Is this a buying opportunity? Poll

[shhughes1116]

I think there are a few folks still waiting for the 2008/2009 GFC bottom, and look where that got them over the last decade.  So with that in mind, you can sit around all day/week/month/year waiting for a bottom. 

 

The market is down 30% now, and there are some companies down 60%, 70%, 80%.  Maybe the market will go down another 30%, or maybe we will just marinate at this level while society figures this out.  Maybe we will go to 8% UE, maybe 10% UE, or maybe 20% UE.    I don't have a clue, and frankly, no one else does either. 

 

The clinical information I am seeing from South Korea, China, Italy, and Spain, suggests that we are getting closer to the point where we can effectively manage severe symptoms associated with COVID-19 (combination of antimalarial medication, and other approved drugs used on off-label use).  We are getting closer to wide-spread rapid diagnostic tests.  And there are a number of promising vaccine candidates.  All of this information seems to be lost in the midst of rising death counts in Italy, Spain, and elsewhere. 

 

And in the meantime, it seems that finally the administration gets it (or at least we have adults working at the table now while the toddler-in-chief plays with his legos).  The Fed stepped in with the Big Bertha Howitzer of monetary stimulus.  And soon the administration will be stepping in with the Big Bertha Howitzer of fiscal stimulus.  They will literally do anything they possibly can to avoid the Great Depression 2, even if it means UBI for everyone. 

 

In the near future, I think we are going to turn a "clinical corner" on this.  And when that happens, I think we will end up with a rip-your-face-off rally.     

 

 

[ERICOPOLY]

Retail wasn't all of a sudden busy two weeks after the bottom in March 2009 either, but a large cap like AXP was at $10 in March 2009 and $20 a month later.  There was no economic report that caused it.  It doubled yet again that year too, but the second doubling took 5x longer than the first and people all the while were talking about the still-to-come foreclosure waves and Fairfax hedged all of their stock holdings.

 

[Guest Schwab711]

I'm with the crowd that says the news will get worse.

 

But the market will bottom -- wherever that may be -- when everyone thinks there is further worse news ahead. That is just how it works. It's impossible to know that point. Market timing won't work this time any more the prior times.

 

I recall quite well the discussions portfolios managers were having in 08, 09, 10 about waiting for certain things to happen before they bought, how much worse it was going to get, etc. And they missed the opportunities. Of course, it also could have gotten worse - history only gets run once but didn't have to happen that way.

 

FWIW, I don't know where the bottom is any better than a man on the street. It's a hard game. But I think at the very least, it's helpful to accept that you won't be the smartest person in a room full of millions trying to outguess each other.

 

No doubt there are some nice prices in some individual names right now. From a sentiment point of view, I think this most startling thing is that many think this will be a blip on the radar. I can't think of any reason for the indexes to trade higher right now (no one can make a ballpark guess of earnings for many, many companies), but I can think of some reasons that might drive stocks lower.

 

I guess we'll see.

[hyten1]

does anyone have any gdp data either from south korea /japan/taiwan, we can include china if we can believe it. I would like to see what is the total hit to gdp thus far and in total for 2020 (forecast). I assume this gives us some idea how much of a gdp hit will US experience and we can then extrapolate how much of a hit to the stock market so to get an idea will this be a 30% peak to through or a 50% peak to trough market downturn before its near a bottom? or will this be worst than that?

[Guest Schwab711]

Retail wasn't all of a sudden busy two weeks after the bottom in March 2009 either, but a large cap like AXP was at $10 in March 2009 and $20 a month later.  There was no economic report that caused it.  It doubled yet again that year too, but the second doubling took 5x longer than the first.

 

If you bought AXP at $40 in September 2008, your long-run returns are meh. The idea we can all time the bottom is quite overrated. I'd rather buy earnings I have some ability to underwrite then to gamble at the casino.

[ERICOPOLY]

Retail wasn't all of a sudden busy two weeks after the bottom in March 2009 either, but a large cap like AXP was at $10 in March 2009 and $20 a month later.  There was no economic report that caused it.  It doubled yet again that year too, but the second doubling took 5x longer than the first.

 

If you bought AXP at $40 in September 2008, your long-run returns are meh. The idea we can all time the bottom is quite overrated. I'd rather buy earnings I have some ability to underwrite then to gamble at the casino.

 

This is why I have bought at-the-money calls (enough to be fully invested were they exercised).  I don't own any common (which is calling the bottom).

 

If it drops a lot more, I get more at-the-money calls.

