Join Early Retirement Today
Closed Thread
 
Thread Tools Display Modes
COVID-19 -based going to cash jitters?
Old 02-23-2020, 07:42 AM   #1
Thinks s/he gets paid by the post
 
Join Date: Jul 2009
Posts: 1,604
COVID-19 -based going to cash jitters?

I am definitely not an alarmist by nature - I stayed long through every reset in the stock market over the last 45 years ...

BUT, in non taxable accounts - tIRA and rIRA - is this a good time to be thinking about an "all out" move?

My reading from places like CIDRAP (Studies show COVID-19 virus likely has multiple infection routes | CIDRAP and CDC warns community COVID-19 spread could take place in US | CIDRAP) leaves me a bit squeamish - wrt to health and money.
stephenson is offline  
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 02-23-2020, 08:12 AM   #2
Thinks s/he gets paid by the post
 
Join Date: May 2019
Posts: 2,637
No change for me, but I'm already pretty conservative at 42% equities, mostly in taxed accounts, with about a year expected to my FIRE target.
GenXguy is online now  
Old 02-23-2020, 08:21 AM   #3
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
REWahoo's Avatar
 
Join Date: Jun 2002
Location: Texas: No Country for Old Men
Posts: 50,000
Quote:
Originally Posted by stephenson View Post
I am definitely not an alarmist by nature - I stayed long through every reset in the stock market over the last 45 years ...

BUT, in non taxable accounts - tIRA and rIRA - is this a good time to be thinking about an "all out" move?

My reading from places like CIDRAP (Studies show COVID-19 virus likely has multiple infection routes | CIDRAP and CDC warns community COVID-19 spread could take place in US | CIDRAP) leaves me a bit squeamish - wrt to health and money.
So if it is as bad as you fear, why worry about trying to time the market and preserve your nest egg? You (we) will be dead and have no need for money.
__________________
Numbers is hard
REWahoo is offline  
Old 02-23-2020, 08:32 AM   #4
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
audreyh1's Avatar
 
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 37,931
I’m at 50/50. I have plenty of cash and short-term funds already. I think this could have a severe economic impact, but I don’t think most companies are going to go out of business.
__________________
Retired since summer 1999.
audreyh1 is online now  
Old 02-23-2020, 08:38 AM   #5
Thinks s/he gets paid by the post
njhowie's Avatar
 
Join Date: Mar 2012
Posts: 3,925
I've been 98% cash/CDs/munis/treasuries and I am doing the exact opposite - using this as an opportunity to pick up bargains from folks who are being frightened unnecessarily.

Sure, the virus is bad and may take time to go away. However, we need to differentiate between one-time shocks and permanent issues. This is obviously a one-time event. More than likely, a year from now nobody will even be talking about it. Before it came about, who spoke about Ebola, SARS, etc.? Nobody - it happens, we work through it, and life carries on.

I would not pull everything out, or make drastic changes to AA unless you were already contemplating it and are prepared to keep it permanently or for a very long time going forward. If you are very concerned and really considering making an all-out move, maybe there's a bigger issue that you do not have an appropriate AA and it's too overweight in equities for your risk tolerance?

This is an election year. Nothing dramatic will happen on the policy side of things to rock the boat. We'll likely see the stock market rallying in to the elections. So, at some point between now and maybe Labor Day, we're very likely going to see the markets begin advancing and hitting new record highs. You're going to want to be in at that time. I wouldn't want to be timing things thinking I could figure the exact point in time to get back in. If you completely cash out and miss the next move higher, it's possible you won't be getting back in.
njhowie is offline  
Old 02-23-2020, 08:54 AM   #6
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Sunset's Avatar
 
Join Date: Jul 2014
Location: Spending the Kids Inheritance and living in Chicago
Posts: 16,973
Money won't be worth anything if this is the extinction event. So you could cash out, buy beans, and bullets, and wait to make a killing or live an extra year or two in your shelter eating beans....

