I am actually interested in a discussion on good short candidates, either specific stocks or sectors. I am going to mostly stay long 5G. It has to happen, but when I see Air Bus and Boeing and their losses, realize no one is going to travel by air for a LONG TIME, I see that sector as shortable, except it has already been decimated. Tons of folks losing jobs, the market is trading like the economy will recover this Summer. The econonmy won't for years, right? So I figure there are some good shorts, but I usually do not approach the market this way.  So anyone with thoughts?

Jon,

I'm interested as well to hear people's thoughts - not only on shorts, bur other investment strategies/ideas as well. Here are my initial thoughts, although I'm not sure how helpful they are -

for instance, I think the car companies are in for a very bad time because 1. Who (at this point) wants to test drive a car that 12 other people have been in that day?; and 2. With as many unemployed people as we have, who feels rich enough to plunk down $50k+ for a Ford F-150? (Now, all that may be offset by a. I believe there was or will be govt. relief for the auto co's, 2. From what I see locally as well as in the news, people are acting downright stupid in terms of distancing - so they might not think twice about taking a test drive, and 3. The American childish appetite for debt never ceases to amaze me - meaning buying things they can't afford. So, at 0% down, 0% (or whatever) at closing, why not buy an F-150 - you'll worry about how to pay the note later. and 4. I just don't know what the kind of liquidity that's being pumped into the system will have in terms of effect - people can buy stuff for free? Inflation may finally make it's long-delayed appearance? I dunno.

What I do know is this - one can play the volitility. For the reasons above, I got rid of 2/3rds of my stake in Ford at $5. Then, I realized by looking at the options that there's money to be made there. So I sold the remaining 1/3 out as calls stk May 08 @$5 for .50 premium. (The stock itself was around $5 when I did that.) A 10% premium? Are you kidding. The problem and the promise are the same - the price gets pushed and pulled according to the news of the day. It's been up as high as around $5.40 or so, and today it ended in the $4.90's.  So, I may pull a 'Jon' and buy them back or let them expire, and sell them out again if that's viable. I'm sure you can find a lot of stocks with some ridiculous premiums if you're wiling to take the risk. Jester is much better and more sophisticated at playing volatility, so he might chime in.

The banks, and related financial institutions (Manulilfe, Metlife, etc.) have been crushed, and are now bobbing around with the volatility -up 3% one day, down 3% the next. I know the banks are in a black hole because while people can not pay their mortgages, the bank still has to pay the institutions that hold those mortgages, or if they own them, they're not getting paid for what are, essentially 'delayed income' from the mortgage payments they should be receiving. I wonder if, like Canada, the govt. will pay banks to loan money. I haven't quite looked into or figured out why the insurance companies have been kicked to the curb. I'm guess it's 1. If they're life insurance companies, the fact that the death rate has been knocked out of predicted ranges may cost them. And if they're insuring other things, people may not be paying their premiums to the extent that they can either get away with it, or simply can't afford it. But if you look at the dividends for MFC and MET, they're pretty enticing, if they can hold them. And at lower prices they become more so. Metlife has strong analyst support. MFC has more of a 'neutral' rating.

Ok, so none of that is critically helpful in terms of shorts. But if the market crashes again, I know some names I believe in that I'm either not selling or will accumulate more of: CIEN (I think 5g was going to be delayed before Corona, stretching over years through 2025, when I think it becomes ubiquitous. But their balance sheet looks good, and they've consistently beaten estimates. They've had a number of downgrades to 'neutral' and PT's from $47-$51 or so based on price appreciation. I'd love to buy some more MSFT at lower prices. I believe in ISRG, but they may suffer short-term, as their business is hospital based - I'd take it as a buying opportunity. They were as low as $390 during the March crash. Ah, retrospect. NVDA may be pricey in this market, but long-term, I like them a lot. I own some Apple - the street absolutely loves them - I have doubts about how many people will drop $$$ on pricey iphones, but the SE model should help.

That's about all that's in my head at the moment. I probably didnt' help a whole lot, but perhaps others can contribute.

For shorts, that's a tough one. I used to be very confident in a test of the March lows, but I'm far less so now. The market leaders have shown they are relatively fine and will be OK, and they make up such a large % of the indices I doubt they'll sell off 25% from here, which is what it would take to return to the lows. Back then it was all fear of the unknown. Now, we know the death rate is a fraction of what we feared. There are treatments coming to improve it. Every day is closer to a vaccine. Plus we know there's a massive amount of asymptomatic people, which probably gets us closer to herd immunity. Sweden may be leading the way there.

Finally, the country is starting to open up. A bit prematurely I think. The correct approach is when at that plateau after the peak which last a few weeks, keep it going another few weeks to really strangle the virus spread. Instead, at Trump's insistence because he wants to have rallies and not lose the election, we're opening up. I doubt that once any State goes to Phase One it ever returns to lockdown, barring a vicious mutation.

