Post Coronavirus economy and investing philosophy

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Closer2323
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Post Coronavirus economy and investing philosophy

Post by Closer2323 »

Let’s say that there is some permanent change to the economy post corona virus. Permanent changes to various industries i.e. airlines, travel, hotels, restaurants etc. all areas affected that people would be less inclined to spend dollars for fear of illness.

Is the thought process though that when it comes to the Total Stock Market that other industries, businesses and sectors would emerge to take their place and thus the economy continues to grow even though these areas potentially drastically change or go away? Could you have a thriving economy where the vast majority of people generally stay home and are anti-social?
New Providence
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Re: Post Coronavirus economy and investing philosophy

Post by New Providence »

The assumption is that we had a thriving economy. I don't know if that was the case when we just found out that "almost three in 10 adults have no emergency savings at all, according to Bankrate’s latest Financial Security Index."
koryg75
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Re: Post Coronavirus economy and investing philosophy

Post by koryg75 »

New Providence wrote: Tue Mar 31, 2020 7:27 pm The assumption is that we had a thriving economy. I don't know if that was the case when we just found out that "almost three in 10 adults have no emergency savings at all, according to Bankrate’s latest Financial Security Index."
Just because people chose not to save doesn’t mean we didn’t have a thriving economy.
UpperNwGuy
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Re: Post Coronavirus economy and investing philosophy

Post by UpperNwGuy »

My investing philosophy will stay the same. Either Total Stock or the S&P 500 will be the anchor of my portfolio. As a result of the economic turbulence, some old companies will drop out and some new companies will take their place, but those changes won't alter my investing philosophy.
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dmcmahon
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Re: Post Coronavirus economy and investing philosophy

Post by dmcmahon »

FWIW I believe we were already seeing the rise of the non-physical economy prior to the virus crash. Just look at the valuations of cloud & tech companies pre-crash.

Plus we were likely to see changes in response to global warming, though not this catastrophic.

Travel & leisure will come back, maybe with new owners though. Same with restaurants, sports, and other forms of entertainment. Some, like movie theaters, may suffer permanent harm if you can get mostly the same experience at home. I don’t think we can have a thriving economy without small businesses, which includes most restaurants and a lot of shops. As is now clear to all, 1/4 of our workforce drew their livelihood from them.

I think work habits may permanently shift to more at-home work and less office-based. And shopping may further accelerate towards on-line and delivery.

I don’t think people are going to succumb to fear of being near other people. At worst we may see some changes in the direction of some Asian countries, Japan & Korea being examples, where people will wear masks when they may be sick. Handshakes may fall out of fashion, kissing hands or cheeks as well if those are in your culture. But no, people aren’t going to avoid seeing a live show like Hamilton or a sporting event out of unwillingness to be seated within a few feet of a stranger.
Rosencrantz1
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Re: Post Coronavirus economy and investing philosophy

Post by Rosencrantz1 »

Closer2323 wrote: Tue Mar 31, 2020 7:06 pm Let’s say that there is some permanent change to the economy post corona virus. Permanent changes to various industries i.e. airlines, travel, hotels, restaurants etc. all areas affected that people would be less inclined to spend dollars for fear of illness.

Is the thought process though that when it comes to the Total Stock Market that other industries, businesses and sectors would emerge to take their place and thus the economy continues to grow even though these areas potentially drastically change or go away? Could you have a thriving economy where the vast majority of people generally stay home and are anti-social?
Personally, I think your premise is flawed - there won't be *permanent* damage to the economy. J&J is so sure, apparently, of their upcoming vaccine tests in the fall that they're (J&J) already ramping up production of the vaccine (before results of human trials). I think a successful vaccine, from one of the many companies trying to discover it, is (IMHO) a forgone conclusion.

IMO, I think it's likely that you'll potentially see some carry-over of social distancing for a year or two after a vaccine is developed. So... to answer your question, yes, I think we'll once again have a thriving economy. People may end up being a little slow to ditch social distancing - but I think they will eventually (just look at the spring breakers before cities closed the beaches) /0.02 cents
Prudence
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Re: Post Coronavirus economy and investing philosophy

Post by Prudence »

Yes the economy will continue to grow but at the slow rate that we have seen over the past couple of decades. This will continue to be bad news for labor but good news for investors. Businesses will reorganize operations so that they will not need to bring back a significant percentage of the people that they fired or furloughed. So, businesses and their investors will do very well when revenues pick up with lower expenses (government subsidies and ultra low interest rates are helpful as well). Long term, investors may suffer due to the structural problems in the economy and no fiscal responsibility in federal government. As a retiree, I will continue to limit my exposure to equities and bonds. Also, I may have to consider adding TIPS at some point.
DNeal
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Re: Post Coronavirus economy and investing philosophy

Post by DNeal »

I am not changing my investing philosophy at all, I can't imagine people wanting to book a cruise for a couple of years. I would think there would long term changes to some industries.
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TheTimeLord
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Re: Post Coronavirus economy and investing philosophy

Post by TheTimeLord »

DNeal wrote: Tue Mar 31, 2020 9:20 pm I am not changing my investing philosophy at all, I can't imagine people wanting to book a cruise for a couple of years. I would think there would long term changes to some industries.
I think whether or not people start cruising again will depend on pricing more than anything. Discount it and they will come.
IMHO, Investing should be about living the life you want, not avoiding the life you fear. | Run, You Clever Boy! [9085]
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SimpleGift
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Re: Post Coronavirus economy and investing philosophy

Post by SimpleGift »

Closer2323 wrote: Tue Mar 31, 2020 7:06 pm Let’s say that there is some permanent change to the economy post corona virus.
There's a bit of a contradiction in this premise to your question. A pandemic is a classic example of a transitory, event-driven crisis, which along with oil shocks, emerging market crises, etc., rarely make much of a permanent impact on a major economy like the United States. If history is any guide, it usually takes huge financial imbalances or market bubbles (think the Great Recession or Great Depression) for a crisis to lead to permanent structural changes.

My sense is the U.S. economy was in fairly good shape before the coronavirus outbreak, and will quickly recover once the pandemic is past. It may well hasten along some specific trends, say, toward more diverse supply chains, telemedicine consultations, and the like — but these will be around the edges of the economy. Just my two cents.
Shallowpockets
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Re: Post Coronavirus economy and investing philosophy

Post by Shallowpockets »

The economy will come back, but there may be a behavioral change in investments. People may be leery of the stock market. They may hold on to their money. Risk aversion. It happened after 2008. Took a long time before people came back into the markets.
I believe there have been posts on here about people wanting to deploy their money (recently) because they had been sitting it out since 2008.
tigers174
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Re: Post Coronavirus economy and investing philosophy

Post by tigers174 »

Should the impact of the coronavirus stimulus and the hit on tax revenues be considered for an increase in future taxes? Mostly towards the decision between pre-tax and Roth savings for now while tax brackets are lower.
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