The ultimate COVID thread

[caligas]

This is all sound advice.

*Cue 25% drop in market*

wait! I was joking!!

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[dchz]

The real smart move is to have all your investment sitting in cash and then buy in when the market bottoms out in about a year or 2.

I've been doing this since 2017.

 

[BLADEMDA]

The real smart move is to have all your investment sitting in cash and then buy in when the market bottoms out in about a year or 2.

I've been doing this since 2017.

This is the time to start buying equities. If you have cash (like I do) then buy low. That means when the market corrects add to your positions. Why buy at all time highs when the market always corrects after a fast and hard run? The traders are scared right now so this is a buying opportunity. How low will it go? I don't know so I bought today and will buy again down another 3%. This is fear right now. When summer comes the only thing to fear is Bernie Sanders. He too will rock the markets so I'm hoping the convention will pick another candidate (even Hillary). Bernie is my kryptonite and will mark the end of this bull run as we head into a recession. A recession based on total fear of socialism run amok. Every single DEMOCRAT on Wallstreet is terrified of Sanders. The guy couldn't run a lemonade stand without losing money.

FYI, I bought equities heavily in October anticipating the run up. Now, I will add to my positions with new cash with market corrections.

 

[BLADEMDA]

The real smart move is to have all your investment sitting in cash and then buy in when the market bottoms out in about a year or 2.

I've been doing this since 2017.

Well, if you think Bernie wins the Presidency and the Dems get the Senate then your wish is about to come true circa late 2020/early 2021.

Earlier this week, Lloyd Blankfein, the former head of Goldman Sachs, waded into the presidential race. “If Dems go on to nominate Sanders, the Russians will have to reconsider who to work for to best screw up the US,” he wrote on Twitter. “Sanders is just as polarizing as Trump AND he’ll ruin our economy and doesn’t care about our military. If I’m Russian, I go with Sanders this time around.”

 

[BLADEMDA]

Surge by Sanders Could Destroy Trillions in Equity
Ira Stoll, New York Sun January 14, 202

• Billionaire Stanley Druckenmiller says stocks would plummet if Bernie Sanders is elected president in the 2020 election.
• “The good news is we’d all be much more equal because everybody would be poorer but the rich would have lost a lot more wealth,” Druckenmiller tells CNBC.

 

[nimbus]

Anybody who is still in accumulation phase and not closing in on retirement should hope for a down market for a couple of decades.

 

[Mman]

Don't time the market

If you look at a graph of real GDP for the US for the last 100+ years, you can barely even see blips from things like world wars on it. Spanish flu was nothing. This virus certainly isn't going to materially impact the profitability of US companies over the long term.


(all that said in my play money account I have been taking some profits the last month or so from the combination of high valuations, corona virus inspired stupidity, and the threat of Bernie Sanders. It would not surprise me in the least to see the market drop 15-25% off highs, if it drops 30%+ I am shoving in as much money as i can get my hands on but my fun money allocation has dropped from about 80% stock to about 60% stock)

 

[dchz]

All those people telling me to buy back in right now:

Do you realize that is also timing the market??

 

[deleted162650]

All those people telling me to buy back in right now:

Do you realize that is also timing the market??

You’re right. Just hold the cash for the next 30 years.

 

[pgg]

All those people telling me to buy back in right now:

Do you realize that is also timing the market??

No, it's not. It's consistent with the sound advice to always lump sum invest windfalls. There's no difference between the cash you're sitting on and a sudden inheritance or lottery winning. The historically best move has always been to maximize time in the market over your investing lifetime. That means, in effect, you should always buy now ... until you're retired in your withdrawal phase.

Pick whatever asset allocation percentages that make sense to you, and put your available funds into that AA. That's not market timing.

 

[Mman]

All those people telling me to buy back in right now:

Do you realize that is also timing the market??

Anybody claiming that the time to buy in is after a 2% or 5% drop or whatever is just being silly. Yet anybody remaining out of the market is being insane, not just silly. The time to be in the market is always. The only thing you should adjust over time is the relative allocations between asset classes, but as Ben Graham noted you should probably never have less than 25% in the market (then again he was probably also overly conservative in saying never more than 75%).

