The Long Term Investor

HERE is a little bit of positive for the markets. I LIKE the thinking behind this little article:

Wall Street Week Ahead: Fund rebalancing could help buoy stock rebound

https://www.reuters.com/article/us-...g-could-help-buoy-stock-rebound-idUSKBN21E1J8

(BOLD is my opinion OR what I consider important content)

"NEW YORK (Reuters) - Money managers rebalancing their portfolios to boost equity exposure into the end of the quarter may support the nascent stock rally that has followed the steep coronavirus-fueled market drop.

With the S&P 500 having lost around a third of its value in the recent selloff, investors may need to step up their equity purchases and sell bonds in order to maintain allocation targets.

A portfolio that had stock allocations at 60% and bond allocations at 40% in mid-February may now be more evenly split between the two asset classes, facilitating the need for some investors to shift exposure toward stocks.

“Given the many trillions of dollars in assets that follow some sort of multi-asset class approach, the coming rebalance could well be in the range of a few hundred billion,” Jurrien Timmer, director of global macro in Fidelity’s global asset allocation division, wrote in a note to clients this week.

Funds can raise stock allocations in several ways, including selling bonds to buy stocks, using the cash in their portfolios or putting fresh money toward equities, said Leo Acheson, director of multi-asset ratings at Morningstar.

From speaking with portfolio managers, Acheson said many have not been waiting for quarter-end to make adjustments and instead are revisiting their portfolios daily and adjusting the split between equities and bonds to maintain their desired risk exposure.

“As managers rebalance and reallocate toward equities to get back toward their strategic weights ... that would be a support for equities,” he said.

U.S. stocks have bounced more than 17% from their lows this week following unprecedented stimulus measures from the Federal Reserve and U.S. Senate passage of a $2 trillion bill aimed at helping unemployed workers and industries hurt by the coronavirus pandemic. Few believe the volatility in markets has ended, as the outbreak’s trajectory remains uncertain and the economic fallout potentially massive.

Still, the Fed’s pledge to buy billions of dollars worth of bonds, including $75 billion in U.S. Treasury securities a day this week, may be a boon to those looking to rebalance.

“You are buying equities at significantly lower prices than they were and you are selling bonds that are being artificially bid up by the Federal Reserve,” said Michael O’Rourke, chief market strategist at JonesTrading in Stamford, Connecticut.

The flows generated by rebalancing appear to have a noticeable impact on asset prices, especially when bond performance trounces that of equities, as has occurred so far in March.

On average, the S&P 500 has climbed nearly 7% over the final five days of a month in which bonds outperformed stocks by at least 10% during the month’s first few weeks, according to Christopher Murphy, co-head of derivatives strategy at Susquehanna Financial Group, citing eight such previous occurrences in data back to 1990.

The iShares Core US Aggregate Bond ETF (AGG.P) has fallen just 1% so far in March, against an 11% slide in the S&P 500 .SPX, as of Thursday, though that performance gap narrowed this week.

Pensions, endowments and foundations - overseeing as much as $15 trillion in assets - are among those that often look to adjust their portfolios around quarter end, said Steve Foresti, chief investment officer at Wilshire Consulting.

“All else equal, these institutions are fairly significantly under their target weight to equities, meaning they need to purchase to get back to their target,” Foresti said. “There is no question there is some natural buying and selling around those rebalancing activities.”"

MY COMMENT

AS I said.....my kind of thinking. Considering ALL the angles of this situation. Things like this re-balancing that are BUILT IN to our investing system will contribute to a little bit of positive direction. NOT a major driver for long......BUT.....every little bit helps in a down day or a up day. Step by step......

 

With NEGATIVITY rampant, it is nice to be able to put a positive spin on things once in a while. HERE is a little bit of a silver lining:

Dow closes lower but still posts its best week since 1938: March 27, 2020

https://www.cnn.com/business/live-news/stock-market-news-today-032720/index.html

(BOLD is my opinion OR what I consider important content)


"US stocks finished the session in the red on Friday, but that didn’t keep major indexes from posting one of their best weeks ever after a monstrous rally between Tuesday and Thursday.

The

• Dow closed 915 points, or 4.1%, lower. It recorded its best week since June 1938, gaining 12.8%.
• The S&P 500 finished down 3.4%, for a weekly gain of 10.3% -- its best since March 2009.
• The Nasdaq Composite fell 3.8%. On the week it’s up 9.1%, its best performance since March 2009."

MY COMMENT

For the DOW......WOW.....best week since June of 1938. The others, best week since March of 2009.......11 years. That is quite a feat even in the current situation. There is some HUGE PENT UP energy in stocks right now. I believe this past week showed how QUICKLY the markets can recover when it is time. AND......YES.....the recovery will come, it is just an unknown right now when it will happen. The BIG ISSUE we saw after the last ECONOMIC CRISIS and near collapse of the world wide banking system (2008/2009) was many many investors that sat on the sidelines.....for years...... WAITING for the right time to get back into the markets. I remember people still siting two, three, four years after the crisis was over and talking about the right time to enter the markets. The other issue that we saw with investors back in that crisis was a HUGE number of people that were driven out of stock and fund investing after having gone through such a SCARY situation. We WILL OBVIOUSLY see much of the same types of behaviors.....some time over the next 2-12 months....whenever.....the recovery happens.

 

This being the weekend, I will UPDATE this PERFECT EXAMPLE of Media dishonesty in the current virus crisis:



FOR those that are into 24/7 virus "stuff" here is the latest data:

https://www.worldometers.info/coronavirus/

I DID find it interesting that MOST of the MEDIA was HYPING the story that we now have more virus cases than any other country including China. NO.....WRONG. You cant just take the number of cases in a country and compare to another country. You have to look at number of virus cases per million of population in each country. If YOU do that for accuracy......ALL THE COUNTRIES BELOW......have more cases in proportion to their population than we do. And as to deaths per million of population.....WE are.......20th in the world with 5 deaths per MILLION of population.......OR.....a TOTAL of 1,717 (updated for accuracy) deaths as of today. (SORRY could not resist putting up some TRUTH about the virus.......I will try to AVOID this "little virus" garbage in the future)

Iceland
Andorra
Germany
Switzerland
Spain
France
Italy
Iran
Estonia
Slovenia
Netherlands
Belgium
Luxembourg
Portugal
Austria
Norway
Israel
Denmark
Iceland
San Marino
Liechtenstein
Gibraltar
Monaco
Isle of Man
Montserrat
St Barth
Vatican City

AND for those that are SCARED or in panic......ARE you seeing facts like this EVER reported in the MEDIA...I had to search far and wide for this article ( I saw it previously but it was very difficult to find it again for this post....it is DATED March 27.):

San Francisco’s early restrictions seem to be helping hospitals avoid coronavirus overload — so far

https://www.cnbc.com/2020/03/27/san...t-yet-overwhelmed-with-coronavirus-cases.html

"In San Francisco, once feared to be a hotbed for the coronavirus, doctors are not yet seeing the dire overcrowding of hospitals that areas such as New York are experiencing.

“I was on campus today, and it’s actually quite mellow,” said Dr. Bob Wachter, professor and chair of the Department of Medicine at UC San Francisco, told CNBC on Thursday. “Because we’re not doing elective procedures that can be pushed back, it’s even quieter than usual.”

