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

H

HalaMadrid

Active Member
Orange Room Supporter
But the moment there is a vaccine this will climb and if there is no vaccine, we can't keep living in everything closed and people can't go anywhere it just doesn't work on the long term. Eventually people will either find a vaccine or live with the possibilty that people will get the sickness and 2% will die and 98% will recover. So whatever this 2% dying is for the economy this is what the drop should be and it is not 20%, 20% is just panic over panic.

If there is one thing to remember from previous crashes, it is that they are always a black swan that nobody factore or has foreseen, however the recovery starts once the black swan is being tackled with measures. So far there have been no measures for the Coronavirus.
I see what you're saying, but that's sort of the problem, isn't it? Besides a vaccine or really reliable treatment, the only measures that can be put in places to effectively combat or slow the public health crisis are ones that would perpetuate the financial crash and slow demand to a halt: increasing movement restrictions, moving all education, large gatherings, etc online, and increasing work from home. If not more draconian (and effective) measures a la China. In order to increase confidence in the long term, you have to majorly hit the economy, especially the service industry, in the short term. So at least in the medium term all of that would perpetuate a sustained downturn, no? And the increase on the demand side of the economy would really depend on how many people can get back to work as normal quickly.

Maybe you're right though. Much of this for me is based on the assumption that the overwhelming majority of people will be perfectly comfortable reducing most non-essential participation in the economy due to sustained panic rather than just accepting the 2% mortality rate and the much higher severe cases rate. I don't think it's as severe as going nowhere and holing ourselves up at home, but vacations canceled, less movie theaters more netflix, less going to gyms, more eating at home, less work travel and hence less hotel stays, weddings delayed, etc. There's just no really good comparison market-wise and nothing other than a really effective vaccine that will quell the panic (at least a year away, if ever).
 
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  • Danny Z

    Danny Z

    Legendary Member
    I see what you're saying, but that's sort of the problem, isn't it? Besides a vaccine or really reliable treatment, the only measures that can be put in places to effectively combat or slow the public health crisis are ones that would perpetuate the financial crash and slow demand to a halt: increasing movement restrictions, moving all education, large gatherings, etc online, and increasing work from home. If not more draconian (and effective) measures a la China. In order to increase confidence in the long term, you have to majorly hit the economy, especially the service industry, in the short term. So at least in the medium term all of that would perpetuate a sustained downturn, no? And the increase on the demand side of the economy would really depend on how many people can get back to work as normal quickly.

    Maybe you're right though. Much of this for me is based on the assumption that the overwhelming majority of people will be perfectly comfortable reducing most non-essential participation in the economy due to sustained panic rather than just accepting the 2% mortality rate and the much higher severe cases rate. I don't think it's as severe as going nowhere and holing ourselves up at home, but vacations canceled, less movie theaters more netflix, less going to gyms, more eating at home, less work travel and hence less hotel stays, weddings delayed, etc. There's just no really good comparison market-wise and nothing other than a really effective vaccine that will quell the panic (at least a year away, if ever).
    In the short term I do not know what is going to happen, I think nobody knows, but we know that much of today's drop was based on Oil not Corona, which has become a bigger headache than Corona. Governments are taking draconian measures they have never taken before white the death rate is 2%. (Ebola was 90%, normal flu is around 0.5%) Ebola had a contagion rate from 1.5 to 2, Corona is 3. I am not a health expert but I can look at numbers and conclude that Ebola can wipe out the whole population why Covid-19 won't. But governments are under pressure to show to their people that they are doing something about it. Especially to the elderly in countries when there is an inverse population pyramid, like in Japan and overwhelmingy most of Europe. The people who die are the people count the most voters. It is more political than anything.
    I also do not know if governments will change and start saying we will live with it, but I don't see other options for them. If climate change that is going to kill us too is not being tackled because nobody want to touch the economy why a 2% death rate is making the people who drive the economy halt it just for the elderly not to die. I know this sounds harsh towards the elderly but bankers and people who drive the economy do not really care about 2% of the population, once it starts hitting their bottom line they will have the world bank and the IMF give some money to the countries that got hit and then the narrative changes and we start hearing that we have to live with it. Actually I am hoping it just starts spreading around fast and people all get it and then 98% recover and then we can go back to regular life. Because what else can happen if there is no vaccine, we will keep trying to contain it and panic we can't forever?
    Maybe right now what should be done is somebody should start with tackling the butcher of Riyad
     
