Coronavirus and the market

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
User avatar
HomerJ
Posts: 14748
Joined: Fri Jun 06, 2008 12:50 pm

Re: Coronavirus and the market

Post by HomerJ » Mon Mar 16, 2020 8:04 pm

sambb wrote:
Mon Mar 16, 2020 7:03 pm
Good point, but thats not what im speaking about, Im speaking about the fact that there were postings about risk - it was an inhuman virus that shut down one of the largest economies in the world. Not a warning about market peak or bear market. Just about risk not factored into the market.
And the Greek debt crisis and Brexit increased the risk that European Union, one of the largest economies in the world, was going to have serious economic issues.

It was absolutely reasonable for people to post about that increased risk. They weren't wrong. The risk was higher.

The U.S. government shutdown increased the risk that U.S., one of the largest economies in the world, was going to have serious economic issues. It kept going and going; no one knew when it was going to end. Or the tariffs and trade wars, lots of risk there.

It was absolutely reasonable for people to post about that increased risk. They weren't wrong. The risk was higher.

SARS and the swine flu also started in China. They were also inhuman viruses that increased the risk that China, one of the largest economies of the world, was going to have serious economic issues.

It was absolutely reasonable for people to post about that increased risk. They weren't wrong. The risk was higher.

Yet the risk didn't show up in any of the situations, and it wouldn't have helped people to jump out of the market every time a reasonable risk increase was talked about on these boards...

It's NEVER obvious... Or it's often obvious (even when it doesn't end up happening).

Market timing is not as easy as you claim. The China virus could have gone the other way. That's what the market thought. They thought it would end up a slightly more serious version of SARS or swine flu, with China controlling it, and 3 weeks later, everything back to normal.

That was indeed a possible outcome.

Nothing is obvious. No one can predict the future easily.

Risk tolerance is determined with those two facts in mind. It's ALWAYS possible the market might start a 50%+ drop tomorrow. The risk is never zero. So one should always be prepared.

If you always carry around an umbrella, you don't have to worry about rain anymore.

People run in here, and shout "Hey, I think the chance of rain is higher today than last week!!!" ALL THE TIME.

And I shrug, because I am already carrying an umbrella.

Sooner or later, someone would be right. Congrats. And it still doesn't matter. Because I already have an umbrella in my hand.
A Goldman Sachs associate provided a variety of detailed explanations, but then offered a caveat, “If I’m being dead-### honest, though, nobody knows what’s really going on.”

ballons
Posts: 330
Joined: Sun Aug 18, 2019 3:05 pm

Re: Coronavirus and the market

Post by ballons » Mon Mar 16, 2020 8:50 pm

Italy May Soon Be Forced to Stop Treating Coronavirus Patients Over 80
https://www.vice.com/en_us/article/5dmq ... ts-over-80

Market isn't going to like this if this comes to America.

sambb
Posts: 2889
Joined: Sun Mar 10, 2013 3:31 pm

Re: Coronavirus and the market

Post by sambb » Mon Mar 16, 2020 8:57 pm

Thanks for the comments. There are opposing opinions. Some see a pandemic causing complete economic annihilation, and others see the flu. Yep, thats the point. Pandemics are rare, once in a lifetime maybe. Some saw the risk. The question is how low we can go.

User avatar
knpstr
Posts: 2814
Joined: Thu Nov 20, 2014 8:57 pm
Location: Michigan

Re: Coronavirus and the market

Post by knpstr » Mon Mar 16, 2020 9:01 pm

sambb wrote:
Mon Mar 16, 2020 8:57 pm
Thanks for the comments. There are opposing opinions. Some see a pandemic causing complete economic annihilation, and others see the flu. Yep, thats the point. Pandemics are rare, once in a lifetime maybe. Some saw the risk. The question is how low we can go.
The reality will be in the middle.
However, for long-term investors this will be one of the great opportunities of a lifetime to buy.
Very little is needed to make a happy life; it is all within yourself, in your way of thinking. -Marcus Aurelius

columbia
Posts: 2669
Joined: Tue Aug 27, 2013 5:30 am

Re: Coronavirus and the market

Post by columbia » Mon Mar 16, 2020 9:06 pm

The J seems to stand for jaundiced.
If you leave your head in the sand for too long, you might get run over by a Jeep.

Randolph Mortimer
Posts: 59
Joined: Thu Mar 12, 2020 7:13 pm

Re: Coronavirus and the market

Post by Randolph Mortimer » Mon Mar 16, 2020 10:16 pm

columbia wrote:
Mon Mar 16, 2020 9:06 pm
The J seems to stand for jaundiced.
Why the snark? What did HomerJ say that was unreasonable? I dare say he is looking more and more like the adult in the room amongst all of the reddit refugees with their hair on fire populating this forum lately.

prairieman
Posts: 252
Joined: Thu Mar 01, 2018 3:17 pm

Re: Coronavirus and the market

Post by prairieman » Mon Mar 16, 2020 10:33 pm

knpstr wrote:
Mon Mar 16, 2020 9:01 pm
sambb wrote:
Mon Mar 16, 2020 8:57 pm
Thanks for the comments. There are opposing opinions. Some see a pandemic causing complete economic annihilation, and others see the flu. Yep, thats the point. Pandemics are rare, once in a lifetime maybe. Some saw the risk. The question is how low we can go.
The reality will be in the middle.
However, for long-term investors this will be one of the great opportunities of a lifetime to buy.
Probably true....

nigel_ht
Posts: 876
Joined: Tue Jan 01, 2019 10:14 am

Re: Coronavirus and the market

Post by nigel_ht » Mon Mar 16, 2020 11:18 pm

HomerJ wrote:
Mon Mar 16, 2020 8:04 pm
Market timing is not as easy as you claim. The China virus could have gone the other way. That's what the market thought. They thought it would end up a slightly more serious version of SARS or swine flu, with China controlling it, and 3 weeks later, everything back to normal.

