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Old 03-27-2020, 01:54 PM   #41
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What about a situation like today where Nothing is being produced? Maybe it is different this time.
Yes, maybe it is.
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Old 03-27-2020, 05:34 PM   #42
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Bull Trap and the market is still overpriced.

Oil industry has a crap ton of debt on the books and a significant float on top of the debt. This alone will hamper the overall market.

Younger people were not buying oil stocks before the crash, I don’t see them changing their minds.

The generational thinking will change tomorrows market, big money will rotate to the new sectors.
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Old 03-27-2020, 05:37 PM   #43
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My crystal ball has never worked quite right. That being said, I think that the worst is yet to come with Covid-19 and the stock market.
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Old 03-27-2020, 05:43 PM   #44
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+1 Bull Trap.

So much unknown carnage. I think the virus is ramping quickly outside of Seattle, LA, San Fran and NYC. I think the market is still over priced. We haven't seen the next unemployment number and I think we are going to see a lot of collateral damage (bankruptcies, housing prices plummet, etc.)

I also think the projections for Q3/Q4 is far too optimistic. I go by the Dow because the S&P is too heavy in a few companies and I was looking for Dow 15,000 or so.

But then again, what the hell do I know. Nobody has ever seen this before. Just think the $2T isn't going to be enough and in an election year they are going to throw ALOT more money at this...
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Old 03-27-2020, 07:19 PM   #45
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My grandparents lived through WWI and the Great Depression. My grandfather was grievously wounded in WWI.

My Dad fought in WWII.

My Uncle fought in the Korean War.

My Brother fought in Vietnam.

So this is a bad situation, for sure, but it is just the next shock. Not making light of it at all. Great sympathy for those impacted health wise, and for those facing sequence of return risks. And the situation has revealed just how messed up parts of society are. It has also revealed how fragile life is. But it is just life. And it is nature doing its thing. From a cosmological perspective, nearly everything in the cosmos is hostile to life and basically trying to kill us.

The society that emerges will be more resilient, however. And science will ultimately resolve this. I put my faith in science. It will be fascinating to see the advances in the health sciences that emerge from this.

It feels to me like the major market drop is over. We are happily continuing to invest, month after month, dollar cost averaging. Nothing has changed.

Hope everybody is safe and healthy. Stay away from people. Follow the CDC's advice.
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Old 03-27-2020, 08:02 PM   #46
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We haven't had an inflation problem thru massive war spending, recession spending, and trillion dollar tax cuts. This infusion of debt spending may test the limits. The MMF crowd has been saying you can keep printing money until you can't. Seems better to risk a round of inflation than unemploy a third of the country with no relief.
Through globalization we have reduced inflationary pressures, at the cost of an industrial and manufacturing base. The rise of populism was already putting strains on that approach - and this event is a watershed moment that will stop/reverse that trend (at least for a number of year, perhaps decades).

I liken what will happen to be a "Ka-BOOM". In the Ka phase, it is deflationary due to the loss of jobs, bankruptcy of business, etc. In the BOOM phase it will be inflationary as all that newly created $ keeps cycling through the economy along with a higher cost base for goods production.

But what do I know? I also thought this was possible after the 2008/2009/2010 downturn, but it did not turn out that way. Yes, gold was $870 or so in 2008 ($1675 today), but the thesis was overall incorrect. I think this was due to two factors: 1) the velocity of money decreased in that period and has not returned to the 2007 values and 2) the import of cheap goods (as mentioned above) ramped up considerably. I don't think those two things will play as large of a roll this time around, and quite frankly the stimulus being applied now makes 2008/09 look like child's play.
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Old 03-27-2020, 08:35 PM   #47
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My grandparents lived through WWI and the Great Depression. My grandfather was grievously wounded in WWI.

My Dad fought in WWII.

My Uncle fought in the Korean War.

My Brother fought in Vietnam.

So this is a bad situation, for sure, but it is just the next shock. Not making light of it at all. Great sympathy for those impacted health wise, and for those facing sequence of return risks. And the situation has revealed just how messed up parts of society are. It has also revealed how fragile life is. But it is just life. And it is nature doing its thing. From a cosmological perspective, nearly everything in the cosmos is hostile to life and basically trying to kill us.

The society that emerges will be more resilient, however. And science will ultimately resolve this. I put my faith in science. It will be fascinating to see the advances in the health sciences that emerge from this.

It feels to me like the major market drop is over. We are happily continuing to invest, month after month, dollar cost averaging. Nothing has changed.

Hope everybody is safe and healthy. Stay away from people. Follow the CDC's advice.
If you think back to your Dad and Grand Parents and their behaviors, a lot of the survival instincts that the older generation is not in todayís society. I remember my grandparents having hordes of cash at the house, because they didnít trust the bank. Their pantries were always stocked, with chickens in the yard, and some form of garden.

Right now we are off kilter with the major cities. There will come a shift. Young money was keen on smaller houses on a small plot of land with community pools, and entertainment features. Will they still think that way?

