Musings: Viruses, Chronic Disease, and a Medical Tech Stock

Alex here with your latest Friday Macro Musings…

As always, if you come across something cool during the week, shoot an email to and we’ll share it with the group.

Latest Articles/Podcasts/Videos —

Your Monday Dirty Dozen [CHART PACK] — I review our confirmed sell signals in equities, revisit the indications of overbought and overloved stocks, and then reiterate our long bond call

Articles I’m reading —

Ray Dalio shared his and his team’s thoughts on the coronavirus and potential market impacts this past week. The article is titled “Our Early Thinking on the Coronavirus and Pandemics”. They run through a number of past pandemics, going all the way back to the Spanish Flu which occurred during WWI. I’m not sure how much of this is useful from a practical investing standpoint but it’s interesting and does give you some context in case things get much worse. Here’s the link and an excerpt:

“As for the spreading of this virus, as with any sort of unknown, there are 1) actual events and 2) the expectations of events that get reflected in market pricing.  Generally speaking, these once-in-a-lifetime big bad things initially are under-worried about and continue to progress until they become over-worried about, until the fundamentals for the reversal happen (e.g., the virus switches from accelerating to diminishing). So we want to pay attention to what’s actually happening, what people believe is happening that is reflected in pricing (relative to what’s likely), and what indicators that will indicate the reversal.”

In addition, Bianco Research is putting out some worthwhile reading materials on the virus which you can find here.

Charts I’m looking at—

This chart is from Cornerstone Macro. The green line shows the Bloomberg Economic Surprise Index of Leading Indicators while the grey line shows the relative performance of industrials (XLI) versus the S&P (SPY). It suggests that industrials may be in for a big rebound in relative performance. This also fits with the underlying strength of breadth/participation that I’m seeing in the sector. There’s a lot of strong tapes in XLI right now.

Book I’m reading —

Not a book, but a long white paper Michael Mauboussin and his team at Credit Suisse put out last year. It covers the all-important concept of moats (competitive advantage). I read everything by Mauboussin. He’s one of the smartest reads on investing and market theory. The paper is well worth your time.

On the subject of moats (and floats), here’s one of the best discussions on the subject I’ve ever come across from the Fundoo Professor. It’s a great slide deck that explores how Buffett so ingeniously exploited the investing power of the two to make his billions. You can find the presentation here.

Trade I’m looking at —

Here’s a company I’ve recently started looking into, Livongo (LVGO). LVGO provides a digital health platform that assists people living with chronic illnesses, such as diabetes. The platform connects to wearables, provides personalized digital guidance, as well as access to health coaching.

Unfortunately, the chronic disease market is booming here in the US as well as elsewhere. Apparently, more than half of the US population suffers from one or more chronic conditions — example, over 4k Americans are diagnosed with diabetes each day.

Anyways… LVGO’s TAM is large and growing. This gives the fast growing (FY19’ revenue growth is expected to be around 160%) quite a long runway.

Currently, the stock is knocking on some support. We’ll have to see if it holds. I’m considering putting on a small starter position next week if I like what I find while doing more digging over the weekend. If you have any thoughts or insight on the company, please shoot them my way!

Quote I’m pondering —

As investors, we also always have to be aware of our innate and very human tendency to be fighting the last war. We forget that Mr. Market is an ingenious sadist, and that he delights in torturing us in different ways. ~ Barton Biggs

That’s it for this week’s macro musings.

If you’re not already, be sure to follow me on Twitter: @MacroOps. I post my mindless drivel there daily.

Have a great weekend.

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Brandon Beylo

Value Investor

Brandon has been a professional investor focusing on value for over 13 years, spending his time in small to micro-cap companies, spin-offs, SPACs, and deep value liquidation situations. Over time, he’s developed a deeper understanding for what deep-value investing actually means, and refined his philosophy to include any business trading at a wild discount to what he thinks its worth in 3-5 years.

Brandon has a tenacious passion for investing, broad-based learning, and business. He previously worked for several leading investment firms before joining the team at Macro Ops. He lives by the famous Munger mantra of trying to get a little smarter each day.


Investing & Personal Finance

AK is the founder of Macro Ops and the host of Fallible.

He started out in corporate economics for a Fortune 50 company before moving to a long/short equity investment firm.

With Macro Ops focused primarily on institutional clients, AK moved to servicing new investors just starting their journey. He takes the professional research and education produced at Macro Ops and breaks it down for beginners. The goal is to help clients find the best solution for their investing needs through effective education.

Tyler Kling

Volatility & Options Trader

Former trade desk manager at $100+ million family office where he oversaw multiple traders and helped develop cutting edge quantitative strategies in the derivatives market.

He worked as a consultant to the family office’s in-house fund of funds in the areas of portfolio manager evaluation and capital allocation.

Certified in Quantitative Finance from the Fitch Learning Center in London, England where he studied under famous quants such as Paul Wilmott.

Alex Barrow

Macro Trader

Founder and head macro trader at Macro Ops. Alex joined the US Marine Corps on his 18th birthday just one month after the 9/11 terrorist attacks. He subsequently spent a decade in the military. Serving in various capacities from scout sniper to interrogator and counterintelligence specialist. Following his military service, he worked as a contract intelligence professional for a number of US agencies (from the DIA to FBI) with a focus on counterintelligence and terrorist financing. He also spent time consulting for a tech company that specialized in building analytic software for finance and intelligence analysis.

After leaving the field of intelligence he went to work at a global macro hedge fund. He’s been professionally involved in markets since 2005, has consulted with a number of the leading names in the hedge fund space, and now manages his own family office while running Macro Ops. He’s published over 300 white papers on complex financial and macroeconomic topics, writes regularly about investment/market trends, and frequently speaks at conferences on trading and investing.

Macro Ops is a market research firm geared toward professional and experienced retail traders and investors. Macro Ops’ research has been featured in Forbes, Marketwatch, Business Insider, and Real Vision as well as a number of other leading publications.

You can find out more about Alex on his LinkedIn account here and also find him on Twitter where he frequently shares his market research.