The problem with being out of the market and waiting to buy for after the correction is that you risk literally never buying again for as good a price as you could get today. A future 30% drop doesn't help if it came after a 50% run up in prices.

 

[BLADEMDA]

Sure, you should be invested per your allocation. But, what about new cash from earnings and 401k? Dollar cost averaging is just 1 strategy. Another strategy is to put the new money to work after pullbacks. Why keep buying after a big run up? The market always corrects. This is a correction now. I’d argue that the cash from 2020 is better put to use buying equities now than in January or early February. Nothing goes straight up.

It is impossible to know where the bottom is but one could clearly spot excessive euphoria in the market over the past 2 months.

I’m not arguing against Dollar cost averaging as a strategy just pointing out there are other ways to put new, fresh money to work in the market.

 

[nimbus]

Sure, you should be invested per your allocation. But, what about new cash from earnings and 401k? Dollar cost averaging is just 1 strategy. Another strategy is to put the new money to work after pullbacks. Why keep buying after a big run up? The market always corrects. This is a correction now. I’d argue that the cash from 2020 is better put to use buying equities now than in January or early February. Nothing goes straight up.

It is impossible to know where the bottom is but one could clearly spot excessive euphoria in the market over the past 2 months.

I’m not arguing against Dollar cost averaging as a strategy just pointing out there are other ways to put new, fresh money to work in the market.

But sometimes excessive euphoria lasts a lot longer than anybody could predict and you miss out on massive gains. I still think DCA is best. I’m just now back to Jan 1, 2020 after a banner year in 2019.

 

[BLADEMDA]

But sometimes excessive euphoria lasts longer than anybody could predict and you miss out on massive gains. I still think DCA is best. I’m just now back to Jan 1, 2020 after a banner year in 2019.

I’m not arguing against dollar cost averaging and certainly believe in picking the right asset allocations.

In addition, I like to take cash from my non equity bucket when the market corrects and deploy it to equities. I then use new cash to put back into my non equities bucket. I maintain my asset allocation but also take advantage of corrections. This strategy only works if you have less than a 90/10 equity allocation and have new cash coming in weekly or monthly.

At no point do you “cash out” of equities but instead you buy more during the correction. Since these corrections don’t last very long you then return to your asset allocation model by deploying the new cash properly.

Again, I don’t have an issue with dollar cost averaging but I do like buying extra equities when they go on sale.

 

[BLADEMDA]

But sometimes excessive euphoria lasts a lot longer than anybody could predict and you miss out on massive gains. I still think DCA is best. I’m just now back to Jan 1, 2020 after a banner year in 2019.

I deployed a significant sum of cash into equities during the summer of 2019 and again in the fall. The vast majority of my purchases were well before the market took off in October. I then restored my non equity bucket in November and December. I’ve been waiting since then to redeploy new cash. This is my opportunity. I expect the market to resume its upward slope by March or April after the scare has subsided.

When equities go on sale I buy them.

 

[Epilepsy365]

My personal option about this matter. I thought this thing was a joke at first 2 months ago, but it’s becoming a real threat to the supply curve. Given that case, the chances of us having a global recessive has risen by 50% for the following reasons:

1) Ever since 2008-2009, I never believe in the recession double down dips for the fact that the FED has endless power to pump up the demand curve with increasing rate cuts and then QEs

2) However, a supply curve contraction in this case can’t be affected by more monetary policy. All monetary policies are useless and will only lead to higher prices. I thereby expect significant higher prices for basic goods the longer that this continues

3) In term of investment timeline, I would stay put on the sideline for at least 12 months. The impact of this decline will be reflected on earning and GDPs for at least the next 12 months. Market prices need to reflect that in order for me to be a buyer

4)As for what to invest, buy TLT, gold, silver, and maybe BTC/ETH as hedges. If not, cash is fine.

