As the case count blows past 78K, we are now finding coronavirus cases that are not linked to China. https://www.bostonherald.com/2020/0...hina-very-worrisome-says-world-health-leader/
I don't wish to panic anyone, while you're busy buying anything with a trading symbol regardless of fundamental or macro information, but this....
The coronavirus dashboard link I posted on the previous page is more spotty than a 14 year old in a chocolate factory. It hasn't been updating properly for two days. This link has been intermittent, as well. Still, it's another source. https://www.worldometers.info/coronavirus/coronavirus-symptoms/ I wouldn't be too quick to believe these dashboards when the numbers stop going up. South Korea doubled the number of reported cases in the last 24 hours.
It's getting difficult to determine if coronavirus dashboards are not being updated in a timely fashion or if the virus has stabilized. Currently, we aren't seeing a lot of new cases and things seem to have plateaued in South Korea. We've seen statistics update retroactively before. This is likely such a situation but I hope it's more of a positive sign. Whatever the case, we know it has and will continue to have an impact on the global economy.
China has done a great job of containment but the bodies continue to pile up every day. Meanwhile, South Korea needs to get it's problem under control. With 763 dead after only a few weeks with the virus, it's clear they are out of control.
Mainland China is doing a great job dealing with an insurmountable problem. Unfortunately, I don't think any other country will respond with the strength China has shown. Both the government and the people have been exemplary. South Korea is clearly of control with their case count going up 35% in the last day. Stock futures are sharply down, most likely on the coronavirus news. I have no plans to sell any of our current holdings. We are ready for any storm that might hit. I'm skeptical a correction will be particularly strong. There seems to be too much cash on the sidelines for a full on market crash. Time will tell.
I wrote my own software to track stocks and indices. It's not all that sophisticated, actually. It updates daily, not minute to minute. Here is a source for the Wiltshire 5000 with 15 minute delay. https://ca.finance.yahoo.com/quote/^W5000FLT?p=^W5000FLT This is where I get the GDP information from. This is the horse's mouth. It updates quarterly figures monthly. https://www.bea.gov/data/gdp/gross-domestic-product With these two pieces of information, all that's left is long division. When I first started using the WBI as part of my capital allocation process, I could not find any near real time, pre-packaged, indicators. This is why I did my own thing and it has worked out well but here is one that has statistics current to this morning. I found it with a google search. For my use, current within a week would probably be sufficient but it's nice to have current information from the end of each day. https://www.gurufocus.com/stock-market-valuations.php
The market is creeping back up, this morning. I suspect there is too much money on the sidelines for the market to crash like 2008, at the moment. Not only that, there are no good alternatives; Interest rates are at record lows. I expect a correction but not a full blown crash. Of course, my predictive track record is dismal so the best advice I can give anyone is don't listen to me on this. Even better advice would be to not listen to anyone on this. Just put your money in the market with an expectation of taking it out in 10~20 years with a nice growth.
Investors love market downturns, like now. High valuations do nothing but stroke the ego, for a long term investor. The lower the valuations, the higher the yield. Higher yield means higher compounding rates on reinvestments. We would be advantaged by the lowest valuations possible. So, consider me happy with the current turn of events. I expanded one of my positions pretty heavily, this morning. The rest of our cash is going to chill for a little while longer. If the cash lays around until this summer or next year, that won't be a big problem. Remember: The stock market is a mechanism that transfers money from the impatient to the patient.
Most of the stocks I'm interested in are still not a great deal but two have entered the value zone. Things are looking up.
COVID-19 cases blow past 81,000 as South Korea at 1261 deaths is now officially more virulent than Charlie Sheen. The graph of deaths had plateaued but there is now an acceleration. We really need South Korea to get on top of this.
