@patricksouth @Twitter @APompliano If two people always have the same opinion, one is unnecessary...
That said, I do agree w/ much of what Pomp said in his note about the extreme reaction in many sectors creating some values
Where we differ is on duration of the economic drawdown, the speed of the recovery... 1/
That said, I do agree w/ much of what Pomp said in his note about the extreme reaction in many sectors creating some values
Where we differ is on duration of the economic drawdown, the speed of the recovery... 1/
@patricksouth @Twitter @APompliano Shape of recovery & format of govt/private assistance.
Highly likely that overly harsh response to #COVID19 threat causes extreme economic pain far beyond expectations and pushes already perilous global economic situation over edge into deep Recession (likely even Depression) 2/
Highly likely that overly harsh response to #COVID19 threat causes extreme economic pain far beyond expectations and pushes already perilous global economic situation over edge into deep Recession (likely even Depression) 2/
@patricksouth @Twitter @APompliano There won’t be a V-shaped recovery and even a U is long shot as will be very challenging to restart global economic flywheel in a world bathed in Nationalism, Populism and Trade Wars rescuing benefits of Globalization.
Many of hardest hit sectors (Pomp calls Corona Infected) 3/
Many of hardest hit sectors (Pomp calls Corona Infected) 3/
@patricksouth @Twitter @APompliano will have to declare bankruptcy and I don’t believe they will get equity bailouts, but rather loan guarantees or convertible bonds and existing equity will be extinguished.
Problem of difference between down 80% and down 90% is you’ve lost half your money...
4/
Problem of difference between down 80% and down 90% is you’ve lost half your money...
4/
@patricksouth @Twitter @APompliano Travel related biz are very unlikely to have any equity value given extreme debt loads. Many other highly leveraged industries will see equity wiped out as well
As @HowardMarksBook says, “leverage can never make a bad investment good, but it can make a good investment bad...” 5/
As @HowardMarksBook says, “leverage can never make a bad investment good, but it can make a good investment bad...” 5/
@patricksouth @Twitter @APompliano @HowardMarksBook All that said, there are places to find value & some of greatest value managers will produce outstanding returns in coming decade, just like they did from 2000-2010 when they compounded at 17% vs. $SPX at (1.9%)
Where Pomp & I agree completely is on long-term recovery returns 6/
Where Pomp & I agree completely is on long-term recovery returns 6/
@patricksouth @Twitter @APompliano @HowardMarksBook The deeper the crash, the better the compound returns will be going forward (just math), the real problem was we were starting from valuations in Feb that would produce meaningful negative returns for a decade. $SPX is still well above fair value and expected returns still low 7/
@patricksouth @Twitter @APompliano @HowardMarksBook Biggest myth is that stocks got cheaper in past theee weeks...
Everyone says look how low forward P/E has gotten. Bad logic, because analysts still using forward earnings estimates that don’t reflect reality... earnings are going to collapse and stay down for long time... 8/
Everyone says look how low forward P/E has gotten. Bad logic, because analysts still using forward earnings estimates that don’t reflect reality... earnings are going to collapse and stay down for long time... 8/
@patricksouth @Twitter @APompliano @HowardMarksBook For long-term investors there will be the Generational Buying Opportunity that all the talking heads keep pitching, but from much lower levels and trying to catch falling knives during a Depression is a fools errand...
Just my opinion FWIW
#BeCarefulOutThere 🚫🔪 9/
Just my opinion FWIW
#BeCarefulOutThere 🚫🔪 9/
