Bull Trap or restarting a Bull run?

[pb4uski]

I predict social unrest, war and famine within 18 months. The world will slowly fall apart due to excess debt. A vaccine will be too late to undo the damage.

I know, I know...dark.

Warped... and IMO unrealistic... we would probably have martial law long before it got to that.

 

[Carnage]

I think we have at least a couple more months of sustained damage to the economy. We're seeing individuals with the need for a bailout, but I've already seen some smaller local businesses go out of business. That will continue to happen and then as others have mentioned, larger companies that don't get bailouts or have poor management will go under as well and we'll have locked in high unemployment for some time I think at the very least.

My hope is that the country uses this opportunity to invest in things like infrastructure and alternative energy to make the country more resilient after this.

 

[pb4uski]

.... My hope is that the country uses this opportunity to invest in things like infrastructure and alternative energy to make the country more resilient after this.

WADR, I'm not sure if superb infrastructure and more alternative energy would have helped in this situation at all.... though I agree that we need to make investment in our aging infrastructure before it crumbles.

 

[Sunset]

Cut it into anonymous cubes and I am sure it tastes like chicken.

Don't you think it tastes a lot closer to pork ?

 

[brewer12345]

Don't you think it tastes a lot closer to pork ?

Hope I never find out. What with all the squirrels and rabbits running around the yard, I don't imagine I ever will.

 

[k-man]

I don't plan on doing any of that until there's a vaccine!

Same. My wife and I didn't work this hard, invest wisely (mostly) to get to the point where we are almost ready to FIRE....to be taken out by some knucklehead in the general public.

I will tell you something....I have been absolutely astounded by the level of ignorance and idiocy of many people I know and respect, especially early on with this thing. These are some very successful and smart people in their respective fields. Some have come around and understand the seriousness of this pandemic. Others still seem to believe that they're all going to be at their high end beach clubs come May 31st. It's pure delusion. Truly the exact definition of the the Normalcy Bias.

My sister-in-law is a nurse at a suburban hospital here in NJ. We're about an hour south of the City. We saw her yesterday...from a distance of course. She heads up two units in this hospital. They have 70 COVID-19 patients...40 on ventilators. Patients on vents range from 30 years old into the 80s. Mortality rate there is 20% for this hospitalized. If you end up on a ventilator...goes up to 50-80%. The sad fact is that our states are scrambling for ventilators for the critically ill patients, but 50-80% will die anyway. This is a vicious virus.

Until there's an antigen test available that will inform me and my wife that we possibly had the mildest of mild cases...and have immunity, we're just not messing around with this thing. No air travel, no public spaces, no restaurants, no concerts...etc. Not until there is a medical intervention that can greatly mitigate the symptoms or a vaccine. But to travel internationally now, in my mind is insanity. We're not cruisers...but come on people....who in their right mind is getting on a cruise ship in the next year?

What I have learned about pandemics is that it's purely about science and math...and those two disciplines don't care where you live, how wealthy you, who you voted for, or who you worship. You survive a pandemic if you're lucky enough to have resources, and by being smart. Stay safe everyone...do what is best for you and your family.

 

[2177V]

Same.
I will tell you something....I have been absolutely astounded by the level of ignorance and idiocy of many people I know and respect, especially early on with this thing. These are some very successful and smart people in their respective fields. Some have come around and understand the seriousness of this pandemic. Others still seem to believe that they're all going to be at their high end beach clubs come May 31st. It's pure delusion. Truly the exact definition of the the Normalcy Bias.

Singapore, South Korea, China had "experience" with SARS so they took it seriously and they have flatten the curve.

In hindsight, we should have restricted all travel from China the very same day that China shutdown Wuhan which was 23 January. We did not...so the corona virus spread globally via travelers who were unaware that they had the disease. Too late now.

Like you, I am still dismayed that people in the USA and Europe did not take it seriously. Now they are the ones who are spreading the disease!

Wakeup everybody! This is a contagious deadly disease! Do people understand the words: "contagious" and "deadly"?

For this reason: I am not investing a penny in equities until everyone wakes up!

