we see in the retail world in volatile markets is pure risk aversion.

–Doug

#37 Figure it Out on 05.02.20 at 1:57 pm

“Not even a fake one.”

Everybody’s got a trigger.

#38 JacqueShellacque on 05.02.20 at 1:57 pm

Doug, I realize that most of your job is to keep people from making poor decisions for unfounded reasons that will cost them money in the long run, but this should be
considered a paradigm-shifting event. The existing methods and thought patterns just don’t work in the face of this massive outlier we live in. Purely from the
perspective of an investor, I can’t help but feel your best case scenario isn’t optimistic enough, and your worst case scenario isn’t pessimistic enough.

The best case scenario is that this will turn out to be the best buying opportunity of the 21st century and a few well-placed (and yes, lucky) moves can make one’s
retirement.

The worst case scenario is Great Depression II (deflation and markets rolling back decades of gains along with millions of unemployed), or perhaps
Weimar Republic-style hyperinflation that wipes out anything of value can’t be nailed down, locked up, or ingested. (Or maybe one, then the other). That’s not to
mention all the resulting chaos those things bring about, and all this in an interconnected world, with no watertight compartments to stop the worst of the damage from propagating, and nothing left in the government toolbox but the printing press and the nightstick.

So I guess what I’m saying is I only care about trying to take maximum advantage of the best case, and trying to salvage something of value in the
worst. I’m not really concerned about the economy reopening in a few weeks vs a few months, or my taxes going up 5 vs 10%, or the S&P going back to what it was on March 1. That’s middle-of-the-road stuff that
(to channel PM Socks) will take care of itself with the 60-40 paradigm, which serves us well 97% of the time. Which sounds great, but the other 3% of the time is
far more consequential. Borrowing and mixing from Nassim Taleb and Douglas Hubbard, I don’t think the current financial and economic analysis paradigms
(where the only source of variation in asset values are past fluctuations of those values around an imagined, normally-distributed mean) is preparation for the
truly consequential, and in fact it may imply it won’t happen.

There’s no reason people with portfolios shouldn’t have 3-5% of that in bets on big gains and big losses. I’d respectfully ask you and your team to one day (soon) let your hair down, and embrace the outlandish, at least for a day or 2. Then we can all go back to musing about REITs and the price of oil.

#39 BS on 05.02.20 at 2:02 pm

The outcome of the actual virus is a side issue. Even if the virus is essentially gone by Summer the damage is done. The world was in heap of debt. Governments, people and corporations. The virus just exposed that over leverage and pricked the bubble. The Fed money printing still leaves a massive hole. It cannot make up for the losses already baked in. Other government money printing such as in Canada is the same but it will debase the currency versus the USD making it worse. The CAD is headed for 60 cents. The latest rally is providing an opportunity to sell your equities (and prefs if you still own them) and get your cash in USD. If we are heading for deflation then USD cash is king.

JP Morgan Global Fixed Income head Bob Michele:

“This feels to me like the second quarter of 2008”

Note Lehman collapsed in Q3 of 2008.

https://www.howestreet.com/2020/05/jpm-fixed-income-head-market-optimistic-before-horror-of-data-hits/

#40 BS on 05.02.20 at 2:12 pm

Warren Buffet is raising cash even though Berkshire already had lots of cash at the start of the year. Note Buffet has been a perma bull on equities for decades. Not now.

Buffett Stays on Sidelines With Cash Rising to $137 Billion

Warren Buffett has been waiting years for stocks to look more attractive. He apparently didn’t think the first-quarter plunge was that opportunity.

As the coronavirus slowdown started to grip the U.S., the famed investor’s Berkshire Hathaway Inc. was building its massive cash pile to a record $137 billion by the end of March. The company said that figure climbed even higher as it dumped more than $6 billion of stocks in April, making Buffett a net seller of equities so far this year.

https://www.bloomberg.com/news/articles/2020-05-02/buffett-stays-on-the-sidelines-amid-market-tumble-as-cash-climbs

#41 Ustabe on 05.02.20 at 2:38 pm

#133 Dr V on 05.01.20 at 11:32 pm

114 Ustabe – thank you for the link. I find the concept interesting, and worth discussing, though I view it as much more a potential economic solution, rather than a form of social justice.

“I view it as much more a potential economic solution”

As do I Dr V. The social justice tag along is just a bonus.

#42 Sail Away on 05.02.20 at 2:39 pm

#38 Figure it Out on 05.02.20 at 1:57 pm
“Not even a fake one.”

Everybody’s got a trigger.

————

Yep. I’ve been around lots of grenades. Not to be fooled with.

#43 Deplorable Dude on 05.02.20 at 2:41 pm

I can’t shake the feeling we are staring societal collapse in the face.

Multiple industries disintegrating simultaneously
, millions out of work, tens of thousands of small businesses going bankrupt, a tsunami of mortgage defaults incoming in a few months. Companies that survive will have major solvency issues as people will be in survival mode and not spending the money necessary to keep the wheels of the economy going. The markets seem to be in denial.

Meanwhile we have doctors in charge of our economy who have politicians running scared on reopening.

Someone talk me off this ledge…..

#44 Sail Away on 05.02.20 at 2:47 pm

I like Elon this way. Random, off the cuff and real.

#45 Ponzius Pilatus on 05.02.20 at 2:48 pm

#32 Sail Away on 05.02.20 at 1:38 pm
Berkshire AGM streaming online in a few hours. Worth attending. Even the great unwashed can attend for the first time this year. Looking at you, Ponze. See you there?
———————————
Rather go for a nice walk in Steveston’s Garry Park with my wife.
And then [email protected] afterwards.

#46 Lost...but not leased on 05.02.20 at 3:57 pm

But I also say this because anyone who’s seen the iconic diner scene in Heat with Robert De Niro and Al Pacino knows that this is a director who can get the best from his actors.

======================

In next re-make…

….diner scene is T2 talking with Bin Laden about need for social – distancing.

#47 Lost...but not leased on 05.02.20 at 4:11 pm

Here in BC…

Listened to very sad story on Noon Presser….but not an exception if one does research .

Lady called “Dr. Bonnie” re: her husband who has pancreatic cancer.

