How Far Will The Market Fall?

[Dona Ferentes]

solid (sell) action.

View attachment 101202

will today be like yesterday? Scalpers got scalped. Falling knives lacerated. The open is looking ominous

 

[IFocus]

To state the obvious its very early days.

Although the falls are rapid bear markets do take time to unflod and the main story is rarely what the trigger is.

Note the virus is also very early days countries have locked down in efforts to contain / slow down the rate of infection.

What happens when those containment strategies get relaxed......the virus wont go away and lockdowns cannot last for ever or even to when a vaccine is produced.

What is of concern is the range of the bars in the impulsive move down they are large more worrisome is that yesterday looked like buyer exhaustion (lack of buyers) still its a bit earlier for that.

 

[basilio]

Another view on the role of the stock market in warping our view of what really matters.

Coronavirus Matters, the Stock Market Doesn’t, and Thinking It Does May Literally Kill Us

If you’ve been spending any time online or watching cable TV, you’ve gotten the message that humanity now faces two grave threats — a novel coronavirus and the crashing stock market — of roughly equal importance.

Yesterday CNBC’s Rick Santelli went further, staking out the position that stocks losing value is actually more terrifying than millions of deaths. “Maybe we’d be just better off if we gave it to everybody,” Santelli sagely explained. That way, lots of people would expire quickly, thereby removing the uncertainty that’s been plaguing investors.

It’s easy to criticize Santelli, but he was just taking the logic of America’s obsession with the stock market a few steps further than normal. For decades, whenever we’ve faced a choice between the reality of human beings and little numbers on a screen, we’ve always gone with the little numbers.
https://theintercept.com/2020/03/06/coronavirus-covid-19-stock-market-economy/

 

[basilio]

What happens when no one wants to buy (except total bottom feeders) and the exit doors are crowded?

 

[Dona Ferentes]

What happens when no one wants to buy (except total bottom feeders) and the exit doors are crowded?

ah yes. There'll always be a market. Find comfort and fear in equal measure from this commentator (3am this morning:

One more quick thing, many of you have been asking, “when is it time to buy?”

I must admit I much prefer that question to, “Is it too late to sell?”

Each of you have different risk appetites, guidelines, mandates et al.

As I said a few days ago I am less bearish than I was 3 weeks ago, as the markets are down 20% plus, hence I have to be...don’t I?

My fear is that a lot of major global investment institutions haven’t, as yet, done much selling. I sense that they have been truly shocked by the severity and the speed of the decline.
It worries me that the majority of them bought into the “this is just a hiccup” story and the SARS 2003 precedent/playbook.

 

[sptrawler]

What happens when no one wants to buy (except total bottom feeders) and the exit doors are crowded?

When no one wants to buy there isn't a market, so no one sells, then people watch their savings slide at 1% interest rates.
Then they see that shares are paying 10-20% on the current share price, as it will be so low, then the little green monster on their shoulder says "what is wrong with you? you need a piece of that" and off the market flies again, then FOMO kicks in. Woosh.

 

[CBerg]

When no one wants to buy there isn't a market, so no one sells, then people watch their savings slide at 1% interest rates.
Then they see that shares are paying 10-20% on the current share price, as it will be so low, then the little green monster on their shoulder says "what is wrong with you? you need a piece of that" and off the market flies again, then FOMO kicks in. Woosh.

Yep, there's not many places for investors to park their money.
If you're 50/60/70 you still have optimistically(for the 70yo's) another 20 years ahead easy, sitting in cash is not an option when the banks are offering you almost zero.

Bonds/credit is an obvious one to me and even though the bond market has been on a decades long bull market, most Aussie investors really do not like them. It is the only holding in my super that has not lost money so far.

Leaves property & alternatives, yields look bad in Sydney & Melbourne for rentals, if you think a recession is coming then rental vacancies might jump BUT cause interest is so low the prices on housing will probably go up!

Real conundrum if you don't have a good personal balance sheet.

 

[So_Cynical]

To state the obvious its very early days.

Note the virus is also very early days countries have locked down in efforts to contain / slow down the rate of infection.

What happens when those containment strategies get relaxed......the virus wont go away and lockdowns cannot last for ever or even to when a vaccine is produced.

Spanish flu had 3 peaks over 2 and a half years, with no vaccine in sight there is every possibility that the current virus could last just as long, with the spanish flu shutdowns worked well to restrict the spread and there is good evidence that cities and states that acted late had significantly more infections and deaths. We may well be in for a winter shutdown of sorts, the panic supermarket buyers may have got it right.
~

 

[Smurf1976]

To state the obvious its very early days.

