IFISAcava
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Post by IFISAcava on Feb 26, 2020 16:59:14 GMT
Two words. Panic Selling (mostly by retail peeps). Those of us who have "been there, done that, got the postcard" have been net buyers (i.e. yes, I've sold some names, but I've bought more new names than I've sold). The people who are really panicking are no doubt those retail "investors" who've fallen hook line and sinker for passive index ETFs. Diworsification.  Interesting but surely you'd have to agree that mrclondon has probably done rather well by predicting this at the start of the thread and "panic selling" his portfolio. Second point is when lots of people panic sell, doesn't panic breed panic meaning further drops in the market? all he can have done (if he has now rebought) is to make around 5% on current market value minus dealing costs. If he hasn't rebought he just sold at a mini market peak and who knows how that will turn out in the long run. EDIT: just saw below that he is staying in cash. So fine - he sold and took some (presumably good) profits. Never wrong to do that, especially if you need some cash - in which case one's time horizon is short and one's sensitivity to the risks of short term falls will be much much greater. But whether he will turn out to have done rather well by selling right now only time will tell.
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registerme
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Post by registerme on Feb 26, 2020 17:02:37 GMT
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Post by mrclondon on Feb 26, 2020 17:48:59 GMT
EDIT - just a reminder that I sold out of equity mainly as a means of ensuring I would be able to support myself in the event of a total collapse of all asset values. This is not some clever investment strategy.
I think we can safely cut most of your post and highlight this line at the end. I am a firm believer in the old adage "only invest money you can afford to loose". You seem to be in the position of struggling to support yourself if your investments go down the pan. Different risk profile. And with you its not a question of appetite for risk, its a question of being able to tolerate risk. Your margin is evidently a lot tighter. For me a 5% loss is not worth loosing sleep about. @wallstreet you miss my point - this could end up with ALL assets totally worthless (property, DB pensions, equity, debt instruments all down 90% plus on current values. Most world banks collapsed). I've said before I have a coverage of c. three times between current assets and expenditure over the next 30-35 years, and took the decision for now to switch c 30% of my assets to cash whilst this specific crisis plays itself out. (First time in 36 years of investing I've felt the need to do this).
A 5%, 10% even 20% drop in equity values wouldn't concern me (if I was still invested). That's just the inherent risk in equity investment in a normal world with wars, famines, earthquakes, extreme weather.
I'm an active investor and re-assess the risk of everything on a regular basis, evey action I take is documented, cross referenced and followed up. I know exactly what risk I can tolerate, and in my lifetime this is the first time I believe there is an event happening that could (yes, only a small chance) fundamentally change the world from that we have known for the last 60 years.
There is an awful lot that is not known about covid-19 and all hopes hinge on a vaccine being produced before too large a proportion of the world's population catch it ... which hinges on a huge downturn in cases over the northern hemisphere summer. But most big biopharm companies expect autumn 2021 as the earliest for large scale vaccine production - if one is found. The early trials (on animals) of a SARS vaccine were a massive failure. Most academics believe that this new virus is not disimilar to SARS and believe that vaccine production is by no means ceratin, and that the mortality rate is somewhere in the same ballpark of 9% (not the 2% banded about by governmental and non-givernmental agencies). More worrying both for the vaccine development and mortality rates is the early indications that it can be recaught only weeks after being apparently cured (link on a post a page or two back) and some frightening (but as yet statistically irrelevant) stats on the mortality rates on 2nd infection.
I truely hope something miraclous happens, but there is the prospect of mass mortality here not just from covid-19 but from everything as worldwide healthcare provision collapses. To avoid this the only approach is the mass draconian quaratines seen in China - something that will work nowhere else on earth apart from North Korea. This article is about the leaks in Italy's quarantine zones as just one example.
I think the key point about all this in the context of investment strategies is that everyone needs to make their own judgements based on their own research and their own circumstances. I spend much of my 'spare' time on investment analysis, and have done so since the early 1980's.
