We view the current market meltdown as being directly correlated with the increase in the average infection rate per infected person in the U.S.
The actions taken by the U.S. government to date (“15 Days to Slow the Spread” and trillion-dollar stimulus) will not be enough to slow the infection rate enough quickly enough in our opinion for a stabilization of prices to occur.
When material enough action is taken to slow the spread, we believe institutional investors will have a clearer idea as to when a return to normalcy will occur. At that time, we believe buying certain non-profitable technology companies that have a strong balance sheet or balance sheet leveraged equities that are trading at low Price / Cash Flow multiplies makes the most sense.
While Canadian technology stocks with major U.S. exposure have rebounded today, we remain leery that another major price decline may take place if enough action is not taken quickly enough.
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