Some people suggest for an asset allocation that you would already have a bunch of bonds/interest earning things in your non-taxable accounts for tax efficiency.

I'm certainly not going to do an all out move, as I cannot predict the market, let alone who will live though this.
__________________
Fortune favors the prepared mind. ... Louis Pasteur
Sunset is online now  
Old 02-23-2020, 09:14 AM   #7
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Mar 2003
Posts: 18,085
This has clearly become a pandemic. Plan accordingly.

Obviously the cruise lines will get hurt here. What other industries could get clobbered? Airlines? Movie theaters? Hotels? I would like to find a combination of lots of people together to make the business work, high fixed costs and plenty of debt.
__________________
"All animals are equal, but some animals are more equal than others."

- George Orwell

Ezekiel 23:20
brewer12345 is offline  
Old 02-23-2020, 09:35 AM   #8
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Sep 2012
Location: Seattle
Posts: 5,991
I mean you would have thought the cruise lines would be crushed by this but they are holding up fairly well. I made a little bit on my CCL puts but cashed it out because it is just holding up better than one might expect.

I don't cruise but evidently there are a bunch of you guys who do and are not put off by being held captive on a prison ship while getting food that looks like it came from a hospital.
Fermion is offline  
Old 02-23-2020, 09:37 AM   #9
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
audreyh1's Avatar
 
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 37,931
Quote:
Originally Posted by Fermion View Post
I mean you would have thought the cruise lines would be crushed by this but they are holding up fairly well. I made a little bit on my CCL puts but cashed it out because it is just holding up better than one might expect.

I don't cruise but evidently there are a bunch of you guys who do and are not put off by being held captive on a prison ship while getting food that looks like it came from a hospital.
I’m just waiting for the impact. It’s amazing that it hasn’t happened yet.
__________________
Retired since summer 1999.
audreyh1 is online now  
Old 02-23-2020, 09:48 AM   #10
Thinks s/he gets paid by the post
njhowie's Avatar
 
Join Date: Mar 2012
Posts: 3,925
Quote:
Originally Posted by brewer12345 View Post
This has clearly become a pandemic. Plan accordingly.
Still not anywhere near the numbers we see in the common flu year after year. The numbers are minuscule. Pandemic means "occurring over a wide geographic area AND affecting an exceptionally high proportion of the population"

https://www.merriam-webster.com/dictionary/pandemic

Quote:
Obviously the cruise lines will get hurt here. What other industries could get clobbered? Airlines? Movie theaters? Hotels? I would like to find a combination of lots of people together to make the business work, high fixed costs and plenty of debt.
Once again, one time issue or permanent? The markets are going to exaggerate it no differently than the nightly news headlines and the fear being driven online. Is it the end of the cruising and travel industries? Extremely unlikely. Might we see a further dip in share prices over the next 3 to 6 months? Possibly. However, the scope continues to be primarily limited to the region. Even the locals see that. Travel agents indicate inquiries and bookings for the cruise lines continue for dates a year out. The cruise lines are also indicating they are seeing little change regarding bookings outside of the Asia region.
njhowie is offline  
Old 02-23-2020, 09:48 AM   #11
Thinks s/he gets paid by the post
 
Join Date: Jul 2009
Posts: 1,604
OK - there is a wide area between nothing happening (treating covid 19 like SARS) and extinction.

Pressure on certain types of businesses? Sure. Airlines, cruise ships, etc.

If it does get out of the bag and we start seeing more significant events, either in transmission that is uncontrolled, or death rates that are uncontrolled, then a broad effect could be the result.
stephenson is offline  
Old 02-23-2020, 09:53 AM   #12
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
NW-Bound's Avatar
 
Join Date: Jul 2008
Posts: 35,712
A lot of stocks will get pinched, but it's hard to know which sectors will get hurt more.

Oil got pummeled immediately, but as mentioned earlier cruise lines hold up so well, which is perplexing. About the virus health risk caused by smoking, should we start to short tobacco companies?

