This happens against a backdrop of unprecedented manipulation of the financial markets since 2008. The signs are everywhere:
- persistent negative-yielding long-term sovereign debt in Europe
- Bank of Japan owns 80% of the Japanese ETF market
- a Federal Reserve unable to contain the exploding repo market
- price-to-earnings multiple at historic highs, even accounting for declines
- stock buybacks galore field by ultra-accommodative central bank policies
- all eyes on the Fed to see what kind of shock-and-awe they can deliver
- a US administration doing everything in its power to undermine the independence of the Fed and bring on negative interest rates
The GFC never ended. It was never resolved. It was simply rolled over, like opening a second credit card account to paper over a hole in a personal budget.
Panic is a strong word. Market panics are very rare. Nevertheless, it would not be surprising to see a full-blown stock market panic this week.
I think this is all very overblown, and think within 5 years most people (obviously not those directly effected) won't even remember this happening. Similar to the Swine flu of 2009. Global growth will have a 1-2Q hiccup and then we'll likely have a rubber band recovery. But markets are in panic mode, and a lot of governments are showing their ineptitude, which is causing even more panic.
Consider that career expert epidemiologists are predicting billions infected and millions if not tens of millions of deaths worldwide, unless something dramatically changes to deflect the current course or some of their assumptions turn out to be substantially wrong. That’s more infected and 1–2 orders of magnitude more deaths than the 2009 swine flu.
The fear in the markets is due to the long systemic propping up of asset values. COVID19 is the pin pricking the balloon. Fundamentally, COVID isn't the problem, it's the Fed. My favorite analogy is forest fires: they're healthy for the environment on occasion. When you stop them from happening indefinitely, bad things happen. In terms of markets, that means people taking on debts when they should not do so. People getting funded for fundamentally unprofitable business ventures. It is healthy for an economy to clean house on economically inefficient ventures from time to time.
The problem is that they are measuring inflation of things like consumer goods, but where inflation ended up occurring was in the stock market - it costs substantially more to buy a given percentage of a companies stock now than it did 5 or 10 years ago.
Plus, some common expenses like health care, college education, and housing have been increasing by way more than the Fed's target as well, and credible arguments have been made that the official inflation numbers don't take this into effect appropriately.
Yes! I've been saying this for years, so nice to see it just pop up here as a matter of fact statement.
Central banking is central planning. Central planning has a bad name because it's so hard for planners to pick the right targets, fully understand the economy and not create side-effects worse than whatever problem they're trying to solve.
Economists have been penning articles for years about the 'mystery' of why inflation remains low despite high rates of money printing, whilst mortgages bonds and stocks soar around them. Well, CPI/RPI aren't complete measures of prices. They are excluding prices that matter a lot to companies, like the prices of financial instruments.
CPI does take into account healthcare and education costs, however. And some countries try to include house prices, albeit sometimes via indirect proxies of questionable utility like modelled "rent levels we think would be charged if people were renting instead of buying".
I think there's a lot of great economics journalism to be done on the exact nature of the inflation time series, because so many things are tied to it and there's just so much largely unexamined complexity sitting behind it.
Instead of the fed injecting money to stimulate loans, government should spend money on necessary future investments and fund it with issue of a ratio of treasury bond and direct monetary creation
Then what would you do when you needed to reduce inflation? The Fed can sell of the assets it's bought, but the government can't sell the roads it's built.
You change the ratio independently of the budget timeline just like the fed adjusts the it's rates.
BTW you seem scared of inflation, inflation has been running low except the upper areas of the economy where the Fed has over low rates - so stock prices are inflated. What is really needed is injection of easier flowing money from below the economy.
If you invest in good programs then they deliver a positive benefit to the economy over time. Like more roads means easier connectivity, less time spent in traffic, or increased network flow. I'd suggest the biggest bang for the buck is universal healthcare and paying public college for all.
You have seen the pictures of the streets in Italy, right ? This is decidedly not a stimulus. It could have been, true, but because of decisions made too late and with money clearly at front of mind it very, very much is a financial disaster.
At the risk of sounding worse, the younger folks who inherit that bequeathed wealth might actually spend it, rather than tying it up in markets. Putting the money to work in the "real economy".
There are some scientists that have models like this, but keep in mind that a lot of the people that come up with these are not peer reviewed estimates, and some of them just want the publicity. The media obviously goes for it, because if it bleeds it leads.
