The Long Term Investor

I post on here any time I make a move. Usually the same day. What is the use of doing an investing thread, if people can not follow along with REAL MOVES. FOR BETTER OR WORSE....I post REALITY in terms of what and why I am doing anything. There is NO reason to do a FAKE investing thread....way too much work to just post a bunch of baloney.

So...this morning when we were down about 500-600 I SOLD OFF a BIG chunk of holdings in terms of the dollar amount......around $1MIL. I sold this in my primary, personal, portfolio. The remainder of my primary portfolio and the majority of my stock market money CONTINUES to be invested for the long term. The other portfolios that I manage like my sister, kids, etc, etc, I did not sell anything.

The reason I did this trade is because I got to the point in my personal portfolio that the funds.....about $800,000, that I had added to the account on about October 4, 2019, plus more that I was able to identify here and there, was at a point of being DEAD EVEN......no loss no gain. A chance to cash out and reinvest that money at no cost, at a tiny gain, in the current market as a DO-OVER. So I spent last night identifying holdings in the portfolio in addition to the $800K that could be sold with little to no capital gain tax exposure and little to NO LOSS. In other words I decided to raise some cash....based on money that was basically dead even.....that would not cost me anything in taxes and would NOT incur a loss. I INTEND to use this money for what I consider a MEDIUM TERM trade.

I believe the following after watching the markets for the past couple of weeks:

We are in an irrational, panic driven market.

The MEDIA is hyping this virus to the MAX.

We will see significant additional infection around the world and in this country going forward.

The MEDIA will continue to ramp up the panic and we will see the markets continue to drop over the next 2-3 months.

The virus is going to be less of an issue than annual Flu BUT reason and rational thinking will be out the window with the public for a while.

My GUESS......and it is simply a guess.....is the following:

There is perhaps a 50/50 chance of 15% to 20% further drop from where we are now.
There is perhaps a 25% chance of a drop of as much as another 30%.
There is perhaps a 10% chance of a drop of as much as another 35% to 40%.

The above will DEPEND on the spread of the virus, especially in the USA, and the continuation of the PANIC atmosphere and reaction.

I saw this as a RARE opportunity due to the fact that I had put a BIC CHUNK of money into the markets October 4 2019 which I can now use for a DO-OVER with no real gain or loss or tax exposure. (actually that money had a small gain left today after the sell off of about $15,000) I had a one time opportunity to RE-DO that October trade.......FREE.

If my GUESSWORK is correct I will be able to reinvest that cash some time over the next few months with a nice discount on prices. I ALSO believe that that cash money DOES NOT have significant risk to the market upside. I believe at worst for my cash, the markets will just linger and will NOT rise much over the next few months. SO.....I will watch and await the events to come over the next few weeks to perhaps 2-3 months. When the funds go back into stocks and funds, they will go back into the same holdings that I sold. the holdings that I sold were spread over my entire portfolio as shown in the portfolio model above.

I WILL NOT take the risk of using any sort of LEVERAGE with those funds.

So basically I had a chance to raise cash with no tax exposure, and, in my opinion, little risk of a significant up-move in the markets.

As I said this is RARE medium term trade for me. Once in a while in my investing life I have taken this sort of action, in spite of being a long term investor. The MSFT trade that I have described in other posts in 1990/1991 was such a time. Selling out in May of 2008 and buying back in in January/February of 2009 was another such time. This will be the THIRD TIME in my investing life that I think I am seeing a significant medium term opportunity to preserve funds and make money going back in. The BIG FACTOR that I am betting on is that the general public will continue to PANIC and drive prices down more and more over the medium term.

The current market is the MOST PANIC driven market and event I have seen in my lifetime. Time will tell if this little experiment works out or not. With the MAJORITY of my funds and the funds of my family I continue to be fully invested as usual.

NOW.......back to the question that was asked about what I would buy.....when I reinvest these funds they will be spread among the 11 stocks that I already hold and the funds that I already hold. I like my portfolio as it is structured right now and like the individual holdings. To me ALL are premium holdings.

