When the US economy showed signs of vulnerability in October, James McDonald took special notice.

The CEO and chief investment officer of Hercules Investments saw the first indication of possible risk to markets when a key gauge of manufacturing activity shrank for two straight months.

At the time, the S&P 500 was in a bull market that was unprecedented in its duration and gains. Also, the Cboe Volatility Index, known as the VIX, was near historic lows, showing that investors expected the good times to persist.

But then came the coronavirus, which was so crippling to the global economy that investors could not shrug it off as they had the manufacturing slowdown, Hong Kong protests, and impeachment trial. Volatility blew up as investors realized that normal life was grinding to a halt across the globe.

McDonald was ready for this. He is among the investors who have cashed in the market's turmoil, thanks to strategies he adopted ahead of time to profit from this kind of volatility.

"In my 26 years, I've never had a trading strategy that has had as much consistency and safety," he told Business Insider.

Back in October, his firm, which manages $150 million in assets, engaged its High Sigma strategy purchasing out-of-the-money call options on the ProShares Ultra VIX Short-Term Futures ETF that profits from higher expected stock-market volatility.

The underlying ETF's price went from about $11 as the S&P 500 peaked on February 19 to above $126 on Wednesday a gain of more than 1,050%.

As a result, McDonald's options trades that bet on this price trajectory have paid off handsomely.

That strategy is over, McDonald said. He is now shifting to what he calls a Gamma Yield strategy that's designed to take advantage of excess volatility and fear in the market.

The strategy monetizes these emotions by selling Cboe-listed options on the cash indexes for the Nasdaq 100, the Russell 2000, and the S&P 500.

His rationale is that options earn part of their value from anticipated price changes in the underlying security. And so the more fear exists in markets, the better the strategy performs.

"As long as there's fear in the markets, these premiums are going to stay high," he said. He added, "I think we can run Gamma Yield all the way to the election."

A cursory look at the stock market's moves during the past couple of days demonstrates why these options have been so profitable. Quadruple-point moves on the Dow Jones Industrial Average have been commonplace since late February, for example. Consequently, these options have become more valuable to account for the wide range of possibilities that traders are pricing in for the future.

"We've done over 700 trades, and every single one of them has been profitable," McDonald said. "We have not had a single loser because of this environment and it makes no sense to do anything else at this point. We're focused on capturing the unique opportunity that we have."

He said the gains of each trade averaged out to 60% to 90%.

McDonald sees no reason to invest any other way for as long as the market is in free fall. He expects volatility to eventually normalize, just as it departed from its normal historical range. But buying index call options should remain profitable all the way through the election because smaller pockets of volatility are likely.

"If we can find a vaccine, that will be great," McDonald said. "But it's not going to erase the negative revenues and the negative industrial output probably for Q2."

See original here:
Coronavirus investing strategy: How to profit with stock index options - Business Insider Nordic

Equity markets have fared reasonably well aided by liquidity in ETFs, as my colleague Craig Lazzarahighlights. Steep discounts to net asset values (NAVs) on popular fixed income ETFs are bringing an onslaught of doomsday projections. But while the signs of stress are evident, its important to decouple the dysfunction of the bond market from the investment product as well as the managers skill.

Let us first consider the market context. The rise of interest rate, credit, and volatility risk waspreviouslydiscussed as theS&P U.S. Treasury Current 10-Year Indexyield fell below 1%. Yields then halved and are now bouncing between 0.5% and 1%. Treasury bid-ask spreads were reported to widen to beyond 1 point and NAV discounts were seen in treasury and credit ETFs. Despite that illiquidity, fixed income ETFs experienced their largest daily volume in treasury and credit sectors. Liquidity is a premium. The Cboe/CBOT 10-year U.S. Treasury Note Volatility Index hit its highest point since the end of Lehman Brothers. This measure, along with its credit and swap variants, highlights the stress experienced across the fixed income markets.[1]

In terms of measuring the impact of these shocks on ETFs, Andrew Upward at Jane Street produced agreat historical summarythat was covered in a recent S&P Globalwebinar. In times of credit stress, the discount as a percentage of NAV reflects the price buyers are willing to pay. In recent days, the largest investment-grade and high-yield ETFs traded at over a 5% discount. This could be misinterpreted as a sign a credit ETF isnt functioning well. There are a few critical points to counter that view. First, prices in the over-the-counter bond market are typically shown as request for quoteas soon as one wishes to sell at an advertised price, the trader showing the bid can remove it. The fact that an ETF has an executable price goes well beyond the unwilling participants in the OTC market. The second critical point is the latency in NAV calculation. As an index provider, we pride ourselves on using independent transparent pricing. These price providers play a heavy role in NAV calculation and are often referred to as price evaluators, since they are providing their evaluation on what the price of a bond should be on a given day. Having an independent resource is critical for the index and fund administration community. But they are not employing exacting measures to determine the price of a bond that may or may not have traded that day. The last point is a timing issue; the official index closes at 3PM, while the ETF and its NAV close at 4:00PM. This also causes a mismatch to NAV during times of volatility.

In the webinar, Bill Ahmuty, Head of SPDR Fixed Income Group at State Street Global Advisors, spoke about how fixed income volumes tend to grow during times of stress, while the underlying cash bond market volume tends to shrink. It appears that ETFs fulfill a critical need of liquidity when liquidity is needed most. ETF structure lends well to this, as investors can trade ETF shares without having to source the individual bonds. This only works to the extent that buyers and sellers can match their trades. Once they are matched, the liquidity must be met by the underlying bond market. As the fixed income ETF market grows, it has a better opportunity to meet or improve liquidity, similar to the equity market.

