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From Barron’s, March 30, 2020 (Part 2)

 

 

Pg 5, Up and Down Wall Street: Change in the US economy in weeks from the longest expansion into abyss has been stunning. Tremendous monetary and fiscal stimulus may not be effective for the public health crisis created by coronavirus. This Tu-Th +21% pop was a bear market rally, not the start of a bull market often signaled by +20% rise from the low. DJIA daily changes averaged +/- 5.2% in March beating the prior record of +/- 3.9% in November 1929. Louise Yamada sees a retest of low and that it may take a while to repair the technical damage. Dr Fauci said that the coronavirus has its own timeline.

Unprecedented Fed actions and unprecedented CARES Act [amounting to 9% of GDP] should backstop the US economic slide; and there may be more stimulus to come. But post-coronavirus after-affects may likely be higher interest rates, higher inflation and potential risk to the US sovereign rating [Fitch has already warned]. The fiscal and monetary responses may be war-like but much of the spending will be for personal compensation and economic shortfalls, not for job and income generating production. Deglobalization will also lead to higher costs for goods. There will be huge risks for bonds except for TIPS. Stocks and gold should be better investments at least in nominal terms, if not real terms.

 

Pg 9, Streetwise: It may be time for long-term investors to buy stocks; SP500 trailing P/E is 16 and it may be 21-24 based on upcoming depressed fwd earnings. Short-term, the market may go hugely up or down. Some strategists are playing the game of sickening near-term bottom and huge yearend rebound. Stick with asset allocation that you are comfortable with. Pay attention to latest rating changes [they can be stale in days and may be changed again]. Attractive are/will be at-home stocks [NFLX, CPB, KR, PEP, CLX] and those that may tap into CARES Act bailout funds [BA; airlines, etc]. Also see interview with CVS CEO Merlo below [pg 16].

 

Pg 10-11: No notable meetings. [It seems that video meetings are not being announced or reported, e.g. recent G-7 and G-20 videoconferences]

The Fed will buy up to 20% of some investment-grade corporate bond ETFs [LQD, VCIT, USIG, VTC, CORP, etc].

Trending search terms on Google include coronavirus, covid 19, recession, unemployment, work from home, delivery, cancel flight/cruise, etc.

Data this week [bad reports start in the earnest]: Pending home sales, Dallas Fed Texas manufacturing survey on Monday; consumer confidence, Chicago PMI on Tuesday; ADP employment report, ISM manufacturing PMI, consumer spending on Wednesday; initial jobless claims, international trade deficit on Thursday; ISM nonmanufacturing index, jobs report [-150,000], unemployment rate [3.9%] on Friday.

 

Bullish Recommendations: SoftBank [SFTBY; 66% discount from assets; equity includes 7% preferreds; CEO Son announced plans for assets sales and use proceeds for extra buybacks and debt paydown; Moody’s downgraded it further into junk territory; pg 18].  

 

Bearish Recommendations: See other stories

 

Pg 12: CoverInvestors Beware: Market Could Head Lower” includes several coronavirus features.

1st feature is to scare the readers – what if the unprecedented monetary and fiscal steps aren’t enough to fight the coronavirus? What if the coronavirus doesn’t subside, or re-emerges after subsiding? What if the coronavirus never goes away and we may have to segregate two populations, those infected and those not infected? Then, we would have wasted billions/trillions in just a few months. Markets would tumble and go into free fall mode after failing a retest of the lows. Earnings estimates for SP500 are being cut and a bearish estimate is $139 [vs $165 in 2019] and use your own P/E on that.

Pg 14: 2nd feature is a call for biotech and pharma industry to do more to fight coronavirus pandemic. After a slow start, there are now 60 programs for Covid-19 treatments and 40 for vaccine development – both public and private. Genetics research is being done by MRNA, BNTX [with PFE], TBIO, SNY, ALNY, German CureVac. Therapeutics research is being done by GILD, ABBV, REGN, VIR, BIIB, OVID. Generics companies like TEVA are supplying existing compounds [antimalarial hydroxychloroquine, etc] that may be effective. These efforts may not be successful or profitable, but companies have responsibility/duty to participate in this fight.

