Is the 2020 crash different from 2008, 2001 or 1987?

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BlueHorseshoe
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Is the 2020 crash different from 2008, 2001 or 1987?

Post by BlueHorseshoe » Wed Mar 18, 2020 5:00 pm

I'm a newbie so apologies for possibly a stupid question...Is this market crash different from prior crashes in 2008, 2001 or 1987?

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Re: Is the 2020 crash different from 2008, 2001 or 1987?

Post by livesoft » Wed Mar 18, 2020 5:01 pm

It is different in at least one way: Those other crashes are over and done with.
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Re: Is the 2020 crash different from 2008, 2001 or 1987?

Post by greg24 » Wed Mar 18, 2020 5:04 pm

Every crash is different. Context is different. The world is different.

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Re: Is the 2020 crash different from 2008, 2001 or 1987?

Post by stocknoob4111 » Wed Mar 18, 2020 5:05 pm

The four most expensive words in the English language are "this time it’s different."

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Re: Is the 2020 crash different from 2008, 2001 or 1987?

Post by fwellimort » Wed Mar 18, 2020 5:05 pm

Each crash is always different. Hence no one knows the future.

Welcome to economics. A game of 'guess the future'.
In here, we decided to just give up 'guessing', and just accept whatever the market dictates long term.

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Re: Is the 2020 crash different from 2008, 2001 or 1987?

Post by Mickstick » Wed Mar 18, 2020 5:07 pm

BlueHorseshoe wrote:
Wed Mar 18, 2020 5:00 pm
I'm a newbie so apologies for possibly a stupid question...Is this market crash different from prior crashes in 2008, 2001 or 1987?
Yes when this crash started the interest rate was slightly over 1% while when the 2008 crash started the interest rate was 5%. There was less room to stimulate the economy via cutting rates this time around. The Fed's balance sheet was less than 1 trillion in 2008, it now exceeds 4 trillion. The only way to to pump the market up at this point is by monetization of debt.

Also there is a global pandemic happening concurrently :wink:
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Re: Is the 2020 crash different from 2008, 2001 or 1987?

Post by rbaldini » Wed Mar 18, 2020 5:07 pm

One way the 2020 crash seems different from 2008 and 2001 (I don't know anything about 1987) is that it is largely exogenous, I think. It's not as if we suddenly looked down and realized we had been building up stock prices on a pile of junk for many years. The economy seemed to be in good shape. Then a virus suddenly showed up and started shutting the world down. This gives me some hope that, when we get through this, we'll be well poised to recover. Take that all with a grain of salt because I don't know much. Perhaps I am forgetting exogenous shocks of prior recessions, or perhaps the economy was not as sound as I believe.

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Re: Is the 2020 crash different from 2008, 2001 or 1987?

Post by flaccidsteele » Wed Mar 18, 2020 5:08 pm

The difference lie in the reasons people gave for the end of the world
The US market always recovers. It’s never different this time. Retired in my 40s. Investing is a simple game of rinse and repeat

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Re: Is the 2020 crash different from 2008, 2001 or 1987?

Post by Unladen_Swallow » Wed Mar 18, 2020 5:12 pm

Every crash is different. To start with, the cause of each crash was different....

There will be similarities in certain aspects as well.

"This time it is different" may sometimes have truth to it. Only, one cannot know what to do about it, or if it will matter. Only after the event can one know exactly how similar or different it was.
"I think it's much more interesting to live not knowing than to have answers which might be wrong." - Richard Feynman

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Re: Is the 2020 crash different from 2008, 2001 or 1987?

Post by arcticpineapplecorp. » Wed Mar 18, 2020 5:16 pm

the other three weren't the result of the impact of a coronavirus. that much we know.
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Re: Is the 2020 crash different from 2008, 2001 or 1987?

Post by Thesaints » Wed Mar 18, 2020 5:16 pm

Is the 2020 crash different from 2008, 2001 or 1987?
Hell yeah!
The range of possible outcomes is so much wider !!

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Re: Is the 2020 crash different from 2008, 2001 or 1987?

