Coronavirus and the market

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Valuethinker
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Re: Coronavirus and the market

Post by Valuethinker » Thu Feb 13, 2020 9:32 am

harvestbook wrote:
Thu Feb 13, 2020 9:16 am
Pandemics are a constant "known unknown," and that's part of the theoretical reward I get for taking risk. Therefore I don't have to do anything, because not doing anything is the job.

It does make me wonder what the US-only investors would be saying if this had broken out in several large US cities instead of China.
It would be about the resilience of public health systems and the ability of the key decisionmakers to react quickly. The market would take its cue from that.

Philadelphia v. St Louis, 1919. One closed public theaters and swimming baths (many more people would not have had access to bathing facilities at home in those times, so would have had their bathing in a public facility) much sooner than the other - the civic government reacted more quickly. And consequently had a much lower infection and death rate.

I do remember the anthrax panic after 9-11 - after a few individuals were murdered with it. Gaps in the system were exposed, then. I don't remember what the stock market response was.

Also there was that tuberculosis & flying panic in the 1990s some time after the homeless turned up with drug-resistant TB - vaguely remember that (it was a specifically American thing).
Last edited by Valuethinker on Thu Feb 13, 2020 9:37 am, edited 1 time in total.

Valuethinker
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Re: Coronavirus and the market

Post by Valuethinker » Thu Feb 13, 2020 9:36 am

Anon9001 wrote:
Thu Feb 13, 2020 8:45 am
Valuethinker wrote:
Thu Feb 13, 2020 8:29 am
Anon9001 wrote:
Thu Feb 13, 2020 7:03 am
This is a useless disease that will go away soon like 2003 SARS. I would actually buy more stocks currently.
On what evidential basis do you make that claim?

It seems to me to be more of an HK flu (1967) than a pandemic like the Spanish flu (1919). And of course our medical knowledge is far greater eg re sequencing the DNA. But as yet we do not really know.

But it will take months (or years) before we have an effective vaccination (right now I don't believe we have an effective diagnostic test?).

In the meantime we know that it spreads easily between people and that it can kill otherwise able-bodied people. Mortality and morbidity seem to be low among people with access to good healthcare. But even western healthcare systems have quite finite capacity - let alone those in poorer parts of the world.

I am reminded the 1919 flu killed 5% of the population of the Indian subcontinent. This time of course the world would know much faster, and could move much sooner so it might be only 1%. But a pandemic could be awful.
Cases outside China do not have morbidity rates similar to cases in China. That gives me lot of confidence that this virus is not very deadly to people living outside China. China is very important economically to the ROW though not as important as USA. If things turn really bad there and China is no longer capable of growing fast economically we could have 2 years of-50% returns and then stocks would go up normally. The manufacturing would shift to Vietnam and India in that case.
Suggesting the Chinese are underreporting the number of infected cases relative to other countries?

Otherwise you'd have to assume that there was something about the Chinese or China that made them have a higher death rate. That's possible although the genetic differences, for example, are so small that it would be hard to credit. And those same genes are omnipresent in Asia and North America (particularly Hawaii and California but not only). Pollution certainly is not unique to China - as another factor - in fact the worst air quality cities in the world are now in the Indian subcontinent rather than China (I am old enough to remember when it was Tokyo).

It would take a lot longer than 2 years to re-locate some of the things the Chinese make. Vietnam I agree would be the logical next place.

Valuethinker
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Re: Coronavirus and the market

Post by Valuethinker » Thu Feb 13, 2020 9:39 am

guyinlaw wrote:
Thu Feb 13, 2020 8:56 am
It's early days.. SARS took 90+ days to peak. We will find out over the next month how bad this is.

Thankfully coronavirus is not as deadly.

Image

https://api.nationalgeographic.com/dist ... outbreaks

Alibaba expects a global impact.

https://finance.yahoo.com/news/alibaba- ... 4933.html
Thank you that is interesting.

It feels as if our stats have not caught up with the infection. Good news - it may be less deadly than was at first thought. Bad news - the measures taken to stop its spread are already too little & too late.

That it took that young opthamologist so long to die is not a good sign.

nguy44
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Re: Coronavirus and the market

Post by nguy44 » Thu Feb 13, 2020 9:41 am

Schlabba wrote:
Thu Feb 13, 2020 6:53 am
Well there is this theory that this virus is more dangerous for east asians as compared to others. If you google for ‘ACE2’ in combination with ethnicity you might find some results (https://www.biorxiv.org/content/10.1101 ... 6.919985v1) I have no idea whether it is true or not. It is certainly not uncommon for diseases to have different effects on different people.
My gut feel is more along the lines of - China has bad pollution and a lot of smokers, particularly among the older ages. I believe the majority of deaths have been among older people and/or people already ill. So there may be many already with respiratory issues that this virus adds to, and makes it a "tipping point" to a serious illness or death.

guyinlaw
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Re: Coronavirus and the market

Post by guyinlaw » Thu Feb 13, 2020 9:59 am

- China has acted much faster that in 2003 SARS
- movement of people anywhere is like airport security.
Eg- people move back to cities after holiday, people getting back to work. Long lines..
- People are moving around last few days getting back from holidays..this will keep happening as factories open..
- many factories will open in mid March. When people return to factory cities, they have to be in 14 days isolation before they can mix with others.

So we will find over next 2 months the true impact.

China is doing things that are really draconian. People are suffering a lot. Prayers that suffering is less..
-- people who are infected are sometime being arrested and quarantined
Reminder to myself "If you're not willing to react with equanimity to a marketplace decline, of 50%, 2-3 times a century, you deserve the mediocre result you will get"-Charlie Munger

curmudgeon
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Re: Coronavirus and the market

Post by curmudgeon » Thu Feb 13, 2020 11:56 pm

Valuethinker wrote:
Thu Feb 13, 2020 9:39 am
It feels as if our stats have not caught up with the infection. Good news - it may be less deadly than was at first thought. Bad news - the measures taken to stop its spread are already too little & too late.