 

[MirrorTodd]

Anybody who is still in accumulation phase and not closing in on retirement should hope for a down market for a couple of decades.

Graduate residency in 1.5 years, finish Army contract in 5.5 years. I'm hoping for a recession around 6-8 years from now, so I can pump all my sudden increased income into the market as it drops.

 

[BLADEMDA]

I think this is a temporary issue. By April when the weather starts to get warmer (warm for me in 1-2 weeks) the virus will decline. By June this “flu” will have died down dramatically. The market is in panic mode so that’s when I like to buy. Stocks are still expensive because earnings will be impacted significantly by Covid 19.

If and when we get another 10 percent down from here I’m going to be buying a lot of equities.

I did buy more equities today and plan on doing so again tomorrow if the market does go down again.

Think of all the sectors from cruise ships to airlines to tech stocks that have been crushed the past few days. If this Covid 19 is under control by May every sector of the market will have a V shaped recovery.

 

[BLADEMDA]

So to the investment gurus out there, do you see this as a significant event, are you just going to ride this out or are you altering your investments expecting a downturn?

The correction is here. We are in a bear market due to fear. The slowdown is real due to the virus. This is a fantastic buying opportunity for long term investors. We could see a 20-25 percent correction from the highs. That’s great for long term investors.

 

[deleted171991]

The correction is here. We are in a bear market due to fear. The slowdown is real due to the virus. This is a fantastic buying opportunity for long term investors. We could see a 20-25 percent correction from the highs. That’s great for long term investors.

It's not just fear. It's also very rational. As Chinese factories stop producing, there will be a huge drop in the profits of many American and multinational companies. Just wait till this quarter's numbers start coming out.

 

[deleted126335]

The correction is here. We are in a bear market due to fear. The slowdown is real due to the virus. This is a fantastic buying opportunity for long term investors. We could see a 20-25 percent correction from the highs. That’s great for long term investors.

The "long term" can be very long term. We are starting out with high valuations for stocks and bonds. For young people with decades of investing and saving in front of them, this pullback is a . They should be rooting for an even greater pullback, (as long as they can maintain their employment, paycheck, and discipline). For recent or soon to be retirees who were over invested in equities this pull back is a . If it continues, it means utter for them.

 

[BLADEMDA]

It's not just fear. It's also very rational. As Chinese factories stop producing, there will be a huge drop in the profits of many American and multinational companies. Just wait till this quarter's numbers start coming out.

I agree the correction reflects the economic recession over 2 quarters. I simply believe (or want to believe) this virus will begin to abate by summer and will return again in the winter. If that is the scenario then the stock market is a buy. If, however, the virus leads to even more panic and a true recession due to the virus spreading well past June then the "meltdown" is just beginning and we are going down another 25% from here.

 

[BLADEMDA]

The "long term" can be very long term. We are starting out with high valuations for stocks and bonds. For young people with decades of investing and saving in front of them, this pullback is a . They should be rooting for an even greater pullback, (as long as they can maintain their employment, paycheck, and discipline). For recent or soon to be retirees who were over invested in equities this pull back is a . If it continues, it means utter for them.

I feel that pain but will remain optimistic we will overcome Covid 19. The end of the world is not yet upon us.

 

[BLADEMDA]

The big drop was the Ebola scare. Now, I readily admit this Covid 19 is doing real damage to the world economies so the drop is steeper and will last longer (3-4 months is my best guess) before making a recovery to about December/early January levels of the stock market.

Fear with a real world economic slowdown should put the S and P 500 another 10-15% lower from here. That said, I am a buyer of equities tomorrow or Monday with another 3% drop from these levels. The world is awash in super cheap money with the bond market at RECORD lows.

 

[BLADEMDA]

KEY POINTS

• There have been 26 market corrections (not including Thursday) since World War II with an average decline of 13.7%.
• Recoveries have taken four months on average.
• The most recent corrections occurred from September 2018 to December 2018. The S&P 500 bounced into and out of correction territory throughout the autumn of 2018.
• The S&P 500′s close below 3,047.53 — its current threshold for a correction — also marked the quickest 10% decline from an all-time high in the index’s history.

