The Black Swan is Here

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
NBKCF
Posts: 111
Joined: Wed Aug 01, 2018 6:14 pm

Re: The Black Swan is Here

Post by NBKCF » Tue Mar 17, 2020 7:40 am

TravelforFun wrote:
Mon Mar 16, 2020 10:13 am
JonnyDVM wrote:
Mon Mar 16, 2020 10:09 am
What annoys me about this swan is I felt like I could see it coming from a good distance away. Staying the course really led me strait into an iceberg.

My defense strategy is that I still have the benefit of time.
Hope you weren't 100% equity.

TravelforFun
TravelforFun,

Can you elaborate on this? I am about 90/10 at age 32. My portfolio has taken quite the whack, but I don't plan to change the allocation. Should I? I planned on being in this allocation until 35 with continued monthly funding of my 401k and Roth IRA. I have tossed around the idea of increasing my 401k contributions too. Any thought on that?

lostdog
Posts: 2503
Joined: Thu Feb 04, 2016 2:15 pm

Re: The Black Swan is Here

Post by lostdog » Tue Mar 17, 2020 7:58 am

jjface wrote:
Mon Mar 16, 2020 1:47 pm
It is good to take the virus seriously but it isn't a plague. It isn't going to kill the majority of people nor will most get sick. There are vulnerable people sure that need looking after. Life will return to normal. Markets will recover. Much more chance of you dying driving to work but no one is banning cars. It is a risk we take.
+1

Some of the answers in this thread are interesting. Some of you must live in constant fear or are a constant pessimist.

Life will go in after this. Black swan? Give me a break.
Global Market Cap Equity || Taxable: VTSAX+VTIAX || Retirement: VTWAX

bikechuck
Posts: 693
Joined: Sun Aug 16, 2015 9:22 pm

Re: The Black Swan is Here

Post by bikechuck » Tue Mar 17, 2020 8:38 am

am wrote:
Mon Mar 16, 2020 10:15 am
There is a chance that we may be well into recovery by summer to end of the year as market is forward looking. Dow/market has had huge inter year losses in the past only to finish the year up (think 1987 ). Staying the course is best. Obviously crystal ball is cloudy as we say here.
Which summer are you referring to? I do think that we could be well into recovery by the summer of 2022. I have never seen anything like this where the economies of the world essentially shut down and the shutdown will last a quarter or more. There are going to be many, many bankruptcies (both business and personal) and things are going to come crawling rather than roaring back.

bikechuck
Posts: 693
Joined: Sun Aug 16, 2015 9:22 pm

Re: The Black Swan is Here

Post by bikechuck » Tue Mar 17, 2020 8:41 am

indian86 wrote:
Mon Mar 16, 2020 4:27 pm

And why is everybody so freaked out about hospital beds? Can't we turn university dormitories or office buildings into clinics basically overnight? We do have a military not currently at war.
Our wars have ended????????????????????????? OMG THANK YOU so much for sharing this news. I have been so distracted that somehow I missed it.

Blue456
Posts: 486
Joined: Tue Jun 04, 2019 5:46 am

Re: The Black Swan is Here

Post by Blue456 » Tue Mar 17, 2020 8:49 am

bikechuck wrote:
Tue Mar 17, 2020 8:38 am
am wrote:
Mon Mar 16, 2020 10:15 am
There is a chance that we may be well into recovery by summer to end of the year as market is forward looking. Dow/market has had huge inter year losses in the past only to finish the year up (think 1987 ). Staying the course is best. Obviously crystal ball is cloudy as we say here.
Which summer are you referring to? I do think that we could be well into recovery by the summer of 2022. I have never seen anything like this where the economies of the world essentially shut down and the shutdown will last a quarter or more. There are going to be many, many bankruptcies (both business and personal) and things are going to come crawling rather than roaring back.
2022 recovery is still recovery. Black swan for me means complete destruction of world economy without possibility of any near time recovery. 2 years to recovery seems like a short recession no?

Blue456
Posts: 486
Joined: Tue Jun 04, 2019 5:46 am

Re: The Black Swan is Here

Post by Blue456 » Tue Mar 17, 2020 8:55 am

technovelist wrote:
Mon Mar 16, 2020 5:25 pm
ianferrel wrote:
Mon Mar 16, 2020 4:50 pm
indian86 wrote:
Mon Mar 16, 2020 4:27 pm
Ok, but please remember so far it appears 98.5% of those infected either never know it (beyond thinking they just have a cold) or are symptomatic to the point that they don't need hospitalization. This is not what the medical community call a "highly acute" disease. This isn't like getting typhoid or lymphoma. Now I understand that that means that they can still spread it, but it doesn't change the 98% number.
Where did you get those numbers?

The best numbers are coming out of Korea, which has done exhaustive testing and contact tracing, and thus looks like they have found closer to the full extent of the spread, as opposed to countries like the US that are basically only testing very sick people to confirm diagnosis. Korea's had a total death rate slightly under 0.1% (so far: 73 deaths out of 8000ish infected).

Then look at Italy. Their death rate matched other countries' at around 1% until they ran out of ICU capacity and had to start wartime triage. It caused their death rate to go from 1% to 5%. If we assume that the 1% Italy was measuring is actually 0.1% due to undertesting (and based on Korea's data), then the *real* death rate if we overwhelm hospitals is maybe 0.5%.

So we now think that maybe 40-70% of Americans are going to get this. If we don't make a really big deal about slowing it down, that's going to be 327m * 40-70% * 0.5% = 600k-1m Americans dead of this thing in the next few months. The flu kills far far less than that.