 

[k-man]

Singapore, South Korea, China had "experience" with SARS so they took it seriously and they have flatten the curve.

In hindsight, we should have restricted all travel from China the very same day that China shutdown Wuhan which was 23 January. We did not...so the corona virus spread globally via travelers who were unaware that they had the disease. Too late now.

Like you, I am still dismayed that people in the USA and Europe did not take it seriously. Now they are the ones who are spreading the disease!

Wakeup everybody! This is a contagious deadly disease! Do people understand the words: "contagious" and "deadly"?

For this reason: I am not investing a penny in equities until everyone wakes up!

Agree with everything you said. However, keep in mind that the market will turn before the general public catches up to how bad this is. It always does, and will this time as well.

Will this be another Great Depression? No, I don't think so. But it surely appears to me to be worse than the great recession. I also think it's possible that the market will turn sooner than it did in the Great Recession. The Great Recession was 16 months or so. This might be that long...maybe a bit less, but the market will turn before that. Because the market isn't just looking for a vaccine at this point, but a medicine cocktail that can prevent the medical "crash" that is happening to all of the poor people ending up on ventilators. Again, my sister-in-law has been a nurse for 25 years and has said they've never seen anything like this.

So, this all comes down to when the majority of the public feels confident enough to go about life as usual. I think we're months away from that, but possibly not the year or more it will take to get a vaccine.

 

[Badger]

Same. My wife and I didn't work this hard, invest wisely (mostly) to get to the point where we are almost ready to FIRE....to be taken out by some knucklehead in the general public.

I will tell you something....I have been absolutely astounded by the level of ignorance and idiocy of many people I know and respect, especially early on with this thing. These are some very successful and smart people in their respective fields. Some have come around and understand the seriousness of this pandemic. Others still seem to believe that they're all going to be at their high end beach clubs come May 31st. It's pure delusion. Truly the exact definition of the the Normalcy Bias.

My sister-in-law is a nurse at a suburban hospital here in NJ. We're about an hour south of the City. We saw her yesterday...from a distance of course. She heads up two units in this hospital. They have 70 COVID-19 patients...40 on ventilators. Patients on vents range from 30 years old into the 80s. Mortality rate there is 20% for this hospitalized. If you end up on a ventilator...goes up to 50-80%. The sad fact is that our states are scrambling for ventilators for the critically ill patients, but 50-80% will die anyway. This is a vicious virus.

Until there's an antigen test available that will inform me and my wife that we possibly had the mildest of mild cases...and have immunity, we're just not messing around with this thing. No air travel, no public spaces, no restaurants, no concerts...etc. Not until there is a medical intervention that can greatly mitigate the symptoms or a vaccine. But to travel internationally now, in my mind is insanity. We're not cruisers...but come on people....who in their right mind is getting on a cruise ship in the next year?

What I have learned about pandemics is that it's purely about science and math...and those two disciplines don't care where you live, how wealthy you, who you voted for, or who you worship. You survive a pandemic if you're lucky enough to have resources, and by being smart. Stay safe everyone...do what is best for you and your family.

+1 This can't be said often enough and loud enough. People who don't pay attention will be angry when they or their family are screaming for a ventilator and there will not be a ventilator available.


Cheers!

 

[2177V]

Agree with everything you said. However, keep in mind that the market will turn before the general public catches up to how bad this is. It always does, and will this time as well.

Will this be another Great Depression? No, I don't think so. But it surely appears to me to be worse than the great recession. I also think it's possible that the market will turn sooner than it did in the Great Recession. The Great Recession was 16 months or so. This might be that long...maybe a bit less, but the market will turn before that. Because the market isn't just looking for a vaccine at this point, but a medicine cocktail that can prevent the medical "crash" that is happening to all of the poor people ending up on ventilators. Again, my sister-in-law has been a nurse for 25 years and has said they've never seen anything like this.

So, this all comes down to when the majority of the public feels confident enough to go about life as usual. I think we're months away from that, but possibly not the year or more it will take to get a vaccine.