Finally, as investors look for those who successfully navigated these markets, the active versus passive debate will return. While that argument may be over for equity, new index-based strategies are proving their worth in fixed income. We will cover passive strategies and their performance in upcoming posts, but now, we want to highlight how theS&P U.S. High Yield Low Volatility Corporate Bond Indexhas outperformed its benchmark by 2.4% YTD.

While fixed income ETFs have largely performed in line with this market, the growth of secondary market trading will continue to help face future liquidity needs.

[1]For more information on this topic, please see the S&P Global webinarMeasuring Fixed Income Volatility.

See original here:
Liquidity Impacts on Fixed Income ETFs and Passive Investing - S&P Global

Most investors know the old adages: Never waste a crisis andbe greedy when others are fearful. But acting upon them is a different challenge entirely, especially when markets are so volatile. But brave investors can find bargains by looking forinvestment trusts that have opened up unusually widediscounts.

Michael Lindsell, of fund groupLindsell Train, recently topped up his holding in his own Lindsell Train Investment Trustafter it hit a rare discount. For fellow bargain hunters, we have uncovered the trusts that seen some of the biggest discount increases as a result of the coronavirus-induced market fallsand are "cheap" compared to historic levels.

By investing in fast-growing biotechnology companies, this fund tries to find the next big medical breakthrough. But this is risky and its share price can fluctuate significantly onthe back of positive of negative tests from the stocks it owns.

Its discount, which measures the difference between the share price and the value of the underlying investment each share buys,fell ninepercentage points in the past three weeks, to 14pc. This means to buy 1 in the trust, investors would only need to spend 84p.

A trust is seen as cheap when its current discount is higher than the longer-term average. International Biotechnology Trust's one-year average discount is 1pc and three-year average is 2.5pc. This means it is extremely cheap compared to normal levels. It yields around 2.5pc which helps compensate for some of the stock market risk.

This giant 2bn trust invests in emerging economies around the globe but has been shunned by investors on the back of fears over poor economic growth and a crash in oil prices. Its discount fell by 7 percentage points in the past three weeks and it is now at 17pc. This iscompared with a 12pc three year average.

Investors that are positive about the long-termprospectfor Asian economies could view this as an attractive entry point. The fund has 25pc in China, 15pc in South Korea and 10pc in Taiwan.

Managed by Simon Barnard but part of famed fund manager Terry Smiths Fundsmith, this trust owns small and medium-sized companies from around the world.

Its discount has grown by around 9 percentage points in the past three weeks and it is now at 6.5pc. It has traded on an average premium of 3pc since it was launched in October 2018, reflecting the strong reputation of Terry Smith and the funds excellent performance to date.

Smaller companies are normally more vulnerable to economic shocks compared to larger firms, but come with greater growth prospects. Investors that have faith in Terry Smith's investment process could capitalise on the market sell off to buy high-growth companies at a rare discount.

Annabel Brodie-Smith, of the AIC, commented: Of the investment companies whose discounts have widened the most during the recent market sell-off, a large number invest in Asia and Emerging Markets, demonstrating investors anxiety about the threat of the coronavirus to the region.

"Other hard-hit sectors include those focused on growth, such as smaller companies and technology."

Continued here:
Are you brave enough to buy these three bargain investment trusts? - Telegraph.co.uk

There's a saying in the investment world that in a bear market, all stocks go to a correlation of one. That basically means that in times of market panic, investors sell everything, almost regardless of business quality or resilience. It's not that everything goes down by the same amount, but very rarely will great stocks go up when the market is plummeting like it has been.

That's why investors looking to be greedy when others are fearful may want to consider Amazon.com (NASDAQ:AMZN) at 1,689.15 per share, and Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL) at $1,084.33 per share at this moment of discounted market prices. Those companies' share prices are down 22.7% and 29.2%, respectively, from their recent all-time highs. Yet both companies' resilience and long-term outlooks remain as bright as ever.

Amazon and Alphabet look like ideal buys right now. Image source: Getty Images.

My current criteria for buying stocks amid this market plunge are:

E-commerce and cloud leader Amazon checks off each of those boxes. As we all know, Amazon is the leader in e-commerce, with about 37% of the market. Yet e-commerce itself only made up about 11% of all U.S. retail last year. That means despite Amazon's massive size, it still has room to grow in its core e-commerce segment.

Amazon is apparently seeing a surge in demand during the outbreak, as people stay at home and inundate the Seattle giant with orders for consumer staples.

In a recent blog post, Amazon reported being completely sold out of certain in-demand household items. In addition, Amazon's characteristic lightning-fast delivery has seen delays recently, as the company's capacity becomes stressed by overwhelming demand.

While these aren't positives, they are certainly better than the alternatives faced by airlines, oil companies, and brick-and-mortar retailers, which is extremely low demand. In addition, Amazon is on the case, pledging to hire 100,000 new full- and part-time positions, in order to both fulfill the new demand and help displaced workers from restaurant and hospitality industries who may be laid off. Not only that, but Amazon is raising its hourly pay by $2 per hour through April. The total incremental cost to Amazon will be roughly $350 million for employee pay across the U.S., Canada, and the E.U.

If Amazon comes out of the crisis looking like the essential infrastructure company that it is, it may not only boost its brand image among customers, but also politicians, staving off potential antitrust pressure from Washington this election season.

Of course, Amazon is not only about e-commerce. It's also the parent company of Twitch, the streaming e-sports and online community site, which should no doubt see increased traffic during this time. That's in addition to Amazon Prime video streaming services, whose content won numerous awards at this year's Emmy's with its hit comedyFleabag.