“Is 60-80% of the world’s population going to get infected? Maybe not. Maybe this will come in waves. Maybe the virus is going to attenuate its lethality because it certainly doesn’t help it if it kills everybody in its path, because it will get killed as well,” he said.
I think you're putting words in his mouth.
Lipsitch's comment in your own link begins with "if a pandemic happens", which is not the same as saying he's "predicting billions infected", so, again, you put words in his mouth as well.
Meanwhile, WHO estimates that only 0.5% of those exposed will develop any symptom at all... and not everyone will even be exposed.
> I think you're putting words in his mouth... again, you put words in his mouth as well.
FYI I am totally different person to jacobolus, who made the original post you responded to. I'm not the one putting words in people's mouth. I don't totally agree with jacobolus's statement, I think the final numbers will be lower [0], but I do believe there's merit to his claim and am more than happy to respond and provide sources.
“Everybody is susceptible. If you assume that everybody randomly mix with each other, then eventually you will see 40, 50, 60 per cent of the population get infected.”
> Lipsitch's comment in your own link begins with "if a pandemic happens"
I think you'd have a better line of argument if you pointed out that neither of the two explicitly stated "millions if not tens of millions" of people will die. I'll conceded that's true, I haven't yet seen a top epidemiologist explicitly state so. However if you take one of the lower estimates of the death rate (0.5%), and apply it to their infection estimates, you'll get millions dead. If the WHO's official 3.4% CFR announced a couple days ago holds or increases, we'll see tens of millions dead.
[0] Once enough people have died (tens of thousands), countries will get their act together and start doing proper quarantines, social distancing, and hygienic controls.
But "everybody randomly mix with each other" means everybody within an infected locale, not everyone on the planet.
As far as we know, it can only be transmitted by contact (including surfaces), only while the virus is active, and only from an infected person while communicable.
A huge portion of world population outside of the First World won't even be "in range." Its spread has been very constrained given that it was in the wild for months with most people taking no special precautions whatsoever.
Look how ridiculously transmissible measles is, yet it took centuries to get to some highly populated regions.
All of the factors you mentioned play into its R0, and yet it is still orders of magnitude more infectious and deadly than SARS was this number of days after outbreak.
Also, centuries ago this global phenomenon wasn’t a thing:
I've heard it may be airborn --i.e. be able to survive minutes or longer free-floating in the air after someone coughs.
It also can survive pretty long on surfaces, I heard > 9 hours even. So you touch a pole on a subway car, and for 9 hours others are sharing the infection with you.
No professional epidemiologist is going to announce a prophecy about exactly what's going to happen, but they can all run the same numbers, and those numbers point to a global pandemic. There's some hedging in their statements, but they're both saying this is serious and the numbers are pointing in that direction.
Nobody wants it to turn out that way, but failing to prepare for that possibility would be a grave error.
SARS happened 17 years ago yet a lot of people remember it vividly.
It had a dramatically smaller infection and fatality count than COVID-19 already has, and COVID seems to be just getting started.
I understand why people want to be optimistic, but this is a really big deal. The markets aren't taking a multi-trillion dollar haircut for nothing. Governments aren't quarantining tens of millions and undertaking absolutely historic responses for nothing.
And if anything, the impact of this is being grossly under-considered yet. Travel is withering to nothing. Airlines are flying around a bunch of empty jets. As these start appearing on balance sheets the cascading effect will begin.
3. Heroic effort that puts a stop to this without major disruption, following by insufferable people telling us "see it was never a big deal in the first place."
People remember SARS in Toronto from 2003. It really freaked out the whole city. I recall it took the film industry about 2 years to recover. When Covid-19 happened everyone wondered if it would be like SARS all over again. Still waiting to see how it pans out.
Depends how many over-indebted companies can't survive even a temporary cut in revenue. Flybe already closed in the UK. Together with people losing jobs, it gives an increase in bad debts.
this is more than just corona. oil prices have dropped 30% which generally should mean all asset/price levels should come down, at least if the drop is prolonged.
I don't play the stock market (I invest monthly and hold), but doesn't all this kind of make you want to buy? Eventually everyone will get Coronavirus and 0.2% of us will be dead. Then it will be back to making things again.
We're down only 12% from an all time high. It's only been a couple of days since the market reacted to Coronavirus. It's possible that if you buy now, you'll soon lose another 20% or more. At the same time, trying to time the bottom is a gamble. Dollar cost averaging might be the best & simplest choice for a conservative investor.