And that's before all the knock-on effects. It's a bad thing when your medical system is overflowing with viral epidemic patients. Better hope no one hasany other medical issue for the next year that might be minor with excellent medical care but critical without. Because there won't be any spare capacity. And the risk of getting the virus through the medical system will be very high as well.
And why is everybody so freaked out about hospital beds? Can't we turn university dormitories or office buildings into clinics basically overnight? We do have a military not currently at war.
A measurement of hospital beds is kind of a shorthand for "quality intensive medical care". Yes, we can turn dormitories into clinics overnight, but we can't turn people into nurses or doctors overnight, nor can we supply those dormitories with ventilators because there aren't ventilators. There aren't any restorative properties to occupying a bed in a dormitory that's been hastily converted to a hospital.
Thanks. I don't understand why otherwise sensible people like those on this board can't understand how serious this is.
They don’t understand how medical care works and get a lot of info from movies.

tesuzuki2002
Posts: 984
Joined: Fri Dec 11, 2015 12:40 pm

Re: The Black Swan is Here

Post by tesuzuki2002 » Tue Mar 17, 2020 8:57 am

yohac wrote:
Mon Mar 16, 2020 10:12 am
Yup, there was plenty of warning. Of course there have warnings on lots of other things too, which fizzled out. This one blew up in our faces (to use another analogy.)
So long as you don't touch your face.... it's fine!!!

tesuzuki2002
Posts: 984
Joined: Fri Dec 11, 2015 12:40 pm

Re: The Black Swan is Here

Post by tesuzuki2002 » Tue Mar 17, 2020 8:58 am

TravelforFun wrote:
Mon Mar 16, 2020 10:13 am
JonnyDVM wrote:
Mon Mar 16, 2020 10:09 am
What annoys me about this swan is I felt like I could see it coming from a good distance away. Staying the course really led me strait into an iceberg.

My defense strategy is that I still have the benefit of time.
Hope you weren't 100% equity.

TravelforFun
I'm am personally going 100% equity!! My 20% bonds have been holding well... but now is time to start reblancing...

technovelist
Posts: 3216
Joined: Wed Dec 30, 2009 9:02 pm
Contact:

Re: The Black Swan is Here

Post by technovelist » Tue Mar 17, 2020 12:21 pm

JonnyDVM wrote:
Mon Mar 16, 2020 10:18 pm
technovelist wrote:
Mon Mar 16, 2020 5:25 pm
ianferrel wrote:
Mon Mar 16, 2020 4:50 pm
indian86 wrote:
Mon Mar 16, 2020 4:27 pm
Ok, but please remember so far it appears 98.5% of those infected either never know it (beyond thinking they just have a cold) or are symptomatic to the point that they don't need hospitalization. This is not what the medical community call a "highly acute" disease. This isn't like getting typhoid or lymphoma. Now I understand that that means that they can still spread it, but it doesn't change the 98% number.
Where did you get those numbers?

The best numbers are coming out of Korea, which has done exhaustive testing and contact tracing, and thus looks like they have found closer to the full extent of the spread, as opposed to countries like the US that are basically only testing very sick people to confirm diagnosis. Korea's had a total death rate slightly under 0.1% (so far: 73 deaths out of 8000ish infected).

Then look at Italy. Their death rate matched other countries' at around 1% until they ran out of ICU capacity and had to start wartime triage. It caused their death rate to go from 1% to 5%. If we assume that the 1% Italy was measuring is actually 0.1% due to undertesting (and based on Korea's data), then the *real* death rate if we overwhelm hospitals is maybe 0.5%.

So we now think that maybe 40-70% of Americans are going to get this. If we don't make a really big deal about slowing it down, that's going to be 327m * 40-70% * 0.5% = 600k-1m Americans dead of this thing in the next few months. The flu kills far far less than that.

And that's before all the knock-on effects. It's a bad thing when your medical system is overflowing with viral epidemic patients. Better hope no one hasany other medical issue for the next year that might be minor with excellent medical care but critical without. Because there won't be any spare capacity. And the risk of getting the virus through the medical system will be very high as well.
And why is everybody so freaked out about hospital beds? Can't we turn university dormitories or office buildings into clinics basically overnight? We do have a military not currently at war.
A measurement of hospital beds is kind of a shorthand for "quality intensive medical care". Yes, we can turn dormitories into clinics overnight, but we can't turn people into nurses or doctors overnight, nor can we supply those dormitories with ventilators because there aren't ventilators. There aren't any restorative properties to occupying a bed in a dormitory that's been hastily converted to a hospital.
Thanks. I don't understand why otherwise sensible people like those on this board can't understand how serious this is.
Give up before you give yourself an aneurism. There’s literally no convincing some people. It appears some want to argue exactly what type of swan to classify this event as. We can’t even agree on that!
Thanks, but I'm not worried about my own health. I'm socked in for the duration and should be fine.
In theory, theory and practice are identical. In practice, they often differ.

technovelist
Posts: 3216
Joined: Wed Dec 30, 2009 9:02 pm
Contact:

Re: The Black Swan is Here

Post by technovelist » Tue Mar 17, 2020 12:24 pm

Prahasaurus wrote:
Tue Mar 17, 2020 3:30 am
Wiggums wrote:
Mon Mar 16, 2020 10:35 am
I don’t know what you call this. Maybe the perfect Storm for a selloff.