So......I hate to miss out on a "POSSIBLE" BIG PANIC with no cash to invest. NOTICE I said "possible" NOT "probable". This is simply an educated guess....but I believe, one that has little to no downside risk (an explosive UP market). I will HOPE to get this money back in at a nice discount in prices, but not try to hit the absolute bottom. TIME WILL TELL if any of the above pans out.

So TomB16.......I NOW have joined you with a CHUNK of investable cash.

 

I will need to look out for the WASH RULE potentially.....but I suspect it will be at least 30 days before this money goes back in.

ZUKODANY

I dont follow DIS. I did of course notice their management change. I was not a fan of Iger. I dont know anything about Chapek. He seems to be a long term company guy. So...I dont have an opinion.

I will say in general......something that was in a page of posts that disappeared a few days ago.....If I was going to buy ANYTHING, I would probably wait at least a week or two to see how this short term MANIA is going to play out. It appears that we are in a short time period of SCIENTIFIC IDIOCY on the part of the general public and investors. I DO NOT agree with what is happening in the markets right now over the short term. BUT....I will try to profit from it a little bit, per post above. My personal view is the economy is STILL strong, and all economic indicators in the USA are in great shape. To the extent that AMERICAN companies are impacted by the supply chain and other virus issues.......I BELIEVE that the economic and business boom that will come with resolution of the issue will QUICKLY make up for any short term impact.

 

SOME good lessons here to review:

Don’t Lose It

https://humbledollar.com/2020/02/dont-lose-it/

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

"HERE’S THE LEAST surprising thing you’ll read this week: You can’t control the financial markets. They’re driven by news—and we simply don’t know what news we’ll get in the weeks and months ahead, whether it’s about the spread of the coronavirus, its impact on the global economy or something else entirely.

But don’t despair: There’s also much that we can control, including how much we save and spend, the amount of investment risk we take, how much we pay in investment costs, our portfolio’s tax efficiency and—most critically at a time like this—our own emotional reaction to market ups and downs.

Indeed, if you were going to design a laboratory experiment to test investors’ mettle, this past week would provide a nearly perfect template. Think about it: We have a virus without a vaccine that’s spreading rapidly—but nobody knows how rapidly—which is damaging the global economy—but nobody knows how badly—at a time when many U.S. stock investors were already anxious after an extraordinarily long bull market that has pushed valuations to worrisome levels.

Feeling unnerved? It would be shocking if you weren’t. Think about all the ways that this year’s market action has messed with our heads.

Recency bias. In 2019, the S&P 500 stocks were up an impressive 28.9%, excluding dividends. This year, they’re down a fairly modest 7.8%. Which number are we focused on? You already know the answer. Instead of celebrating the huge gains enjoyed over the past decade, investors are fretting about the relatively modest losses suffered this year. Our thinking, alas, tends to be heavily influenced by whatever’s happened most recently.

Extrapolation. The S&P 500 has given up 12% over the past six trading days. The temptation is to take the past week’s losses and extrapolate them into the future. But that would be a classic investor mistake: We imagine we can forecast returns simply by looking at past performance.

Loss aversion. Recent stock losses—and our sense that more damage may lie ahead—is enough to cause many folks to panic. We simply loathe losing money. Indeed, experts in behavioral finance suggest we get at least twice as much pain from losses as pleasure from gains.

Anchoring. As of yesterday’s market close, the S&P 500 had fallen back to levels last seen in mid-October. If somebody had told you in mid-October that U.S. share prices would tread water for the next four months or so, you likely would have shrugged. But instead, we’re anchored on the S&P 500’s Feb. 19 all-time high and the 12% decline since then.

Hindsight bias. Because the current bull market has lasted so long and because stock valuations have been significantly above historical averages, many investors have been expecting a bear market for many years—and they’ve been badly wrong. Despite that, there’s a risk that these folks will decide they predicted the current market decline. That, in turn, may bolster their confidence in their own financial acumen, leading them to make big investment bets.

Unstable risk tolerance. Will those big investment bets involve stashing more in stocks or bailing out? Which way folks jump will likely depend, in part, on how recent market action has affected their tolerance for risk. In theory, we’re supposed to figure out how much risk we can stomach and then build a portfolio that reflects that. In practice, our appetite for risk tends to rise and fall with the financial markets—and right now a lot of investors are likely discovering they aren’t nearly as brave as they imagined.