(disclaimer: I have $280 SPY puts expiring in April, and tomorrow is probably gonna be a great day, personally)
The issue, at least in the United States, is that corporate debt is sky-high right now: [0]. If the recovery doesn't happen soon enough before those businesses default on their bonds, the bondholders lose a bunch of money and then we might be looking at a liquidity crisis.
High rates of corporate debt are misleading. We've had a decade of essentially zero or near-zero interest rates. We've also had companies that generate profits on an almost unprecedented scale be able to (legally) transfer IP offshore and essentially engage in IP licensing as a form of transfer pricing (which is otherwise illegal).
So you have a bunch of people who would rather borrow money at near-zero rates than repatriate profits that they'd then have to pay taxes on. This is just deferring tax debt indefinitely. Worst case scenario for the tech companies at least is that they need to repatriate some of their mountains of cash (and possibly downsize to reduce costs).
I don't know what fraction of corporate debt this covers but given the size of the tech companies now, I'd be surprised if it wasn't a significant chunk.
Buying and holding is "playing". It's the belief that markets fundamentally go up long term, which is a healthy and reasonable assumption, for if nobody could ever get a positive return, the rationale for the existence of markets ceases to exist.
But that logic is flawed, see Japanese market. NIKKEI 225 Index, Was 34k in 1990, still 20+k and hasn't recovered after 30 years. There's nothing preventing that from happening to the US market.
People don't usually invest their entire life assets at a singular point in time. Share purchases are made per paycheck (e.g., 401k) over a working career. In practice, no retail investor experienced what you described.
> But maybe we’d be just better off if we gave it to everybody, and then in a month it would be over because the mortality rate of this probably isn’t going to be any different if we did it that way than the long-term picture, but the difference is we’re wreaking havoc on global and domestic economies
This is absolutely false and yet another reason why journalists shouldn’t play epidemiology.
Mitigating the rate of spread leads to less deaths overall. If everyone got it at the same time, there wouldn’t be enough healthcare system capacity to handle it. This isn’t a new concept, it’s well-known within epidemiology. Cities with early interventions in the 1918 flu epidemic had 50% lower peak death rates. If everyone got it at once, many more people would die than if the same number of people got it over a longer period of time.
The following is my speculation, but if we woke up tomorrow and everyone suddenly had the coronavirus, then the economy would be in much bigger trouble than it would be with a slower rate of infection.
Unfortunately the current rates are based on people (mostly) having access to forced respiration devices. 1/5 people who get Covid require external oxygen...
The entire world has collectively decided that recessions are unacceptable, so all central banks will print as much money as necessary to ensure no pain is ever experienced by anyone except prudent savers. Watch the printing presses get ramped up, I assume everyone in the USA will be getting a few thousand bucks in the mail soon.
Are you saying that you think central banks will overshoot their inflation targets? Or that they'll hit them but that you don't think they should have those targets?
If you're not sure if you can, probably you can't. At this point nothing indicates that we've learned how to reliably avoid recessions. Quantitative easing and negative rates don't look like the Holy Grail, quite the opposite.
Absolutely disagree with this sentiment. Avoiding recessions pushes for a change in the rules of the game allowing unhealthy practices to go on unpunished in the market. This is incredibly unhealthy in the long run.
My hot take is that the virus isn’t affecting future cash flows enough to warrant a crash, but as is typical, it sure as heck is a big enough catalyst for “risk off” to take hold and most pent-up mispricings to finally normalize, which according to some would be a huge pullback or crash.
Your hot take is wrong. Cash flows are absolutely going to be impacted here. Initially, the thought was that this was only going to be a supply-side shock, but people are planning to completely hunker down, not booking flights, not traveling to work, taking time off.
This is going to be a large, if transitory, problem. Buy a little bit of the dip every day, and get ready to eat some losses in Q2. Summer is coming.
I misphrased that - I meant to say in the long term. I agree that we will see a quarter or two of eps impact due to virus. But for a true crash the market needs to price in a longer term impact due to the virus - which seems unlikely on its own. However we certainly can see a crash due to sentiment and valuation changes prompted by this as a catalyst.
This has introduced credit risk to impacted businesses as well. Credit risk means we could see less liquid debt markets which could decrease employment, investment, and long run GDP growth. All of this especially concerning given that the fed has only 1 - 2 more pulls at monetary supply via interest rates before they have to introduce more QE.
There are too many connections here to simply discount the long-run risk to the economy which is why you're seeing a sell off.
PwC's audit lead gave a great interview on Bloomberg the other day that I thought summed this situation up well. Paraphrased: Those that have been fixing their roof while the sun is shining are going to be just fine, but a lot of businesses didn't do that.
