We Anticipate a Period of Severe Market Turbulence that Will Create New Opportunities for Patient Investors

It’s the combination of disease attributes and systemic fragility that makes the situation so dangerous, yet difficult for most people to comprehend.

By Karen Parker Feld, The Irreverent Economist, Paladin Advisors:

We have been closely monitoring developments related to the coronavirus since late January, and concluded several weeks ago that it poses a potentially significant risk to human life, global supply chains and economies around the world.  Paladin has long considered the possibility that some geopolitical event of unknown origin might disrupt asset markets that are broadly overvalued and at risk of an abrupt change in sentiment.

Investors are having a difficult time processing the onslaught of new information about this virus; we do not think it’s fully priced into markets. That’s because most people (or investment algorithms, for that matter) do not have an intuitive understanding of exponential growth and its consequences; they rely instead on “base rate analysis” as described in a recent piece by Tyler Cowen.

Even those who understand the scope and impact of the disease per se (transmission rates, fatality rates, etc.) may not fully appreciate the intersecting and compounding challenges posed by (a) faltering global supply chains which are reducing the availability of medicines and PPE for health workers; (b) an inadequate public health infrastructure and large un/underinsured US population; and (c) a dysfunctional political process that slows effective decision making and puts narrative management ahead of disease control. Liz Specht has done a good job laying out the likely sequence of events that will — in the  absence of swift and aggressive control measures — strain our health care systems over the next few months.

We believe this virus will have far-reaching consequences for our economy and society. It’s the combination of disease attributes and systemic fragility–described in our July quarterly letter, Valor Added — that makes the situation so dangerous, yet difficult for most people to comprehend.

Meanwhile, our leaders have been spreading falsehoods about current testing, which is encouraging the spread of this disease. The CDC actually instructed hospitals not to test until patients demonstrate severe illness—at which point they’ve probably infected many other people.  The guidance has recently changed, but it won’t help much, given the shortage of test kits.

The number of health care workers exposed to the virus is rising rapidly, with implications for the care not just of coronavirus patients, but all others who need urgent medical attention.  In Korea, where the authorities have been aggressive in identifying and managing the disease, there is nevertheless a long waiting list for hospitals.  The same is true in Italy, which went from zero cases to hospitals at full capacity in the span of one week. We may already be approaching that scenario in major urban centers.  Many are comparing this to the flu, but that’s wrong:  the coronavirus is 10 times more deadly than flu, even with good health care.

Just think about it:  does it stand to reason that the 2nd largest economy in the world (China) just collapsed because the government decided to shut everything down due to a bad case of the flu?  Reports suggest that perhaps half of Iranian leaders have been infected, and many have already died. Investors have not begun to reckon with the geopolitical consequences of these developments.

We anticipate a period of severe market turbulence that will create new opportunities for patient investors, and our clients will be in a position to take advantage of those.  Our greater concern now lies with the many individuals, families, teams and societies who have been hurt by this terrible disease, in China and elsewhere.  We hope for swift discovery and testing of an effective vaccine. In the meantime, whatever ‘social distancing’ might be required to protect our societies, let us pull together in other ways, direct and indirect, to support one another.

Gabriel Garcia Marquez wrote eloquently of the transformative power of loss and longing in Love in the Time of Cholera.  The coronavirus will require a different kind of love–involving extra precautions against infection, yes, but also heightened compassion and support for our fellow citizens.  That is how we will come through this together, building a stronger community that is immunized against dishonesty and distrust. By Karen Parker Feld, Paladin Advisors

“False optimism can easily lead you astray and prevent you from making contingency plans or taking bold action.” Read... What Sequoia Capital’s “Black Swan” Memo Means for Unicorn-Hotspots Like San Francisco, Silicon Valley & Others

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  164 comments for “We Anticipate a Period of Severe Market Turbulence that Will Create New Opportunities for Patient Investors

  1. Bet says:

    This is just the first leg down. My condolences to the 401k being turned into 201k

    • mike says:

      I love your phrasing: “severe market turbulence.” It is as if the captain of the Titanic announced to his passengers, as his ship was sinking: “congratulations, you will soon have a once in a lifetime opportunity to experience the wonders of the ocean depths after first enjoying a refreshing, cooling, salt-water swim.”

      Given our current government, humor is essential. I have heard some great jokes but I am scared of repeating them about all of the US government’s requirements for Americans to get coronavirus testing since they clearly have not prepared even a small fraction of the needed test kits.

  2. weinerdog43 says:

    Thank you Karen. Thoughtful and timely.

    It makes one wonder about ‘just in time’ deliveries and the general fragility of the supply chain.

    • sierra7 says:

      Karen Parker:
      In the famous words of Gordon Gecko in the movie, “Wall Street”:
      “Tell me something I don’t (already) know! It’s my birthday!”

      • Winston says:

        I prefer this one from the non-fictional The Big Short. It’s more relevant:

        Mark Baum: “It’s time to call bull***t.”
        Vinnie Daniel: “Bull***t on what?”
        Mark Baum: “Every f***ing thing.”

        • mike says:

          Amen. Who would have thought that the US government would be like the slow kid in class, who cannot figure out what he is supposed to do, even after watching the smarter kid do it? Despite having to have learned about the Italian (and now NY state) government’s actions from the competent, US intelligence services, this US administration still does not get it.

          Apparently, the few, competent members of this administration, who were handling US-China relations, are not handling this epidemic. The persons in charge here are just trying to lie until it goes away, while competent governments are establishing quarantines and now massive cordon sanitaires.

    • Bart says:

      A couple of guys at Johns Hopkins just wrote about the supply chain ramifications with this crisis and going forward. Given where the world is trending, JIT inventory systems likely much more risky. If manufacturing is automated, why not put the machinery in the US. Less shipping costs and the supply source more stable. BTW, should this COVID thing exacerbate in the US, there won’t be enough hospital beds and those N95 masks come from China and with our current US inventory, they will only last a few days.

  3. Phaedrus says:

    The linked quarterly letter is a good read. As is the twitter thread on hospital bed availability. One thing to note, hospital beds != ICU beds. ICU beds are much scarcer, perhaps only 100,000 in the USA? I’ve heard that number bandied about. If it turns out that 10% of severe cases need a respirator to stabilize then COVID19 mortality will jump 10%+ once we run out of ICU resources, which at the exponential growth rate, will be in one to two months.

    • Zantetsu says:

      I clicked on the link and nothing loaded. Not sure what is up. It’s the “Valor Added” link right?

      • Wolf Richter says:

        Zantetsu,

        It works, but it’s a PDF and it might be blocked on your system. You might try to copy and paste the link into a different browser.