And of course, Amazon Web Services should do nothing but gain in importance during this critical time. In the current environment, the need for a flexibly distributed yet secure workforce becomes even more front-and-center, making cloud computing of the utmost importance. As the dominant leader in cloud computing, Amazon is poised to benefit. In this trying time, AWS is offering credits to customers in the most affected areas, and is also assisting many life sciences companies in the race to find a cure or vaccine for COVID-19.

This all adds up to increased demand for Amazon's overall product and service portfolio, making the company a long-term buy at these discounted levels.

Another company filling out my three criteria is Alphabet. No doubt, with many staying at home for long periods, consumers today will be using lots of Google search and watching YouTube videos at home. Still, that doesn't mean Alphabet will see increased sales. A majority of Alphabet's revenue comes from digital advertising, so it would certainly feel the affects of any COVID-19 economic slowdown.

No one is disputing that Alphabet's ad revenue growth will likely take a hit; however, Alphabet saw its ad revenue, between search, YouTube, and third-party properties grow 15.7% last year. In addition, 2020 was supposed to be even stronger, thanks to political advertising and the Olympics. Therefore, it seems Google's ad growth is only likely to slow, not reverse -- though there may be considerable uncertainty as to how much.

Yet while 2020 ad growth may be severely impacted, once the economy starts going again, Google search will still be the premier ad platform across the world, and YouTube will continue the torrid growth exhibited last quarter, when Alphabet revealed YouTube stand-alone revenues for the first time.

In addition, investors may be overlooking Alphabet's two other prized assets-- its Google cloud platform and its balance sheet. As of Dec. 31, Alphabet had roughly $120 billion of cash ready to deploy on either share repurchases or acquisitions.

Meanwhile, Google's cloud division grew a whopping 52.8% in 2019 to $8.9 billion, or 5.5% of revenue, but the underlying Google cloud platform infrastructure-as-a-service segment grew even faster than that. Google is a distant third-place challenger in the cloud race, but research firm Canalys estimates GCP grew 87.8% in 2019, faster than any other platform and increasing its market share from 4.2% to 5.8%. As mentioned before, nimble cloud operations will continue to be in high demand going forward, benefiting all cloud players, Google included.

Alphabet is a huge, strong company likely to only see a growth deceleration, not a growth decline, even in a recession. With a newly discounted stock price, investors should monitor whether the company will drastically increase its pace of buybacks. Either way, with a boatload of cash and a P/E ratio of just 22, Alphabet looks like an awfully big bargain at the current moment.

In times of great uncertainty and widespread market panic, it's probably wise to focus on the verybest stocks in the market and hold for better times ahead. Today is one of those times.

More here:
Coronavirus Crash: Where to Invest $2,773.48 Right Now - Motley Fool

Alison Southwick and Robert Brokamp, CFP

Mar 16, 2020 at 12:52PM

It's been stressful as countries work to contain the spread of the coronavirus. Motley Fool analyst Bill Mann joins us to share his insight into the top headlines as well as how he's managing his money amid the volatility.

To catch full episodes of all The Motley Fool's free podcasts, check out ourpodcast center. To get started investing, check out ourquick-start guide to investing in stocks. A full transcript follows the video.

This video was recorded on Feb. 28, 2020.

This video was recorded on Feb. 28, 2020.

Alison Southwick: This is Motley Fool Answers. I'm Alison Southwick and I'm joined, as always, by Bertie Brokamp. I've already called you that one, haven't I?

Robert Brokamp: You're running out because there are only so many things you can do.

Southwick: Personal finance expert here at The Motley Fool. Hello, Bro.

Brokamp: Well, hi.

Southwick: In this week's episode... Well, it's been a doozy of a week for everyone as investors [and the world, at large] try to deal with the spread of the coronavirus. Joining us, in-studio, to help make sense of the headlines is Bill Mann. Hi, Bill...

Bill Mann: How are you?

Southwick: ...analyst at The Motley Fool. All that and more on this week's episode of Motley Fool Answers.

__

So, Bro, what's up?

Brokamp: Well, we're going to talk about stocks a little later. They're not up, but I will tell you what is up because something else is down. As the stock market goes down, often people flee to the bond market driving bond prices up and driving rates down. So the 10-year Treasury, as of this taping on Friday -- so a few days before this episode comes live -- is at 1.15%, an all-time low. The 30-year Treasury is at 1.66%, another all-time low. We've never seen rates this low.

When rates go down, the prices of existing bonds go up. The Vanguard Total Bond Market ETF -- an ETF that I own a little bit of -- was actually up 3.5% this year doing its job -- going up as stocks go down. Over the past year the bond market is up almost 11%.

If you asked anyone a year ago if they would expect 11% from the bond market they would have said no, but that's where we are.

What does this mean for your personal finances? Well, first of all, mortgage rates are also down, so the rate on a 30-year mortgage, according to Freddie Mac, is 3.45%, only a little bit above the all-time low of 3.3% is from 2012.

Mann: Amazing.

Southwick: Giving it away.

Brokamp: Just giving it away.

Mann: Come get a house!

Brokamp: Exactly. So that's good. Now what this also means is probably at some point the Fed's going to cut rates. It was just a few weeks ago when Fed Chair Jerome Powell was saying, we're probably where the rates are this year. Don't expect anything. Now the markets are predicting, with about a 90% chance of certainty, that there will be at least one rate cut and maybe three this year.

Southwick: Whoa! Bill's ready to pull the trigger on saying something.

Brokamp: How much is that going to help, Bill?

