Bull Trap or restarting a Bull run?

[Dtail]

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.

 

[RenoJay]

Not sure if it’s called a bull trap or a bear trap, but I’m betting it’s a trap and that there will be second and third order repercussions many aren’t 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 I’m betting pretty big money it’s Group 2.

 

[BeachOrCity]

+1

Not sure if it’s called a bull trap or a bear trap, but I’m betting it’s a trap and that there will be second and third order repercussions many aren’t 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 I’m betting pretty big money it’s Group 2.

 

[pb4uski]

+2

 

[brewer12345]

Not sure if it’s called a bull trap or a bear trap, but I’m betting it’s a trap and that there will be second and third order repercussions many aren’t 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 I’m betting pretty big money it’s 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.

 

[Dtail]

Not sure if it’s called a bull trap or a bear trap, but I’m betting it’s a trap and that there will be second and third order repercussions many aren’t 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 I’m betting pretty big money it’s 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?

 

[razztazz]

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.

 

[jollystomper]

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.

 

[OldShooter]

"Bull Trap or restarting a Bull run?"

Yes.

 

[Toocold]

Vast majority of the people on this thread believe that it's a bull trap. This means, it's a another bull run

 

[Fermion]

Vast majority of the people on this thread believe that it's a bear trap. This means, it's a another bull run

sigh. Bull trap. Bull trap. Trapping a bull.

The animal that is being trapped doesn't usually set the trap. At least I have never seen a bear go out and put one of those claw traps on the ground.

It is a bull trap when you mean that bulls will be getting fooled by a fake market rally and it is a bear trap when you mean that the bears will be getting fooled by a short dip in a rally.

 

[Toocold]

sigh. Bull trap. Bull trap. Trapping a bull.

To make you happy, I edited it to bull trap. Relax

 

[Fermion]

To make you happy, I edited it to bull trap. Relax

Thanks!


It isn't as bad as using there and their incorrectly but still is annoying.

 

[GenXguy]

Vast majority of the people on this thread believe that it's a bull trap. This means, it's a another bull run

I believe it's a bull run in the future at some point, sure. That point hasn't been reached yet - the market still has to find a new bottom, which is hasn't settled on yet.

 

[harley]

I will say that I don't know which of these is the case, but I am not buying until it becomes clear.

I understand completely, but that is exactly what I was thinking in 2009-2012 when I missed a lot of the run up. I think buying at various low levels might be a better idea, sort of DCA'ing at a level you are pretty sure will eventually be exceeded. I don't mind doing some buying and seeing the price drop from there, since I'm pretty sure that in 5-10 years this will be another one of those dips in the overall upward chart line.

 

[brewer12345]

I understand completely, but that is exactly what I was thinking in 2009-2012 when I missed a lot of the run up. I think buying at various low levels might be a better idea, sort of DCA'ing at a level you are pretty sure will eventually be exceeded. I don't mind doing some buying and seeing the price drop from there, since I'm pretty sure that in 5-10 years this will be another one of those dips in the overall upward chart line.

At cheap enough prices I will hold my nose and buy. Not there yet.

 

[k-man]

There's no way this is the bottom. Many of us have been through the dot.com bubble and following recession. We've been through the housing bubble and Great Recession. The happy talk about a "V" out of this thing is over. Now we're hearing a "wide U". I just don't believe it. There is so much damage being done at this time. The stimulus money is taking way too long to get to those who need it most. The entire world is already in a very deep recession. The corporate debt bubble and the housing market are very concerning to me. I think it's going to be a deep, long recession. The bottom will likely appear when we can assess the wreckage in 6-9 months. Expect many additional shocks along the way. We were in a Vanguard 60/40 balanced fund and moved to their Treasury fund at the close on February 25th. We may start to move back into the market in increments at 40% down and continue as it moves forward. We'll never time the bottom, but hoping to avoid the worst of it. When we get back in we'll be much more aggressive, possibly even VTSAX. Good luck everyone....tough times. Also..full disclosure, my spouse's business is completely shut down, so she'll apply for the PPP program, but we're losing there. We also had a special trip booked to South Africa in May and may end up losing that money as well. Stay smart, healthy and safe!

 

[RAE]

There's no way this is the bottom.

The entire world is already in a very deep recession. The corporate debt bubble and the housing market are very concerning to me. I think it's going to be a deep, long recession. The bottom will likely appear when we can assess the wreckage in 6-9 months.

