Coronavirus - Financial, Health and Other impacts II

[Gumby]

This is the thread to discuss the financial impacts of the coronavirus COVID-19. There are two other threads - one for the health and preparedness aspects of the coronavirus and one for the impact on travel. Please choose the appropriate thread for your comments and do not repeat the same post in multiple threads (see the Community Rules regarding multi-posting).

This is a undoubtedly a situation of concern to many, but it behooves us all to post in a sober and responsible manner. Factual information, with appropriate support/reference, is best. Reasonable and concrete suggestions for action are also appropriate. However, fear mongering and the promotion of rumors is not. As a general rule, before you post, ask yourself "Am I confident this is true?" and "Will this be useful to others or am I just venting?" The "hot topic" designation is turned on to give everyone a pause in which they can answer those questions.

Thank you,

The Moderator Team

 

[steelyman]

It’s been one heck of a week for the markets. I think a weekend will be more than welcomed. Even if you’re retired.

 

[Bir48die]

Yes it’s been a week. I’d be interested in those who do 100% self investing if they’ve held tight or radically changed AA this week or gone cash.

 

[Nemo2]

Yes it’s been a week. I’d be interested in those who do 100% self investing if they’ve held tight or radically changed AA this week or gone cash.

We haven't sold anything....but we are experiencing a few "Woulda-shoulda-coulda" moments.

 

[Dtail]

We haven't sold anything....but we are experiencing a few "Woulda-shoulda-coulda" moments.

Same here, but staying the course.
Will not lock in losses now.
From another perspective, our investment assets now only up 6% life to date, so don't have as much cushion as some others, but nevertheless staying the course.

 

[DogGone]

Staying the course and making a list of buy opportunities to keep my mind positively focused.

 

[sengsational]

Accidental Cash

Back in early days (when the "Diamond Princess" was still populated with infected people) I was pretty certain the market would be reacting at some point. I made the decision not to alter my asset allocation "no matter what", because, as I've been telling myself (an occasionally you all), I have many, many years of cash or cash equivalents. So the market is doing what I figured it would do, and I'm going to stick to the plan.

But, the day before the big drop, I sold equities in preparation to buy a car. So I've got $30K in the money market 'by accident', but well-timed. Now all I have to do is convince DW that she can keep driving her (perfectly good, but old) car for a while longer. I told her the used car market (along with other such things that aren't necessities) would probably soften considerably as this thing progresses, so she might get more car for less money if she waits. I don't see her waiting, though.

 

[brewer12345]

Back in early days (when the "Diamond Princess" was still populated with infected people) I was pretty certain the market would be reacting at some point. I made the decision not to alter my asset allocation "no matter what", because, as I've been telling myself (an occasionally you all), I have many, many years of cash or cash equivalents. So the market is doing what I figured it would do, and I'm going to stick to the plan.

But, the day before the big drop, I sold equities in preparation to buy a car. So I've got $30K in the money market 'by accident', but well-timed. Now all I have to do is convince DW that she can keep driving her (perfectly good, but old) car for a while longer. I told her the used car market (along with other such things that aren't necessities) would probably soften considerably as this thing progresses, so she might get more car for less money if she waits. I don't see her waiting, though.

We are planning to shop for a 3 year old midsize SUV in the fall. DW asked today if a supply chain disruption would have an effect on the availability and cost of such a vehicle. I told her it will be very hard to tell because factories may struggle to produce new cars (which spills demand into the used market) but a recession will make people less eager to buy new/newer cars. No idea what will happen, in other words.

 

[sengsational]

... factories may struggle to produce new cars (which spills demand into the used market) but a recession will make people less eager to buy new/newer cars. No idea what will happen, in other words.

Good point. I didn't think of that.

 

[NW-Bound]

The financial impact on the world economy is going to be high, with tourism knocked way down and supply chain from China disrupted. I have seen estimates such as China's growth slowing from 6% to 4.5%, and world economy losing 1.3%. Does that seem low to you, compared to the damage this could do? But what do I know? I am not an economist.

The market has lost more than 12% from its high. I have lost less than that, but that's because I am not 100% in stock.

The loss is nothing yet, compared to effects of 9/11 and the subprime bubble. Of course the day is still young. It is going to be interesting.


PS. Speaking of cars, I said in another thread I "lost" a Porsche Taycan Turbo. After today, it's upgraded to a 2020 Ferrari Roma.

