Can I get out and in? Or is it just not worth the effort and the friction and the surprise possibility that the virus runs its course.
Yesterday's wake up call that the so-called worst case has occurred with Apple (AAPL) , amply demonstrated by the lead story in the Financial Times explaining that travel curbs are the real culprit, the real reason why iPhones are hard to make, makes you wonder if it is worth it to trim positions in a world where are alternatives are slim and index fund buying is heavy.
Or to put it another way, the public is buying because everyone knows that this virus will run its course and most people who get it get better anyway just like the non-novel flu. I think it is telling that the best of the best in terms of virus knowledge, Tony Fauci, again ends his discussion with a reminder of how deadly our own flu is and that it is having an odd second leg right now.
I do not know why there is not discussion about how children seem to be immune and those in their twenties, thirties and forties, are getting this thing and apparently they are staying at home until they have beat it with some fraction choosing to go to the hospital if it worsens.
There are a couple of reasons I think why people aren't lessening their fear for the virus:
1. The mainstream media which historically has chosen to side with the PRC over a president viewed with disdain and untrustworthy versus President Xi, is discovering what a dictator can do. The idea that 50 million people can be confined by the equivalent of martial law is even more outrageous than they think that Trump can be. No kidding. This is Stalin-like in its brutality, kind of like the famine of Ukraine in the 1930s. So anything that gives the regime credibility is now viewed as a sham.
2. There is so much stimulus being injected into China that if this darned thing is solved the country will be on steroids. There is a Draghi "whatever it takes" ethos that can't be denied.
3. We have faith in the collective wisdom of our biotechs and mainstream companies to come up with something even as there is zero sign of success.
There is no doubt that if this thing is slowed, or, more important, viewed as just a severe flu that can run its course, something unthinkable a week ago, then a rally of immense proportions - with all of this pent-up demand playing an incredible role in making it worthwhile to stay in.
Take Starbucks (SBUX) . We sold some yesterday for Action Alerts PLUS. Why not? We know the numbers are too high. It doesn't take a weatherman to know which way the wind blows. But we aren't getting any downgrades. Why? I think the analysts are fearful that something good will happen.
We have seen Advanced Micro (AMD) , integral to China, go up and up and up until it is now up 15% from those bozos who said sell. That's a function of wanting to be in at all costs.
Finally the U.S. has suddenly lurched in favor of Secretary Mnuchin and away from Trade Rep Peter Navarro in terms of an easier line on China. Sure there's a lot of saber-rattling but that's all there has been.
Bottom line: there's too much upside, not enough downside, so the selling, which should have begun, just hasn't happened. At the same time the earnings as is are very strong. Therefore it is too late to sell and buy back again. That's the convention wisdom. I don't agree with it for stocks directly impacted. But it's the way of all trading.