The sectors you'd expect to struggle have already taken such a huge hit. Airlines down over 55%. They'll be interesting to watch this week after Buffett's comments Friday. In typical talking his book fashion, he said in March he wouldn't be selling any airlines stocks, then on Friday he said he sold all his airline shares in April. Berkshire is holding onto its cash for now. I wonder if there are shorting opportunities in restaurants? CMG is usually at an absurd multiple, and currently not far from its ATH, but OTOH their recent earnings report was decent. Perhaps fast casual can be OK with strong pickup and delivery even with reduced restaurant capacity for a while. The chains that are more for the sit-down experience though, they rely on high occupancy and high margin drinks sales. Perhaps if something like CAKE rallies again, which last week jumped to $24 then sold off back to $20.

DIS is more of a buy on the dips for long term imo. AMC is one to watch here. Universal did well with the digital release of Trolls World Tour, to which AMC responded by banning all Universal movies. That's just posturing I think. Universal probably has no big releases in the next while anyway so they'll come to a deal. What will Disney do though? I can't see them sitting out on $20 digital rentals for new releases, and I doubt AMC can afford to ban Disney, they're struggling already. It's not looking good for them with the virus and probably studios holding onto films for longer because what's the point of releasing them to 25% occupancy, plus a gap in content due to no filming, and now this digital threat. Shades of GameStop circa 2013?

The big oil companies have rallied more than I'd expect to see, given how cheap oil is and the hopes for economic recovery being too optimistic. I think many will be looking at them as a buy on weakness story too. The market in general has gotten ahead of itself I think. Maybe it'll be more range bound for a while?

Good posts by all.  My take on the markets right now is that we may still have a chance to buy at lower prices, I am not sure if the lows get tested, but feel that the rally in the markets makes stocks far more expensive than they were when all this began.  There is support at the 50DMA which is at about 2758, not too far from todays pre-market level, the question of course is if it will hold, I lean on not holding. 

I believe that we are a ways until we have truly effective and widespread testing (which detects even the asymptomatic), an effective treatment (remdesivir is a small step in the right direction, but not a silver bullet), and of course an effective vaccine that is produced at a global scale, in short this stool is missing all three legs. That said, I believe Science will conquer this virus, but ot takes time.

When I look at the John Hopkins COVID-19 map and see where the US is as it relates to bending the curve, I see a graph that is not vertical, but it is not yet curving, so we are some weeks before a true curve can be achieved.  Then there is the platau, which is also weeks long, maybe months.  China is seeing a second wave in some parts of the country.  The Southern hemisphere is also beginning to look troublesome as their Fall season has begun, specially Brazil, Chile, Peru, Ecuador etc...  That tells me this thing is surely coming back by mid fall. I hope I am wrong, but that is how I see this playing out.

Because of all of that believe the re-opneing of the economy will be fraught with risk, and there is a chance we get some states in trouble again, which in turn will scare people back into their homes again.  The Fed and Government will have to continue throwing helicopter money to put a net underneath this battered economy.

Then there is Trump and his campaign, he is going back to a tariff war, which I believe is the worst course of action at the precise worst moment  for depressed economies around the world.  This will work agaisnt the very idea of re-opening economies.  A trade war in the middle of a depression is crazy.  I think that the move out of China had begun anyway, it was proceeding well, and I do not think there is anything that would have stopped it, so pushing on a trade war may add to the China exodus, but at the cost of pushing  economies further into the hole.

So while I am not sure we see the lows again, I see plenty of trouble for the real economy for the next 18 months.

lt cap, et. al.,

I agree with much of your thinking on this. I am, probably, the most 'Cassandra-like' on the board.  But I think we may re-test the March lows. I'd be pleasingly amazed if the 'opening up' didn't result in a rash of higher death rates, with subsequently even more political clashes between those who value business above life, and vice-versa. If that somehow doesn't happen,  I think the next 'wave', whether it comes in the fall or winter, will be so psychologically demoralizing, the market will catch the 'fever.' If it's coming is inevitable, hopefully it comes soon enough to crush any chance of a Trump re-election.  Short candidates? American Greetings? Not so many "Happy Birthday' cards to grandma and grandpa? (sorry, sorry - terrible joke.)

But don't take my word for it. Laurie Garrett, a Pulitzer prize winning science/disease journalist, had an interesting turn on PBS newhour tonight:  pbs.org/ne...deaths

She also was the subject of this NY Times Piece:  nytimes.com/20...316408

If, as I think, the 'opening' of America will result in a large spike of infections and deaths, it'll be interesting to see how all of this gets 'spun' - obviously a lot of our lack of preparedness and what may be foolish choices will try to be 'drowned out' by blaming it on the Chinese. Trump supporters are probably receptive to that. When I see people 'protesting' without face masks and without distancing, I figure the best we get out of that is, if they're wrong and all die, the general of the IQ of the country gets a boost. Small consolation.

I apologize for the pessimism, bad jokes, unkind references. I do feel badly for the people that have to go to poorly paying, dangerous jobs that threaten their health because they need the money. We are, after all, the fortunate - those who can invest their money to become 'more fortunate'.