Pg 16: 3rd feature is Hough’s interview with CVS CEO Merlo. CVS operates drugstore chain and PBM Caremark [Aetna was a recent acquisition]. Special provisions for Covid-19 related supplies, medicines, testing [including experimental drive-through setup in parking lots of some stores] and deliveries are being made at CVS stores; issues of coverage for Covid-19 treatment [including telemedicine] and waivers of testing fees are being dealt with by Caremark/Aetna. Workers are being provided bonuses and day-care services; extra workers are being hired. Some store remodeling has been deferred for now.

Pg 18: 4th feature is on tech stocks for post-coronavirus world from 5 analysts.

David Readerman, Endurance Capital: DOCU, ZM, EQIX, DLR, CONE, COR

Rich Greenfield, LightShed Partners: NFLX, TWTR

Paul Meeks, Independent Solutions and Wireless Fund WIREX: BABA, AMD, LRCX, TSM, MU, AMAT, VIRT

Dan Niles, Santori Fund [L-S Hedge]: MSFT, SNE, ZNGA, TTWO, EA, NTES, Tencent, AMZN, RNG; trading shorts AAPL, DELL, HPQ

Craig Moffett, MoffettNathanson: CHTR, ATUS, TMUS

Pg 19: Another Cover 5th feature is “Muni Bonds Have Started to Rally. Why You Should Get On Board – And Where to Find Bargains”. State and local governments face economic downturn, yet munis, with low default rates, are rallying. The Fed will also buy investment-grade munis. 70% of $3.9 trillion muni market [almost the same for the last 10 years, so munis have shrunk as % of the bond market] are held by retail investors. In the recent selloff, HY munis were hit very hard.

OEFs: VWITX, PMLAX, MKINX, EITAX; HY NHMAX

ETFs: MUB; HY HYD

CEFs: NEA, MMU, BTT; HY NMCO

 

Pg 25: Very low Treasury rates and high risks [or spreads] in corporates are making a mess out of bond ladders. A fix includes using different types of bonds for replacements [e.g. investment-grade corporates or CDs for Treasuries] in Treasury ladders.

 

Pg 26: Mortgage re-fi make sense at these low rates. But due to very high demand for re-fi, lenders haven’t lowered mortgage rates as much [as 10-yr + historical spread may indicate] and have added points across the board. Retirees face special issues in demonstrating income from pension, annuities, Social Security and regular/consistent portfolio withdrawals [portfolio size alone doesn’t count for much].

 

Pg 28: Matthew McLennan and Thomas Kertsos of quality gold-mining SGGDX [including 18.5% in gold bullion, 4.4% in silver bullion] recommend some exposure to gold for uncertain times – geopolitical risks; now coronavirus, super-easy monetary policy, huge fiscal stimulus. Some countries [Peru, South Africa] have suspended gold production to protect workers from coronavirus.

 

Pg 30: Low-volatility funds have delivered in this selloff with lower upsides and downsides [although it may not seem like it on some days]. But there are some issues: Portfolio selection is based on volatilities in the past and may be overweight in utilities and consumer-staples; rebalancing schedules vary; some are unconstrained and that can lead to concentrated sector exposures. Mentioned are ETFs SPLV, USMV, QLV; mutual funds/OEFs BLVAX, FULVX, MLVAX.

 

Pg 31: Some very scary numbers for layoffs and unemployment will be coming soon. Coronavirus wasn’t much of a factor in Fed Chair Powell’s February 11-12 testimony before Congressional committees. But then everything changed at mind-boggling speed by coronavirus pandemic and huge monetary and fiscal responses. With widespread business shutdowns or skeleton operations, unemployment will skyrocket by millions; unemployment insurance claims went from under 2 million pre-coronavirus to 5+ million now and are expected to go up much more [in just 2 areas hard hit by shutdowns, leisure/hospitality had 17 million jobs and retail 15 million jobs]. Some state unemployment insurance offices are overwhelmed. CARES Act will help some with direct cash payments and expanded unemployment benefits. There has also been some relief for mortgage payments and against evictions. The Fed has stepped in to provide basically unlimited liquidity and loans. But monetary and fiscal policies may be of limited effect for coronavirus health crisis. If this crisis continues for a while, millions of people will have to figure things out for themselves financially.