 

[deleted126335]

I feel that pain but will remain optimistic we will overcome Covid 19. The end of the world is not yet upon us.

I don't think that the end of the world is upon us either. But I don't discount the possibility that an extended period of subpar equity and fixed income returns are upon us. The consequences for a soon to be or recent retiree are potentially huge.

See Pascal's wager.

 

[Epilepsy365]

I agree the correction reflects the economic recession over 2 quarters. I simply believe (or want to believe) this virus will begin to abate by summer and will return again in the winter. If that is the scenario then the stock market is a buy. If, however, the virus leads to even more panic and a true recession due to the virus spreading well past June then the "meltdown" is just beginning and we are going down another 25% from here.

The % via the SP500 is just in nominal term. It’s not reliable anymore with the FED doing forever QEs. The most reliable thing from my exp to see if the pullback is done or still has more room to go is to examine big companies that make up the large portion of the SP500 or Nasdaq namely Apple, Amazon, Facebook, Walmart, and Costco.

 

[deleted59964]

well someone has some confidence in the market ...



Twiggy buys in
Andrew “Twiggy” Forrest, chairman of Fortescue Metals Group, has been accumulating shares in the iron ore miner over the past week.
According to a filing provided to the ASX, Mr Forrest purchased 22,112,053 shares on market between February 20 to 27 for a total outlay of $242,651,295.
His total holding in the company now stands at 1,112,165,000 shares.
FMG shares are down 5.3 $10.205 per cent today.

 

[pgg]

I don't think that the end of the world is upon us either. But I don't discount the possibility that an extended period of subpar equity and fixed income returns are upon us. The consequences for a soon to be or recent retiree are potentially huge.

See Pascal's wager.

Shouldn't a soon to be or recent retiree have adjusted his asset allocation to substantially reduce exposure to equities? (Unless the size of the portfolio was so large, and his need so modest, that his "retirement" funds were less for retirement and more for a long term wealth transfer to descendants, legacy, philanthropy, etc. Which is itself not a problem at all as that investment horizon is decades away.)

Don't you agree that the market know everything we know about COVID19 at this point? Every prognostication or expectation voiced in this thread, as of today, is priced into the market, as of today.

If people feel compelled to "do something" and actually do something, their asset allocation was not appropriate for them a month ago. Anyone adding money to the market now is timing the market, and we know (we know!) that over the long term that market timing is a losing strategy. Those funds they're plowing in now to take advantage of this correction should have been invested a month or a year ago when they first became available, at whatever ratio of equity/non-equity that their asset allocation called for.

We've been talking about the possibility that an extended period of subpar equity and fixed income returns could be upon us for a full decade now.

There is nothing for me to do here except to keep adding money to my accounts, same as every other month, same % to equity and same % to non-equity. Perhaps rebalance if things get too far away from the desired AA.

 

[deleted59964]

I don’t think the markets can price in the impact of covid19 as its course is still unknown.
I think it’s priced in for the virus to have run its course in a few months. If that is not the case, things will get worse.
If there is a significant impact in Western Europe and North America I think the economic impact will be profound.

from a humanitarian perspective - I fear for the people of India, Pakistan, and North Korea.

 

[BLADEMDA]

Israeli scientists: 'In a few weeks, we will have coronavirus vaccine'

Once the vaccine is developed, it will take at least 90 days to complete the regulatory process and potentially more to enter the marketplace.

www.jpost.com

 

[AdmiralChz]

from a humanitarian perspective - I fear for the people of India, Pakistan, and North Korea.

This ain’t Ebola, or even SARS. Overall mortality rate is 2% and vast majority of those are in folks > 50 years of age. This is very similar to the flu.

 

[AdmiralChz]

On a personal note, this is probably a great time to go through with my house refinance. I thought rates were awesome 14 months ago but they are down almost 1.5% since! Seeing some rates < 3. Think about it.