Said that he wasn’t able to get surgery for his pancreatic cancer (elective???) due to COVID 19 pandemic….(gotta keep those beds available !!!) …unfortunately he now he has been moved to palliative.

Wake up people…

#48 Doug Rowat on 05.02.20 at 4:12 pm

#39 JacqueShellacque on 05.02.20 at 1:57 pm

There’s no reason people with portfolios shouldn’t have 3-5% of that in bets on big gains and big losses. I’d respectfully ask you and your team to one day (soon) let your hair down, and embrace the outlandish, at least for a day or 2.

I can almost braid my beard. I’ll soon be embracing my ‘Captain Lou Albano’.

–Doug

#49 kommykim on 05.02.20 at 4:22 pm

RE: #36 ImGonnaBeSick on 05.02.20 at 1:49 pm
#2 Stone on 05.02.20 at 10:05 am
The main question though is, how has the balanced and diversified portfolio done YTD so far?

——-

If you take XBAL or VBAL as a proxy, YTD -5.35%. Seems a balanced portfolio has held up exceptionally well. What were you trying to infer exactly? This is pretty easily researched.

=======================================

And if you add in the dividends that those funds throw off, they are only down about -3.7% YTD. Not bad actually.

#50 BrianT on 05.02.20 at 4:28 pm

Yeah Michael Mann is right at the top but for some reason he hasn’t done anything great in quite a while-Thief was outstanding and Collateral also-even the Insider was riveting.

#51 GrumpyPanda on 05.02.20 at 4:32 pm

The strength of the Healthcare sector may simply reflect what is a need versus a want. Investing in the companies of bills you don’t want to pay a proven strategy.
Should prove an interesting free agent market for all pro sports as owners start to wonder who is really
worth 7 or 8 figures a year.

#52 espressobob on 05.02.20 at 4:43 pm

I’m sure most who read this blog don’t have portfolios large enough to engage in sector plays like pharma. Risky.

Most are probably better off with a global approach wether by market cap or by weighting, diversifying the risk.

Not saying owning health care is wrong. Just pointing out this is for affluent investors who should be under proffesional management while exploring these opportunities.

#53 Lost...but not leased on 05.02.20 at 4:48 pm

I agree with many GF posters re: this Pandemic is/will be getting a reboot…err resurgence.

Logically….even “Spanish Flu” ended….right?
Sad re: the carnage …but we heal…build up immunity….life goes on…right?

Actually….if one is attuned to Gubermint doublespeak …..the future IS predictable…

There is nooooo waaaay this can end soon….the ducks are lined up for a “resurgence”…simply READ THEIR LIPS and body language.

#54 Yukon Elvis on 05.02.20 at 4:57 pm

#22 Sail Away on 05.02.20 at 12:18 pm
BTW: a grenade should never be held that way. Not ever. Not even a fake one. Not even as a photo.
………………………

Especially the white ones. Tape the spoon down so the pin doesn’t snag on bush.

#55 Gordon on 05.02.20 at 5:22 pm

Great post Doug.

Heat is my favorite movie, just watched it again last month.
Love the scene when De Niro is driving the 840i in the tunnel and he decides to go murder Waingro, his facial expressions!

#56 Camille on 05.02.20 at 5:31 pm

Thank you for the post Doug. But I cannot help feeling you wrote this 2 weeks ago, except perhaps for the introduction.
Have you read the papers today. They’re already forgetting the virus, relative to anytime before.
Granted, you did capture the possible resurgence of the virus in your worst case. But right now it’s an outlier. We would have to seriously reverse course.
So danger is what we don’t know about a recovering economy? Risk analysis says future dip or not, go all in (least do nothing).

#57 Faron on 05.02.20 at 5:37 pm

#155 Bytor the Snow Dog yesterday…

Utah is stunning in its scenic beauty and if you are into any kind of outdoors stuff from hunting to 4x to backpacking to skiing, its all doable. Mormons take care of their towns and their own. People are very friendly. If you aren’t Mormon, living in Utah could feel isolating depending on where you settle. Logan, a bit north of SLC is a nice little town at the foot of the mts. Much less traffic than SLC.

What Sail Away says about rule following is right on. People in the US is a bit more “interpretive” when it comes to social rules and some laws. I think it’s a reason why the US is so innovative industrially, technologically and artistically and probably always will be. I have found in the research I do for work that Canadians and many Germanic Europeans aim to replicate and perfect while Americans generate new ideas.

Arizona isn’t my place as a lefty but there are amazing places to see and some cool small towns. I think you will find like minded folks. Obviously, I’m generalizing in the extreme. I like Flagstaff as a left leaning college town in the hills.

You would probably like central and eastern Oregon but the winters are still quite cold.

#58 No Name News on 05.02.20 at 5:41 pm

Comment #17 “ Because every day is a different news story? ”

-At this time, the ‘news’ we are exposed to does not have the traditional meaning we once knew from the past. The news today (personal thoughts, ideas, opinions) is not agenda or bias free.
I am breaking free of ‘The News’. It doesn’t matter anymore.

#59 C19 on 05.02.20 at 5:41 pm

Just a quick note as many of you are aware while I felt the pandemic was serious I have been quite vocal about how I think we have been overly cautious so open up the economy.
So on Vancouver island of about 870,000 beavers and 121 cases as of May 1 with 101 recovered
A friend who is extremely careful got C19 (just found out today) and has no clue from where they got it as they are very diligent about social distancing and so forth due to a family member who cannot go out out because of health issues.
And yes this has actually changed my investment thoughts, yes I know it’s only one person but it’s weird how they got it. – unknown!
I now believe this will go on longer and affect the structure of the economy. Yes we will recovery but when is anyone’s guess. Since my portfolio has recovered and I am up 3 percent, time to add more cash. As said above AC a company that makes no money and flys no planes cannot be priced correctly at $17.?

Be safe.

I still think we are almost done but it appears there are still hidden people out there with the virus.