Mann: I'm a very simple bear and maybe I'm not creative enough to think about this; but, ultimately markets are dropping and the 10-year, which is a great fear gauge -- maybe even better than the VIX -- is skyrocketing. What good is a rate cut going to do when you're talking about a health scare? Is it going to make people less afraid? This isn't a financial crisis.

Brokamp: Right, and I don't have the answer to that. Part of it is psychological. When you read the articles of people saying the Fed shouldn't even wait until the March meeting -- they should cut now -- it's just to reassure folks that they're on top of it.

Southwick: Whatever "on top" that means.

Brokamp: Whatever it means.

Mann: Does a quarter point rate cut come with a mask?

Southwick: We're doing things, OK? We're doing stuff. Get off our back. We're very busy.

Mann: Actions are happening.

Southwick: They're just running around waving their arms.

Brokamp: Practically speaking, what this means is to the extent that you can earn anything under cash, which is not very much, it's going to go down. What you can do now -- and I think it's probably worth considering -- is buy a one or two-year CD to lock in today's low rates before they go lower. That's what's going to happen. That's the one thing that occurs to me -- is that those are going to go down. Also other types of loans will be cheaper. Maybe it's a better time to buy a car. It might mean that you...

Mann: But you can't talk to people.

Brokamp: That's true. Just stay in the car. Don't get out of it, ever.

Mann: Just beep your horn until someone brings you another car.

Brokamp: Hopefully credit card rates will go down. We talked last week about how much the level of credit card debt is at an all-time high. The average rate, now, is between 17-21%. Maybe that will go down and be helpful. But for the most part I agree with you. There's only so much that the Fed can do at this point.

And that, by the way, is what's up.

[...]

Southwick: So it's been a rough week [on Wall Street and around the world], to put it lightly, and so we thought we would have Bill Mann come in. He's an analyst at The Motley Fool. He's been an analyst with The Motley Fool for a while, now.

Mann: 633 years.

Southwick: 633 years.

Brokamp: Which must be the same because Bill and I started on the exact same day.

Southwick: Oh, no way!

Brokamp: Yes.

Southwick: I didn't know that.

Mann: Yeah.

Brokamp: We have the exact same Fooliversary.

Southwick: Oh, that is fun.

Mann: That was either one of the greatest days in Fool history or the worst.

Southwick: Did anyone else start with you guys?

Brokamp: Rich McCaffrey, who's no longer here.

Mann: Yes, who was a great guy and a great analyst. I miss him terribly.

Brokamp: He moved to Morningstar and then Legg Mason. Is he still alive? Hey, Rich, how are you doing?

Mann: That's terrible. He's doing great.

Southwick: I think it's obvious we want to talk about anything other than the stock market this week, so let's talk more about Rich. What's his favorite color?

Brokamp: Great guy. Lovely wife.

Southwick: So woof, it was a rough week for Wall Street and the global markets. As of today I believe the Dow has dropped for seven straight days, but who's counting? There's been a lot of crazy headlines out there, so Bill's [here] to help us dissect the headlines and hopefully feel better about ourselves. Today is Friday. For our listeners it's [next] Tuesday.

Mann: Yes, so the market can't drop tomorrow.

Southwick: Not for us, but for our listeners it can.

Brokamp: Yes.

Southwick: Who even knows what's going on in the world when they're listening to this? I don't know. Maybe they're living off of tin can food and stockpiling guns. I don't know what's going on this coming Tuesday. It's gonna be chaos, maybe. No, it's not. It's all going to be fine.

Bill, thank you for joining us today. Should we open up the newspapers and see...?

Mann: You actually should. I think this is one of those situations... There's something that I always find so interesting [with] our leaders. With journalists. To be responsible [with] most crises they don't want to make people panic. But at some point you don't want people to underestimate what's happening, either, and there's this interesting inflection.

I think that's what happened this week. We went from it's the flu. It's not as bad as any of the other things that turned out not to matter that you had to remind yourself [about]. This actually is worse.

Southwick: Let's look at the top of The Wall Street Journal this morning, this morning being Friday in our world. The big headline was, Stocks on Track for Biggest Weekly Losses Since 2008. Oh, 2008 was the worst.

Mann: That was the worst.

Southwick: Bill, take us back.

Mann: It's been the quickest that we have moved from a top into a correction in history.

Southwick: Which is a 10% drop, right?

Mann: A 10% drop. I think these sort of demarcations are silly, but they exist so let's use one. To me, we talk about coronavirus as it is an epidemic or pandemic, but we also have to think of it as being an economic incidence, and the economic incidence, in this case, is going to be worse than the actual disease will turn out to be. I think for most situations you want to just shrug and say I don't know what's going to happen, but what is going to happen is that fairly heroic measures are going to have to be taken to stop the spread of the disease and that's going to hit supply chains everywhere.

Southwick: It's like the effort to keep it from spreading is what's hurting the economy. It's not the actual impact of so many people being sick. It's us trying to keep it contained that's what's doing it. I think you said it on one of the other shows -- or maybe you just said it aloud...

Mann: Hey, there are no other shows out there. This is the show.

Brokamp: The lesser shows.

Southwick: The lesser shows. I think you commented that you were kind of surprised that it took so long for the stock market to react. Why is that?

Mann: I think it goes back to how people are primed to not panic. And I think that's really the case in the midst of a bull market. I mean good news tends to be overemphasized and bad news tends to be hand waved away, a little bit, until it becomes self-evident that it really is bad and impactful.

