Hang Tight

Saying this has been a rough week in the stock market is like saying the sun rises in the west and sets in the east. Thank you Captain Obvious. Looking at the diabetes segment it’s not surprising that our world has been touched by this selloff. Going into today’s trading here’s how some select companies have been impacted this week;

Dexcom -7.1%

Tandem -11.5%

Insulet -10%

Livongo -3.4%

Lilly -8.5%

Novo Nordisk -6.7%

Medtronic -10.2%

Now let’s get a few things straight we are NOT market prognosticators, nor do we want to be. Second, we have no idea how long this selloff will last, how much damage it will inflict and when it will end. Third based on all available public information the impact of the coronavirus has not fully been felt yet and it looks like things will get worse before they get better. Finally the good news is that it’s Friday and no matter what happens today we have earned a well-deserved happy hour.

What we will say is that we continue to believe many of these companies will be just fine over the long term. That for those who can stomach this most recent roller coaster ride it would wise to sit tight and even add to positions. As Momma Kliff noted earlier in the week stocks are about the only asset that no one buys when they go sale and right now there is a big sale happening.

Since we really don’t pay too much attention to the day to day movements and concentrate more on companies having solid management combined with sound business strategies, we aren’t overly worried about the Three Amigo’s – Dexcom – Insulet and Tandem. Nor are we overly concerned with Lilly or Novo Nordisk. Quite frankly even without this recent selloff we would still be worried about Livongo and Medtronic.

As we stated earlier in the week even before the selloff turned into a daily beat down many of these companies even the ones which are very well run had valuations that were difficult to justify by any conventional metric. This market had all the signs of losing touch with reality and while no one enjoys these selloffs they are somewhat needed to bring things into balance. We saw this with the dot com bubble not that long ago.

So take some advice from Momma Kliff who was fond of saying sometimes you have to take some lumps along the way to get where you want to be and just for grins and giggles every once in a while, pull down your pants and slid on the ice. Enjoy Happy Hour.