For now, UCSF clinicians are managing a steady trickle of patients entering the emergency rooms with COVID-19 symptoms, while still bracing for a possible flood. As of Friday, San Francisco has 279 confirmed cases, and the city saw its largest increase of COVID-19 diagnoses on Thursday. California now has more than 4,000 known COVID-19 cases.

At UCSF’s Parnassus campus, there were 11 patients diagnosed with COVID-19 as of Thursday, seven of them in intensive care, according to Wachter who has made it a point to make that information available to the public. In preparation for a potential surge, the hospital has scaled down surgeries to only those that are essential, making it less busy than in the months before the pandemic.

Wachter said he personally visited the Parnassus hospital on Thursday, and noted that the hospital’s intensive care unit is still filled with empty beds and the emergency room is only “moderately busy.” Moreover, the UCSF clinics have dialed down the volume of patients, with more than 50% of encounters now taking place online between doctors and patients. Because the number of seriously ill COVID-19 patients has been increasing at a manageable rate, the hospital has had more time to prepare.

Infectious disease experts say that the region’s early steps, including ordering people to avoid crowds and shelter in place, may have slowed the trajectory of the virus. But experts say it remains critically important that residents continue to heed the advice of public health officials and stay home.

Wachter said he could see the situation take a dramatic turn for the worse at any moment and his team is watching closely for any signals. In the past few days, some medical experts, like the cardiologist and researcher Dr. Eric Topol, have noticed by studying the data that California appears to be taking a turn for the worse. “Their (California’s) death curve slope is heading north, whereas it was more akin to Washington until the last 48 hours,” he noted. "

SEE REST of article for additional content.

HERE IS THE REAL problem with what is being reported:


We don’t know how many COVID-19 patients are hospitalized across the country, because only some states are publishing data. Journalists can join our effort to gather this data from every state.
Coronavirus Hospitalization Numbers Are Spotty. Journalists, Help Us Fill in the Gaps.

https://www.propublica.org/article/...e-spotty-journalists-help-us-fill-in-the-gaps


YES, there is definately a crisis in New York City, especially in Public hospitals. I DO NOT downplay where we are right now.....BUT...the level of EXAGGERATION is rampant in the MEDIA. Very few people ever take the time to look at ACTUAL data and news as opposed to OPINION JOURNALISM on this topic. The BOTTOM LINE.........INVESTORS BEWARE of what you see and hear on an anecdotal basis. MUCH of the DIRE outcomes being talked about are PROJECTIONS based on worst case predictions for the future......NOT....current FACT.

Media honesty issues cuts across ALL MEDIA.....conservative, liberal, and everything in-between. AS investors and as citizens we NEED accurate reporting during this crisis.

We need to be RATIONAL and USE REASON in this situation. We need to do exactly what we are doing.....prepare for the worst just in case........but NOT HYPE the situation.

OK RANT OVER...........I will TRY to stick with hard core investing posting....what can I say......SORRY.

 

I am REALLY surprised that homes seem to STILL be selling in our area. Our suburb has about 3600 homes. At the moment the lowest priced home is $405,000. Highest is about $2MIL. The two highest priced homes have now DROPPED off the market......$3-5MIL range. I STILL am seeing homes going "pending" in spite of all that is going on. Open houses seem to be gone for the past two weeks now. Out of 3600 homes there are 31 for sale right now. Before the virus the number of listings for sale was averaging about 26. We would be in an EXTREME sellers market.......if not for the virus.

It is interesting that mortgage rates are in the 3.8 to 4.2% range in this area. With the low rates on the 10 year Treasury you would think they would be MUCH lower. But liquidity and funding issues have had the opposite impact and driven rates up.

Of course......all REAL ESTATE is local, local, local.....AND....location, location, location. I am sure this situation WILL impact home sales and the ability of realtors to do business going forward....BUT, so far.......I am not seeing anything.

 

In CONJUNCTION with the above.......here is a little article that showcases the dangers of unprecedented financial action by the FED and others. YES....we have to take ALL steps to secure the economy. BUT....much of what we are doing.....so quickly...has the potential for EXTREME side affects. I AGREE with what the FED is doing. BUT...our economy and financial products and systems are so complex and intertwined it is just about IMPOSSIBLE for the FED and others to see and anticipate the impact of what is being done. We NEED lots of OUT OF THE BOX thinking and evaluation of various moves being considered in order to try to anticipate and avoid this sort of unexpected impact.

Mortgage bankers warn Fed mortgage purchases unbalanced market, forcing margin calls

https://www.cnbc.com/2020/03/29/mor...s-unbalanced-market-forcing-margin-calls.html

(BOLD is my opinion OR what I consider important content)

"The Mortgage Bankers Association in a dire letter to regulators Sunday warned that the U.S. housing market is “in danger of large-scale disruption,” due to efforts by the Federal Reserve that were intended to help rescue the mortgage market.

At issue are the Fed’s unprecedented $183 billion of purchases last week of mortgage-backed securities. The purchases were meant to drive down rates, and they did.

But together with the storm that gripped financial markets from the coronavirus, they also effectively blew up a widespread hedge that mortgage bankers use to protect themselves against rate increases. The hedge pays them if the prevailing rate in the market is higher than the rate than the mortgage rate they locked with the customer.

The system works well unless mortgage rates are highly volatile. It is generally considered to be a safe trade: the hedge simply protects the lender against higher rates until the mortgage closes. But compounding the problem, many customers couldn’t close on their loans because of quarantines, leaving the mortgage lenders with only the cost of the hedge and no off-setting loan.

The huge volatility in mortgage bonds created massive margin calls from the broker-dealers, who wrote the hedges, to their mortgage bankers.

Some of these mortgage bankers are now facing margin calls of tens of millions of dollars that could drive them out of business, according to Barry Habib, founder of MBS Highway, a leading industry advisor who was among the first to publicly sound the alarm bell last week.

Hardest hit are independent mortgage bankers who wrote about 55% of the $2.1 trillion mortgages created last year and can have higher leverage.

In its letter to regulators, the MBA said: “The dramatic price volatility in the market for agency mortgage-backed securities [MBS] over the past week is leading to broker-dealer margin calls on mortgage lenders’ hedge positions that are unsustainable for many such lenders.”

The letter went on to say, “Margin calls on mortgage lenders reached staggering and unprecedented levels by the end of the week. For a significant number of lenders, many of which are well-capitalized, these margin calls are eroding their working capital and threatening their ability to continue to operate.”

Some lenders, the letter said, may not be able to meet their margin calls in a day or two.

The Fed came into the mortgage market forcefully two weeks ago when rates began to rise because a large array of investors were selling mortgage securities to raise cash, in part, to offset big losses in the stock market. There was also fear that borrowers wouldn’t be able to pay.

In the week of March 16, the Fed bought $68 billion of mortgages. But the market still saw massive selling, prompting the Fed to come in with an additional $183 billion of purchases last week. The combined $250 billion in mortgage purchases by the Fed over two weeks was $84 billion more than the Fed had bought over any four-week period during the financial crisis in 2009.