That was indeed a possible outcome.
Nope. It (3 weeks back to normal) wasn't a possible outcome after the Chinese government announced lockdowns and social distancing for three weeks though their largest holiday to be followed by a 2 week quarantine when workers came back to factory cities.
Nothing is obvious. No one can predict the future easily.
There was no need to predict the future. Just read the news from China and then Korea when car factories there reported part shortages and an impacted supply chain and realize that those impacts were happening to every business that depended on China for components, assembly or sales.
Risk tolerance is determined with those two facts in mind. It's ALWAYS possible the market might start a 50%+ drop tomorrow. The risk is never zero. So one should always be prepared.
Risk assessment gives you an idea of how likely a 50%+ drop might be. Whether it's closer to zero or closer to 100 percent.
If you always carry around an umbrella, you don't have to worry about rain anymore.

People run in here, and shout "Hey, I think the chance of rain is higher today than last week!!!" ALL THE TIME.

And I shrug, because I am already carrying an umbrella.

Sooner or later, someone would be right. Congrats. And it still doesn't matter. Because I already have an umbrella in my hand.
You have an umbrella that works for a normal rain shower. Hopefully that's all this is. And even with an umbrella, if it's raining hard enough you still get wet.

There's an interesting article from ERN about bear markets and recovery times. Accounting for inflation the 2000 bear took 13 years to fully recover to previous high plus CPI.

He then goes on to point out that for retirees even a large cash bucket doesn't eliminate sequence risk:

"Let’s look at the following example: Imagine you start with a $1,000,000 portfolio. You put 72% or $720,000 into equities and 28% or $280,000 into your cash bucket yielding about enough to keep up with inflation (not a bad assumption right now). You withdraw $40,000 a year adjusted for inflation from the safe asset bucket. You never had to touch your equity portfolio while it was underwater. So, why haven’t we succeeded in hedging against Sequence Risk? Well, if the equity portfolio only just returns to its old all-time high in CPI-adjusted terms after 7 years, we now have an equity portfolio worth $720,000 (in year 0 dollars) but we’re withdrawing $40,000 p.a. (in year 0 dollars).

Do you see a problem with that? We now have a 100% equity portfolio and a 40/720=5.56% withdrawal rate! Simply returning to a new all-time high in your equity portfolio is not enough, not even if adjusting for inflation! You also have to replenish your diminished cash bucket before the next big bear market as well! So, to make it back to a $1m portfolio, your equity portion should have grown by roughly (1000/720)^(1/7)-1=4.8% over and on top of inflation to make it back to the initial portfolio level."


https://earlyretirementnow.com/2019/10/ ... ar-market/

And that's without the deflation risk and potential "Japanification" (aka Nikkei collapse).

User avatar
corner559
Posts: 444
Joined: Wed Nov 07, 2007 3:05 am

Re: Coronavirus and the market

Post by corner559 » Mon Mar 16, 2020 11:26 pm

ballons wrote:
Mon Mar 16, 2020 8:50 pm
Italy May Soon Be Forced to Stop Treating Coronavirus Patients Over 80
https://www.vice.com/en_us/article/5dmq ... ts-over-80

Market isn't going to like this if this comes to America.
Given the lax attitude toward the virus in the beginning and lack of testing kits, we are only seeing the very beginning of this. It will be very rough sailing ahead.

APX32
Posts: 90
Joined: Sat May 27, 2017 1:22 pm

Re: Coronavirus and the market

Post by APX32 » Tue Mar 17, 2020 2:15 am

I see two issues here.

First, all these lockdowns and shutdowns are a good attempt to slow down the spread of the virus, but for how long? Whether it’s two weeks or two months from now, unless you have a cure (vaccine), then the pandemic will start all over again once you lift the restrictions, assuming we were able to slow it down in the first place.

Second, with a vaccine reportedly more than a year away, does that mean the entire world has to live under quarantine for the next 12-18 months? The alternative seems to be this herd immunity I keep hearing about, in which natural selection will do its work, but that’s too horrible to contemplate.

At this point, hard too see any way out of this except a worldwide economic depression that will take years to recover from. Sorry for the doom and gloom forecast, as we are starting a weeks-long shutdown in my state (WA), I’m having some trouble trying to come up with positive outcomes.

Unless this thing just magically disappears (like the flu season winding down as we approach warm weather), the economic/market prospects are looking grim.
8% SPY | 5% GLD | 87% Cash

sambb
Posts: 2889
Joined: Sun Mar 10, 2013 3:31 pm

Re: Coronavirus and the market

Post by sambb » Tue Mar 17, 2020 2:22 am

APX32 wrote:
Tue Mar 17, 2020 2:15 am
I see two issues here.

First, all these lockdowns and shutdowns are a good attempt to slow down the spread of the virus, but for how long? Whether it’s two weeks or two months from now, unless you have a cure (vaccine), then the pandemic will start all over again once you lift the restrictions, assuming we were able to slow it down in the first place.

Second, with a vaccine reportedly more than a year away, does that mean the entire world has to live under quarantine for the next 12-18 months? The alternative seems to be this herd immunity I keep hearing about, in which natural selection will do its work, but that’s too horrible to contemplate.

