CoronaVirus Delivers FAANG Buying Opportunity of a Lifetime

James West
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Facebook (NASDAQ:FB), Apple (NASDAQ:AAPL),  Amazon (NASDAQ:AMZN), Netflix (NASDAQ:NFLX) and Google (NASDAQ:GOOGL) are the stocks that have collectively come to be known as the FAANG stocks. CoronaVirus is the name of the latest microbial human predator to emerge from China. Combined, these two forces will kill some people and enrich others. Which one will you be?

Statistically, the Corona virus is killing approximately 2.3 percent of people it infects. If 2.3 percent of the world’s population is about to be euthanized by this aggressive new virus, that theoretically, in the most general terms, represents a 2.3 percent maximum global GDP output.

I can see all the statisticians and economists in the crowd sputtering in outrage, but the point here is not accuracy of statistical potentiality, but rather a general look at he maximum worse case economic scenario, assuming this virus does not morph into something more approximating the bubonic plague that ravaged Europe from 1347 to 1351 and killed 25 – 60 percent  of the population on the planet.

Our concern is the magnitude of the opportunity presented by the persistent weakness that is directly correlated to the worsening of the coronavirus scare in the FANG+ Index Futures as indicated in the chart above. Media reports of spreading of the virus to the rest of the world has the market pricing in a reduction in economic velocity as a result.

While there may well very well be a deterioration in economic impetus from the diminished movement of human beings and goods around the planet, that will likely be more than offset by the economic force of all the things that need to happen to contain, treat and ultimately vaccinate against this new threat, which is likely, given that we have yet to suffer any bubonic plague-scale pandemic since the middle ages without developing a medical solution.

The market also has demonstrated a tendency to reflect price sentiment going out six months absent unforeseen emergent catalysts like this virus, so as media reporting begins to project more progress toward a solution or otherwise levelling off of rates of infection and death, this too, like everything these days, will fade into the fog of the news cycle and be forgotten.

FAANG Stocks are the Best Performers Anyway

NYSE FANG+ Index

The FANG+ Stock Index Futures are the easiest way to play the FAANG stocks as a group, with the added effect of 5 analagous stocks to boot. Though I don’t understand why Twitter is there. Should be Tesla, at this point, in my opinion.

The FAANG stocks are the cornerstone of the S&P 500, and are the primary beneficiaries of the government subsidies for banks and investors in the top layer of the food chain as a result of Quantitative Easing or Stimulus, which is blatant printing of money and handing it over to the elite. You’d have to be a blind donkey to think the financial system is anything but a rigged system of institutionalized welfare for those who need it the least.

So buy the FAANG stocks, and don’t worry about the CoronaVirus. It’s going to have its 15 minutes of fame like everything else these days.

Unless….

This CoronaVirus is different from its previous relatives, that caused MERS and SARS, in that it incubates and remains contagious for two weeks before expressing symptoms in its host. In an as-yet-unknown percentage of cases, the infected individuals don’t manifest symptoms at all, and so act as “super-carriers”, spreading the virus everywhere they go without limit because they are thought to be healthy.

And then of course there is the always present threat of mutation that could make it even more virulent and/or contagious and/or deadly. In which case the only thing we should be buying is a remote cabin in the mountains fully stocked with food to last a year or two.

James West

James West

Editor and Publisher

James West founded Midas Letter in 2008 and has since been covering the best of Canadian and US small cap companies. He covers global economics, monetary policy, geopolitical evolution, political corruption, commodities, cannabis and cryptocurrencies. As an active market participant, James is not a journalist and is invariably discussing markets...
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