Ironically, the MBA had urged the Fed to come in strongly to help the mortgage market. “We understand that when the Fed came into the market, they couldn’t come in surgically. They didn’t have a scalpel. They only have a sledgehammer,” MBA chief economist Micheal Frantantoni told CNBC.

The New York Fed appears to have adjusted its purchases in response to the industry outcry. It purchased $40 billion of mortgages Friday, $10 billion less than it planned to buy, and it plans to do another $40 billion Monday but could end up doing less.

“We are expecting the Fed to modulate their purchases,” Frantantoni said.

But Habib said the Fed needs to go further than just modulate.

“This is a collapse of the system,” Habib said. “It’s as simple as the Fed stops buying for a period of time.”

While CNBC has learned that the MBA has made its concerns known to the Fed and other regulators, the specific request in the MBA letter went to the Financial Industry Regulatory Authority and the Securities and Exchange Commission. The MBA asked for regulatory relief for the broker-dealers who provide the hedges. Regulators have recommended a best practices guideline to collect margin on any variation above $250,000.

The MBA asked FINRA and the SEC to issue guidance urging lenders not to escalate the margin calls to “destabilizing levels.”"

MY COMMENT

VERY DIFFICULT right now to.....even begin....to anticipate how some of the moves that have been taken or will be taken in the future will impact markets and the economy. ANOTHER example of the potential for the cure to be worse than the disease.

The markets opened with great strength today. I am sure many were expecting another down open and a down day after Friday and the futures. BUT, we are a long way from the close and in an environment where the slightest news story can drive markets.....UP or DOWN very quickly. If we hold onto this gain to the close, I believe it is another obscure sign that we have reached a bottom in the past week or two. BUT....volatility will remain VERY HIGH, and EVERYTHING will continue to be news driven for some months. I will continue to reinvest ALL cash on down days over this month as planed. OBVIOUSLY every plan is subject to continued evaluation as events and actions overtake the markets to the UP side and to the DOWN side.

 

BUMMER......nothing I own was down today......so I did not buy anything. TODAY, beating the SP500 by .12% along with some nice gains in the accounts.

SOME of these "stay at home" orders are getting a little ridiculous. End of May, mid June. CRAZY.

Here is a BIG one. Doubtful that these jobs will still be around in a month or two.

Macy's will furlough the majority of its 125,000 employees

https://www.cnn.com/2020/03/30/investing/macys-employees-furlough-coronavirus/index.html

 

I PREVIOUSLY thought.....WRONGLY...that I could avoid posting about the virus crisis on here. BUT...it is impossible to separate what is going on and the economy and investing. SO.....ANYONE..... feel free to post away on anything to do with the virus or anything else that you think is relevant. For readers.......just because something is posted on here DOES NOT mean I agree or disagree. Just because I DON'T COMMENT or do comment, don't assume anything.......in terms of whether or not something NOT posted by me represents my opinion.

I DO TOTALLY agree with this little article, with the exception of the travel ban from Europe, China, etc.

We Were Wrong: So Sorry that We Ruined Your Life

https://www.aier.org/article/we-were-wrong-so-sorry-that-we-ruined-your-life/

(BOLD is my opinion OR what I consider important content)

"Andrew Cuomo, governor of New York, is moving up in the betting odds for getting the Democratic presidential nomination, even though he is not running. The reason is that binge-watching newshounds have noticed something about his comportment during this crisis. He seems just slightly struggling to know what’s true. Sometimes he is even honest.

Consider this. On Thursday March 26, Cuomo dared question the orthodoxy that has wrecked countless businesses and lives. He revealed what actual experts are saying quietly all over the world but had yet not been discussed openly in the endless public-relations spin broadcast all day and night.

He said the following:

“If you rethought that or had time to analyze that public health strategy, I don’t know that you would say quarantine everyone. I don’t even know that that was the best public health policy. Young people then quarantined with older people was probably not the best public health strategy because the younger people could have been exposing the older people to an infection. “

Further:

“What we did was we closed everything down. That was our public health strategy. Just close everything, all businesses, old workers, young people, old people, short people, tall people. Every school closed, everything.”

It’s true that anyone following the unfolding fiasco and the gradually emerging data behind it knows that Cuomo is right. The response has not been modern and scientific. It has been medieval and mystical. The theory behind the policy has been nothing but a panicked cry of run and hide before the noxious gas gets you. Lacking reliable data – which is the fault of the CDC and FDA – we replaced knowledge with power.

In the end, this fiasco is an epistemic crisis. As Ed Yong has written in a beautifully detailed article for The Atlantic, “The testing fiasco was the original sin of America’s pandemic failure, the single flaw that undermined every other countermeasure.” Even the wide acceptance of social distancing as a norm, however much it helps curb the spread, presumes this absence of knowledge. Stay away from everyone as much as possible: a slogan that reveals how little we know.

And yet lacking that knowledge, the politicians, cheered on by the media, acted in ways that have fundamentally wrecked life as we knew it, all in the course of a couple of weeks.

The massive knowledge gap was filled by a cascade of predictive models made possible by modern statistical packages readily available by subscription to any member of the clerisy. If this, and this, and this, and if this and this and this, then ENTER. Out pops what appears to be a precise presentation of our future under the following conditions, along with an overlay of embedded cause-and-effect assumptions about certain policies followed or not followed. Day after day we were bombarded with such predictions, and we paid close attention because we had little in the way of actual on-the-ground facts that have been available to us in previous disease panics.

It then became the perfect storm. Risk-averse politicians deciding to do something, anything, to avoid blame. Bureaucrats doing what they do best, which is telling people no, you cannot innovate, you cannot produce, you cannot distribute. Local tyrants stopping price gouging and therefore preventing the price system from working. A howling media famished for eyeballs, ears, and clicks. A public panicked about disease and death. An egregious dividing of people into essential and nonessential. Policy snares, tangles, missed opportunities all around.

The cacophony of information chaos has been palpable, unbearable.

All the while, a few knowledgeable experts have been trying their best to weigh in and get some slight attention for rationality. My heart, in particular, goes out to the esteemed Professor John Ioannidis who has been exposing fake science based on bad data his entire life and has been previously celebrated for doing so. He writes as often as he can, while still trying to be as precise and accurate as he can. Apparently such high-end people have a private email list in which they share observations and data, while doing their best to bring calm while civilization is falling apart.

His first salvo appeared March 17. God bless The National Post for publishing Ioannidis’s latest exasperated piece.

At the moment, we are enacting extremely severe measures in an effort to do something. However, we have very little evidence-based data on how to guide our next steps. We really don’t know where we are, where we are heading, whether our measures are effective, or if we need to modify them. There is a possibility that many of our aggressive measures could be doing more harm than good, especially if they are to be maintained in the long term. There will be major consequences in terms of lives lost, major disruptions to the economy, to the society, and to our civilization.

At this juncture we need to act swiftly. At the same time, we need to act equally swiftly to collect unbiased data that will tell us how many people are infected, the chances that someone who is infected will have a serious outcome and die, how the epidemic is evolving in different settings and places around the world, and what difference we are making with the measures that we’re taking. This information can make a huge difference and there is a lot that can go wrong if we don’t have the right data.