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registerme
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Post by registerme on Feb 26, 2020 17:59:59 GMT
you miss my point - this could end up with ALL assets totally worthless (property, DB pensions, equity, debt instruments all down 90% plus on current values. Most world banks collapsed) To see that happen you'd have to envisage an event orders of magnitude worse than the Great Depression, not to mention the deaths of hundreds of millions across the developed world, the total collapse of the global economy, and the cessation of all government function. Everywhere. Were that to be the case a) worries about the value or positioning of our portfolios would be irrelevant and b) if you think the risk is material (even if tail) your best investment would be a generator, diesel, firearms and ammunition, and some remote defensible fortress property. To which my response would be "sod it, I'll do what I can for my neighbours".
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cb25
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Post by cb25 on Feb 26, 2020 18:12:27 GMT
According to The Sun there's a government document titled Covid-19 Reasonable Worst Case Scenario that suggests 80% of the population might catch Coronavirus resulting in 500,000 dead. Not good obviously, but wouldn't stop society functioning (and it's only a possible scenario). |
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Post by mrclondon on Feb 26, 2020 18:17:23 GMT
you miss my point - this could end up with ALL assets totally worthless (property, DB pensions, equity, debt instruments all down 90% plus on current values. Most world banks collapsed) To see that happen you'd have to envisage an event orders of magnitude worse than the Great Depression, not to mention the deaths of hundreds of millions across the developed world, the total collapse of the global economy, and the cessation of all government function. Everywhere. Were that to be the case a) worries about the value or positioning of our portfolios would be irrelevant and b) if you think the risk is material (even if tail) your best investment would be a generator, diesel, firearms and ammunition, and some remote defensible fortress property. To which my response would be "sod it, I'll do what I can for my neighbours". I don't disagree - my best guess is the bottom will be 30-50% down on current values reached this time next year. But (as per my post on the 10th), that 50% drop would represent a drop in pension income from £20k pa to £10k pa if my DB pension schemes went bust.
As an aside its likely that much of Iran's government has been exposed, and EU leaders had their own scare - the Slovak PM was on the brink of flu during last week's summit on the EU budget.
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r00lish67
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Post by r00lish67 on Feb 26, 2020 18:18:26 GMT
you miss my point - this could end up with ALL assets totally worthless (property, DB pensions, equity, debt instruments all down 90% plus on current values. Most world banks collapsed) To see that happen you'd have to envisage an event orders of magnitude worse than the Great Depression, not to mention the deaths of hundreds of millions across the developed world, the total collapse of the global economy, and the cessation of all government function. Everywhere. Were that to be the case a) worries about the value or positioning of our portfolios would be irrelevant and b) if you think the risk is material (even if tail) your best investment would be a generator, diesel, firearms and ammunition, and some remote defensible fortress property. To which my response would be "sod it, I'll do what I can for my neighbours". This is my instinctive reaction too. I don't discount a catastrophic health outcome or indeed very substantial stock market losses, but a genuine question mrclondon (or others), and apologies if it's been answered upstream - why do you see the stock market collapsing to this extent this time around, when in the only perhaps comparable instance (Spanish flu) it actually rose (apparently) despite 50 million deaths?
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Post by mrclondon on Feb 26, 2020 18:39:29 GMT
To see that happen you'd have to envisage an event orders of magnitude worse than the Great Depression, not to mention the deaths of hundreds of millions across the developed world, the total collapse of the global economy, and the cessation of all government function. Everywhere. Were that to be the case a) worries about the value or positioning of our portfolios would be irrelevant and b) if you think the risk is material (even if tail) your best investment would be a generator, diesel, firearms and ammunition, and some remote defensible fortress property. To which my response would be "sod it, I'll do what I can for my neighbours". This is my instinctive reaction too. I don't discount a catastrophic health outcome or indeed very substantial stock market losses, but a genuine question mrclondon (or others), and apologies if it's been answered upstream - why do you see the stock market collapsing to this extent this time around, when in the only perhaps comparable instance (Spanish flu) it actually rose (apparently) despite 50 million deaths? Two reasons to my mind a) the world economy is so very different now due to integrated global supply chains (personal experience given manufacturing operations is my field)
b) a different mentality within the populations
I've been meaning to post on this 2nd point for a few days. The 'snowflake' generation (horrible term but is the common parlence) could be about to experience a major shock as they have never known anything other than an easy life on the whole. Even my generation of late middle age has had few calamities to deal with, in my case its back to the 1976 drought ... and even then no real hardship as my father brought water home from work (an industrial site) so I didn't spend that much time queuing at the standpipe.