Post by Jim180 » Wed Mar 18, 2020 5:17 pm

Well yes, those other years people could still live a normal life even as the market was dropping. Now everyone is basically under house arrest. First time since the Great Depression that so few people are working.

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Re: Is the 2020 crash different from 2008, 2001 or 1987?

Post by watchnerd » Wed Mar 18, 2020 5:41 pm

I could still go to a bar and cry in my beer in the last crash.

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Re: Is the 2020 crash different from 2008, 2001 or 1987?

Post by junior » Wed Mar 18, 2020 5:43 pm

You can't really know how similar or different it is until it's over.

So far U.S. stocks have much higher valuations (as measured by Shiller PE10) than they did at the low point of the 2008 crash, for example. So so far for the stock investor it hasn't been as bad, but who knows what the future holds?

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Re: Is the 2020 crash different from 2008, 2001 or 1987?

Post by panhead » Wed Mar 18, 2020 5:45 pm

watchnerd wrote:
Wed Mar 18, 2020 5:41 pm
I could still go to a bar and cry in my beer in the last crash.

:sharebeer
+1

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Re: Is the 2020 crash different from 2008, 2001 or 1987?

Post by JD2775 » Wed Mar 18, 2020 5:56 pm

watchnerd wrote:
Wed Mar 18, 2020 5:41 pm
I could still go to a bar and cry in my beer in the last crash.

:sharebeer
haha. Perfectly summed up.

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Re: Is the 2020 crash different from 2008, 2001 or 1987?

Post by Scooter57 » Wed Mar 18, 2020 6:16 pm

Never in the last 70+ years has so much of the world's economic activity come to a global standstill for this long. We truly are on untrodden ground.

Smaller companies were already in an earnings recession before the virus struck and corporate debt had risen to toxic levels. Most of the gain in the S&P index last year was due to a very small number of tech stocks going ballistic. So a shock like this starts a domino effect.

We are just above the level we hit in Dec 2018 when the Fed averted a bear market by lowering rates. They tried it this time and it did not work, for the first time since QE began.

Tricks and gimmicks work until they don't.

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Re: Is the 2020 crash different from 2008, 2001 or 1987?

Post by ved » Wed Mar 18, 2020 6:35 pm

In previous crashes, governmnet, companies etc encouraged consumers to participate in the economy by spending.
It's different this time, because to stop the virus, the economy has to be shut down.

Think about that for a minute. To be able to survive the virus, the world has to deliberately crash its economy.

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Re: Is the 2020 crash different from 2008, 2001 or 1987?

Post by Angst » Wed Mar 18, 2020 6:36 pm

livesoft wrote:
Wed Mar 18, 2020 5:01 pm
It is different in at least one way: Those other crashes are over and done with.
Big +1 to that.
They're all the same though in that they thrive on fear and only die once the fear is exhausted.

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Re: Is the 2020 crash different from 2008, 2001 or 1987?

Post by veggivet » Wed Mar 18, 2020 6:38 pm

The demand side of the economy has been just about totally turned off suddenly, along with an oil price war with resulting oversupply. I'd say it's different this time.
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Re: Is the 2020 crash different from 2008, 2001 or 1987?

Post by J295 » Wed Mar 18, 2020 6:40 pm

In each one of those past instances (and right after 9/11) there was dialogue by someone saying “this time is different. “

Similar comments by some in the present situation.

Will be able to give a solid answer in 5 years.

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Re: Is the 2020 crash different from 2008, 2001 or 1987?

Post by Thesaints » Wed Mar 18, 2020 6:43 pm

Angst wrote:
Wed Mar 18, 2020 6:36 pm
livesoft wrote:
Wed Mar 18, 2020 5:01 pm
It is different in at least one way: Those other crashes are over and done with.
Big +1 to that.
They're all the same though in that they thrive on fear and only die once the fear is exhausted.
This time you may have noticed a lot more fear...

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Re: Is the 2020 crash different from 2008, 2001 or 1987?

