[Black Monday 9 March 2020] Stock Market crash - 2020

Mrsrx

Mrsrx

Somehow a Member
Orange Room Supporter
At the time of creating this thread the financial markets are trying to figure out if this is a Bear market or a Market correction. Yesterday (27/2/2020) the US markets lost around 4.3% of their value following a series of drops of around 2 to 3% per day accumulating a 11% to 12% loss in 4 days.
European markets are down from 12% (DAX - Germany) to 8% (CAC-France)

An explanation of the terms: Here's how long stock market corrections last and how bad they can get

In short:
Market Correction:
  • There have been 26 market corrections (not including Thursday) since World War II with an average decline of 13.7% over an average of four months.
  • Recoveries have taken four months on average.
  • The most recent corrections occurred from September 2018 to December 2018. The S&P 500 bounced into and out of correction throughout the autumn of 2018 before plunging into a bear market (a 20% decline from its all-time high) on Christmas Eve.

Bear Market:
  • There have been 12 bear markets since World War II with an average decline of 32.5% as measured on a close-to-close basis.
  • The most recent was October 2007 to March 2009, when the market dropped 57% and then took more than four years to recover. The S&P 500 closed in a bear market in December 2018 using intraday data.
  • Bear markets have lasted 14.5 months on average and have taken two years to recover on average.

Apparent reasons:
  • The obvious elephant in the room the Coronavirus that seems to be affecting supply chains, production, movement, sales all over the world
  • Bernie Sanders as the democratic front runner in the US elections and the fact that he is not very billionaire/multinational friendly in terms of policies (debatable)
A bit of research on the reasons (not necessarily facts):
This crash has been overdue for a while. The stock markets were artificially inflated and have not stopped going up since 2009 (almost tripling their values) and companies are becoming richer while consumers standards of living are not following. It all looked like a market bubble that at somepoint was going to pop.
Even if Trump is not 100% for the bubble it seems he was applying pressure on the US FED (central bank like) to lower interest rates (print money + giving less interest + pushing stock buybacks) to keep the market going up until his reelection. Journalists and market analysts have been talking about a recession market for 2 years now but the US leadership was delaying it as Trumps platforme ran mostly on economic (jobsjobs) platform.
Recession definition: 2 consecutive quarters where an economy shrinks in 2019 the US, Japan and Germany were extremely close to getting that tag yet stocks recorded one of their best years in the last decades.
Many pundits claim the existence of "canary" economies that are generally small and weak globalized economies that fall just before a big crash and last year we have seen the fall of the Lebanese economy as well as Argentina's as they start feeling the market slowdown and have no reserves to defend against it or buy time like bigger economies.
Thread to follow the news a bit if this gets worse.
 
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  • Mrsrx

    Mrsrx

    Somehow a Member
    Orange Room Supporter
    A global view (1 day change following the first 3 days of the week that were RED):

    1582880915445.png

    Canada: no idea why it is green but good for them
    China: Dropped earlier and "Shorts" are not allowed on the chinese stock markets meaning you cannot make money when the market goes down
    Hong kong: Is very unstable due to politics and also shorts are not allowed
     
    NewLeb

    NewLeb

    New Member
    When it comes to the stock market, there is no real “reason” as to why it does what it does. Sure, you could blame it on the virus or whatever, but essentially speaking, the stock market has a mind of its own and does what it wants.

    People and traders will give their own explanations as to why it moved in a particular direction, but the big boys (like the major banks and investment funds) ultimately decide where it’s going, and they’ll take it wherever they want to go.

    Personally, I think they’re using the virus as an excuse to heavily short-sell, since they know that the ordinary trader is influenced by the mainstream news events.
     
    Mrsrx

    Mrsrx

    Somehow a Member
    Orange Room Supporter
    When it comes to the stock market, there is no real “reason” as to why it does what it does. Sure, you could blame it on the virus or whatever, but essentially speaking, the stock market has a mind of its own and does what it wants.