 

[Mman]

It's not just fear. It's also very rational. As Chinese factories stop producing, there will be a huge drop in the profits of many American and multinational companies. Just wait till this quarter's numbers start coming out.

Most CEOs will find a way to pile as much bad stuff about their company as they can into their next quarterly report because it is expected and they can blame it all on coronavirus. They like to load up the bad stuff during times everyone else is struggling so they can look better on their next report.

 

[deleted59964]

This ain’t Ebola, or even SARS. Overall mortality rate is 2% and vast majority of those are in folks > 50 years of age. This is very similar to the flu.

Coronavirus has already infected 10 times more people than SARS
Corona virus has already killed 4 times more people than SARS

If you don’t think poor, malnurished people in developing countries are at high risk you are deluded.

 

[deleted59964]

This ain’t Ebola, or even SARS. Overall mortality rate is 2% and vast majority of those are in folks > 50 years of age. This is very similar to the flu.

Seasonal flu mortality 0.1%
coronavirus - appears to be about 2%

 

[AdmiralChz]

Seasonal flu mortality 0.1%
coronavirus - appears to be about 2%

I just don’t see the need for hysteria, but if you want to join in saying the sky is falling...

 

[deleted171991]

I agree the correction reflects the economic recession over 2 quarters. I simply believe (or want to believe) this virus will begin to abate by summer and will return again in the winter. If that is the scenario then the stock market is a buy. If, however, the virus leads to even more panic and a true recession due to the virus spreading well past June then the "meltdown" is just beginning and we are going down another 25% from here.

That's why DCA/lump sum investing beats timing the market, long-term. We don't know what will happen. A coronavirus pandemic can be the black swan that ends up paralyzing the world economy, and destabilize a number of countries.

Still, I have been sitting on 40% cash equivalents for years now (allows us to sleep very well at night), so I won't put more money in (except for my 401k contributions) until I see the Dow under 20,000 (last recession it went down to about 8,000, and the market value should double about every 10 years due to inflation and business growth). Or some truly undervalued individual stocks in great businesses, due to panic and overreaction. Keyword here is margin of safety, the bigger the better. Bulls make money, bears make money, pigs get slaughtered.

P.S. While I was posting this, I had a browser tab open on Marketwatch, to doublecheck my recall about he nadir value of the Dow during the last recession. In about 15 minutes (between opening the tab and remembering to close it), the darn thing dropped 300 points. Wouldn't be surprised if this is another -3% day.

P.P.S. Already at about -4% for the day. This is beginning to smell like a recession.

 

[deleted171991]

View attachment 297026
I just don’t see the need for hysteria, but if you want to join in saying the sky is falling...

The good thing about everybody wearing masks is that the sick people wear masks, too, even while asymptomatic. And, while regular masks may not help, the N95 would decrease transmission for sure (because of... physics of pore size and virus size).

 

[deleted171991]

We ain't seen nothing yet. Just wait till the virus spreads to India and most of Western Europe. Now THAT will be panic.

With the incompetent populist leaders in many countries, I wouldn't be surprised to see more damage than from the usual pandemic.

 

[Epilepsy365]

Keep your dry powder ready until Thanksgiving. Monetary policies won’t do jack. Only global fiscal policies will change the demand curve. I’m very positive that some FED intervention like a rate cut along with expansion of QEs will provide a relief rally during the summer around April. But, we are going to double dip down further once the quarterly reports start coming in that are affected by this thing.

This thing is not slowing down and even the hot weather in Iran and Africa doesn’t seem to be much of a hindrance.

 

[deleted171991]

Keep your dry powder ready until Thanksgiving. Monetary policies won’t do jack. Only global fiscal policies will change the demand curve. I’m very positive that some FED intervention like a rate cut along with expansion of QEs will provide a relief rally during the summer around April. But, we are going to double dip down further once the quarterly reports start coming in that are affected by this thing.

This thing is not slowing down and even the hot weather in Iran and Africa doesn’t seem to be much of a hindrance.

Haven't you heard? The markets are down because of Bernie Sanders.