That it took that young opthamologist so long to die is not a good sign.
My feeling is that we have very limited reliable data about the spread and rates at this time. Though I suppose that's not really unusual with a new disease. As an example, Japan apparently only has the ability to run about 300 tests per day, nationwide - which they have to divide between the Diamond Princess outbreak and protecting the rest of the country. It seems likely that there are plenty of cases, especially in Asia, that are incubating under a cold, flu, or pneumonia diagnosis.

If China pushed most of their diagnostic capability to Hubei, the rest of the country may be significantly underreporting just because they don't have test capacity (this seems likely to me). It would be interesting to see if there is currently a big spike in pneumonia cases (and deaths) which might in reality be COVID.

I actually have a lot of skepticism about "cause of death" statistics even in the US. If you take an 89 year old, whose body is just worn out, it's easy for a doctor to pick any of a half-dozen causes to put on the death certificate.

guyinlaw
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Re: Coronavirus and the market

Post by guyinlaw » Fri Feb 14, 2020 5:47 am

Shenzhen seems to be lock down, quarantine.. It seems like many people from many places around in China have come to Shenzhen city and Guangdong province to cross into Hong Kong... Hong Kong has closed most of land borders, couple of crossing points are still open...

This spreading in Shenzhen and Guangdong can be a serious problem..
Guangdong's foreign trade accounts for more than a quarter of China's
https://twitter.com/IsChinar
https://twitter.com/jenniferatntd
https://twitter.com/hashtag/shenzhen?src=hashtag_click

Vaccines are still long way off, 18 months by WHO estimate.. Too many frontline healthcare workers are being infected..
https://www.ft.com/content/758fc319-072 ... a458be72a4

This youtube channel by Doctor has the best information and daily updates.. explains why there was a big spike in numbers..
https://www.youtube.com/user/MEDCRAMvideos/videos

daily updates of numbers
https://www.worldometers.info/coronavir ... rus-cases/

PS. Maybe much of this is not actionable because market knows best.. but it is scary as hell and very sad.
Last edited by guyinlaw on Fri Feb 14, 2020 6:19 am, edited 1 time in total.
Reminder to myself "If you're not willing to react with equanimity to a marketplace decline, of 50%, 2-3 times a century, you deserve the mediocre result you will get"-Charlie Munger

guyinlaw
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Re: Coronavirus and the market

Post by guyinlaw » Fri Feb 14, 2020 6:16 am

Specifically, Morgan Stanley suggested that real time measurements of Chinese pollution levels would provide a "quick and dirty" (no pun intended) way of observing if any of China's major metropolises had returned back to normal. What it found was that among some of the top Chinese cities including Guangzhou, Shanghai and Chengdu, a clear pattern was evident – air pollution was only 20-50% of the historical average. As Morgan Stanley concluded, "This could imply that human activities such as traffic and industrial production within/close to those cities are running 50-80% below their potential capacity."
https://www.zerohedge.com/economics/chi ... e-scenario

Image
While not perfect, and certainly not a comprehensive view of what is really taking place "on the ground", the above data is a useful real-time indicator of how the people in China perceive the threat of the coronavirus pandemic, and one thing is abundantly clear: as the pandemic spreads further without containment, and as the charts above flatline, so will China's economy, which means that while Goldman's draconian view of what happens to Q1 GDP is spot on, the expectation for a V-shaped recovery in Q2 and onward will vaporize fast
Image

China forecast expect a V shape recovery...
Image
Reminder to myself "If you're not willing to react with equanimity to a marketplace decline, of 50%, 2-3 times a century, you deserve the mediocre result you will get"-Charlie Munger

clydeonetime
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coronavirus market effects

Post by clydeonetime » Sat Feb 15, 2020 11:23 am

[Thread merged into here, see below. --admin LadyGeek]

It is hard for me to understand that the market has yet to be affected by the coronavirus. I have been maximizing my Roth IRA and 401K accounts the last two years. I have been fortunate enough to have invested extra cash in a taxable IRA account. My thought/question is this: Do I cash out my taxable account now before the coronavirus affects the market?

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Re: coronavirus market effects

Post by z3r0c00l » Sat Feb 15, 2020 11:28 am

A strange flurry of posts about this, I might suggest searching all the other threads on the topic. My upshot is you are falling victim to hysteria. Did you also panic during H1N1/09? Do you even remember H1N1/09? Stocks recovered from the great depression and WWII, I think we can handle a mediocre pandemic.

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Re: coronavirus market effects

Post by Teague » Sat Feb 15, 2020 11:51 am

Why suppose the market has been unaffected by this? I see no evidence for this assumption.

I'd argue it has been affected by the virus, and of course also by the tons of other things that influence market behavior on a constant basis. Of course there just isn't a way to tease out what cause had what effect. It's all one big messy stew of cause, effect, secondary and tertiary effects, emotions like greed, fear, and everything else. But surely the market has taken current events into account.
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clydeonetime
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Re: coronavirus market effects

Post by clydeonetime » Sat Feb 15, 2020 12:25 pm

I am by nature a buy and hold, Long term, ride the wave, investor. I understand fully that these things come and go and will come and go. This coronavirus my be the "one" or may not be. I am not a market timer. That is not how I invest. I am rational and using common sense. China will shut down. This virus will impact the world. This virus will or has already impacted our stock market. My taxable account is up a good amount. I am thinking it would be a smart idea to cash out of my taxable account while I am up. And when this virus really impacts our market buy back in on the low... I know "market timing" is gambling and not a good investment strategy. And "this time" is not different from "last time". On the flip side the writing is on the wall. No way any country gets out of this virus without being impacted....

