Did anyone's financial advisor see this coming?

[Redbugdave]

I keep an eye on the markets each day and when I saw the quickness of the virus spread, I did move my 401 out of equities when the DOW hit 27K. I am a Do It Yerselfer Indexer and do not play the markets. I just had a bad feeling about the markets this time. One of my friends is a Financial Advisor and I told him what I did and he said he thought it was a good move, but he himself did not move much out of equities. I think he believed this was just another bump and used to riding the wave. It was just a hunch for me. I will sit tight and shuffle extra cash and 401 back in when things turn around. I don't look at the market much right now in all this turmoil. I have IRA's mostly in equities but do not plan on touching that money for years. I am retired by the way. Class of 2014.

[bobandsherry]

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Originally Posted by Redbugdave I keep an eye on the markets each day and when I saw the quickness of the virus spread, I did move my 401 out of equities when the DOW hit 27K. I am a Do It Yerselfer Indexer and do not play the markets. I just had a bad feeling about the markets this time. One of my friends is a Financial Advisor and I told him what I did and he said he thought it was a good move, but he himself did not move much out of equities. I think he believed this was just another bump and used to riding the wave. It was just a hunch for me. I will sit tight and shuffle extra cash and 401 back in when things turn around. I don't look at the market much right now in all this turmoil. I have IRA's mostly in equities but do not plan on touching that money for years. I am retired by the way. Class of 2014.

The trick is when will you move that money back? Market up big so far today, a bounce or is this the "v" in the market movement. Timing that will be the real verification of if you win or not. Good luck

[Redbugdave]

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Originally Posted by bobandsherry The trick is when will you move that money back? Market up big so far today, a bounce or is this the "v" in the market movement. Timing that will be the real verification of if you win or not. Good luck

Well, really for me there is no big rush. I make money as long as I get back in somewhere below 27K on the DOW. When things are not as volatile. That may be a while.

[prudent_one]

I don't use an FA but if I was an FA, I wouldn't have done anything. If you make a knee-jerk reaction with your client's money that ended up being a bad move, then you overreacted and panicked, and your rep is ruined. If instead you do nothing and THAT was wrong, well, "unprecedented scenario", cite many experts who also did nothing, and you get a pass.

[OldShooter]

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Originally Posted by prudent_one I don't use an FA but if I was an FA, I wouldn't have done anything. If you make a knee-jerk reaction with your client's money that ended up being a bad move, then you overreacted and panicked, and your rep is ruined. If instead you do nothing and THAT was wrong, well, "unprecedented scenario", cite many experts who also did nothing, and you get a pass.

Many of the panel clocks in older airplanes are mechanical -- they keep working if the aircraft loses power.

One of the memes in flight training is: "In an emergency, the first thing to do is to wind the clock." The rationale is that if you don't have time to wind the clock, things are probably so bad that nothing you can do will matter. Also, winding the clock gives you a little bit of thinking time before you try to take action.

[harley]

I got a call from my old FA today. I quit working with him 10+ years ago. Nice guy, but I wanted to do things my way. He left a voice mail, just checking in, and mentioned what a great day it was in the market today. I'm going to give him a call tomorrow, since we always got along pretty well. Be interesting to see if he's offering to manage my money again during this "crisis".

[audreyh1]

Wow, he had time to call you?

[harley]

Yeah I was a little surprised too. Of course, he's getting pretty old now, and his son is working with him. Maybe Jr. is handling the panicking masses and Sr. is just being sociable.

[bobandsherry]

Anyone making sense of the market the past few days? Nothing has changed in regards to solving/curing C-19. It's so bad that government has determined it needs to pump $2 trillion into the economy. Administration boasting how that's the most in the history -- isn't that a sad statement to make? The # of jobless claims exceeded estimates, so things are worse than anticipated. VIX still high. And since there is no cure or prevention, we'll be right back where we are in a short time. And yet the market is up strong again today. Crazy -- not sure where this goes next but I guess I'll just enjoy the ride.

[OldShooter]

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Originally Posted by bobandsherry ... making sense of the market ...

Ooga! Ooga! Oxymoron alarm!!!

[Toocold]

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Anyone making sense of the market the past few days?

The stock market is based on expectations -- not the actual. Some people say it's a barometer of people's thoughts/feels about 6-12 months out. All those things that you mentioned likely have been priced in.

My guess is the more certainty there is on the situation (the # of new cases and likely hospitalization, capacity of the health care system to take on patients, likely curve of spreading with all the actions taken to date, approximate end to the epidemic, and how all of this will impact the overall economy), the more likely that volatility will reduce.

From my state's presentation it appears there are existing epidemic models on the health part.

[Spock]

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Originally Posted by bobandsherry Anyone making sense of the market the past few days? Nothing has changed in regards to solving/curing C-19. It's so bad that government has determined it needs to pump $2 trillion into the economy. Administration boasting how that's the most in the history -- isn't that a sad statement to make? The # of jobless claims exceeded estimates, so things are worse than anticipated. VIX still high. And since there is no cure or prevention, we'll be right back where we are in a short time. And yet the market is up strong again today. Crazy -- not sure where this goes next but I guess I'll just enjoy the ride.

Look at graphs from the '29 crash, the '87 crash, etc. There are bear market rallies and "Dead Cat Bounces" (if you drop a dead cat from high enough, it will bounce back up a little before falling again).
Chartists/technicians will state a market must re-test its prior lows before climbing again.
I'm no expert. But my view is there is more bad news coming when all these places that were ordered closed "until April 1" learn they are still closed until April 15, April 30th, whatever.