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    H

    HalaMadrid

    Active Member
    Orange Room Supporter
    In the short term I do not know what is going to happen, I think nobody knows, but we know that much of today's drop was based on Oil not Corona, which has become a bigger headache than Corona. Governments are taking draconian measures they have never taken before white the death rate is 2%. (Ebola was 90%, normal flu is around 0.5%) Ebola had a contagion rate from 1.5 to 2, Corona is 3. I am not a health expert but I can look at numbers and conclude that Ebola can wipe out the whole population why Covid-19 won't. But governments are under pressure to show to their people that they are doing something about it. Especially to the elderly in countries when there is an inverse population pyramid, like in Japan and overwhelmingy most of Europe. The people who die are the people count the most voters. It is more political than anything.
    I also do not know if governments will change and start saying we will live with it, but I don't see other options for them. If climate change that is going to kill us too is not being tackled because nobody want to touch the economy why a 2% death rate is making the people who drive the economy halt it just for the elderly not to die. I know this sounds harsh towards the elderly but bankers and people who drive the economy do not really care about 2% of the population, once it starts hitting their bottom line they will have the world bank and the IMF give some money to the countries that got hit and then the narrative changes and we start hearing that we have to live with it. Actually I am hoping it just starts spreading around fast and people all get it and then 98% recover and then we can go back to regular life. Because what else can happen if there is no vaccine, we will keep trying to contain it and panic we can't forever?
    Maybe right now what should be done is somebody should start with tackling the butcher of Riyad
    Yeah, I suppose I was thinking more of what people might be willing to tolerate and you mean what governments actually do, which is looking more and more like almost nothing. I'd rather we contain it because too many of us are or know someone who falls into the preexisting conditions and elderly category, but you're right the corporations who will decide the response don't care. I agree with and appreciate the high levels of cynicism here:
    The people who die are the people count the most voters. It is more political than anything.
    If climate change that is going to kill us too is not being tackled because nobody want to touch the economy why a 2% death rate is making the people who drive the economy halt it just for the elderly not to die.
    This would be great for much more than the economy, but who do you propose do this? His whatsapp buddy in the white house?
    Maybe right now what should be done is somebody should start with tackling the butcher of Riyad
     
    NewLeb

    NewLeb

    New Member
    I think by now most of the shock and fear has subsided, and the market has pretty much factored in all implications of the virus. We could see it pushing up gradually now, or at least consolidating, especially considering the last hour of Friday’s trading session. And to those who are wondering, yes, I made profit on Friday.
     
    Mrsrx

    Mrsrx

    Somehow a Member
    Orange Room Supporter
    I think by now most of the shock and fear has subsided, and the market has pretty much factored in all implications of the virus. We could see it pushing up gradually now, or at least consolidating, especially considering the last hour of Friday’s trading session. And to those who are wondering, yes, I made profit on Friday.
    A recession is far from factored in....can be mid fall
     