#60 crowdedelevatorfartz on 05.02.20 at 5:50 pm

Interesting research out of Montreal regarding the 1918 Spanish Flu.
Seems the mortality rate was particularly brutal for people between the ages of 20 and 40. The peak of health.
And if you were 28 in 1918 you had the highest mortality rate of all.
Why?
Upon further research they discover a possible reason.
People born in 1890 were exposed to a virulent strain of “Russian Flu” that year. Infant children’s immune systems would have been exposed and built anti bodies.
Scientists today believe that the 1918 body’s immune systems tried to “fight off” a Russian Flu when the Spanish Flu was hammering other areas of the body…..hyper immune antibodies fighting the wrong “enemy” as it were.
Healthy people who showed no symptom’s in the morning were dead by midnight.
They think the elderly today may have a similar issue.
They were exposed to another type of flu 70 or 80 years ago when they were children that is triggering the wrong immunity response.

#61 YouKnowWho on 05.02.20 at 6:03 pm

#55 Gordon

I always had an issue with that scene. Of course you can’t end the movie without it, so it happens for that reason.

De Niro is calm calculated and logical. That decision at that point was rush and emotional.

Money in the trunk, girl in the car, exit all set up vs. High risk murder for revenge?

I have never been sold on the fact that De Niro would make that decision. He’d bail and have Waingro whacked.

Up to that point, the movie is damn near perfect.

#62 conan on 05.02.20 at 6:12 pm

I think it will be somewhere between base case and worst case. I expect the markets will be a lot of small v’s inside many big V’s. Would not be surprised if Monday is a big sell off day, and the week itself is very market meh.

I am watching for round 2 with Covid. I think a lot depends on that.

https://www.youtube.com/watch?v=mZjraQagtTo

#63 NFN_NLN on 05.02.20 at 6:17 pm

#53 Lost…but not leased on 05.02.20 at 4:48 pm
I agree with many GF posters re: this Pandemic is/will be getting a reboot…err resurgence.

Dr. Julian Bashir:
It’s a children’s story, about a young shepherd boy who gets lonely while tending his flock. So he cries out to the villagers that a wolf is attacking the sheep. The people come running, but of course there’s no wolf. He claims that it’s run away and the villagers praise him for his vigilance.

Elim Garak:
Clever lad. Charming story.

Dr. Julian Bashir:
I’m not finished. The next day, the boy does it again, and the next too. And on the fourth day a wolf really comes. The boy cries out at the top of his lungs, but the villagers ignore him, and the boy, and his flock, are gobbled up.

Elim Garak:
Well, that’s a little graphic for children, wouldn’t you say?

Dr. Julian Bashir:
But the point is, if you lie all the time, nobody’s going to believe you, even when you’re telling the truth.

Elim Garak:
Are you sure that’s the point, Doctor?

Dr. Julian Bashir:
Of course. What else could it be?

Elim Garak:
That you should never tell the same lie twice.

#64 jess on 05.02.20 at 6:22 pm

lagging 2002 2014 banksters

Thursday, April 30, 2020
Israel’s Largest Bank, Bank Hapoalim, Admits to Conspiring with U.S. Taxpayers to Hide Assets and Income in Offshore Accounts
Bank Hapoalim (Switzerland) Pleads Guilty and Bank Hapoalim B.M. Enters into Deferred Prosecution Agreement for Criminal Misconduct;

From at least in or about 2002, and continuing until at least in or about 2014, the Bank conspired with employees, U.S. customers, and others to: (1) defraud the United States with respect to taxes; (2) file false federal tax returns; and (3) commit tax evasion. Employees of BHBM and BHS assisted U.S. customers in concealing their ownership and control of assets and funds held at the Bank, which enabled those U.S. customers to evade their U.S. tax obligations, by engaging in the following conduct:

Assisting U.S. customers with opening and maintaining accounts in the names of pseudonyms, code names, trust accounts, and offshore nominee entities;
Opening customer accounts for known U.S. customers using non-U.S. forms of identification;
Enabling U.S. taxpayers to evade U.S reporting requirements on securities’ earnings in violation of the Bank’s agreements with the IRS;
Providing “hold mail” services for a fee, avoiding any correspondence regarding the undeclared account being sent to the U.S.;
Offering back-to-back loans for U.S. taxpayers to enable them to access funds in the United States that were held in offshore accounts at the Bank in Switzerland and Israel; and
Processing wire transfers or issuing checks in amounts of less than $10,000 that were drawn on the accounts of U.S. taxpayers or entities in order to avoid triggering scrutiny.

At least four senior executives of the Bank, including two former members of BHS’s board of directors, were directly involved in aiding and abetting tax evasion of U.S. taxpayers.

Under today’s resolutions, the Bank is required to cooperate fully with ongoing investigations and affirmatively disclose any information it may later uncover regarding U.S.-related accounts. The Bank is also required to disclose information consistent with the Department of Justice’s Swiss Bank Program relating to accounts closed between Jan. 1, 2009, and Dec. 31, 2019. The agreements provide no protection from criminal or civil prosecution for any individuals.

https://www.justice.gov/opa/pr/israel-s-largest-bank-bank-hapoalim-admits-conspiring-us-taxpayers-hide-assets-and-income

#65 POTOK PHILIPPE on 05.02.20 at 6:29 pm

I get those stacks higher than the CN Tower!

#66 MF on 05.02.20 at 6:36 pm

44 Deplorable Dude on 05.02.20 at 2:41 pm

Sure man.

Almost everything you mentioned won’t come true -except pain for real estate.

Sometimes you just have to get offline, go outside, and talk to real people. You’ll realize the online world does not represent reality at all. People are friendly, hopeful, and optimistic -the opposite to the online world.

Also, never believe anything you read on the internet, and be skeptical of what you are being convinced about. This blog is gold when it comes to real estate and finances. There are some other themes. Some of them I agree with, others I think are completely false. It’s all good though.

Hope that helps!

MF

#67 Doug Rowat on 05.02.20 at 6:41 pm

#55 Gordon on 05.02.20 at 5:22 pm
Great post Doug.

Heat is my favorite movie, just watched it again last month.
Love the scene when De Niro is driving the 840i in the tunnel and he decides to go murder Waingro, his facial expressions!

And a brightly lit tunnel. Mann famous for using ‘the city’ to convey all kinds of meaning. Like the coyotes under the neon streetlights in Collateral.

–Doug

#68 Sail Away on 05.02.20 at 6:46 pm

Classic media: Kim Jong Un is dead! Aaaaaagh! He’s dead! He’s dead! Major problems. Speculation city. Huge instability leading (probably) to Armageddon! Prepare! It’s all over, it’s…

Oh, actually, it looks like he’s just fine. Next.