    • rhodium says:

      I’ve worked on building some hospitals. A hospital that looks massive has far fewer beds than you’d think. Most space is generally used for treating and testing, aka outpatient type stuff. The healthcare industry wants to maximize the $/sq. ft. so they don’t keep a whole lot of beds that wouldn’t normally be used (maybe enough capacity to handle a bad flu season). Treating a pandemic is not profitable, so it was never factored into their capacity. The next best alternative is of course cots lining the hallways and I think that’s exactly what’s going to happen. Hopefully cots aren’t made in China.

      • Cas127 says:

        Depending on exactly what supportive care is actually being provided (and there are indications that even for a significant portion of hospitalized patients, the care is not all that cutting edge high tech) then a good question to ask is whether or not nearby multi unit facilities can be converted to medical use. If the primary use of hospital real estate is simply to segregate the infected, but only moderately ill…that is not the highest and best use of scarce medical sq footage.

        Other nearby RE can fulfill that purpose and shuttle patients as actually rqd.

        This seems a better solution than hallway cots.

      • Bart says:

        Cots in the hallways for a contagious virus. You need a CCU wing with filtered air in and out. Hallways would spread the virus to every person in the building. PS – you put the tyvek suit on once. Take it off and its contaminated and it needs to be disposed of as hazmat. Guess where the tyvek suits come from.

  4. WishingWell says:

    I was buying a bit (still am) but only playing with like 1% of my cash. I have a sizable 7 figure sum in cash that I need to deploy, so I’m going to start drawing up a game plan for this.

    Wishing everyone well, this does seem like the big one with alarming indicators. Hopefully, virus will blow over but the economic trigger is not going to be great.

    What happens when earnings actually properly price in the virus? TSK TSK

    • John Taylor says:

      It’s a tough one. I’m looking for asset dumps, like we had today, and picking up anything with a good dividend yield that looks safe. There’s a lot of money that needs to be deployed, and interest rate repression has been increasing, so I expect these things to bounce back fairly quickly once the selling subsides in the short-term.
      Perhaps later on I can shift to more aggressive holdings, but that will be after peak coronavirus – when economies and borders are opening back up. For a while yet we’ll hear more news about borders shutting, so we’re still playing defense.

    • Trinacria says:

      I suggest contacting SoCalJim…..

      • sc7 says:

        I heard he was raising his tenants’ rent another 20%, because he had 8 cash offers to buy the house outright, and people lining up outside his house to fill out rental applications.

  5. Danno says:

    “We anticipate” ? Really Sherlock…Anticipate?

    • Wolf Richter says:

      So maybe this is just the beginning and not the end, no?

      • Harrold says:

        Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.

        -Winston Churchill

        • Brant Lee says:

          This is the end
          Beautiful friend
          This is the end
          My only friend, the end

          -Jim Morrison

          LOL. I beat someone to the punch with that quote!!
          Heck guys, fill up your new Wolf beer mug, we’ll slide through.

        • DawnsEarlyLight says:

          When I buy a new book, I always read the last page first, that way in case I die before I finish, I know how it ends.

          N. Ephron

      • MCH says:

        Well, let’s say it’s not the end of the beginning, that’s for sure. If we just take a look at a chart of the S&P500; the high was 3380; 50% drop is 1690, we’re hanging around 2750 today. We barely dropped 18%, and all that did was erase the gains form 2019, or puts us around May of last year.

        At best, this is the end of the beginning, but somehow I doubt if we’re that lucky. With the velocity of uncertainty going around, we need to drop another 500 points to get us down to 2017 levels. I think at that time, Wolf already started writing about the good times.

        Wondering what is the next shoe to drop.

      • Rock Me Daddy says:

        SARS-CoV2 is not the “cause” of the market drops, it is the “trigger”

        why would jpm and lincoln national both drop 2X the rate of the market?

        the virus is not going to cause property damage like a flood or hurricane is it?

        so then, why would insurers and top money center banks drop twice the market rate?

        derivatives.

        fukushima’s destruction wasnt caused by the tsunami, it was caused by the sendai earthquake that triggered the tsunami.

        similarly, covid-19 is not the the cause of economic destruction, it is the trigger which exposes the derivative bomb we’re sitting on.

        that is what the 10 year is flashing about; the derivatives, not the virus.

  6. VintageVNvet says:

    Simple enough, but lacking essential details that i did not know now to copy and paste here.
    Perhaps a good start, but not as it is right now, this is more like an initial ”response to RFP. sent from the first analyst to look at it to the team”
    So far/

    • Karen says:

      It may sound that way–but that’s not how we’re seeing it. People are at varying stages of understanding the scope of this disease; 90% will probably treat the virus and the challenges it poses as a one off–that it’s back to business as usual, once the worst has passed. It will not be business as usual. Policy frameworks will change, global trade arrangements will change, leaders will change. Our perception of time and value will change.

      This is not a message of patience from Wall St; there is little credibility to be found there. Sometimes the most valuable investment advice is to step back, wait and watch the larger trends unfold. Cash is useful, certainly. Bonds too–for a little while longer. We think it’s time to look further afield for real assets that deliver real value as policymakers lose their footing.

      • Karen says:

        To be concrete: our net equity exposure is < 20% We've been short USD (vs JPY and EUR), long gold (tactically) and long oil (starting today and adding rapidly). A cash/equivalents buffer of 20+% is a good idea. Real assets (including TIPS, but not real estate, yet) should over time approximate 30% of portfolios–perhaps more as the Fed gets going.

      • Petunia says:

        Any real pandemic in America will spell the end of the private health insurance industry. It will be a showcase for the real lack of access, high death tolls, bankruptcies, and the real rationing that exist right now in the system. It will be the gateway to a national healthcare system. If you think this is a pandemic, the shorts are all obvious.

        • Eyes Open says:

          Think Warren Buffet, he created the modern insurance racket.

          Collect Premium, Deny Claims

          This made him a billionaire

          Yes, I agree. Long ago some wise man said there will come a time in USA, when people die not of old age, but simply because they can’t afford treatment. We are there, and a pandemic like has came to Italy or China will show the World that the USA is callous about death of the poor, old, or weak.

          I’m not sure any shorts are obvious, the rest of the world simply doesn’t make ‘profit’ out of the misery of its citizens, in almost all the world even the poor can afford to take their children to the hospital.

  7. jerome says:

    What is the definition of patient? This is just getting started. Already thinking ahead to when it’s time to buy? Give me a break.

    • Keepcalmeverythingisfine says:

      I am certainly thinking ahead of what and when to buy. Why would I not do that as long as I am healthy? I certainly will have patience as things unfold. You don’t have to catch the exact bottom of the S&P 500 index. Just being within 10% of the bottom will serve you well in 5 years.

  8. Telly says:

    ‘Will Create New Opportunities for Patient Investors’

    Now that’s funny!