 

Pg 32: Interview with Raghuram Rajan, U Chicago and former Head, RBI [Indian central bank]. Urgent actions are need from legislators and finance ministers, not just from central bankers. This is a health crisis with economic and financial fallouts, but not primarily a financial or banking crisis. But if it remains unresolved for too long, it may lead to financial disaster. There is lot of leverage in the system, so some unforeseen problems may develop by failures of some companies and/or financial institutions. CARES Act [it was pending at the time of the interview] is a right-size response for now as a buffer for a few months. A proper balance has to be struck between keeping existing businesses alive and avoiding the appearance of some just abusing free government money. Negative rates come from central bank policy decisions and sustained actions but the Fed isn’t there. Relaxations of tariffs may help. Current hope is that coronavirus crisis can be controlled in 2-3 months [as in China, Taiwan, S Korea] and there may be a good rebound in Q3 and Q4.

 

Pg 33: Interview with Mervyn King, former Head of BOE. Recent book Radical Uncertainty: Decision Making Beyond the Numbers, 2020. Uncertainties can be resolvable [i.e. there is some prior experience] or radical [i.e. unprecedented, like coronavirus pandemic]. Radical uncertainties require wide ranging open discussions as well as humility. In coronavirus pandemic, damage to businesses is from government mandated shutdowns and fiscal responses are required besides the monetary responses. The Fed has indicated that it will do whatever is necessary but that may not be enough. Due to widespread shutdowns, business revenues and cash flow will collapse, and without help, some good and viable businesses may never come back. It may seem that the Fed and/or the Government will be picking winners and losers but in an emergency that is unavoidable even though unintentional.

 

Pg 34: Peter Sands, Global Fund to Fight AIDS, Tuberculosis, and Malaria and former CEO of Standard Chartered/SCBFY. Government and business leaders have been blind to the dangers of the spread of infectious diseases. Health leaders don’t understand why? Covid-19 is a good example of this – panicked, stumbling and unbalanced responses are the result. In a study of 15 countries that suffered infectious disease outbreaks [including SARS, MERS], by considering 2 year periods before and after the outbreak it was found that none of the institutions such as IMF, Economic Intelligence Unit [EIU], S&P etc recognized the health dangers ahead. Author has subsequently failed to push IMF, EIU, S&P to include health risks in their assessments. It seems that analysts are not prepared or willing to consider low-probability, high-impact risks that they don’t understand. Health community is at some fault too by touting every health issue as urgent. Monetary and fiscal policies are less effective as they deal with consequences of health crisis, not their root causes. Bill & Melinda Gates Foundation [with Wellcome and MA] supports Therapeutics Accelerator program that investigates the uses of existing off-patent drugs and patented drugs for new or other/off-label diseases/infections. Such programs should receive much larger public funds.

 

Pg 35: Many companies have cut or suspended dividends [MAR, F, JWN, BA] to conserve cash in anticipation of revenue and cash flow declines. But some financials, healthcare [CVS] and techs [INTC, TXN] may continue with their dividends – they may cut on buybacks and/or capex instead. [Companies that get bailout funds under CARES Act would have to suspend dividends and buybacks].

 

Extras from Friday – I try to guess on Friday which features will make it in the weekend edition but the following guesses didn’t make it. Almost 75-80% of the weekend edition is now available by 9:00 PM Central on Friday. Barron’s revised website has “Interests” tabs similar to columns topics and that makes it easier to find potential items for the weekend edition. This is also the reason for earlier postings on Saturday – I do wait for my paper delivery [typically between 5:00-6:30 AM Central] to fill in some data.