#69 IHCTD9 on 05.02.20 at 6:49 pm

I can almost braid my beard. I’ll soon be embracing my ‘Captain Lou Albano’.

–Doug
— —

Ms IH has been threatening to braid my now overflowing beard. When I put on a t shirt, I have to yank the thing thru the neck now.

She’s been watching a lot of “Vikings” on Netflix…

#70 NFN_NLN on 05.02.20 at 6:50 pm

Garth,

In a cold war between the US and China, do you see yourself aligning with Trudeau against the US?

#71 Handsome Ned on 05.02.20 at 6:54 pm

The most important scene in Heat is where the deNiro character tells his girlfriend that you have to be ready and willing to leave at a moments notice. He does not follow his own advice which leads to his doom. I had a bad feeling in January and should have gone liquid and be on way to New Zealand. Alas I am going to dance with who I brung and ride this mother out. Got to run, Al Pacino is busting down my door.

#72 Trader Joe on 05.02.20 at 6:58 pm

Not sure of the relevance of posting GIC rates. Nobody buys them. The green bank has a big 5 Canadian Banks- linked 4 year note at 8%. Cashable at market value, non-callable, payable every 6 months with a -30% payment threshold and a memory feature so if you miss a payment because the index falls 30% on a payment date but is above the threshold at the next payment date you get the missed payment as well. Best of both worlds. Doubt Turner Investments can offer that product.

#73 Smoking Man on 05.02.20 at 7:57 pm

Dogs, you all ever wonder why gas prices never go bellow zero, yet price at the pump never goes bellow 60..

Price fixing my dogs.

#74 yvr_lurker on 05.02.20 at 7:59 pm

#60
Interesting research out of Montreal regarding the 1918 Spanish Flu.
Seems the mortality rate was particularly brutal for people between the ages of 20 and 40. The peak of health.
And if you were 28 in 1918 you had the highest mortality rate of all.
Why?
Upon further research they discover a possible reason.
People born in 1890 were exposed to a virulent strain of “Russian Flu” that year. Infant children’s immune systems would have been exposed and built anti bodies.
Scientists today believe that the 1918 body’s immune systems tried to “fight off” a Russian Flu when the Spanish Flu was hammering other areas of the body…..hyper immune antibodies fighting the wrong “enemy” as it were.
Healthy people who showed no symptom’s in the morning were dead by midnight.

——————-

My grandfather (who died at age 87 in 1991) was orphaned by the spanish flu in Montreal when he was 12. His mother died first, and then 6 months later his father who was in his late 20s died in the second round of it. Grandpa and his younger sister were raised in two separate protestant orphanges. As a result of this flu, he essentially only had a grade 5 education, and only reconnected with his sister (who had not much more than a grade 3 education) when he was in his 30s. I remember as a kid asking him whether he went to the funeral for his parents. He didn’t remember any funeral, as they were all dropping like flies in Nov. 1918 and many were put in unmarked graves if you were from working class families.
This event, naturally, had a major impact. He developed skills for a trade (electrician), but had lost his education and family.
Thankfully now we can all still learn stuff online with classes still going etc…

#75 burnaby south gardener on 05.02.20 at 8:04 pm

Two links: The first compares confirmed flu deaths with confirmed Covid 19 deaths based on CDC data.

https://www.washingtonpost.com/business/2020/05/02/theres-more-accurate-way-compare-coronavirus-deaths-flu/

The 2nd link shows 3 possible furtures (looking 2 years into the future).
https://www.statnews.com/2020/05/01/three-potential-futures-for-covid-19/

Both (past and future) are important when you reflect on impact of the virus on our health care system.

Whatever steps we take in trying to restore the economy, it is not going to be easy. There are no quick fixes (treatments or vaccines) on the immediate future (say 2 years).

#76 Re 72 joe trader on 05.02.20 at 8:21 pm

Hey Joe, what does that mean?
Could you tell me a little more I’m not that bright. Thx

#77 Abolitionist on 05.02.20 at 8:26 pm

Smoking Man – glad you’re still around. Keep up the fight.

#78 Bytor the Snow Dog on 05.02.20 at 8:34 pm

@57 Faron- Thanks again. You’ve given me more to consider.

#73 Smoking Man on 05.02.20 at 7:57 pm sez:

“Dogs, you all ever wonder why gas prices never go bellow zero, yet price at the pump never goes bellow 60..

Price fixing my dogs.”
——————————————
Hope you are doing ok.

It’s not price fixing, it’s taxes.

#79 NoName on 05.02.20 at 8:34 pm

If you want to watch really exYu
good movie here, eng subtitles. Definitely worth watching.

https://youtu.be/ZwozSLas8DM

#80 Flop... on 05.02.20 at 8:41 pm

WULLY, ole boy, you got a frontline report for us about the floods in the Mac?

That much water is enough to wash all my sins away.

Well, most…

M45BC

#81 Drinking on 05.02.20 at 8:42 pm

Since Sars 2 has been proven to infect Felixe’s; I will stick with Canines and see where this all taly’s off to; hopefully my half dug bunker will not require any more work; dam, my back is sore! That Scotch is certainly helping with the pain! :)

#82 Marco on 05.02.20 at 8:55 pm

And a brightly lit tunnel. Mann famous for using ‘the city’ to convey all kinds of meaning. Like the coyotes under the neon streetlights in Collateral.
–Doug
Well in seventies, the best movies came from Quebec and Australia
Both Canada and Australia subsidizing heavily. Way better movies than Hollywood.
But anyway, financial guys well diversified in art knowledge… It is just on this blog?

#83 Nonplused on 05.02.20 at 9:00 pm

“So, the average yield for all of the above is a whopping 0.47%. You earn basically nothing and then have the additional difficulty of correctly timing your way back into the market. Like almost all retail investors (and most professional money managers for that matter), your timing won’t be successful and markets will probably rally by 20% or more before you feel ‘comfortable’ getting reinvested.”

In a fiat money system, prices of anything worth anything always always always go up, in general. That’s because they always print more money. Not a lot more, they try and keep inflation at or below 2%, but it is always there. That is better than 0.47% even if your money doesn’t actually buy any more stuff.