    Rates are already near zero, debt is off the charts at all levels, stimulus has been pouring forth for 12 years, and that has created the forest of dry wood. And now we have the spark that’s igniting it.

    Somehow, I am not seeing ‘opportunity’ here.

    • Wolf Richter says:

      There will be opportunities. That’s what I’m waiting for, with liquidity coming out of my ears. But you may have to be “patient.” No one knows whether this “patient” is one day or three weeks or years. Buy low, sell high. Stock prices are still very high, though they’re lower than they were a few weeks ago. To be able to take advantage of opportunities when they arise, you keep your liquidity ready, and you wait.

      • VintageVNvet says:

        As a ”non player” at least so far, I am seeing a ton of buying opportunities coming up, wanted to say so soon, but maybe not for those ”faint of heart”…
        While not any kind of fan of buying when there is mayhem, I am a total fan of buying soon as makes clear sense immediately thereafter.
        Absolutely NOT going to dig out of the equity in RE, if for no other reason than the very good tax and other benefits, but might dig something out of the jars in the back yard to buy soon.

      • DR DOOM says:

        If the bottom is based on basic fundamentals, there will be a blood bath to come.

      • The Colorado Kid says:

        You would’ve had to wait quite awhile on the Nikkei 225 (like 31 years and counting). This is going to be like that and a life changing event for investors.
        I think we are short term (maybe a year) going into a deflationary depression that the FED has no answers for, except ultimately to print and put us into a inflationary depression.
        This is the end game and will lead to a complete monetary reset and the elimination of cash in the first world. We will end up with an IMF Global Cryptocurrency SDR based on a basket of leading currencies akin to something like the Libra I suspect. This unfortunate event will give these filthy swine all the excuses they need.

        • Wolf Richter says:

          The Colorado Kid,

          I’m not talking about “buy and hold forever” — I should have made that clear. I’m talking about taking advantage of a big move, in other words, a trade.

          The Nikkei had many huge moves, up and down, over those 30+ years. Some of them lasted quite a while. I remember buying some Japanese tech stock fund back in the day (1999?), and it surged, and the yen surged after I’d bought, and when I cashed out a few months later and converted to USD, it was a massive win.

          If I had tried that a few months later, I would have gotten crushed. Timing was luck. But not holding this stuff forever was forethought.

        • Truckguy says:

          2007 didn’t result in a Breton Woods-style global reset, so I’m not yet ready to assume it’s inevitable now. I can certainly devise scary worst-case scenarios involving economic and societal collapse, but I’m not yet convinced that’s where we’re heading.

      • cb says:

        What will opportunity look like? P/E ratio? Dividend Yield? S&P price level? etc.

        • Wolf Richter says:

          cb,

          Sure, I could list a few things here. But one of the characteristics of a real opportunity is that you don’t know what is coming or when it is coming. You have to be prepared, and you have to look for it, and when you see it, you have to jump on it.

          If I see something and I jump on it in the future, I might publish it, as I did with the short sale, which was the first trade I ever published.

          But I’m hesitant to do that for many reasons, including that I don’t want to be accused of just talking my book. Also, when I publish a trade, I now face two risks, not just one: I risk losing money, and I risk being ridiculed for a really stupid trade when it goes awry :-]

    • Karen says:

      Since mid-January oil is down 50%. Industrial metals are down ~30%, emerging market equities are down ~20%, bank stocks (not that you’d want them yet) are down ~40%. This market reckoning is not over; that will probably take several more months. Most investors don’t have that much patience, much less cash. Both are at a premium now.

  9. VeryAmused says:

    Central banks have allowed MASSIVE financial tinder to be created all around the world. This tinder pile has been smoldering for years.

    This virus is the gasoline that sets the tinder pile ablaze.

    It is MUCH more complex yet as simple as this.

    This is it!

    I will see you all at S&P ~1000.

    • Cas127 says:

      SP 500 hit a low of 676 in 2009…but on a PE/ZIRP goosed basis, it was probably only overvalued by 40 to 50 pct pre-virus.

      ZIRP has been pumping a lot of air into valuations for years – when things get that bad, any number of things (real, imagined, mixed) can set off a collapse.

      But successive American governments only care about doomed paper fixes that drag them through the next election, not fundamental reforms that would expose them and threaten their power.

      • VeryAmused says:

        “…but on a PE/ZIRP goosed basis…”

        The problem is you believe this is some new found magical mechanism.

        In reality is all just a confidence game based on a massive debt mirage.

        When confidence is utterly crushed and the golden tower mirage turns out be a dumpster behind the low rent Chinese restaurant…well…

        I will see you all at S&P ~1000

        Or maybe I am just too optimistic…

        I will see you all at S&P ~600

      • NBay says:

        Actually 666 and change….(was surprised there was no religious commentary later, that I saw anyway). I was a CNBC fan then and they were all running around like chickens with their heads cut off….some great ranting, too.
        They didn’t know everything about the bail outs and QE at the time……..
        “Whatever it takes”, eh?

  10. Lisa_Hooker says:

    Are patient investors only the ones in hospital? Are self-quarantined folks patients? Or are the patient confined to people with lots of money and time on their hands? Inquiring minds want to know.

    I apologize to all, the word just shouted out for this, I could not help myself.

    • NBay says:

      No need for apology. Obviously everyone is having a great time with language in this article and in many comments…..unfortunately most are serious, and some even think they are saying something.

      • Karen says:

        Our portfolios have been conservatively invested since early last year. I didn’t have the ability (or cojones) to go short the way Wolf did in January, but we’ve been able to protect our clients. Frankly, I am much more concerned about people than markets right now. Anyone who says “it’s just the flu” or “the fatality rate is only 2%” or “it’s just old folks who will be hurt” don’t understand what’s at stake here.

        • Small Fry VC says:

          Hi Karen – a private banker tried to pitch me his services. I asked him to compare performance vs a few indices over recent years.

          ‘Oh well you can’t … blah blah blah blah’

          To which I responded, I prefer to invest in businesses that I control or as a small-time venture capitalist in entrepreneurs who know how to run profitable businesses.

          Maybe I should be investing in freaks like Adam Neuman who applies yoga mantras (and bare feet) to business and walks away with a billion + $$$.

          The problem is identifying the one out of 10,000 freaks who is going to make money losing money.

          Most recently I invested into a startup that peaked at USD200k profit per month and flogged it for 50x what I put into it. Small potatoes compared to Wework or Casper, but then it beats the monkey throwing darts approach.

          Not nearly as blunt as the Softbank approach of bidding up each round of investment till you hit the unicorn valuation then flogging the steaming dung heap on retail meatheads.

          That strategy has its limitations.

          How’d you match up against the market’s 30% bump last year?

