Corona virus, stock market gyrations & Jack Bogle

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Gemini1962
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Corona virus, stock market gyrations & Jack Bogle

Post by Gemini1962 » Thu Feb 27, 2020 6:23 am

Looking at the recent scare stories about the Corona virus and the subsequent falls in the stock market I am reminded of a quote I heard Jack Bogle say in an interview when he was asked about stock market gyrations. He quoted from Macbeth and likened the stock market noise to "A tale told by an idiot full of sound and fury signifying nothing."

Close your eyes and ears and stay the course. I am 2 years away from retirement and still 100% in equities - not the ideal for some but I sleep absolutely fine at night. I lived through 2008, also 100% in equities and did... absolutely nothing. It will work itself out and we'll be fine but if I'm wrong and we all die then it won't matter anyway :D

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fredflinstone
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Re: Corona virus, stock market gyrations & Jack Bogle

Post by fredflinstone » Thu Feb 27, 2020 6:39 am

We aren't all going to die, but a stock market decline of 50% or more is certainly possible. Here are some data points to consider:

- car sales are down 92% in China
https://www.theguardian.com/business/20 ... n-industry

- dramatic decline in tourism in Kyoto (worst in thirty years)
https://soranews24.com/2020/02/08/kyoto ... portunity/

- an estimated 10-15% chance that 80 percent of UK residents will be infected.
https://www.standard.co.uk/news/health/ ... 71726.html

In a worst-case scenario, we are probably looking at tens of millions of deaths worldwide, supply chain problems for virtually all manufactured goods, decimation of the travel, tourism, and hospitality industries, and global economic depression. I'm glad you are staying the course, but do not take this lightly.
Stocks 28 / Gold 23 / Long-term US treasuries 19 / Cash 22 / TIPS 8

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Gemini1962
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Re: Corona virus, stock market gyrations & Jack Bogle

Post by Gemini1962 » Thu Feb 27, 2020 7:08 am

I'm sorry but I don't believe the hype spouted by the media to sell newspapers. We are a couple of months away from warmer weather and this virus won't like the sunshine.

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Re: Corona virus, stock market gyrations & Jack Bogle

Post by columbia » Thu Feb 27, 2020 7:10 am

Gemini1962 wrote:
Thu Feb 27, 2020 7:08 am
I'm sorry but I don't believe the hype spouted by the media to sell newspapers. We are a couple of months away from warmer weather and this virus won't like the sunshine.
What is your background in working with infectious diseases?
If you leave your head in the sand for too long, you might get run over by a Jeep.

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Gemini1962
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Re: Corona virus, stock market gyrations & Jack Bogle

Post by Gemini1962 » Thu Feb 27, 2020 7:19 am

None, it was the view of a Professor of infectious diseases on the radio the other morning.

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Re: Corona virus, stock market gyrations & Jack Bogle

Post by fredflinstone » Thu Feb 27, 2020 7:24 am

Gemini1962 wrote:
Thu Feb 27, 2020 7:08 am
I'm sorry but I don't believe the hype spouted by the media to sell newspapers. We are a couple of months away from warmer weather and this virus won't like the sunshine.
You don't believe that car sales in China are down 92 percent?
Stocks 28 / Gold 23 / Long-term US treasuries 19 / Cash 22 / TIPS 8

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Gemini1962
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Re: Corona virus, stock market gyrations & Jack Bogle

Post by Gemini1962 » Thu Feb 27, 2020 7:32 am

I've no idea they may well be, you can prove whatever you like with statistics but I believe it will work itself out within a few months. During my lifetime the media have told me I was going to die from smallpox, tb, sars, ebola, swine flu, bird flu, foot & mouth and God alone what else but I'm still here.

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Re: Corona virus, stock market gyrations & Jack Bogle

Post by goblue100 » Thu Feb 27, 2020 7:49 am

fredflinstone wrote:
Thu Feb 27, 2020 6:39 am
We aren't all going to die, but a stock market decline of 50% or more is certainly possible. Here are some data points to consider:

- car sales are down 92% in China
https://www.theguardian.com/business/20 ... n-industry

- dramatic decline in tourism in Kyoto (worst in thirty years)
https://soranews24.com/2020/02/08/kyoto ... portunity/

- an estimated 10-15% chance that 80 percent of UK residents will be infected.
https://www.standard.co.uk/news/health/ ... 71726.html

