Brendan Wood International
TopGunSM Press

OPINIONS ARE NOT FACTS AND FEAR IS NOT AN INVESTMENT TOOL

March 23rd, 2020 by TopGun Press

For Immediate Release – New York, NY, March 23rd, 2020 (TopGunsm Press)

A chorus of provocative media and political Coronavirus predictions over the weekend remain unmitigated by credible facts. We will undoubtedly see a multitude of politicians, civil servants, journalists and their guests in front of microphones expressing their opinions to a near captive quarantined audience this week. The damage to the confidence of everyday working people in their investment portfolios is a costly by product.

At his Saturday press conference, the well intentioned Governor of New York made a series of alarming statements. One such statement accompanied by an underlining banner read … “40% to 80% will become infected”. By those lights, a US death toll of 4 to 8 million people would ensue from a 3% mortality rate. Later in the monologue, Mr. Cuomo frequently repeated, “this may take four months, six months, nine months, nobody knows.” A few minutes earlier Mr. Cuomo preceded these frightening assertions with an opinion versus fact disclaimer. However, it was hard to decipher where opinions ended and facts began. Mr. Cuomo also verbally mis-stated the NY State death toll at 374, which was actually a displayed national not local figure. None of the journalists present questioned these statements. Key takeaways: Everybody wash your hands, socially distance and worry like hell! After scaring viewers to death, the Governor asked for psychotherapists to volunteer to staff public phone lines to help calm people down. This is only an example. It would be unfair to single out Mr. Cuomo, who sincerely admitted several times that he is personally scared by the virus. Speculation and fear inducing media are widespread. Many fund managers are interviewed and quoted without first even being asked if they are short sellers. “A lot of people are going to be broke,” one major fund manager is quoted as having said.

Bad news creates ratings and news media are business enterprises which rely on ratings, of course. Just as politicians rely upon crises to challenge incumbents. However, sensationalism, of any stripe, which broadly erases life savings and stressfully affects the health of the older generation is unpatriotic, whatever our political convictions.

The readership of this daily update reached over one hundred thousand professional investors and their clients last week. We hope that it helps to reinforce reason, patience and your relationships. We will shortly begin sharing the names which TopGunsm professional investors agree to be the most resilient and promising targets on their current shopping lists.

Investor Responses:

1) Are you planning to be a net buyer in the near term 3 months? (Net buyer means own more $ in equities than you do today.)

Yes = 86% (87% last week)
No = 14% (13% last week)

2) Will you be buying using cash reserves or switching existing positions into higher quality names that were overpriced but have become cheaper?

Cash Reserves = 34% (37% last week)
Switching Existing Positions into Higher Quality Names = 52% (50% last week)

3) How long do you think that decreasing real spending, lower earnings and supply chain issues directly caused by Coronavirus will prevail as deterrents to investing?

1 Month = 0% (0% last week)
3 Months = 44% (46% last week)
6 Months = 43% (41% last week)
1 Year = 13% (13% last week)

4) Will markets/prices come back to January 2020 levels? 0-100%

Yes = 85% (88% last week)
No = 15% (12% last week)

5) How long will this recovery take?

1 Month = 1% (1% last week)
3 Months = 41% (47% last week)
6 Months = 40% (37% last week)
12 Months = 12% (10% last week)
12-18 Months = 6% (5% last week)

6) How do you rate the future effect of a change in the US administration from Trump to a democrat in November as a market performance risk 0-100%? (Risk of a negative impact on prices)

Yes = 62% (67% last week)
No = 38% (33% last week)
Average Level of added risk = 44% (47% last week)

TYPICAL INVESTOR COMMENTARY:

“Personally yes, I plan to be a net buyer in three months. Global money is going to have to go back into the market.”

“According to the experts, it is exponential the way this thing evolves, so should we be surprised when we see these jumps on a day-to-day basis? Probably not, obviously it is still concerning, though.”

“I think you’ll see money flow back into equities this year.”