China was already locked down in the middle of February. Factories were closed and the market was still hitting all-time highs. I just had to ask myself what's going on here because, in other times, really small events have made the markets react very sharply, but in this case the country that is literally the center of global manufacturing was closed for business and we're like, "Well, it seems OK."

Southwick: It's a whole town. Not even a town. It's a city of millions of people being told, "You can't leave your house."

Mann: It's essentially the country. We get reports from Beijing and from Shanghai where traffic, right now, is 3% of what it usually is. These are word-of-mouth reports, but the eyes on the streets are saying that the country is ground to a halt. And just to highlight how impactful this can be, Dun & Bradstreet did a study and showed that of the Fortune 1000 companies worldwide, about 163 have a Tier 1 relationship with Chinese suppliers, which means that Chinese suppliers directly supply things to them. But nearly all of them, 938 have a second-level relationship with a supplier in China. So any type of interruption of the supply chain will really impact companies that we would think about.

Southwick: Let's start by talking about the sectors that are going to be the hardest hit. We can head over to CNN who's saying that, "The global travel industry may not recover for years."

Initially we saw a cruise ship quarantined in Japan. We see the people waving from their balconies. And the initial headlines were like the cruise industry is really going to take a hit. As if, "Oh, no. My portfolio. The cruise industry. I'm so overexposed there. This is going to be bad." Then people were like, "Oh, wait a second. l travel. Maybe I shouldn't even go on a plane. I shouldn't go on a vacation." Now companies are telling their employees to cancel all their business trips. You're not flying anywhere.

Mann: Yes. Apple just cancelled a conference. Microsoft just cancelled a conference. And these were conferences that were happening in April and in May. So it is deeply impacting the travel industry.

To go back to China -- and I understand that by Tuesday these points are completely meaningless because it's already in 56 countries -- Chinese travelers made 150 million overseas trips in 2019 and right now it's functionally zero. And when most things go from 150 million to zero, that seems bad. So the travel industry is being impacted in really harsh ways. Take Apple, for example. If you can't get an iPhone, right now, because of a supply issue, you're going to get it when the supply becomes available. But a trip -- that's not something that's going to get consumed again later. It's just simply not happening. So any company that has a lot of debt and a lot of leverage -- in many different ways -- is in a lot of risk right now and travel is probably at the top of the heap.

Southwick: Are there any other sectors that you [think] are going to be in trouble?

Brokamp: The price of oil has plummeted. Absolutely plummeted.

Mann: Yes, the oil manufacturers. The luxury industry simply because of where they count on most of their growth coming from. From China. From the Middle East. Those types of companies are going to feel the pinch.

But [take] the pharmaceutical industry, all of the basic ingredients for pharmaceuticals tend to be made in China and in Asia, now. Just the basic materials. And if those are unavailable, that's a big problem.

Southwick: Let's talk about some individual companies. CNBC today had the headline, Apple is now down more than 20% from its record, making it among the hardest hit Dow stocks. And so Apple and Microsoft are among the most prominent businesses that have warned that supply chain disruptions could slow sales. What's funny, though, is if you actually look at Apple's chart, it's $270.

Mann: Thank you.

Southwick: That's where we were in December.

Mann: Exactly. First of all, everyone just take a deep breath. It's so easy to get wound up. I feel like what we were just doing is getting people wound up. Just keep in mind that Apple, Microsoft, and companies like that are coming down a lot because they have had unbelievable runs in their share prices. Apple has essentially doubled over the last year -- and that's hard to do when you started as a $600 billion company -- so any type of disruption for Apple had no bad news priced in.

Yes, it's a fact that Apple has dropped 20% but this is not a crisis. You're back to where you were in December, so thank you for putting it that way.

Southwick: You're welcome, although I am a little bummed to see Disney is also down 20%, but I guess people aren't going to go into the parks except for the Southwicks. We're going to Disney World in three weeks.

Mann: The Manns are on our way, too, in April.

Southwick: Are you really?

Mann: Yes, so what I'm saying is...

Brokamp: Shorter lines is what you have, too.

Mann: Yes, that's good. That's also good, but the way we tend to go there is just buy Disney now because we're leaving all of our money.

View post:
Investing in the Time of Coronavirus - Motley Fool

Apple's first original movie stars Anthony Mackie and Samuel L. Jackson. It will be released on Friday.

After sitting in escrow for four months, fledgling Apple TV+ stakes its first public offering on an in-house movie in The Banker, an old-fashioned biopic with a thoroughly modern twist on the uphill climb of aspiring African American entrepreneurs. Although its claim of being true has become a subject of debate, its hard to argue against investing in a fascinating story long buried in the abject racism it aims to dissolve.

The assets are plentiful, chiefly powerful turns by Marvel Universe cohorts Anthony Mackie and Samuel L. Jackson as disparate business partners looking to place their differences aside to shatter racist barriers in the Caucasians-only game of real estate investment in 1950s L.A. Simply put, they were out to prove that in making green it doesnt matter if youre black or white. But concessions must be made, namely a need to borrow a trick from a concurrent form of discrimination, the Hollywood Black List, by employing a naive dupe to be their front.

In the case of Mackies native-born Texan, Bernard Garrett, and Jacksons bon vivant nightclub owner, Joe Morris, that clueless rube is laborer-turned-player Matt Steiner, brought perfectly to life by a sheen-free Nicholas Hoult (The Favourite). Together, the unconventional trio snookers its way into anonymously ascending to the undisputed kings of downtown L.A. real estate.