Well, the just printed a $hit-load of money. (A government borrowing from its own central bank at 0% is money printing.) That money is going to go somewhere, eventually. So stay tight with strong companies that have market power. They will actually benefit as their debts are inflated to a lower level compare to income. Names like Coca-Cola, Procter & Gamble, McDonald’s, REITs, and many others will come out repriced at higher levels as the dollar absorbs the impact of all this borrowing.

So follow Doug’s advice and stay balanced and diversified. The rivers will still flow and the sun still shine tomorrow. Things will still be worth something.

#84 short horses on 05.02.20 at 9:04 pm

“…even some of the hardest-hit US states, such as New York and New Jersey, lend evidence that the US will eventually contain the virus.”

The NY Times may just be trying to sell papers, but they’re publishing images of New Yorkers enjoying the warm weather in crowded parks:

https://www.nytimes.com/2020/05/02/us/coronavirus-updates.html

I think a sufficiently high enough number of citizens will prove unable to control themselves that we’ll be somewhere below the base case: the virus is going to keep coming in waves until a vaccine is widely produced — and this leaves aside the prospect of resistant mutations.

#85 no expert on 05.02.20 at 9:08 pm

#28 crowdedelevatorfartz on 05.02.20 at 1:17 pm
Interesting research stat out of France.
95% of the infected were non smokers…

In a country where 25% of the population smokes.

Is nicotine or the smoke the virus killer?

————————

I’m going to guess that if the stats are true it is either the tar (what kills germs kills people) or the fact that smokers have been “social distancing” for years because of the outcry over second-hand smoke. If the nicotine itself were an antiviral I am sure someone would have noticed by now. But I suppose it is possible.

#86 John on 05.02.20 at 9:17 pm

#77
Ditto

#87 Nonplused on 05.02.20 at 9:18 pm

#73 Smoking Man on 05.02.20 at 7:57 pm
Dogs, you all ever wonder why gas prices never go bellow zero, yet price at the pump never goes bellow 60..

Price fixing my dogs.

———————

Commodity prices cannot go below zero for long unless the particular commodity is a byproduct. Pump prices cannot go as low as commodity prices because of processing and transportation costs and taxes. The price fixing is in the taxes (like the new carbon tax, not dependent on commodity prices), so there is price fixing, but it is the government that is doing it.

#88 ImGonnaBeSick on 05.02.20 at 9:25 pm

#59 C19 on 05.02.20 at 5:41 pm
&
#84 short horses on 05.02.20 at 9:04 pm

——

Good Lord… If every single person in Canada got corona (37m), 35m would have mild to no symptoms (96%)… Why does everyone think they’re the special 4%?

Btw, no vaccines for any coronaviruses to date. So, we need a better plan than making everyone with healthy immune systems stay home. Otherwise, we’re all going to get knocked for a loop on anything that comes around… I’m absolutely amazed at the general lack of knowledge Joe Public has on microbiology and immunology.. or rather just basic personal hygiene.

#89 Steve French on 05.02.20 at 9:48 pm

Smoking Man:

Where you hanging your hat these days?

Casino Rama?

#90 Turkey day on 05.02.20 at 9:56 pm

The low level hidden menace that lurks below the calm…..volatility is low….daily life goes on…..and then… its Turkey day.

Colville is wonderful.

#91 Westcdn on 05.02.20 at 10:04 pm

In the movie “Sucker Punch” I liked the line where the Sensei Master says now defend yourself when she is attacked by giant samurai.

Stand my ground or attack. Always consequences. Being a politician is about re elected and avoiding the grenade. True, I don’t want to die early but I have honour.

I am willing to be injected with CV19 and studied to understand this bug. After all, I am going to have develop the antibodies one way or another. I do want a “he bought the farm provision”.

There are others who are being paid to face danger and wimp out.

#92 MF on 05.02.20 at 10:07 pm

#75 burnaby south gardener on 05.02.20 at 8:04 pm

Awesome articles. Thank you for that.

Reposted for everyone to see:

https://www.statnews.com/2020/05/01/three-potential-futures-for-covid-19/

https://www.washingtonpost.com/business/2020/05/02/theres-more-accurate-way-compare-coronavirus-deaths-flu/

MF

#93 Magnumnext on 05.02.20 at 10:14 pm

Surprised Garth gives you so much free time off to watch tv and movies. However, if you are going to use valuable minutes watching Miami Vice, watch the original TV show with Don Johnson. Might make you want to go out and buy some shades, a white linen suit, with various pastel suits and lose the socks when wearing loafers.

#94 mark on 05.02.20 at 10:47 pm

Nice work, Doug.

#95 NFN_NLN on 05.02.20 at 11:12 pm

#73 Smoking Man on 05.02.20 at 7:57 pm
Dogs, you all ever wonder why gas prices never go bellow zero, yet price at the pump never goes bellow 60..

Whoever sold you your last batch of “cigarettes” may have dusted them.

I believe you meant to say: “wonder why oil prices go below zero, yet gas prices at the pump never goes below 60..”

Futures contracts aren’t oil.
Oil isn’t gasoline, there is overhead in refining, etc.
Gas dropped below 60 in Alberta.

Plus, once you factor in that some of that is carbon tax and the time value of money, this may be the lowest priced gas in my lifetime.

#96 DON on 05.02.20 at 11:33 pm

https://www.theguardian.com/australia-news/2020/may/01/customers-angry-as-me-bank-slashes-amount-they-can-withdraw-from-home-loans

#97 J on 05.02.20 at 11:36 pm

#28 crowdedelevatorfartz on 05.02.20 at 1:17 pm
Interesting research stat out of France.
95% of the infected were non smokers…
————————————————

They are researching if nicotine patches can treat the virus. We’ll see what the eventual results are…

https://globalnews.ca/news/6862874/coronavirus-nicotine-reality-check/

#98 Boris the Spider on 05.03.20 at 1:40 am

Countries around the world are stockpiling oil to beat the band. Its a free for all in industrialized and developing countries who know they’ll need the energy when the Corona Panic is over and its business as usual.

https://www.bangkokpost.com/world/1911948/oil-hungry-asian-nations-pounce-on-low-prices-to-build-stockpiles

Only the ‘commerce- ignorant’ Luddittes like Trudeau , Greta and Butts think we’re going to collapse into a 17th century morass where the elite are again titled barons lording it over us peons. The smart money says otherwise.