        • Dan says:

          Indeed, people don’t realize what’s at stake. I support your call to have increased love and compassion for our fellow citizens. How many of us are willing to put ourselves in harm’s way to help someone with the virus and risk getting it ourselves? I can only hope that I will answer yes when the time comes.

        • Iamafan says:

          Did you beat the SPY?

        • Wolf Richter says:

          She’s beating the SPY big time so far this year :-]

        • Karen says:

          Wolf’s being very charitable. We lagged well behind the S&P 500 last year…so yes, we’re ahead this year. Our focus is on 5- to 10-year performance, and there the math helps us, clandestinely. Controlling drawdowns creates a foundation for strong performance when markets recover. It’s all about volatiltiy drag and geometric vs. arithmetric returns. We just hope clients don’t fire us in the interim.

  11. Ron says:

    “We anticipate a period of severe market turbulence that will create new opportunities for patient investors, and our clients will be in a position to take advantage of those.”

    Long investors have now morph into patient investors, another attempt to keep client money under her companies control. Wall Street types are wolves in sheep’s clothing, always presented as highly educated PHD’s along with special insights that will make the average person wealthy or retire to a world of travel and excitement. Interesting she saw this coming but not until late January but her firm had at least considered that someday “some geopolitical event of unknown origin might disrupt asset classes”.

    • Wolf Richter says:

      Ron,

      The author Karen has been a bear for quite a while and doubting last year where all this would be going. Read her quarterly newsletters. One of them is linked in the article. You can find the others on her site.

      • VintageVNvet says:

        I have no doubt about what you say, but her posts on your site, at least ‘appear’ to be sales pitches to many of us oldr types who respect your point of view..
        On the other hand, past those appearances, she does make her points with competence, even if some do not agree with her.

      • Ron says:

        She is a salesperson talking her craft if this can be helpful in providing some insight for her client base then her business should grow.

        I am 74 and made my money in Bay Area RE which provided generous ROI the results are in cash a practical financial option for retirement during good and bad economic times.

        • Wolf Richter says:

          Ron

          “I am 74 and made my money in Bay Area RE”

          YOU are the biggest salesperson of them ALL!!!

          But nothing wrong with being a salesperson. Nothing in happens in the economy until there is a sale.

        • cb says:

          Real estate profits have mostly been speculative profits powered by a corrupt money printing Federal Reserve system.

          but don’t tell real estate investors that ,,,,,,,,,,,,,,,,, they like to think that because they bought real estate at a time when it made sense (due to positive cash flow and return on investment), and at a time when it was easy to get into ,,,,,,,,,,,,,,,, and thereafter they became wealthy due to the luck of being positioned in front of the FED’s money flow and inflation ,,,,,,,,,,,,,,that they are now confirmed Geniuses

          in the mean time, producers in our society, particularly young workers, get to pay disproportionate rents to the Rentier class.

  12. Steve Graves says:

    You know the craziest part of all this? Someone’s still buying Tesla at the price it reached less than six weeks ago.

    We are a long ways from the bottom, folks.

    • Cas127 says:

      Tech (especially unicorn tech) has not really been hit as hard as other sectors yet…there are a lot of Goofy valuations still waiting in line to be shot.

    • DR DOOM says:

      Tesla and the rest of the QQQ ain’t even begun to puke up all that fed fiat it’s been stuffing down its gullet. It also stuffed savers time value of money down its snout for good measure.

  13. CLN says:

    Heck, I’m just glad to be reading this and NOT being the first commenter. When I saw it at zero comments for some time I began to wonder if I was the last reader left.

    Well, that’s a load off my mind.~

    • Wolf Richter says:

      CLN,

      Don’t worry. As of this moment, less than one hour after posting it, over 2,000 people have read it. Many more thousands will read it. The number of comments is not indicative of the number of readers, never is. Some of my most-read articles have less than the average number of comments.

      • Cas127 says:

        Wolf,

        Inquiring minds want to know…what are the median and average number of page views per post here?

        • Wolf Richter says:

          I don’t know that — and it’s hard to figure because all the old stuff still lives and gets views via search — and that’s a good part of my traffic. My data collection system is not that sophisticated. I know that the most successful articles got over 100,000 views. I consider something over 10,000 views as OK-ish. And over 30,000 views as very good.

        • Cas127 says:

          Wolf,

          Imagine the numbers if you posted bikini shots.

        • Wolf Richter says:

          Cas127,

          The ads I get show exactly that. “Swim suits for busty women” is my favorite. But I also get cocktail-dress ads that are nice. I used to get ads from a dating site “young women for mature men” or something like that, which had some distracting images, but that stopped. Maybe the site was taken down :-[

    • VintageVNvet says:

      Don’t worry, and please do your best to jump right in.

      This is the best moderated site I have known and participated in so far, and mainly because, after a few tests, Wolf moderates for the benefit of all rational and reasonable commenters.

      • Dan Romig says:

        Indeed.

      • Zantetsu says:

        Yes, I have had what I thought were reasonable posts deleted from articles, including posts for this very article itself. But, Wolf is curating the comments for the betterment of the site so I accept it.

  14. Wisoot says:

    So long as the turbulence referred to in this article blows this list of business practices into history for ever.

    https://www.nytimes.com/2020/02/21/business/wells-fargo-settlement.html

    Just 14 years of standard bank practices: lying to regulators, over charging customers, falsifying bank records, hiding activity from investors, creating fake accounts, widespread mistreatment of customers, and the list goes on…

    Too big to fail created this attitude and alot of cocaine. I’m off to swim in the Thames for a freebie.

    • sierra7 says:

      Wisoot:
      Yes, we have not paid for those sins of distrust that took us down in ’08.
      Until we cleanse the plate we will continue to have a corrupt financial system.
      “Trust” has been trashed.
      Until some “trust” has been re-established we will have a corrupt “market”.
      This market was just waiting for a “stumble” to plunge it into the abyss. The virus is the symptom not the disease.

      • Sydney Collin says:

        “ The virus is the symptom not the disease.”

        The disease has been one of gorging Mr. Market on processed foods til it’s gotten grossly obese, then having it snort lines, do shots of tequila and cavort with hookers all night long. Wash rinse repeat daily for 12 years.

        Then Mr. Virus offers Mr. Market a thin wafer and it sends him into cardiac arrest.

        Bad, Mr. Virus. Bad! You hurt Mr. Market!

  15. David Hall says:

    Over 80% of those who die of the flu are over the age of 65.

    SARS-2-CoV is more lethal than the flu.

    A coronavirus can survive longer on a cold surface than on a warm surface. Same thing with a flu virus.

    If you look at a coronavirus tracker map, you may notice the number of infections has been greater in the northern hemisphere than the southern hemisphere.