The first half of the movie -- directed by George Nolfi (the Matt Damon vehicle, The Adjustment Bureau) and co-written by a gaggle led by Nolfi -- is a treat, as the characters meet and hatch their plan to unleash a clever end-around catching their white counterparts napping. Particularly enjoyable are the scenes of the two black men tutoring their utterly vanilla partner, Matt, on how to be white. Garrett, the brains, instructs the dupe on the intricacies of algebraic equations and how they relate to cost vs. square footage. And Morris, the gregarious funster, teaches him the combined fineries of schmoozing and golf.

Naturally, it all miraculously works; otherwise, we wouldnt have a movie. And I would have been fine with continuing on such an amusingly predictable path, watching the trio gobble up one high-rise or mansion after the other. Then, Nolfi abruptly switches gears on a trip with Garrett, his gorgeous wife, Eunice (Nia Long), and young son, Bernard Jr. (Jaylon Gordon), back to Garretts overtly racist hometown of Willis, Texas, where the idea of buying the local bank suddenly pops into the millionaires head. As the owner, and with Matt masquerading as the banks president, he envisions a world of long-overdue change endeavored by doing something no one in Jim Crow Willis ever considered possible: extending home and business loans to blacks.

Morris, who like the song says, Loves L.A., is rightly hesitant about his partners brainstorm, but reluctantly goes along. And once again, its a blast watching Garrett and Morris, posing as the banks janitor and Matts chauffeur, respectively, in pulling the wool over the eyes of stupid, racist rednecks. At least it is for a while. Nolfi sadly cant resist the urge to insert a stock white villain and a bloviating U.S. senator in James DuMonts George McClellan (the Arkansas pol central in the depantsing of demigod Joe McCarthy) to break up the party. Yes, what ensues really happened, but the convoluted nature of the financial crimes our three heroes have committed causes the movie to get lost in the weeds. The fanciful air begins to escape, a deflation exacerbated by Nolfis sudden rush to reach his films unsatisfying conclusion.

Still, by then, hes built enough goodwill upon his three charming lead actors to sustain. Jackson, especially, is rapturous as the happy-go-lucky Dean Martin of this greenback Rat Pack. Hes as electric as Mackie is subdued and steadfast as the films Gary Cooper-like backbone of integrity. Sure, his Garrett breaks some banking laws along the way, but his heart is always pure in helping his people rise up against centuries of unjust oppression.

Yet, a dark (i)Cloud hovers above The Banker in the person of the real Eunice Garrett, claiming the film is filled with inaccuracies (a claim the producers deny). Even more nefarious, and the reason Apple abruptly pulled The Banker from its planned awards-season theatrical debut in December, are claims by Bernard Garrett Sr.'s daughter, Cynthia, that as a child she was molested by her older half-brother, Bernard Jr., a one-time producer on the movie. Thats terrible, of course, but why should that affect the movie's release? It's a bit like Joe Biden being judged by the suspect actions of his 50-year-old son, Hunter. What does one have to do with the other?

Apple apparently agrees and has decided to go forth with The Banker. And the timing couldnt be better, seeing how the weight of current events has pretty much pinned us to our couches in front of the TV. Captive audiences could certainly do a lot worse, like Mark Wahlbergs hideous Spenser Confidential over on Netflix. Whereas that turkey is an account best closed out, The Banker, flawed as it is, generously yields interest.

Read the original:
Review: The Banker is worth investing your time - The Patriot Ledger

The author is an analyst of NH Investment & Securities. He can be reached atys.hwang@nhqv.com. -- Ed.

Time to pay close attention to petrochemical industry

Although petrochemical firms earnings are to be sapped by weakened demand, we view the sector as offering attractive investment opportunities amid falling oil prices. NCC cost competitiveness has recovered to its highest level since 2016, and oversupply concerns are expected to fade gradually.

Petrochemical players cost competitiveness to strengthen

As of Mar 18, the Asian naphtha price (CFR Japan) has slid to US$241/ton, the lowest level witnessed since May 2003. The US ethane price (Mont Belvieu) has fallen sharply to US$0.10/gallon. The YTD naphtha-based production cost to produce a ton of ethylene has fallen US$308 more than that for ethane-based production. Due to sluggish demand, prices for PE, MEG, and PVC produced at NCCs (naphtha-based production) and ECCs (ethane-based production) have also been declining, but product price spreads are set to expand in the case of products produced at NCCs.

Saudi Arabia and UAE have announced that they will up their crude oil production in April, and there is no scheduled OPEC+ meeting to adjust oil production. Accordingly, oil supply should continue to exceed demand for now. If oil prices remain below production costs, US shale gas/oil producers are likely to reduce their shale gas/oil and ethane gas supply, given that US shale gas/oil producers financial conditions are weak.

Oversupply concerns to dissipate

Up until recently, the amount of planned capacity expansion for ethylene over 2020~2022 had been about twice the expected rise in demand, leading to oversupply fears. By type of raw material, gas (eg, ethane and propane) takes up around 80% of the planned capacity addition. Since it is difficult to increase shale gas/oil output at the current oil price level, production cuts are inevitable when low oil prices are prolonged. This situation is to lead to climbs in ethane prices, in turn notably upping the possibility of canceling or postponing much of the current gas-based facility expansion plans.

About 80% of Chinas ethylene expansion plans are based upon ethane gas. Of particular note, the cost competitiveness of Chinese ECCs is likely to be lower than that for Koreas NCCs, since most of the projects in China are based upon shale gas as a raw material.