 

[Running_Man]

If the Corona virus were to proceed in the manner that Brewer is fearing, the damage to the stock market and the economy would be impaired far greater than is thought possible. Debt downgrades would be enormous in their quantity.

Still hoping for a quick end to the virus with the increase in sunshine, but much depends on the spread of the virus around the world and my confidence in such a scenario is declining by the day as the parabolic rise of cases outside China continues. Italy reported a 50% increase in one day and has 3% deaths on just the reported cases so far. I thought Brewer was far too pessimistic just a couple weeks ago but business is starting to be seriously effected and the effects are just now starting. I could envision more negative news tomorrow causing investors to not want to carry positions into the weekend and leading to a 2000 point decline tomorrow. So what happens next will be very interesting, if Cramer is right and the bottom is in then this will all be over shortly and the great buying opportunity will be the topic on these boards in a month.

So come on sunshine and clear this up!

 

[Austin704]

Sitting tight on my AA, which is 70/30 with no plans to sell or to buy. Been building up a bigger cash position lately while the equites ride, so no change in strategy.

I suspect most of us on this forum have been through the dot.com bear market and the Great Recession, so this is just another stress test of risk tolerance. If we’ve planned well and our AA reflects our true risk tolerance, then we shouldn’t lose any sleep over this correction—even if it slides into a bear market. Good time to buy if you’re in the accumulation phase.

In my view, a correction or even a short bear market is healthy for the market—it brings prices more in line with long-term averages and and weeds out a few fools. If it weren’t Coronavirus it would be something else sending the market into a tailspin. Stay the course.

 

[razztazz]

Yes it’s been a week. I’d be interested in those who do 100% self investing if they’ve held tight or radically changed AA this week or gone cash.

I tipped my hand here a few weeks back when things first started showing signs of uncertainty. Don't recall what thread it was. At that time I sold off some SPY's to rebalance in general and restock the emergency cookie jar with the excess. I am pretty much at the point where I've won my game so I don't have to keep playing. Maybe play like George Blanda his last 10 yrs. Kick a field goal every now and then.

Comes last Friday. Sunday night I was watching the futures and Nikkei action. After thinking about it for a couple hours I put in a sell order for everything executed Monday morning. So, I have no stocks, ETFs, or mutual funds at the moment

I was real smart/lucky/possessed-by-evil-spirits with exit/entrance points in 2000/2003, and 2008/2009. Just some evil chart reading, listening to chatter, (Yes, the Talking Heads) and guts. I cannot knowingly do it again of course but I am not shell-shocked out of ever investing again either. I'm just out for now.

Staying the course only counts when you know or have a good idea of what's out there. Rocks, icebergs, sand bars, submarines, giant octopusses? You don't stay the course. You steer the ship. Vast uncharted waters? No idea how long provisions will last? Pull a 180? Sail slower? Discover new worlds? Sink and drown?

 

[REWahoo]

Yes it’s been a week. I’d be interested in those who do 100% self investing if they’ve held tight or radically changed AA this week or gone cash.

I've done nothing and plan to do more of the same.

 

[Brat]

I have known Brewer1234 from back in the day of the housing debt crisis. He has been there, done that, and worked for the Feds to monitor insurers. Although he may seem a bit extreme at times he has earned a tee shirt. He knows his stuff.

That said, no one knows the future but I regard his opinions highly.

 

[Fermion]

Wife's 401K losses have essentially wiped out any gains I have made in our taxable account and IRAs. I realize the 401K loss is just "paper" right now, but still.

Had I held on to the March 20 $325 puts (which I sold for $16,000 gain), they would be worth near $300,000 today.

I did buy the $275s but they have not gone up nearly as much.

 

[USGrant1962]

If the Corona virus were to proceed in the manner that Brewer is fearing, the damage to the stock market and the economy would be impaired far greater than is thought possible. Debt downgrades would be enormous in their quantity.

Still hoping for a quick end to the virus with the increase in sunshine, but much depends on the spread of the virus around the world and my confidence in such a scenario is declining by the day as the parabolic rise of cases outside China continues. Italy reported a 50% increase in one day and has 3% deaths on just the reported cases so far. I thought Brewer was far too pessimistic just a couple weeks ago but business is starting to be seriously effected and the effects are just now starting. I could envision more negative news tomorrow causing investors to not want to carry positions into the weekend and leading to a 2000 point decline tomorrow. So what happens next will be very interesting, if Cramer is right and the bottom is in then this will all be over shortly and the great buying opportunity will be the topic on these boards in a month.

So come on sunshine and clear this up!