I believe that in a 2 to 4 months, we will see less and less new virus cases and then there will be a stock market rally. However, I also believe this rally will be short lived and will never return to what it was before the crash.

This is because the damage to the economy and to people's psychological well being. I do not expect people to start booking vacation cruises again, flying overseas, and spending money again like nothing had happened. I do agree that the stock market is quicker. Our national debt may go up from $1T to $3T. We either accept inflation by printing more money or we start paying down the $3T national debt by reducing government spending. Both of these options are not good for the stock market. I see some hard times ahead and it may take many years for a full recovery.

 

[Dtail]

I believe that in a 2 to 4 months, we will see less and less new virus cases and then there will be a stock market rally. However, I also believe this rally will be short lived and will never return to what it was before the crash.

This is because the damage to the economy and to people's psychological well being. I do not expect people to start booking vacation cruises again, flying overseas, and spending money again like nothing had happened. I do agree that the stock market is quicker. Our national debt may go up from $1T to $3T. We either accept inflation by printing more money or we start paying down the $3T national debt by reducing government spending. Both of these options are not good for the stock market. I see some hard times ahead and it may take many years for a full recovery.

So do you still think we will test new lows before that time?

 

[kjpliny]

I believe that in a 2 to 4 months, we will see less and less new virus cases and then there will be a stock market rally. However, I also believe this rally will be short lived and will never return to what it was before the crash.

This is because the damage to the economy and to people's psychological well being. I do not expect people to start booking vacation cruises again, flying overseas, and spending money again like nothing had happened. I do agree that the stock market is quicker. Our national debt may go up from $1T to $3T. We either accept inflation by printing more money or we start paying down the $3T national debt by reducing government spending. Both of these options are not good for the stock market. I see some hard times ahead and it may take many years for a full recovery.

I think you mean deficit. The national debt is something on the order of $25T now (with the latest stimulus package). It will never be paid down.

 

[harley]

I believe that in a 2 to 4 months, we will see less and less new virus cases and then there will be a stock market rally. However, I also believe this rally will be short lived and will never return to what it was before the crash.

This is because the damage to the economy and to people's psychological well being. I do not expect people to start booking vacation cruises again, flying overseas, and spending money again like nothing had happened. I do agree that the stock market is quicker. Our national debt may go up from $1T to $3T. We either accept inflation by printing more money or we start paying down the $3T national debt by reducing government spending. Both of these options are not good for the stock market. I see some hard times ahead and it may take many years for a full recovery.

I don't disagree that there are hard times ahead, but never is a long time. I definitely disagree that the changes we're seeing now are permanent, or that cruising and air travel are dead. If there's a vaccine developed and the coronaviruses become nothing more deadly than the flu I expect people's lives to return to what things were like before. Maybe not in the first year, or even two, but not much beyond that. Sure, maybe when driving back and forth from FL I'll wipe down the hotel room a little better, but we already do that, and we travel with our own blankets and pillows. No big deal, and it won't change our lifestyles as long as there's little chance of death.

 

[k-man]

So do you still think we will test new lows before that time?

You didn't ask me, but I can not, for the life of me imagine that we will not retest the lows..and go lower. Sometimes, those of us who are investors, especially people who get very sophisticated in their investment strategies can miss the forest for the trees.

When I hear traders talking about "testing the lows", and "200 day moving averages", and the like....I want to shout...."This is different!!"

We have literally had a massive amount of the world shut down for months or more at at time. How on earth does anyone think we're going to just bounce out of this? Here in the States, we did come into this into good shape economically. How about Europe? We sell an awful lot of goods to Europe. Watch China, their factories are chugging back to life and they are producing goods. Who's buying? Europe is closed. The United States is closed. In many ways it's like what is happening in the Oil market....Saudi Arabia and Russia are pumping away, trying to destroy each other (and our suppliers).....filling up tankers and storage facilities. With no buyers....and prices plummeting.

So when Europe is on the other side of this...and mind you, they're still reeling, are they going crazy purchasing goods that China is producing? And as sleepy Europe starts to churn back to life, which will be be much slower than China did (Germany will be the exception), we here will still be coming out of the fog of war.