Demand at worst point, but good investment chances are coming

We believe that global demand for petrochemical products has now reached its lowest point. Although individual companies have lowered their cracker utilization rates by 10~20% pts, and although 1.1mn tons worth of production at Lotte Chemical Daesan NCC and 1.5mn tons worth of production at RAPID Cracker in Malaysia have been suspended amid troubles, these efforts should barely be sufficient to offset the decrease in demand. We foresee that after three to six months of adjustment of facility utilization rates to deal with a rapid change in demand, supply-demand conditions will be balanced this summer. Against this backdrop, we view domestic petrochemical players such as LG Chemical, Lotte Chemical, and KPIC as warranting investor attention, believing that good buying opportunities will emerge amid the current market landscape.

Read more:
Petrochemical Industry: Falling Oil Prices Offer Attractive Investment Opportunities - BusinessKorea

As toilet paper packages fly off the shelves and are rationed by retailers, some people are concerned that they might run out during the coronavirus pandemic. Its even become difficult to track down toilet paper rolls online.

Whats an alternative? Well, you might want to consider getting a bidet or bidet-toilet attachments. More common in Europe, Latin America and Asia, they are becoming more popular in America. Bidets keep users clean and require little to no toilet paper.

We found two lower-budget options and one higher-budget option, but you might want to get them while theyre still available, as theyre starting to sell out.

Price: $79 (reg. $99)

These bidets are flying out of the warehouse. The affordable TUSHY Classics are either sold out or back ordered until April 20, but they might be worth the month wait. TUSHY boasts that its bidet can be installed in under 10 minutes. The Classic has several different water pressure settings.

Price: $69.97

Shoppers who purchase this option should be prepared to install it themselves. This hand-held bidet nozzle and hose attaches to a holster. You can put the holster on the wall or on the side of the toilet. The bidet can be shut off using the valve.

Price: $299 (reg. $316.99)

This installable bidet seat is a luxurious addition to your bathroom. It includes a heated seat, two self-cleaning bidet nozzles, five water pressure settings, five water temperature settings, a deodorizer, a remote control and power-saver mode.

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How to repair your dry skin from hand-washing and hand sanitizers

Read more:
Coronavirus tips: Worried about toilet paper supply? Consider investing in a bidet - syracuse.com

With the S&P 500 down 28.4% in the past month, it's fair to say the novel coronavirus pandemic has not started us out on the right path for 2020. Still, not all is hopeless.

For those with some extra capital lying around, there are some plays to be made. I like a small bank that has just gone on sale called CNB Financial (NASDAQ:CCNE), the quarantine-friendly nature of social media stock Facebook (NASDAQ:FB), and the king of warehouse retailers Costco Wholesale (NASDAQ:COST). If I had $5,000 available right now to invest, it would be put toward buying some combination of these three stocks.

CNB Financial is a smaller bank that is creating some big growth. I took shares in the bank at $20 and around $17.43, and I am looking to increase that position at some point. The valuation here is what makes the bank such an appealing play. Growth has been stellar, and the current pullback has created a remarkable entry point for those with dry powder.

Image source: Getty Images.

Interest income through the last three years has grown in the double digits, averaging 18.2% annually through that time frame. Net interest income from that cash has averaged 12.7% annually over the last three years. Non-interest income has also experienced annual growth, culminating in an average annual increase in operating income of 18.6% over the same time period.

Overall, CNB finished 2019 with a 19% gain in net income to $39.9 million.

Most of the growth here has only come in recent years, as the bank has engaged in M&A to spur growth. Most recently, the bank announced its agreed acquisition of Bank of Akron for $64.5 million. The trend of M&A has allowed for expansion into new markets in Ohio, while the bank has also pressed a new presence in the Buffalo, New York, area.

With $305 million reported in total equity on the balance sheet, the company carries a book value of $19.80 a share. At the time of writing, the stock carries a price-to-book of 0.93. It's not often that you can find a company that just reported a 19% increase in annual net income, and is also trading below book. The bank returned 13% on equity last year, outpacing the industry average of 11.8%.

The stock has lost three years of gains in less than a month, falling more than 30%. Now, the stock is prime for taking. As the stock has gained, the dividend yield had been neglected, offering less than desired on that front. Thanks to the sell-off, the yield is now at 3.4%. Over the last 20 years the stock has gained 263.9% versus the S&P 500's 131.7%. To me, this one is a no-brainer at these prices.

Facebook requires absolutely no public exposure or travel to use. It has arguably made it far easier for couch potatoes to do nothing. Now, with the mounting fear and avoidance of public spaces, the social media giant seems likely to be a place of distraction and entertainment for those who are wisely avoiding the risks of going out. Because of these attributes, I consider it a safe play right now.

Giving up 28.3% in share price over a month's time, Facebook shares have fallen more than the S&P 500, and that might be offering some upside considering there isn't a lot within the company's business structure that should be affected by the coronavirus. As I said before, by my logic more people will be sitting inside staring at social media, thanks in large part to the coronavirus. So many professional sports leagues have been postponed. So many people are now working remotely, and so many schools have been canceled. This all leads to a lot of bored people with time on their hands.

Though overall revenue growth has slowed in recent years, Facebook still finished 2019 with 26.6% sales growth totaling $70.7 billion. Net income did slide 16%, but it had less to do with operations, which only saw income slide 4%. This virus might be the thing that shifts the story.

User growth remained strong through 2019, with a year-over-year 8% increase in monthly active users as of Dec. 31. With the slowing of businesses and activities, I think all of Facebook's apps, including Instagram, stand to see a rise in traffic in the foreseeable future. After the sell-off, shares are trading at around 23.6 times trailing full-year earnings of $6.43 per diluted share.