 

[LC]

Poll results seem to indicate that people have no damn idea  ;D

[KCLarkin]

does anyone have any gdp data either from south korea /japan/taiwan, we can include china if we can believe it. I would like to see what is the total hit to gdp thus far and in total for 2020 (forecast). I assume this gives us some idea how much of a gdp hit will US experience and we can then extrapolate how much of a hit to the stock market so to get an idea will this be a 30% peak to through or a 50% peak to trough market downturn before its near a bottom? or will this be worst than that?

 

If you are doing a DCF, 2020 GDP is irrelevant. Whether it is a 30% drawdown or a 50% drawdown is unrelated to fundamentals. Nobody can time the bottom.

[ERICOPOLY]

does anyone have any gdp data either from south korea /japan/taiwan, we can include china if we can believe it. I would like to see what is the total hit to gdp thus far and in total for 2020 (forecast). I assume this gives us some idea how much of a gdp hit will US experience and we can then extrapolate how much of a hit to the stock market so to get an idea will this be a 30% peak to through or a 50% peak to trough market downturn before its near a bottom? or will this be worst than that?

 

If you are doing a DCF, 2020 GDP is irrelevant. Whether it is a 30% drawdown or a 50% drawdown is unrelated to fundamentals. Nobody can time the bottom.

 

AIG and C still had future earnings ahead yet the common was all but wiped out.  This is what people fear on a grand scale (the Great Depression II scenario).  In which case it's not as simple as the DCF and 2020 GDP scenario.

 

[fareastwarriors]

I been nibbling. I can't call the bottom so I can DCA in over time.

 

[chrispy]

I just feel the difference here is it is a medical problem with defined curfews and shut down of many businesses.  The businesses will not be online until these restrictions are lifted.  Therefore, many people will be in terrible positions until the medical problem is resolved

[coc]

I can't think of any reason for the indexes to trade higher right now (no one can make a ballpark guess of earnings for many, many companies), but I can think of some reasons that might drive stocks lower.

 

The idea we can all time the bottom is quite overrated.

 

I'm confused.

[Guest]

It would be so funny if we ended in the red today. ;D

[kab60]

Denmark is pretty hard hit and in a lockdown. Worst case is 5,5k deaths. Or 1/1000 of population. 16k die each year from tobacco. We'll get through this. And then when we get through this, rates might still be crazy low. So high appetite for stock and infrastructure. I think. :D

[Guest Schwab711]

I can't think of any reason for the indexes to trade higher right now (no one can make a ballpark guess of earnings for many, many companies), but I can think of some reasons that might drive stocks lower.

 

The idea we can all time the bottom is quite overrated.

 

I'm confused.

 

I don't think risk/reward is that great right now but the market may disagree with me and vote this is the bottom. The market may fall a further 50% and I start buying after 20% of that 50%, thus still taking very large losses and being wrong. I have opinions in life but I also know that my opinions are not facts. That I can't think of a reason for stocks to rally does not mean they are incapable of rallying, it means my imagination is too limited.

[Guest longinvestor]

The pivot from ignorance/detection/containment to treatment has already happened; starting with China in February and Europe. Just not enough of the headline yet.

 

Vaccine is still off, in about 18 months per Bill Gates.   

[Viking]

The problem is there is still much important information we do not know. How bad will it get in the current clusters: NY City and Washington State? How will the medical situation impact investors psychology? Will new clusters form in other urban areas in the US? Will US go to full lockdown? How long will the lock down last? What will the US and global economy look like in 1 month? 3 months? Will the virus come back in the fall?

 

Will a treatment be discovered? Will a vaccine be discovered?

 

Investment = Safety of principal + adequate return

Rule #1: don’t lose what you got

 

The hurricane is off the coast. I am getting a better idea of its likely path. We will know much more in 14 days.

 

My strategy right now is to buy a small amount of quality on big down days (10-20% of my portfolio) and sell them on  big updays for small gains (2-5%). Rinse an repeat. In another week or two perhaps i will switch to buy and hold and build out my portfolio. It will depend on the answers to the questions above (the facts will inform my investment decisions). I am trying to tell myself to be patient as this could get much  worse.

 

Current favourite picks (to trade): GOOG, MSFT, Facebook, telcos

[Viking]

I can't think of any reason for the indexes to trade higher right now (no one can make a ballpark guess of earnings for many, many companies), but I can think of some reasons that might drive stocks lower.

 

The idea we can all time the bottom is quite overrated.

 

I'm confused.

 

I don't think risk/reward is that great right now but the market may disagree with me and vote this is the bottom. The market may fall a further 50% and I start buying after 20% of that 50%, thus still taking very large losses and being wrong. I have opinions in life but I also know that my opinions are not facts. That I can't think of a reason for stocks to rally does not mean they are incapable of rallying, it means my imagination is too limited.