Businesses with high leverage, unsteady cash flows, flaky customers, and inefficient cost structures could be in trouble here.
I'm a buyer in this market, but I'm a buyer precisely because I have a long horizon. There's no guarantee that we get back up to these rich valuations any time soon.
The US is 80% services based which is why we were immune from the China trade war. China has a lot more to lose than the US because they don’t import from the US as much as they export.
But services are going to dry up very very badly. Which will disproportionately affect the US, especially with how many minimum wage jobs there are.
Only 2% of the US workforce has a FEDERAL minimum wage job. Many states and cities have higher minimum wages than that, and something like 40% make less than $15.
I have been holding S&P puts as a hedge since the S&P was at 3330, and my portfolio value is at the same level as it was near early Feb highs because of them even though my stock holdings are down.
The idea that you should just sit back and be ok with a 20% haircut isn’t something that I will just “take” if I can help it.
You are waving around a winning lottery ticket as evidence of your strategy being better. What is your strategy? First of all, was this put even good? How much of your portfolio did you cover and how much as a fraction did it cost? But much more importantly, how many times have you hedged your portfolio in the last eleven years?
Hedges cost money. Market goes up long term. You will lose money long-term by hedging. That's the steady state of your strategy. That's the obvious reason why people don't hedge. I'm puzzled as to why you didn't acknowledge this. Instead, you offer an outlier where hedging performed better. Seems deeply disingenuous.
You don't have to do it constantly, and it would only lower your gains, not cause you to lose money unless you're over insuring.
All-time highs, inflated money supply, dropping interest rates, trade wars, overbought stocks, overloaded repo markets, bond yield inflection, and more signs over the last few months are a pretty clear signal to engage in hedging.
I agree with that but do you know you’re going to take a 20% hair cut? What if you get out of the market after it drops 6% at the bell tomorrow and then it goes up 1% the day after and 3% the day after that? Do you panic buy back in? What happens if someone finds out that a cheap readily available drug cures it and this whole thing is over in three weeks?
I’m extremely pessimistic about the market right now, but I’m more pessimistic that if I traded that I wouldn’t lose more money.
I’ve had a big chunk of my 401k sitting on the sidelines for months now. I’m going to wait to see how this virus thing shakes out then use it to buy back in after it looks like the worst is over.
Until then, there’s way too much uncertainty to try and trade this. I’m not retiring for twenty years. Whatever happens it should bounce back in 2-3 years or so.
Well of course I can’t predict the future but we kept hitting all time highs even well into the coronavirus outbreak in early Feb and it didn’t make sense to me. I didn’t think the rally had any more legs to it and bought puts to hedge. As the market kept going down I kept or trimmed the options.
The point of using options is that I’m still holding a lot of my stock, so if it bounces back up then it’s just my options that lose value.
Ray Dalio gave an interview a couple of days ago in which he predicted insolvency for some sellers of just such far-out-of-the-money puts. Any ideas who these might be, beside hedge funds? In particular, anyone systemically important e.g. shadow banks ...
Insurance through options is not a losing strategy. They are designed for hedging, and some basic attention to trends (all-time highs and coronavirus) can provide nice gains or protection from losses.
Anytime in the last quarter with constant news about all time highs, record low interest rates, overbought stocks with extreme ratios, and a global pandemic affecting supply chains was enough to try and allocate some attention towards a downturn with cheap bets or portfolio protection. 1-5% on puts is well within standard risk management.
You don't need to be a daytrader or prophet for any of this. If you missed the drop and positions have lost value then sell covered calls for income. Then wait it out because we have an entire summer of disrupted global trade coming. Don't think about buying in until that's over.
I don’t subscribe to generic investment advice. Options are insurance when things are wacky. The coronavirus has concerned me since January and I hedged accordingly.
What’s the point? Instead of spending money on stocks and puts against the same stocks (which costs money), why not just allocate less to stocks in the first place?
The reasons I could imagine is if the stock is illiquid (401k, lockup, etc)
I bought S&P puts at the wrong time so many times that I just gave up, didn't trust my gut in early Feb, assumed the market would find some strange way to keep going up. Oops.
>The idea that you should just sit back and be ok with a 20% haircut isn’t something that I will just “take” if I can help it.
You don't have to be an active trader to preserve your capital. I've been invested for years but around the 2nd week of Feb, I went 100% cash. This time I saw train and got off the tracks. My plan is to average in slowly over time as the market stabilizes and the news gets better.