    People and traders will give their own explanations as to why it moved in a particular direction, but the big boys (like the major banks and investment funds) ultimately decide where it’s going, and they’ll take it wherever they want to go.

    Personally, I think they’re using the virus as an excuse to heavily short-sell, since they know that the ordinary trader is influenced by the mainstream news events.
    This may be true and let us assume it is does not negate the reason in your logic:
    Bankers think people will be scared so they will do this.

    On the other hand i agree the market has a mind of its own that is the aggregation of the minds of all big money investors and money managers but i do not think they all sit at a table every morning to decide if they swing up or down...its what in french is called "un mouvement de foule" meaning like in a concert when people start weirdly moving left or right or when there is a gunshot and people start panicking and running without any coordination...that is how it generaly works in my opinion and not a big conspiracy that is 100% controlled.
     
    NMA

    NMA

    Well-Known Member
    Cant wait for the market to crash, i need more amazon and apple shares.
     
    Danny Z

    Danny Z

    Legendary Member
    When it comes to the stock market, there is no real “reason” as to why it does what it does. Sure, you could blame it on the virus or whatever, but essentially speaking, the stock market has a mind of its own and does what it wants.

    People and traders will give their own explanations as to why it moved in a particular direction, but the big boys (like the major banks and investment funds) ultimately decide where it’s going, and they’ll take it wherever they want to go.

    Personally, I think they’re using the virus as an excuse to heavily short-sell, since they know that the ordinary trader is influenced by the mainstream news events.
    Of course momentum goes both ways and sentiments can exacerbate the fall (or the climb for that matter) but yes the coronavirus plays a major and because it cannot even be quantified in dollars the the bearish sentiments goes lower but it is clear if you are bank and lending money to company dealing with a supply chain disturbance because of the corona virus then nothing in their balance sheet or in the business plan will make you change your mind in lending them money and if you are company who is supposed to fly people around the world or if you are a company whose trade is based on people's movement like a construction company building a dam in Iran or south italy and you have an outbreak there, then you move all your workforce and stop travel there and your business will be affected.
    All this is coupled with companies slashing their guidance due to Corona like MS and Apple and Goldman and Sachs saying not to buy the dip yet.
    Yeah things are dire, the virus is not contained and there is a case in the US not related to China, so it seems that a person contacted it in the US and that is scary it means there is at least another person who has it and maybe a lot more. the lock down in Wuhan is equivalent to Chicago and Milwaukee and part of the midwest being locked down during Xmas. Imagine how much business will be affected by this.
     
    Mrsrx

    Mrsrx

    Somehow a Member
    Orange Room Supporter
    Of course momentum goes both ways and sentiments can exacerbate the fall (or the climb for that matter) but yes the coronavirus plays a major and because it cannot even be quantified in dollars the the bearish sentiments goes lower but it is clear if you are bank and lending money to company dealing with a supply chain disturbance because of the corona virus then nothing in their balance sheet or in the business plan will make you change your mind in lending them money and if you are company who is supposed to fly people around the world or if you are a company whose trade is based on people's movement like a construction company building a dam in Iran or south italy and you have an outbreak there, then you move all your workforce and stop travel there and your business will be affected.
    All this is coupled with companies slashing their guidance due to Corona like MS and Apple and Goldman and Sachs saying not to buy the dip yet.
    Yeah things are dire, the virus is not contained and there is a case in the US not related to China, so it seems that a person contacted it in the US and that is scary it means there is at least another person who has it and maybe a lot more. the lock down in Wuhan is equivalent to Chicago and Milwaukee and part of the midwest being locked down during Xmas. Imagine how much business will be affected by this.
    What are your targets on indexes to start averaging down? ....
    day 1 i thought SP500 at 3K and dow at 26K and Nasdaq at 8600 but then realised this is much much worse and we may be in heading for a long one here so did not start. (it was mostly random thoughts and probably not very coherent numbers)
     
    ܐܵܠܘܼܟ̰ܵܐ

    ܐܵܠܘܼܟ̰ܵܐ

    Active Member
    Orange Room Supporter
    A couple of observations:

    2020 is a year of growth. The stock market has always been an inflated bubble. I think it will inflate more and more this year without popping. Trump was expected to have a crash in his two terms. I doubt this is going to happen judging from how his persona encourages investment and production.