Two emergency fed cuts, is unusual and causing a choppy market. We have a public health and closures that make it harder yo determine the economic impact.
We are so early in this process. People have not yet grasped that. Wait until it hits Brazil, or India... People are looking at Asia and thinking it's not so bad, neglecting to understand what those countries had to do to stop this. And most countries, including America, are not equipped with the right technology or health care infrastructure to implement what is required.

Also, I think NYC is going to be the first major American city to see their hospitals collapse under the weight of this virus. That should happen in about 5-7 days or so. Exponential math is a crazy thing, really sneaks up on you.
Yep. It's like when you see an airplane coming at you. It seems far away but it arrives very rapidly.
In theory, theory and practice are identical. In practice, they often differ.

technovelist
Posts: 3216
Joined: Wed Dec 30, 2009 9:02 pm
Contact:

Re: The Black Swan is Here

Post by technovelist » Tue Mar 17, 2020 12:25 pm

justglassin wrote:
Tue Mar 17, 2020 5:38 am
ukbogler wrote:
Tue Mar 17, 2020 4:37 am
JonnyDVM wrote:
Mon Mar 16, 2020 10:09 am
What annoys me about this swan is I felt like I could see it coming from a good distance away. Staying the course really led me strait into an iceberg.

My defense strategy is that I still have the benefit of time.
'Staying the course' = 'Ignore developments'.

A rational person changes his mind when new facts become available.
Well put. Staying the course eventually = deer in the headlights? I moved most of my TSP to the G fund three weeks ago and it so far has saved me 6 figures. But now I have to decide when to get back in.

When I moved it, I said I would start to move back in once we hit December 2018 levels, yet we seem to be blowing right past those and it still feels like Europe and the States are still just at the end of the beginning of our response. I get that markets are forward looking, so we may be closer to a bottom than the news and events on the ground portray.

Having confessed my sin of timing the market and reacting to an event, I welcome anyone's constructive thoughts about when to start moving back to my 90/10 position?
Once the pandemic is under control, i.e., the infection rate starts to go down.
In theory, theory and practice are identical. In practice, they often differ.

quantAndHold
Posts: 4308
Joined: Thu Sep 17, 2015 10:39 pm

Re: The Black Swan is Here

Post by quantAndHold » Tue Mar 17, 2020 6:31 pm

justglassin wrote:
Tue Mar 17, 2020 5:38 am
ukbogler wrote:
Tue Mar 17, 2020 4:37 am
JonnyDVM wrote:
Mon Mar 16, 2020 10:09 am
What annoys me about this swan is I felt like I could see it coming from a good distance away. Staying the course really led me strait into an iceberg.

My defense strategy is that I still have the benefit of time.
'Staying the course' = 'Ignore developments'.

A rational person changes his mind when new facts become available.
Well put. Staying the course eventually = deer in the headlights? I moved most of my TSP to the G fund three weeks ago and it so far has saved me 6 figures. But now I have to decide when to get back in.

When I moved it, I said I would start to move back in once we hit December 2018 levels, yet we seem to be blowing right past those and it still feels like Europe and the States are still just at the end of the beginning of our response. I get that markets are forward looking, so we may be closer to a bottom than the news and events on the ground portray.

Having confessed my sin of timing the market and reacting to an event, I welcome anyone's constructive thoughts about when to start moving back to my 90/10 position?
When the Bogleheads who still insist that things are overblown stop posting, then it will be time to dive back in.
Yes, I’m really that pedantic.

am
Posts: 3258
Joined: Sun Sep 30, 2007 9:55 am

Re: The Black Swan is Here

Post by am » Tue Mar 17, 2020 7:41 pm

bikechuck wrote:
Tue Mar 17, 2020 8:38 am
am wrote:
Mon Mar 16, 2020 10:15 am
There is a chance that we may be well into recovery by summer to end of the year as market is forward looking. Dow/market has had huge inter year losses in the past only to finish the year up (think 1987 ). Staying the course is best. Obviously crystal ball is cloudy as we say here.
Which summer are you referring to? I do think that we could be well into recovery by the summer of 2022. I have never seen anything like this where the economies of the world essentially shut down and the shutdown will last a quarter or more. There are going to be many, many bankruptcies (both business and personal) and things are going to come crawling rather than roaring back.
You sound convincing but you will likely be wrong. Yes a lot of suffering for sure. But I will not be surprised if we end up positive for the year.

bikechuck
Posts: 693
Joined: Sun Aug 16, 2015 9:22 pm

Re: The Black Swan is Here

Post by bikechuck » Tue Mar 17, 2020 8:08 pm

am wrote:
Tue Mar 17, 2020 7:41 pm
bikechuck wrote:
Tue Mar 17, 2020 8:38 am
am wrote:
Mon Mar 16, 2020 10:15 am
There is a chance that we may be well into recovery by summer to end of the year as market is forward looking. Dow/market has had huge inter year losses in the past only to finish the year up (think 1987 ). Staying the course is best. Obviously crystal ball is cloudy as we say here.
Which summer are you referring to? I do think that we could be well into recovery by the summer of 2022. I have never seen anything like this where the economies of the world essentially shut down and the shutdown will last a quarter or more. There are going to be many, many bankruptcies (both business and personal) and things are going to come crawling rather than roaring back.
You sound convincing but you will likely be wrong. Yes a lot of suffering for sure. But I will not be surprised if we end up positive for the year.
I love your optimism and I do hope that you are correct but I sincerely doubt it.