China is stockpiling hundreds of millions of barrels in underground caverns. US is digging more holes in spite of capacity to drill. The sale on oil is wild and crazy.

Only clowns like our black face “Sock Boy” are spewing their ‘#killcanada nonsense.

The PM of Australia said it all “We’re not interested in your socks Justin”.

If only Canadians would rise to that level of intelligence.

#99 sky on 05.03.20 at 2:06 am

Titanic barely afloat, artificially buoyed by an ocean of fiat. Nonessential ballast immediately dumped overboard and clinging desperately to soggy banknotes. Elites onboard still partying hardy but the crystal stemware is vibrating, the chandeliers are swaying and the deck chairs are starting to slide across the floor.

#100 We All Count on 05.03.20 at 2:14 am

I have decided that I can add a letter to the alphabet Armageddon since everyone else seems to be able to.

LGBTQS+ (S is for “strait”)

https://www.youtube.com/watch?v=MbrIgaLHxnA

Good riffs in that song even if it isn’t for today.

#101 NFN_NLN on 05.03.20 at 2:15 am

The Oracle of Omaha has spoken people:

https://www.youtube.com/watch?v=6kS_N-GAWI8&t=12m33s

Taken from the Berkshire Hathaway shareholders meeting today.

#102 Sail Away on 05.03.20 at 3:13 am

Big news here in Canada…

https://www.google.com/amp/s/www.thestar.com/amp/news/gta/2020/05/02/after-reports-of-an-alligator-being-spotted-in-brampton-investigators-conclude-it-was-a-beaver.html

#103 Kris Zalloh on 05.03.20 at 6:11 am

Trudeau- Butt- nomics has driven Canada off a cliff.

https://www.bnnbloomberg.ca/april-auto-sales-plummet-into-uncharted-territory-with-75-drop-1.1430266

There’s no turning back. It’s not stalling. We’re in a free fall collapse. Canada is in recession falling fast into depression. This is Trudeau-Butts-nomics.

Look at Ontario after Butts and Wynne. The disaster is still unfolding. It’s so bad that Ford doesn’t want to bring it up. The energy rates are still going up for consumers because Butts designed teaser rates into the “green flop”.

Now the prices skyrocket for people who can’t find money for food. This happening across Canada. The coming winter will see seniors dead frozen in their homes being eaten by cats.

Dollar is crashing. GDP is crashing. Suicide is skyrocketing. Murder and hate is at record levels. Trudeau- Trudeau Trudeau. What a disaster.

#104 Bytor the Snow Dog on 05.03.20 at 7:37 am

Current gas taxes in Ontario:

Federal Excise Tax- 10 cents/litre
Provincial Fuel Tax- 14.7 cents/litre
Carbon Tax- 5.87 cents/litre

Total 30.57 cents/litre
All of which (along with the price of the actual gas) has 13% HST added to it.

#105 BrianT on 05.03.20 at 7:54 am

What is really important is that everybody listen to the authorities, stay in the basement and STAY SAFE. We closed all the gyms and nature parks to keep our little children safe-make sure you keep drinking as much booze as possible and don’t forget to pick up lots of junk food next time you line up at No Frills. Remember-this virus does not discriminate-so nothing you do to improve your health will help you.

#106 NoName on 05.03.20 at 8:00 am

#101 NFN_NLN on 05.03.20 at 2:15 am
The Oracle of Omaha has spoken people:

https://www.youtube.com/watch?v=6kS_N-GAWI8&t=12m33s

Taken from the Berkshire Hathaway shareholders meeting today.

Did you catch a part when he says 463m in not that much money?

LOL

#107 Wrk.dover on 05.03.20 at 8:05 am

I suppose when Buffet says he won’t hold a company that is going to chew up money in the future, that will include any company that pays dividends on no earnings.

I am liking the advent of real accounting.

Bottom line, if you want more money, either work or make your money work to make money.

No more sleight of hand book keeping to “make” money.

An entrepreneur will be able to compete yet again!

#108 Bytor the Snow Dog on 05.03.20 at 8:22 am

Correction to the above. Carbon tax is 6.66 cents/litre (ohhhh scary).

#109 LMAO on 05.03.20 at 9:12 am

looks like the david icke crowd has shown up here en masse.

#110 crowdedelevatorfartz on 05.03.20 at 9:15 am

@#103 Kris Zalloh
“The coming winter will see seniors dead frozen in their homes being eaten by cats.”

++++
And what a cheery Christmas 2020 that will be.
Lumps of coal for the fire will be a treat.
Over to you Felix.

#111 crowdedelevatorfartz on 05.03.20 at 9:29 am

When speaking with people on the street……
( from a safe social distance, of course)

It amazes me the amount of people that think the economy will be switched back on like a light switch when the “all clear” signal is given.
Optimists to my pessimist. :)
People who have suffered through this economic “job killer” are going to be very leery to spend money for anything but essentials until they have a bit of savings stashed away for the next “rainy day”.
And since the vast majority of the economy (and the tax revenue it provides a wasteful Liberal govt) depends on you and I spending money ( not “Big Business”).

What will the Liberal largess do if the recession is crawling around on its knees for possibly months or years…..?
Uncharted territory …even for the legions of Lettered Economists infesting every level of govt and all the tv channels.

It should keep Economists busy for the next 100 years winning Nobel Prizes for Economics( what The Economist describes as the “dismal science” ) trying to theorize and mathematically model a “proof” as to…… what went wrong and why……

#112 TurnerNation on 05.03.20 at 9:46 am

The item may be more of a ticking time b…
All this talk of phased re-opening but not one word about the closed Courts and rental tribunals? Why.

-Is the government enjoying absolute control?
-Will new new set of laws be invoked, say a UN model?
-Will the courts ever reopen or will police and military be tasked with keeping the peace? (I predict a 95% confession rate; the other 5%? Don’t ask.)
That could never happen here eh? Yep every country said that at some point. Quaint old beliefs people cling onto.

It appears, POG is over. Perhaps our forum host could hoist that big fabric upside down this year.