Perhaps this is a good time to talk about market crashes after retirement. In order to mitigate market crashes on retirement funds, here are some ideas: 1) Engage austerity that will allow living on distributions, interest, and fixed income 2) Keep enough cash to be able to stretch fixed income to span an average correction 3) Use a line of credit as an operating line during the recession 1) It makes a lot of sense to have some fixed income, even if it's not enough to live on. Fixed income becomes golden during a correction when there is a high cost of selling anything. 2) Cash can be handy during market corrections to not only live off of but perhaps offensively target good companies that are hit particularly hard. The danger with cash is it is itself an inefficiency so a compromise needs to be considered that will give up the least market return but be sufficient to span a corrective period. 3) Retirees tend to not consider debt. In fact, to retire at all we generally need to pay off our house and get our affairs in good order. We just don't think about debt as an option. Modelling this option, I've come to the conclusion that paying $10K of interest once or twice per decade is probably more efficient than keeping cash around or selling distressed stock. I've used 1 and 2 but it's clear I would be better served to invest more aggressively and use our line of credit and austerity to bridge the occasional down turn.
I didn't notice any but I might not. This thread is my internet sensory deprivation tank so I could lose 8 pages and not notice.
So, I'm looking at the current market numbers and trying not to giggle. We are sitting on a mountain of cash. This begs the question, did I get lucky. Yes but..... People over-state the opportunity cost of being out of the market. The down side of missing market gains is true but I don't recall seeing anyone price in the up-side of being on the sidelines when the world panics. The thing is, every couple of years there is a new war, recession fears, pandemic (MERS, SARS, West Nile, etc.), or some event that provides people an opportunity to over-react. I am not saying the down market opportunities make up for lost gains but I am saying it isn't as much of an imbalance as people indicate. Further, there are some corner cases in which the gains out weight the costs. I will go one step further and suggest market volatility is a great mechanism to bulk up on long term, distributing, low gain, core type companies. It's more difficult to build up growth positions during market down turns for an investor. For example, I have no intention of buying more Tesla right now. I'm happy with what I have and will just ride out the storm. It's near $700 so I'm keeping an eye on it. Our core holdings, however, are looking amazing. One of our REITs was yielding 6% in 19Q2 so I turned the DRIP off. Now it's stable in the 7.5% range, the DRIP is back on, and yesterday I had buy orders connect that will yield out at 8%. As long as that REIT can maintain the dividend I can sail through a recession with a nice little bundle of 8% yielding investments followed by a nice capital gain when the current down trend is over. Most of our powder is still dry, though. The WBI peaked at 160%. Now it's at 152%. A full on crash would put the WBI at or below 100%, so it's not yet time for us to go all-in. Oh yes... cash levels... I had planned to be at 50% cash if the market ever hit WBI 160%. That didn't happen for a couple of reasons. We got into the mid 30% range. Primarily, WBI at those levels means the market has gone up to epic levels. Even with external cash flows pouring in, in order to be at 50% cash, we would have had to sell some core positions. That was never going to happen. I'm proud of those to own those companies. Those companies are our business partners. The furthest I went was to trim a few of the holdings I didn't strongly believe in when they showed extreme negative value. I would have done that in a lower WBI situation anyway, but the WBI tipped the scale in a couple of cases. A year ago, we owned 13 companies. Now, we own 8 of those (plus two new companies). All 4 divestitures were small positions (None were more than 2% of our portfolio and one was a tiny, tiny fraction). Our money will go back into the market as specific objective value targets are reached. These values are calculated on stocks individually and are not tied to the WBI. It just happens that many companies show more value when the WBI is down so the WBI is really a warning light to indicate a need to stay alert. That brings us to the future. Is the market going to keep going down? I can tell you with full confidence and absolute certainty that I do not know.
Beijing is a new COVID-19 hot spot and there are some anomalies with the Japanese statistics. Japan probably has a far worse problem than reported. A former director of the CDC said the south Koreans are doing a good job tracking and isolating the virus. I choose to trust his expertise. Italy is another hot bed of bed ridden fevers. Iran... We are all going to get it. Done deal.