TY for deleting your extreme GDP loss suggestion, I was writing a response about the Great Depression when your suggestion was apparently edited.

Anyway, a 2000 point decline tomorrow gets us down ~16%, just a little more than the average intra-year correction of 13%.

I don't want to minimize CoVid-19, it will certainly slow the global economy. But OTOH there seem to be tons of people here and in the media that want to maximize it. IMO, it is a bad flu - nothing more, nothing less. It is not the Spanish flu or the Plague.

And as they don't say in The North, Summer is coming.

 

[brewer12345]

The financial impact on the world economy is going to be high, with tourism knocked way down and supply chain from China disrupted. I have seen estimates such as China's growth slowing from 6% to 4.5%, and world economy losing 1.3%. Does that seem low to you, compared to the damage this could do? But what do I know? I am not an economist.

I think it really depends on whether the spread fizzles out soonish or continues spiraling out of control. Moody's publicly said today that if the virus turns into a true pandemic, the US and the global economy will enter a recession in the first half. That is a lot more than a 1.5% reduction in growth. For whatever reason, they put the likelihood of that happening at 40%, but I am not aware of them having any public health professionals or virologists on staff so I wonder how they came up with that.

So the real question is what happens with this outbreak. I am seeing reports of confirmed cases all over Europe, Asia, starting up in South America. Cases are being reported in places so obscure I find myself googling to see where they are (San Marino is a new one for me). A case showed up in Nigeria, which IMO is really bad. The US should be able to monitor this closely but for whatever reason we either cannot or won't test and therefore are currently flying blind. Frankly, I am not optimistic about this fizzling any time soon. I think the virus has been spread all over the world through the miracle of air travel and it is contagious enough that it is spreading like wildfire in a lot of areas. I am currently expecting a recession and so is the bond market. The stock market finally seems to be catching on, but with the fast but modest drop we have seen, a recession is definitely not priced in.

 

[Scuba]

I’ve been buying this week. We recently had an investment in my IRA pay out, so my IRA was 100% cash last week. This week I’ve been buying each day. It’s long-term money for us so I am expecting it will have plenty of time to recover, just as markets did in 2009.

With our taxable portfolio that we’re using to live on and to fund our remodel, I’ve been more conservative. I have bought a bit more equities there too but still holding plenty of cash to get us through a bad market cycle.

Overall, we are holding around 10% in cash, 25% in bonds and hard money loans, and the rest in equities. The only change I’m expecting in terms of our AA is that we will likely spend at least half of our cash on our remodel over the next six months.

 

[Sunset]

Wife's 401K losses have essentially wiped out any gains I have made in our taxable account and IRAs. I realize the 401K loss is just "paper" right now, but still.

Had I held on to the March 20 $325 puts (which I sold for $16,000 gain), they would be worth near $300,000 today.

I did buy the $275s but they have not gone up nearly as much.

I bought some $230 puts, mostly because I'm cheap, not because I know the market will drop that much... it won't make up for the decline in stock value but any small victory during a decline is nice.

 

[rk911]

Yes it’s been a week. I’d be interested in those who do 100% self investing if they’ve held tight or radically changed AA this week or gone cash.

we fit that bill. haven't done a thing and not planning to. we will ride this "crisis" out like all the others.

 

[W2R]

we fit that bill. haven't done a thing and not planning to. we will ride this "crisis" out like all the others.

+1

 

[tulak]

I went from 70% to 50% equities on Monday. I also bought puts the last few days, which overall have almost doubled. That’s a small amount though and doesn’t negate the losses in my overall portfolio.

I don’t think this is over yet and I suspect it’ll lead to a global recession. There’s still too much uncertainty around this virus. But maybe I’m wrong? Even if so, the market was overvalued. This was a trigger for a long overdue correction.

Does anyone know if manufacturing in China is operating again?

I haven’t had a chance to look at that yet. I don’t see this ending until people can get back to work.

 

[Dtail]

I bought some $230 puts, mostly because I'm cheap, not because I know the market will drop that much... it won't make up for the decline in stock value but any small victory during a decline is nice.

Yeah, that's how I feel.My whopping 5.5% move to Treasuries last week on Thursday feels like a very small victory nonetheless.

 

[atmsmshr]

I finished selling LTCG last week to round out our cash needs to the end of the year. Just dumb luck. Guess I will wait awhile for the dust to settle to rebalance.

Just about all of our stock is in NextEra (my mega). Hanging on till next year for more LTCG selling.