In a worst-case scenario, we are probably looking at tens of millions of deaths worldwide, supply chain problems for virtually all manufactured goods, decimation of the travel, tourism, and hospitality industries, and global economic depression. I'm glad you are staying the course, but do not take this lightly.
In a few years, the coronavirus will be a pimple on the butt of an elephant looking at the stock market chart.
Financial planners are savers. They want us to be 95 percent confident we can finance a 30-year retirement even though there is an 82 percent probability of being dead by then. - Scott Burns

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Re: Corona virus, stock market gyrations & Jack Bogle

Post by nigel_ht » Thu Feb 27, 2020 7:50 am

Gemini1962 wrote:
Thu Feb 27, 2020 7:32 am
I've no idea they may well be, you can prove whatever you like with statistics but I believe it will work itself out within a few months. During my lifetime the media have told me I was going to die from smallpox, tb, sars, ebola, swine flu, bird flu, foot & mouth and God alone what else but I'm still here.
Make sure your beneficiaries are up to date. This one kills us older folks. 3.4% CFR for 60-69. 10% CFR if you have cardiovascular disease.

Old folks tend to have more preexisting conditions but for folks in the 80+ range it was 14%.

The stats seem pretty binary...if you don’t go critically ill you’re mostly okay. But 81% of folks on mechanical ventilators died within 28 days (smaller study). The larger study showed 61% of critically ill patients died.

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Re: Corona virus, stock market gyrations & Jack Bogle

Post by HJG0989 » Thu Feb 27, 2020 8:14 am

I am 2 years away from retirement and still 100% in equities - not the ideal for some but I sleep absolutely fine at night. I lived through 2008, also 100% in equities and did... absolutely nothing. It will work itself out and we'll be fine but if I'm wrong and we all die then it won't matter anyway
You lived through 2008 but you weren't 2 years away from retirement. Will you have a pension to cover your expenses?

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JoeRetire
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Re: Corona virus, stock market gyrations & Jack Bogle

Post by JoeRetire » Thu Feb 27, 2020 8:18 am

fredflinstone wrote:
Thu Feb 27, 2020 6:39 am
We aren't all going to die
Yes we are. Hopefully for most of us, it won't be any time soon.
It's the end of the world as we know it. | It's the end of the world as we know it. | It's the end of the world as we know it. | And I feel fine.

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JoeRetire
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Re: Corona virus, stock market gyrations & Jack Bogle

Post by JoeRetire » Thu Feb 27, 2020 8:20 am

Gemini1962 wrote:
Thu Feb 27, 2020 7:08 am
We are a couple of months away from warmer weather and this virus won't like the sunshine.
I think I heard someone say that...
It's the end of the world as we know it. | It's the end of the world as we know it. | It's the end of the world as we know it. | And I feel fine.

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Re: Corona virus, stock market gyrations & Jack Bogle

Post by Scooter57 » Thu Feb 27, 2020 8:25 am

During your lifetime have you ever before seen the world's leading industrial nation shut down huge parts of its industry for a month?

Me neither.

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Re: Corona virus, stock market gyrations & Jack Bogle

Post by Nowizard » Thu Feb 27, 2020 8:28 am

Many here say to stay the course which I hope is a reflection of two things: 1. A portfolio that is separate from everyday expenses; 2. Not being near retirement or with other income streams that protect from the necessity of accessing retirement funds in the next year or two.
Those circumstances exist with many posters here but not all. Others have legitimate questions that lead to other possibilities such as moving portions, or all, of their retirement assets, at least until issues of record deficits, contentious elections, a long-running bull market and a potential pandemic are clarified. There may be other issues about to appear as well. They are considering whether another adage applies such as is used when people need to access funds within a couple of years or less to, for example, purchase a home. Typical advice is to put the money in MM or something similar. Others consider whether it is "Different this time." This is not to criticize those who repeat "Stay the course" or "Tune out the noise," but to simply say that individual circumstances can result in markedly different and appropriate responses not only now but in all market conditions.