Illusion of control. Faced with danger, often our instinct is to act. That can make us feel more in control of our destiny—but it may not be good for our financial future. Most of us hold a portfolio built to help us pay for retirement and other goals in the decades ahead. Should we mess with that investment mix simply because of a few rough days in the market? To ask the question is to answer it."

MY COMMENT

AMEN.....again. HOPEFULLY my little experiment in building some cash will not fall prey to and be driven by some of the above rules. I dont think so, but you never know. I PROBABLY should NOT be trying to make money from a short to medium term situation. BUT, I believe this is close to a NO RISK situation. I dont believe I will lose significant money even if I end up going back into the stocks with those funds at little gain. AND.....my little experiment will at least be interesting to watch. LATER everyone.....I need to go log in to my account and record the prices of the eleven stocks at the time of my partial sale this morning. My HIGH TECH method will be a 5x3 note card siting on my desk top that I will see EVERY DAY.

 

HERE is a nice little article comparing DOLLAR COST AVERAGING to LUMP SUM INVESTING. I know......what about the virus. Well everything cant be all about the virus 24/7. Well......actually it can and is right now, but I am tired of it. I have stated many times in this thread that I subscribe to lump sum investing.....all in all at once. The vast majority of academic research that I have seen confirms that lump sum will beat dollar cost averaging. HOWEVER.....it is a very difficult thing for people to do. HUMAN risk aversion and personal doubt makes it easier to swallow an approach like DCA over lump sum. There are a lot fo things in investing that seem intuitive....BUT....they are not. This is one of them. This is a long article, so I will not post the text, but for those that are interested in fine tuning your investing and giving yourself every little edge, this is a good article.

Dollar Cost Averaging vs. Lump Sum: The Definitive Guide

https://ofdollarsanddata.com/dollar-cost-averaging-vs-lump-sum/

MY COMMENT

There are exceptions to every rule and the current markets may be an example when it is safer to DCA compared to lump sum investing. We are in a time period right now where an EXTERNAL event with nothing to do with business is impacting markets. We are also in an extreme PSYCHOLOGICAL event driven by modern MEDIA, POLITICS, and ANCIENT human emotions and fears. I have seen much information lately that Corona will not be much more severe than the Flu and will settle into a death rate about the same as the Flue. BUT....we are in the start of a very unsettled time period.

Perhaps the best source for ACADEMIC research on investing that I know of is DALBAR. They do excellent research. I dont buy any of their products or research but it is generally available around the internet on various subjects.

 

I EXPECT a NASTY open on Monday for the markets. If so....humans are just being humans......irrational, superstitious, tribal, beings. If the open is calm....in spite of the news and MEDIA breathless fear mongering......that will be a BIG positive sign.

Trump misidentifies first US coronavirus fatality, calling man a ‘wonderful woman’

https://nypost.com/2020/02/29/trump...virus-fatality-calling-man-a-wonderful-woman/

Fear at nursing facility; 50 sick...

https://apnews.com/f175d89567a26d59cab27725c9e8a0d7

Empty streets, economic turmoil as virus alters daily life

https://apnews.com/00d9680372ff4945449f670c10a88fe9

52 People in Washington State Nursing Home with Coronavirus Symptoms, 2 Test Positive

https://www.breitbart.com/border/20...ome-with-coronavirus-symptoms-2-test-positive

MY COMMENT

The current veneer of civilization is very thin at the moment......BUT....that is usually the norm in any HYSTERICAL EVENT. LIKEWISE...........the social compact between citizens of THIS country. THIS is why CULTURE, history, shared social norms, etc, etc, count. I would HATE to see the current people of THIS country face a REAL crisis like WORLD WAR II. At least based on how and what I see from the media regarding this very MINOR event.

I have lived through MANY various events. TYPICALLY.......in the past...... people would RALLY as AMERICANS in such an event. I am NOT sure that will be the case anymore going forward based on this panic and reaction over......NOTHING. We are in the early stages of this event. HOPEFULLY people with start to react with reason and rationality. HOPEFULLY the MEDIA will take a positive constructive role in NOT fostering panic. HOPEFULLY the politicians will NOT try to use this event in their CYNICAL and OBSCENE push for advantage and power.