This has been an acute situation. At the same time, collecting reliable data should not take time and should not halt our decision-making process. Getting information on representative samples of the population is very easy. It has been done in Iceland, where they have a cohort covering most of the national population looking at samples that have been provided. They see that they have an infection rate of 1.0 per cent, and up until now only two people have died. So, out of the 3,500 infected people in Iceland there have been two deaths, which corresponds to an infection fatality rate lower than the common flu. Of course, some people may be infected later, but nevertheless, these estimates would be very different compared with the original claims of case fatality rates of 3.4 per cent that were circulated.

At the same time, we have other pieces of evidence that the number of people who are infected is much larger compared with the number of cases we have documented. In most places, with few exceptions around the world, we are just testing people who have substantial symptoms who have come to seek health care or even to be hospitalized. These are just the tip of the iceberg. The Iceland experience and other data from Rome and Italy where entire city populations were tested shows that the vast majority of people are either completely asymptomatic or mildly symptomatic in ways that you would not be able to differentiate from the common cold or common flu. This information makes a huge difference while we are proceeding with aggressive measures of social distancing and lockdowns that may have tremendous repercussions, especially in the long term.

As the song says, stop making sense.

I write on Saturday morning March 28, and right now there are two contrary strains about to collide. On the one hand, you have scientists reducing their death-rate predictions further and further, lopping off zeros by the day. On the other hand, this is accompanied by appalling levels of despotism, even to the point of National Guard checkpoints at state borders and restrictions on what you can buy even at “essential” stores. This gigantic gap between emerging professional medical consensus and appalling policy ignorance is revealing as never before the practical impossibility of scientific public policy.

Then you have the cascade of unintentional and unexpected outcomes of the rush to coerce. It began with Trump’s disastrous block on flights from Europe that sent millions scrambling for tickets and led to an unspeakable crush of people standing shoulder-to-shoulder at our nations’ airports, contradicting the demand that people social distance just when the virus was revealing itself as highly contagious. The very opposite of intended results!

That’s just the beginning. I doubt seriously that the political class in this country, as low a regard I have it, set out to destroy all that we call civilized life, instantly generating millions of unemployed workers and bankrupt businesses all around, not to mention a pandemic of utter hopelessness on the part of vast swaths of the world’s population. Still, this is what they have managed to achieve. This is what their pretense of knowledge – as opposed to actual wisdom – has unleashed on the world, with incalculable human cost.

As for economics, are we talking recession? Depression? Those words indicate cyclical changes in business conditions. My friend Gene Epstein suggests another term for what we are going through. The Great Suppression. There will be months, years, and decades in which to more clearly observe the countless ways in which the supressors piled error upon error, blockage upon blockage, to add to the grotesquery.

What truly should inspire us all right now are the grocers, pharmacists, truck drivers, manufacturers, doctors and nurses, construction workers, restaurant workers, service station attendants, webmasters, volunteers of all sorts, philanthropists, and specialists in a huge variety of essential professions who keep life functioning more or less. And let us not forget the “unessential” people (it’s an incorrect and vicious term) who have innovated ways around the Great Suppression to continue to serve others, keep the rent being paid, and food on their tables. They are the means of salvation out of this mess.

The market, hobbled and bludgeoned, still loves you.

As for the politicians, Andrew Cuomo has admitted some of the error. In a much-welcome change, he has even deregulated medical services. There’s just a hint of humility and humanity embedded in these statements and actions. We need more of that, vastly more, if only to contribute to calming things down long enough to gain some perspective, and, hopefully, some eventual realization that in the “land of the free and the home of the brave” a virus should be regarded as a disease to mitigate and cure, not an excuse to bludgeon life on earth as we know it."

MY COMMENT

I continue to see source after source say that the apex of this will be in mid April.....WTF. So in two to three weeks we will be at the peak? As I type this we have 2933 deaths in the entire USA. Predictions have now been reduced by many to 100,000 to 200,000 deaths.

PREVIOUSLY we were seeing death predictions being thrown around by many in the media in the millions and tens of millions for just the USA. PREVIOUSLY we were seeing death rates being routinely thrown around by health care bureaucrats and the media in the 3-4% rate for just the USA. You DONT see these sorts of numbers any longer. What you see and hear is.......NOW..... MUCH LESS.

HOW can the peak be ONLY 2-3 weeks away and YET we have less than 3000 deaths AND an expectation of 100K to 200K? The data DOES NOT add up. It is GARBAGE in GARBAGE out. It is the some sort of flawed "science" that is based on computer models and projections that have ZERO connection to REALITY. AND.....much of that so called "science" is driven by political and other ideology that is being PUSHED by many different groups with some agenda that they are driving.

 

AS I type this....a few minutes till the close the market averages....DOW, SP500, NASDAQ are up.....3.20, 3.62, and 3.35 percent. A continuation of the RALLY week we saw last week? A DEAD CAT or SUCKERS RALLY bounce? Or, a reaction to an EXTREME BOTTOM that was NOT justified.

PERVERSELY........I am pulling for DOWN days......in order to complete reinvesting so that I will be FULLY invested. ONE THING is sure.....I will probably get plenty of those days going forward in either scenario.

 

Made a few VERY SMALL buys on 4 stocks today that were negative and had ZERO gain from where I sold them previously. Thinking that as rent becomes due for residential and commercial leases in April we will see more and more DRASTIC, negative stories about tenants and business closures and the markets will be lower on short term news. ALTHOUGH....this is simply speculation......no way to predict anything at the moment. So, I will just have to see what is going on day by day and week by week to do my purchases.

 

Looks like I MIGHT get a chance to do some more buys tomorrow......if the futures turn out to be correct. BUT...for now....I LIKE the article below on International investing. As I have mentioned, I DO NOT invest in ANY stocks or companies that are outside the USA. FIRST.....I believe there is absolutely NO NEED to go outside the country that is the massively dominant business country in the world. SECOND......the AMERICAN companies that I own ALL operate and do business around the world....their products are iconic products around the world. There is absolutely NO NEED for me......in my opinion.....to invest in second rate companies outside AMERICA, just so I can tick some box regarding International investing.

Opinion: Here’s why owning non-U.S. stocks is causing your portfolio a world of hurt

https://www.marketwatch.com/story/h...olio-a-world-of-hurt-2020-03-31?mod=home-page

(BOLD is my opinion OR what I consider important content)

"What happened to the promise of international diversification? Far from cushioning the blow of the bear market in U.S. stocks, international diversification has worsened the decline.

The U.S. stock market has lost 22.1% since the beginning of the year; international stocks are down 25.4%. Emerging market stocks, which many analysts earlier this year were arguing were the most undervalued of any in the world and thus the most compelling, are off 25.9%.

These returns are plotted in the accompanying graph. Year-to-date returns are through Mar. 27, as judged by the Vanguard Total U.S. Stock Market ETF VTI, -1.43% Vanguard Total International Stock Market Index ETF VXUS, -0.52% , and the Vanguard FTSE Emerging Markets ETF VWO, +0.47% .


In fact, this isn’t a surprise. The potential benefits of international diversification have always been oversold, and recent experience simply confirms what we should have already known.

To be sure, international diversification certainly appears on paper to provide a free lunch. Both U.S. and foreign stocks have produced roughly similar long-term returns, and there is a relatively low correlation between the paths they take along the way. Given that, a portfolio divided between the two should perform just as well over the long term but with lower volatility.