    The stock market sell off might make people reduce their spending. People were using the stock market like a savings account. Travel fantasies are being postponed indefinitely.

    • cas127 says:

      “Travel fantasies are being postponed indefinitely.”

      Don’t worry – I am sure some ad seller at CNN is right now explaining to editorial how Carnival Cruise lines is the vital link in our national defense infrastructure that saves us all from the Rooskies…

    • DawnsEarlyLight says:

      Head to where the virus has trouble surviving, It’s protective outer membrane hates dry and hot climates. Even better, throw in a good wind to help dry it out. Just make sure you and your sinuses don’t dry out!

    • Javert Chip says:

      Whew!

      Good to know even people not claiming medical knowledge know EXACTLY how this virus behaves.

    • Lance Manly says:

      So… Why are the people coming back from Nile cruises infected?

    • Lisa_Hooker says:

      Thank you D. Hall for “People were using the stock market like a savings account.” Too many have been expecting the equities markets to provide the same financial security as bonds and cash. There are great differences between saving and investing and speculating. This is the loudest wake-up call in many years.

  16. GotCollateral says:

    Meh, its a credit bubble… JPM isn’t at the discount window cause of coronas… it’s there because for years, them and it’s ilk have been suckling on FRBNY tits of mispriced risk, like a siren call, luring global “investors” in to the same damn shit with horrible covenants and collateral that might as well be worth the toilet paper I wipe my ass with.

  17. Dave Mac says:

    I keep getting the feeling this situation is like 1929, and the aftermath will be very similar, if not worse.

    Politicians and central bankers will only make things worse.

  18. Old Engineer says:

    Most objective, insightful, and comprehensive evaluation of the most likely course of events over the next months. Very well written. And with a very realistic prediction of how it is going to play out.
    Excellent article.

  19. Any general will tell you that public tolerance for casualties in time of war drives strategic thinking. A small number of deaths can influence a great deal of political upheaval. The debate over the seriousness of the issue comes down to choices between using massive public resources, and restrictions, with economic impact, to alleviate something with limited ability to inflict harm. The question then is, both sublimely and ironically, how many people have to die to reelect Donald Trump? Depending on who you ask.

    • Javert Chip says:

      Ambrose:

      My take on the politicians:

      1) As long as Trump is president, he’ll move heaven & earth to get that vaccine ou to the public.

      2) If Biden was President, he’d forget what the vaccine is supposed to be for.

      3) If Bernie was President, the pharmaceutical worker’s council would spend the next 2 years arguing over the income cutoff level, above which NOBODY gets the vaccine (obviously no billionaires will get it; only millionaire socialist leaders will qualify). Once this is decided, another year or so is required to negotiate higher union wages for workers on the vaccine project. Then and only then, work on the vaccine can start…should take an additional 3-5 years.

      Like Biden said the other day, half the country may have died…

      • No president would promote a new DNA vaccine without testing, for a disease which is akin to the common cold. If the deplorable/snowflake standoff was tense it will get worse. Deplorables who don’t believe in the virus will go to public places, not
        take precautions, not wash their hands, and they will transmit the disease. Then the Deps will get dragged out of their homes sneezing and coughing and they will scream the entire time that the Deep State is out to get them. A few Hasidic Jews refusing measles vaccinations is a microcosm of the problem.

  20. Auld Kodjer says:

    “… yet difficult for most people to comprehend”.

    Ouch.

    The overconfidence of mediocre white men appears to have jumped and spread like another virus.

    • Mark_2 says:

      @Auld Kodjer
      “…overconfidence of mediocre white men…”
      I can think of many men, white and otherwise, that are not in the business that the statement applies to.

      It’s more of a “I’m the accomplished professional” tone – if you want to read into it at all.

    • Zantetsu says:

      That’s a pretty racist comment dude.

    • Karen says:

      I don’t think it’s difficult for people who read this blog to understand, but most people don’t read this blog. Nor does it have anything to do with race or gender. This is about human nature. It’s sensible, 99.9% of the time, to extrapolate based on mental models draws from past experience. Such models are absolutely essential; they help us cope with an incredibly complex world. I think this is one of those rare model-breakers. Not because of the coronavirus per se; our system has become exceedingly fragile and prone to failure from any number of shocks.

      I’m no salesman. You haven’t heard of Paladin because we haven’t tried to become known. I’m just a huge fan of Wolf’s, like everyone else here.

      • Mark_2 says:

        @Karen Thanks for your article but i have to say in your above post I’m a little nervous you used “human nature” and the word “sensible” with only 6 or so character distance. :–)

        • Wolf Richter says:

          Mark_2,

          “I’m a little nervous you used “human nature” and the word “sensible” with only 6 or so character distance. :–)”

          Hahahahaha, gonna hafta steal that from you at the next occasion.

      • There Will Be Blood says:

        How’d you measure up against the 30% bump in the US market last year? On a nett basis please (as in subtract all fees)

        • Karen says:

          No question we lagged well behind. Our portfolios were up 10-15% on average, since we were conservatively positioned. We didn’t hear too many complaints; our clients hire us to be value investors. I think they would have worried if we had kept up. That said, it certainly was uncomfortable.

    • Dave says:

      Mr Kodjer,
      The definition of the word people is: human beings in general or considered collectively.

      Here is something from Psychology 101.

      Projection: interpreting someone else thoughts/actions/words based on your own shortcomings.

  21. Randy Oldman says:

    I still have many bags of rice and beans from AD 2000, so who’s the fool now?

    • cesqy says:

      An average recession lasts 18 months. This could be well be an above average downturn since it’s the Fed’s Longest Bubble and the rates are so low. I hope you have enough rice and beans and the firepower to protect.

    • Javert Chip says:

      Probably depends on how much dry rot they have. Just saying.

  22. Mark_2 says:

    So, this question is glancingly on-topic…

    Can a company like Alcola or US Steel have their stock become worthless? I read investopedia on the topic and couldn’t figure. If someone has a general answer or could point to where I could read up, I’d be much appreciated.

    • VintageVNvet says:

      Of course their stock, and bonds too, can become worth less than the ((used to be paper )) now website or something, on which those paper indications of worth appear… why would it be otherwise if they are willing to sell same to us peons, etc…
      Just think about it for a while,,, longer if still in doubt of the various mechanisms by which companies can divest of all real assets without telling us stockholders a word of it…

    • VeryAmused says:

      Anything can become worthless.

      Determining the value of something is a very complicated matter. It is not something you can easily “read up” on but something you study for years/decades.

      There is no easy answer.

    • Petunia says:

      If the price of a share drops down low enough, let’s say $1 or below, it will be delisted from most stock exchanges. Then it will be essentially worthless because you cannot easily trade it.