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Re: coronavirus market effects

Post by fredflinstone » Sat Feb 15, 2020 12:29 pm

clydeonetime wrote:
Sat Feb 15, 2020 12:25 pm
I am by nature a buy and hold, Long term, ride the wave, investor. I understand fully that these things come and go and will come and go. This coronavirus my be the "one" or may not be. I am not a market timer. That is not how I invest. I am rational and using common sense. China will shut down. This virus will impact the world. This virus will or has already impacted our stock market. My taxable account is up a good amount. I am thinking it would be a smart idea to cash out of my taxable account while I am up. And when this virus really impacts our market buy back in on the low... I know "market timing" is gambling and not a good investment strategy. And "this time" is not different from "last time". On the flip side the writing is on the wall. No way any country gets out of this virus without being impacted....
While I agree that the virus is probably going to have a bigger economic impact than most people think, I have learned from painful experience that it is best not to engage in market timing based on my personal opinions. If you decide to take some money off the table, good luck and let us know how it goes.

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climber2020
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Re: coronavirus market effects

Post by climber2020 » Sat Feb 15, 2020 12:32 pm

For the benefit of everyone, please report back here in 2-3 years and let us know how it all went. These threads are always very educational.
clydeonetime wrote:
Sat Feb 15, 2020 12:25 pm
And when this virus really impacts our market buy back in on the low...
You'll be competing against professionals with supercomputers who do this full time for a living, and many of these people likely have insider knowledge that common people will never have access to.

BoggledHead2
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Re: coronavirus market effects

Post by BoggledHead2 » Sat Feb 15, 2020 12:34 pm

It’s “death toll” is rising - and grabs the headlines

Do a deeper dive into the “death toll”:total cases ratio ... all the sudden “98% of people are fine with minor symptoms” becomes less scary

The market had a mini tantrum a week or 2 ago heading into the weekend; then people woke up and realized they should just wash their hands, rest if not feeling well, and move on with life

It’s the new SARS/Y2K nonsense

PDX_Traveler
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Re: coronavirus market effects

Post by PDX_Traveler » Sat Feb 15, 2020 12:40 pm

clydeonetime wrote:
Sat Feb 15, 2020 12:25 pm
I am by nature a buy and hold, Long term, ride the wave, investor. I understand fully that these things come and go and will come and go. This coronavirus my be the "one" or may not be. I am not a market timer. That is not how I invest. I am rational and using common sense. China will shut down. This virus will impact the world. This virus will or has already impacted our stock market. My taxable account is up a good amount. I am thinking it would be a smart idea to cash out of my taxable account while I am up. And when this virus really impacts our market buy back in on the low... I know "market timing" is gambling and not a good investment strategy. And "this time" is not different from "last time". On the flip side the writing is on the wall. No way any country gets out of this virus without being impacted....
Just saying, but "My taxable account is up [.....] smart idea to cash out of my taxable account while I am up" and "I am not a market timer" are inconsistent statements from my p.o.v. It is precisely what I have learned to unlearn in my few years on this Bogleheads forum. If you're finding you're swayed by such 'analyses', perhaps the more actionable thing is to look at why you're investing, and what your asset allocation target should be.

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JoeRetire
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Re: coronavirus market effects

Post by JoeRetire » Sat Feb 15, 2020 1:03 pm

clydeonetime wrote:
Sat Feb 15, 2020 11:23 am
Do I cash out my taxable account now before the coronavirus affects the market?
If coronavirus market effects scare you, then you should definitely cash out everything today and sit on it until the worry passes.
Very Stable Genius

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JoeRetire
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Re: coronavirus market effects

Post by JoeRetire » Sat Feb 15, 2020 1:05 pm

clydeonetime wrote:
Sat Feb 15, 2020 12:25 pm
I am rational and using common sense.

China will shut down. This virus will impact the world. This virus will or has already impacted our stock market.

I know "market timing" is gambling and not a good investment strategy. And "this time" is not different from "last time".

On the flip side the writing is on the wall. No way any country gets out of this virus without being impacted....
Hmm. Not all of these statements seem to go together...
Very Stable Genius

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Re: coronavirus market effects

Post by palanzo » Sat Feb 15, 2020 1:55 pm

JoeRetire wrote:
Sat Feb 15, 2020 1:03 pm
clydeonetime wrote:
Sat Feb 15, 2020 11:23 am
Do I cash out my taxable account now before the coronavirus affects the market?
If coronavirus market effects scare you, then you should definitely cash out everything today and sit on it until the worry passes.
And pay capital gains and put him/herself in the position of finding it difficult to get back into the market?

The OP said s/he is a long term, buy and hold investor. I think this is poor advice in these circumstances.

Valuethinker
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Re: coronavirus market effects

Post by Valuethinker » Sat Feb 15, 2020 2:12 pm

BoggledHead2 wrote:
Sat Feb 15, 2020 12:34 pm
It’s “death toll” is rising - and grabs the headlines

Do a deeper dive into the “death toll”:total cases ratio ... all the sudden “98% of people are fine with minor symptoms” becomes less scary
On a global scale that would be 160 million people dead. Or if you want to use a narrow focus over 6 million Americans. The virulence is what is so concerning - this is very easy to spread.

It's not entirely clear those would simply be old and/ or immune-compromised people. Some of the people who have died were healthy adults including that opthamologist (Wen Liang?).

So what distinguishes this so far from SARS, MERS & Ebola:

- it's relatively easy to catch from another human being
- we don't have an effective antiviral treatment (like those diseases in the early stages of the epidemic)
- overall morbidity and mortality rates are unknown. If it is another Hong Kong flu (and it seems in that sort of level of seriousness, so far) then it will be OK. If it's a Spanish flu, none of us is going to forget this (every family tree of the 1918 time seems to have a "Great Uncle Jack died in the war, Great Aunt Susan died in the flu)-- the Spanish flu was specifically deadly to the young and able bodied

The market had a mini tantrum a week or 2 ago heading into the weekend; then people woke up and realized they should just wash their hands, rest if not feeling well, and move on with life

It’s the new SARS/Y2K nonsense
SARS was not easy to spread. It still had a significant impact on the economies and cities at the time. There's 60 million people in China living in lock down right now.

Y2K was your "wash your hands" event. We all "washed our hands". A huge problem was tackled in a global and semi-coordinated manner. Every important program was reviewed and tested (in my first job in computing, in the early 1980s, one of the maintenance tasks was "change year digits to 4" and my boss said at the time "we are all going to quit before 2000 happens". BTW President Nixon was warned of the problem in a meeting in about 1970.