    The Corona virus is a wild card, but so far it has been quarantined and has not reached a pandemic level. But if it was to affect the Chinese economy, this will mean more local production and investment in the US and India.

    I'm bullish on the Stock Market and the Crypto Market in 2020. We'll see how that plays out. We have 10 months left.
     
    Mrsrx

    Mrsrx

    Somehow a Member
    Orange Room Supporter
    A couple of observations:

    2020 is a year of growth. The stock market has always been an inflated bubble. I think it will inflate more and more this year without popping. Trump was expected to have a crash in his two terms. I doubt this is going to happen judging from how his persona encourages investment and production.

    The Corona virus is a wild card, but so far it has been quarantined and has not reached a pandemic level. But if it was to affect the Chinese economy, this will mean more local production and investment in the US and India.

    I'm bullish on the Stock Market and the Crypto Market in 2020. We'll see how that plays out. We have 10 months left.
    Its 28th of feb not 28th of jan. Italy, Iran, France and south Korea the virus is not contained and panic selliing is happening and trump's persona is pushing panic as he lowered CDC funding a while ago and is still claiming that the wall is the national emergency.
    Meanwhile he put Mike Pence in charge of the CDC as "he has a talent in these things" the same Mike Pence that has articles like this on him:

    That is feeding the panic.

    That said it is a long year and it is the difference between a correction and a bear market...its on the verge
     
    ܐܵܠܘܼܟ̰ܵܐ

    ܐܵܠܘܼܟ̰ܵܐ

    Active Member
    Orange Room Supporter
    Its 28th of feb not 28th of jan. Italy, Iran, France and south Korea the virus is not contained and panic selliing is happening and trump's persona is pushing panic as he lowered CDC funding a while ago and is still claiming that the wall is the national emergency.
    Meanwhile he put Mike Pence in charge of the CDC as "he has a talent in these things" the same Mike Pence that has articles like this on him:

    That is feeding the panic.
    Regardless, the virus is not a pandemic.
    And the articles you linked are just Leftist jabs at Mike Pence. He is nothing like those clickbait articles depict him.
     
    Mrsrx

    Mrsrx

    Somehow a Member
    Orange Room Supporter
    Regardless, the virus is not a pandemic.
    And the articles you linked are just Leftist jabs at Mike Pence. He is nothing like those clickbait articles depict him.
    Leftist, centrist, right wing who cares its a panic market now and the fact that these articles exists and are running on CNBC and co feeds the panic... it is a pandemic changing the definition of how we measured historical pandemics to avoid the name does not make it better and it is not the only reason for the crash anyway.
     
    ܐܵܠܘܼܟ̰ܵܐ

    ܐܵܠܘܼܟ̰ܵܐ

    Active Member
    Orange Room Supporter
    Leftist, centrist, right wing who cares its a panic market now and the fact that these articles exists and are running on CNBC and co feeds the panic... it is a pandemic changing the definition of how we measured historical pandemics to avoid the name does not make it better and it is not the only reason for the crash anyway.
    Same can be said about Bird Flu in 2014-2015. Did that crash the economy?
     
    Isabella

    Isabella

    The queen of "Bazella"
    Orange Room Supporter
    A couple of observations:

    2020 is a year of growth. The stock market has always been an inflated bubble. I think it will inflate more and more this year without popping. Trump was expected to have a crash in his two terms. I doubt this is going to happen judging from how his persona encourages investment and production.