    • Mark_2 says:

      Thanks to all who replied: VintageVNvet , VeryAmused, Petunia that I saw. I thought there’d at least be assets if the business was no longer viable. I better at least get a used office chair!!!

    • Bobber says:

      Read about Chapter 11 bankruptcy. It happens to companies all the time and shareholders almost always lose everything. Stay away from highly indebted companies.

    • Wolf Richter says:

      Mark_2,

      “Can a company like Alcola or US Steel have their stock become worthless?”

      Yes. See Sears Holdings or Enron.

      In bankruptcy court, most often ownership is shifted from the former owners (shareholders) to the creditors, which become the new owners. These creditors either try to run the restructured company, or let the old management team run it for them, or find a new management team to run the company. They can also sell some of the new shares to new investors to bring in new money. If that is not a good outcome for creditors, they can decide to liquidate the company and sell the assets to get at least some of their money back.

      In these cases, shareholders get nothing. And their shares are just cancelled. They can still be traded over the counter but they don’t represent anything anymore.

      There are some Chapter 11 bankruptcies where shareholders retain a small portion of the company (and so their shares still have a minuscule value), and creditors get the rest.

      Other bankruptcies are filed to deal with legal liabilities (PG&E’s wildfire liabilities). These types of bankruptcies might not wipe out shareholders.

      • cb says:

        I don’t understand the distinction about a bankruptcy for legal liabilities. Credit liabilities are legal liabilities. All liabilities, when sufficient, and having legal standing can be used to push a company into bankruptcy and wipe out shareholder value, can they not?

        With PG&E are you talking about a situation where the court would protect shareholders from judgements?

        Another situation I never understood was the Obama/General Motors “restructuring.”

        • Wolf Richter says:

          The court provides an orderly forum with rules to negotiate and restructure the debts. That’s really all it does. All kinds of deals are made in court. Shareholders have little or now say in this.

          In a situation like PG&E, the regular creditors didn’t have a problem with the company, and the company wasn’t defaulting on anything. It simply chose to file for bankruptcy to have more leverage in settling the other claims and court cases relating to the wildfires. This has now largely turned into the battle of the hedge funds — those lined up on the equity side and the claimants, and those lined up on the creditor side. As always, ratepayers are going to pay the price.

      • Mark_2 says:

        Wolf, Bobber….thanks, better to know the risk. I maybe should’a asked sooner!

  23. Thomas Roberts says:

    Because, most people are asymptomatic. What will likely happen is all the healthcare workers will get the coronavirus and those able “the healthcare workers”, will have to work through it. Rather than trying to avoid infection, they will just have to accept it. Whatever your reason for going to the hospital, you’ll get coronavirus during your stay.

    • Javert Chip says:

      A fantastic demonstration of the failure of A Priori logic.

      • SwissBrit says:

        Many doctors and nurses are carriers of MRSA and other ‘superbugs’ on their skin, but are never affected or have any symptoms, and yet patients can be be at risk from catching infections fom their caregivers.
        It’s not too far a stretch to imagine that Thomas Roberts’ above scenario could play out.

        • Javert Chip says:

          SwissBrit

          “…It’s not too far a stretch to imagine that Thomas Roberts’ above scenario could play out…”

          At this point, when very little is actually known about the disease, almost any drooling fool’s ramblings “…could play out…”.

          Rather than scaring people away from medical care, people who don’t know anything should probably, you know, kind of just admit they don’t know anything.

    • cesqy says:

      Job one for the Fed is to protect the banks and bankers. In my planning, I’m making an assumption the NHS will protect the hospitals and doctors.

      • The Colorado Kid says:

        cesky, hey I hate the FED too, but ZIRP & NIRP don’t actually help the banks.
        They do, however, help certain denizens of Penn. Ave. who dabble in serial bankruptcies and wanton real estate fraud.

        • cas127 says:

          ZIRP has been going on for 17 yrs to one extent or another…and the G has been running deficits for 50.

          I’m sure that in the future DC will do its degenerate best to pin all the blame on the patsy du jour, but the inescapable truth is that it is DC’s culture and large political class that has really profited from the ruin of the currency and the nation.

  24. Mike R says:

    Doesn’t make sense at ALL to blame the coronavirus on the market meltdowns. Convenient, yes. Rational, no. The markets were WAY overdue to correct, and the Fed just kept propping and pumping with no end to any QE or form of it, in sight. They jacked this market to the sky, as it was stretched so far above its 200 dma, that any little thing could prick this bubble. Now its a multitude of excuses from virus to oil, and election year, or NK. Make one up thats convenient and lie about it to no end. There has been zero price discovery for years now. If the darn CB’s and the Fed would just let this play out, the market might be able to eventually re-discover what risk is. This means too they need to let rates normalize. rates going to zero on their own, is a result of market expecting the Fed to lower, and that expectation becomes an erroneous ‘demand.’ Its like a 2 year old tantrumming. The absolute best thing the Fed could do right now, would be to just sit tight. Say nothing, and do nothing. Let the markets find their own footing. The interference distorted these markets very badly. That includes the dollar, most other currencies, oil, and more. Derivatives based on interest rates are all out of whack too. the people promoting those, and the very few benefitting need to be taken out to the wood shed. Due to the constant manipulation, from here on out, we will see even more massive whip sawing than has just occurred. Rip your face off rallies will be worse than these downdrafts. Big and medium size Banks will likely go down with this. its a mess that the fed has created, and other central banks along with them. JCB and ECB and China are just as guilty.

    • Tom Pfotzer says:

      Nice summary, Mike.

      To Phaedrus, above: I remember a Phaedrus…in Zen and the Art of Motorcycle Maintenance. One of my fav books all time. Why? Know thyself, Man, look to the cause of things.

      Karen: great article, esp. the concept of some events being outside precedent, and being able to spot that intellectual circumstance (in others, and oneself). That’s one great takeway.

      Re: finding “buying opportunities”…I’m going to wait a while on the buying. I positioned for short a while back, when shorting was cheap (when “to the Moon, Alice! BTFD!!” was the mantra). I did it a while back, but I coulda done it just as well …. a few short weeks ago.

      :)

      I’ve been expecting all this stuff for years, but it is still remarkable how quickly this now moving.

      At the moment, the question I’m trying to solve is “what to transition into” as this unfolds. That is clear as mud right now.

      For ex: I’ve heard some smart people say “No V recovery, but rather nasty ol’ “L” with a long leg”. Karen, would you like to comment on the likelihood and implications of “L-shaped recovery”?

      And when I see the international oil industry doing conducting a massive race-to-the-bottom, all-out-warfare for declining market share…a true fight for national survival…that tells a riveting story. Russia…SArabia…those are not babes in the woods. They’ve seen and done it all. I am paying attention to this phenomenon.