Had that code hygiene not taken place it could have been very disruptive.

bradinsky
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Re: coronavirus market effects

Post by bradinsky » Sat Feb 15, 2020 2:19 pm

clydeonetime wrote:
Sat Feb 15, 2020 12:25 pm
I am by nature a buy and hold, Long term, ride the wave, investor. I understand fully that these things come and go and will come and go. This coronavirus my be the "one" or may not be. I am not a market timer. That is not how I invest. I am rational and using common sense. China will shut down. This virus will impact the world. This virus will or has already impacted our stock market. My taxable account is up a good amount. I am thinking it would be a smart idea to cash out of my taxable account while I am up. And when this virus really impacts our market buy back in on the low... I know "market timing" is gambling and not a good investment strategy. And "this time" is not different from "last time". On the flip side the writing is on the wall. No way any country gets out of this virus without being impacted....
Based on those thoughts, wouldn’t physical gold be a better bet?

kiddoc
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Re: coronavirus market effects

Post by kiddoc » Sat Feb 15, 2020 2:22 pm

Meh! I'll tell you the same thing I tell my patients:

The changes you have made so far based on the Coronavirus news should be around 1/50 or 100 th of the changes you make every year at the beginning of the flu season. In terms of magnitude, flu is around 50-100 times as worse as the current news on this virus.
"The four most dangerous words in investing are: 'this time it's different.'" - Sir John Templeton

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celia
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Re: coronavirus market effects

Post by celia » Sat Feb 15, 2020 2:35 pm

clydeonetime wrote:
Sat Feb 15, 2020 11:23 am
I have been fortunate enough to have invested extra cash in a taxable IRA account.
OP, What is a ‘taxable IRA’ account? I only know about traditional and Roth IRAs.

Ever since the coronaviris hit the news, many news outlets have been blaming the virus on normal market swings.

Exactly, how would it affect the market? All those who got sick cashed out their assets? Anyone scared of catching it has cashed out? Or does it mean drug manufacturers are about to make a ‘killing’? (Pun intended :D )

VaR
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Re: coronavirus market effects

Post by VaR » Sat Feb 15, 2020 2:43 pm

PDX_Traveler wrote:
Sat Feb 15, 2020 12:40 pm
If you're finding you're swayed by such 'analyses', perhaps the more actionable thing is to look at why you're investing, and what your asset allocation target should be.
This is right on. This is a great time to introspect on your risk tolerance and check to make sure that your resulting asset allocation is appropriate. OP, if you're worried that the market will correct by dropping 5-10%, and you can't tolerate that with your current asset allocation, what allocation would make you comfortable? What is your current allocation, btw?

FWIW (which is nothing), I happen to agree that the market is trading off 2019-nCOV impacts against the easing up of the U.S.-China trade war.
kiddoc wrote:
Sat Feb 15, 2020 2:22 pm
Meh! I'll tell you the same thing I tell my patients:

The changes you have made so far based on the Coronavirus news should be around 1/50 or 100 th of the changes you make every year at the beginning of the flu season. In terms of magnitude, flu is around 50-100 times as worse as the current news on this virus.
In particular, I read that 19 million Americans have been hit with the flu this season, with 180,000 hospitalized and 10,000 dead, including 68 children. Note that this is on track to be a bad season, as bad as 2017-2018 when 80,000 Americans died of the flu, including 180 children.

Update: CDC estimates 26-36 million illnesses, 12-17 million medical visits, 250,000 - 440,000 hospitalizations, and 14,000 - 36,000 deaths so far this season in the U.S.
https://www.cdc.gov/flu/about/burden/pr ... imates.htm

That said, the seriousness of the slowdown in commerce and business will have some impact, but I believe that impact is already baked in to the current market. Any further deterioration would be the result of future news of the outbreak getting better or worse, and any market impact of that involves predicting future events, then extrapolating that prediction by prediction reaction to it.

Bottom line: Make sure one's asset allocation is appropriate to one's new appreciation for one's risk tolerance.

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JoeRetire
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Re: coronavirus market effects

Post by JoeRetire » Sat Feb 15, 2020 4:10 pm

palanzo wrote:
Sat Feb 15, 2020 1:55 pm
JoeRetire wrote:
Sat Feb 15, 2020 1:03 pm
clydeonetime wrote:
Sat Feb 15, 2020 11:23 am
Do I cash out my taxable account now before the coronavirus affects the market?
If coronavirus market effects scare you, then you should definitely cash out everything today and sit on it until the worry passes.
And pay capital gains and put him/herself in the position of finding it difficult to get back into the market?

The OP said s/he is a long term, buy and hold investor. I think this is poor advice in these circumstances.
It's good advice, given the constraints posed by the OP.

The OP seems extremely worried about the coronavirus. The OP wrote "China will shut down. This virus will impact the world. This virus will or has already impacted our stock market. On the flip side the writing is on the wall. No way any country gets out of this virus without being impacted...."

Cashing out isn't something I'd do, but then I'm not worried about a pandemic.

If the question was "should I be so scared of the coronavirus that I consider going to cash?" then my answer would be "No". But that wasn't the question being asked.

Perhaps you could provide an answer based on your interpretation about what the OP is asking.
Very Stable Genius

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yangtui
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Re: coronavirus market effects

Post by yangtui » Sat Feb 15, 2020 4:16 pm

where are you hearing about the coronavirus? to keep this post actionable, i suggest that you eliminate and ignore whatever news source you are consuming that is causing you this fear. it is important to not let the people holding the megaphone gaslight you. i am pretty sure they are only doing it for money but sometimes i suspect they enjoy causing people unnecessary fear and panic. one of the toughest skills to learn is saying no and ignoring "news".