Tim

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Re: Corona virus, stock market gyrations & Jack Bogle

Post by Call_Me_Op » Thu Feb 27, 2020 8:29 am

JoeRetire wrote:
Thu Feb 27, 2020 8:20 am
Gemini1962 wrote:
Thu Feb 27, 2020 7:08 am
We are a couple of months away from warmer weather and this virus won't like the sunshine.
I think I heard someone say that...
Very stable genius?
Best regards, -Op | | "In the middle of difficulty lies opportunity." Einstein

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Re: Corona virus, stock market gyrations & Jack Bogle

Post by fredflinstone » Thu Feb 27, 2020 8:29 am

goblue100 wrote:
Thu Feb 27, 2020 7:49 am
fredflinstone wrote:
Thu Feb 27, 2020 6:39 am
We aren't all going to die, but a stock market decline of 50% or more is certainly possible. Here are some data points to consider:

- car sales are down 92% in China
https://www.theguardian.com/business/20 ... n-industry

- dramatic decline in tourism in Kyoto (worst in thirty years)
https://soranews24.com/2020/02/08/kyoto ... portunity/

- an estimated 10-15% chance that 80 percent of UK residents will be infected.
https://www.standard.co.uk/news/health/ ... 71726.html

In a worst-case scenario, we are probably looking at tens of millions of deaths worldwide, supply chain problems for virtually all manufactured goods, decimation of the travel, tourism, and hospitality industries, and global economic depression. I'm glad you are staying the course, but do not take this lightly.
In a few years, the coronavirus will be a pimple on the butt of an elephant looking at the stock market chart.
You can see the future? Wow!
Stocks 28 / Gold 23 / Long-term US treasuries 19 / Cash 22 / TIPS 8

sambb
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Re: Corona virus, stock market gyrations & Jack Bogle

Post by sambb » Thu Feb 27, 2020 8:37 am

If your risk tolerance has changed then definitely rebalance to lower allocation. Lots of people have changed. Never take too much stock of your risk won’t tolerate.

We could see huge declines in the market in a pandemiC.

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Re: Corona virus, stock market gyrations & Jack Bogle

Post by Psyayeayeduck » Thu Feb 27, 2020 8:40 am

I'm with you, OP. The coronavirus has a fantastic PR department that followed others in the past -- SARS, swine flu, bird flu, Zika, etc. Honestly, it needs to beat influenza first when it comes to death counts before stressing about coronavirus and even then it is a long way. Now if it follows more of the Black Plague playbook then I would start worrying. All I know is that it is following the same news cycle I seen before and I am not sure what I can do in addition to what I am doing already. I eat healthy, exercise, wash my hands, meditate, take my prescribed medication, use PTO if I develop signs of sickness to prevent infecting others (if need be), etc. Maybe this coronavirus event is a nice reminder to ensure that your beneficiary updates and insurance are up-to-date especially if one is in the later years of their expectancy life.

If I'm a bit more honest, I'm just glad that I picked the DCA route this year when it comes to my investments. Last year's unusual high rate of return made me a bit defensive of this year's performance especially with multiple fronts happening this year that have a good chance of being economic game changers (e.g., Brexit, US elections).

I'm still doing the whole "stay the course" approach as before as it has treated me very well. As I have mentioned here before on this website, I might not be able to get the A+ but I will be very happy with a passing grade when it comes to saving and investing. As long as I can beat my last year's saving rate of 61.78%, I'm happy. :greedy :wink:

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Re: Corona virus, stock market gyrations & Jack Bogle

Post by RubyTuesday » Thu Feb 27, 2020 8:52 am

Regardless of short term concerns over Coronavirus, if you are 2 years from anticipated retirement with 100% equities, I hope you’re either:
- already so wealthy your plans won’t change with 40-50% decline,
- receiving a pension that meets your basic needs in retirement,
- fine with working 8-10 more years if there is 40-50% decline, or
- willing to live on 40-50% less retirement income.

That is a dangerously high risk level if your retirement plans are in any way dependent on the equity assets.
“Doing nothing is better than being busy doing nothing.” – Lao Tzu

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Re: Corona virus, stock market gyrations & Jack Bogle

Post by Keenobserver » Thu Feb 27, 2020 9:18 am

Here we go again. The world is ending because this virus is
" different" Few months from now, everything will.be back on track. Big fish waiting for you to sell.

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Re: Corona virus, stock market gyrations & Jack Bogle

Post by CFR » Thu Feb 27, 2020 9:32 am

I'm gonna admit I am sitting on some cash and not buying. If I am honest, it's because I am market timing. Waiting to see how this works out. I suspect it will subside, as others have mentioned, when Spring comes. No specialty in that area, just read that thesis here and there.

My concern is that it appears to spread before symptoms appear. Is that similar to influenza? What is amazing is about 6 months are gone in a few days. Wow.