Although the falls are rapid bear markets do take time to unflod and the main story is rarely what the trigger is.

That's a main reason why I'm thinking there must be further to fall.

Markets don't go straight down from top to bottom but this one has thus far done pretty much that, suggesting that we haven't really seen the bottom.

Even the 1987 crash, whilst substantially a single day event, still took 37 trading days after the high to get to the bottom. Thus far this decline is only 15 days.

 

[Klogg]

Spanish flu had 3 peaks over 2 and a half years, with no vaccine in sight there is every possibility that the current virus could last just as long, with the spanish flu shutdowns worked well to restrict the spread and there is good evidence that cities and states that acted late had significantly more infections and deaths. We may well be in for a winter shutdown of sorts, the panic supermarket buyers may have got it right.
~
View attachment 101226

Doubtful. They're trialing vaccines come April in China - on humans.

I wouldn't be surprised to see a vaccine by mid 2021. If this continues to be a pandemic, they'll push things through much quicker than normal.
Further, there are three promising antivirals.


On a personal level - I'm 33, no underlying conditions, no elderly people in my household. One would be tempted to contract the virus, deal with a week or two of feeling crappy, then build some form of immunity.

Sounds ridiculous given all the hype, but death rates for those under 60 are miniscule - comparable to influenza.


As for the market bottom - I'm guessing once reserve banks start printing (more), we're there.

 

[gartley]

How far will it fall? On this leg down or how far will a bear campaign run? I don't use EW ( and much thanks to another ASF member for his views on this, he nailed it from years back) much any more but given that to 2009 to 2020 move was rather sluggish compared to other world bourses I would count it as wave B. Wave A down being the the GFC low. As wave B exceeded the 2007 high it is more than likely an irregular flat which means a re test of the 2009 lows ultimately in the years ahead

 

[satanoperca]

If you're 50/60/70 you still have optimistically(for the 70yo's) another 20 years ahead easy, sitting in cash is not an option when the banks are offering you almost zero.

Why is this not an option, play it out:
Banks 0%
Share market +20% -40%, just depends on when you buy and sell
Property - who knows, but buying now might present some problems if you need to exit fast.

If I was >70+, cash looks the safest, but be aware the Govnuts deposit guarantee with the banks is not all what it seems

 

[MrChow]

1918, 1957, 1968 virus deaths all peaked at the start of the northern hemisphere flu season October-December. 2009 was heading that way too before the vaccine was given out that October.

Big market falls tend to need to elongate time and history suggests it'll get it. Theory being people accumulate latency for 6 months then flu season hits and there's another wave.

 

[Dona Ferentes]

a pretty poor day again down more than 7%, and awful finish

 

[CBerg]

Why is this not an option, play it out:
Banks 0%
Share market +20% -40%, just depends on when you buy and sell
Property - who knows, but buying now might present some problems if you need to exit fast.

If I was >70+, cash looks the safest, but be aware the Govnuts deposit guarantee with the banks is not all what it seems

Because even though cash in the bank is not going to lose it's value in dollars terms like the share market might.
I'm yet to ever see rates, insurances, just the day to day cost of living fall in price.

If your cash pile is large enough that's it is not an issue for another 2 decades, I'd say you've managed to do pretty well for yourself.

 

[mcgrath111]

Had an order for some ETFs. I'm expecting to get more bang for my buck in a few weeks time/ likely to go lower - but what life has taught me is, I know very little about stocks; or the economy - and so I will continue to average down.

I imagine the ramifications on the economy will be brutal.

 

[qldfrog]

an image is worth a 1000 words
woooohhhh

 

[aus_trader]

Because even though cash in the bank is not going to lose it's value in dollars terms like the share market might.
I'm yet to ever see rates, insurances, just the day to day cost of living fall in price.

If your cash pile is large enough that's it is not an issue for another 2 decades, I'd say you've managed to do pretty well for yourself.

I do have to agree that the buying power of cash is decreasing for just about everything, except maybe fuel due to the huge drop in oil price at the moment.

Maybe a little exposure to stocks may be the way to go even if you are at retirement age, even a little bit of Gold exposure as insurance against inflation and devaluing currency IMO.

 

[MrChow]

Current Drawdown:
XAO -26.5%
S&P500 -20.2%

Coronavirus deaths:
3 Australia
38 U.S

 

[Dona Ferentes]

Current Drawdown:
XAO -26.5%
S&P500 -20.2%

Coronavirus deaths:
3 Australia
38 U.S

More relevant but as uncorrelated:-
Tests for Covid-19:
10000+ ... Australia
9000 ..... USA

(changing every day)