A much greater proportion of the population at the time of the spanish flu would be willing to 'rollup their sleeves' and (for example) help out in the fields to ensure that food supply remained largely intact. It was after all immediately after WWI. How many people these days would be similiarly inclined to help out ?
On the first point I'm aware of one manufacturing company here in the UK now desparately trying to extend bank loans to stave off collapse (with a positive initial response). No production = no sales = no revenue = in due course bust. Critical supplier is actually Taiwanese, which is currently unable to source their own requirements (previously from Hubei) but is hopeful of obtaining supply from elsewhere in China in two or three months time.
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Post by bracknellboy on Feb 26, 2020 18:49:14 GMT
...there's a government document titled Covid-19 Reasonable Worst Case Scenario that ... now, where have I heard that name before...... ?
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IFISAcava
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Post by IFISAcava on Feb 26, 2020 18:58:06 GMT
According to The Sun there's a government document titled Covid-19 Reasonable Worst Case Scenario that suggests 80% of the population might catch Coronavirus resulting in 500,000 dead. Not good obviously, but wouldn't stop society functioning (and it's only a possible scenario). That would be a 1% mortality then - all the armchair experts are telling me it's more like 10% or higher. Those numbers would indeed put a stress on the health service. Having said that, even the Black Death didn't affect 80% (although in a chilling parallel it did enter Europe via Italy...)
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Post by bracknellboy on Feb 26, 2020 19:03:54 GMT
To see that happen you'd have to envisage an event orders of magnitude worse than the Great Depression, not to mention the deaths of hundreds of millions across the developed world, the total collapse of the global economy, and the cessation of all government function. Everywhere. Were that to be the case a) worries about the value or positioning of our portfolios would be irrelevant and b) if you think the risk is material (even if tail) your best investment would be a generator, diesel, firearms and ammunition, and some remote defensible fortress property. To which my response would be "sod it, I'll do what I can for my neighbours". ... when in the only perhaps comparable instance (Spanish flu) it actually rose (apparently) despite 50 million deaths? not a fact I was aware off. However, since that was only shortly after the end of WW1 I'm not sure we can read too much into it because of all the other dynamics going on.
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registerme
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Post by registerme on Feb 26, 2020 19:16:19 GMT
./mutters in disbelief at somebody writing off an entire generation.
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jj
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Post by jj on Feb 26, 2020 19:33:21 GMT
Actually I only invest deeply in P2P this last couple of years because I judged the stockmarkets to be too much of a risk. Too toppy.
It is far too early to suggest the markets is going to tank or crash. If it does tank its goodbye P2P from me as I'll put all my money into the stockmarkets one way or another.
The time it takes to reach a bottom usually varies between 1-2 years & losses between 45-55%. This Relates to a V or U recession.
As I say if it happens.
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Post by Deleted on Feb 26, 2020 19:35:53 GMT
According to The Sun there's a government document titled Covid-19 Reasonable Worst Case Scenario that suggests 80% of the population might catch Coronavirus resulting in 500,000 dead. Not good obviously, but wouldn't stop society functioning (and it's only a possible scenario). That would be a 1% mortality then - all the armchair experts are telling me it's more like 10% or higher. Those numbers would indeed put a stress on the health service. Erm nope, it is the numbers in critical condition and requiring intensive medical intervention that are close to 10% in some places (like HK and Singapore). And yeah... that could put a bit of 'stress' on the health service (just a tiny bit of an understatement). If you feel brave, compare these kind of numbers to the critical care capacity of the UK medical system...
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benaj
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Post by benaj on Feb 26, 2020 19:54:28 GMT
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