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Re: Corona virus, stock market gyrations & Jack Bogle

Post by DB2 » Thu Feb 27, 2020 9:35 am

And then there's the election this year and a certain outcome from that alone could easily lead to a 30% drop in my opinion...not to mention the challenges of a recovery for the several years to follow.

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Re: Corona virus, stock market gyrations & Jack Bogle

Post by MnD » Thu Feb 27, 2020 10:13 am

Licking my chops at the prospect of buying shares at fire sale prices from the panic sellers. Market will have to drop substantially more to trigger a buy per my IPS but wouldn't be at all surprised to see this be the trigger for a recession and a market sell off (-20-30%). We are already in a correction for total stock market (-10.5%) and total international stock market (-10.2%). The chicken little's will no doubt wait for even worse timing and pricing before selling and I'll be ready. :twisted:
70/30 AA for life, Global market cap equity. Rebalance if fixed income <25% or >35%. Weighted ER< .10%. 5% of annual portfolio balance SWR, Proportional (to AA) withdrawals.

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Re: Corona virus, stock market gyrations & Jack Bogle

Post by Almond » Thu Feb 27, 2020 10:26 am

say this does become a pandemic and we have supply chain disruptions, people struggling to get food and needed meds, sanitary conditions in less developed countries unraveling and in the West they will be greatly strained. All of these things will have a huge knock on effect.

While I get the Bogle way is to stay the course and not time the market, did Bogle factor in a worldwide pandemic and its downstream impact when calculating this approach? I honestly don’t know the answer but would be curious to hear input

Thank you

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Re: Corona virus, stock market gyrations & Jack Bogle

Post by actx » Thu Feb 27, 2020 10:34 am

What am I missing ??!

So there are 2800 deaths worldwide (almost all in China - a country of more than a billion people). It is alreay plateauing / decreasing in China.
Less than 100 people in Europe infected and no deaths.
Less than 100 people in USA infected.

I have heard 2% mortality rate of those who see doctor or are in hospital, not total infected as most don't get treated and/or show no serious symptoms.

Talk of cancelling the olympics (which I despise but even so). . .suspending schools for months?

And the world ending? A poster on this tread's worst case scenarios is "10s of millions dead" - huh? from 2800 to 10s of millions?

What am I missing as this seems to be an insignificant issue in the scope of things. . .other than cable news and others that can profit from doom and gloom.

Serious question.

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Re: Corona virus, stock market gyrations & Jack Bogle

Post by 7eight9 » Thu Feb 27, 2020 10:37 am

Almond wrote:
Thu Feb 27, 2020 10:26 am
say this does become a pandemic and we have supply chain disruptions, people struggling to get food and needed meds, sanitary conditions in less developed countries unraveling and in the West they will be greatly strained. All of these things will have a huge knock on effect.

While I get the Bogle way is to stay the course and not time the market, did Bogle factor in a worldwide pandemic and its downstream impact when calculating this approach? I honestly don’t know the answer but would be curious to hear input

Thank you
We aren't there yet but if the selloff continues people might want to consider what Jack Bogle said in 2009.

The stock market’s damage has already been done. And if you’re one of those people near or already in retirement, you already know you’re going to have to work longer, save more or spend less.

But what should you do right now with the money you have left? Should you wade back into the stock market, if you bailed out when the market was plunging? Or if you watched your investments drop and then recover a little in the last few months, should you just hold on? What happens if the market doesn’t fully recover for a long time? (That happened in Japan in the ’90s.) ...

“If another decline in the market is going to bankrupt you or put you out of business or destroy your retirement account, you should not go back into the stock market,” said John C. Bogle, the founder of Vanguard and viewed by many as the father of index investing. “It’s not complicated. The stock market can go up and down a lot and nobody really knows how much and when.”


https://www.nytimes.com/2009/06/20/your ... money.html
I guess it all could be much worse. | They could be warming up my hearse.

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Re: Corona virus, stock market gyrations & Jack Bogle

Post by RubyTuesday » Thu Feb 27, 2020 10:56 am

Almond wrote:
Thu Feb 27, 2020 10:26 am
say this does become a pandemic and we have supply chain disruptions, people struggling to get food and needed meds, sanitary conditions in less developed countries unraveling and in the West they will be greatly strained. All of these things will have a huge knock on effect.