Of all the battles Iíve fought in, the person I was when I entered them, was not the person I was when I left them! I believe that to be true for any crisis.
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Old 03-27-2020, 10:32 PM   #48
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So what do you think. - 1) Bull Trap and we retest lows due to more unemployment, no economic growth, no end yet to covid-19 situation or 2) start of a Bull Run with a Fed tools (QE, buying equities) and Stimulus supported stock market ?
It could go either way and it all depends on how quickly people can start going back to work. If people are back to work by August then I think we have roughly seen the bottom (might retest it or go a little lower).

If people are stuck in quarantine for the rest of the year then look out below.
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Old 03-28-2020, 05:08 AM   #49
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And what about inflation? Too much money chasing too few goods? Lower GDP and more $ in circulation?
Now I'm hearing that they're preparing another round 3 months from now, if needed. Like it won't be needed?
Now we'll have people that will be getting a raise by not working at all. What is next?
I do think we could see a re-emergence of inflation. In a lot of ways, the last 25 year has been characterized by global supply chains that have continued to soak up an unbelievable amount of low cost labor as entire continents shifted into a global capitalist economy. IT and other advances of course compounded those gains, but the global supply of cheap labor was a major contributing factor.

If the world revisits global supply chains as a result of seeing how tenuous this is -- especially if global politics amplifies that effect -- you could see real inflation.

And its not just manufacturing. When India shut down almost every major company on the planet lost call center and significant IT capacity.

When the smoke clears, there will be A LOT of discussion on how to avoid this in the future.

There could also be short term inflation when people come out of their homes and start spending again into supply chains that have ground to a halt.

All in all, the above might be a good thing if it happens in moderation. It will give countries a legitimate reason to start normalizing interest rates (vs. worrying about a deflation spiral) and repatriation of jobs may help moderate some of the income inequality and other tensions in the system.

It will be hard on everyone who's out buying bonds at 1% right now, but good for the governments and big companies that sold the debt.
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Old 03-28-2020, 05:39 AM   #50
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Originally Posted by WyomingLife View Post
My grandparents lived through WWI and the Great Depression. My grandfather was grievously wounded in WWI.

My Dad fought in WWII.

My Uncle fought in the Korean War.

My Brother fought in Vietnam.

So this is a bad situation, for sure, but it is just the next shock. Not making light of it at all. Great sympathy for those impacted health wise, and for those facing sequence of return risks. And the situation has revealed just how messed up parts of society are. It has also revealed how fragile life is. But it is just life. And it is nature doing its thing. From a cosmological perspective, nearly everything in the cosmos is hostile to life and basically trying to kill us.

The society that emerges will be more resilient, however. And science will ultimately resolve this. I put my faith in science. It will be fascinating to see the advances in the health sciences that emerge from this.

It feels to me like the major market drop is over. We are happily continuing to invest, month after month, dollar cost averaging. Nothing has changed.

Hope everybody is safe and healthy. Stay away from people. Follow the CDC's advice.
I appreciate your perspective essay!
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Old 03-28-2020, 05:51 AM   #51
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Some inflation could be good, as in the end it is one's own personal inflation rate that matters.
Thus perhaps one could do better with higher CD rates as one example, even though "officially" the net real return is not high.
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Bull Trap or restarting a Bull run?
Old 03-29-2020, 10:08 AM   #52
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Bull Trap or restarting a Bull run?

Not sure if itís called a bull trap or a bear trap, but Iím betting itís a trap and that there will be second and third order repercussions many arenít factoring in yet such as: massive bankruptcy of some household name mega corps, shockingly high headline unemployment rate, one or more state pension funds declaring functional insolvency, home loans becoming exceedingly hard to get, etc.

I think there are fundamentally two sets of prognosticators:

Group 1: those who feel the economy had been very good, and that the virus is essentially a temporary pause in economic activity.

Group 2 (which includes me): those who feel the economy had not been nearly as good as touted because it was essentially supported by unsustainable debt, and now the credit bubble has burst and the long term repercussions will play out regardless of how the virus recovery goes

No one can say right now which group is right, but Iím betting pretty big money itís Group 2.
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Old 03-29-2020, 10:31 AM   #53
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Originally Posted by RenoJay View Post
Not sure if itís called a bull trap or a bear trap, but Iím betting itís a trap and that there will be second and third order repercussions many arenít factoring in yet such as: massive bankruptcy of some household name mega corps, shockingly high headline unemployment rate, one or more state pension funds declaring functional insolvency, home loans becoming exceedingly hard to get, etc.

I think there are fundamentally two sets of prognosticators:

Group 1: those who feel the economy had been very good, and that the virus is essentially a temporary pause in economic activity.