Post by cheese_breath » Wed Mar 18, 2020 6:44 pm

flaccidsteele wrote:
Wed Mar 18, 2020 5:08 pm
The difference lie in the reasons people gave for the end of the world
And now they'll probably be selling podcasts instead of books.
The surest way to know the future is when it becomes the past.

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Re: Is the 2020 crash different from 2008, 2001 or 1987?

Post by watchnerd » Wed Mar 18, 2020 7:43 pm

ved wrote:
Wed Mar 18, 2020 6:35 pm


Think about that for a minute. To be able to survive the virus, the world has to deliberately crash its economy.
They won't.

They'll choose recession + more virus over depression + fewer virus.

Plus, once it becomes endemic, containment becomes less effective.

People will learn risk mitigation strategies.

Here in the Seattle area, restaurants are already setting up tables in parking lots for people to pick up take out.

As we got "security theater" after 9/11, we'll get "virus theater" in shared spaces, a cleansing ritual, before you can get into a theater, school, airport, etc.

3 months from now, economies won't be on lockdown. The cost will be seen to be too high.

And, at least in democracies, people will stop complying.
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Re: Is the 2020 crash different from 2008, 2001 or 1987?

Post by Sockpuppet » Wed Mar 18, 2020 8:00 pm

stocknoob4111 wrote:
Wed Mar 18, 2020 5:05 pm
The four most expensive words in the English language are "this time it’s different."

Sir John Marks Templeton
This time it’s certainly different!

I’m confident market will rebound eventually, but this is a very very different experience than we’ve had before.

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Re: Is the 2020 crash different from 2008, 2001 or 1987?

Post by techland » Wed Mar 18, 2020 8:06 pm

This crash is very different. I would say 9/11 would be most similar, in the sense that they were both caused by external forces (aka war/natural disaster/terrorist attack).

I think in 2008 for example, you had more of a market/financial problem causing the crash. Such as lending too much money to people to buy houses they can't afford, and now we trigger a shock to the banking system.


That is the very unfortunate thing about covid-19. You are going to have a lot of businesses that were completely healthy and running well, go from 100 to zero for no fault of their own. Very sad.

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Re: Is the 2020 crash different from 2008, 2001 or 1987?

Post by averagedude » Wed Mar 18, 2020 8:07 pm

Every crash is different, and this one is no exemption.. This could be the biggest short term crisis that we have ever seen. Question will be, will this be a long term crisis? Being an optimist, I believe this will pass and things will be normal again 6 months from now. Nobody really knows though.

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Re: Is the 2020 crash different from 2008, 2001 or 1987?

Post by MotoTrojan » Wed Mar 18, 2020 9:46 pm

techland wrote:
Wed Mar 18, 2020 8:06 pm
This crash is very different. I would say 9/11 would be most similar, in the sense that they were both caused by external forces (aka war/natural disaster/terrorist attack).
One major difference though; 9/11 occurred during a bear market while COVID-19 hit at record highs.

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Re: Is the 2020 crash different from 2008, 2001 or 1987?

Post by watchnerd » Wed Mar 18, 2020 9:48 pm

Yes, this reminds me more of 9/11 than GFC.
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Re: Is the 2020 crash different from 2008, 2001 or 1987?

Post by Scooter57 » Wed Mar 18, 2020 9:55 pm

Thesaints wrote:
Wed Mar 18, 2020 6:43 pm
Angst wrote:
Wed Mar 18, 2020 6:36 pm
livesoft wrote:
Wed Mar 18, 2020 5:01 pm
It is different in at least one way: Those other crashes are over and done with.
Big +1 to that.
They're all the same though in that they thrive on fear and only die once the fear is exhausted.
This time you may have noticed a lot more fear...
Well, yes. Losing your life is a lot more scary than losing half your money. Most people with a lot of money in the market are in riskier age groups, so they are already in a keyed up, worried state. Concentrating on your portfolio actually distracts from fears of losing those you love.

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Re: Is the 2020 crash different from 2008, 2001 or 1987?

Post by fatmike91 » Wed Mar 18, 2020 10:07 pm

There is a big difference:

In hindsight, those other crashes weren't the end of the world (as we know it).