While I get the Bogle way is to stay the course and not time the market, did Bogle factor in a worldwide pandemic and its downstream impact when calculating this approach? I honestly don’t know the answer but would be curious to hear input

Thank you
Jack Bogle has said “stay the course” many times, and has also said “I meant it every time.”
“Doing nothing is better than being busy doing nothing.” – Lao Tzu

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Re: Corona virus, stock market gyrations & Jack Bogle

Post by beehivehave » Thu Feb 27, 2020 10:57 am

actx wrote:
Thu Feb 27, 2020 10:34 am
What am I missing ??!

So there are 2800 deaths worldwide (almost all in China - a country of more than a billion people). It is alreay plateauing / decreasing in China.
Less than 100 people in Europe infected and no deaths.
Less than 100 people in USA infected.

I have heard 2% mortality rate of those who see doctor or are in hospital, not total infected as most don't get treated and/or show no serious symptoms.

Talk of cancelling the olympics (which I despise but even so). . .suspending schools for months?

And the world ending? A poster on this tread's worst case scenarios is "10s of millions dead" - huh? from 2800 to 10s of millions?

What am I missing as this seems to be an insignificant issue in the scope of things. . .other than cable news and others that can profit from doom and gloom.

Serious question.
Yes, it is too soon to panic or call off events. But the most qualified health professionals (CDC, NIH, etc.) are telling us this epidemic has some unusual and worrisome characteristics. Unlike other diseases, it is transmitted easily, from people with no symptoms, is not easy to detect, appears to have a fairly high mortality rate and has no vaccine or cure. If not contained, think flu 200 times more dangerous with no vaccine. Not the end of the world but enough to get one's attention and interfere with normal commerce.
Hope for the best and prepare for the worst.
Not hope for the best and prepare for the best.
.

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Re: Corona virus, stock market gyrations & Jack Bogle

Post by goblue100 » Thu Feb 27, 2020 11:18 am

fredflinstone wrote:
Thu Feb 27, 2020 8:29 am
goblue100 wrote:
Thu Feb 27, 2020 7:49 am

In a few years, the coronavirus will be a pimple on the butt of an elephant looking at the stock market chart.
You can see the future? Wow!
Just as well as you can.
fredflinstone wrote:In a worst-case scenario, we are probably looking at tens of millions of deaths worldwide, supply chain problems for virtually all manufactured goods, decimation of the travel, tourism, and hospitality industries, and global economic depression. I'm glad you are staying the course, but do not take this lightly.
Financial planners are savers. They want us to be 95 percent confident we can finance a 30-year retirement even though there is an 82 percent probability of being dead by then. - Scott Burns

Almond
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Re: Corona virus, stock market gyrations & Jack Bogle

Post by Almond » Thu Feb 27, 2020 11:19 am

7eight9 wrote:
Thu Feb 27, 2020 10:37 am
Almond wrote:
Thu Feb 27, 2020 10:26 am
say this does become a pandemic and we have supply chain disruptions, people struggling to get food and needed meds, sanitary conditions in less developed countries unraveling and in the West they will be greatly strained. All of these things will have a huge knock on effect.

While I get the Bogle way is to stay the course and not time the market, did Bogle factor in a worldwide pandemic and its downstream impact when calculating this approach? I honestly don’t know the answer but would be curious to hear input

Thank you
We aren't there yet but if the selloff continues people might want to consider what Jack Bogle said in 2009.

The stock market’s damage has already been done. And if you’re one of those people near or already in retirement, you already know you’re going to have to work longer, save more or spend less.

But what should you do right now with the money you have left? Should you wade back into the stock market, if you bailed out when the market was plunging? Or if you watched your investments drop and then recover a little in the last few months, should you just hold on? What happens if the market doesn’t fully recover for a long time? (That happened in Japan in the ’90s.) ...

“If another decline in the market is going to bankrupt you or put you out of business or destroy your retirement account, you should not go back into the stock market,” said John C. Bogle, the founder of Vanguard and viewed by many as the father of index investing. “It’s not complicated. The stock market can go up and down a lot and nobody really knows how much and when.”


https://www.nytimes.com/2009/06/20/your ... money.html

thank you.

