The panic starts today, but the reality is going to be with us a while. Inconceivable doesn’t mean what they think it means.
This is what happened in the Great Depression. Deflation means you may not have a job to return to. Inflation means you pay more for goods at the supermarket. Once companies see the savings from having staff work at home, many won’t be coming back.īut if you’re not actually writing software, the situation is more dire. It’s true that, as Zoom CEO Eric Yuan says, the coronavirus from China is going to “change the landscape” of work. There’s a contract for January 2024 gasoline at $1.24 per gallon. Once planes and trucks get back on the road, they’re going to be making money hand-over-fist. Jet fuel is costing $1.60 per gallon out to 2023. You can hedge oil at $40 per barrel all the way through September 2021. Oil prices started March 9 were 23% below where they were a day before. If machines can do what people used to do, that’s deflationary. If you want to make money from people using their internet for work, you can do it in this market. I’m already seeing AT&T (NYSE: T) yielding nearly 6%, Verizon Communications (NYSE: VZ) yielding 4.5% and Cisco Systems (NASDAQ: CSCO) yielding nearly 4%. Everyone is hiding at home, those who can are trying to work, and videoconferencing is a hot niche.īut there are going to be huge bargains in good companies once the machines are finished. Zoom is a hot stock right now because it offers free videoconferencing. When everyone around you is panicking, however, you don’t pay 19 times revenue for anything. In a go-go market, where everyone is looking for growth, you grab that rocket ship and hang on.
Zoom is a fast-growing company, but it’s still a small one. “To every thing there is a season, and a time to every purpose under the heaven.” (A lot of investors are going to be on their knees this week.) Or if you prefer, open your Bibles to Ecclesiastes 3. We should have a young David Crosby, still going strong at age 78, sing the harmony for us. It opened March 9 at $105 per share, down 8% from its March 6 close. What has the stock done since then? Basically, nothing.
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