Note: This thread is related to #Coronavirus #COVID19

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Gavin Baker+ Your Authors @GavinSBaker Husband, Becky Painter. CIO, Atreides Management. Former PM, Fidelity OTC fund. No investment advice, views all my own. Mar. 04, 2020 1 min read + Your Authors

1) Political risk is now essentially zero. All about the Coronavirus, which is an uncertainty rather than a risk.

Strange to me that companies to date are generally only cutting guidance to reflect China, which is already recovering.

2) No one knows anything. Companies don’t know. Investors don’t know.

Better than expected preannouncements this week don’t mean anything. They might mean something in a month.

It is a time of uncertainty, not risk. Amplified by a disappointing CDC response so far.

3) Also strange to hear long only, alpha focused investors say that they are “upgrading” their portfolio to position themselves for a recovery.

This isn’t a bet on a recovery - it is a bet on continued market weakness from an alpha perspective.

4) “Upgrading” a portfolio will generally destroy alpha in a recovery.

Obviously *very* different if one is an absolute return oriented investor where it makes more sense to upgrade the long side of the book.

5) My macro friend - who is not Stanley Druckenmiller btw - is still cautious. I have no idea. 🤷‍♂️

You can follow @GavinSBaker.


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