The reason it hasn’t worked out this way is that the low correlation between U.S. and foreign stocks derives in large part from their returns during U.S. bull markets. During U.S. bear markets, in contrast, correlations between the two skyrocket.

Why? I know of two reasons:

•  The first is statistical. Because of how correlation coefficients are calculated, the increased volatility that inevitably accompanies a bear market translates more or less automatically into higher correlations.

•  The other reason is behavioral: When investors panic, they tend to sell all risky assets indiscriminately in a mad rush to safe havens. Correlations between those risky assets rise steeply because they all are falling together.

Notice what this means: Correlation is highest when you want it to be lowest, and lowest when you want it to be highest.

The reduced correlations during bull markets were in evidence during the U.S. bull market that began in March 2009. Between then and the market’s high this past Feb. 19, the U.S. equity market’s annualized return was 7.8 annualized percentage points higher than international equities, and 8.1 percentage points higher than emerging market equities.

By the way, the increased correlations during bear markets are also evident in the stocks within the S&P 500 SPX, -1.60% . The chart below plots the January 2021 version of the CBOE’s S&P 500 Implied Correlation Index; notice that the index was close to its low at the Feb. 19 bull market high, and two and one-half times higher just four weeks hence.


To be clear, this discussion doesn’t mean you should always avoid non-U.S. stocks. There no doubt are many other compelling reasons to consider them. But if the sole reason you’re investing in non-U.S. stocks is their alleged low correlation with U.S. stocks, you may want to think twice.""

MY COMMENT

I consider International stocks as......BUYER BEWARE. If I cant find plenty of investments in my own country......the world wide leader in business.......I should not be an investor. In a time like the current crisis, I ALSO strongly prefer to invest in dominant, iconic, AMERICAN companies that will lead the way in the markets when we recover. Those same AMERICAN stocks will also hold more value AND provide a cushion in a falling market. That is one primary reason that I focus on......AMERICAN, DOMINANT WORLD WIDE, ICONIC PRODUCT, GREAT MANAGEMENT, DIVIDEND PAYING, BIG CAP.......companies.These sorts of companies, in a crisis environment, or in a bear market, WILL hold their value and......."usually"...will fall less....sometimes far less..... than other stocks.

 

Invested about 10% of my remaining cash today at about 9:30. At the time the DOW was bouncing around from 3% to about 3.4% DOWN. I also have about the same amount of orders in for the mutual funds that will happen at the close today. I DEBATED waiting till later in the day since LATELY we seem to hit the lows of the day in the last hour of trading. BUT...I went ahead and did the trades, I am NOT going to try to MICRO-TIME the markets by a few hours. I NOW have about HALF my funds reinvested into the stocks and funds. I will do the remainder over the month of April and if necessary into May. BUT....that plan is contingent on what is happening as we go forward.

 

JUST, seconds ago, added a few more VERY VERY small purchases. HON, AMZN, NKE, and AAPL. DONE for the day. The GOOD NEWS, at the moment.......today....... I am BEATING both the SP500 and the DOW handily. When I looked they were both down about (-4.21%). My primary stock portfolio was at (-2.21%). I will take it.......BUT......I dont have to LIKE IT.

 

VIRUS article of the day. I LIKE this article and generally agree with it. BUT...we MAY AS WELL continue for the next 30 days since we are all wound up and at the start of that time period. I HOPE that all the mayors, county officials, and governors will RELAX when we get to the end of this 30 days and let society return to normal. How do you do this....you RELY on the people of the country to have and use common sense in terms of what and how they do things.

Coronavirus Death Predictions Bring New Meaning to Hysteria

https://www.realclearmarkets.com/ar...ons_bring_new_meaning_to_hysteria_487977.html

(BOLD is my opinion OR what I consider important content)

"The U.S. is staring at a Netflix-type apocalypse. You know, with feral animals eating human corpses, mutant plants reoccupying streets and buildings, empty restaurants and malls across the landscape….

Well, that last part is true, anyway.Not because of the disease but rather hysteria.

You’ve heard the apocalyptic claims. Imperial College in London – in a claim that would later get walked way back to far less fanfare* –estimated as many as 2.2 million U.S. deaths, depending on how drastically the population is locked down, locked out, and locked in. To reduce that figure to a “mere” 1.1 million, we would need to live a gulag life “until a vaccine becomes available (potentially 18 months or more),”they said.The CDChas issued an estimateof as many as 1.7 million American deaths.

Yet with lesser measures in place now – and for a very short period – the market has crashed, we areexperiencing more unemployment claimsthan at the height of the Great Recession, and there looms a real possibility of aworldwidedepression.Andthere are those who saythose measures aren’t nearly draconian enough.

Do we really need to destroy the country to save it?

Consider that China has hadfewer than 3,300 deaths even though the virus struck a country with a lousy healthcare system wholly unaware. Their epidemic peakedover five weeks ago,with almost no new cases now. So with a vastly better health care system, the U.S. can expect a per capita death rate about 666 times higher than the Middle Kingdom? Seriously, Imperial College?

You can quit reading right there. But please don’t. The utter insanity here is worth documenting, as well as knowing why even the lower bound U.S. estimates are nonsense.

EPIDEMICS ALWAYS FLATTEN AND DECLINE ON THEIR OWN

Fact is, the epidemic worldwide, far from “growing exponentially,” is slowing.And that was to be expected per what’s called “Farr’s Law,” which dictates that all epidemics tend to rise and fall in a roughly symmetrical pattern or bell-shaped curve.AIDS, SARS, Ebola, Zika – all followed that pattern. So does seasonal flu each year. COVID-19peaks have already been reported in China, South Korea, and Singapore.

Importantly, Farr’s Law has nothing to do with human interventions such as “social distancing” to “flatten the curve,” and indeed predates public health organizations. It occurs because communicable diseases nab the “low-hanging fruit” first (in this case the elderly with comorbid conditions), but then find subsequent fruit harder and harder to reach.Until more or less now, COVID-19 has been finding that fresh fruit in new countries, but it’s close to running out. So while many people assume that China contained its epidemic with draconian regulations, we actually have no evidence of that. Even the New York Times admitted South Korea recovered far more quickly with measures nowhere on the scale of China, although of course theTimes still attributes that to human intervention, which assigning no role to Mother Nature.

When the coronavirus epidemic ends and the public health zealots inevitably slap themselves on the back for having prevented their own ridiculous scenarios, don’t buy it. This isn’t to say that thorough hand-washing several times a day and not sneezing and coughing in others’ faces won’t help: It will. But without the authoritarian and economically-devastating measures the U.S. and other countries are taking that are wrecking the world economy, there will be no Apocalypse Now or in the future. The streets are empty not because of direct effects of the disease, but from fear and from government dictates; as in a cognate of “dictatorship.”

Mind, right now we’re seeing a spike in cases because only now is testing becoming readily available in the U.S. due to a delay in the CDC developing its own assay. This availability is almost universally hailed as only good, but has at least two bad aspects.