    Danny Z

    Danny Z

    Legendary Member
    A recession is far from factored in....can be mid fall
    It is actually factored in and will happen, however governments can't do anything from the offer side, they can do it from the demand side. and so fat they have reduced interests rate to 0 and still the offer shock is still around until the lockdowns around the world are lifted.
    Markets can still drop in the meatime but this is actually not relevant, numbers and percentage of drops do not mean much anymore. If lockdowns work like they did in China, Korean and Taiwan, we should be done with them in about a month or two. Some companies would have failed in the meantime and low demand and offer would have hit the GDP growths and recession will happen, but then again there is no underlying financial structural reason for the crash, and there will be a boom in hygiene like there are was a boom in security demand after 9/11 and things will pick up fast. The companies who were already struggling with debt will probably disappear but that will give birth to new companies with better capital structure and things should be better. In the meantime if you hold airline companies, car companies etc. you got a hit on your portfolio that might take a long time to recover. That's why your investments should be based on your objective and their horizons on when you need the money. you should always be high in fixed income for short term investments and long term investments you should keep stocks and not worry about what looks now major but would be a blip on the radar in 10 years
    We are still on a upward curve since 1980 and both 2008 and 2018 look like blips
    Since 2008 and despite today's major drop we are still higher than the max before 2008 drop and the trend is still up. So in 10 years we will be higher than the highest before this drop, provided the virus doesn't mutate and wipe out the whole world
    Mind you the level the DJ is at now was already seen in Dec 2018... So if you entered the market then you haven't lost anything

    1584367218989.png
     
    Danny Z

    Danny Z

    Legendary Member
    I see what you're saying, but that's sort of the problem, isn't it? Besides a vaccine or really reliable treatment, the only measures that can be put in places to effectively combat or slow the public health crisis are ones that would perpetuate the financial crash and slow demand to a halt: increasing movement restrictions, moving all education, large gatherings, etc online, and increasing work from home. If not more draconian (and effective) measures a la China. In order to increase confidence in the long term, you have to majorly hit the economy, especially the service industry, in the short term. So at least in the medium term all of that would perpetuate a sustained downturn, no? And the increase on the demand side of the economy would really depend on how many people can get back to work as normal quickly.

    Maybe you're right though. Much of this for me is based on the assumption that the overwhelming majority of people will be perfectly comfortable reducing most non-essential participation in the economy due to sustained panic rather than just accepting the 2% mortality rate and the much higher severe cases rate. I don't think it's as severe as going nowhere and holing ourselves up at home, but vacations canceled, less movie theaters more netflix, less going to gyms, more eating at home, less work travel and hence less hotel stays, weddings delayed, etc. There's just no really good comparison market-wise and nothing other than a really effective vaccine that will quell the panic (at least a year away, if ever).
    All this is just a pause... and should be not very long at most 2-3 months if we look at what happened in china
     
    Mrsrx

    Mrsrx

    Somehow a Member
    Orange Room Supporter
    It is actually factored in and will happen, however governments can't do anything from the offer side, they can do it from the demand side. and so fat they have reduced interests rate to 0 and still the offer shock is still around until the lockdowns around the world are lifted.
    Markets can still drop in the meatime but this is actually not relevant, numbers and percentage of drops do not mean much anymore. If lockdowns work like they did in China, Korean and Taiwan, we should be done with them in about a month or two. Some companies would have failed in the meantime and low demand and offer would have hit the GDP growths and recession will happen, but then again there is no underlying financial structural reason for the crash, and there will be a boom in hygiene like there are was a boom in security demand after 9/11 and things will pick up fast. The companies who were already struggling with debt will probably disappear but that will give birth to new companies with better capital structure and things should be better. In the meantime if you hold airline companies, car companies etc. you got a hit on your portfolio that might take a long time to recover. That's why your investments should be based on your objective and their horizons on when you need the money. you should always be high in fixed income for short term investments and long term investments you should keep stocks and not worry about what looks now major but would be a blip on the radar in 10 years
    We are still on a upward curve since 1980 and both 2008 and 2018 look like blips
    Since 2008 and despite today's major drop we are still higher than the max before 2008 drop and the trend is still up. So in 10 years we will be higher than the highest before this drop, provided the virus doesn't mutate and wipe out the whole world
    Mind you the level the DJ is at now was already seen in Dec 2018... So if you entered the market then you haven't lost anything

    View attachment 18382
    What i meant by factored in is that it is priced in and no drops in the future and this is the bottom. Today proved that it is not priced yet.