We're not sure yet whether this one is the end of the world as we know it...

We'll ask the same question about the next one, and look back at 1987, 2001, 2008 and 2020 and wonder the same thing.

/

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Re: Is the 2020 crash different from 2008, 2001 or 1987?

Post by watchnerd » Wed Mar 18, 2020 10:11 pm

fatmike91 wrote:
Wed Mar 18, 2020 10:07 pm

We're not sure yet whether this one is the end of the world as we know it...
End of civilization and humanity?

Oh, heck no. And if one actually think that's likely, one should pull all their money out of the market right now and go buy that cabin in the woods.

Will this change the way we conduct our lives, travel, and do business?

Sure, so did 9/11. I expect "virus rituals" to be the next "security rituals" we'll get at airports and other public spaces.

Will this have economic impact and consequences for globalization?

Yes, I expect so. I'm not necessarily sure that's a negative, though.
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Re: Is the 2020 crash different from 2008, 2001 or 1987?

Post by Cubicle » Wed Mar 18, 2020 10:26 pm

Different in how, why, when, who.

Not different in what you (& everyone) should do: Nothing. Do nothing.
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Re: Is the 2020 crash different from 2008, 2001 or 1987?

Post by physixfan » Wed Mar 18, 2020 10:40 pm

This coronavirus is more similar to 1929 in my opinion. My reasons: a fast and deep drop in stock market; and a big increase in unemployment afterwards; and long term interest trend.

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Re: Is the 2020 crash different from 2008, 2001 or 1987?

Post by Thesaints » Wed Mar 18, 2020 10:48 pm

MotoTrojan wrote:
Wed Mar 18, 2020 9:46 pm
techland wrote:
Wed Mar 18, 2020 8:06 pm
This crash is very different. I would say 9/11 would be most similar, in the sense that they were both caused by external forces (aka war/natural disaster/terrorist attack).
One major difference though; 9/11 occurred during a bear market while COVID-19 hit at record highs.
Another difference a lot more major: 9/11 affected airlines and a little more. This affects almost everything.

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Re: Is the 2020 crash different from 2008, 2001 or 1987?

Post by Fallible » Wed Mar 18, 2020 10:58 pm

BlueHorseshoe wrote:
Wed Mar 18, 2020 5:00 pm
I'm a newbie so apologies for possibly a stupid question...Is this market crash different from prior crashes in 2008, 2001 or 1987?
They are all different in many ways, and you should include the near disaster of LTCM in '98, and also 9/11. As a new investor, you'll want to read up on market history to prepare for the next crash.
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Re: Is the 2020 crash different from 2008, 2001 or 1987?

Post by palanzo » Wed Mar 18, 2020 11:01 pm

watchnerd wrote:
Wed Mar 18, 2020 7:43 pm
ved wrote:
Wed Mar 18, 2020 6:35 pm


Think about that for a minute. To be able to survive the virus, the world has to deliberately crash its economy.
They won't.

They'll choose recession + more virus over depression + fewer virus.

Plus, once it becomes endemic, containment becomes less effective.

People will learn risk mitigation strategies.

Here in the Seattle area, restaurants are already setting up tables in parking lots for people to pick up take out.

As we got "security theater" after 9/11, we'll get "virus theater" in shared spaces, a cleansing ritual, before you can get into a theater, school, airport, etc.

3 months from now, economies won't be on lockdown. The cost will be seen to be too high.

And, at least in democracies, people will stop complying.
I tend to agree, however, once the hospitals are full of patients including patients in the corridors and all electives cancelled, then we may see a different response.

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Re: Is the 2020 crash different from 2008, 2001 or 1987?

Post by Lee_WSP » Thu Mar 19, 2020 12:23 am

08 was a structural crash. 00 was part structure, part cyclical. 87 was event driven. Coronavirus is currently event driven, but could trigger a cyclical or structural crash depending on whether we actually got our stuff together after '08

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Re: Is the 2020 crash different from 2008, 2001 or 1987?