 

[d9sccr]

View attachment 297026
I just don’t see the need for hysteria, but if you want to join in saying the sky is falling...

I get what you’re saying and actually agree, but we’re still relying on data from China —which I’d call suspect to say the very least.

 

[BLADEMDA]

The panic is real but so is the recession. Another big down day today. Monetary policy can’t overcome fear. So, even if the fed cuts rates and another round of QE the market won’t stabilize until the fear subsides.

 

[nimbus]

We ain't seen nothing yet. Just wait till the virus spreads to India and most of Western Europe. Now THAT will be panic.

With the incompetent populist leaders in many countries, I wouldn't be surprised to see more damage than from the usual pandemic.

Cool: Health Officials, Scientists Banned From Speaking About Coronavirus Without Mike Pence’s Approval

In equally terrifying news, Trump’s always-wrong economic adviser, Larry Kudlow, has been added to the response team.

www.vanityfair.com

“The White House moved on Thursday to tighten control of coronavirus messaging by government health officials and scientists, directing them to coordinate all statements and public appearance with the office of Vice President Mike Pence, according to several officials familiar with the new approach.... Mr. Pence was scheduled to lead a meeting of the government’s coronavirus task force on Thursday.
The vice president’s first move appeared to be aimed at preventing the kind of contradictory statements from White House officials and top government health officials that have plagued the administration’s response. Even during his news conference on Wednesday, Mr. Trump rejected the assessment from a top health official that it was inevitable that the coronavirus would spread more broadly inside the United States.“


Anthony Fauci has to clear his media statements with Pence??

The Trump administration briefly barred a top US disease expert from speaking freely to the public after he warned the coronavirus might be impossible to contain

A February New York Times article said Dr. Anthony Fauci wasn't allowed to speak publicly without White House approval.

www.google.com

Get ready for a wild ride.

 

[pgg]

I don’t think the markets can price in the impact of covid19 as its course is still unknown.
I think it’s priced in for the virus to have run its course in a few months.

That's precisely the point. The future is unknown, but what we know (and speculate) NOW is priced into the market NOW.

It's entirely possible this WILL completely run its course and be a nothingburger in a few months, and the market will rebound sharply. The DJIA might hit 30,000 three days after the November election. We don't know.

What you're doing is betting the market will continue to tank (timing it). You're betting that NOW is the right time to sell (or buy) but you don't actually KNOW anything the market doesn't.

from a humanitarian perspective - I fear for the people of India, Pakistan, and North Korea.

We agree.

Iran too. Already looks bad there.

 

[facted]

If you guys think this is bad, wait until a major city in the US goes on lockdown telling people to stay home and closes schools for weeks or months.

This is just the beginning of the storm.

 

[BLADEMDA]

If you guys think this is bad, wait until a major city in the US goes on lockdown telling people to stay home and closes schools for weeks or months.

This is just the beginning of the storm.

Pure fear. That’s why the market is crashing

 

[deleted171991]

Media's coronavirus stories trying to hurt Trump, Mick Mulvaney says as he urges public to turn off TV

Mulvaney, who also heads the Office of Management and Budget, also said that there will "probably" be school closures and transportation issues due to the impact of the virus.

www.cnbc.com

Many hundreds of dead abroad? Fake news.
Newly discovered cases by the hundreds daily, if not more? Fake news.
A virus that's 10 times more deadly than the flu? Fake news.
A virus that's spread even by asymptomatic patients? Fake news.
The existence of at least one US patient who had no reason to acquire the disease (unless there are many undocumented cases already)? Fake news.
Trump fired the entire National Security Council pandemic team in 2018? Fake news.
Stock market crashing because of the effect on the economy, and incompetent administration response to the coronavirus? Fake news.
The president is a genius? Presidential Medal of Freedom or pardon, as applicable.

 

[nimbus]

If you guys think this is bad, wait until a major city in the US goes on lockdown telling people to stay home and closes schools for weeks or months.

This is just the beginning of the storm.

Pure fear. That’s why the market is crashing

We are not different from Japan, Korea, and China where it is already happening.