At this point, hard too see any way out of this except a worldwide economic depression that will take years to recover from. Sorry for the doom and gloom forecast, as we are starting a weeks-long shutdown in my state (WA), I’m having some trouble trying to come up with positive outcomes.

Unless this thing just magically disappears (like the flu season winding down as we approach warm weather), the economic/market prospects are looking grim.
and the market hasnt priced this risk in perhaps

User avatar
PoultryMan
Posts: 87
Joined: Fri Feb 02, 2018 3:12 pm

Re: Coronavirus and the market

Post by PoultryMan » Tue Mar 17, 2020 2:43 am

APX32 wrote:
Tue Mar 17, 2020 2:15 am
I see two issues here.

First, all these lockdowns and shutdowns are a good attempt to slow down the spread of the virus, but for how long? Whether it’s two weeks or two months from now, unless you have a cure (vaccine), then the pandemic will start all over again once you lift the restrictions, assuming we were able to slow it down in the first place.

Second, with a vaccine reportedly more than a year away, does that mean the entire world has to live under quarantine for the next 12-18 months? The alternative seems to be this herd immunity I keep hearing about, in which natural selection will do its work, but that’s too horrible to contemplate.

At this point, hard too see any way out of this except a worldwide economic depression that will take years to recover from. Sorry for the doom and gloom forecast, as we are starting a weeks-long shutdown in my state (WA), I’m having some trouble trying to come up with positive outcomes.

Unless this thing just magically disappears (like the flu season winding down as we approach warm weather), the economic/market prospects are looking grim.
Well you may well be right about a global depression, there will be very, very serious consequences to the shutdown/slowdown of several economies. [medical comment removed by moderator prudent]

We will get through this.

peskypesky
Posts: 190
Joined: Fri Mar 08, 2013 8:56 pm

Re: Coronavirus and the market

Post by peskypesky » Tue Mar 17, 2020 5:29 am

Not sure if this has come up already in this thread, but the Phillipines are shutting down their stock market due to covid-19.

https://www.reuters.com/article/us-heal ... 1400V?il=0

User avatar
prudent
Moderator
Posts: 7502
Joined: Fri May 20, 2011 2:50 pm

Re: Coronavirus and the market

Post by prudent » Tue Mar 17, 2020 6:48 am

Some posts not about the market were removed.. Please stay on topic.

User avatar
ReformedSpender
Posts: 525
Joined: Fri Mar 16, 2018 1:24 pm
Location: Stone's Throw from Vanguard

Re: Coronavirus and the market

Post by ReformedSpender » Tue Mar 17, 2020 6:53 am

One thing I can't come to grips with is the timing (not sure I can go into more detail as may be considered political), the overall sentiment (market) and media coverage of COVID-19.

For example, swine flu infected ~60M in the US with >10k deaths yet ZERO quarantines, ZERO closings and ZERO bailouts/stimulus packages. Similar stories for MERS, Ebola, etc.

Anyone else a little :confused :confused
Market history shows that when there's economic blue sky, future returns are low, and when the economy is on the skids, future returns are high. The best fishing is done in the most stormy waters.

User avatar
gmaynardkrebs
Posts: 2102
Joined: Sun Feb 10, 2008 11:48 am

Re: Coronavirus and the market

Post by gmaynardkrebs » Tue Mar 17, 2020 7:08 am

HomerJ wrote:
Mon Mar 16, 2020 8:04 pm
sambb wrote:
Mon Mar 16, 2020 7:03 pm
Good point, but thats not what im speaking about, Im speaking about the fact that there were postings about risk - it was an inhuman virus that shut down one of the largest economies in the world. Not a warning about market peak or bear market. Just about risk not factored into the market.
And the Greek debt crisis and Brexit increased the risk that European Union, one of the largest economies in the world, was going to have serious economic issues.

It was absolutely reasonable for people to post about that increased risk. They weren't wrong. The risk was higher.

The U.S. government shutdown increased the risk that U.S., one of the largest economies in the world, was going to have serious economic issues. It kept going and going; no one knew when it was going to end. Or the tariffs and trade wars, lots of risk there.

It was absolutely reasonable for people to post about that increased risk. They weren't wrong. The risk was higher.

SARS and the swine flu also started in China. They were also inhuman viruses that increased the risk that China, one of the largest economies of the world, was going to have serious economic issues.

It was absolutely reasonable for people to post about that increased risk. They weren't wrong. The risk was higher.

Yet the risk didn't show up in any of the situations, and it wouldn't have helped people to jump out of the market every time a reasonable risk increase was talked about on these boards...

It's NEVER obvious... Or it's often obvious (even when it doesn't end up happening).

Market timing is not as easy as you claim. The China virus could have gone the other way. That's what the market thought. They thought it would end up a slightly more serious version of SARS or swine flu, with China controlling it, and 3 weeks later, everything back to normal.

That was indeed a possible outcome.

Nothing is obvious. No one can predict the future easily.

Risk tolerance is determined with those two facts in mind. It's ALWAYS possible the market might start a 50%+ drop tomorrow. The risk is never zero. So one should always be prepared.

If you always carry around an umbrella, you don't have to worry about rain anymore.

People run in here, and shout "Hey, I think the chance of rain is higher today than last week!!!" ALL THE TIME.

And I shrug, because I am already carrying an umbrella.

Sooner or later, someone would be right. Congrats. And it still doesn't matter. Because I already have an umbrella in my hand.
Umbrellas often turn inside-out in a hurricane.