The GOOD NEWS....this event over the next 3-8 months will turn out to be NOTHING for the vast majority of people and the world. The REAL danger and the REAL potential for lasting damage will be the PANIC and REACTION of people........NOT this simple cold virus.

In any event I will continue to be fully invested....except for the funds I raised discussed a few posts above. WHY, because I understand the science of this virus and reality of the NON-IMPACT it will have on 99% of this country and the world from a health standpoint. For anyone NOT on the CUSP of retirement the current market action will be LONG FORGOTTEN in the near future and especially in 2 or 5 or 7 or 10 or more years from now. I have lived and invested through:

The gas lines and crises of the 1970's. The years of STAGFLATION and 12-18% interest rates of the late 1970's early 1980's. The massive inflation of the same era. The FLASH CRASH of 1987. The DOT COM CRASH. The 2008/2009 potential collapse of the banking system due to the DERIVATIVE financial product stupidity. The 9-11 attacks. Various assassinations, and bombings. The Vietnam War. etc, etc, etc. ALL were much more REAL in terms of their impact on society compared to the current event. The financial markets recovered from them all and moved forward as usual. The SAME WILL happen now. If you are not in retirement, if you have at least 7-10 years horizon. YOU will be fine. The money you invest in your 401K or other accounts during the coming days and months will have grown MASSIVELY. If you are in your 20's, 30's, 40's and even 50's....you have plenty of time and when you look back at a chart you will not even be able to make out this little event.......AT ALL. It will be lost in all the little blips up and down.....in the NORMAL market action.

SMART investors will do just fine......SIMPLY by doing NOTHING. That is all it will take......is the ability to simply do NOTHING.

 

I will say....the REAL PROBLEM with this whole little situation will NOT be the average person. It will be the investment banks, the professionals, the AI traders, the computers......they will all panic like they ALWAYS do. The computers will be trading based on the algorithms and programs in micro seconds. This is the real danger. This sort of micro second trading has the power to SNOWBALL the markets way down, way fast.

For most people just keep in mind......over the next months you will be seeing your 401K and other contributions going in at a really nice price if the markets go down. AND...perhaps people will tire of this quickly and the media will simply move on as they always do. The ELECTION will be a BIG FACTOR in how long and how hard the MEDIA is going to DRIVE this issue.

Lets all stay safe and sane. HERE is the REALITY:

Here's the mortality rate for every age bracket, according to the study:

• Children and teens (ages 10 - 19): 0.2%
• 20s: 0.2%
• 30s: 0.2%
• 40s: 0.4%
• 50s: 1.3%
• 60s: 3.6%
• 70s: 8.0%
• 80s and older: 14.8%"

AND......those figures represent the data in a third world country with a third world health system. NO DOUBT the figures will be SIGNIFICANTLY lower in a first world country with world class health care like the USA.

Many medical EXPERTS expect that the MAXIMUM mortality in a first world country like the USA will be about 1/2 of one percent. ANY deaths from this virus will probably be well below the number killed EVERY YEAR in this country by the FLU. This is cold comfort if your family is personally impacted BUT.........

We live in interesting times......

 

I deal with 7 accounts. ALL are at Schwab. I was interested in what Schwab is telling their customers about the current markets. HERE is their info:

Q&A on COVID-19: The Economy, Markets and What Investors Should Do

https://www.schwab.com/resource-cen...-economy-markets-and-what-investors-should-do

"Key Points

• 
  While it is hard to predict the economic impact from the coronavirus (COVID-19) in the first quarter given little yet reported and many unknowns, most economists are anticipating a rebound later this year.
  
  
• Two of the best performing stock markets in the world so far this year are China and Italy, where COVID-19 outbreaks have been focused—reminding us that headlines don’t often make for good investment advice.
  
  
• Rather than trying to call the bottom, a more effective way to think about investing right now is to focus more on the duration rather than the decline. Markets may have further to fall, but they may not stay down for the rest of the year barring a severe pandemic.
  