Post by fatmike91 » Thu Mar 19, 2020 8:09 am

watchnerd wrote:
Wed Mar 18, 2020 10:11 pm
fatmike91 wrote:
Wed Mar 18, 2020 10:07 pm

We're not sure yet whether this one is the end of the world as we know it...
End of civilization and humanity?

Oh, heck no. And if one actually think that's likely, one should pull all their money out of the market right now and go buy that cabin in the woods.

Will this change the way we conduct our lives, travel, and do business?

Sure, so did 9/11. I expect "virus rituals" to be the next "security rituals" we'll get at airports and other public spaces.

Will this have economic impact and consequences for globalization?

Yes, I expect so. I'm not necessarily sure that's a negative, though.

You completely missed my point. Those other crashes felt like the end of the world when they were happening, and so will the next one.


/

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Re: Is the 2020 crash different from 2008, 2001 or 1987?

Post by Sandtrap » Thu Mar 19, 2020 9:05 am

I've been in awe of the speed of the crash and steepness of fall.

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Re: Is the 2020 crash different from 2008, 2001 or 1987?

Post by bertilak » Thu Mar 19, 2020 9:18 am

rbaldini wrote:
Wed Mar 18, 2020 5:07 pm
One way the 2020 crash seems different from 2008 and 2001 (I don't know anything about 1987) is that it is largely exogenous, I think. It's not as if we suddenly looked down and realized we had been building up stock prices on a pile of junk for many years. The economy seemed to be in good shape. Then a virus suddenly showed up and started shutting the world down. This gives me some hope that, when we get through this, we'll be well poised to recover. Take that all with a grain of salt because I don't know much. Perhaps I am forgetting exogenous shocks of prior recessions, or perhaps the economy was not as sound as I believe.
I believe that is true and significant. It also gives me hope. Actually, hope leaning towards expectation. Two conflicting thoughts:
  • The economy may have taken some permanent damage making the recovery weaker.
  • This may flush out some inefficiencies (thinning the herd?), making the recovery stronger.
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Re: Is the 2020 crash different from 2008, 2001 or 1987?

Post by Thesaints » Thu Mar 19, 2020 9:22 am

You completely missed my point. Those other crashes felt like the end of the world when they were happening, and so will the next one.
No, they didn’t!

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Re: Is the 2020 crash different from 2008, 2001 or 1987?

Post by Faith20879 » Thu Mar 19, 2020 9:30 am

BlueHorseshoe wrote:
Wed Mar 18, 2020 5:00 pm
..Is this market crash different from prior crashes in 2008, 2001 or 1987?
To us, this time it is very different in two aspects.

1. We were still working and paychecks were coming in steadily. Now we are retired and have to plan for our paychecks.

2. We are older and have less time to recover.

The double whammy is, in addition to the depressing news of markets, we are now in the high risk group under the COVIT-19 threat which is a lot more serious.

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Re: Is the 2020 crash different from 2008, 2001 or 1987?

Post by MarkBarb » Thu Mar 19, 2020 9:34 am

It is different in a couple of fundamental ways. First, 1987 was almost strictly a stock price crash not reflected in an economic slowdown. In 2001 and 2008, the economy slowed because of a reduction in aggregate demand. In 2020, it is aggregate supply that has fallen as producers are unable to produce.

This is also different because it is pandemic driven. At the point, nobody knows what the impact will be or how governments and markets will react.

Different doesn't necessarily means worse.

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Re: Is the 2020 crash different from 2008, 2001 or 1987?

Post by james22 » Thu Mar 19, 2020 10:00 am

watchnerd wrote:
Wed Mar 18, 2020 7:43 pm
They'll choose recession + more virus over depression + fewer virus.
Exactly.

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Re: Is the 2020 crash different from 2008, 2001 or 1987?

Post by Prahasaurus » Thu Mar 19, 2020 10:30 am

You are in the first quarter of the Super Bowl, and asking if this year's Super Bowl is any different from last year's, or 2008, 2001, or whatever. I suggest you wait a bit. I'm amazed at how many people assume that the bad part is behind us, and now it's time for a thorough historical analysis. No, not by a long shot...