User avatar
knpstr
Posts: 2814
Joined: Thu Nov 20, 2014 8:57 pm
Location: Michigan

Re: Coronavirus and the market

Post by knpstr » Tue Mar 17, 2020 8:27 am

nigel_ht wrote:
Mon Mar 16, 2020 11:18 pm
There's an interesting article from ERN about bear markets and recovery times. Accounting for inflation the 2000 bear took 13 years to fully recover to previous high plus CPI.
All perspective. Unrealized gains/losses are just that unrealized.
We're still above market low of DJIA 6,470 in 2009... so what is the fuss about us being close to 20,000? Looks to me like we're way up! One can pick any data point to compare, there is no rule you must use "all time highs". Don't know about you but my investment accounts have yet to fall below all accumulated gains. Seems to me I have yet to lose any money I've contributed.

So if your $1 dollar invested long ago, grew to $10 and now you have $7... I don't exactly see what all the worry is about. Again, it is all perspective. This notion of "all time high" is what was "yours" and since we're down from that you've "lost money", is false.

Individual investors do not need to "mark to market" their holdings daily, and for those that do so are causing unnecessary mental strain. It is an unwise and unproductive practice, unless you are a trader.
Very little is needed to make a happy life; it is all within yourself, in your way of thinking. -Marcus Aurelius

nigel_ht
Posts: 876
Joined: Tue Jan 01, 2019 10:14 am

Re: Coronavirus and the market

Post by nigel_ht » Tue Mar 17, 2020 8:57 am

knpstr wrote:
Tue Mar 17, 2020 8:27 am
nigel_ht wrote:
Mon Mar 16, 2020 11:18 pm
There's an interesting article from ERN about bear markets and recovery times. Accounting for inflation the 2000 bear took 13 years to fully recover to previous high plus CPI.
All perspective. Unrealized gains/losses are just that unrealized.
We're still above market low of DJIA 6,470 in 2009... so what is the fuss about us being close to 20,000? Looks to me like we're way up! One can pick any data point to compare, there is no rule you must use "all time highs". Don't know about you but my investment accounts have yet to fall below all accumulated gains. Seems to me I have yet to lose any money I've contributed.

So if your $1 dollar invested long ago, grew to $10 and now you have $7... I don't exactly see what all the worry is about. Again, it is all perspective. This notion of "all time high" is what was "yours" and since we're down from that you've "lost money", is false.

Individual investors do not need to "mark to market" their holdings daily, and for those that do so are causing unnecessary mental strain. It is an unwise and unproductive practice, unless you are a trader.
The issue isn't whether it becomes $7 but if it become $2 and stays there for 20 years.

Also, if I can't retire on $7 but need $15 and it takes me 13 years to get back to $10+CPI that takes me past the accumulation phase. And that's 13 years with the 2003-2007 bull in there and not a 10 year deflationary period and stagnation. Typically you think 10 years is enough to recover but it isn't always and its not just ancient history stuff like 1929.

Which is the point of that post and why going defensive is just as bogle (or not) as buying the dip. Both are "market timing" but nobody around here says folks that buy the dip should give up investing and turn it over to a financial advisor.

Seasonal
Posts: 1649
Joined: Sun May 21, 2017 1:49 pm

Re: Coronavirus and the market

Post by Seasonal » Tue Mar 17, 2020 9:51 am

Markets are up at at the moment, likely because:

Italy may have turned the corner "BREAKING: Coronvirus Outbreak. One week after Italy's national lockdown (8 days after the north), Italy has three days with same number of new cases. This means 5 days after lockdown cases leveled off, consistent with typical incubation period of 3-5 days. This is good news." https://twitter.com/yaneerbaryam/status ... 5606682626

Trump has proposed a massive stimulus bill. I bring this up not as a discussion of proposed legislation, but due to its likely market impact.

FI4LIFE
Posts: 499
Joined: Sun Apr 28, 2019 9:27 am

Re: Coronavirus and the market

Post by FI4LIFE » Tue Mar 17, 2020 9:54 am

fortyofforty wrote:
Mon Mar 16, 2020 4:41 pm
Steadfast wrote:
Mon Mar 16, 2020 4:38 pm
CT-Scott wrote:
Mon Mar 16, 2020 4:22 pm
The Dow had its worst point drop ever as stocks tumbled again
Welcome news for long term investors. I'm buying, all the way down.
That simple strategy has made me a small fortune, beginning in 1987, through thick and thin. :beer
Simple dollar cost averaging or some other strategy?

Corsair
Posts: 365
Joined: Mon Oct 21, 2019 9:57 am
Location: WA

Re: Coronavirus and the market

Post by Corsair » Tue Mar 17, 2020 10:13 am

Just reported on CNBC that New York Mayor Cuomo is saying 19% are requiring hospitalization :shock: In my opinion I still don't believe the market has fully priced this in... some countries have skewed their numbers to look better than they were.

Mayors seems to be stepping up which his good, praying they succeed!
Stocks only go up? Don't fight the Fed. | All posts are my own opinions and are not financial advice.

quantAndHold
Posts: 4670
Joined: Thu Sep 17, 2015 10:39 pm

Re: Coronavirus and the market

Post by quantAndHold » Tue Mar 17, 2020 10:25 am

I’m just the reporter here, not making judgements about what was said, but this is notes a family member took from a Goldman Sachs conf call yesterday. This is probably a good proxy for what the market is “thinking”.
Conclusions of Goldman Sachs Investee call where 1,500 companies dialed in. The key economic takeaways were:

50% of Americans will contract the virus (150m people) as it's very communicable. This is on a par with the common cold (Rhinovirus) of which there are about 200 strains and which the majority of Americans will get 2-4 per year.

