Thursday October 14, 2021
I haven’t been writing much in the screeds because it’s more of the same and I’ve been trying to do some other things. However, the recent behavior of Moderna’s stock price has been intriguing to me. This is an instance where a stock took a huge plunge and I could see a reason for it, albeit not related to the company at all.
The day after Merck announced they had a pill for people who got Covid and it would lessen the symptoms Moderna went down. It had been in the mid 400s, now it was in the low 330s. I bought some more. Then it went lower still the next day. I bought some more. Now it is turning around. It is in the low teens of 300.
What caused this? As far as I can tell people dumped because of Merck’s announcement. It’s not often that I have seen a direct cause and effect on a stock price.
Now, Moderna had said they may have a vaccine for HIV. The stock hasn’t moved on that announcement.
There is also talk that you may not need a booster if you got Moderna’s double shot. As far as I can tell the FDA is still considering. They have said if you are in certain risk groups get the booster.
When I went to Moderna’s website they said they are setting up facilities in Africa to be able to produce five hundred million shots a year ( I think that was the number ).
From what I have gleaned, everything about Moderna is positive. An outside influence caused people to dump, and this has created a huge opportunity.
The brings me to one of my tenets of investing, which I’ll call “accepting reality.”
Yes, you’d like the stock at 165 when I first suggested it. (Or later at 110 and then 93) Or wouldn’t we all have liked it at 20? Sure. But that’s not reality. The reality is it was 450 and now it’s 312, do you want it?
No one can tell you what it will do.
Most systems for buying stocks are based on history, not current events. The ones that look to the future have to guess.
What’s your guess? Will the overwhelming positive evidence cause the stock to go back up?
In two weeks Moderna will announce its earnings for the quarter. This is always an interesting exercise for any company. Financial people who follow a company make estimates. Before the actual earnings meeting there may be another meeting where they “ask for guidance.” Interestingly, if a company has boffo numbers but they don’t meet the estimates of the experts the stock can go down. This to me makes no sense, but then again much of what happens in the stock market doesn’t make sense.
Moving on to Southwest Airlines. Did I say I was going to write about this? No? Huh. Okay, I saw an explanation that made sense to me as to what happened. This goes back to my time at Cray in the 1980s. We were trying to sell a computer to American Airlines. It cost $35 million. That’s before peripherals. Airlines have two big computational bottlenecks. One is figuring out where you want your planes and when you want them there. The other is making sure you have crews that know the plane at that location and that they have enough hours left in their monthly allotment and enough rest in between their last flight. That crew stuff is strictly controlled by the FAA. Apparently, the government doesn’t want an overworked exhausted pilot flying a plane. (Why aren’t there any cries about “Freedom!” Around this issue? All I can say is, “Thank god there aren’t.”)
Because the scheduling was so intensive computationally American only ran the scheduling program once a month. If we could show them that a Cray could run the program more often and in so doing reap even a small benefit on fuel savings (I think the number was .2% of fuel costs) American could pay for the computer in one year.
It turns out that Southwest run a direct route system. That means they fly from point A to B and don’t go through a hub. Many airlines use a hub and spoke system. Think Delta in Atlanta or United in Dallas and Chicago. Southwest has a lot of flights to Florida. Florida got hit with a series of thunderstorms that knocked out their airports for several hours. This caused Southwest to delay flights. Those planes were scheduled to make other flights. Those other flights had to be cancelled and the result was a rolling set of delays. A hub and spoke system would have helped them recover because all the flights would have come into a central area where crews and planes could have been shuffled around.
I know what you are asking, Did we sell American that Cray? No. We had optimized their program. It was flying. Then one of their people said all our answers were wrong. I kiddingly asked if they wanted speed or accuracy. They decided they didn’t want to spend the money at that time. Bummer.
Oh Grinding Poverty. That was it. I’m reading Fiona Hill’s book “There’s Nothing For You Here.” Her dad’s comment about living in coal country in northern England is the title of the book. He wanted his daughter to get out if she could. Her parents had to tell her at one point that they couldn’t afford to send her to a school where all the tuition and books were paid for because they couldn’t afford to buy the school uniform.
It’s hard to imagine but Hill makes the point over and over again in different ways that when you are that poor even the smallest obstacle is insurmountable. Reagan and Thatcher advocated that if you worked hard you could make it out. Hill points out in example after example that is not the case. When major industries in a one company town shut down the people can’t just move on. They are stuck.
Without help, from someone, anyone, or anything (the government? Socialism!) conditions will not get better for those folks. Period.
PS Neighborhood Halloween Preparations
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