Have you read the wiki and browsed the forum for an extended period of time? It seems like every month now somebody is posting a question about their portfolio and what action they are thinking of taking based on whatever flavor of the month news narrative the media is pushing. If things get worse and global markets really start tanking the equity portion of my portfolio will dip, when that happens I will need to rebalance from bonds to get my predetermined percentages back in line. I have a job that is historically extremely secure and enough cash to last a very long time.

BoggledHead2
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Re: coronavirus market effects

Post by BoggledHead2 » Sat Feb 15, 2020 4:41 pm

Valuethinker wrote:
Sat Feb 15, 2020 2:12 pm
BoggledHead2 wrote:
Sat Feb 15, 2020 12:34 pm
It’s “death toll” is rising - and grabs the headlines

Do a deeper dive into the “death toll”:total cases ratio ... all the sudden “98% of people are fine with minor symptoms” becomes less scary
On a global scale that would be 160 million people dead. Or if you want to use a narrow focus over 6 million Americans. The virulence is what is so concerning - this is very easy to spread.

It's not entirely clear those would simply be old and/ or immune-compromised people. Some of the people who have died were healthy adults including that opthamologist (Wen Liang?).

So what distinguishes this so far from SARS, MERS & Ebola:

- it's relatively easy to catch from another human being
- we don't have an effective antiviral treatment (like those diseases in the early stages of the epidemic)
- overall morbidity and mortality rates are unknown. If it is another Hong Kong flu (and it seems in that sort of level of seriousness, so far) then it will be OK. If it's a Spanish flu, none of us is going to forget this (every family tree of the 1918 time seems to have a "Great Uncle Jack died in the war, Great Aunt Susan died in the flu)-- the Spanish flu was specifically deadly to the young and able bodied

The market had a mini tantrum a week or 2 ago heading into the weekend; then people woke up and realized they should just wash their hands, rest if not feeling well, and move on with life

It’s the new SARS/Y2K nonsense
SARS was not easy to spread. It still had a significant impact on the economies and cities at the time. There's 60 million people in China living in lock down right now.

Y2K was your "wash your hands" event. We all "washed our hands". A huge problem was tackled in a global and semi-coordinated manner. Every important program was reviewed and tested (in my first job in computing, in the early 1980s, one of the maintenance tasks was "change year digits to 4" and my boss said at the time "we are all going to quit before 2000 happens". BTW President Nixon was warned of the problem in a meeting in about 1970.

Had that code hygiene not taken place it could have been very disruptive.
The flu has killed millions of people; Let’s board up the windows and hide the women & children and empty all of our bank accounts

Coronavirus is the new media clickbait fear monger ... wash your hands, stay home from work when you don’t feel well, and see move on with life / your investment plan.

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Re: coronavirus market effects

Post by Trader Joe » Sat Feb 15, 2020 4:53 pm

clydeonetime wrote:
Sat Feb 15, 2020 11:23 am
It is hard for me to understand that the market has yet to be affected by the coronavirus. I have been maximizing my Roth IRA and 401K accounts the last two years. I have been fortunate enough to have invested extra cash in a taxable IRA account. My thought/question is this: Do I cash out my taxable account now before the coronavirus affects the market?
No, I would never do this.

BoggledHead2
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Re: coronavirus market effects

Post by BoggledHead2 » Sat Feb 15, 2020 5:00 pm

clydeonetime wrote:
Sat Feb 15, 2020 11:23 am
It is hard for me to understand that the market has yet to be affected by the coronavirus. I have been maximizing my Roth IRA and 401K accounts the last two years. I have been fortunate enough to have invested extra cash in a taxable IRA account. My thought/question is this: Do I cash out my taxable account now before the coronavirus affects the market?
I’m thinking about selling my Tesla stock because Elon Musk has a tummy ache.

Does this sound smart on my part?

palanzo
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Re: coronavirus market effects

Post by palanzo » Sat Feb 15, 2020 9:24 pm

JoeRetire wrote:
Sat Feb 15, 2020 4:10 pm
palanzo wrote:
Sat Feb 15, 2020 1:55 pm
JoeRetire wrote:
Sat Feb 15, 2020 1:03 pm
clydeonetime wrote:
Sat Feb 15, 2020 11:23 am
Do I cash out my taxable account now before the coronavirus affects the market?
If coronavirus market effects scare you, then you should definitely cash out everything today and sit on it until the worry passes.
And pay capital gains and put him/herself in the position of finding it difficult to get back into the market?

The OP said s/he is a long term, buy and hold investor. I think this is poor advice in these circumstances.
It's good advice, given the constraints posed by the OP.

The OP seems extremely worried about the coronavirus. The OP wrote "China will shut down. This virus will impact the world. This virus will or has already impacted our stock market. On the flip side the writing is on the wall. No way any country gets out of this virus without being impacted...."

Cashing out isn't something I'd do, but then I'm not worried about a pandemic.

If the question was "should I be so scared of the coronavirus that I consider going to cash?" then my answer would be "No". But that wasn't the question being asked.

Perhaps you could provide an answer based on your interpretation about what the OP is asking.
The OP asked "Do I cash out my taxable account now before the coronavirus affects the market?"

I think the answer is no. I would further advise the OP to stop reading or watching the sources that are contributing to his or her worries. Perhaps guide the OP to read the Wiki or one of John Bogle's books.

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Re: coronavirus market effects

Post by Valuethinker » Sun Feb 16, 2020 4:39 am

BoggledHead2 wrote:
Sat Feb 15, 2020 4:41 pm
Valuethinker wrote:
Sat Feb 15, 2020 2:12 pm
BoggledHead2 wrote:
Sat Feb 15, 2020 12:34 pm
It’s “death toll” is rising - and grabs the headlines

Do a deeper dive into the “death toll”:total cases ratio ... all the sudden “98% of people are fine with minor symptoms” becomes less scary
On a global scale that would be 160 million people dead. Or if you want to use a narrow focus over 6 million Americans. The virulence is what is so concerning - this is very easy to spread.

It's not entirely clear those would simply be old and/ or immune-compromised people. Some of the people who have died were healthy adults including that opthamologist (Wen Liang?).