70% of Germany will contract it (58M people). This is the next most relevant industrial economy to be effected.

Peak-virus is expected over the next eight weeks, declining thereafter.

The virus appears to be concentrated in a band between 30-50 degrees north latitude, meaning that like the common cold and flu, it prefers cold weather. The coming summer in the northern hemisphere should help. This is to say that the virus is likely seasonal.

Of those impacted 80% will be early-stage, 15% mid-stage and 5% critical-stage. Early-stage symptoms are like the common cold and mid-stage symptoms are like the flu; these are stay at home for two weeks and rest. 5% will be critical and highly weighted towards the elderly.

Mortality rate on average of up to 2%, heavily weight towards the elderly and immunocompromised; meaning up to 3m people (150m*.02). In the US about 3m/yr die mostly due to old age and disease, those two being highly correlated (as a percent very few from accidents). There will be significant overlap, so this does not mean 3m new deaths from the virus, it means elderly people dying sooner due to respiratory issues. This may however stress the healthcare system.

There is a debate as to how to address the virus pre-vaccine. The US is tending towards quarantine. The UK is tending towards allowing it to spread so that the population can develop a natural immunity. Quarantine is likely to be ineffective and result in significant economic damage but will slow the rate of transmission giving the healthcare system more time to deal with the case load.

China’s economy has been largely impacted which has affected raw materials and the global supply chain. It may take up to six months for it to recover.

Global GDP growth rate will be the lowest in 30 years at around 2%.

S&P 500 will see a negative growth rate of -15% to -20% for 2020 overall.

There will be economic damage from the virus itself, but the real damage is driven mostly by market psychology. Viruses have been with us forever. Stock markets should fully recover in the 2nd half of the year.

In the past week there has been a conflating of the impact of the virus with the developing oil price war between KSA and Russia. While reduced energy prices are generally good for industrial economies, the US is now a large energy exporter, so there has been a negative impact on the valuation of the domestic energy sector. This will continue for some time as the Russians are attempting to economically squeeze the American shale producers and the Saudi’s are caught in the middle and do not want to further cede market share to Russia or the US.

Technically the market generally has been looking for a reason to reset after the longest bull market in history.

There is NO systemic risk. No one is even talking about that. Governments are intervening in the markets to stabilize them, and the private banking sector is very well capitalized. It feels more like 9/11 than it does like 2008.
Yes, I’m really that pedantic.

User avatar
Crushtheturtle
Posts: 267
Joined: Sat Mar 15, 2014 10:29 pm
Location: SC

Re: Coronavirus and the market

Post by Crushtheturtle » Tue Mar 17, 2020 10:33 am

quantAndHold wrote:
Tue Mar 17, 2020 10:25 am
I’m just the reporter here, not making judgements about what was said, but this is notes a family member took from a Goldman Sachs conf call yesterday. This is probably a good proxy for what the market is “thinking”.
Conclusions of Goldman Sachs ...
Thank you, very informative
“The mass of men lead lives of quiet desperation.” - Henry David Thoreau

fortyofforty
Posts: 2083
Joined: Wed Mar 31, 2010 12:33 pm

Re: Coronavirus and the market

Post by fortyofforty » Tue Mar 17, 2020 11:08 am

FI4LIFE wrote:
Tue Mar 17, 2020 9:54 am
fortyofforty wrote:
Mon Mar 16, 2020 4:41 pm
Steadfast wrote:
Mon Mar 16, 2020 4:38 pm
CT-Scott wrote:
Mon Mar 16, 2020 4:22 pm
The Dow had its worst point drop ever as stocks tumbled again
Welcome news for long term investors. I'm buying, all the way down.
That simple strategy has made me a small fortune, beginning in 1987, through thick and thin. :beer
Simple dollar cost averaging or some other strategy?
Just dollar cost averaging. Nothing fancy. Buying on a regular schedule, in good times and bad. Fully funded retirement accounts, employer and personal. Of course, that small fortune is a bit smaller this month. :)

User avatar
knpstr
Posts: 2814
Joined: Thu Nov 20, 2014 8:57 pm
Location: Michigan

Re: Coronavirus and the market

Post by knpstr » Tue Mar 17, 2020 11:27 am

nigel_ht wrote:
Tue Mar 17, 2020 8:57 am
Also, if I can't retire on $7 but need $15 and it takes me 13 years to get back to $10+CPI that takes me past the accumulation phase. And that's 13 years with the 2003-2007 bull in there and not a 10 year deflationary period and stagnation. Typically you think 10 years is enough to recover but it isn't always and its not just ancient history stuff like 1929.
If we're in a deflationary period as you suggest you'd need $10-CPI not $10+CPI.
Very little is needed to make a happy life; it is all within yourself, in your way of thinking. -Marcus Aurelius

Randolph Mortimer
Posts: 59
Joined: Thu Mar 12, 2020 7:13 pm

Re: Coronavirus and the market

Post by Randolph Mortimer » Tue Mar 17, 2020 11:45 am

quantAndHold wrote:
Tue Mar 17, 2020 10:25 am

"S&P 500 will see a negative growth rate of -15% to -20% for 2020 overall."

"Stock markets should fully recover in the 2nd half of the year."
Thank you for the report. Reading through, the above two comments don't seem to jibe. I know these are probably quick notes hastily jotted down, but could you ask for clarification?