      Is there a website that deals with the “what next, now that bubble economics is busted?” question? MMT and socialism-cubed isn’t cutting it for me.

      • Karen says:

        I don’t think there’s an alphabet letter available to describe what this (still to be hoped for) recovery might look like. If I had to guess, I’d say a right-tilted W. Feel like this could take months.

        We’re looking to real assets, but geez, be careful given the vol. We bought a little oil yesterday (terrifying) and may come back for some gold (easier). We’re taking some profit on our small short S&P 500 position (again, don’t have Wolf’s balls) and looking at EM (Brazilian equities are down only 40% so far!).

        One thing I will say (leaving aside the Sincheonji): I’ve been incredibly impressed with Korea for decades, and wouldn’t be surprised if they come out of this stronger (and sooner). They’re warriors. Shincheonji too–yikes.

        • Wisoot says:

          Karen wrote “Feel like this could take months.”

          Agreed – 3 supermoons of 2020 in succession.

          The first in – Earth – Virgo – March 9

          Next in – Air – Libra – April 8
          Closest to Earth so will have the biggest impact of all three.

          Last in – Water – Scorpio May 7
          Expect a sting in the tail w/c 11 May.

          A blue moon end of October might be a more settling time.

  25. Joe says:

    Thanks, Wolf.

    I’m on the east coast and I don’t the hysteria is at the same level as what seems to be occurring out west (understandable).

    As for the market, I extracted myself completely on February 24, 2020 and I am now just waiting to see the virus run its course both physically and economically.

    I believe the signals will be obvious.

  26. WES says:

    Eskimos Quinn here.

    I didn’t get a very good sleep last night, as some careless central bankers dropped a couple of gold bricks through the roof of my igloo!

    I suppose I should have been grateful for for the helicopter money drop, instead of worrying about the holes in my igloo’s roof, being cold, and maybe freezing to death!

    I did however see a couple of grinning polar bears starring down at me, through the holes in my igloo’s roof!

    Strangely each bear seemed to have the numbers 30 and 60 stamped on the bottoms of their front paws.

    At first … I couldn’t figure out what … the two numbers meant.

    Then slowly … it dawned on me … the bears were holding sheets of fine and course sandpaper in their paws!

    Then … it hit me. … like a snowball … right between the eyes!

    After the bears had caught me … they were going to give me a very vigorious body rub down!

    First, they were going to start with the course sandpaper … rubbing … until I couldn’t take it anymore and … cried stop!

    Then … they were going to rub me down using the fine sandpaper … until I couldn’t take it anymore and … cried stop again!

    That is why … the bears were grinning … so loudly!

    Then … I woke up!

    I was freezing cold due to the holes in my igloo’s roof!
    The walls of my igloo were bare!
    Still there were the bears!
    And there were no gold bricks lying on the igloo’s floor!

  27. bruce says:

    Last week Jim Cramer said it was time to buy……..anyhow, just curious how everyone here is play this? Puts? They seem rather expensive. Jan SPY 200’s are at 9 bucks!

    • Zantetsu says:

      Does anyone with any sense care what that guy says?

      Watching/reading his stuff is like reading supermarket tabloids. It’s just fluff, don’t waste your time, no matter how hard it tries to clickbait-title your interest.

      • Wolf Richter says:

        Zantetsu,

        I think you need to take a Cramer appreciation course. Cramer is funny, 100% entertainment. What he does is financial stand-up comedy. He’s hilarious, the camera angle, the whole thing. People watch him to have fun and forget about the real world for a few minutes, no?

        • Zantetsu says:

          I’d rather spend the time reading wolfstreet.

        • Wolf Richter says:

          Thanks! But I’m not nearly as funny as Cramer. That guy is a hoot. Just don’t take him seriously. Ever.

        • In the 90’s Cramer’s hedge fund under performed. A dart board was better. He was accused often of doing a pump and dump on Mr Softy, using Maria Bartiromo, who talked it up in the AM on CNBC, and his fund sold in the PM. TheStreet.com was the best website ever. He featured articles about his wife, called her the Trading Goddess. She knew more than he did.
          His big edge on the show is being able to call the CEOs. Then he cannot be too tough on them or they won’t take his calls?! He is anachronism, a stock picker in an indexed world. He knows his stuff. I have often thought of a history of stock market gurus and websites. When the stock market is finished maybe there will be time.

        • cb says:

          If you want to see a clown, go to the circus. Kramer types are dangerous when they are promoted as a know-all expert and those least able to afford it, the naive, might pay attention.

          We need less hucksterism, not more. Hucksters should be ridiculed off the public forum.

    • Nat says:

      If you want to use puts try making spreads it should offset most of the nasty high IV effects of the underlying options that is responsible for much of their elevated costs at the momeny.

      Wolf is just shorting the old fashion way, which while it certainly has risks also avoids the current price gouge on options.

      Also deep in the money puts, while inately expensive and limiting your gains, should be a better deal then usual price wise when compared to ATM or OTM puts.

      • Bet says:

        I always try to buy at least four to six months out with a 60 to 70 delta on puts. It’s essentially a synthetic short

    • Gregorio says:

      Remember during the last financial crisis when Crammer told people to get out of the market? I took that as my cue to start buying stocks again. Turned out great for me.

  28. Boomer says:

    We aren’t even close to the 2016 market levels when Trump won the election. Anyone who follows Wolf, David Stockman and others should have had a inkling this is coming. C19 the catalyst. Out of the Casino! Otherwise Rockefeller and Rothschild said something about making money when blood is running in the streets.

  29. Bernadette says:

    Thank you, Wolff, for sharing Karen’s article. I share her sentiment on healthcare workers exposed to patients with subtle or existing coronavirus. Yet, I have a ‘nagging’ sense that there is a ‘secretive’ collusion brewing among Health Insurance & worldwide health institutions such as WHO, Blue Shield, Aetna, Kaiser with regards to ‘who will pay for all of this mess’ then eventually pass down the cost’ to everybody with more fear-based Lie = Betrayal, circle of propaganda.

    I’ve been researching to understand the impact on global shipping and thought to share https://www.supplychaindive.com/news/coronavirus-renders-nearly-9-of-container-shipping-fleets-inactive/573200/

    • Ron says:

      WHO was working close with China very early and will tell you that China’s interaction with WHO during this outbreak was very unusual. As a result WHO had extensive knowledge of the Virus. WHO had test kits made and offered them to the U.S. in early January 2020 but the Trump Administration wanted to make their own. WHO recommend to the Trump Administration that they use The Who Test kits until their U.S. kits would be available in volume but were turned down.

    • Unamused says:

      who will pay for all of this mess

      The same people who always pay for it, directly and indirectly.

      The people who will profit from it will be the people who always profit from it.