Group 2 (which includes me): those who feel the economy had not been nearly as good as touted because it was essentially supported by unsustainable debt, and now the credit bubble has burst and the long term repercussions will play out regardless of how the virus recovery goes

No one can say right now which group is right, but Iím betting pretty big money itís Group 2.
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Old 03-29-2020, 10:56 AM   #54
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Old 03-29-2020, 10:56 AM   #55
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Not sure if itís called a bull trap or a bear trap, but Iím betting itís a trap and that there will be second and third order repercussions many arenít factoring in yet such as: massive bankruptcy of some household name mega corps, shockingly high headline unemployment rate, one or more state pension funds declaring functional insolvency, home loans becoming exceedingly hard to get, etc.

I think there are fundamentally two sets of prognosticators:

Group 1: those who feel the economy had been very good, and that the virus is essentially a temporary pause in economic activity.

Group 2 (which includes me): those who feel the economy had not been nearly as good as touted because it was essentially supported by unsustainable debt, and now the credit bubble has burst and the long term repercussions will play out regardless of how the virus recovery goes

No one can say right now which group is right, but Iím betting pretty big money itís Group 2.
I will say that I don't know which of these is the case, but I am not buying until it becomes clear.
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Old 03-29-2020, 11:04 AM   #56
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Originally Posted by RenoJay View Post
Not sure if itís called a bull trap or a bear trap, but Iím betting itís a trap and that there will be second and third order repercussions many arenít factoring in yet such as: massive bankruptcy of some household name mega corps, shockingly high headline unemployment rate, one or more state pension funds declaring functional insolvency, home loans becoming exceedingly hard to get, etc.

I think there are fundamentally two sets of prognosticators:

Group 1: those who feel the economy had been very good, and that the virus is essentially a temporary pause in economic activity.

Group 2 (which includes me): those who feel the economy had not been nearly as good as touted because it was essentially supported by unsustainable debt, and now the credit bubble has burst and the long term repercussions will play out regardless of how the virus recovery goes

No one can say right now which group is right, but Iím betting pretty big money itís Group 2.
I agree in general, but what say you if they develop a drug which basically mostly prevents death, but not the virus, which could happen.
Does that overcome scenario #2 even though the economy could still be in shambles?
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Old 03-29-2020, 11:11 AM   #57
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Group 2 (which includes me): those who feel the economy had not been nearly as good as touted because it was essentially supported by unsustainable debt, and now the credit bubble has burst and the long term repercussions will play out regardless of how the virus recovery goes
I am in this group on general principle. i.e. Things xucked under the hood for a long time already and were do for a fall no matter what. But I don't think it will be as bad as this suggests. Much of the "fall" here is still fear driven and virus induced. When that gets duly and properly dealt with, there will still be an unwinding but not like what it might appear at this point in time, since much of it will have already be done. It'll be a "normal" economics based recovery which, sans the unknowns and emotions caused by a pandemic, should be easier to rectify.

P.S. And I ain't buyin' back in yet, either.
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Old 03-29-2020, 11:19 AM   #58
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My grandparents lived through WWI and the Great Depression. My grandfather was grievously wounded in WWI.

My Dad fought in WWII.

My Uncle fought in the Korean War.

My Brother fought in Vietnam.

So this is a bad situation, for sure, but it is just the next shock. Not making light of it at all. Great sympathy for those impacted health wise, and for those facing sequence of return risks. And the situation has revealed just how messed up parts of society are. It has also revealed how fragile life is. But it is just life. And it is nature doing its thing. From a cosmological perspective, nearly everything in the cosmos is hostile to life and basically trying to kill us.

The society that emerges will be more resilient, however. And science will ultimately resolve this. I put my faith in science. It will be fascinating to see the advances in the health sciences that emerge from this.

It feels to me like the major market drop is over. We are happily continuing to invest, month after month, dollar cost averaging. Nothing has changed.

Hope everybody is safe and healthy. Stay away from people. Follow the CDC's advice.

Very true.


Just to add, my Dad was living on the streets of his native country at the age of six after his mother died and his father abandoned him because he could not feed him, and survived only after a woman was kind enough to take him to a foster home in another country where, while they never knew what they would be eating day-to-day, at least they had a roof over their head.

We have MANY friends and relatives who parents or they themselves grew up in countries in even more difficult situations, where rationing (including power and water)is the norm, clean water is difficult to come by, illness existed on a regular basis for far more items, and the only way the authorities protect you is if you bribe them in some way, shape or fashion.

So relatively speaking these friends/relatives and relatives are following precautions, but also have a view of "welcome to our world". Not in a bad way, just that they are puzzled by the "panic" actions they see folks taking in terms of the shopping frenzy and having to stay at home in nice surroundings. As one friend put it, "the worst grocery store I have seen so far( in terms of empty shelves and sections) would still be by far the best store in my home country".

The one area I differ in in science - while I put some faith in science, I have experienced science and related health connections to be driven just as much by political, financial, and special interests as any other area. In the short them they may come up with a solution, but what that will mean for the long term, IMHO remains to be seen.
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Old 03-29-2020, 11:20 AM   #59
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"Bull Trap or restarting a Bull run?"

Yes.
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Old 03-29-2020, 12:34 PM   #60
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Vast majority of the people on this thread believe that it's a bull trap. This means, it's a another bull run
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