User avatar
HomerJ
Posts: 14748
Joined: Fri Jun 06, 2008 12:50 pm

Re: Coronavirus and the market

Post by HomerJ » Tue Mar 17, 2020 11:51 am

gmaynardkrebs wrote:
Tue Mar 17, 2020 7:08 am
HomerJ wrote:
Mon Mar 16, 2020 8:04 pm
If you always carry around an umbrella, you don't have to worry about rain anymore.

People run in here, and shout "Hey, I think the chance of rain is higher today than last week!!!" ALL THE TIME.

And I shrug, because I am already carrying an umbrella.

Sooner or later, someone would be right. Congrats. And it still doesn't matter. Because I already have an umbrella in my hand.
Umbrellas often turn inside-out in a hurricane.
Even though I disagree with your sentiment (I'm prepared even for a hurricane), I have to give you points for that awesome reply :)
Last edited by HomerJ on Tue Mar 17, 2020 12:08 pm, edited 1 time in total.
A Goldman Sachs associate provided a variety of detailed explanations, but then offered a caveat, “If I’m being dead-### honest, though, nobody knows what’s really going on.”

User avatar
willthrill81
Posts: 19114
Joined: Thu Jan 26, 2017 3:17 pm
Location: USA

Re: Coronavirus and the market

Post by willthrill81 » Tue Mar 17, 2020 11:53 am

Randolph Mortimer wrote:
Tue Mar 17, 2020 11:45 am
quantAndHold wrote:
Tue Mar 17, 2020 10:25 am

"S&P 500 will see a negative growth rate of -15% to -20% for 2020 overall."

"Stock markets should fully recover in the 2nd half of the year."
Thank you for the report. Reading through, the above two comments don't seem to jibe. I know these are probably quick notes hastily jotted down, but could you ask for clarification?
I don't see much plausibility in the latter of the two comments (i.e. stocks recovering before the end of the year).
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

Randolph Mortimer
Posts: 59
Joined: Thu Mar 12, 2020 7:13 pm

Re: Coronavirus and the market

Post by Randolph Mortimer » Tue Mar 17, 2020 11:57 am

willthrill81 wrote:
Tue Mar 17, 2020 11:53 am
Randolph Mortimer wrote:
Tue Mar 17, 2020 11:45 am
quantAndHold wrote:
Tue Mar 17, 2020 10:25 am

"S&P 500 will see a negative growth rate of -15% to -20% for 2020 overall."

"Stock markets should fully recover in the 2nd half of the year."
Thank you for the report. Reading through, the above two comments don't seem to jibe. I know these are probably quick notes hastily jotted down, but could you ask for clarification?
I don't see much plausibility in the latter of the two comments (i.e. stocks recovering before the end of the year).
We know.

User avatar
willthrill81
Posts: 19114
Joined: Thu Jan 26, 2017 3:17 pm
Location: USA

Re: Coronavirus and the market

Post by willthrill81 » Tue Mar 17, 2020 1:54 pm

Yesterdaysnews wrote:
Tue Mar 17, 2020 1:35 pm
Economic damage likely to be significant but it seems the government is willing to do whatever is needed to prevent economic collapse.
I don't think that more than a handful of posters here believe that there's a realistic chance of an economic collapse. But there is a lot of space between economic nirvana and economic collapse.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

nigel_ht
Posts: 876
Joined: Tue Jan 01, 2019 10:14 am

Re: Coronavirus and the market

Post by nigel_ht » Tue Mar 17, 2020 2:02 pm

knpstr wrote:
Tue Mar 17, 2020 11:27 am
nigel_ht wrote:
Tue Mar 17, 2020 8:57 am
Also, if I can't retire on $7 but need $15 and it takes me 13 years to get back to $10+CPI that takes me past the accumulation phase. And that's 13 years with the 2003-2007 bull in there and not a 10 year deflationary period and stagnation. Typically you think 10 years is enough to recover but it isn't always and its not just ancient history stuff like 1929.
If we're in a deflationary period as you suggest you'd need $10-CPI not $10+CPI.
Nope...given that CPI is negative $10 + negative CPI is still the correct formula. Your point is correct though...if CPI is negative that's in your favor. Although personally I'd rather have a bull.

User avatar
ray.james
Posts: 1321
Joined: Tue Jul 19, 2011 4:08 am

Re: Coronavirus and the market

Post by ray.james » Tue Mar 17, 2020 2:13 pm

quantAndHold wrote:
Tue Mar 17, 2020 10:25 am
I’m just the reporter here, not making judgements about what was said, but this is notes a family member took from a Goldman Sachs conf call yesterday. This is probably a good proxy for what the market is “thinking”.
Thank you for sharing.
When in doubt, http://www.bogleheads.org/forum/viewtopic.php?f=1&t=79939

quantAndHold
Posts: 4670
Joined: Thu Sep 17, 2015 10:39 pm

Re: Coronavirus and the market

Post by quantAndHold » Tue Mar 17, 2020 3:29 pm

Randolph Mortimer wrote:
Tue Mar 17, 2020 11:45 am
quantAndHold wrote:
Tue Mar 17, 2020 10:25 am

"S&P 500 will see a negative growth rate of -15% to -20% for 2020 overall."

"Stock markets should fully recover in the 2nd half of the year."
Thank you for the report. Reading through, the above two comments don't seem to jibe. I know these are probably quick notes hastily jotted down, but could you ask for clarification?
Yeah, I thought that was weird too. I kinda wondered if they really meant recovery by the end of 2021, given the rest of the content.

Apparently, my guy spread his notes to more than a few people. What he sent me is all over social media. Verbatim. I’m not the only one who reposted it...
Yes, I’m really that pedantic.