#113 akashic record on 05.03.20 at 10:15 am

# Oracle of Omaha Berkshire Hathaway Buffett

Good analysis here.
https://www.zerohedge.com/markets/brace-monday-massacre-buffett-liquidates-all-airline-holdings-hints-berkshire-remains

Let’s see Monday

#114 Phylis on 05.03.20 at 10:44 am

#113 akashic record on 05.03.20 at 10:15 am Weird, i listened to it. I certainly had to adjust to the slow measured pace. Spin happens on many axis. Buy future earnings with understood risks.

#115 Phylis on 05.03.20 at 10:47 am

Saying ‘axes’ seems odd as it would lead to an misinterpretation.

#116 twofatcats on 05.03.20 at 10:48 am

To pay for this scamdemic I am predicting a GST on the sale of your primary residence. They will pick a starting price say anything sold with a sales price of $800K and above. The reason for this is the simplicity: The sales price is a published fact. It can’t be gamed.

Applying a capital gains tax to the sale of a primary residence would be too difficult for most homeowners – people would have to calculate the amount of interest paid on the mortgage, renovations, property taxes etc over a 25 and 30-yr span.

#117 Fused on 05.03.20 at 11:00 am

#113
Another buying opportunity awaits, when these stocks are at their lowest it will be the best time to load up.
People will fly again and these stocks will recover it will just take time, buy and hold, buy leaps, run the wheel strategy with calls and puts, lots of ways to make income from this.

#118 BrianT on 05.03.20 at 11:02 am

Buffett is a genius and has done a great job for his shareholders but the reality is that nobody has played the Crony Capitalist game as well as Buffett-the guy was the biggest single beneficiary from the 2008 bailouts-over 20 billion for Warren himself-and that is just one of the deals. But yeah having Buffett so negative is interesting for sure.

#119 BrianT on 05.03.20 at 11:07 am

The latest calculation is that a resident of Toronto is 14.7 times more likely to die from this virus than a resident of Oakville-so if you are afraid of this virus forget about social distancing and walking the right direction in Walmart-move out of TO and decrease your statistical chance of dying enormously.

#120 not 1st on 05.03.20 at 11:28 am

Looking at some interviews with Buffett just back in Feb he was his usual breezy self and pontificating on the virus.

Now 2 months later and $50B down and some of his businesses about to go out of business, he looks like he has aged 10 yrs.

Not a good sign at all. And that’s in the US. Whats in store for Canada has to be biblical.

#121 not 1st on 05.03.20 at 11:37 am

Justin missed one thing in his Marxist instruction, his form of socialism demands an army to back it up. I guess his army will be CRA employees which outnumber our own military now.

#122 Doug Rowat on 05.03.20 at 11:49 am

#72 Trader Joe on 05.02.20 at 6:58 pm

Not sure of the relevance of posting GIC rates. Nobody buys them. The green bank has a big 5 Canadian Banks- linked 4 year note at 8%.

Market-linked GICs and structured notes are usually garbage. Many have ‘volatility clauses’, which means you could end up with nothing but your principal after a set number of years if the index moves outside of set ranges. Many also entice you with the cumulative return–only the fine print reveals that this figure isn’t an annualized number. Further, the stated benchmark indices are often not ‘total return’ therefore you don’t get the dividend. The S&P/TSX Bank Index, for example, is actually negative over the past five years if you strip out the dividends. Read the fine print.

–Doug

#123 Not So New Guy on 05.03.20 at 12:12 pm

I once met a person who complained about paying 60 cents for gas.

Then he was told they’re paying $1 for it in BC

#124 Yuus bin Haad on 05.03.20 at 12:13 pm

Best Case. Everyone comes to his or her senses and stops watching the News.

#125 Not So New Guy on 05.03.20 at 12:20 pm

The GTPMI™ has calmed right down. Well below 200 when 300+ indicates a crisis.

Fear has left the building and gone to the beach. Everyone is waiting to go to the mall and start their new businesses from scratch. Justin’s army, meanwhile, is stoned and pondering bringing back the mullet

#126 Sail Away on 05.03.20 at 12:27 pm

#123 Not So New Guy on 05.03.20 at 12:12 pm

I once met a person who complained about paying 60 cents for gas.

Then he was told they’re paying $1 for it in BC

—————

I used to complain about sore feet until I met a man with no legs.

#127 Wrk.dover on 05.03.20 at 12:40 pm

#116 twofatcats on 05.03.20 at 10:48 am
To pay for this scamdemic I am predicting a GST on the sale of your primary residence.

Applying a capital gains tax to the sale of a primary residence would be too difficult for most homeowners – people would have to calculate the amount of interest paid on the mortgage, renovations, property taxes etc over a 25 and 30-yr span.

———————————–

I have hand written in cursive receipts I have held since 1981 to apply against this eventuality. Who they have there that can read them.

#128 not 1st on 05.03.20 at 12:44 pm

US intelligence now saying probably virus came out of Chinese lab.

Color me shocked. Bye bye china.

https://www.bloomberg.com/news/articles/2020-05-03/pompeo-says-enormous-evidence-links-virus-to-wuhan-laboratory?utm_campaign=socialflow-organic&utm_content=business&cmpid=socialflow-twitter-business&utm_medium=social&utm_source=twitter

#129 Figure it Out on 05.03.20 at 12:54 pm

“Best Case. Everyone comes to his or her senses and stops watching the News.”

I find it strange how many people show up here and complain like “media outlet X doesn’t cover the news exactly the way I like it” or “I can’t stand watching/hearing Y” or “I read about Z in the media and the media isn’t covering it!”

To me, Critical Media Studies is at the intersection of SJW boo-hooism and Things That You Can’t Make Money Doing. But lots of people show up here, almost bragging about how much psychic pain they’re inflicting on themselves, and reporting to the rest of us, like those old radio survey diaries that used to come in the mail with a 50 cent piece.

When I was growing up, our town had one TV channel and two radio stations. Late at night, I could get commercial AM out of Chicago. That sucked. Today I can get exactly the news and commentary I’m looking for, from all around the world and all across the political spectrum. Why watch news you hate and complain about it?

#130 Wrk.dover on 05.03.20 at 1:08 pm

It would be nice if someone here could tell me if RBF2010 RBC investment savings account series A, worth 40 grand is bulletproof when all else fails. It appears to be in HCG.

Asking for myself actually.