Jim180
Posts: 408
Joined: Wed Jun 26, 2013 9:47 pm

Re: The Black Swan is Here

Post by Jim180 » Tue Mar 17, 2020 8:30 pm

One thing that's different about this is that it may be the first time in American history that the whole country basically shuts down because of the fear of death. Past pandemics have not affected the market like this one. No amount of money the government throws at this problem will make it go away. The only thing that will ease fears is when a slowdown of new cases occurs. Who knows when that is? With the market moving 5-10% per day there could be an extended period (perhaps months) of stock market declines until the drop in new cases occurs. I don't think it can be ruled out that this event could challenge the drop during the Great Depression depending how long it takes. Remember, this is psychologically worse than the financial crisis was to average Americans.

saintsfan342000
Posts: 131
Joined: Wed Apr 04, 2018 9:46 pm

Re: The Black Swan is Here

Post by saintsfan342000 » Tue Mar 17, 2020 10:01 pm

technovelist wrote:
Tue Mar 17, 2020 12:24 pm
Prahasaurus wrote:
Tue Mar 17, 2020 3:30 am
Wiggums wrote:
Mon Mar 16, 2020 10:35 am
I don’t know what you call this. Maybe the perfect Storm for a selloff.

Two emergency fed cuts, is unusual and causing a choppy market. We have a public health and closures that make it harder yo determine the economic impact.
We are so early in this process. People have not yet grasped that. Wait until it hits Brazil, or India... People are looking at Asia and thinking it's not so bad, neglecting to understand what those countries had to do to stop this. And most countries, including America, are not equipped with the right technology or health care infrastructure to implement what is required.

Also, I think NYC is going to be the first major American city to see their hospitals collapse under the weight of this virus. That should happen in about 5-7 days or so. Exponential math is a crazy thing, really sneaks up on you.
Yep. It's like when you see an airplane coming at you. It seems far away but it arrives very rapidly.
Only if the plane is accelerating. If it’s velocity is constant then it approaches only linearly with time.

am
Posts: 3258
Joined: Sun Sep 30, 2007 9:55 am

Re: The Black Swan is Here

Post by am » Tue Mar 17, 2020 10:09 pm

Jim180 wrote:
Tue Mar 17, 2020 8:30 pm
One thing that's different about this is that it may be the first time in American history that the whole country basically shuts down because of the fear of death. Past pandemics have not affected the market like this one. No amount of money the government throws at this problem will make it go away. The only thing that will ease fears is when a slowdown of new cases occurs. Who knows when that is? With the market moving 5-10% per day there could be an extended period (perhaps months) of stock market declines until the drop in new cases occurs. I don't think it can be ruled out that this event could challenge the drop during the Great Depression depending how long it takes. Remember, this is psychologically worse than the financial crisis was to average Americans.
Let’s face it no one knows. But I think we’ve priced in a lot of doom. Everyone knows that cases and deaths are rising. Economy sinking. Jobs lost. We see what’s happening in Italy and know it could be us. How long no one knows but this could end by summer as warm weather comes and cases drop. Vaccine and treatments on the horizon. Life becomes normal again. Data starts looking better. Market rejoices. Things don’t have to be the way they were before for markets to jump. There have been worse epidemics, wars, etc and we’ve made it out just fine. Stay the course. It’s not different this time. Let’s hope I am right :D

technovelist
Posts: 3216
Joined: Wed Dec 30, 2009 9:02 pm
Contact:

Re: The Black Swan is Here

Post by technovelist » Tue Mar 17, 2020 10:16 pm

saintsfan342000 wrote:
Tue Mar 17, 2020 10:01 pm
technovelist wrote:
Tue Mar 17, 2020 12:24 pm
Prahasaurus wrote:
Tue Mar 17, 2020 3:30 am
Wiggums wrote:
Mon Mar 16, 2020 10:35 am
I don’t know what you call this. Maybe the perfect Storm for a selloff.

Two emergency fed cuts, is unusual and causing a choppy market. We have a public health and closures that make it harder yo determine the economic impact.
We are so early in this process. People have not yet grasped that. Wait until it hits Brazil, or India... People are looking at Asia and thinking it's not so bad, neglecting to understand what those countries had to do to stop this. And most countries, including America, are not equipped with the right technology or health care infrastructure to implement what is required.

Also, I think NYC is going to be the first major American city to see their hospitals collapse under the weight of this virus. That should happen in about 5-7 days or so. Exponential math is a crazy thing, really sneaks up on you.
Yep. It's like when you see an airplane coming at you. It seems far away but it arrives very rapidly.
Only if the plane is accelerating. If it’s velocity is constant then it approaches only linearly with time.
Yes, it approaches linearly if not accelerating.
But it is very hard to judge such high speeds, so it still surprises you with how fast it arrives.
In theory, theory and practice are identical. In practice, they often differ.

TinyTim
Posts: 30
Joined: Mon Aug 17, 2015 11:47 am

Re: The Black Swan is Here

Post by TinyTim » Tue Mar 17, 2020 10:25 pm

(1) I worked until age 70 and took SS when I retired.

(2) I bought an annuity that pays about 20% of basic living expenses

(3) Most of my mutual fund portfolio is Vanguard Wellesley, which has a 35/65 stock/bond ratio

Our primary concern now is about the virus itself and its effect on our lives. Our daughter is a primary care doctor in Seattle and on the front lines of exposure. We shepherd our grandchildren, ages 2 and 4, four days a week, but our daughter and her husband don't want us to do that due to our age-related risk. The silver lining in this is that our son-in-law can work from home.