First, we’re now picking up a lot more asymptomatic people who will be counted as “cases” just as much as people on death’s door. This will further contribute to hysteria. Second, many who test positive will suddenly develop “nocebo” symptoms; the opposite of placebo. As I observed long ago, nocebo symptoms come from the mind but can be very real. They definitely can mimic COVID-19 symptoms. It’s a good guess that hospitals are seeing their share of the “worried well,” people who were feeling pretty well before they tested positive and suddenly truly feel deathly ill. And they’re not the only ones suffering as a result. This adds to the burden on severely stressed hospital workers already overwhelmed with patients whose symptoms do result from COVID-19—or from the many other ailments and injuries that haven’t stopped afflicting people while our attention is focused on this particular virus.

On the positive side (no pun intended), the more you test, the lower the death rate becomes because the denominator grows faster than the numerator. Rather than the 3.4% rate the WHO put out, the current crude U.S. death rate is ABOUT 1.6%and will probably drop to less than half that as we’ve seen so far in South Korea at 0.6%. Then as testing continues, the rate will drop even further. For the Imperial College figure to be correct, U.S. deaths would have to be 0.66 percent and every American would need to be infected.

THE ITALIAN JOB

So how many deaths can the U.S. reasonably expect? If it’s not the Chinese model, it appears to bethe Italian one. At the least,the media tell us, “Italy’s Coronavirus Crisis Could Be America’s.” Really?

That country so far has had over 7,500 deaths out of a population of 50 million, but it appears cases peaked on March 21.

Still, at this point that’s a stunning 9.5% crude death rate, by far the highest death percentage in the world. Which of course is why the media choose to focus on it, rather than other countries such as Germany with only about 240deaths out of a much larger population.

But why is this happening in Italy? Partly it’s because Italy just doesn’t have a particularly good health care system. Even more specifically, last year the Nuclear Threat Initiative (NTI) and the Johns Hopkins Center for Health Security ranked the U.S.the best-prepared country in the world to handle a pandemic in late 2019, whereas Italy came in at only 31 – below Mexico.

As Forbes recently noted,U.S. hospitals have vastly more critical care beds than Italy, which in turn has more than South Korea. And you don’t even want to hear about China. Not because they eat bats, but because “bed” pretty much equals “floor.”

Beyond that, Italy has the fifth oldest population in the world(whereas the U.S. ranks 61). We already knew from Chinese data that COVID-19 is overwhelmingly a killer of the old and infirm.An analysis by China’s Center for Disease Control & Prevention found that most deaths occurred in those aged 80 and over.

Further, almost all those elderly dead had “comorbid” conditions of cardiovascular disease, diabetes, or hypertension. Similarly, almost everyone who has died in Italy has been over age 70,and virtually all had comorbid conditions: In fact, half of those who died had three or more. Almost nobody under 50 has succumbed and almost all who have also had serious existing medical conditions. This is a condemnation of the nation’s health care system; not a portent of America’s future.

And it appears a major factor may be how cases are recorded, which makes the assumption that dying from COVID-19 is the same as dying with it. Given the strong overlap between the population susceptible to flu and COVID-19, it’s certain that many who actually succumbed to flu are marked as coronavirus cases. We can expect that in the U.S. as well.

IF IT’S NOT THE HEAT, IT’S THE HUMIDITY

Yet another U.S. advantage is that the epidemic hit it later than Italy (and Asia, of course) and spring is in the air. Respiratory viruses usually hate warm, moist, sunny weather.Hence flu arrives in the U.S. in the fall and disappears by April or May. We know the “common cold” is rare in summer and many colds are caused by four different coronaviruses.

SARS was a coronavirus and simply died out between April and July, 2003. The media and public health officials desperately want you to think this coronavirus is different, but the evidence so far is that it follows the usual pattern with scientific publications such as “High Temperature and High Humidity Reduce the Transmission of COVID-19.”

The media and public health alarmists also cite MERS-CoV as an exception, but there’s evidence that it is also complains: “If it’s not the damned heat, it’s the humidity!”This year, the flu peaked in February. So it’s possible that even now weather is affecting U.S. coronavirus spread. Will it come back in autumn? Probably. But by then many in the population will have had exposure immunity, hospitals will be better prepared, the worried well problem will be reduced because it will no longer be a “new” virus, and we’ll have time to see if anything in our arsenal of antivirals and other medicines is truly effective.(No, there will be no vaccine available.)

Meanwhile, we apparently have a new definition for “American exceptionalism.” Ignore what’s happening in the entire rest of the world; ignore epidemiology; ignore virology; ignore common sense; ignore history. America, as Johnny Cash sang: “God’s Gonna Cut You Down.” Just as SARS was supposed to (it killed zero Americans) and just as forecasters (seriously)predicted more American AIDS deaths than there were Americans.

Meanwhile, the harsh measures encompassing much of the country are simply unproven – beyond knowing that hermits don’t get contagious diseases.South Korea didn’t need them and Sweden hasn’t used them even as its neighbor Norway has been praised for early implementation. For its efforts, Norway has reported over twice as many cases per capita and suddenly suffers its highest unemployment rate in 80 years.

But as always we follow the dictates of the public health zealots, the media and power-hungry pols. Shame on us that after all these years we are once again ignoring reality for the dubious benefits of hysteria.

*Note: As this article was being written, Neil Ferguson, the head of the Imperial College study, simply threw his model away. Along with the U.S. one of 2.2 million deaths, he predicted the U.K. would have as many as 510,000 deaths. In an oral presentation he reduced the U.K figure slightly… to 20,000. So the model that launched a thousand articles wasn’t worth anything more than the pixels it appeared with."

MY COMMENT

I must have heard the word ITALY 50 to 100 times in the press conference yesterday. Just for reality. Italy has a death rate of 218 per million of population, Spain is at 194 per million. WE...the USA are at 14 per million. NO....we are NOT going to be anywhere near or like ITALY. Current data for the USA....total cases 205,053. Total deaths 4516 in a country of 330MILLION people.

https://www.worldometers.info/coronavirus/

I have been alive for 70 years and this is the FIRST TIME in my life that we have taken these sorts of actions in response to ANY virus or sickness. SARS, MERS, AIDS, H1N1, you name it....we have NEVER reacted as a country like this to a similar event.

BUT......I know....talking to the wind. SO....we may as ell do the 30 days and HOPE that at the end we have the brains to UNLEASH the economy BEFORE we destroy it.

As an example.....H1N1:

"The 2009 H1N1 pandemic originated in the United States before spreading around the world, according to the U.S. Centers for Disease Control and Prevention (CDC). A later study suggested it was first diagnosed in humans in Mexico. The CDC estimated that from April 12, 2009 to April 10, 2010, there were 60.8 million H1N1 cases, with 274,304 hospitalizations and 12,469 deaths in the U.S. alone. They also estimate that worldwide, 151,700 to 575,400 people died from (H1N1)pdm09 during the first year. Unusually, about 80% of the deaths were in people younger than 65 years of age."

We did VIRTUALLY NOTHING in response to H1N1.

 

UNLESS we get a REALLY BIG drop in the markets.....I will probably wait about 1-2 weeks to do any more reinvesting of cash. I am about half reinvested right now. I expect that we will NOT see the worst till mid April to mid May. BUT....at this point in time it is just guesswork to try to predict ANYTHING to do with business, stocks, the economy, etc, etc. SO.....I might change my mind within days. BUT....we may have already reached the low on the DOW. We would need to drop about another 10% from where we are right now to retest the prior low....in the mid 18,000's.