Almond
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Re: Corona virus, stock market gyrations & Jack Bogle

Post by Almond » Thu Feb 27, 2020 11:21 am

RubyTuesday wrote:
Thu Feb 27, 2020 10:56 am
Almond wrote:
Thu Feb 27, 2020 10:26 am
say this does become a pandemic and we have supply chain disruptions, people struggling to get food and needed meds, sanitary conditions in less developed countries unraveling and in the West they will be greatly strained. All of these things will have a huge knock on effect.

While I get the Bogle way is to stay the course and not time the market, did Bogle factor in a worldwide pandemic and its downstream impact when calculating this approach? I honestly don’t know the answer but would be curious to hear input

Thank you
Jack Bogle has said “stay the course” many times, and has also said “I meant it every time.”
Good advice. Guess if this thing really spiraled out of control the stick market would be the least of our worries :happy

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Re: Corona virus, stock market gyrations & Jack Bogle

Post by tc101 » Thu Feb 27, 2020 12:04 pm

I might as well make my prediction, since everyone else is:

It will be pretty bad. If it spreads to 1/7 of the world population and kills just 1% of those, that is 10 million deaths. If it spreads to half the world population and kills 2% of those it will be 70 million deaths. So I predict the number of deaths will be somewhere between 10-70 million. That will create a lot of suffering and anxiety, but will not lead to any kind of collapse of civilization.

It will lead to a global economic slow down. Not sure if that will be at the level of recession or depression, but it will be a big downturn.

In a year and a half to two years there will be a vaccine. The whole thing will be cleared up within 3 years. The stock market will recover and people who bought and held will be fine financially in the long run if they had a reasonable AA in the first place and don't do panic selling in the next two years.

If you feel nervous about the value of your stock holdings going down by 40-50%, your AA is probably not conservative enough and you should sell stocks today, because I predict they will continue going down for some time.

I think most of us will be personally touched by it. Someone we know and care about will probably die.

The stock market predictions will be irrelevant to the huge number of people suffering and dying in third world slums, who will suffer the most.

Let me state that I have been making predictions all my life and I am usually wrong. But it is so much fun to predict the future.
. | The most important thing you should know about me is that I am not an expert.

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tc101
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Re: Corona virus, stock market gyrations & Jack Bogle

Post by tc101 » Thu Feb 27, 2020 12:42 pm

If not contained, think flu 200 times more dangerous with no vaccine. Not the end of the world but enough to get one's attention and interfere with normal commerce.
I don't think that is correct. I have read in numerous places that it is 10-20 times more deadly than the flu. That is still very serious, but you are off by a factor of 10.
. | The most important thing you should know about me is that I am not an expert.

NoviceInvestor2019
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Re: Corona virus, stock market gyrations & Jack Bogle

Post by NoviceInvestor2019 » Thu Feb 27, 2020 12:56 pm

tc101 wrote:
Thu Feb 27, 2020 12:42 pm
If not contained, think flu 200 times more dangerous with no vaccine. Not the end of the world but enough to get one's attention and interfere with normal commerce.
I don't think that is correct. I have read in numerous places that it is 10-20 times more deadly than the flu. That is still very serious, but you are off by a factor of 10.
We also don't actually know the death rate - we know a very precise number of deaths, but we really have no idea how many people have been infected and either not shown symptoms, not shown symptoms serious enough to send them to the doctor, or have gone to the doctor and just been told they have the flu.

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Re: Corona virus, stock market gyrations & Jack Bogle

Post by beehivehave » Thu Feb 27, 2020 1:40 pm

tc101 wrote:
Thu Feb 27, 2020 12:42 pm
If not contained, think flu 200 times more dangerous with no vaccine. Not the end of the world but enough to get one's attention and interfere with normal commerce.
I don't think that is correct. I have read in numerous places that it is 10-20 times more deadly than the flu. That is still very serious, but you are off by a factor of 10.
OK, but more like 20 to 40 times (this year 16,000 deaths/29,000,000 cases to 41,000/41,000,000).
The stats for both, especially the new virus, are just estimates.

venkman
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Re: Corona virus, stock market gyrations & Jack Bogle

Post by venkman » Fri Feb 28, 2020 12:38 am

This is a virus that spreads through person to person contact, and can present with relatively mild symptoms.

There are millions of people in the US who will go to their job anyway if they have mild symptoms, because they can't afford to miss work. A lot of them work in jobs where they have close contact with the public (food service, retail, etc.) There is a very real potential for this virus to hit a tipping point and spread rapidly. If it does, the economy could take a huge hit, as fear causes people to just stay home when they otherwise would've been going out and spending money.