Patzer
Posts: 271
Joined: Wed Jun 10, 2015 10:56 am

Re: Coronavirus and the market

Post by Patzer » Tue Mar 17, 2020 4:48 pm

Taking a shot at GDP (QoQ) impact of COVID-19.
Purely my own analysis of the impacted industries and how they will suffer and recover.
I have a really good handle on the facts for COVID-19, but I have never tried to project GDP before, so I am probably wrong. :D

Q1 2020: +.43%
Q2 2020: -7.98%
Q3 2020: -2.06%
Q4 2020: +8.17%

Edit: This is a base case that does not consider any stimulus that may pass on or after 3/17/2020.
Last edited by Patzer on Tue Mar 17, 2020 5:15 pm, edited 2 times in total.

guyinlaw
Posts: 607
Joined: Wed Jul 03, 2019 9:54 am

Re: Coronavirus and the market

Post by guyinlaw » Tue Mar 17, 2020 5:09 pm

Dire economic data released by China on Monday showed that the country was pummeled by the coronavirus outbreak in January and February. The world's second biggest economy looks unlikely to recover any time soon.
https://www.google.com/amp/s/amp.cnn.co ... ndex.html

viewtopic.php?f=9&t=305217&p=5105663#p5105663
"Equity markets could get worse if the slowdown extends further, but also realize that the markets will rebound far before economic data improve."

User avatar
Forester
Posts: 1274
Joined: Sat Jan 19, 2019 2:50 pm
Location: UK

Re: Coronavirus and the market

Post by Forester » Tue Mar 17, 2020 5:11 pm

Capitalism needs to be able to cleanse & renew itself. All the financial engineering creates is ossification and moral hazard. The same companies which borrowed to buy back stock will now be bailed out. I smell stagflation.

7eight9
Posts: 1055
Joined: Fri May 17, 2019 7:11 pm

Re: Coronavirus and the market

Post by 7eight9 » Tue Mar 17, 2020 5:25 pm

The Venetian, Palazzo closing until at least April 1; no layoffs or furloughs
Las Vegas Sands Corp. is closing The Venetian, Palazzo and the Sands Expo and Convention Center until at least April 1, effective immediately. The company said no employee layoffs or furloughs are being considered.
https://www.reviewjournal.com/business/ ... s-1983676/

LVS --- $40.86 +$1.26 (3.18%) $35.92-74.29 < 52 week

Now just waiting for Caesars Entertainment Corporation (CZR) to announce closures.
I guess it all could be much worse. | They could be warming up my hearse.

7eight9
Posts: 1055
Joined: Fri May 17, 2019 7:11 pm

Re: Coronavirus and the market

Post by 7eight9 » Tue Mar 17, 2020 8:32 pm

Sisolak orders 30-day closure of nonessential businesses
CARSON CITY — Gov. Steve Sisolak announced Tuesday a statewide closure of all casinos, restaurants, bars and other nonessential businesses for 30 days in the state’s latest response to the COVID-19 outbreak.
https://www.reviewjournal.com/local/loc ... s-1983950/
I guess it all could be much worse. | They could be warming up my hearse.

User avatar
Forester
Posts: 1274
Joined: Sat Jan 19, 2019 2:50 pm
Location: UK

Re: Coronavirus and the market

Post by Forester » Wed Mar 18, 2020 6:14 am

Reckon we'll begin to get past peak hysteria soon. Places like Singapore are getting back to normality. The medical emergency is with us, but I believe opinion will shift against shutting down too much of the economy. As cases peak and level off and restrictions are lifted, the stock market will calm down. I shifted my allocation back up to 40% stocks this morning.

User avatar
prudent
Moderator
Posts: 7502
Joined: Fri May 20, 2011 2:50 pm

Re: Coronavirus and the market

Post by prudent » Wed Mar 18, 2020 12:02 pm

Posts not discussing the market are off-topic and have been removed. Please use this thread for market impacts.

There are 3 threads:

- Market impacts: Coronavirus and the market (this one)

- Preparations: Coronavirus (Consumer Issues) How you are preparing?

- Everything else: Bogleheads community discussion - Coronavirus

Seasonal
Posts: 1649
Joined: Sun May 21, 2017 1:49 pm

Re: Coronavirus and the market

Post by Seasonal » Wed Mar 18, 2020 12:23 pm

The worry is that this will kill multiples of 55,000 Americans and that the steps necessary to keep the death numbers low will cause great economic damage. From what I've read today, a very sizeable percentage of Americans are employed by businesses that only have enough cash for a few weeks. With little or no revenue, due to shutdowns and other reductions in demand, they won't long survive and the cascading effect on GDP and employment will be very bad.

I've written this in other threads, but today we seem to be seeing a flight to liquidity. Sell anything to raise cash. As one economist put it:
The reason long rates are going up have nothing to do with fiscal fears and everything to do with investors and corporates needing cash (to keep the lights on) and the only way to get cash at the moment is to sell your most liquid assets = equities and Treasuries. Credit markets in all shapes and forms have enormous bid-offer spreads which makes them very illiquid.
I'd guess the Fed will act to maintain liquidity using its emergency powers and the federal government will do massive fiscal stimulus. The real solution will be on the healthcare front, but it would be good to keep the financial system from melting down in the interim.