Cycle
Posts: 1578
Joined: Sun May 28, 2017 7:57 pm
Location: Minneapolis

Re: The Black Swan is Here

Post by Cycle » Tue Mar 17, 2020 10:37 pm

totally not a black swan. this is very similar to spanish flu, but it isn't taking out the young this time around. pandemics happen relatively frequently, though this is a really really bad one.
Never look back unless you are planning to go that way

keyfort
Posts: 161
Joined: Thu Apr 04, 2019 12:46 pm

Re: The Black Swan is Here

Post by keyfort » Tue Mar 17, 2020 10:55 pm

So if they develop an effective antiviral (e.g. maybe Avigan) or even a quicker than expected vaccine, what is that? A White Swan?

smectym
Posts: 839
Joined: Thu May 26, 2011 5:07 pm

Re: The Black Swan is Here

Post by smectym » Wed Mar 18, 2020 2:52 am

ukbogler wrote:
Tue Mar 17, 2020 4:37 am
JonnyDVM wrote:
Mon Mar 16, 2020 10:09 am
What annoys me about this swan is I felt like I could see it coming from a good distance away. Staying the course really led me strait into an iceberg.

My defense strategy is that I still have the benefit of time.
'Staying the course' = 'Ignore developments'.

A rational person changes his mind when new facts become available.
UK, I agree that “Stay the Course” has for some time now desiccated into a macabre cliche which encourages willful ignorance on the part of its adherents, with some advocates going so far as to urge investors to not follow the news and not check the portfolio. The slogan should be retired. Those who continue to reiterate it should reflect. The model investor is not complacent, pleased to regard his own incuriosity and intellectual indolence as virtues, as represented by such cutesy mass-market promotions as the “Couch Potato Portfolio.” Rather, the investor should be alert, eager for fresh insight and new information, open to considering views which grate against his own, even if ultimately to reject them. This doesn’t mean a sudden return to trading on whims and rumors of whims, and in my view Boglehead principles remain valid. But this is a time to snap out of it and look alive, for our own sake and that of those who depend on us.

am
Posts: 3258
Joined: Sun Sep 30, 2007 9:55 am

Re: The Black Swan is Here

Post by am » Wed Mar 18, 2020 6:42 am

smectym wrote:
Wed Mar 18, 2020 2:52 am
ukbogler wrote:
Tue Mar 17, 2020 4:37 am
JonnyDVM wrote:
Mon Mar 16, 2020 10:09 am
What annoys me about this swan is I felt like I could see it coming from a good distance away. Staying the course really led me strait into an iceberg.

My defense strategy is that I still have the benefit of time.
'Staying the course' = 'Ignore developments'.

A rational person changes his mind when new facts become available.
UK, I agree that “Stay the Course” has for some time now desiccated into a macabre cliche which encourages willful ignorance on the part of its adherents, with some advocates going so far as to urge investors to not follow the news and not check the portfolio. The slogan should be retired. Those who continue to reiterate it should reflect. The model investor is not complacent, pleased to regard his own incuriosity and intellectual indolence as virtues, as represented by such cutesy mass-market promotions as the “Couch Potato Portfolio.” Rather, the investor should be alert, eager for fresh insight and new information, open to considering views which grate against his own, even if ultimately to reject them. This doesn’t mean a sudden return to trading on whims and rumors of whims, and in my view Boglehead principles remain valid. But this is a time to snap out of it and look alive, for our own sake and that of those who depend on us.
Rebalance, keep buying, and stay the course. We will get through this.

Pitagoras
Posts: 28
Joined: Mon Apr 08, 2019 9:51 am

Re: The Black Swan is Here

Post by Pitagoras » Wed Mar 18, 2020 6:58 am

TravelforFun wrote:
Mon Mar 16, 2020 9:54 am

In time like this, this retired person is glad that I have 10 years of annual expenses in cash and bonds and don't have to worry about losing my job.

If you plan to live less than 10 years you good to be glad...

User avatar
JonnyDVM
Posts: 1971
Joined: Wed Feb 12, 2014 6:51 pm
Location: Atlanta, GA

Re: The Black Swan is Here

Post by JonnyDVM » Wed Mar 18, 2020 7:10 am

*Asteroid hits*
99.8% of humanity is extinguished within 90 seconds in a colossal ball of Fire

Stock market 0

Poster- “is this a back swan?”

Response - “well not really, scientists have been telling us this was possible for years now. Realistically it was already priced in....”
It’s not “just the flu”. Stop saying that. It’s really annoying. -me

technovelist
Posts: 3216
Joined: Wed Dec 30, 2009 9:02 pm
Contact:

Re: The Black Swan is Here

Post by technovelist » Wed Mar 18, 2020 7:51 am

JonnyDVM wrote:
Wed Mar 18, 2020 7:10 am
*Asteroid hits*
99.8% of humanity is extinguished within 90 seconds in a colossal ball of Fire

Stock market 0

Poster- “is this a back swan?”

Response - “well not really, scientists have been telling us this was possible for years now. Realistically it was already priced in....”
Exactly.
In theory, theory and practice are identical. In practice, they often differ.