 

I agree. To much we do not know. Another factor for me is the President; based on his past actions my guess is he will continue to be toxic to a successful resolution to the situation. This just makes me more cautious.

[Spekulatius]

does anyone have any gdp data either from south korea /japan/taiwan, we can include china if we can believe it. I would like to see what is the total hit to gdp thus far and in total for 2020 (forecast). I assume this gives us some idea how much of a gdp hit will US experience and we can then extrapolate how much of a hit to the stock market so to get an idea will this be a 30% peak to through or a 50% peak to trough market downturn before its near a bottom? or will this be worst than that?

 

China is defiantly restarting their economic engine, but who going to buy there stuff when the rest of the world is in lockdown. It would be kind of ironic if this calamity starting out in China and hitting it hard would actually show their resiliency while the rest of the world  (ex Japan, Korea, Singapore) tumbled into lockdown that it can’t get out of. may not exactly play out like this, but who knows? Most of the off patent medication consumed in the US is made China and India nowadays.

[Castanza]

does anyone have any gdp data either from south korea /japan/taiwan, we can include china if we can believe it. I would like to see what is the total hit to gdp thus far and in total for 2020 (forecast). I assume this gives us some idea how much of a gdp hit will US experience and we can then extrapolate how much of a hit to the stock market so to get an idea will this be a 30% peak to through or a 50% peak to trough market downturn before its near a bottom? or will this be worst than that?

 

China is defiantly restarting their economic engine, but who going to buy there stuff when the rest of the world is in lockdown. It would be kind of ironic if this calamity starting out in China and hitting it hard would actually show their resiliency while the rest of the world  (ex Japan, Korea, Singapore) tumbled into lockdown that it can’t get out of. may not exactly play out like this, but who knows? Most of the off patent medication consumed in the US is made China and India nowadays.

 

This situation is proving fruitful for the simple fact it’s bringing to light to the average Joe, just how cucked the US is by China. When the average Joe hears 90+ percent of our pharmaceuticals are manufactured in China, what do you think that’s going to produce? Nothing but animosity and more hatred for the government. Perhaps Paul is right, maybe we should forgo the bailouts to anyone and everyone and “burn the thickets” so you speak.

 

A guy near me who runs a pretty successful Brew Pub wrote this.

 

So the bail outs for big business will start already. Total bullshit. How about we help all the PEOPLE first?

If a casino needs a bailout maybe we have too many of them? Maybe they are not spending the income properly? Maybe they are paying the board and execs too much. So in reality, they are not running the business correctly. They are overspending, not budgeting and not in tune with their own business model.

 

Years ago after a few years in business they redid the intersection of wertzville and valley roads. Huge project, something like 6million with grants mixed in. It went way over schedule, the intersection was a mess and i was completely BANKRUPT. People stopped coming to the shop because they couldnt navigate through the construction. People stopped ordering delivery because they thought we were closed. Sales dropped 40% i had to run credit with every vendor. In the midst of it all i needed help, i had 2 little kids, mortgage payments equipment payments etc. I called the Apropriate authorities and companies that pay businesses stipends for situations like this while they are effecting their businesses.

This is what the woman on the phone told me "Oh you are that little PIZZA SHOP in the plaza? no we have no programs that fit your needs."

I was devastated, i needed help for something completely out of my control and NOONE was there for me.

 

Long story short is that we adapted, closed our retirement accounts and went ALL IN with a new business model  (right after the intersection was finished) and we came back and grew the business by about about 800% , paid back the debt and ran the business differently knowing that NOONE is ever going to be there to help. NOONE.

I guarantee if these big businesses are not given the bail out they will magically find the means to survive. But why spend their own money if they can get it printed for them for free.

 

ALOT OF SMALL BUSINEESES ARE GOING TO CLOSE BECAUSE OF THIS. ALOT OF SMALL BUSINESSES WILL CLOSE IN THE TOUGH YEAR TO COME AFTER THIS IS ALL OVER. OUR GREAT NATION WAS BUILT FROM THE GROUND UP STARTING WITH THESE SMALL BUSINESSES THAT ARE FAILING FOR REASONS OUT OF THEIR CONTROL.

 

The answer prob is NOT sending people $1000.00 and giving a trillion to people who already have proven they cant run a business.

 

But what do i know? I just have to make sure i put the cheese on top of the sauce, you know?

 

Thanks for your time,

AL 

 

Edit: Not saying I agree with it completely, just pointing out sentiment

[Enrico Pallazzo]

I don’t know if this perspective is useful or not.  I used to lurk here a lot, but I’ve sort of lost interest in equity markets for the last few years.  Obviously I’m interested now which is why I’m back.