Besides some US bond ETFs, some EM ETFs have traded at large discounts [EPHE, etc]. They trade in the US when the underlying foreign markets are not trading. Moreover, Philippines exchange was shut Mar 16-19; China Shenzhen was shut Jan 23-Feb 26. EM ETF bid-ask spreads have widened [GXC, FBZ, etc].

YBB
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Re: From Barron’s, March 30, 2020 (Part 2)


@yogibearbull wrote:

 

 

Pg 5, Up and Down Wall Street: Change in the US economy in weeks from the longest expansion into abyss has been stunning. Tremendous monetary and fiscal stimulus may not be effective for the public health crisis created by coronavirus. This Tu-Th +21% pop was a bear market rally, not the start of a bull market often signaled by +20% rise from the low. DJIA daily changes averaged +/- 5.2% in March beating the prior record of +/- 3.9% in November 1929. Louise Yamada sees a retest of low and that it may take a while to repair the technical damage. Dr Fauci said that the coronavirus has its own timeline.

Unprecedented Fed actions and unprecedented CARES Act [amounting to 9% of GDP] should backstop the US economic slide; and there may be more stimulus to come. But post-coronavirus after-affects may likely be higher interest rates, higher inflation and potential risk to the US sovereign rating [Fitch has already warned]. The fiscal and monetary responses may be war-like but much of the spending will be for personal compensation and economic shortfalls, not for job and income generating production. Deglobalization will also lead to higher costs for goods. There will be huge risks for bonds except for TIPS. Stocks and gold should be better investments at least in nominal terms, if not real terms.

 

Pg 9, Streetwise: It may be time for long-term investors to buy stocks; SP500 trailing P/E is 16 and it may be 21-24 based on upcoming depressed fwd earnings. Short-term, the market may go hugely up or down. Some strategists are playing the game of sickening near-term bottom and huge yearend rebound. Stick with asset allocation that you are comfortable with. Pay attention to latest rating changes [they can be stale in days and may be changed again]. Attractive are/will be at-home stocks [NFLX, CPB, KR, PEP, CLX] and those that may tap into CARES Act bailout funds [BA; airlines, etc]. Also see interview with CVS CEO Merlo below [pg 16].

 

Pg 10-11: No notable meetings. [It seems that video meetings are not being announced or reported, e.g. recent G-7 and G-20 videoconferences]

The Fed will buy up to 20% of some investment-grade corporate bond ETFs [LQD, VCIT, USIG, VTC, CORP, etc].

Trending search terms on Google include coronavirus, covid 19, recession, unemployment, work from home, delivery, cancel flight/cruise, etc.

Data this week [bad reports start in the earnest]: Pending home sales, Dallas Fed Texas manufacturing survey on Monday; consumer confidence, Chicago PMI on Tuesday; ADP employment report, ISM manufacturing PMI, consumer spending on Wednesday; initial jobless claims, international trade deficit on Thursday; ISM nonmanufacturing index, jobs report [-150,000], unemployment rate [3.9%] on Friday.

 

Bullish Recommendations: SoftBank [SFTBY; 66% discount from assets; equity includes 7% preferreds; CEO Son announced plans for assets sales and use proceeds for extra buybacks and debt paydown; Moody’s downgraded it further into junk territory; pg ?];   

 

Bearish Recommendations: See other stories

 

Pg 12: CoverInvestors Beware: Market Could Head Lower” includes several coronavirus features.

1st feature is to scare the readers – what if the unprecedented monetary and fiscal steps aren’t enough to fight the coronavirus? What if the coronavirus doesn’t subside, or re-emerges after subsiding? What if the coronavirus never goes away and we may have to segregate two populations, those infected and those not infected? Then, we would have wasted billions/trillions in just a few months. Markets would tumble and go into free fall mode after failing a retest of the lows. Earnings estimates for SP500 are being cut and a bearish estimate is $139 [vs $165 in 2019] and use your own P/E on that.