I’ve bought and sold at different strikes and late March/April expirations for last 2 weeks. At end of Friday I entered $270p for 4/17 at around $6 or so.
Me too. I bought 10 contracts on SPY puts 5 days before the drop, expiring January. My first target is the Dec 2018 lows but I expect a 50% drop before the end of the year.
I love how people are self righteous about the timing but I have been wildly profitable over the last 20 years picking my spots like this.
Value investors don't time the market, though it can seem like timing. To the extent to which one can assess a personal 'intrinsic value' to a company, one can buy when it is substantially undervalued and sell when it is substantially overvalued.
One can see this in Berkshire's cash hoard. Expect to see it deployed in the year to come, when valuations may become more in-line with historical norms.
1) Plenty of funds have protected losses and even made gains with this market move. Buying puts as insurance, especially as volatility climbs, is standard operating procedure.
2) Hedge funds aren't open to the public and don't care about popularity. Their mandate is to limit volatility, not to maximize gains. That's why they might not match indexes in bull markets but outearn them in turbulent times.
3) There is an inflection point with capital where it gets much harder to make more because of changes in liquidity, transparency, and price action resulting from your moves. Independent traders can make 100% gains from large moves, a large fund could never do that unless it was an absolute perfect scenario.
4) I'm surprised that so many people find it hard to believe that months of constant negative news after 10 years of perfect bull run and frothy all-time highs does not signal a hint of a downturn. What more of a sign do you need? Nuclear war?
I explained that hedge funds are not about maximizing gains. And yes, I earned over 150% last year, but no that's not possible when managing 10 figure portfolios with rules on volatility and securities.
Neither has anything to do with seeing the numerous warning signs over the last 3 months pointing to increased risk of a downturn which was worth a small percentage on puts.
If you want to be a completely passive buy-and-hold investor then that's fine, but you don't have to be a daytrader to make some basic adjustments for the next quarter based on global news.
It's looking at a dozen red flags (read the the top post on this HN page) to have high confidence that there is trouble in the next few months. This is not predicting anything crazy other than a general downturn, and then making appropriate moves. A global pandemic alone is enough to signal it.
It seems like the disagreement is from completely passive investors who don't realize that there are levels between daytrader and adjusting positions every few weeks based on news.
Also I have friends in real estate who have earned 100% returns in a single year. It's not an impossible feat.
> This is not predicting anything crazy other than a general downturn
Why do you think this is not already reflected in the current price? You are the only person on the stock market following the news?
> adjusting positions every few weeks based on news
You really don't get it do you? You don't buy or sell based on things going good or bad. You buy when things are under-priced, and sell when things are overpriced. And even with the latter you don't know the exact timing when the market will realize this.
> Also I have friends in real estate who have earned 100% returns in a single year. It's not an impossible feat.
If you can win 100% in a year, you can just as easily lose 50%. That's just how returns, risk and time work.
There's new news all the time which is not priced in, hence the market being halted from developments over the weekend.
My point is that basic adjustments following the news can easily increase gains instead of passive buy-and-hold investing. The market will trend down for the next 3 months, use that however you will.
Why are you looking for a low? The market was at a high and what you should've been looking for was a downturn.
Timing days is impossible. Timing a trend over months is what I'm talking about, and anytime in the last 2 months was a good time to allocate 1-5% on making money or protecting your investments from a market drop.
At this point, if your investments have lost value then sell some covered calls to make income while you stay out of the market. We have an entire summer of disrupted global trade coming, don't buy in until that's over.
That analysis is true according to precedent. But we are experiencing an unprecedented event.
That said, eventually we will have a vaccine, anti-viral, or effective test&quarantine system; and the time to buy is BEFORE we have this under control.
I can’t see why this wouldn’t be the biggest crash for 50 years.
All the other ones were largely human caused and largely controlled by sentiment, and did not cause everyone around the world to avoid contact with everyone else.
This will last until a vaccine is developed which might take 12-18 months and in the meantime many many businesses will die around the world.
The domino effects will be huge. Remember that lots of people and companies are up to their eyeballs in debt, what if that starts to run out of control with bad debt everywhere cause businesses and people are bankrupt?
This is very long term and very damaging to all economies and there’s not really much governments can do to change people’s behaviour.
This one is caused by sentiment, but that sentiment is driven by a virus which is out of human control. Unlike for example a war, which can be controlled by politicians.
Thar’s a big one blowin in, batten down the hatches.