 

The reason I mention this is because I am coming to you guys with an outside perspective.

 

Here’s the thing: people on this forum seem much less pessimistic than people on other general interest forums.  There are various ways to interpret this, but mine is: for whatever reason, people who are into investing (I.e. the type of human beings that drive market prices) are much more complacent.  But I don’t think that complacency will last.

 

I’ll be curious to see what the markets look like next week when panic is more widely held among the investor base.

 

Me, I think this is the single most unpredictable moment in the last hundred years.  I don’t think we have ever seen a GLOBAL shock to supply and demand.  Global will really complicate our ability to address the shock and stimulate the economy.

 

Given that uncertainty, I like cash right now.

[elliott]

Enrico, are you sure holding a lot of cash is the right thing to do? I do hold cash, to be clear, but I also fear it might lose value - a lot of value. And I dont think we will see it coming.

This ties with a question Castanza made early in the thread. "Are you buying gold?" I have a small % of the portfolio allocated to gold, so no, I am not buying because I already had the gold. It might be a good idea to buy if you do not have, although its considerably more expensive than say a year ago, and gold price rised, but also dropped, during the GFC.

[elliott]

Something I am not sure markets are pricing in is the possible long lasting effects of this crisis. Much of Europe, for example, was in pretty bad (economic) shape before the virus. This may just precipitate whatever was going to happen eventually. Several of the points Dalio has been mentioning in the last few years come to mind: income inequality and unemployment, the need to live off subsidies and what that does to peoples morale, resulting populisms and nationalist movements vs globalisation trends, social welfare systems arguably broken, the conflict between the US and China (far from just an economic issue), etc, etc

 

ps Now that I mention Dalio... If you read his books, you will remember that some crisis where markets went down a lot saw periods in between where they also raised a lot. 30%, 40%, and sometimes even with accompanying good macro economic data that supported the rallies fundamentally. So we may think that all is good at some point, and actually be just in the middle of the way down.

 

[meiroy]

 

A lot of the expected horrors + the uncertainties are already priced in.  Once the real situation starts to surface it would reduce uncertainty which should boost prices, at least for a while.

 

This is not an act of god, it is man-made and men or women can and will fix it.

 

Bailouts might start within days.

 

Russie might succumb to SA.

 

Cash will be given directly to households.

 

Massive testing is highly effective.

 

Potential drugs and vaccines, probably sooner than expected.

 

Households QE is exactly what the economy needed to begin with.

 

Maybe they'll start massive infrastructure projects because of all the unemployed, again, exactly what the USA needs.

 

Banks went into this with sold balance sheets.

 

Lots of good stuff can happen within a month or two.

 

Having said that, of course, the negative impact on economies is real and would be long-lasting.

 

 

 

 

 

 

 

 

[cubsfan]

This situation is proving fruitful for the simple fact it’s bringing to light to the average Joe, just how cucked the US is by China.

 

And rightly so - if there is one thing this President has been right about for 3 years - it's dependence on China.

The haters will never give the man an ounce of credit during a crisis obviously, but the average Joe will do so.

 

Seems like this crowd is real critical of Trump handling of this crisis. Too bad really.

 

I mean the President is ALWAYS fair game for criticism given his position - but the "open border" crowd

and all the folks that don't want border security and fences - want to have it both ways.

No screening or profiling - let any body in at any time. Remember all that crap?

 

The crowd that loves China - and detest how Trump was out to destroy China. Yet China covers this shit up and

causes a world-wide disaster. LeBron James and Trump critics must be happy now...

 

Oh, right crowd, our REAL enemy is Russia, not China - remember?

 

But now you have your armchair quarterback reasons to really bring Trump down - instead of band together as

real citizens should do under their leader during a crisis. Very patriotic.

 

And of course, President Trump is a bigot for being the first to impose a travel ban on January 31 from China:

https://www.whitehouse.gov/presidential-actions/proclamation-suspension-entry-immigrants-nonimmigrants-certain-additional-persons-pose-risk-transmitting-2019-novel-coronavirus/

The first world leader to have to balls to do it - yet his liberal critics condemned him as a racist and xenophobe.

 

Too bad some of you want to have it both ways...I would love to see how the Dems would have handled this crisis.

 

In the end, President Trump's 3 year effort to distance us from dependence on China is looking more and more brilliant.

 

But perhaps, Corona virus will accomplish what your beloved Russia Hoax, Mueller Investigation and countless other

feats of Presidential backstabbing didn't accomplish for you:  Bring down this President for good.