Old Sage(brush)
Posts: 54
Joined: Sat Dec 08, 2018 8:27 am

Re: The Black Swan is Here

Post by Old Sage(brush) » Wed Mar 18, 2020 8:10 am

Strange times, lots of interesting thoughts here. Regarding the asteroid, if the stock market goes to zero, what percentage should you be in bonds?

technovelist
Posts: 3216
Joined: Wed Dec 30, 2009 9:02 pm
Contact:

Re: The Black Swan is Here

Post by technovelist » Wed Mar 18, 2020 8:17 am

Old Sage(brush) wrote:
Wed Mar 18, 2020 8:10 am
Strange times, lots of interesting thoughts here. Regarding the asteroid, if the stock market goes to zero, what percentage should you be in bonds?
I would think that the more important question is "What is your expense ratio?" :mrgreen:
In theory, theory and practice are identical. In practice, they often differ.

MikeG62
Posts: 2496
Joined: Tue Nov 15, 2016 3:20 pm
Location: New Jersey

Re: The Black Swan is Here

Post by MikeG62 » Wed Mar 18, 2020 8:25 am

TravelforFun wrote:
Mon Mar 16, 2020 9:54 am

In time like this, this retired person is glad that I have 10 years of annual expenses in cash and bonds and don't have to worry about losing my job.

What are your defense strategies?

TravelforFun
Defensive strategies:

Government (FDIC/NCUA) insured CD's and cash.

Sadly, bonds not feeling quite as safe as they did 30-days ago. And while my fixed income (and cash) exposure was north of 60% of my financial assets at the market top (in Feb), two-thirds of that is in bonds (thankfully very high grade bonds, but bonds nonetheless). Unfortunately, been reminded again that bonds don't always hold up in equity bear markets. On the plus side, the rest of my FI exposure is in CD's and cash (overwhelming majority in CD's).

While I truly believe the top rungs of investment grade bonds will ultimately prove to be money good, it doesn't necessarily fully assuage the worry one might have seeing "both" their equities and bonds selling off meaningfully at the same time while credit markets are simultaneously freezing up. Having said that, actions taken by the Fed and Treasury in the last week should prove to be very helpful in stabilizing the credit market. I am meaningfully encouraged by that.
Real Knowledge Comes Only From Experience

Nowizard
Posts: 2605
Joined: Tue Oct 23, 2007 5:33 pm

Re: The Black Swan is Here

Post by Nowizard » Wed Mar 18, 2020 8:42 am

Hopefully, your discretionary income leads to a decision to not follow your screen name at the moment. :D

Tim

User avatar
Sandtrap
Posts: 9921
Joined: Sat Nov 26, 2016 6:32 pm
Location: Hawaii No Ka Oi , N. Arizona

Re: The Black Swan is Here

Post by Sandtrap » Wed Mar 18, 2020 8:50 am

TravelforFun wrote:
Mon Mar 16, 2020 9:54 am
We've been talking about it forever on this forum but I think it's here. The stock market is crashing, public places are closed, stores ran out of stuff, people will soon lose their jobs, and no antidote for the plague yet.

In time like this, this retired person is glad that I have 10 years of annual expenses in cash and bonds and don't have to worry about losing my job.

What are your defense strategies?

TravelforFun
+1
Not only an economic and financial "Black Swan" but, personal "Black Swans" as well. IE: job loss, health, change of family dynamics, etc.
Perfect Storm Black Swan ???

Also, at least 10 years in cash/bonds/fixed.
Retired.

I'm not sure if the economic crash is caused by the Corona Virus spread, or if it was simply a trigger to something that was coming anyway.

j :happy
Wiki Bogleheads Wiki: Everything You Need to Know

Glockenspiel
Posts: 1009
Joined: Thu Feb 08, 2018 1:20 pm

Re: The Black Swan is Here

Post by Glockenspiel » Wed Mar 18, 2020 9:15 am

am wrote:
Mon Mar 16, 2020 10:15 am
There is a chance that we may be well into recovery by summer to end of the year as market is forward looking. Dow/market has had huge inter year losses in the past only to finish the year up (think 1987 ). Staying the course is best. Obviously crystal ball is cloudy as we say here.
I think we're in for the long haul. This is going to be a constant news story for the next 12-18 months, until a vaccine is developed, tested, and given to the world. If we stop taking social distancing measures and closing schools, restaurants, and other non-essential businesses, it's going to spike back up and cause an overload to the healthcare system. We might be in this situation until Spring of 2021.

User avatar
JonnyDVM
Posts: 1971
Joined: Wed Feb 12, 2014 6:51 pm
Location: Atlanta, GA

Re: The Black Swan is Here

Post by JonnyDVM » Wed Mar 18, 2020 9:18 am

Old Sage(brush) wrote:
Wed Mar 18, 2020 8:10 am
Strange times, lots of interesting thoughts here. Regarding the asteroid, if the stock market goes to zero, what percentage should you be in bonds?
That really depends on each individuals risk tolerance. If you think that you might panic and sell equities during the abrupt mass extinction of humanity you probably want to lean more towards a 60/40 or even a 50/50 portfolio. Otherwise 80/20 is probably OK

Truthfully most people underestimate their risk tolerance. It’s easy to say I’m going to stay the course when times are good. But when you see a immense tidal wave of fire coming at you on the horizon, a lot of people start to make rash decisions with their portfolios which can cause problems in the long run.
It’s not “just the flu”. Stop saying that. It’s really annoying. -me

Ron
Posts: 6605
Joined: Fri Feb 23, 2007 7:46 pm
Location: NY-NJ-PA Metropolitan Statistical Area

Re: The Black Swan is Here

Post by Ron » Wed Mar 18, 2020 9:25 am

watchnerd wrote:
Mon Mar 16, 2020 3:29 pm
I don't know why swans are always getting blamed for this stuff.

What did they ever do to anyone?

I'd much rather blame it on albino crocodiles.