 

SORRY for another negative post.....is there anything else these days? Over the past 10 years or more MANY have gotten used to living from stock dividends. As interest rates dropped and stayed low, many stocked up on dividend paying stocks as a way to make up for the low rates.

The next hit to your retirement fund: Disappearing dividends

https://www.cnn.com/2020/04/01/investing/dividends-coronavirus-recession/index.html

(BOLD is my opinion OR what I consider important content)

"Pension funds and other investors are smarting from the worst quarter for stocks since 2008. Now many are bracing for more pain as companies slash dividend payouts in the face of a global recession that is wiping out their revenue and putting millions of their workers out of a job.

Banks have already started ditching payments worth billions of dollars, and so have companies in other industries. The cuts are a sign of just how big a hit the coronavirus has been for global businesses, which delivered a record $1.4 trillion in dividends last year.

"We're getting companies suspending or cutting dividends every single day at the moment," said Jane Shoemake, investment director on the global equity income team at Janus Henderson, an asset manager that tracks global dividends.
Goldman Sachs estimates that S&P 500 (DVS) dividends will decline by 25% this year. Citigroup, meanwhile, thinks dividends in Europe — which are typically more generous than in the United States — could be cut in half.

Pressure to slice dividends is coming from many sources: In the United States, companies that accept federal bailouts or loans to survive the coronavirus crisis are barred from paying dividends in the near term, while regulators are calling on banks to preserve capital so they can keep lending to businesses and offer mortgage holidays to households.

UK banks including HSBC (HBCYF), Standard Chartered (SCBFF) and Lloyds (LLDTF) have halted dividend payments following a request from the country's financial services regulator. Their shares plunged on Wednesday, pushing the FTSE 100 (UKX) index down more than 3%.

For the retail, hospitality and energy sectors — which have seen revenue dry up completely in some places — it's about holding onto enough cash to tide them over until the lockdowns lift and the economy can start to recover.
"It's all about the balance sheet right now," said Peter Boockvar, chief investment officer at Bleakley Advisory Group.

A looming 'wave' of cuts
Dividend payments have exploded since the global financial crisis as steady economic growth and President Donald Trump's corporate tax cut in 2017 left companies flush with cash. Executives binged on buying back shares and boosting dividends, which reward investors while boosting the value of the company's stock.

In 2019, dividend payments rose by 3.5% to hit $1.4 trillion, an all-time high, according to Janus Henderson.
Companies usually try to preserve those payments at all costs. Shareholders can be punishing if they backpedal.
That's especially true in the oil sector, where dividends are the main prize keeping investors committedto an industry with limited opportunities for growth. But faced with an oil price crash, a sharp recession and the prospect of having to layof for furlough employees, companies have few options but to retrench.

Goldman Sachs strategists Cole Hunter and David Kostin told clients this week that "a wave of dividend suspensions, cuts, and eliminations will result in payouts declining by 38% during the next nine months."
In Europe, dividends cuts could be even worse than during the global financial crisis, when they fell by a third, according to Citigroup strategist Robert Buckland.

Under pressure
Those hit the hardest by the pandemic have quickly moved to stop dividend payments in a bid to conserve cash. Carnival (CCL), which is trying to tap capital markets for $6 billion as the cruise industry implodes, halted its dividend on Tuesday.
Companies also have public opinion to consider at a moment when shareholder handouts are politically charged. Continuing to make dividend payments while cutting employees loose would pose a major reputational risk.

"To be seen to be paying out a big dividend when all of this is going on, it could not be taken very well," Janus Henderson's Shoemake said.

Macy's (M) suspended its dividend on March 20 before announcing that it would furlough most of its 125,000 employees earlier this week.

Access to government bailouts is a factor, too. Under the $2 trillion stimulus bill enacted by the United States last week, businesses that take advantage of a new $500 billion lending program can't issue dividends until a year after the loan has been repaid. Airlines that receive US assistance aren't permitted to make such payments through September.

The situation is slightly different for banks. Regulators have assured the public that lenders have the capital necessary to get them through the crash without sparking a new financial crisis. But they're encouraging banks to pause dividends anyway so they can boost lending, helping to power the economy through this vulnerable moment.

The European Central Bank has asked banks not to pay dividends until at least October "to boost banks' capacity to absorb losses and support lending to households, small businesses and corporates."

Big Oil holds out
In the oil sector, where dividends are sacrosanct, the biggest players are doing their best to stay the course despite the 63% collapse in oil prices since early January.

"Through the last downturn they did whatever they could to avoid cutting their dividends," said Anish Kapadia, director of energy at the consultancy Palissy Advisors, referring to a plunge in oil prices between 2014 and 2016.

Royal Dutch Shell (RDSA) hasn't slashed its dividend since World War II, and it's going to extraordinary lengths to avoid doing so now. The company said this week it has secured a $12 billion line of credit, which comes on top of a $10 billion credit facility obtained in December.

But taking on more debt at such a precarious moment could be dangerous, and it's not an option for all oil companies, Kapadia said.They could reduce spending on equipment, but they already sold a lot of what they could during the last oil shock.
If prices stay this low, the product of a price war between Saudi Arabia and Russia and evaporating demand, cash levels could be low enough to force Big Oil's hand.

"As you go on through the year, the prospect of dividend cuts becomes much higher," Kapadia said.
Some companies, such as those in tech, health care and utilities, will be less affected by the coronavirus outbreak and could stay the course. But in the current environment, it's hard to say which payouts are safe — especially when the outlook is so uncertain.
"Even companies that could pay dividends may not do so," Citigroup's Buckland said. "Better to build cash on the balance sheet to deal with potential pitfalls ahead.""

MY COMMENT

If ANYTHING good comes of this business interruption.....hopefully it is the death of share buybacks. What a complete waste of money. NOW is the time for all those that live from their dividends to plan for the next 6-18 months. If I was using dividends as retirement income I would plan for a 50% cut for at least the next 18 months. Personally, I would plan to NOT depend on any dividends going forward for a couple of years. NOT....out of doom&gloom, but out of conservative budgeting.

 

My portfolio stocks have been BEATING the SP500 on the UP and DOWN days during this little event. BUT......a phyric victory, with everything going on daily. I KNOW in the medium to long term the BEATS that I am piling up right now will leverage and compound to some REAL MONEY. I DONT anticipate investing in anything today. I want to see the direction of the markets for at least a few days. It.....FEELS....to me like the markets are likely to push DOWN this week, so I am holding off for now. Although.....FEELINGS.....are not real productive when it comes to investing. Perhaps I should call it.......INVESTORS INTUITION....instead. That sounds a little more knowledgeable. On the topic of BEATING the markets in a BEAR period:

Your next move will play a big role in beating the market over the long term

https://www.marketwatch.com/story/y...t-over-the-long-term-2020-04-01?mod=home-page

(BOLD is my opinion OR what I consider important content)

"You need to exercise special care during this bear market if your goal is to beat the market over the long term.