    Your graph shows that we are in midfall to under the line and then rebound to it. (check out what i was responding to basically saying its over go back in now)
    I never got out so im staying just wondering when i should reinforcing my positions.
     
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    H

    HalaMadrid

    Active Member
    Orange Room Supporter
    All this is just a pause... and should be not very long at most 2-3 months if we look at what happened in china
    It's not really comparable to China because they took a lot of measures in addition to the lockdown that stopped the spread and (theoretically) increase confidence. No country outside of east Asia did the same. This is a freefall.
     
    Danny Z

    Danny Z

    Legendary Member
    It's not really comparable to China because they took a lot of measures in addition to the lockdown that stopped the spread and (theoretically) increase confidence. No country outside of east Asia did the same. This is a freefall.
    All countries are working on flattening the curve we are in a quasi shutdown here in Canada, because they deem they can flatten the curve with the measure so far taken. They can still go in full lockdown as the situation evolves.

    What i meant by factored in is that it is priced in and no drops in the future and this is the bottom. Today proved that it is not priced yet.

    Your graph shows that we are in midfall to under the line and then rebound to it. (check out what i was responding to basically saying its over go back in now)
    I never got out so im staying just wondering when i should reinforcing my positions.
    I won't reinforce nor sell, in panic markets if you do not know what to do or are wondering, just do nothing. The price doesn't mean anything in panic markets
     
    Mrsrx

    Mrsrx

    Somehow a Member
    Orange Room Supporter
    I won't reinforce nor sell, in panic market if you do not know what to do or are wondering, just do nothing.
    Yes not touching anything for a while now. standing still injected 500 euros since the start of this which is not that big so it is fine and it was a mistake.
    Now staying put and may start rethinking about this when the level starts hitting the line.

    You were right when you said do not go in.mnet3allam men kisna but it was not that impactful for me this mistake.
     
    Danny Z

    Danny Z

    Legendary Member
    You were right when you said do not go in.mnet3allam men kisna but it was not that impactful for me this mistake.
    When the crisis ends and _we will know specifically through milestones when it will end_ lockdwons are lifted, airlines will start flying people get back to work and numbers of new cases dwindle. then you will have a day or two when markets climbs and you might be able to reinforce then, but maybe it will just shoot up so fast that you won't have time to react.
     
    H

    HalaMadrid

    Active Member
    Orange Room Supporter
    All countries are working on flattening the curve we are in a quasi shutdown here in Canada, because they deem they can flatten the curve with the measure so far taken. They can still go in full lockdown as the situation evolves.
    Sure, all I'm saying is that they're not actually doing enough to flatten the curve and will probably need both full lockdown and other public health measures--and investors see this, hence the panic because the response looks unserious. I think on the long-term of the markets, you're probably right. I just don't think the long term is in 2-3 months. It's more like 2-3 years.
     
    Danny Z

    Danny Z

    Legendary Member
    Sure, all I'm saying is that they're not actually doing enough to flatten the curve and will probably need both full lockdown and other public health measures--and investors see this, hence the panic because the response looks unserious. I think on the long-term of the markets, you're probably right. I just don't think the long term is in 2-3 months. It's more like 2-3 years.
    Flattening the curve means lengthening the process. so yeah it will take sometime before it peaks then starts going down. I trust they know what they are doing now, they have all learned from Italy and China. In Canada we still have a narrow window to flatten the curve. Note that flattening the curve is based on the medical health system capacity for each country. the UK has decided to change weapons factories production chains to respiratory machines and ramp up their production for example. As long as health systems can cope with the peak they will decided on measures and flattening accordingly. It is hard to find where the right balance is, mathematicians, statisticians and health professional know better than me.
     
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