The markets are gyrating following a path of least resistance lower for now but I wouldn’t necessarily try to bet that these trends continue. On the one hand, the economy has been terrible for a month and is going to get even worse over the next two weeks as lock downs grow across the globe before it might possibly start recovering. Small businesses are going to be in big trouble and unemployment is going to be through the roof when the summer starts. That said, here’s why it’s hard to be bearish right now.
1. The markets are already down 30% from their recent (admittedly Bubblicious highs) which means a lot of the bad news has been priced in.
2. More importantly, the whole world is trying to find a cure and tests and other fixes for the Coronavirus Crisis and people/society/humankind are amazing.
3. Millions of the workers who just lost their jobs are going to find new jobs in more resilient, long-term industries, including some that we don’t even realize are about to exist post-Coronavirus Crisis. And all the companies that do survive the Coronavirus Crisis, all of which were desperately trying to find good help pre-Coronavirus Crisis, are going to be able to find that help.
Feet-to-fire, I’d expect that the markets spike and tank 2-3% on a day-to-day basis with a continued downtrend unless the data clearly were to start showing that the number of people getting and transmitting Covid-19 has suddenly dropped dramatically or if there’s a cure or an easy, cheap treatment for those who come down with it. I think it’s best to remain cash-heavy with some hedges and to hold onto our core positions.
And I’ve even got a new name for the portfolio that I expect will be a core holding for years to come and which I’ll write more about in coming weeks. The company is CRISPR Therapeutics AG (stock symbol is CRSP), a gene editing company, focusing on developing transformative gene-based medicines for serious human diseases. It develops its products using Clustered Regularly Interspaced Short Palindromic Repeats (CRISPR)/CRISPR-associated protein 9 (Cas9), a gene editing technology that allows for precise directed changes to genomic DNA. It has a portfolio of therapeutic programs in a range of disease areas, including hemoglobinopathies, oncology, regenerative medicine, and rare diseases. To be clear, this is not the only CRISPR company in the world, despite its name being the same as the acronym (CRISPR) that other companies use too, but this one is probably the leading CRISPR company in the world.
Now you guys know that I don’t like to invest in giant large cap biotech companies, and when I do invest in biotech-related companies I usually try to find one like this one that’s still just a $2 billion market cap and isn’t widely known or owned. For the last few years, I’ve been trying to learn more about DNA ever since my daughter Amaris was born with a genetic disorder called Trisomy 13, which basically means that she has 3 copies of chromosome 13 in most of the cells of the body, instead of the usual 2 copies. The idea of being able to edit genes is compelling enough to me that I’ve been waiting for a chance to buy the stock in the leading CRISPR company at a reasonable valuation and I think we have that chance now. I’m buying a pretty decent-sized first tranche in CRSP and will look to buy more in coming days and weeks.
Other than that, I think it’s best to stay the cautious course for now but don’t get too bearish. Like I explained above and like I always remind us — things usually work for the US and they probably will again this time too.
Finally, a remind that we’ll do this week’s Live Q&A Chat over video using Google Hangouts Meetings tomorrow (Friday) at noon ET.