On the other side, there will be companies less affected, such as utilities, domestic food producers and industries, pharmaceuticals, etc...
__________________
"Old age is the most unexpected of all things that happen to a man" -- Leon Trotsky (1879-1940)

"Those Who Can Make You Believe Absurdities Can Make You Commit Atrocities" - Voltaire (1694-1778)
NW-Bound is offline  
Old 02-23-2020, 10:04 AM   #13
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
ExFlyBoy5's Avatar
 
Join Date: May 2013
Location: ATL --> Flyover Country
Posts: 6,649
Quote:
Originally Posted by NW-Bound View Post

On the other side, there will be companies less affected, such as utilities, domestic food producers and industries, pharmaceuticals, etc...
Yeah, but what is Tesla going to do?!?! That's what is REALLY important!
__________________
FIRE'd in 2014 @ 40 Years Old
Professional Retiree
ExFlyBoy5 is offline  
Old 02-23-2020, 10:04 AM   #14
Recycles dryer sheets
 
Join Date: May 2013
Posts: 327
Keeping my eye on already-stressed Chinese banks and Chinese business debt. No idea whether Chinese bank defaults could trigger worldwide banking woes, but it will be interesting to watch. (Keeping my 50/40/10 asset allocation...)
footenote is offline  
Old 02-23-2020, 10:15 AM   #15
Thinks s/he gets paid by the post
njhowie's Avatar
 
Join Date: Mar 2012
Posts: 3,925
Quote:
Originally Posted by NW-Bound View Post
Oil got pummeled immediately, but as mentioned earlier cruise lines hold up so well, which is perplexing.
Not extremely perplexing. The cruise lines have seen their share prices take a beating already. The shares of CCL/CUK, which is the strongest company among the Big-3, are off 30% from 52-week highs and pays 5% dividend at current prices. The earnings will take a one-time hit this year (as will the other cruise lines), but the company is strongest in the sector having the lowest debt and debt ratios. Of their 100+ ship fleet, I believe only 4 of them operate in Asia. They are extremely well-diversified in every facet of their business when it comes to itinerary, target customer, luxury vs. economy, and so on.

I would never touch RCL or NCLH shares as they are both highly leveraged. CUK shares however, paying over 5% dividend, with the lowest PE, and their strong balance sheet is a bargain. I'm slowly accumulating and will continue to. Five years out the shares will be significantly higher. In the mean time, with interest rates continuing to fall, the 5% dividend will keep me happy.

So again, one-time issue or permanent one?
njhowie is offline  
Old 02-23-2020, 10:17 AM   #16
Thinks s/he gets paid by the post
njhowie's Avatar
 
Join Date: Mar 2012
Posts: 3,925
Quote:
Originally Posted by footenote View Post
Keeping my eye on already-stressed Chinese banks and Chinese business debt. No idea whether Chinese bank defaults could trigger worldwide banking woes, but it will be interesting to watch. (Keeping my 50/40/10 asset allocation...)
Chinese government has already indicated they are prepared to step in and provide as much liquidity as necessary so it will not escalate.
njhowie is offline  
Old 02-23-2020, 10:18 AM   #17
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Mar 2003
Posts: 18,085
Quote:
Originally Posted by footenote View Post
Keeping my eye on already-stressed Chinese banks and Chinese business debt. No idea whether Chinese bank defaults could trigger worldwide banking woes, but it will be interesting to watch. (Keeping my 50/40/10 asset allocation...)
To the extent the gubmint has the ability to do so, I cannot imagine they will allow large banks to fail.
__________________
"All animals are equal, but some animals are more equal than others."