They're mean.
Exactly; Black Swans are quite common in Australia:

https://en.wikipedia.org/wiki/Black_swan

- Ron

bethanybeachreader
Posts: 12
Joined: Mon Mar 12, 2018 6:55 am

Re: The Black Swan is Here

Post by bethanybeachreader » Wed Mar 18, 2020 9:54 am

I don't consider this a Black swan event. We still have the essentials to survive (food water electricity).

Does this suck, yes. But for the most part we are all going to make it. Some of us may be poorer, and unfortunately I fear some will lose everything (home, bankruptcy, etc...).

If we are still dealing with this a year from now, then it might be a different story.

Think positive.

bloom2708
Posts: 7450
Joined: Wed Apr 02, 2014 2:08 pm
Location: Fargo, ND

Re: The Black Swan is Here

Post by bloom2708 » Wed Mar 18, 2020 10:03 am

Deleted
Last edited by bloom2708 on Wed Mar 18, 2020 12:19 pm, edited 1 time in total.
"People want confirmation, not advice" Unknown | "We are here to provoke thoughtfulness, not agree with you" Unknown | Four words: Whole food, plant based

Blue456
Posts: 486
Joined: Tue Jun 04, 2019 5:46 am

Re: The Black Swan is Here

Post by Blue456 » Wed Mar 18, 2020 10:35 am

What is a black swan? I feel like some people have different definition from others.
To me black swan means complete and irreversible destruction of world economy for decades to come. Can someone please educate me what is a true black swan? Is this any even that just causes a recession? Is it suppose to be an unexpected event that causes a recession (I thought most recessions were unexpected). Is black swan just a recession that lasts more than 5 years?

Topic Author
TravelforFun
Posts: 2000
Joined: Tue Dec 04, 2012 11:05 pm

Re: The Black Swan is Here

Post by TravelforFun » Wed Mar 18, 2020 11:01 am

Blue456 wrote:
Wed Mar 18, 2020 10:35 am
What is a black swan? I feel like some people have different definition from others.
To me black swan means complete and irreversible destruction of world economy for decades to come. Can someone please educate me what is a true black swan? Is this any even that just causes a recession? Is it suppose to be an unexpected event that causes a recession (I thought most recessions were unexpected). Is black swan just a recession that lasts more than 5 years?
From Investopidia, 'A black swan is an unpredictable event that is beyond what is normally expected of a situation and has potentially severe consequences. Black swan events are characterized by their extreme rarity, their severe impact, and the widespread insistence they were obvious in hindsight.'

TravelforFun

Thesaints
Posts: 3453
Joined: Tue Jun 20, 2017 12:25 am

Re: The Black Swan is Here

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

technovelist wrote:
Wed Mar 18, 2020 8:17 am
Old Sage(brush) wrote:
Wed Mar 18, 2020 8:10 am
Strange times, lots of interesting thoughts here. Regarding the asteroid, if the stock market goes to zero, what percentage should you be in bonds?
I would think that the more important question is "What is your expense ratio?" :mrgreen:
And don’t forget to stay the course !

Grt2bOutdoors
Posts: 22233
Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

Re: The Black Swan is Here

Post by Grt2bOutdoors » Wed Mar 18, 2020 12:09 pm

TravelGeek wrote:
Mon Mar 16, 2020 4:13 pm
indian86 wrote:
Mon Mar 16, 2020 3:58 pm
Yeah I get the "flatten the curve thing" but really, why don't we worry about flattening the curve each year when we have 30-50k plus deaths from the common flu?
I don't think you are getting the "flatten the curve thing".

The seasonal flu doesn't bring the US healthcare system down. The whole point of flattening the curve is to prevent that (see Wuhan or Italy for what happens when the healthcare system collapses). There will still be plenty of deaths even with a flattened curve when all is said and done, I am afraid.

https://www.flattenthecurve.com/
+1 Exactly. And for those young turks who think they are invincible, guess what? This is an equal opportunity virus - it takes on all comers.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

Grt2bOutdoors
Posts: 22233
Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

Re: The Black Swan is Here

Post by Grt2bOutdoors » Wed Mar 18, 2020 12:16 pm

bloom2708 wrote:
Wed Mar 18, 2020 10:03 am
14 million Americans die from heart disease every year. Now there is a black swan that is the Rodney Dangerfield of black swans. No respect.

Diabetes comes in a close second. Very few are giving up fat, salt, sugar and oil. I want the heart disease and diabetes live map.

Maybe a gray swan.
One is acute, one is chronic. The difference is you can live a very long time with diabetes and there are treatments to extend your life. The former, there is no cure as of now, no real treatment per se and extremely limited life saving options (not enough capacity in beds or ventilators world wide). I read the 2015 NYS report on ventilator guidelines, it's very sobering to see what is in store if this thing morphs out of control. That is why the market is selling off, they are projecting it will accelerate from here. I'm all for hibernating indoors for months if need be - we can sort out the issues after the fact but this focus on money/finances is just plain disgusting.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

TravelGeek
Posts: 3357
Joined: Sat Oct 25, 2014 3:23 pm

Re: The Black Swan is Here

Post by TravelGeek » Wed Mar 18, 2020 1:48 pm

Grt2bOutdoors wrote:
Wed Mar 18, 2020 12:16 pm
bloom2708 wrote:
Wed Mar 18, 2020 10:03 am
14 million Americans die from heart disease every year. Now there is a black swan that is the Rodney Dangerfield of black swans. No respect.

