I had a nightmare about the Corona Virus in January & became bearish
Most experts were dismissive about the impact of the Corona Virus on the economy and the stock markets.
They felt that it was a passing phase which would work itself out in a few weeks.
However, Bill Ackman was prescient.
He realized that the virus would have a devastating effect and would cripple the World.
“Beginning in late January I was getting increasingly bearish and I woke up with a nightmare,” Ackman revealed.
“My nightmare was that you have this virus that replicates and infects incredibly rapidly,” he added.
Ackman did the sensible thing of hedging his portfolio presumably by buying Puts and selling Futures.
He also withdrew tons of cash from the ATM and went into lockdown.
His office staff were also directed to Work From Home.
He advised President Donald Trump to enforce a complete shut down of the country and a closing of the borders
Mr. President, the only answer is to shut down the country for the next 30 days and close the borders. Tell all Americans that you are putting us on an extended Spring Break at home with family. Keep only essential services open. The government pays wages until we reopen.
— Bill Ackman (@BillAckman) March 18, 2020
With exponential compounding, every day we postpone the shutdown costs thousands, and soon hundreds of thousands, and then millions of lives, and destroys the economy.
— Bill Ackman (@BillAckman) March 18, 2020
This is by far the best piece I have seen which explains the math behind the virus. It is a must read. https://t.co/ktu7CqR5v2
— Bill Ackman (@BillAckman) March 20, 2020
Hilton will go bankrupt. No business can survive a prolonged lockdown
“Hilton is the canary in the coal mine,” Ackman pointed out, implying that the steep plunge of its stock price was a hint of the dark days to come.
He rightly pointed out that the concept of a gradual or partial lockdown was absurd because people would flee from areas where there is a lockdown into areas where there is none.
This would result in a rampant spread of the virus and put it beyond control.
Instead, a complete lockdown of the entire Country coupled with a sealing of the borders is the best solution.
“What’s scaring the American people and corporate America now is the gradual roll-out … Capitalism does not work in an 18-month shutdown, capitalism can work in a 30-day shutdown,” he stated.
“America will end as we know it. I’m sorry to say so, unless we take this option,” he added in a grim tone.
Mr. President, the moment you send everyone home for Spring Break and close the borders, the infection rate will plummet, the stock market will soar, and the clouds will lift. We need your leadership now!
— Bill Ackman (@BillAckman) March 18, 2020
I want to light myself on fire pic.twitter.com/yyNuBwnDHo
— Bear Market Ramp Capital (@RampCapitalLLC) March 18, 2020
Stock markets spooked, plunge to lower circuit
Bill Ackman’s prescient comments about the impact of the Corona Virus served as a wake-up call to investors on Wall Street and other places.
They rushed to dump their stocks, sending the markets into an unending tailspin.
Ackman just halted the market.
— Nathan Michaud (@InvestorsLive) March 18, 2020
Please get Ackman off CNBC before people start jumping off bridges. @CNBC
— Michael Novogratz (@novogratz) March 18, 2020
#BREAKING – Bill Ackman CEO of Pershing Square capital tells CNBC “If we allow this to continue, every hotel company in the world is done” Ackman says he believes “Hilton Worldwide stock is “Going to zero”
— Richard Southern (@richard680news) March 18, 2020
Sentiment seems like it is getting VERY negative. That Ackman interview didn't help. I wonder if we'll look back and call it the Ackman Whiny Bitch Bottom™. And no, I'm not going to take that back. What he did today was completely irresponsible and he cried too much. #facts
— Joseph Fahmy (@jfahmy) March 19, 2020
If yesterday marks the low, it will be called the Ackman bottom.
— Mark Minervini (@markminervini) March 19, 2020
However, visionary Billionaire Elon Musk was not much impressed by the panic.
“The coronavirus panic is dumb … Fear is the mind-killer” he said in a dismissive tone.
The coronavirus panic is dumb
— Elon Musk (@elonmusk) March 6, 2020
Fear is the mind-killer
— Elon Musk (@elonmusk) March 15, 2020
Global recession & severe Bear market is coming
Other experts also warned that there would be devastating consequences of the Corona Virus.
Industrialist Anand Mahindra warned that that a global recession would play out whose costs would be incalculably high.
The virus will eventually be conquered, but it will have left behind a global recession. The costs of that are incalculably high at this time. The most fearsome toll will be on small businesses, the self-employed & those whose lives depend on meagre daily wages. (1/4)
— anand mahindra (@anandmahindra) March 19, 2020
This sentiment is shared by other knowledgeable personalities.