Q: What’s the economic impact of COVID-19?
While it is hard to predict the economic impact in the first quarter given little data yet reported and many unknowns, most economists are anticipating a rebound later this year. They see the drag on growth early in the year resulting in only a modestly weaker pace of growth for the year as a whole. For example, on February 22, the International Monetary Fund (IMF) updated their 2020 global growth outlook, lowering the pace of growth by 0.1% due to the anticipated impact of COVID-19, putting their estimate of GDP growth at 3.2% compared with 2.9% last year.

With the situation evolving rapidly, how bad could it get in the event of a pandemic? In 2008, an internal report by the World Bank estimated the impact of a “mild” flu pandemic at 0.7% of global GDP, a “moderate” pandemic at 2% and a “severe” outbreak at 4.8%. That would be the difference between a slowdown, a downturn, and a global recession as deep as the GDP decline during the financial crisis of 2008-09.

In the event of a pandemic: mild, moderate and severe potential global GDP impact


Source: Charles Schwab, Federal Reserve and World Bank data as of 2/27/2020.

Some good news is that the global economy was improving ahead of the coronavirus outbreak even as recently as mid-February. For example, echoing last week’s better-than-expected IFO business confidence report for Germany, yesterday’s Italian business confidence survey for February showed unexpected improvement. While these results are out of date since the survey period preceded the jump in coronavirus cases in Italy by a week, it offers further evidence that core European countries were seeing improving economic momentum just ahead of the rise in new cases.

Q: What economic stimulus is being applied, where, and will it work?
The seemingly daily announcements of new outbreaks and quarantines have been met lately by government announcements of new economic stimulus to combat the economic effects of the COVID-19:

• Hong Kong announced stimulus equivalent to 4% of GDP in the form of giving 10,000 Hong Kong dollars to all residents 18 or older.
• The German finance minister announced plans to suspend the debt brake provision in the German constitution to allow higher deficit spending.
• China has unveiled a host of measures from cutting rates to boosting infrastructure financing and support for small and medium-sized businesses.
• Taiwan has approved a $2 billion stimulus package that includes tax cuts for travel related businesses.
• The market is expecting the world’s major central banks to cut interest rates, including the Federal Reserve as soon as next month.

While this stimulus may help to support some demand, much of it is unlikely to show up where spending has been cut the most, travel and entertainment, given the fears of contagion. And it is unlikely to have any impact on restoring supply from closed factories. As a result, economic stimulus may be less effective in addressing the drag from COVID-19 than the factors related to a typical economic downturn.

Q: What is the earnings impact?
Since January 20, 530 companies have mentioned COVID-19 in their communications to investors. More specifically, nearly 200 companies revised their earnings guidance lower in response to COVID-19. Those revisions were more prevalent in the Industrials, Consumer Discretionary and Information Technology sectors, as you can see in the chart below.

Number of MSCI World Index companies lowering earnings guidance due to COVID-19 since January 20


Source: Charles Schwab, Factset data systems data as of 2/27/2020.

The long-awaited earnings recovery expected by analysts for the first quarter is now likely to be delayed. Overall, Wall Street analysts have not made much of a cut to their corporate earnings forecasts for the year, anticipating a second half double-digit rebound. Those estimates are at risk if the outbreak results in a prolonged negative impact on supply and demand for businesses.

Q: What are stock markets pricing in?
One way to look at what the stock market is anticipating is to compare it to the spread of COVID-19. Based solely on the trends in new case growth and stock market moves, the stock market may be pricing in the risk of a surge in daily new cases triple that of the late January peak, as you can see in the chart below.

Stocks: new virus cases to triple?


Source: Charles Schwab, Bloomberg data as of 2/27/2020. Past performance does not guarantee future results.

Perhaps the most surprising development in the stock market is that two of the best performing stock markets in the world so far this year are China and Italy, where COVID-19 outbreaks have been focused—reminding us that headlines don’t often make for good investment advice.

China is the best performing stock market this year


Source: Charles Schwab, Bloomberg data as of 2/27/2020. Past performance is no guarantee of future results.

Q: Will stocks fall another 10%?
No one knows for sure. The market became more vulnerable to a pullback after a strong run up last year and as investors became more optimistic in 2020 despite growth slowing and earnings stalling. And even now, stocks have retraced only a portion of last year’s gains.