- George Orwell

Ezekiel 23:20
brewer12345 is offline  
Old 02-23-2020, 10:28 AM   #18
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Mar 2003
Posts: 18,085
Quote:
Originally Posted by njhowie View Post
Still not anywhere near the numbers we see in the common flu year after year. The numbers are minuscule. Pandemic means "occurring over a wide geographic area AND affecting an exceptionally high proportion of the population"

https://www.merriam-webster.com/dictionary/pandemic



Once again, one time issue or permanent? The markets are going to exaggerate it no differently than the nightly news headlines and the fear being driven online. Is it the end of the cruising and travel industries? Extremely unlikely. Might we see a further dip in share prices over the next 3 to 6 months? Possibly. However, the scope continues to be primarily limited to the region. Even the locals see that. Travel agents indicate inquiries and bookings for the cruise lines continue for dates a year out. The cruise lines are also indicating they are seeing little change regarding bookings outside of the Asia region.
This stuff is loose and spreading in Asia, Italy, Malaysia, possibly Africa, probably Hawaii, and I would guess in the lower 48. Sounds like a pandemic to me. The media and gubmint have done their best to keep the party going as long as possible ("just the flu, bro"), but I think the herd is starting to get the vague idea that all is not right. Pretty soon I think they are going to start to panic at real or imagined packs of wolves closing in. When that happens, the very overvalued market is going to have its reckoning.

As far as real world outcomes, there is a lot we really do not know. However, just with what we can see now, this new plague spreads very easily, consumes huge amounts of healthcare resources, and in the event that it becomes widely spread the death rate will rise a good bit because the healthcare system will quickly be overwhelmed. With that very definitely in the range of possible outcomes, how do we value equities? If quarantines and the cancellations of anything involving large groups of people become widespread, what will that mean for the economy? Exercises for the reader. I would suggest that merely including these possibilities in the range of outcomes should result in a materially lower price for risk assets.

I don't care to speculate on the truly awful outcomes (this mutates into something a lot worse). Just based on what we can see now, the valuation of the equity market mystifies me. I think cruise lines, hotels, airlines, movie theaters, restaurants, etc. and all at a huge risk if there are either enforced restrictions on gatherings of people or the populace (like me and many board members) simply starts avoiding these sorts of situations. If you don't see the world that way, I would welcome hearing your arguments why the sun will continue shining regardless of this new plague.
__________________
"All animals are equal, but some animals are more equal than others."

- George Orwell

Ezekiel 23:20
brewer12345 is offline  
Old 02-23-2020, 10:34 AM   #19
Thinks s/he gets paid by the post
njhowie's Avatar
 
Join Date: Mar 2012
Posts: 3,925
Quote:
Originally Posted by brewer12345 View Post
If you don't see the world that way, I would welcome hearing your arguments why the sun will continue shining regardless of this new plague.
I'm not looking for a debate. You have your dire view, and you're free to go with it. I have mine and will go with it as well. I doubt I will convince you of my view, and I know that you are not going to convince me of yours. So, no reason to waste our afternoons on it.
njhowie is offline  
Old 02-23-2020, 10:36 AM   #20
Recycles dryer sheets
 
Join Date: May 2013
Posts: 327
Quote:
Originally Posted by brewer12345 View Post
To the extent the gubmint has the ability to do so, I cannot imagine they will allow large banks to fail.
It's been reported that the Chinese Central Government has already asked banks to accommodate small-to-medium businesses which can't make loan repayments due to quarantines devastating sales. What I'm watching is how this unfolds. There may be a point at which the government can no longer prop up bad debt-ridden banks.
footenote is offline  
Closed Thread


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Date based retiring instead of money based? Cassius King Other topics 60 07-16-2019 07:06 AM
Canceling Term Life Insurance Policy Jitters Drake3287 FIRE and Money 60 07-14-2019 10:18 AM
Pre retirement jitters. bclover Life after FIRE 42 04-01-2016 09:27 PM
Having Retirement Jitters KaChing Hi, I am... 9 01-04-2008 06:37 AM
Re: Asset based or dividend based Bob_Smith FIRE and Money 21 01-05-2004 12:50 PM

» Quick Links

 
All times are GMT -6. The time now is 10:34 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2024, vBulletin Solutions, Inc.