To be sure, this may not be your goal. You long ago may have decided to invest in index funds. But I know that many of you still harbor the desire, either explicitly or implicitly, to do better than that.

If so, this column is for you.

The key to achieving your goal is to follow your adviser through thick and thin—and by “thin” I mean bear markets like the one we suffered from over the last five weeks. While it’s easy to follow along when things are going well, it’s tough when the markets are plunging. Ironically, though, that’s when the majority of advisers open up a lead over buying and holding—their alpha, in other words. Take away their bear market alpha, and they’re likely to have no alpha at all.

This isn’t to say that advisers don’t lose money during bear markets. Most (but not all) do. But most of the best advisers lose less than the market itself. And that margin of outperformance turns out to be a crucial factor in their beating the market over the long term. The lesson here is to focus on relative returns (losing less than the market averages) rather than on the absolute losses themselves.

A corollary is that now is a particularly poor time to give up on your adviser or strategy.

One way of illustrating this profound point is to compare the percentage of advisers who beat a buy-and-hold in bull markets with the proportion in bear markets. The attached chart summarizes the data from my Hulbert Financial Digest tracking of investment newsletters, which began in 1980. The chart focuses on bear markets in the calendar maintained by Ned Davis Research. (I didn’t include entries in that calendar in which the Dow Jones Industrial Average DJIA, 0.393% did not fall by 20% on a closing basis.)


Notice that the percentage of monitored newsletters that beat a buy-and-hold was above 50% in each of the bear markets. The average across all five bear markets is 65%, or about two out of three. That’s far higher than the percentage that beat a buy-and-hold during bull markets, which as you can see from the chart is below 30%.

A recent analysis from Style Analytics reached similar conclusions in an analysis of equity mutual funds. As in the case of the newsletters, they found that a markedly higher percentage of them beat a buy and hold during bear markets than in bull markets. But an additional finding was also very revealing: They found that as they focused on mutual funds with better and better records, an increasing percentage of their long-term market beating return came from bear markets.

What accounts for these results? It can’t be that managers are any smarter or shrewder during bear markets than bull markets, for example.

Part of the answer is mathematical. To the extent a manager has any cash in his portfolio, that cash will be a drag when the market is rising and a source of alpha when the market is falling. A related factor: The bigger the loss during a bear market, the commensurately bigger gain that must be produced during bull markets to overcome the loss. But that requires excessive risk, and rarely in my tracking of newsletters have the riskiest newsletters been able to pull this off.

Another part of the answer is psychological: Few investors truly have the patience and discipline to stick with a strategy through a bear market—leaving outsize gains for those who do have those qualities.

To be sure, a bear market won’t resurrect the long-term performance of a terrible adviser. Patience and discipline is not a good idea when you’re following the wrong adviser. So the assumption behind my argument is that you’re following an adviser who is right and appropriate one for your financial situation. And I acknowledge that there is no way of knowing with certainty that you are.

But I do know that it’s a bad reason to get rid of an adviser for losing money during a bear market.

The bottom line: No one said it would be easy sticking to your guns when the market plunges, especially when it falls as far and as quickly as it did over the last five weeks. But what you do next plays an outsize role in whether you will beat the market over the long term."

MY COMMENT

A time like the current situation is the perfect time to evaluate a couple of things. FIRST.....your ACTUAL risk tolerance now that we are in the.....REALITY....of a quick and nasty BEAR market. Theoretical risk tolerance during a eleven year BULL market is one thing.........ACTUAL risk tolerance during a market crisis is another thing. SECOND.........your investment plan. Is your portfolio performing the way you expected it to perform. OR.......did you ever even give any thought to how your portfolio would perform in a nasty BEAR market? It is probably NOT a good thing to be making wholesale changes to a portfolio in the current crisis....BUT....the lessons being learned......RIGHT NOW........should be applied as we go forward. For past decades one of my PRIMARY GOALS has been to try to BEAT the SP500 in both UP and DOWN markets. That is a BIG part of my long term lifetime investing plan to invest in the sort of BIG CAP companies that I invest in. It makes it a little easier to sleep at night AND weather a nasty BEAR event knowing that you are at least racking up daily gains by LOSING LESS than the averages. It ALSO makes at a little bit more tolerable to be a long term stock and fund investor by knowing that the investments that you own are the CREAM OF THE CROP of the American economy. I continue to be......NEARLY....fully invested for the long term. I expect to have ALL cash fully committed to the markets some time over the next month or so in my usual portfolio fashion.

 

Welcome Yashwanthraj. Feel free to post any time you wish. The value of this board is in the shared experience and support of fellow investors....ESPECIALLY....during a time like this. There are some GREAT threads in these forums.....TomB16 in this forum. I also like a lot of the Stock Market Today forum threads by BigBear. I am NOT a trader.......I am a LONG TERM INVESTOR......but there are also many trading threads by many different types of traders.

 

THIS is why I ONLY stick with AMERICAN, BIG CAP, etc, etc, etc, companies. This CHINESE company committed (allegedly) big time FRAUD. They were (allegedly) able to pull it off for nearly three quarters. Where were the CPA's? Oh yes......it is China. RAMPANT (alleged) FRAUD. Besides that this company was full of HYPE and being pushed by the HOT money on Wall Street. Going to beat out Starbucks, etc, etc.

China's Luckin Coffee plunges 75% on accounting probe

https://www.cnn.com/2020/04/02/investing/luckin-coffee-accounting-probe-stock/index.html

"Luckin Coffee has become a phenomenon in China -- and with Wall Street investors -- due to stunning growth. But it turns out some of its sales may have been fake.

Shares of Luckin Coffee (LK) plunged 80% in early trading Thursday after the company disclosed in a regulatory filing with the Securities and Exchange Commission that its board had formed a committee to look into accounting irregularities.

Luckin said in the filing that beginning in the second quarter of 2019, chief operating officer Jian Liu and several of his direct reports "had engaged in certain misconduct, including fabricating certain transactions." Luckin said Liu has since been suspended.
The company added that the fabricated transactions amounted to about 2.2 billion yuan (approximately $310 milion US) from the second quarter to the fourth quarter of last year.

"Certain costs and expenses were also substantially inflated by fabricated transactions during this period," Luckin added in the SEC filing.

Luckin went public on the Nasdaq last May, which is why the company needs to file regular updates with the SEC.
The stock surged shortly after its Wall Street debut thanks to soaring sales and an aggressive expansion plan. It seemed that Luckin was going toe to toe with Starbucks (SBUX), which has a massive presence in China, and wasmore than holding its own against the global coffee giant.

Shares of Luckin were down sharply this year -- even before Thursday's accounting bombshell -- due to concerns that Covid-19 were affecting its sales.

The stock, along with other Chinese consumer companies that trade in the US, rallied earlier this week. A strong manufacturing sector report in China raised hopes that the Chinese economy was taking a turn for the better following the coronavirus outbreak.

MY COMMENT

BEWARE HOT, CHINESE, IPO's. For that matter, BEWARE ANY Chinese company because REGARDLESS of the company......why would someone want to buy stock in a company that was based and potentially controlled by the Chinese government. Add to that....chasing the next great thing IPO and you have a recipe for DISASTER. The HEADLINE of this article is VERY GENEROUS to this company as is the article.