This virus propagates exponentially. The measures we took as a nation (in the USA, at least) to prepare for this were too little too late. It was a complete and total failure on multiple levels. It's getting better, but that won't help the likely hundreds of thousands already infected (we don't really know because our testing has been so terrible).

The impact of all that won't be seen until next week, and even then only in certain cities at first. The number of confirmed cases will explode, deaths will dramatically increase, hospitals in New York City will likely start to collapse, patients frantically being transferred to military hospitals, etc. That's when this tragedy really begins, for most Americans. Even now our leaders are taking victory laps on the great job they are doing, when the opposite is true. But again, wait until next week...

What we've seen form the market so far was a simple correction, yes brought about by the virus. But it was a correction that was going to happen regardless, eventually. The stock market has been propped up by share buy-backs for many years, and now the party is over. Sooner or later this was going to happen, it was all a house of cards. I especially love how Boeing spent around 45 billion USD on share buy-backs, and now they are asking for a bail out in the tune of about 45 billion USD...

However, I don't think the disaster of the Coronavirus has yet been priced into equities. By disaster, I mean the likely thousands and thousands of deaths in the USA, which I believe are inevitable (just do the math), most of which were preventable with proper preparation. Yes, most people now understand it's probably bad, but few people understand how bad, how dangerous, and what is coming very soon. The visceral impact, how visual it's all going to be, with people dying in hallways, families screaming, doctors and nurses dropping from exhaustion, working without proper equipment because we didn't bother to order in time, the panic in other cities, the terrible racist reaction against Asians (I already hear politicians calling this the "Chinese Virus"), the political finger pointing, etc., etc. Some of that is just being discussed now in the abstract, it still hasn't been really processed by most Americans as a likely reality.

But by next Friday, it will be very, very real. And then, in my opinion, the market really starts to react.
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Re: Is the 2020 crash different from 2008, 2001 or 1987?

Post by Unladen_Swallow » Thu Mar 19, 2020 11:14 am

Prahasaurus wrote:
Thu Mar 19, 2020 10:30 am
You are in the first quarter of the Super Bowl, and asking if this year's Super Bowl is any different from last year's, or 2008, 2001, or whatever. I suggest you wait a bit.


However, I don't think the disaster of the Coronavirus has yet been priced into equities. By disaster, I mean the likely thousands and thousands of deaths in the USA, which I believe are inevitable (just do the math), most of which were preventable with proper preparation. Yes, most people now understand it's probably bad, but few people understand how bad, how dangerous, and what is coming very soon.
So, which is it? is it too soon to make predictions or not? You seem to be sure of your predictions in the first quarter of the Super Bowl.

And everyone talking about "disaster not priced into equities " - you have no analytical, data driven, or economic basis for this. Just your feelings. You think the world is ending, and wonder why the market hasn't already crashed 90% to reflect your predictive fear. The wisdom of the pessimists as it were.

There are people on the other side, the optimists. The market is down much more than they wish.

The market doesn't care about either group.
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Re: Is the 2020 crash different from 2008, 2001 or 1987?

Post by dru808 » Thu Mar 19, 2020 11:21 am

It’s different this time.

Isn’t it always different, this time?
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Re: Is the 2020 crash different from 2008, 2001 or 1987?

Post by protagonist » Thu Mar 19, 2020 11:22 am

A sample size of three, each due to considerably different underlying causes, is woefully insufficient to make any statistically meaningful predictions of what will happen in 2020. (You can also toss 1929 and 1970s into that list and my conclusion still stands).

To quote the surprisingly prescient Firesign Theater, "We are all bozos on this bus."

CobraKai
Posts: 502
Joined: Mon May 07, 2018 10:17 am

Re: Is the 2020 crash different from 2008, 2001 or 1987?

Post by CobraKai » Thu Mar 19, 2020 12:00 pm

watchnerd wrote:
Wed Mar 18, 2020 9:48 pm
Yes, this reminds me more of 9/11 than GFC.
It's like a combination of the two.

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