So what distinguishes this so far from SARS, MERS & Ebola:

- it's relatively easy to catch from another human being
- we don't have an effective antiviral treatment (like those diseases in the early stages of the epidemic)
- overall morbidity and mortality rates are unknown. If it is another Hong Kong flu (and it seems in that sort of level of seriousness, so far) then it will be OK. If it's a Spanish flu, none of us is going to forget this (every family tree of the 1918 time seems to have a "Great Uncle Jack died in the war, Great Aunt Susan died in the flu)-- the Spanish flu was specifically deadly to the young and able bodied

The market had a mini tantrum a week or 2 ago heading into the weekend; then people woke up and realized they should just wash their hands, rest if not feeling well, and move on with life

It’s the new SARS/Y2K nonsense
SARS was not easy to spread. It still had a significant impact on the economies and cities at the time. There's 60 million people in China living in lock down right now.

Y2K was your "wash your hands" event. We all "washed our hands". A huge problem was tackled in a global and semi-coordinated manner. Every important program was reviewed and tested (in my first job in computing, in the early 1980s, one of the maintenance tasks was "change year digits to 4" and my boss said at the time "we are all going to quit before 2000 happens". BTW President Nixon was warned of the problem in a meeting in about 1970.

Had that code hygiene not taken place it could have been very disruptive.
The flu has killed millions of people; Let’s board up the windows and hide the women & children and empty all of our bank accounts
Straw man.
Coronavirus is the new media clickbait fear monger ... wash your hands, stay home from work when you don’t feel well, and see move on with life / your investment plan.
I agree there is not much point changing your investment plan.

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mrspock
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Re: coronavirus market effects

Post by mrspock » Sun Feb 16, 2020 5:01 am

Some perspective:

2.8m (1) people die each year in the US, this is about 0.86% (1) of the population and 1.8% globally (2). We have a long long way to go before we
start putting a dent into this number.

The corona virus is indeed something we need to take seriously, and focus our resources to get under control, but any notion that it is going to do permanent long term damage to the US economy is probably a stretch. Probably the biggest risk to any economy right now is the fear caused by the virus vs the virus itself, but I suspect this is fairly contained to the tourism and transportation sectors.

Stay the course.

1. https://www.cdc.gov/nchs/fastats/deaths.htm
2. https://en.m.wikipedia.org/wiki/Mortality_rate

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Re: coronavirus market effects

Post by Enganerd » Sun Feb 16, 2020 6:35 am

I tend to agree that for average investors/western citizens there is little reason to obsess about the nCOV-19. Stock up on non-perishables to prudently prepare in a non costly manner. It is confusing that markets have not had a larger reaction to China's quarantine measures but EMH still applies. What competitive advantage does any of us have in trading on the news?

OTOH the constant downplaying of the seriousness of a novel contagious virus by mainstream media and many posters is puzzling. WHO declared a global public health emergency. Former FDA commissioner stated that a pandemic is likely. 760,000,000 (think 2x U.S. population) are in some sort of residential lockdown in China. The above does not happen for a bad flu season. This is obvious, why on earth would anyone make the comparison to flu or automobile deaths? I can only speculate that it is a mental coping strategy to make it easier to stay the course.

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JoeRetire
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Re: coronavirus market effects

Post by JoeRetire » Sun Feb 16, 2020 6:54 am

Enganerd wrote:
Sun Feb 16, 2020 6:35 am
WHO declared a global public health emergency.
This is the 6th such declaration in the last decade.

Let's not pretend the market should come to a standstill each time.
Very Stable Genius

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Re: coronavirus market effects

Post by viewer0 » Sun Feb 16, 2020 7:26 am

I would now buy some reputed Chinese stocks like Alibaba, as when the commotion is over, they will shoot up fast.

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Re: coronavirus market effects

Post by Seasonal » Sun Feb 16, 2020 7:38 am

What assumptions and expectations about the coronavirus are built into current market prices? Will reality be better or worse? Will there be other developments which will move the market significantly one way or the other and, if so, how much and when?

Unless you know the answers to these questions, changing your investments based on current headlines is foolish. In particular, selling based on current scary news or panics, in the hope of buying on the lows, has a terrible history

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Re: Coronavirus and the market

Post by LadyGeek » Sun Feb 16, 2020 8:55 am

I merged clydeonetime's thread into the on-going discussion. The combined thread is in the Investing - Theory, News & General forum (general discussion).
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.

Enganerd
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Re: coronavirus market effects

Post by Enganerd » Sun Feb 16, 2020 9:28 am

JoeRetire wrote:
Sun Feb 16, 2020 6:54 am
Enganerd wrote:
Sun Feb 16, 2020 6:35 am
WHO declared a global public health emergency.
This is the 6th such declaration in the last decade.

Let's not pretend the market should come to a standstill each time.
I did not imply the market should react to WHO declaring a global public health emergency. I did say some may find it confusing that such large scale quarantine measures in China have not caused a market sell off. But the main point is that I am genuinely confused why so many keep comparing the current # of deaths due to the corona virus to other causes of death. The concern is rapid spread of a novel virus, that is obvious. Current # of deaths compared to the flu has no bearing on the this concern. Obviously governments all across the world are taking this concern seriously.

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Re: Coronavirus and the market

Post by Corsair » Sun Feb 16, 2020 10:03 am

This is approx. 10% of the world population. Crazy!
NY Times wrote:Residential lockdowns of varying strictness — from checkpoints at building entrances to hard limits on going outdoors — now cover at least 760 million people in China, or more than half the country’s population, according to a New York Times analysis of government announcements in provinces and major cities.

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Re: Coronavirus and the market

Post by BoggledHead2 » Sun Feb 16, 2020 12:07 pm

Corsair wrote:
Sun Feb 16, 2020 10:03 am
This is approx. 10% of the world population. Crazy!
NY Times wrote:Residential lockdowns of varying strictness — from checkpoints at building entrances to hard limits on going outdoors — now cover at least 760 million people in China, or more than half the country’s population, according to a New York Times analysis of government announcements in provinces and major cities.
3 consecutive days of lowered reports of new cases ... in addition to 98% of those infected ending up fine ...