I don't know what the odds are that it will happen, but I don't think it's alarmist to say that things might get much worse before they get better.

AlphaLess
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Re: Corona virus, stock market gyrations & Jack Bogle

Post by AlphaLess » Fri Feb 28, 2020 12:58 am

fredflinstone wrote:
Thu Feb 27, 2020 6:39 am
We aren't all going to die, but a stock market decline of 50% or more is certainly possible. Here are some data points to consider:

- car sales are down 92% in China
https://www.theguardian.com/business/20 ... n-industry

- dramatic decline in tourism in Kyoto (worst in thirty years)
https://soranews24.com/2020/02/08/kyoto ... portunity/

- an estimated 10-15% chance that 80 percent of UK residents will be infected.
https://www.standard.co.uk/news/health/ ... 71726.html

In a worst-case scenario, we are probably looking at tens of millions of deaths worldwide, supply chain problems for virtually all manufactured goods, decimation of the travel, tourism, and hospitality industries, and global economic depression. I'm glad you are staying the course, but do not take this lightly.
I agree. Market is NOT going down because this is a health pandemic issue that is going to cause massive deaths.

Market is going down because there is going to be a massive hit to both production and consumption of goods.

Stocks are merely pricing in economic activity, revenue and earnings, and growth thereof.

When you are facing with even near term massive negative growth, stocks are going to go down.

Given available information, it is not hard to fathom that we could be down 30% from top (SP500 was at around 3400, so about 1000 points down). But worst case outcomes are possible. If the global economy has 3-4 quarters, each with negative 5% of real gdp growth, stocks could be down 80% from the top. That means SP500 could be at around 700.
"A Republic, if you can keep it". Benjamin Franklin. 1787. | Party affiliation: Vanguard. Religion: low-cost investing.

AlphaLess
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Re: Corona virus, stock market gyrations & Jack Bogle

Post by AlphaLess » Fri Feb 28, 2020 12:59 am

venkman wrote:
Fri Feb 28, 2020 12:38 am
This is a virus that spreads through person to person contact, and can present with relatively mild symptoms.

There are millions of people in the US who will go to their job anyway if they have mild symptoms, because they can't afford to miss work. A lot of them work in jobs where they have close contact with the public (food service, retail, etc.) There is a very real potential for this virus to hit a tipping point and spread rapidly. If it does, the economy could take a huge hit, as fear causes people to just stay home when they otherwise would've been going out and spending money.

I don't know what the odds are that it will happen, but I don't think it's alarmist to say that things might get much worse before they get better.
Also, USA, out of the peer group of industrialized, developed economies, is the only one with 10-15% of population uninsured.

Add that to the culture of not missing to work (due to peer or firm pressure, or inability to take time off), and we could have a calamity.

I am not saying that a lot of people are going to die, but just that systems are going to be overwhelmed.

Reports are that USA does not have enough test cases for even small breakouts: https://www.nytimes.com/2020/02/27/heal ... ornia.html
"A Republic, if you can keep it". Benjamin Franklin. 1787. | Party affiliation: Vanguard. Religion: low-cost investing.

Caduceus
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Re: Corona virus, stock market gyrations & Jack Bogle

Post by Caduceus » Fri Feb 28, 2020 1:09 am

tc101 wrote:
Thu Feb 27, 2020 12:04 pm
I might as well make my prediction, since everyone else is:

It will be pretty bad. If it spreads to 1/7 of the world population and kills just 1% of those, that is 10 million deaths. If it spreads to half the world population and kills 2% of those it will be 70 million deaths. So I predict the number of deaths will be somewhere between 10-70 million. That will create a lot of suffering and anxiety, but will not lead to any kind of collapse of civilization.

It will lead to a global economic slow down. Not sure if that will be at the level of recession or depression, but it will be a big downturn.

In a year and a half to two years there will be a vaccine. The whole thing will be cleared up within 3 years. The stock market will recover and people who bought and held will be fine financially in the long run if they had a reasonable AA in the first place and don't do panic selling in the next two years.

If you feel nervous about the value of your stock holdings going down by 40-50%, your AA is probably not conservative enough and you should sell stocks today, because I predict they will continue going down for some time.

I think most of us will be personally touched by it. Someone we know and care about will probably die.

The stock market predictions will be irrelevant to the huge number of people suffering and dying in third world slums, who will suffer the most.