#BREAKING: Trump says US "may be" sliding into recession due to coronavirus https://t.co/Us2JTwOsq9 pic.twitter.com/rZQOECLVMF
— The Hill (@thehill) March 16, 2020
Roubini warns on 'severe' coronavirus recession, says everyone needs $1K payment https://t.co/ZKPAuU3B0N via @YahooFinance
— Nouriel Roubini (@Nouriel) March 18, 2020
UN chief: World at war with a virus, recession near certain https://t.co/suS9s5zyIW
— Republic (@republic) March 19, 2020
US, UK & other countries have announced strong economy boosting measures in recent days. Need RBI to do the same – it is time for action!
— Sanjiv Bajaj (@sanjivrbajaj) March 18, 2020
This guy’s magnificent.
Addresses his 177,000 employees on their plan.
Says COVID-19 is worse for Marriott than the Great Financial Crisis and 9/11 combined.
Taking no salary and cutting all executive comp by 50% this year. $MAR https://t.co/1KpFo9bdaX
— Downtown Josh Brown (@ReformedBroker) March 20, 2020
Bargains of a lifetime …. if we manage the crisis correctly
Bill Ackman clarified that he is taking advantage of the crash to buy stocks aggressively.
“These are bargains of a lifetime if we manage this crisis correctly,” he said with a comforting smile on his face.
That is why we are buying stocks. These are bargains of a lifetime if we manage this crisis correctly.
— Bill Ackman (@BillAckman) March 18, 2020
However, he did get pulled up by his followers for fear-mongering and creating confusion.
@BillAckman actually you gave all of us reason to be confused. You made your case on how horrible all was on the containment, USA response and it’s demise and then told us you bought stocks. Aggressively.
— Stephanie Link (@Stephanie_Link) March 18, 2020
I agree that high-quality company stocks are a bargain of a lifetime right now. However, your interview on CNBC was the most irresponsible thing anyone has ever done. All you did was unnecessarily breathe fear into an already frightened public. You owe Americans a public apology.
— David W Ingle (@DavidWIngle1) March 18, 2020
CNBC should be ashamed he had positions that are short he said it!
— Jonathan Glaubach (@TraderYON) March 18, 2020
Market may not have bottomed out yet
Kalpraj Dharamshi, the veteran value investor, claimed a few days ago that the market had bottomed out and sent out a buy call.
Putting my neck out for chopping. Market has bottomed Friday. Nifty is done retesting 9k. Buy. Pharma seems to be leading. #Markets #Nifty #Panic #Coronapanic
— Kalpraj Dharamshi (@KalprajD) March 17, 2020
However, he soon realized that he had made a terrible mistake.
I was trying to find the market’s bottom….instead the Market found mine ? #Coronacrash #MarketSlump
— Kalpraj Dharamshi (@KalprajD) March 18, 2020
I'm going to go out on a limb right now to say that any market talking head who says we're at or 'very near' the bottom should be charged w/ financial malpractice. We have yet to get what will be much worse data– medical AND economic– that *will* cause major sell-offs.
— Liz Claman (@LizClaman) March 19, 2020
DJIA now down 30% from the peak, in the 30-40% down range I predicted a few weeks ago it would end up. But since monetary bazooka is nearly used, markets will not bottom till the virus contagion is spread & the fiscal bazooka (2-3% of GDP) is credibly displayed. May be weeks away
— Nouriel Roubini (@Nouriel) March 16, 2020
Mark Minervini, the author of the well-known books Think & Trade Like a Champion and Trade Like a Stock Market Wizard advised that there is “plenty of time” for the Bull market to resume.
Everyone is trying to nail the bottom of this "once is a lifetime" buying opportunity. First of all, it's not a once in a lifetime opportunity. Second, picking the bottom isn't the opportunity. The bull market that follows is the opportunity. And there's plenty of time for that.
— Mark Minervini (@markminervini) March 19, 2020
People dont understand the magnitude of countries shutting down entire economys.
— Rokkein (@rokkein) March 19, 2020
We aren’t at the bottom yet. Many people will be laid off and are being laid off. What bailout can keep a company with a 90% drop in business going. Sorry to express some fear and I’m optimistic this will get better eventually, but we’re in for some more pain.
— Dex (@Dex96477375) March 19, 2020
Obviously, it is advisable for us also to lie low at present and not venture into Dalal Street until after the storm has passed and the all-clear sign is given!