Rather than trying to call the bottom, a more effective way to think about investing right now is to focus more on the duration rather than the depth of the decline. Markets may have further to fall, but they may not stay down for the rest of the year barring a severe pandemic. The last major bear market began in October 2007 and didn’t bottom for two and a half years as major imbalances had to be corrected. Today, the global economy faces fewer such imbalances. A short duration drop by nearly any amount is easier on long-term investors than one that lasts for years.

Q: What should investors do?
Over the past 12 months, markets have experienced both large gains and sharp reversals, which may have knocked portfolio allocations off course. Rebalancing back to long-term targets may be appropriate. Now would be an optimal time to develop a plan, or revisit it if it’s been a while since the last review.

To take a strong investing position, one way or another, it takes strong conviction in answers to key questions. Questions we are seeking answers to include:

• What is the impact on China’s economy? The first credible data point won’t be available until we get the February purchasing managers’ index report on Feb. 29. But that is just one survey, it won’t be until March 16 that we get the industrial output, fixed asset investment and retail sales data to give us first take on the COVID-19 impact.
• How quickly is the supply shock easing as production returns in China? Chinese officials have announced that at least 50% of major industrial firms are back to work and cited even higher percentages in key inputs like metals (80%). There is some evidence such as rising air pollution levels, and shipping traffic to suggest this may be the case. But the pace that China restores the remaining operations is critical to assessing the global supply chain impact. Additionally, while supply chain disruptions in China may be easing, disruptions in supply in countries outside of China could form.
• What will be the response to outbreaks in other countries? China had an authoritative response to containing the spread of the virus, other countries may be less willing or able to quarantine large regions or shutdown businesses. World Bank research shows that 60% of the economic impact comes from cutbacks in travel and entertainment with much of the rest tied to other efforts to avoid infection. Rather than being made by one party as in China, those decisions may be made by thousands of businesses and millions of households around the world which are hard to predict.

We look forward to sharing the answers we gather to these questions to enable informed investment decisions."

MY COMMENT

They have been sending info to customers over the past week or so by email. Of course, they have the same bias as any big brokerage. I believe they are correct in their analysis from an economic and investing standpoint. In the current situation from an economic and investing standpoint I see NOTHING of concern. We are the safe haven of the world, and all the various economic fundamentals are the same as they were a month ago.....if not stronger. Companies that are impacted by loss of business or supply issues will bounce back STRONGLY once things get back to normal in the markets. In fact they will be doing MORE than normal business as their customers stock back up on their products.

The BIG issue is the REACTION of investors, traders, AI/computer trading, and the big banks. At the moment this is ALL one big unknown. The markets do NOT like unknown situations. Going forward how much further we see the general averages and individual stocks fall is going to mostly depend on the reaction of.......people. People....with all their fallacies, delusions, habits, genetic behavioral predispositions, etc, etc. The other BIG factor going forward is going to be the MEDIA.....especially in an election year. With all the news this weekend about new cases, the nursing home, one death, etc, etc, TOMORROWS open and trading through the day should give us a much better idea of how people are going to react as this "little" event picks up speed over the next month or two.

 

NICE market open today and nice pre-market action CONSIDERING the headlines over the weekend. ALSO, nice action showing some strength into the close last Friday. If this keeps up I may have to ABANDON my little FEAR&PANIC trade theory I will see how things go over the rest of the week and into early next week. I was out and about with various sorts of people this weekend and there was actually ZERO conversation brought up about this virus. The REGULAR.....EVERYDAY....AMERICAN investor and especially non-investors may react much better than I anticipated. People may actually lose interest in the DRAMA of this story quickly. My primary account is beating the SP500 HANDILY today....about 1.3% to .3% when I looked earlier. I dont like to sit on cash....so I will abandon this little trade quickly in favor of the long term markets if FEAR&PANIC does not seem to be happening.

One thing that CONFOUNDS me is......why are people buying toilet paper? Why are people buying bottled water? I dont think toilet paper is generally made in China. To avoid going to the store? As to water.....if you are on city water or for that matter well water, who would care about buying bottled water? WEIRD BEHAVIOR......