Pg 14: 2nd feature is a call for biotech and pharma industry to do more to fight coronavirus pandemic. After a slow start, there are now 60 programs for Covid-19 treatments and 40 for vaccine development – both public and private. Genetics research is being done by MRNA, BNTX [with PFE], TBIO, SNY, ALNY, German CureVac. Therapeutics research is being done by GILD, ABBV, REGN, VIR, BIIB, OVID. Generics companies like TEVA are supplying existing compounds [antimalarial hydroxychloroquine, etc] that may be effective. These efforts may not be successful or profitable, but companies have responsibility/duty to participate in this fight.

Pg 16: 3rd feature is Hough’s interview with CVS CEO Merlo. CVS operates drugstore chain and PBM Caremark [Aetna was a recent acquisition]. Special provisions for Covid-19 related supplies, medicines, testing [including experimental drive-throughs setup in parking lots of some stores] and deliveries are being made at CVS stores; issues of coverage for Covid-19 treatment [including telemedicine] and waivers of testing fees are being dealt with by Caremark/Aetna. Workers are being provided bonuses and day-care services; extra workers are being hired. Some sore remodeling has been deferred for now.

Pg 18: 4th feature is on tech stocks for post-coronavirus world from 5 analysts.

David Readerman, Endurance Capital: DOCU, ZM, EQIX, DLR, CONE, COR

Rich Greenfield, LightShed Partners: NFLX, TWTR

Paul Meeks, Independent Solutions and Wireless Fund WIREX: BABA, AMD, LRCX, TSM, MU, AMAT, VIRT

Dan Niles, Santori Fund [L-S Hedge]: MSFT, SNE, ZNGA, TTWO, EA, NTES, Tencent, AMZN, RNG; trading shorts AAPL, DELL, HPQ

Craig Moffett, MoffettNathanson: CHTR, ATUS, TMUS

Pg 19: Another Cover 5th feature is “Muni Bonds Have Started to Rally. Why You Should Get On Board – And Where to Find Bargains”. State and local governments face economic downturn, yet munis, with low default rates, are rallying. The Fed will also buy investment-grade munis. 70% of $3.9 trillion muni market [almost the same for last 10 years, so munis have shrunk as % of the bond market] are held by retail investors. In the recent selloff, HY munis were hit very hard.

OEFs: VWITX, PMLAX, MKINX, EITAX; HY NHMAX

ETFs: MUB; HY HYD

CEFs: NEA, MMU, BTT; HY NMCO

 

Pg 25: Very low Treasury rates and high risks [or spreads] in corporates are making a mess out of bond ladders. A fix includes using different types of bonds for replacements [e.g. investment-grade corporates or CDs for Treasuries] in Treasury ladders.

 

Pg 26: Mortgage re-fi make sense at these low rates. But due to very high demand for re-fi, lenders haven’t lowered mortgage rates as much [as 10-yr + historical spread may indicate] and have added points across the board. Retirees face special issues in demonstrating income from pension, annuities, Social Security and regular/consistent portfolio withdrawals [portfolio size alone doesn’t count for much].

 

Pg 28: Matthew McLennan and Thomas Kertsos of quality gold-mining SGGDX [including 18.5% in gold bullion, 4.4% in silver bullion] recommend some exposure to gold for uncertain times – geopolitical risks; now coronavirus, super-easy monetary policy, huge fiscal stimulus, Some countries [Peru, South Africa] have suspended gold production to protect workers from coronavirus.

 

Pg 30: Low-volatility funds have delivered in this selloff with lower upsides and downsides [although it may not seem like it on some days]. But there are some issues: Portfolio selection is based on volatilities in the past and may be overweight in utilities and consumer-staples; rebalancing schedules vary; some are unconstrained and that can lead to concentrated sector exposures. Mentioned are ETFs SPLV, USMV, QLV; mutual funds/OEFs BLVAX, FULVX, MLVAX.