And so, in my mind....take the virus out of the equation completely, and the reality is that there has been an enormous amount of capital destruction. Getting this global engine restarted and getting the trains running on time again...is going to take awhile.

 

[Dtail]

^^^
Thanks for your response.
I agree overall, but it does seem that there are continuing efforts to pull out many stops and timing of information just to keep the stock market from falling, not that there isn't a sincere effort to help businesses and people.

 

[donheff]

I believe that in a 2 to 4 months, we will see less and less new virus cases and then there will be a stock market rally. However, I also believe this rally will be short lived and will never return to what it was before the crash.

Never? So DOW 25000 in 2040? Look at the charts for Germany following WWII. The economy could be seriously set back for quite a while but the Spanish Flu is not nuclear Armageddon.

 

[karen1972]

Watching the market shoot up today makes me feel like we are living in totally different worlds. I'm waiting for the other shoe to drop and that will happen when this virus finally reaches some of the smaller towns. That is where the farmers live, the truckers, many factories, etc. IF you start interrupting some of that, then real fear could set in. Many of my cousins are truckers, living in rural Wisconsin still far away from where the virus supposedly has spread and they are still not sure its that serious. This is good in some ways as they continue to provide product across the states. My great nephew told me yesterday only people between 60-80 can get it, I was dumbfounded, his mom is going for a nursing degree. They were going fishing with their cousins today.

People don't get it until it impacts them. And when it does impact them I believe they will refuse to go to work and then what? We can only hope it keeps maintained but I just won't bet my money on that. Especially given many I know in those small towns were still vacationing thru mid March so who knows what they brought home.

 

[k-man]

Watching the market shoot up today makes me feel like we are living in totally different worlds. I'm waiting for the other shoe to drop and that will happen when this virus finally reaches some of the smaller towns. That is where the farmers live, the truckers, many factories, etc. IF you start interrupting some of that, then real fear could set in. Many of my cousins are truckers, living in rural Wisconsin still far away from where the virus supposedly has spread and they are still not sure its that serious. This is good in some ways as they continue to provide product across the states. My great nephew told me yesterday only people between 60-80 can get it, I was dumbfounded, his mom is going for a nursing degree. They were going fishing with their cousins today.

People don't get it until it impacts them. And when it does impact them I believe they will refuse to go to work and then what? We can only hope it keeps maintained but I just won't bet my money on that. Especially given many I know in those small towns were still vacationing thru mid March so who knows what they brought home.

Very true. The general public will get it when it impacts them personally. However, this volatility is to be expected in the markets. The markets traded exactly in this manner during the Great Recession. There was the initial drop, which we've had followed by volatility and some periods where things felt stable and it seemed that the worst was over....it wasn't. The overall trend was down for 16 months with huge swings in the market before the final "whoosh" to the bottom, then a big bounce off the bottom. But it took 5 years for the market to return to the highs of October 2007.

We're still in the "shock" phase of this crisis. The market is up today on optimism that parts of Europe (Italy and Spain) may have peaked in cases and are coming down the other side of the hump. That gives us hope. But now they'd assembled committees that are tasked with how to roll out of their respective national lockdowns. We here in the US have that benefit as far as the economic piece is concerned. We have seen what China has done, now we'll witness what Europe does and hopefully learn which approach will work best. Let's hope that our leaders efforts to return to some kind of economic normalcy is way, way better than the job that they did in preparing us for this pandemic.

But we can't make a true bottom until we can assess the damage that the pandemic and a rolling full economic stop to our global economy has done to the nation.

 

[2177V]

So do you still think we will test new lows before that time?

Yes we will test new lows IMHO. This is because we "only" had about a 32% drop a month ago and the great recession hit 50% drop in the S&P500 and took almost a year to reach the bottom.

In both cases, there was complete loss of confidence. There may be mini rallys and high volatility with 1000 points swings which also happened during the great recession.

A V shaped recovery is wishful thinking because of the serious damage to our economy. IMHO, this damage is NOT temporary and will last longer than the corona virus.