This hysteria is ridiculous. Clickbait “death toll” nonsense. It’s good china is taking measures to reduce the spread ... but selling market shares because of this is just mind blowing to me

makingmistakes
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Re: Coronavirus and the market

Post by makingmistakes » Sun Feb 16, 2020 12:34 pm

My wife is from China. She showed me pictures someone sent her from Guangzhou... not a soul in the streets. A lot of non-government workers suddenly have no income. If the fear continues, there will undoubtedly be a big economic impact.

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Re: Coronavirus and the market

Post by guyinlaw » Sun Feb 16, 2020 2:55 pm

BoggledHead2 wrote:
Sun Feb 16, 2020 12:07 pm
Corsair wrote:
Sun Feb 16, 2020 10:03 am
This is approx. 10% of the world population. Crazy!
NY Times wrote:Residential lockdowns of varying strictness — from checkpoints at building entrances to hard limits on going outdoors — now cover at least 760 million people in China, or more than half the country’s population, according to a New York Times analysis of government announcements in provinces and major cities.
3 consecutive days of lowered reports of new cases ... in addition to 98% of those infected ending up fine ...

This hysteria is ridiculous. Clickbait “death toll” nonsense. It’s good china is taking measures to reduce the spread ... but selling market shares because of this is just mind blowing to me
[OT comment removed by admin LadyGeek]

Yes, you may have no reason to sell shares. But situation in China is heartbreaking.. whatever few rights people had are out of window, if you cough or sneeze, you maybe arrested and put in quarantine. I thank God I don't live under autocratic regime.

Btw, WHO head said it is matter of time when this spreads all around the world and measures in China are just delaying it. I hope it is not true. Hope he was exaggerating, to get governments to act and help China.

Yes, no reason to sell now, but I am padding my emergency fund...
Reminder to myself "If you're not willing to react with equanimity to a marketplace decline, of 50%, 2-3 times a century, you deserve the mediocre result you will get"-Charlie Munger

BoggledHead2
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Re: Coronavirus and the market

Post by BoggledHead2 » Sun Feb 16, 2020 3:50 pm

If there’s a global virus pandemic, your asset allocation / emergency fund won’t matter

Wash your hands, rest when you dont feel well, and move on with life.

*i can’t stand people who come to work sick - like they are so kind of hero, but that’s for another thread

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Re: Coronavirus and the market

Post by clip651 » Sun Feb 16, 2020 3:51 pm

Regarding the effect of quarantines on the market ...

One thing to consider, if this virus (or any infectious disease, really) eventually spreads worldwide, or to most countries and most areas, at some point quarantines will stop being a major tool used to try to control the disease. Sure, sick people will still be advised to stay home, and other precautions will continue to be taken to minimize disease spread, but management may become much more similar to what we see with the annual flu seasons at some point. Quarantines just aren't that effective (or necessary) once an infectious disease becomes truly widespread. Why stop people from traveling between points A and B (whether that is across town, across the country, or from one country to another) if that disease is already present in non-trivial numbers in both places?

I don't say this to minimize the impact on those who do become very sick or die from the disease. But this thread is about market impacts. China and other areas won't stay closed forever. Either the quarantine efforts will work well, or they won't. This is normal for disease control efforts.

Also on a random side note, in terms of market impact ... the virus hit around Chinese New Year, when I believe there are normally a large number of people in China on extended vacations. This has been the opposite of an extended vacation for affected people, and more things are affected than a normal New Year period. But the factories were already going to be quiet for a portion of this time due to the holidays.

There are so many ways this or any other newsworthy situation could end up playing out. For me, I'm staying the course with my investments. I already had an oversized emergency fund for other personal reasons. If I didn't have the emergency fund, and was 100% stock, this might be a good time to do a gut check on the asset allocation (for the long term, not a change it now and then change it back sort of thing). But if you already have an all weather asset allocation, and a good emergency fund, I personally think staying the course is a reasonable choice as always.

cj

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Re: Coronavirus and the market

Post by willthrill81 » Sun Feb 16, 2020 4:30 pm

makingmistakes wrote:
Sun Feb 16, 2020 12:34 pm
My wife is from China. She showed me pictures someone sent her from Guangzhou... not a soul in the streets. A lot of non-government workers suddenly have no income. If the fear continues, there will undoubtedly be a big economic impact.
The quarantining efforts alone will surely have a big economic impact on China. But the Chinese stock market is very tiny in comparison to the global markets. Yes, a reduction of goods coming from China will have an impact on the American economy, but probably not as much as many think. Look at the 'heavy hitters' in the U.S. market right now, the FAANG stocks. The only one of them who might be directly impacted in a negative way is Amazon's retail side, but even they generate most of their profits on the web hosting services side of their business.

Wal-Mart, by contrast, sells a lot of goods from China and could be effected much more, but the market doesn't seem to think so. Their stock price is slightly up over the last month.
“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

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lock.that.stock
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Re: Coronavirus and the market

Post by lock.that.stock » Sun Feb 16, 2020 4:39 pm

willthrill81 wrote:
Sun Feb 16, 2020 4:30 pm
makingmistakes wrote:
Sun Feb 16, 2020 12:34 pm
My wife is from China. She showed me pictures someone sent her from Guangzhou... not a soul in the streets. A lot of non-government workers suddenly have no income. If the fear continues, there will undoubtedly be a big economic impact.
The quarantining efforts alone will surely have a big economic impact on China. But the Chinese stock market is very tiny in comparison to the global markets. Yes, a reduction of goods coming from China will have an impact on the American economy, but probably not as much as many think. Look at the 'heavy hitters' in the U.S. market right now, the FAANG stocks. The only one of them who might be directly impacted in a negative way is Amazon's retail side, but even they generate most of their profits on the web hosting services side of their business.