 

Pg 31: Some very scary numbers for layoffs and unemployment will be coming soon. Coronavirus wasn’t much of a factor in Fed Chair Powell’s February 11-12 testimony before Congressional committees. But then everything changed at mind-boggling speed by coronavirus pandemic and huge monetary and fiscal responses. With widespread business shutdowns or at skeleton operations, unemployment will skyrocket by millions; unemployment insurance claims went from under 2 million pre-coronavirus to 5+ million now and is expected to go up much more [in just 2 areas hard hit by shutdowns, leisure/hospitality had 17 million jobs and retail 15 million jobs]. Some state unemployment insurance offices are overwhelmed. CARES Act will help some with direct cash payments and expanded unemployment benefits. There has also been some relief for mortgage payments and against evictions. The Fed has stepped in to provide basically unlimited liquidity and loans. But monetary and fiscal policies may be of limited effect for coronavirus health crisis. If this crisis continues for a while, millions of people will have to figure things out for themselves financially.

 

Pg 32: Interview with Raghuram Rajan, U Chicago and former Head, RBI [Indian central bank]. Urgent actions are need from legislators and finance ministers, not just from central bankers. This is a health crisis with economic and financial fallout, but not primarily a financial or banking crisis. But if it remains unresolved for too long, it may lead to financial disaster. There is lot of leverage in the system, so some unforeseen problems may develop by failures of some companies and/or financial institutions. CARES Act [it was pending at the time of the interview] is a right-size response for now as a buffer for a few months. A proper balance has to be struck between keeping existing businesses alive and avoiding the appearance of some just abusing free government money. Negative rates come from central bank policy decisions and sustained actions but the Fed isn’t there. Relaxations of tariffs may help. Current hope is that coronavirus crisis can be controlled in 2-3 months [as in China, Taiwan, S Korea] and there may be a good rebound in Q3 and Q4.

 

Pg 33: Interview with Mervyn King, former Head of BOE. Recent book Radical Uncertainty: Decision Making Beyond the Numbers, 2020. Uncertainties can be resolvable [i.e. there is some prior experience] or radical [i.e. unprecedented, like coronavirus pandemic]. Radical uncertainties require wide ranging open discussions as well as humility. In coronavirus pandemic, damage to businesses is from government mandated shutdowns and fiscal responses are required besides the monetary responses. The Fed has indicated that it will do whatever is necessary but that may not be enough. Due to widespread shutdowns, business revenues and cash flow will collapse, and without help, some good and viable businesses may never come back. It may seem that the Fed and/or the Government will be picking winners and losers but in an emergency that is unavoidable even though unintentional.

 

Pg 34: Peter Sands, Global Fund to Fight AIDS, Tuberculosis, and Malaria and former CEO of Standard Chartered/SCBFY. Government and business leaders have been blind to the dangers of the spread of infectious diseases. Health leaders don’t understand why? Covid-19 is a good example of this – panicked, stumbling and unbalanced responses are the result. In a study of 15 countries that suffered infectious disease outbreaks [including SARS, MERS], by considering 2 year periods before and after the outbreak it was found that none of the institutions such as IMF, Economic Intelligence Unit [EIU], S&P etc recognized the health dangers ahead. Author has subsequently failed to push IMF, EIU, S&P to include health risks in their assessments. It seems that analysts are not prepared or willing to consider low-probability, high-impact risks that they don’t understand. Health community is at some fault too by touting every health issue as urgent. Monetary and fiscal policies are less effective as they deal with consequences of health crisis, not their root causes. Bill & Melinda Gates Foundation [with Wellcome and MA] supports Therapeutics Accelerator program that investigates the uses of existing off-patent drugs and patented drugs for new or other/off-label diseases/infections. Such programs should receive much larger public funds.

 

Pg 35: Many companies have cut or suspended dividends [MAR, F, JWN, BA] to conserve cash in anticipation of revenue and cash flow declines. But some financials, healthcare [CVS] and techs [INTC, TXN] may continue with their dividends – they may cut on buybacks and/or capex instead. [Companies that get bailout funds under CARES Act would have to suspend dividends and buybacks].