Then again, maybe the bottom is in and off we go again surfing a wave of printing money. Place your bets.

[bobandsherry]

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Originally Posted by Toocold The stock market is based on expectations -- not the actual. Some people say it's a barometer of people's thoughts/feels about 6-12 months out. All those things that you mentioned likely have been priced in. My guess is the more certainty there is on the situation (the # of new cases and likely hospitalization, capacity of the health care system to take on patients, likely curve of spreading with all the actions taken to date, approximate end to the epidemic, and how all of this will impact the overall economy), the more likely that volatility will reduce. From my state's presentation it appears there are existing epidemic models on the health part.

I get and understand that, which is why I posted the question.

So what has changed in expectations from a few days ago when market dropped almost 3,000 and now? Fundamentally nothing. Cases still climbing. Testing still insufficient. Deaths still climbing. No cure. No vaccine. Still short hospital rooms and staff, perhaps even at a higher level than anyone expected The only new information is unemployment level is significantly HIGHER than was expected. And I guess cost is now $2 trillion, not the $1.2 trillion that was mentioned days ago. And BTW VIX is still high, sitting at 58.

Cruise lines are now extending their suspended operations. Communities are extending or instituting shelter in place. All this is saying the worst is not yet behind us.

So what's changed for the good in regards to expectations?

[Spock]

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Originally Posted by bobandsherry I get and understand that, which is why I posted the question. So what has changed in expectations from a few days ago when market dropped almost 3,000 and now? Fundamentally nothing. Cases still climbing. Testing still insufficient. Deaths still climbing. No cure. No vaccine. Still short hospital rooms and staff, perhaps even at a higher level than anyone expected The only new information is unemployment level is significantly HIGHER than was expected. And I guess cost is now $2 trillion, not the $1.2 trillion that was mentioned days ago. And BTW VIX is still high, sitting at 58. Cruise lines are now extending their suspended operations. Communities are extending or instituting shelter in place. All this is saying the worst is not yet behind us. So what's changed for the good in regards to expectations?

The Fed said they are going to buy a lot of securities.

[Toocold]

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So what has changed in expectations from a few days ago when market dropped almost 3,000 and now?

I'm truly guessing but perhaps it's (likely) passing and size of the CARES act, a backstop on the run on corporate bonds, lower hospitalization rates, additional mobilization of companies to produce needed supplies, an end date (april 16th) that noone believes but at least there is an anchor... We still haven't gotten word on any impact of some of the treatments but I'm sure some people know how they are going.

I think what will be a net negative is if there is a huge spike in California or Florida. Countless other things that noone can anticipate.

[target2019]

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Originally Posted by harley I got a call from my old FA today. I quit working with him 10+ years ago. Nice guy, but I wanted to do things my way. He left a voice mail, just checking in, and mentioned what a great day it was in the market today. I'm going to give him a call tomorrow, since we always got along pretty well. Be interesting to see if he's offering to manage my money again during this "crisis".

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Originally Posted by audreyh1 Wow, he had time to call you?

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Originally Posted by harley Yeah I was a little surprised too. Of course, he's getting pretty old now, and his son is working with him. Maybe Jr. is handling the panicking masses and Sr. is just being sociable.

My first thought is that Sr is turning the business over to Jr, and making calls to bring in business before he tries to step away.

[bobandsherry]

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Originally Posted by Spock The Fed said they are going to buy a lot of securities.

Did that change today? Shrug.

[bobandsherry]

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Originally Posted by Toocold I'm truly guessing but perhaps it's (likely) passing and size of the CARES act, a backstop on the run on corporate bonds, lower hospitalization rates, additional mobilization of companies to produce needed supplies, an end date (april 16th) that noone believes but at least there is an anchor... We still haven't gotten word on any impact of some of the treatments but I'm sure some people know how they are going. I think what will be a net negative is if there is a huge spike in California or Florida. Countless other things that noone can anticipate.

All the items you listed didn't change from yesterday to today, and well, you see what the market is doing today.

And I agree with you on spike in cases still coming, but also number of patients tested, so more a data point that confirms what we already believe to be true. I focus on the % of positives to total tests in US. Despite that the focus for those tested is on those who get tested are those with symptoms (so skewed population), the % positive still remains reasonable at under 15%. Remove NY results and % positive is under 10% (NY is over 25%). And mortality rate is just around 1% for US overall. Hoping for a cure and prevention soon.

[bmurphy]

Yes - I did. (I'm an FA). Re-allocated portfolios defensively, but while we're out-performing the market by a decent amount - still down YTD close to double digits as of end of today.

[Robert1389]

This is the fastest, steepest, DrawDown in history. On February 21, we're at all time highs with lowest UnEmp rate in 50 years. We had a GDP of 1.5-2.1% with very low inflation and interest rates. There were more jobs than people who could fill them.


By March 23rd, the S&P500 had lost 30.64%.............................no, no one saw this coming. This is a true "Black Swan," that showed up out of China, who misled the rest of the world as to how contagious this virus is.


It's not your advisor's fault, it's not your fault personally, but the Chinese Communist Party (CCP) has a lot to answer to the entire world.


The only flag was an overvalued market, which in and of itself, could remain overvalued for the foreseeable future as long as the economic underpinnings continued to support it. But when a Black Swan such as this shows up, the overvaluation will quickly turn into undervaluation.