Wal-Mart, by contrast, sells a lot of goods from China and could be effected much more, but the market doesn't seem to think so. Their stock price is slightly up over the last month.
My guess is that many of these mega-corporations have alternate supply chains already mapped out for many products (India, Malaysia, Thailand etc.). Perhaps the ones to take the biggest hit will be corporations that rely on factory assemblies in China (maybe Apple)?

Time and the next quarterly earnings will tell....

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willthrill81
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Re: Coronavirus and the market

Post by willthrill81 » Sun Feb 16, 2020 4:46 pm

lock.that.stock wrote:
Sun Feb 16, 2020 4:39 pm
willthrill81 wrote:
Sun Feb 16, 2020 4:30 pm
makingmistakes wrote:
Sun Feb 16, 2020 12:34 pm
My wife is from China. She showed me pictures someone sent her from Guangzhou... not a soul in the streets. A lot of non-government workers suddenly have no income. If the fear continues, there will undoubtedly be a big economic impact.
The quarantining efforts alone will surely have a big economic impact on China. But the Chinese stock market is very tiny in comparison to the global markets. Yes, a reduction of goods coming from China will have an impact on the American economy, but probably not as much as many think. Look at the 'heavy hitters' in the U.S. market right now, the FAANG stocks. The only one of them who might be directly impacted in a negative way is Amazon's retail side, but even they generate most of their profits on the web hosting services side of their business.

Wal-Mart, by contrast, sells a lot of goods from China and could be effected much more, but the market doesn't seem to think so. Their stock price is slightly up over the last month.
My guess is that many of these mega-corporations have alternate supply chains already mapped out for many products (India, Malaysia, Thailand etc.). Perhaps the ones to take the biggest hit will be corporations that rely on factory assemblies in China (maybe Apple)?

Time and the next quarterly earnings will tell....
Yes, it's true that Apple's supply chain could be interrupted by all of this, but I agree that they probably considered this possibility already and have made some contingency plans. Smart businesses do that. When I worked in the mortgage servicing arm for a regional bank many years ago, another gentleman and I crafted a full-blown contingency plan for how we could maintain operations in the event of various interruptions. One month after I left, hurricane Katrina hit the local area hard, and the plan was quickly put into action; in this case, all operations were temporarily moved 300 miles, and all workers were temporarily moved to and housed there.

The market seems to believe that Apple will be okay as their stock price is slightly up over the last month.
“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

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Re: Coronavirus and the market

Post by H-Town » Sun Feb 16, 2020 4:48 pm

We have a group of smart people here. But it’s foolish to think you can outsmart the stock market. It requires wisdom to realize that. Experienced and successful investors have a long term plan and stay the course. They might not be the smartest people in the room, but they are smart enough to win this game.

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lock.that.stock
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Re: Coronavirus and the market

Post by lock.that.stock » Sun Feb 16, 2020 5:03 pm

willthrill81 wrote:
Sun Feb 16, 2020 4:46 pm
lock.that.stock wrote:
Sun Feb 16, 2020 4:39 pm
willthrill81 wrote:
Sun Feb 16, 2020 4:30 pm
makingmistakes wrote:
Sun Feb 16, 2020 12:34 pm
My wife is from China. She showed me pictures someone sent her from Guangzhou... not a soul in the streets. A lot of non-government workers suddenly have no income. If the fear continues, there will undoubtedly be a big economic impact.
The quarantining efforts alone will surely have a big economic impact on China. But the Chinese stock market is very tiny in comparison to the global markets. Yes, a reduction of goods coming from China will have an impact on the American economy, but probably not as much as many think. Look at the 'heavy hitters' in the U.S. market right now, the FAANG stocks. The only one of them who might be directly impacted in a negative way is Amazon's retail side, but even they generate most of their profits on the web hosting services side of their business.

Wal-Mart, by contrast, sells a lot of goods from China and could be effected much more, but the market doesn't seem to think so. Their stock price is slightly up over the last month.
My guess is that many of these mega-corporations have alternate supply chains already mapped out for many products (India, Malaysia, Thailand etc.). Perhaps the ones to take the biggest hit will be corporations that rely on factory assemblies in China (maybe Apple)?

Time and the next quarterly earnings will tell....
Yes, it's true that Apple's supply chain could be interrupted by all of this, but I agree that they probably considered this possibility already and have made some contingency plans. Smart businesses do that. When I worked in the mortgage servicing arm for a regional bank many years ago, another gentleman and I crafted a full-blown contingency plan for how we could maintain operations in the event of various interruptions. One month after I left, hurricane Katrina hit the local area hard, and the plan was quickly put into action; in this case, all operations were temporarily moved 300 miles, and all workers were temporarily moved to and housed there.

The market seems to believe that Apple will be okay as their stock price is slightly up over the last month.
Agreed. It will be interesting to see how mega-corps respond to this event and how it is going to affect their earnings. I'm sure Apple employs some smart folks whose sole job is to handle supply chain contingencies. However I can't help but think that a full production halt from the biggest economy in the world won't disrupt their operations (think about phone, computer parts like DRAM, processors, displays etc.). I'm not sure any company accounted for anything of that magnitude though one can argue that with the recent trade wars/tarriffs this may have been considered already.

The way I see it is depending on the severity and spread of the virus, this will wound up in one of two situations. Virus is contained in the next few weeks and a mitigation plan is established (likely), or the spread increases resulting in China-wide halts in production (unlikely). The former might put a minor dent in the earnings. The latter might result in a bigger impact in production costs, but may result in some of the assemblies moving back to the US.

All finances aside, I really hope that this gets contained and a vaccine found very soon. I can only imagine the toll this epidemic has taken on affected families mentally and physically, especially those living in China.

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Re: Coronavirus and the market

Post by willthrill81 » Sun Feb 16, 2020 5:08 pm

lock.that.stock wrote:
Sun Feb 16, 2020 5:03 pm
All finances aside, I really hope that this gets contained and a vaccine found very soon. I can only imagine the toll this epidemic has taken on affected families mentally and physically, especially those living in China.
100% agree. The human impact of pandemics is always bad. It's just a question of how bad it is for how many.
“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

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