    The Corona virus is a wild card, but so far it has been quarantined and has not reached a pandemic level. But if it was to affect the Chinese economy, this will mean more local production and investment in the US and India.

    I'm bullish on the Stock Market and the Crypto Market in 2020. We'll see how that plays out. We have 10 months left.
    The situation in China is even worse than you think, says this analyst with a history of accurate calls
     
    Mrsrx

    Mrsrx

    Somehow a Member
    Orange Room Supporter
    Same can be said about Bird Flu in 2014-2015. Did that crash the economy?
    Read my opinion stated in the OP the coronavirus is the trigger or a bigger issue that has been feuled by FOMO sentiment for the last years. The market got really disconnected from the economy and a large correction was expected....it is triggered by both the virus and bernie sanders ascension. My OP was if this was a correction or a bear market and you are posting as if the last week did not shed 6 TRILLIONS of valuation in the stock market.

    If the CV continues the impacts will be huge as stated by Danny Z and even if not the market had reasons to correct.
     
    NewLeb

    NewLeb

    New Member
    Of course momentum goes both ways and sentiments can exacerbate the fall (or the climb for that matter) but yes the coronavirus plays a major and because it cannot even be quantified in dollars the the bearish sentiments goes lower but it is clear if you are bank and lending money to company dealing with a supply chain disturbance because of the corona virus then nothing in their balance sheet or in the business plan will make you change your mind in lending them money and if you are company who is supposed to fly people around the world or if you are a company whose trade is based on people's movement like a construction company building a dam in Iran or south italy and you have an outbreak there, then you move all your workforce and stop travel there and your business will be affected.
    All this is coupled with companies slashing their guidance due to Corona like MS and Apple and Goldman and Sachs saying not to buy the dip yet.
    Yeah things are dire, the virus is not contained and there is a case in the US not related to China, so it seems that a person contacted it in the US and that is scary it means there is at least another person who has it and maybe a lot more. the lock down in Wuhan is equivalent to Chicago and Milwaukee and part of the midwest being locked down during Xmas. Imagine how much business will be affected by this.
    Can’t argue with any of that. I suppose my post was aimed more towards those who actively trade the market on a daily basis, rather than how the stock market would generally look like a few months down the line.
     
    Danny Z

    Danny Z

    Legendary Member
    What are your targets on indexes to start averaging down? ....
    day 1 i thought SP500 at 3K and dow at 26K and Nasdaq at 8600 but then realised this is much much worse and we may be in heading for a long one here so did not start. (it was mostly random thoughts and probably not very coherent numbers)
    It is hard to say what is sentiment and what is numbers. But one thing for sure if there is a vaccine that works then it is time to buy massively. But when will this come and how long before can destroy the market and of course there is a reason why the market would be massacred it is it because the economy could suffer as well. I am riding the wave with no selling. Anytime it could just reverse 1000pts
     
    Mrsrx

    Mrsrx

    Somehow a Member
    Orange Room Supporter
    It is hard to say what is sentiment and what is numbers. But one thing for sure if there is a vaccine that works then it is time to buy massively. But when will this come and how long before can destroy the market and of course there is a reason why the market would be massacred it is it because the economy could suffer as well. I am riding the wave with no selling. Anytime it could just reverse 1000pts
    I have held out from any movements last week but will probably restart buying this week some good companies on a discount
     
    Danny Z

    Danny Z

    Legendary Member
    I have held out from any movements last week but will probably restart buying this week some good companies on a discount
    better stay away during wild swings if you're in stay in, if you're out stay out, today we saw the dow climb 1000pts again. Nothing fundamental changed in the last days, and I don't day trade, I am in for the long term so noting fundamentally changed for me either.
    If you feel that swings like these are hurting you, that you can't recover from them on the short term and it is hurting your sleep then you are more heavily invested in the market than you should. There was a time when i was in this position, now I don't do it anymore. but if i wanted to trade something today I would short the VIX.
     
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