LawProf
Posts: 145
Joined: Sun Feb 03, 2013 12:32 am

Re: Coronavirus and the market

Post by LawProf » Wed Mar 18, 2020 12:42 pm

Things are bad. Based on anecdotal evidence from friends, commercial tenants are walking out on leases, residential renters are calling property management companies to inform them they cannot pay rent, and mortgage payments are being missed. Whole industries are sick (airlines, tourism). Other industries figure to follow (automotive, anything discretionary). A lot of businesses are going to fail, and we could be entering another real estate crash. And we've just started this thing. The market still has further down to go.

anoop
Posts: 1431
Joined: Tue Mar 04, 2014 1:33 am

Re: Coronavirus and the market

Post by anoop » Wed Mar 18, 2020 12:46 pm

I suspect we will see companies reporting the biggest losses ever as CFOs will take this opportunity to clean up their balance sheets.

Thesaints
Posts: 3455
Joined: Tue Jun 20, 2017 12:25 am

Re: Coronavirus and the market

Post by Thesaints » Wed Mar 18, 2020 1:18 pm

If we can find a silver lining in all this, it will be finally sufficient to refer to the first page of this thread anyone daring to express doubts on the benefits of cost averaging.

peskypesky
Posts: 190
Joined: Fri Mar 08, 2013 8:56 pm

Re: Coronavirus and the market

Post by peskypesky » Wed Mar 18, 2020 3:38 pm

Coronavirs kills bull market....saves bulls.

https://www.euroweeklynews.com/2020/03/ ... nKGNahKhPY

User avatar
1789
Posts: 1496
Joined: Fri Aug 16, 2019 3:31 pm

Re: Coronavirus and the market

Post by 1789 » Wed Mar 18, 2020 3:44 pm

LawProf wrote:
Wed Mar 18, 2020 12:42 pm
Things are bad. Based on anecdotal evidence from friends, commercial tenants are walking out on leases, residential renters are calling property management companies to inform them they cannot pay rent, and mortgage payments are being missed. Whole industries are sick (airlines, tourism). Other industries figure to follow (automotive, anything discretionary). A lot of businesses are going to fail, and we could be entering another real estate crash. And we've just started this thing. The market still has further down to go.
I hope that you are wrong but i agree with your observations :(
"My conscience wants vegetarianism to win over the world. And my subconscious is yearning for a piece of juicy meat. But what do i want?" (Andrei Tarkovsky)

User avatar
willthrill81
Posts: 19114
Joined: Thu Jan 26, 2017 3:17 pm
Location: USA

Re: Coronavirus and the market

Post by willthrill81 » Wed Mar 18, 2020 3:47 pm

LawProf wrote:
Wed Mar 18, 2020 12:42 pm
Things are bad. Based on anecdotal evidence from friends, commercial tenants are walking out on leases, residential renters are calling property management companies to inform them they cannot pay rent, and mortgage payments are being missed. Whole industries are sick (airlines, tourism). Other industries figure to follow (automotive, anything discretionary). A lot of businesses are going to fail, and we could be entering another real estate crash. And we've just started this thing. The market still has further down to go.
Many thought that the simultaneous crash of real estate and stocks during the GFC was a one-off event. However, it's increasingly looking like that is simply not so.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

skisk
Posts: 27
Joined: Sat Feb 22, 2014 8:23 pm

Re: Coronavirus and the market

Post by skisk » Wed Mar 18, 2020 6:00 pm

I normally dont follow the stock market closely, but with the daily gyrations I have paid more attention. One thing that has really surprised me is how poorly financial analysts in general have been at predicting what would happen. They have barely been able to forecast what will happen the next day, let alone anything else further out. I know that forecasting is not easy to do, but the people that do this professionally full-time should be a bit better at understanding short and long term effects of a situation than mere mortals are. Or maybe the really smart ones work for financial companies and hedge funds and are keeping quiet, and the ones that show up in interviews and TV are not the cream of the crop?

I am also extremely curious to see what Berkshire Hathaway are doing. Are they already getting calls from companies wanting to tap into their famous liquidity? Will BH be able to do more deals like the BoA deal they did in 2009?

User avatar
knpstr
Posts: 2814
Joined: Thu Nov 20, 2014 8:57 pm
Location: Michigan

Re: Coronavirus and the market

Post by knpstr » Wed Mar 18, 2020 6:59 pm

LawProf wrote:
Wed Mar 18, 2020 12:42 pm
Things are bad. Based on anecdotal evidence from friends, commercial tenants are walking out on leases, residential renters are calling property management companies to inform them they cannot pay rent, and mortgage payments are being missed. Whole industries are sick (airlines, tourism). Other industries figure to follow (automotive, anything discretionary). A lot of businesses are going to fail, and we could be entering another real estate crash. And we've just started this thing. The market still has further down to go.
Things were guaranteed to get "bad" when we were told to shutdown the economy for prophylactic purposes.
The question isn't "how bad" (in terms of number of industries that get shutdown by mandate), but rather "how long" do we have to keep the economy on lock down.
Very little is needed to make a happy life; it is all within yourself, in your way of thinking. -Marcus Aurelius

User avatar
LadyGeek
Site Admin
Posts: 63837
Joined: Sat Dec 20, 2008 5:34 pm
Location: Philadelphia
Contact:

Re: Coronavirus and the market

Post by LadyGeek » Wed Mar 18, 2020 8:51 pm

I removed some off-topic posts regarding "big data". Also, a post about someone losing their job. Both of these topics can be discussed in the community discussion thread (below).

Please stay on-topic, which is the market.


======================

There are 3 threads:

- Market impacts: Coronavirus and the market (this one)

- Preparations: Coronavirus (Consumer Issues) How you are preparing?

- Everything else: Bogleheads community discussion - Coronavirus
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.

Post Reply