 

Well it was a KILLER day today in the markets. If we can string together a few good days and get to the end of a positive week that will be a good indication that things are now stable. This would probably indicate the failure of my plan to trade on panic.

In reply to RG and Zukodany.

My personal opinion is that anyone longer than 3-6 months is going to be fine (short term). Any one longer than a few years will be good for the longer term. I also believe that the re-election of Trump will kick off a BIG market run....perhaps the mother of all Santa Clause rallies. Or, the markets may price it all in before the election....but.....I would think the after election rally is more likely.

I was out and about today. Went to a large grocery store. Lots of people as usual. No masks. No loading up on crazy stuff. Seemed like a regular busy shopping day at HEB. I heard a very rational Dr on the TV today. He said that using the data from S. Korea which is much more like the USA than China.....he was anticipating a fatality rate of .2% with this infection. He compared that to .1% with the Flu. When I hear that I say.....WTF......we have people walking around with FLU EVERY year by the hundreds of thousands. We have some level of world wide Flu epidemic every year. With a death rate of .1%. YET....no one is quarantined, there is no panic, no one stays home when they are sick....it is nothing. This Corona situation is simply CRAZY.

I doubt there will be much real impact on business except for those that are shaky anyway. It might be a hard time for some small businesses in particular. Listed companies on an exchange.....in my opinion any losses over the next quarter or two, will be quickly made up by the increase in and influx of business when we break free of the current situation in 3-6 months. If the supply chain issues come to pass.....there will be a HUGE pent up demand as the supply chain comes back up to speed.

As to fear and panic. I believe....AT THE MOMENT....that we have now dodged that bullet. We have shown no reaction at all to the negative news of the weekend. Some of which was pretty sensational. It now seems like rational thinking is taking hold. Of course, it is a fluid situation and anything can happen short term as RG said.

 

If you take the gain on the DOW today....+1293....and add in the paring of the loses that occurred Friday afternoon......we have a nice little day and a half rally going on.

I like to think today was a positive indicator, especially with the strength the averages showed on Friday heading into a weekend. BUT...here is another....just as reasonable if not more so....view:

The Dow Is Surging – But Analysts Warn It’s Just a ‘Dead Cat Bounce’

https://www.ccn.com/the-dow-is-surging-but-analysts-warn-its-just-a-dead-cat-bounce/

• "The Dow Jones surged nearly 700 points on Monday on hopes of emergency stimulus from G7 central banks to combat the “coronavirus crash.”
• Despite Wall Street optimism, analysts are concerned about whether a rate cut from the Fed can truly help the economy.
• ISM manufacturing came in weak, and economists expect it to get even worse.

The Dow Jones rallied aggressively on Monday, as a deeply oversold stock market rebounded on burgeoning hopes of coordinated central bank easing.

Dow bulls are rabidly pricing in a sizable cut from the Federal Reserve, but multiple analysts warn that an interest rate reduction may be impotent to buttress a stock market plagued by a health crisis.

Dow Jones Soars on Hopes the Fed Can Save the Stock Market
Among the major U.S. stock market indices, the Dow Jones Industrial Average (DJIA) was the top performer.

Less than an hour before the closing bell, the Dow had rallied 693.43 points or 2.73% to 26,102.79.


The Dow Jones exploded higher on Monday on hopes of considerable stimulus from central banks around the world. | Source: Yahoo Finance
The S&P 500 and Nasdaq also started March off on the right foot, rising 2.14% and 2.03%, respectively.

It was a solid day in the commodity sector, as crude oil managed to rally 4.5%. Risk-on conditions did little to harm the price of gold, which enjoyed a 1.9% gain and looks to retake the $1,600 handle.

And yet bond yields remain in absolute free-fall, suggesting a dark outlook for the U.S. economy. The yield on the benchmark 10-year note is touching record lows.

Analysts Warn Fed Rate Cut May Be Meaningless
It appears that hopes of emergency stimulus from G7 central banks have done a lot to soothe fears on Wall Street.

Dow bulls are looking extremely optimistic about the impact that united rate cuts could have on the global economy as it fights the negative effects of the coronavirus.