+1, I agree. In my opinion, it's way, way, way too early to even think about buying into this market right now. This is not something that is going to end quickly, nor is it a situation where the market is going to come storming back rapidly. The economic impact we are seeing with this virus is unlike anything the world has faced in a long, long time, if ever.

 

[Jerry1]

Thanks!


It isn't as bad as using there and their incorrectly but still is annoying.

They're, they're now. It will be fine.

 

[REWahoo]

They're, they're now. It will be fine.

Here here!

 

[airforce1]

There's no way this is the bottom. Many of us have been through the dot.com bubble and following recession. We've been through the housing bubble and Great Recession. The happy talk about a "V" out of this thing is over. Now we're hearing a "wide U". I just don't believe it. There is so much damage being done at this time. The stimulus money is taking way too long to get to those who need it most. The entire world is already in a very deep recession. The corporate debt bubble and the housing market are very concerning to me. I think it's going to be a deep, long recession. The bottom will likely appear when we can assess the wreckage in 6-9 months. Expect many additional shocks along the way. We were in a Vanguard 60/40 balanced fund and moved to their Treasury fund at the close on February 25th. We may start to move back into the market in increments at 40% down and continue as it moves forward. We'll never time the bottom, but hoping to avoid the worst of it. When we get back in we'll be much more aggressive, possibly even VTSAX. Good luck everyone....tough times. Also..full disclosure, my spouse's business is completely shut down, so she'll apply for the PPP program, but we're losing there. We also had a special trip booked to South Africa in May and may end up losing that money as well. Stay smart, healthy and safe!

Concur 100%.

During the Great Recession in 2008-09, total job losses were 8.8 million over 25 months versus a total of 9.96 million initial claims in just two weeks. That's very sobering.

The FED and the GOV may try to legislate or stimulus the way out but CoVID-19 is ultimately dictating the way consumers and businesses behave.

Lose a house in the Great Recession? "Oh well, a black mark on my credit rating and I have to tighten my belt"

Pandemic? "I could die. I need to stay home"

Stakes are different.

As I posted elsewhere, I have now reallocated my TSP to 90% G Fund, 10% C Fund and won't change until I see majority of countries exhibit flattening CoVID-19 growth curves.

And let me add that currently China is not honest with their CoVID-19 numbers as people suspected and I believe this pandemic will be the straw that broke the camel's back and destroy their large shadow banking economy.

Stay safe everyone!

 

[k-man]

You bring up a point that I think is crucial. And that is consumer behavior and sentiment when we get through the first wave of this deadly virus. Yes, there will be some pent-up demand, no doubt. But how many people are jumping on flights? How many going to concerts, to the movies, to packed theme parks? How about business conferences in convention centers? Family weddings, parties, even funerals. Anything that normally is an intimate affair with hand shaking, back slapping, high fiving and hugging? It's going to be a rough 6 months or so. I do believe in this nation. 1000%!! But we're in the soup for awhile until we figure out how to live in this new normal.

 

[boatfishandnature]

This is a very unusual recession in that it is very intense, but we know that its cause will be gone in 18-24 mo (when a vaccine becomes widely available in the largest economies of the world). An upside would be an effective medicine to make the infection milder, which could happen much sooner. In most recession this certainty on the timing of the reasonably likely worst case scenario is not there. The recovery from previous epidemics of the past century or so (1918 Spanish Flu, 1957 H2N2) have been V-shaped. There is good reason to think that the most likely scenario is a V-shaped recovery, just not very soon.

 

[Dtail]

This is a very unusual recession in that it is very intense, but we know that its cause will be gone in 18-24 mo (when a vaccine becomes widely available in the largest economies of the world). An upside would be an effective medicine to make the infection milder, which could happen much sooner. In most recession this certainty on the timing of the reasonably likely worst case scenario is not there. The recovery from previous epidemics of the past century or so (1918 Spanish Flu, 1957 H2N2) have been V-shaped. There is good reason to think that the most likely scenario is a V-shaped recovery, just not very soon.

A month ago I also thought the same thing, but will there be too much damage to the economy baked in before the vaccine is discovered?

 

[airforce1]

A month ago I also thought the same thing, but will there be too much damage to the economy baked in before the vaccine is discovered?

Yes, I think so. Once you have 10 million out of work, it's hard to place that genie back in the bottle. I predict several million will be added to those numbers in the next 6-12 months.

It took 10 yrs to recover from the Great Recession, so the confidence level is high that it will take just as long to see the light at the end of that tunnel.