 

Extras from Friday – I try to guess on Friday which features will make it in the weekend edition but the following guesses didn’t make it. Almost 75-80% of the weekend edition is now available by 9:00 PM Central on Friday. Barron’s revised website has “Interests” tabs similar to columns topics and that makes it easier to find potential items for the weekend edition. This is also the reason for earlier postings on Saturday – I do wait for my paper delivery [typically between 5:00-6:30 AM Central] to fill in some data.

Besides some US bond ETFs, some EM ETFs have traded at large discounts [EPHE, etc]. They trade in the US when the underlying foreign markets are not trading. Moreover, Philippines exchange was shut Mar 16-19; China Shenzhen was shut Jan 23-Feb 26. EM ETF bid-ask spreads have widened [GXC, FBZ, etc].


Very informative!

Gabe

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Re: From Barron’s, March 30, 2020 (Part 2)

As always a big thanks for yogi.

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Re: From Barron’s, March 30, 2020 (Part 2)

Yogi,

This issue discusses lot of factors relating to Corona virus and its impacts. You have summarized very nicely. Thanks.

SRT

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Re: From Barron’s, March 30, 2020 (Part 2)

Thanks for this, Yogi

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Re: From Barron’s, March 30, 2020 (Part 2)

"Low-volatility funds have delivered in this selloff with lower upsides and downsides"

Vanguard's quant low volatility fund VMVFX has been my worst performer, and down more than 500 Index.  Think this fund will go bye-bye once I get back to at least even.  Granted I've only been in it for about a year, and it's only been around for a few years and had never been tested in a recession/bad down market.  But now it has, and I don't like the result.

On the plus side, it's the smallest % of my port at <7

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Re: From Barron’s, March 30, 2020 (Part 2)

Yogi,

Thanks. Your work is appreciated.

Hootz

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Re: From Barron’s, March 30, 2020 (Part 2)

Thanks Yogi !

Let us not forget Frank Lorenzo.  No matter how many airlines he managed and then put into bankruptcy there were always others that either survived or took advantage of the severely discounted assets to re-organize.  Businesses will go under but the services they provided will not go extinct.  

While as an investor the bailouts will personally benefit me to some extent there is the question of how capitalism is constantly eroded when there are not enough losers.   We continue down the road of 2008-09 and the moral hazard.  Fuld, Prince, Cayne, Kennedy, Killinger,  Corzine, were all punished and while allowed their multi $MM golden parachutes still had to choose between losing the Beach house in the Hamptons and the town house in Vail / Aspen.   Smells like there will be excesses of scale again vs the amount of aid the working poor heretofore with multiple jobs, and the  middle class taxpayers get vs what the S&P 500 get.  

Aid to the Cruise lines suggestions make me want to puke. The TRCA  Temporary Reciprocal Currency agreements that used US taxpayer money to bail out foreign banks were not bad enough?  Let the Cruise lines propose that 15% of all the ship board crews be American citizens or Green Card holders who earn typical US wage scales and pay US income taxes and to specify a formula for establishing a fair share of their fleets to be registered under the US flag and pay those costs and taxes as well.  Otherwise let Norway and Liberia bail them out. 

 

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Re: From Barron’s, March 30, 2020 (Part 2)

Yogi,

Great writeup!!!

ctyankee

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Re: From Barron’s, March 30, 2020 (Part 2)

big steve,

Thanks for sharing  your experience with VMVFX. I was thinking of buy-ing it in my Fidelity IRA account. Now I will drop the idea. 

SRT

 

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Re: From Barron’s, March 30, 2020 (Part 2)


@bigsteve wrote:

"Low-volatility funds have delivered in this selloff with lower upsides and downsides"

Vanguard's quant low volatility fund VMVFX has been my worst performer, and down more than 500 Index.  Think this fund will go bye-bye once I get back to at least even.  Granted I've only been in it for about a year, and it's only been around for a few years and had never been tested in a recession/bad down market.  But now it has, and I don't like the result.

On the plus side, it's the smallest % of my port at <7

 


Being half international, Vanguard Global Minimum Volatility Inv,(VMVFX) has lagged the US stock market. I have a smaller holding and have not added much to it for some time. I think the extra international exposure will suffice.

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