#131 Wrk.dover on 05.03.20 at 1:13 pm

Home trust actually. Year is up tomorrow, was 2.48%

#132 BrianT on 05.03.20 at 1:15 pm

#116Two-Yeah-federal transfer tax-they could ease it in at a real low rate-say 1% and keep increasing it-it would work politically because nobody really complains much about the transfer taxes already in place-it would bring in a lot of money and like you said easy as can be to implement with no real way to avoid it.

#133 Lost...but not leased on 05.03.20 at 1:18 pm

DELETED

#134 BrianT on 05.03.20 at 1:20 pm

#129Figure-it is because the sheep get a vote-the internet gives the opportunity for the average person to point out the lies of the MSM-look at it as public service-charity work-you are getting an free education-quit complaining.

#135 Lost...but not leased on 05.03.20 at 1:24 pm

#84 short horses on 05.02.20 at 9:04 pm

“…even some of the hardest-hit US states, such as New York and New Jersey, lend evidence that the US will eventually contain the virus.”
=======

On the basis that , regardless of race and nationality, we are all more or less the same biologically…

The Devil is ALWAYS in the details:

The NYC “pandemic” deaths are criminal…I’ll post a link later.

#136 Lost...but not leased on 05.03.20 at 1:28 pm

#133 Lost…but not leased on 05.03.20 at 1:18 pm
DELETED

============

Curious why a link to a press release from PM office was deleted ???

Because of your childish rendition of the PM’s name. – Garth

#137 twofatcats on 05.03.20 at 1:36 pm

#132 BrianT

They will give the new tax a cute name like ‘Temporary Emergency Relief Tax’ to take some of the stink off it.

We all know it won’t be temporary.

#138 MF on 05.03.20 at 1:50 pm

34 BrianT on 05.03.20 at 1

That coin has two sides. All the nuts get a voice now too.

MF

#139 Ronaldo on 05.03.20 at 2:18 pm

#120 not 1st on 05.03.20 at 11:28 am
Looking at some interviews with Buffett just back in Feb he was his usual breezy self and pontificating on the virus.

Now 2 months later and $50B down and some of his businesses about to go out of business, he looks like he has aged 10 yrs.

Not a good sign at all. And that’s in the US. Whats in store for Canada has to be biblical.
—————————————————————–
Actually for a guy that’s turning 90 in 4 months, he looks and sounds pretty darn good. I suspect the airline stocks will take a nice dive tomorrow after these latest headlines. Computers will go nuts.

#140 May the 4th Be With You on 05.03.20 at 2:18 pm

There will be an uprising and revolution against all of this, starting on Monday, May 4th.

Be there.

(Or has it already started this weekend? People are crowding onto trails and pathways and beaches across Canada. Retail food stores are saying FU to regulations, still having “security” staff at entrances but allowing dozens more into their stores, which are now looking like regular weekend shopping crowds inside. The results? Time will tell. But a total revolt has begun)

#141 SoggyShorts on 05.03.20 at 3:10 pm

–Doug

#49 kommykim on 05.02.20 at 4:22 pm
RE: #36 ImGonnaBeSick on 05.02.20 at 1:49 pm
#2 Stone on 05.02.20 at 10:05 am
The main question though is, how has the balanced and diversified portfolio done YTD so far?

——-

If you take XBAL or VBAL as a proxy, YTD -5.35%. Seems a balanced portfolio has held up exceptionally well. What were you trying to infer exactly? This is pretty easily researched.

=======================================

And if you add in the dividends that those funds throw off, they are only down about -3.7% YTD. Not bad actually

*************
Return for 2020 Not Inc dividends // since Jan 04 2019 no divs
-10.59% SOGG // +7% (plus 2.7% dividends)
-11.20% VEQT // na ( flat + dividends since inception Feb 98 2019)
-8.62% VGRO // +5.7%
-5.63% VBAL // + 6.3%

All equity with very little maple is doing ok too when you combine a fantastic year(2019) with a craptastic one. So far.
Lost too much sleep before the rally though. Wish I’d just been 80/20 voo/IEF the whole time.

#142 Sail Away on 05.03.20 at 3:17 pm

#120 not 1st on 05.03.20 at 11:28 am

Looking at some interviews with Buffett just back in Feb he was his usual breezy self and pontificating on the virus.

Now 2 months later and $50B down and some of his businesses about to go out of business, he looks like he has aged 10 yrs.

————-

So he looks 100?

#143 under the radar on 05.03.20 at 3:20 pm

#10 Not really accurate.

Accounting rules require the company to report unrealized losses in equities, so this loss is a reflection of the coronavirus stock market rout. Berkshire’s operating earnings actually rose to $5.9 billion from $5.6 billion in the same period a year ago.

#144 crowdedelevatorfartz on 05.03.20 at 3:48 pm

@#128 not 1st
“US intelligence now saying probably virus came out of Chinese lab.”

++++
US “intelligence”….

What else can they say?
That it came from a Lab in Quantico?

They told us last Monday “Rocket Man” was in a coma, in a vegetative state, near death….. by Friday he’s cutting ribbons at another factory.

It’s an election year.
Trump would say he’s Jesus to get the born again vote.

#145 Alberta Nomad on 05.04.20 at 5:47 pm

The original definition of decimate is to destroy 10% of something (execution of 1 in 10 soldiers in the Roman army, 1 in 10 villagers etc.). Current doomsday projections deserve words that imply more than 10% destruction, like massacre…..

This was first brought to my attention in the science fiction novel Illium, by Dan Simmons — a mind warping read.

#146 TLDR on 05.05.20 at 9:57 am

TLDR – Grenades

[by] Doug Rowat @greaterfool.com

[PROPHECY] financial forecasters seeing 3 COVID-19 outcome scenarios in their crystal balls – [#1] Worst Case and [#2] Best Case are the most likely to not happen, leaving us with [#3] the Base case, which is already ‘exhibiting evidence’ that ‘it is happening’,

[LESSON] ‘Worst Casers’ who take their Investment Portfolio(IP) $ and flee to the safety of the no risk / no return zone of gov bonds, risk [#1] no return (ex basket < 0.5% on avg) and [#2] having to make the tough decision of timing when to jump back onto the market merry go round

[PROOF] Evidence presented illustrating Health Care sector is outperforming S&P over 365d, confirming past prophecy that one should have it as part of a prophetable B+D IP