“I am trying to work my way through the significant volatility, using it to upgrade my portfolio, generally. I am buying other larger, liquid names and also small cap names. With risk-reward profiles changing by the second, I am trying to focus the portfolio in on what I think the best risk-reward bets are. So, everyday, I am going through the process of buying some things and selling some things. I am not trying to dramatically shift exposure. I have covered almost all of my shorts. They all became fantastic pretty fast.”

“It will continue to be volatile over the next little. I do not know if we’ve actually found a floor yet for commodity prices.”

“I think you’ll see a bottom and/or crater in the next month or so, and it will take a while for it to start revving. It really depends on what happens with stimulus. There’s a lot of variables.”

“Equities will probably trade lower but, eventually, investors will decide that there is an end in sight and money will start coming into the equities before the commodities moves.”

“Air Canada just let go 5,000 flight attendants and other staff. More than 500,000 employment insurance claims have been filed this week. That’s about 2% of the Canadian workforce. I’m sure the numbers will grow higher. In general, there are some things I’m optimistic about. I’m bidding on some names in small cap land that are below their cash value. I’m half-worried that I’m going to get hit. I’m bearish, overall.”

“If the US intervenes in the Saudi/Russia dispute, it could be a game-changer for the energy industry. You could see a spike if they come to a resolution. But, in the current condition, I think that you’re probably going to see some downward revisions just as inventories go.”

“I guess the risk here is that the only models that have shown how you contain this is the more draconian, the better. China can do that because China has, you know, centralized decision-making, being a communist state. China has much stronger enforcement compared to developed markets. Different countries are trying and doing different things. But increasingly, you’re seeing more and more European countries go into shutdown.”

“China has taught us that you have to shut everything down. That looks to be a successful model. So, let’s see other countries that don’t do that and then there’s a humanitarian disaster. All the hospitals get overwhelmed, then politically that’s challenging. This virus has just turned everything on its head. What was normal yesterday suddenly isn’t anymore and may never be again.”

“The gas price should fundamentally get stronger. There is a lot of associated gas production coming from oil production as people slow their development of oil. There should be less supply of gas, so that should be a positive for gas longer term.”

About Brendan Wood International:

Brendan Wood International (BWI), formed in 1970, is a private partnership generating independent performance audits globally. Brendan Wood debriefs large institutional investors worldwide on a daily basis. There are 2000 investors in the investor panel collectively managing + $40 trillion invested in the 1400 companies on the BWI Index. Relying on real time performance intelligence, the firm advises public companies, institutional and activist investors, investment banks and broker dealers on strategy, performance and recruitment of TopGun talent. The firm’s partners have formally presented at 1000+ C level strategy meetings and corporate off sites in fifty cities. Brendan Wood founded the exclusive TopGunsm Club, a performance based institution.

We wish to emphasize that all reports, evaluations and assessments contained herein, represent Brendan Wood International’s subjective judgment and opinions, based on our years of experience and on information obtained by us in the course of our research. Much of the factual information contained in the reports has been obtained by us from third parties on whose responses we have relied in good faith, independent verification by Brendan Wood International being, under the circumstances, impossible. While we believe that you will find our reports to be an invaluable tool in formulating your own strategies and judgments, the foregoing should be borne in mind. Under no circumstances should any ratings or evaluations of individuals’ performances in these reports be considered as a sufficient basis for making decisions concerning the careers of individuals, including such matters as promotions, compensation arrangements, terminations, etc.

This report is not meant as investment advice and should not be interpreted as advising on the value of a company’s securities, the advisability of investing in, purchasing or selling any company’s securities or any other conclusion relating to investment/divestiture of a company’s securities. Finally, this report is not intended as an offer or solicitation for the purchase or sale of any of company’s securities.

Related Links:

www.TopGunPress.com
www.brendanwood.com
@BrendanWoodIntl

 

Contacts:
Jordan Novak
Partner
Brendan Wood International
+1 416 924 8110
jnovak@brendanwood.com

Amanda Knott
Managing Director
Brendan Wood International
+1 416 924 8110
aknott@brendanwood.com

 

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