Current year analyst estimates are calling for earnings of around $9.07 per share. That would be some pretty nice growth year over year. It would also give the company a forward P/E ratio of 16.4. Overall, I like Facebook as a play in a time when many more businesses based on physical stores or real-world activities are facing a tough headwind.

Long-term, the coronavirus can't hamper retail forever. But it most certainly does seem able to cause a lot of headaches in the short term. If this is a concern, then the king of bulk goods seems like the way to go. Costco carries everything in bulk, and the extra sales figures provided by the company when it reported on the most recent quarter gave insight into the effect that the coronavirus has had on its sales. Traffic increased 11.7% year over year in February, with a 9% increase in the United States. Thanks to the warehouse nature of Costco, the panic on COVID-19 seems to have driven customers to the store to prepare.

Overall, it is still about the long game, rather than the short-term shock of something like the coronavirus. In the ever-continuing onslaught between Amazonand virtually every other retailer, Costco carries the weight to thrive.

Revenues have gained an average of 7.1% annually from fiscal 2016 to 2019, with prudent management leading to an annualized average gain in net income of 11.7% through that same time frame. Similarly, earnings per diluted share averaged 11.6% through that same time frame. Finishing fiscal 2019 with $8.26 per diluted share, earnings increased 16.5% for the year.

Sales for the first two quarters of fiscal 2020 have been encouraging. Total comp sales for the first 24 weeks of the fiscal year are up 6.6% year over year, with 7% gains in the United States. E-commerce sales are up 17.4% through that time frame. Thus far for the fiscal year, total revenues are up 8% at $76.1 billion, with earnings up 6.9% to $4.00 per diluted share.

For the second fiscal quarter alone, comp sales gained 8.9% with 28.4% gains in e-commerce. Net sales increased by 10.5% to $38.3 billion.

Full-year estimates are around $8.71 per share. Yes, that gives Costco shares a high premium of 33 times forward earnings. The retailer tends to command a higher premium due in part to the strength of its business over time.

Historically, Costco shares have absolutely decimated the S&P 500 over the last 20 years, gaining 509.2% versus the S&P 500's 106.3%. Market confidence is displayed in the stock's performance over the last month, as it is down 7.4% compared to the S&P 500's 19.8%. I like it as a good stock investment right now.

Go here to see the original:
Coronavirus Market Crash: Where to Invest $5,000 Right Now - Motley Fool

06:01 19/03/2020 Warren Ingram

Stock markets are moving around like a child on a jumping castle.

If you observe the herd mentality of those clearing out the stocks of toilet paper from the shops, you have an inkling of the limited thought being applied by investors who are selling shares at this time. Rational investors are watching events with interest and doing very little.

The best investors are starting to gradually buy quality assets at great prices, but they are moving slowly and with great fortitude. If you are in a state of panic (or even worse) are selling all your shares now, you are doing yourself a great disservice.

The moves are big

Some people are saying that this current market crash is a once-in-a-lifetime event. I think that is a foolish comment.

I started in the investment markets in 1996, just in time to experience one year of rising markets before the Emerging Markets crashed.

Soon after, markets crashed again with the IT bubble that burst in spectacular fashion. Since then we have had many notable market events, including the 2008 financial crisis.

These crashes were hard to predict, and markets recovered after all of them. Investors who sold out in the middle of the crash lost money forever and those who did nothing, recovered their losses and made profits again. It is nearly impossible to understand why it will be different this time.

The reasons are varied

I have had many conversations with investors over the last few years about the US stock market. We generally agreed that the market was expensive and that it was due for a pause or a bit of a drop. No one foresaw that the market would crash because of a coronavirus from China.

Unfortunately, the stock market was also impacted by a new trade war between Saudi Arabia and Russia, two of OPECs biggest oil producing members. To make matters worse, interest rates on US government bonds (US Treasuries) dropped suddenly and posed a real threat of reducing to negative interest rates.

The markets were impacted by three major events in a very short space of time. However, none of them are structural issues that will change the way the world works. If anything, increased awareness of sanitation and the benefits of the efficiency of online meetings and working from home might force a change for the better.

Central banks have done what is necessary

I really like the action taken by the US Federal Reserve in recent weeks. They took decisive action to limit the financial impact on the economy. They ensured that the financial system will not grind to a halt by giving comfort to banks by providing additional capital and sureties that are necessary in times of crisis.

Similar action has been taken by other central banks around the world and this will mitigate the economic impact that is currently being felt globally.

If you need income

If you live on the income from your assets, there is no benefit in selling your investments now. If you feel the need to act, try to reduce the income that you withdraw from your investments.

Im not suggesting you change your lifestyle, just try to cut where possible. In addition, try to delay big expenses that are not essential now. For example, if you were planning to buy a new car, delay this decision if it means that you must sell some investments to raise the necessary cash.

If you want to buy shares

I think it is absolutely the right time to consider buying investments now. However, I would not rush to invest all the money at once.

Rather take time and phase your purchases over a period of months. For South African investments, I would phase in my purchases over three months and for international purchases, I would take six months.

My reason for the accelerated SA purchases is that SA is really cheap now. There are brilliant companies on offer at crazy low prices. The US stock market is not really that cheap, it is probably at fair value now, i.e. not cheap or expensive.

Act slowly now

If I can leave you with one message in these times, resist the urge to act quickly with your investments. These market events always feel overwhelming and devastating.

However, they all pass and investors who dont panic tend to profit from the crashes. If you are feeling optimistic and want to buy shares, I agree with you, just do it slowly and over a period of months!

Warren Ingram is a Director of Galileo Capital and hosts the HonestMoney Podcast.

See original here:
HONEST MONEY | Is it time to panic over your investments? - Fin24