      Money, like water, seeks its own level. Water flows down, money flows up. The only reason all money doesn’t flow to the top is because it is diverted before it gets there.

  30. Michael Engel says:

    1) SPX weekly entered Jan 2018(H) And Feb (L) trading range.
    2) It stopped on the gap between Jan 29 2018 (C) and Feb 5 2018 (O).
    3) SPX weekly bubble down / bubble up below and above a rising
    backbone : Jan 2018 (H) to Sep 2018(H) and a parallel line from Feb low.
    4) This morning SPX hit support and popup.
    5) If MBS & Putin signed a secret handkerchief pact to destabilize US
    six month before election, and eliminate shale, within few years, when
    WTI reach 150, ARAMCO will be worth $6T, x5 than AAPl and the 1980
    gas lines will comeback and US economy will be doomed.
    6) Covid-19 was exported from China, but Trump & Xi, both have a
    mutual interest to keep US shale alive and the balance of power, perhaps in stronger hands.
    7) In 2008 when WTI was @ 32 and USD was at historical nadir, China
    stimulated the economy and bought commodities at bottom prices
    with cheap dollars and low interest rates, to build RE, industries, R/R
    and their arm forces….
    8) Now we got an island, those two previous weekly candles, between two unusual large gaps that gave investors a hear attack…

  31. Michael Engel says:

    1) US shale keep a balance of power in the energy sector. It prevent price from rising too high.
    2) If US shale will be eliminated, Putin + MBS will rule the world.

    • Bobber says:

      Maybe Trump will put a tariff on oil imports, so nobody in the US sees a lower price. I’m sure that was his first thought.

    • Curious says:

      That’s a big “IF”. It’s a form or Russian Roulette, since Russia gets 40% of it’s revenue from oil, Saudi Arabia 87%, Iraq 65%, Iran?

      We could probably rebuild our shale industry easier than they could rebuild they entire economies. In the meantime, our economy could get a major bonus with low gas prices for a while.

      • cas127 says:

        Agreed.

        Rule the world…through oil prices 80 pct off peak…okay. Or rule the world…the way they did from 85 to 2004, when oil almost never was above $30…okay.

        And how does Russia or Saudi “destroy shale”…the oil and the technology remain exactly where they are…until prices go back to the $40 to $45 breakeven needed to make shale profitable.

        Of all the things for the US to worry about…dramatically lower oil prices is way down the list.

  32. Michael Engel says:

    1) We never had a dissected chart like that with x2 huge gaps.
    2) NYA weekly reveal the secret of the gaps :
    3) The first gap sent NYA into 2018 trading range : Jan(H) & Feb(L).
    4) The 2nd gap got it out, under the trading range.
    5) NYA might have a backup, next.
    6) If its a thud, watch out. There is a potential for a major sign of weakness.
    7) Otherwise, resumption of the trading range, or a
    sign of strength.

  33. Unamused says:

    We Anticipate a Period of Severe Market Turbulence that Will Create New Opportunities for Patient Investors

    Patient, as in ‘very young’.

    The above assertion is based on a number of assumptions which I believe are quite unjustified. For example, it assumes the global economic paradigm is sustainable, when it clearly is not.

    • Unamused says:

      Who’s tracking commercial loan defaults and bank failures here? There is reason to believe those are about to become a problem.

    • Karen says:

      I’m sorry I wasn’t clear. I agree the paradigm is over. But there will be a new paradigm with phenomenal opportunitites.

      We’ve been annoying our clients for 3 years now, telling them the current framework is unsustainable. They haven’t fired us yet, thank god. Maybe a lot of folks know it, but are afraid of what comes next. Can’t say I blame them.

    • cb says:

      Yes, it is a shallow, hazy assertion. Who doesn’t see a period of turbulence, and while that may create opportunities for traders, the opportunities for investors will come from a market decline and identified value opportunities. The service would be in projecting what the “patient” investor should be looking for to recognize opportunities.

      Ah, but that is rarely done. That could be dangerous. It’s much safer to focus on clever prose, generalities and platitudes.

      I do commend Karen for calling out her long position on oil. Gutsy and generous to share.

  34. Steve says:

    Investor -> Patient Investor -> Patient?

  35. Iamafan says:

    Tyler Cowen, mentioned in the article, is a big Chinese food nut in the Maryland, D.C area. I have followed his marginal revolution blog since before the GFC if I can remember. Anyway, I wonder if Tyler still dines in Chinese restaurants after he heard of the coronavirus scare? It’s not just Bill Gates who is scared.

  36. Freebird says:

    There is nothing about this that is hard or difficult to comprehend. We all saw the massive crash of 2008. We all know that the bankers and the bought off politicians prevented any real reform or change after this. We all know the only reason there was a “recovery” was the government and the Fed pumping trillions and trillions of dollars out to the banks and the rich. We all know all that happened to the rest of us is that we got trickled on.
    We all know that the system was broken. We all know that nothing was done to fix the system. Thus, it was perfectly clear that all that was needed was a Black Swan to fly overhead and that the whole corrupt house of cards would come tumbling down.
    There is nothing hard to understand about any of this. The only people who are confused are people who were silly enough to listen to bankers and politicians.

  37. timbers says:

    Reportedly South Korea was testing up to 10,000 people a day in drive throughs were you learn the results in about 10 minutes.

    The United States? It’s still struggling to get testing rolling.

    Of course, it’s not really fair to compare a First World nation like South Korea to a Third World nation with a Third World healthcare system like the U.S.

    • Mark_2 says:

      “testing up to 10,000 people a day in drive throughs”

      That’s brilliant.

      “The United States? It’s still struggling”

      well, various parties are likely jostling for position to profit or make some publicity splash; then it’s down to branding and promotional ads on the packaging. This all takes time.

  38. Karen says:

    Thanks to all for the feedback. In my client segment, it’s unusual (practically unheard of) to have reduced risk to the extent we did, and put on the kinds of hedges we did. Our clients are awesome, but not the kind that read Wolf Street! I understand and appreciate the perspective of those who say the investment part sounds like vague platitudes. That was not my intent–I’m just trying to communicate a broad perspective to a broad audience. Now that we have a few more readers, I’ll take it up a notch with our mostly-ignored blog :-)

    The part about getting real and caring for one another is dead serious. We need to get started on that ASAP. Here again, Wolf is a leader in our profession.

  39. Michael Gaff says:

    I think you are all little more than “chicken littles.”
    Every year for the last thirty years or so, hundreds of thousands of humans
    have died from the flu. Hundreds of thousands of dead people.

    Yet, with the advent of algorithms, exponential calculations of mortality, and pure bovine scatology from the minds of those like Greta, et. al., we are all going to die.

    What pure crap.

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