Let me state that I have been making predictions all my life and I am usually wrong. But it is so much fun to predict the future.
This sounds fun. So let me make my prediction too. I don't base my own investments off my own macro-economic predictions (thank goodness), so this is just all in good fun, but here's what I think:

In a few months, people will largely have adapted to the drip-drip-drip news of coronavirus. Countries in Southeast Asia, like Indonesia and Malaysia, with lots of trade and travel links with China, and also Africa, with huge amounts of Chinese workers, are reporting implausibly small amounts of cases. We can either believe that this is because they are just lucky or, more likely, that there's already widespread community spread and the coronavirus is just not that distinguishable from the flu for most people, whether in symptoms or consequences. When the U.S. reported that some random person had contracted the coronavirus with no recent travel history to China, do you really think this was the first person? Most likely it's already everywhere in the United States but just not distinguishable from flu symptoms.

When people accept that the coronavirus is just going to be one more of the gadzillion viruses that are circulating in the global population, things will settle down. I agree that most of us will probably be personally touched by it, in the sense that the coronavirus will probably infect a significant population of the world. But I don't think most of us will personally know someone who dies from it. Remember that with H1N1, people overestimated the mortality rates because there were millions out there who had gotten the virus and only had mild symptoms and were never tested for it anyway.

I will wager that lots and lots and lots of people in the U.S. already have the coronavirus and are blissfully unaware of it. Most probably think it's a regular case of the sniffles.

I don't know what will happen to the stock markets in the short run. But I will guess that the effects of the coronavirus on the stock market will be short lived - a maximum of a few months, and maybe even as short as two weeks (because markets are forward looking, and will have weighted the probabilities of all the doomsday scenarios you mentioned already). What will more likely caues the stock market to trade down is a global rise of interest rates or some other macroeconomic variable having little to do with the temporary adjustments governments are making in response to the virus.

I'm not investing with any of these macroeconomic predictions in mind. I buy when some things are compellingly valued, and refrain from buying things that are not compelling valued, even if they have "dipped" 10% or 20% or 30%.

hbdad
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Re: Corona virus, stock market gyrations & Jack Bogle

Post by hbdad » Fri Feb 28, 2020 1:12 am

fredflinstone wrote:
Thu Feb 27, 2020 6:39 am

- an estimated 10-15% chance that 80 percent of UK residents will be infected.
https://www.standard.co.uk/news/health/ ... 71726.html
Reminds me of Sex Panther. They’ve done studies you know. 60% of the time it works every time.

HowlerNine
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Re: Corona virus, stock market gyrations & Jack Bogle

Post by HowlerNine » Fri Feb 28, 2020 1:26 am

I don't think any of the alarmist comments above are unwarranted. There's a difference between being a doomsday prepper and trying to map out the positives and negatives of a situation.

Unfortunately there are still so many unknowns regarding the virus and its effects. Until we see how governments with more transparency respond to the virus, it's all a guessing game. There's obviously plenty of mismanagement and errors happening in just about every country this virus is affecting. From faulty quarantines to potential coverups to hospitals and people dealing with something new for the first time. With any first experience, the ones that follow will be managed with greater knowledge and dealt with better. In 1-2 weeks I think we'll start to see how the refined systems for dealing with the virus work. I do think it'll be possible to work with, but I don't see us there yet. The double whammy of legitimate effects on businesses and economies and everyone's fear factor of a largely unknown virus really make this a substantial event. One that has a lot of latent potential to effect markets in a very real way.

I agree with those that say there will be a resolution and markets will recover and still be able to deliver long term results. That being said, this virus is dredging up a lot of world issues that have been brewing beneath the surface. From trade to how countries interact with one another and work together, to the reasons countries argue and fight. How well we all work together is ultimately judged by how we all deal with a tragedy when everything goes sideways. So I think this is much more than just the coronovirus... Which as many have said is acting as a catalyst for more than just stock market volitility.

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watchnerd
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Re: Corona virus, stock market gyrations & Jack Bogle

Post by watchnerd » Fri Feb 28, 2020 2:02 am

I've come to the point where it's a waste of my neurons to think about the effect COVID19 will have on the market.

We can't touch our retirement accounts without penalty until 2029.

We have enough fixed income and cash to last to 2030.

There is no decision tree for us.
70% Global Market Weight Equities | 15% Long Treasuries 15% short TIPS & cash || RSU + ESPP

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