“Anthony Fauci, the longtime director of the National Institute of Allergy and Infectious Diseases (N.I.A.I.D.), spoke up. “A vaccine that you make and start testing in a year is not a vaccine that’s deployable,” he said. The earliest it would be deployable, Fauci added, is “in a year to a year and a half, no matter how fast you go.”
I freely admit I'm no virologist, but I don't quite get the focus on vaccines over cures.
People are panicking because there's no cure and they think there's a small but negligible chance they might die if they get it.
The virus is structurally quite simple. There are antibodies known from the previous SARS epidemic that are predicted via simulation to bind to the spike proteins very well indeed. I did some research over the past few days into how quickly you can make antibody serums and, well, it's a lot faster than you can make vaccines, especially if you aren't trying to manufacture huge quantities. At least one biotech firm claims to be right on the cusp of manufacturing antigens, which are a key ingredient in the (mass) production of antibodies.
Very few people get COVID-19 so badly they'd need to be given an external cure. With the containment efforts, it's possible you don't need huge factories producing antibodies to be able to cure the worst affected cases, and it's possible that the news of availability of a cure would itself be sufficient to largely end the panic. If COVID-19 becomes just "a bad flu that can be cured at your local hospital in the unlikely case it gets worse" then we might see a reset to normalcy very fast.
So late last year after about 3 attempted rallies, around one of those local peaks I decided enough is enough and I basically liquidated everything so now I'm 100% cash. This was all before the coronavirus. My rationale for this was simply that we were in the longest bull market in modern history, we were likely closer to the top than the bottom and because of certain FIRE tendencies [1] I decided my time horizon had shrunk to less than 5 years, at which point I decided it was more prudent to get out of equities.
For the last several years I wondered what triggered the eventual correction. By "correction" I mean there'll eventually be a reversion to mean that will, for a time, cause the market to be oversold. Traditionally this is a good time to buy but it can be hard to get anywhere near the local bottom (this is where the term "dead cat bounce" originates).
I didn't think it would be anything like 2000. We have some tech giants around $1T market caps now but they are money generating machines the likes of which probably hasn't been seen since the era of Standard Oil and the rail barons (whereas 2000 was purely speculative). It didn't seem like real estate would be the trigger either.
I thought it might be the possibility of a trade war with China but, on further inspection, it seems China may well be more vulnerable to that than the US. Still, China has a way of thinking long term that's simply nonexistent in US politics.
Certainly when I heard about this new virus, I didn't think it would be it. AFter all, we'd had SARS. But SARS was in some ways too effective and it basically burned out really quickly so never threatened a pandemic.
But this? The problem here isn't the disease. After all, for most people, it'll likely just be a bad flu. The problem is the changing behaviour it will cause because there seems to be such a long period of being contagious while asymptomatic while being highly contagious.
Some airlines are down 40%+ this year. Some cruise lines are even worse off than that. With travel being impacted, so are hotels, restaurants, tourism, etc. Any large public gatherings are likely to be curtailed (either officially or just effectively as people stay away).
As soon as I saw there were cases in California where the source couldn't be identified I thought "well that's game over for containment". The same with the Italian cases.
Oil prices have plummeted due to lower demand so all oil-dependent economies are now at risk of recession. The Fed's attempt last week to jump start the economy with a surprise 0.5% rate cut basically did nothing and there's only so low rates can go.
So best case I think we're in for a bad 6 months, maybe as much as 18-24 months.
Personally I'm disappointed I didn't end up shorting the market in the last week, I honestly don't really know why I didn't. But it could be worse.
It'll be interesting to see how the anti-vaxxers spin this as it unfolds.
What I do know is that it's way too early to go bargain hunting on the stockmarket.
There needs to be a discussion about how China is going to compensate the world for covid19. Given the thousands of lives lost and billions of lives disrupted, it seems unfair and unwise to let the source of the loss escape shouldering the cost.
- persistent negative-yielding long-term sovereign debt in Europe
- Bank of Japan owns 80% of the Japanese ETF market
- a Federal Reserve unable to contain the exploding repo market
- price-to-earnings multiple at historic highs, even accounting for declines
- stock buybacks galore field by ultra-accommodative central bank policies
- all eyes on the Fed to see what kind of shock-and-awe they can deliver
- a US administration doing everything in its power to undermine the independence of the Fed and bring on negative interest rates
The GFC never ended. It was never resolved. It was simply rolled over, like opening a second credit card account to paper over a hole in a personal budget.
Panic is a strong word. Market panics are very rare. Nevertheless, it would not be surprising to see a full-blown stock market panic this week.