In addition, heaven help the bullish investor if the corona virus is NOT temporary. There are recent reports in Japan and China that there are now new cases of the virus which bullish investors are currently ignoring....just like when they ignored the shutdown of Wuhan in late January.

IMHO, to get out of this mess, we need to have about 500 million test kits so that we can test everyone in USA at least twice so that the authorities can isolate the virus. We are not there yet.

 

[38Chevy454]

I thought of an analogy. The economy was like a tree growing and healthy. We essentially cut that tree 1/2 down by flipping the switch on the economy to off. That tree will live, but the growth back will be slow. Not instantaneous like the cutting half off was. It takes several years for that tree to grow back to where it was.

Those branches cut off represent the jobs and people that are now gone. Turning the switch back on does not make those cut off branches come back to life.

The govt tries adding some fertilizer to help that cut tree. But the tree can't put those branches back on, it has to grow new ones.

 

[Dtail]

Yes we will test new lows IMHO. This is because we "only" had about a 32% drop a month ago and the great recession hit 50% drop in the S&P500 and took almost a year to reach the bottom.

In both cases, there was complete loss of confidence. There may be mini rallys and high volatility with 1000 points swings which also happened during the great recession.

A V shaped recovery is wishful thinking because of the serious damage to our economy. IMHO, this damage is NOT temporary and will last longer than the corona virus.

In addition, heaven help the bullish investor if the corona virus is NOT temporary. There are recent reports in Japan and China that there are now new cases of the virus which bullish investors are currently ignoring....just like when they ignored the shutdown of Wuhan in late January.

IMHO, to get out of this mess, we need to have about 500 million test kits so that we can test everyone in USA at least twice so that the authorities can isolate the virus. We are not there yet.

Appreciate the response. It might come down to will the USA take on unlimited debt to stave off the market downturn.

 

[ESRwannabe]

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 ?

What I have learned over time is that I always want to stay 100% invested. So, I don't have to worry about it. It can be frustrating not having cash available to invest with. So, I try to buy as many monthly paying assets as I can. There are good dividend growth and high yield monthly ETFs out there if you look for them.

WisdomTree has several monthly paying US div growth ETFs and Invesco also has two. GlobalX also has a number of high yield options.

 

[2177V]

I thought of an analogy. The economy was like a tree growing and healthy. We essentially cut that tree 1/2 down by flipping the switch on the economy to off. That tree will live, but the growth back will be slow. Not instantaneous like the cutting half off was. It takes several years for that tree to grow back to where it was.

Those branches cut off represent the jobs and people that are now gone. Turning the switch back on does not make those cut off branches come back to life.

The govt tries adding some fertilizer to help that cut tree. But the tree can't put those branches back on, it has to grow new ones.

Good analogy. The last great recession in 2008 took 5 years to recover. For the current 2020 Corona Virus recession, 5 years sounds about right to me. I reallocated from 60/40 to 100% treasuries in 2019 because I am retired and I cannot wait 5 years. I may be dead by then.

Since my VUSUX treasuries are up 10%, I am one of the few people who is making money during this bear market because I was cautious about believing that the record breaking bull market will last forever.

 

[pb4uski]

Appreciate the response. It might come down to will the USA take on unlimited debt to stave off the market downturn.

While I can see that happening it makes no sense to me.... there is way too much focus on using monetary policy to prop up the stock market when only roughly half of Americans own stock directly or indirectly.

I'm not sure if the fed has its eyes on the right ball.

 

[eytonxav]

While I can see that happening it makes no sense to me.... there is way too much focus on using monetary policy to prop up the stock market when only roughly half of Americans own stock directly or indirectly.

I'm not sure if the fed has its eyes on the right ball.

I think the focus is on propping up businesses, so there are jobs to come back to when the switch gets thrown to startup again. Of course the market will react to what it perceives as moves that will speed that up. I suspect the recovery is going to be something between a V and a U, and hopefully the economy will look healthy again by this time next year. Can't lose sight of fact that the economy was healthy before the virus shut things down. This situation is totally different than the great recession which was man made and took a long time to get back to healthy employment levels.