Once upon a time in Las Vegas, a person could place a bet on almost any outcome of almost anything under the sun. A guy could walk up to the “book” at the Sands Casino and get odds on whether his pregnant wife would deliver a boy after three daughters.
The father-to-be could place a bet that even if he did not get the son he was hoping for, he could at least make some money and go out to celebrate the birth of his new baby girl.
In this time of the Internet, where both a complete lack of privacy and political correctness rules our lives, I suppose betting on the gender of your next child would be a capital offense.
In the television series Billions, fictional character Bobby Axelrod is out of his Twin Towers office when the first plane hits. He immediately calls a stockbroker friend and “shorts” aviation stocks, hotels and shipping companies. There has been much conversation as to the ethics of what Axelrod did. I think you know my view on the matter.
The fear of a COVID-19 pandemic has created chaos and panic selling in the financial markets and with oil prices. Many people have made a “lot” of money in the past three days. The opportunities for profits are there because tens of thousands are sick and thousands have died. Further, tens of millions and probably more people are going to suffer financial harm—from slight to severe—in the wake of the virus.
Stealing from a badly injured person in an automobile accident is morally reprehensible, with the perpetrator deserving a special tortuous place in hell.
However, while not having anything to do with the victims of the COVID-19, there are going to be those that say they will hold until things return to normal. They say, “God watches over drunks and children.” Some have added “and fools.” Sinning fools can find redemption but financial fools usually end up like a bug splattered against the windshield.
Unless Divine Intervention cures the COVID-19 problem tomorrow, it will be at least many months before there is any chance of a return to normal. Only the Divine Powers might know what the markets will look like by then.
Having said that, the Philippine stock market could mount a recovery much quicker than the rest. But if you are going to bet that way, better hope that your reward will be huge.
Every investment decision must come down to comparing the amount of expected loss (and we are counting pesos here) and potential reward. I say “expected” loss because I always assume that the position will lose. Then an investor must make an estimate of the probability odds of the worst case and of the best case. That is the most difficult part because we often give too much reliance on hopes, wishes and even prayers when we look at our investments.
If you want to bet on the COVID-19 “winning” against a quick cure or viral “burnout,” we know what will immediately be damaged. It is really a no-brainer. These have anything to do with tourism—hotels, transportation and souvenir shops.
Consumer retail will see some damage but the severity will all depend on the length of time the outbreak continues. Capital expenditure will undoubtedly slow over the next months as business gets very cautious and takes a “wait and see” attitude.
But even after all of that brilliant analysis, it all comes down to one thing: Is the Philippines going to dodge this viral firestorm of biblical proportions?
E-mail me at mangun@gmail.com. Visit my web site at www.mangunonmarkets.com. Follow me on Twitter @mangunonmarkets. PSE stock-market information and technical analysis tools provided by the COL Financial Group Inc.