Diabetes comes in a close second. Very few are giving up fat, salt, sugar and oil. I want the heart disease and diabetes live map.

Maybe a gray swan.
One is acute, one is chronic. The difference is you can live a very long time with diabetes and there are treatments to extend your life. The former, there is no cure as of now, no real treatment per se and extremely limited life saving options (not enough capacity in beds or ventilators world wide). I read the 2015 NYS report on ventilator guidelines, it's very sobering to see what is in store if this thing morphs out of control. That is why the market is selling off, they are projecting it will accelerate from here. I'm all for hibernating indoors for months if need be - we can sort out the issues after the fact but this focus on money/finances is just plain disgusting.
And bloom2708's heart disease and diabetes is of no personal concern to me. He isn't going to kill my parents with it either. Our healthcare system is scaled to deal with the number of cases, so he isn't taking away an ICU bed from me.

Like "it's just like the flu", apples and oranges.

oldfort
Posts: 101
Joined: Mon Mar 02, 2020 8:45 pm

Re: The Black Swan is Here

Post by oldfort » Wed Mar 18, 2020 6:51 pm

Blue456 wrote:
Wed Mar 18, 2020 10:35 am
What is a black swan? I feel like some people have different definition from others.
To me black swan means complete and irreversible destruction of world economy for decades to come. Can someone please educate me what is a true black swan? Is this any even that just causes a recession? Is it suppose to be an unexpected event that causes a recession (I thought most recessions were unexpected). Is black swan just a recession that lasts more than 5 years?
Read any books by Nassim Nicholas Taleb, starting with the Black Swan. My summary would be an event that is so rare that the probability is not only low, but can't be calculated with any degree of certainty.

Topic Author
TravelforFun
Posts: 2000
Joined: Tue Dec 04, 2012 11:05 pm

Re: The Black Swan is Here

Post by TravelforFun » Sun Mar 22, 2020 6:21 pm

If you still wonder whether this is a black-swan event, wonder no more. I live in North TX and now they just issued a 'shelter in place' order in Dallas.

TravelforFun

SteadyOne
Posts: 67
Joined: Fri Mar 22, 2019 5:26 pm

Re: The Black Swan is Here

Post by SteadyOne » Sun Mar 22, 2020 9:25 pm

Grt2bOutdoors wrote:
Wed Mar 18, 2020 12:16 pm
bloom2708 wrote:
Wed Mar 18, 2020 10:03 am
14 million Americans die from heart disease every year. Now there is a black swan that is the Rodney Dangerfield of black swans. No respect.

Diabetes comes in a close second. Very few are giving up fat, salt, sugar and oil. I want the heart disease and diabetes live map.

Maybe a gray swan.
One is acute, one is chronic. The difference is you can live a very long time with diabetes and there are treatments to extend your life. The former, there is no cure as of now, no real treatment per se and extremely limited life saving options (not enough capacity in beds or ventilators world wide). I read the 2015 NYS report on ventilator guidelines, it's very sobering to see what is in store if this thing morphs out of control. That is why the market is selling off, they are projecting it will accelerate from here. I'm all for hibernating indoors for months if need be - we can sort out the issues after the fact but this focus on money/finances is just plain disgusting.
Do you mean 1.4 million?
“Every de­duc­tion is al­lowed as a mat­ter of leg­isla­tive grace.” US Federal Court

Grt2bOutdoors
Posts: 22233
Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

Re: The Black Swan is Here

Post by Grt2bOutdoors » Mon Mar 23, 2020 9:02 pm

SteadyOne wrote:
Sun Mar 22, 2020 9:25 pm
Grt2bOutdoors wrote:
Wed Mar 18, 2020 12:16 pm
bloom2708 wrote:
Wed Mar 18, 2020 10:03 am
14 million Americans die from heart disease every year. Now there is a black swan that is the Rodney Dangerfield of black swans. No respect.

Diabetes comes in a close second. Very few are giving up fat, salt, sugar and oil. I want the heart disease and diabetes live map.

Maybe a gray swan.
One is acute, one is chronic. The difference is you can live a very long time with diabetes and there are treatments to extend your life. The former, there is no cure as of now, no real treatment per se and extremely limited life saving options (not enough capacity in beds or ventilators world wide). I read the 2015 NYS report on ventilator guidelines, it's very sobering to see what is in store if this thing morphs out of control. That is why the market is selling off, they are projecting it will accelerate from here. I'm all for hibernating indoors for months if need be - we can sort out the issues after the fact but this focus on money/finances is just plain disgusting.
Do you mean 1.4 million?
That's a question to Bloom2708.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

alex123711
Posts: 155
Joined: Sun May 20, 2018 5:01 am

Re: The Black Swan is Here

Post by alex123711 » Thu Mar 26, 2020 6:24 am

Below text/ article is from Nassim Taleb the author of the book black swan who coined/ popularised the term black swan...

Not a Black Swan

"Furthermore, some people claim that the pandemic is a “Black Swan”, hence something unexpected so not planning for it is excusable. The book they commonly cite is The Black Swan (by one of us). 

Had they read that book, they would have known that such a global pandemic is explicitly presented there as a white swan: something that would eventually take place with great certainty. Such acute pandemic is unavoidable, the result of the structure of the modern world; and its economic consequences would be compounded because of the increased connectivity and overoptimization.

As a matter of fact, the government of Singapore, whom we advised in the past, was prepared for such an eventuality with a precise plan since as early as 2010."


https://medium.com/incerto/corporate-so ... 31a67bff4a

Post Reply