Friday File: Annual Review Part 3 (plus PANIC, SPCE and more)

Checking in on more Real Money Portfolio holdings, including thoughts on GOOG, TTD, SPCE, MKL, DIS, COR and SLP

By Travis Johnson, Stock Gumshoe, February 7, 2020


Here’s the scenario of a week ago: China is in the midst of an epidemic of possibly explosive proportions, with fear gripping much of the country (and the world) as a coronavirus spreads and seems to have a pretty high mortality rate, with conspiracy theories abounding and the fear of social unrest as whole cities seem to be abandoned in an attempt to quell the viral outbreak… and while that’s happening, we’re also at the conclusion of the Chinese New Year celebrations that had everyone on holiday… and were extended to keep more people from traveling, and to keep the Chinese stock markets closed.

All that’s about to come to a head, the Chinese stock market will reopen to possibly catastrophic losses on Monday morning… and indeed, that’s how it turns out, with more travel bans and border closings announced over the weekend and the Chinese markets down roughly 8% on their first day of trading after the holiday, the worst drop in 4+ years (and the worst open in more than a decade). So is that the black swan that sends the global economy into a tailspin? Is this what’s needed to send the “Goldilocks” economy running away from the three bears?

Well, that’s the narrative we heard a lot last weekend, and the financial media is forever trying to forge a narrative to explain where things will go… but when Europe and the US started trading on Monday, that narrative of impending doom was swept quickly away by more buying. Halfway through the day, the S&P 500 was up 1%… with the story being either that the market liked China’s more aggressive response to the coronavirus, or that the coronavirus was being shrugged off because we’ve seen things like this before and they didn’t end up having a long term impact (like SARS or Swine Flu), or, for the few honest pundits out there, a simple “I have no idea what’s going on.”

Being prepared is important, and thinking about personal reactions for your safety and well-being is important — but that doesn’t mean panicking and shifting your investment strategy every time a headline scares you (scaring you is the point, remember, otherwise you won’t click through and read the rest of the article and see their ads), it means things that are more mundane — having a plan for what to do ...

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