Not everyone is so convinced. Prominent CNBC analyst Jim Cramer made it clear Tuesday that he believes a Fed rate cut is meaningless without a vaccine to fight the spread of the disease.

Karen Petrou, managing partner at Federal Financial Analytics, agrees with Cramer. She believes the Dow is merely experiencing a dead-cat bounce, writing in a Financial Times op-ed:

If the Fed does step in, the aptly named dead-cat bounce in which prices recover only for a short while, should not be mistaken for resurrected animal spirits. No amount of rate cuts will cure a single coronavirus patient, nor will anyone frightened of illness decide to buy a new house, a car, or even a night out at a restaurant.

Interest rate cuts may give investors a sugar rush, but they won’t stop the coronavirus outbreak from wreaking havoc on the economy if the disease continues to spread.

U.S. Health Secretary Alex Azar even put the possibility of internal travel restrictions on the table in the last few days, after the U.S. announced its second death over the weekend. (The U.S. death toll climbed to at least six on Monday as the Seattle-area outbreak worsened.)

Nordea: ISM Manufacturing Was Even Worse Than It Looked
Helping support risk appetite in the Dow Jones was a better than expected German manufacturing PMI, alongside a passable ISM manufacturing number in the U.S.

Unfortunately, economists at Nordea Research picked plenty of holes in Monday’s PMI reading. And they anticipate plenty of even weaker prints in the future:

When digging into the details of the report, the report looks much worse than the headline index suggests… Going forward we expect the ISM Manufacturing index to substantially decline. Not only have some respondents submitted their answers before the equity market tanked, but the underlying details of the report also suggest weak readings ahead.


Nordea expects ISM manufacturing PMI to continue to struggle. | Source: Nordea FX"

MY COMMENT

Anyone that is invested for the long term will see no impact from this little market event. SHORT TERM........it is purely a crap shoot what and when.....anything.....good or bad.....will happen.

 

OK........well that was a BUST. I UNWOUND my attempt to trade on fear and panic (see post 842 above) today when the DOW was DOWN about 300+.

I dont know what the markets are going to do today or going forward. BUT, the theory of the trade was to take advantage of a panic situation in the markets. That theory is out the window.....as least as I anticipated it. I dont see a lot of panic downside now. We will be a typical erratic up and down, news driven market for the short term. Of course, the PRIMARY news will continue to be the MEDIA driven virus, virus, virus, story.

So, being a fully invested investor all the time.....and....NOT being into market timing......and always believing in.......all in all at once. I put the funds back into the positions they were in before......at the same percentages. I have not had time to calculate an exact figure, since I wanted to get these orders filled while we were down 300+......but I Iost approximately $10,390 by my rough calculations. So about 1%. EASY COME.....EASY GO.

 

As you can tell.......I HATE to be out of the markets. I am now back fully invested as usual. During this past few weeks I have CONSISTENTLY been outperforming the SP500 when up and down. That is my BENCHMARK and what I live for as an investor. When I last looked about 30 minutes ago I was UP compared to the SP500 by about .3%.

MONDAY was an interesting day. When I first logged in I thought the figures were a MISTAKE. Some accounts UP over $100,000 in one day. I believe it was a record for these accounts. TODAY the worst as of about 30 minutes ago was down OBVIOUSLY, but nowhere near that amount. At the moment I am basically back at about where I was in about November 2019.

 

YES.....Stonewatcher

I will have about $200K going back into my three mutual funds at the closing NAV today, so good with the markets being down. I will NOW be back to about early to mid October....in my market time machine.

What ENDED this little experiment for me was:

Total lack of panic that I was seeing with the general public in my area.
Explosive UP move on Monday.

The theoretical basis for my trade was:

Panic selling continuing for weeks, if not months.
Little to no risk of explosive upside moves in this environment

I now believe that both of the above criteria are NOT true. So, it is back fully invested for me, as usual.

SO where are we at the moment:

DOW year to date (-9.18%)
SP500 year to date (-7.04%)

 

OK.....at the close the stock side of things.....being fully invested.....BEAT the SP500 for the day by .4%. I am now where I was approximately October 15.