Author Topic: Economic macro trends helped/hurt by COVID  (Read 651 times)

ctuser1

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Economic macro trends helped/hurt by COVID
« on: August 20, 2020, 08:57:48 AM »
I was just quizzing economic trends with DW over a cup of tea, and thought I'll reel the mustachians in the discussion too.

1. Biotech:
Huge amount of new capacity + knowhow created. Expect massive new amounts of gene therapies and other things we probably can't even imagine today to pop out of it. They will be both a boon (lives saved/improved) and a bane (how do you pay for them?).

2. Education:
Distance learning is a failure. But I think people aren't very happy about paying full fare for distance learning classes either. This will pinpoint the focus on school costs.
Something will change for all but the top 20 schools. Either they will go out of business, or lower costs, or something.
Cost of education for the vast majority of the kids will likely go down over the next 5 years or so.

Negative side: This will lead to a big deflationary ripple effect on the economy (think of all the salaries currently paid to the university administrators).

3. Urbanization of the population.
Instead of Urbanization it will be suburbanization . I like it, of course - because I live in suburbia. It will be good if suburbs become higher density and accommodate more people, and bad if they just become mini-SanFrancisco's.

4. Supply chain resiliency over efficiency
There will be a much closer look at the resiliency of the supply chain(s) over and above efficiency.
This will be inflationary for the economy as a whole - which will of course be welcome in most aging societies.
It's difficult to predict anything else specific coming out of it. It can lead to very unpredictable and surprising outcomes.


ctuser1

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Re: Economic macro trends helped/hurt by COVID
« Reply #1 on: August 20, 2020, 10:11:43 AM »
One more:

5. Telecom in Suburbia
Optimum is working on last mile fiber in my town. They claim fiber is already "in the neighborhood", just not in the houses yet.

Is this widespread? It will make sense for it to be - given so much WFH usage. Good internet will now become a much more important thing for suburbia than before. So I am sure cities/towns will work hard to improve things. Will this spur the new age of last mile fiber in US? -> All the associated economic goodies that go with it?

It's a heck of an opportunity right now for effecting this change. I hope Pai is sent packing after January '21 and someone more in-tune with people's interests (as against Verizon's interests) take the helm at FTC and make this happen!!

 

hodedofome

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Re: Economic macro trends helped/hurt by COVID
« Reply #2 on: August 20, 2020, 01:08:25 PM »
Software was already moving from on-premise to the cloud, but Covid caused every business's cloud roadmap to change from "in the next 5 years" to "right now." Every business is moving to the cloud as fast as they possibly can now.

An in-house server or phone system is now considered a liability to the business, not just 'old school.'

ctuser1

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Re: Economic macro trends helped/hurt by COVID
« Reply #3 on: August 21, 2020, 07:56:53 AM »
I have one high-conviction investment opportunity aided by both macro trends and localized factors with a very secured 20% upside (and a lot more if bubble forms and PE expands).

Intel...

Yes, I know the bear thesis. But those "risks" will take over a decade to play out. And you think US will allow Taiwan and South Korea to get duopoly on fabs after the recent focus-shift on the supply chain from efficiency to resiliency?? So the bear thesis isn't very strong IMO.

The near term bull thesis is, however, quite convincing.

We do know (and some early data has leaked out) that a lot more desktop computers are selling - helping intel's bottomline. We will see that play out in the earnings numbers in the next year or two. Current PE is 9. What do you think Mr. Market will do if it is pushed even lower??

I don't do long term speculative stuff well. It's also not necessary to take that into account for this thesis.

Any other "high conviction" and "value" opportunities? (I hesitate to pay very high PE and put it in the index instead to reduce risk).

I have been following MU for a long time (=years) hoping such a perfect storm of opportunities will arise - but alas that hasn't happened yet.
« Last Edit: August 21, 2020, 08:03:38 AM by ctuser1 »

LaineyAZ

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Re: Economic macro trends helped/hurt by COVID
« Reply #4 on: August 21, 2020, 08:59:36 AM »
Supply chains, specifically pharmaceuticals.  I think a lot of people in the U.S. were surprised to find that so many of the prescriptions they take are made in China and other foreign countries.  They are going to demand manufacture of Covid-19 vaccines and other prescription drugs within the U.S.