Stock market chaos

[BillyStubbsTears]

In the last 10 days, the Dow Jones has seen the three highest daily rises and the four highest daily losses in history (in absolute points).

In percentage terms, today was the fourth biggest daily loss in history. The only higher daily losses were Black Monday in 1987 and two days in the Wall Street crash in 1929.

And today comes 4 days after the 12th biggest daily percentage loss ever, on Monday.

[BillyStubbsTears]

I hope no-one listened to that mad "buy on the dip" advice last week. When the stock markets were 20% higher than they are now.

[Superspy]

It's certainly made interesting viewing, and I see it going a lot further down before a genuine climb happens again. However, due to the bulk of this being panic around the virus and not economic data (sort of, I'm sure you'll understand what I mean) I wouldn't be at all surprised, once we get on top of things, to see a completely unprecedented recovery that could potentially overshoot where it was before. Time will tell of course. I'm of the long-term-hold ilk, so all I'm doing at the minute is not selling out, and watching my portfolio tank, fully expecting that in the long term it won't matter.

On the positive side for me I'm about to start a new job with a significantly increased pension contribution...so cheap shares for the foreseeable!

[big fat yorkshire pudding]

I have a whack to put into pension (given tax benefit it could lose 39% I'd still be ahead).

For mine and the kids non pension investment, I sold a bit so that helped and reinvested elsewhere, which has been successful comparably.

As super spy said, it's long term holdings so will be what will be. My monthly contributions will carry on, that is by definition the point of smoothing what you invest.

[selby]

  Long term shares have tanked, but that is what they are long term most bought 2008/9 still in front and dividends reinvested.
  Reinvested a chunk Monday showing a loss from profits on closed short positions, and a chunk yesterday from further short positions that are nicely up today.
  Will continue this strategy through the period of a real buying opportunity if you have the cash.

[Filo]

My stocks and shares isa has dipped £10k this last 2 weeks, still way ahead on what I put in, spoke to the bank yesterday and I’ll ride the storm, longer term I teckon I’ll get that back and more

[BobG]

I'm on the back of my guy every hour nearly. He's getting quite fed up of me. For anyone lucky enough to have a couple of quid spare this is the best opportunity you will ever see. Sell your gold stocks (lol!), buy share based investments. And when things get back to a bit more normality, sell some of the share profits and buy back the gold stocks. It'll take  perhaps a year, so you have to be able to do without the cash for that long, but events like this are life changing. There's a lot more economic woe to come yet, right across the world, so shares won't go flying upwards no matter what the central banks do.  They have very little room for manoeuvre, having not normalised interest-rate policy and balance sheets since the Financial Crisis in 2008/09. Consequently, we've had a decade of historically low interest rates and ongoing monetary stimulus. There are certain things that liquidity can't cure and the failure to get back to normality after 2008/09 means the central banks now have almost nothing with which to fight economic disaster that coronavirus is bringing.

Me? I'd line the worlds' press barons up against a wall and machine gune the lot of 'em. The level of panic for what is still a pretty trivial illness compared to, say, flu, can only mean there are hidden agendas in play. Who stands to gain? That's the question to ask yourself.

BobG

[BillyStubbsTears]

I'm going to disagree on that one Bob.

The stock market was already in a bubble before C-19. It was ready for a major drop anyway.

But the economic consequences of C-19 could be horrific. And if they are, the stock market will not bounce back any time soon.

C-19 shouldn't be an economic disaster.

But it IS a frightening economic challenge. Here's why.

Most economic crises are either demand shocks or supply shocks.

In demand shocks, people get worried about the future. So they stop spending as much. So sellers stop earning. So people lose their jobs. So people worry about the future.

In supply shocks, it suddenly becomes harder to produce stuff that people want. So companies that require the supply can't produce what they want to. So less goods are produced to sell. So we become less productive. We don't produce as much as we could, so we get poorer because we are selling less.

A demand shock was 2008, when everyone suddenly started panicking that banks were unstable.

A supply shock was 1973, when OPEC quadrupled the price of oil overnight, and factories couldn't afford power to produce stuff.

 C-19 will produce a demand shock to the economy, because people stop spending when they are scared (and when they are cooped up in their houses) so less stuff is bought and companies selling go under.

But it also produces a supply shock. Because we will lose millions of hours of work time. So we will produce less to sell.

And on top of all of that, the most frightening thing is that perfectly sound companies might go under because of these shocks. So, when we come through C-19 in 6 months time, we've lost airlines and manufacturers and software companies and plumbers.

The economy still NEEDS them after C-19. But if they have gone bankrupt, they cannot provide the services the rest of us want to buy.

And if THAT happens, our capacity to grow in future is shot. Because you can't snap your fingers and produce a BA, or a steel company or a software house or Joe Bloggs plumbers overnight.

So if THAT happens, we have another lost decade ahead, while we build our productive capability again.

Good news is, we know how to deal with this.

Governments should borrow, now, massively if necessary.

Firstly to keep demand in the economy, by putting money in people's pockets and paying for quick investment. That keeps demand going.

Secondly, by offering massive financial support to struggling companies. So they survive and can still operate in 6 months time. That deals with the supply shock.

It will hugely increase Govt borrowing. But, frankly, f**k that. We'll deal with that later.

In fairness, I think this Tory Govt get all this, in a way that George Osborne and especially, Philip Hammond couldn't understand. So I do think we will implement broadly correct macroeconomic policy.

Trouble is. Even if WE do, would you trust Trump to implement the right policies in the States? And if he doesn't, the world economy will tank. And stocks will collapse way further.

And THAT is why I've taken my entire pension pot out of stocks and put it into Govt bonds. Bugger all growth. But at least it's as safe as you can get.

[BillyStubbsTears]

More here on the huge threats to the stock market

https://mobile.twitter.com/paulkrugman/status/1238436741155078145

[Superspy]

I assume from all of that BST that you're not expecting to get back into the stock market for a number of years rather than months? Or is that more of a case of seeing how the likes of Trump play the situation?

[BillyStubbsTears]

I think it's a case of seeing how stuff starts to settle down. Everything is up for grabs at the moment.

[Bristol Red Rover]

Crises have always been one way the rich make more money (enter conspiracy theiries here ). Sure some may lose a bit but overall, they are able to buy cheap when things begin to improve, including with property etc.

Property prices will be an interesting thing to watch. On the one hand, with deaths there will be more property available. On the other, a fair chunk of inheritance will fall into the hands of potential investors.

[BobG]

My advisor fellow sides with you Billy. He's been saying for aeons that stock markets are massively over valued. He still thinks they are. He is not keen at all on buying anything because the impact of corona has a helluva long way to go yet.  Hold cash is his advice. Somewhat reluctantly, that's what I'm doing. It's pretty obvious that we are only at the start of an economic corona downturn.

BobG

[BillyStubbsTears]

The FTSE is now down 33% in just over three weeks.

This hasn't happened since the Wall Street Crash.

There is a massive test of political honesty coming up here.

Lat time we had anything remotely like this was 2008-09, when left of centre Govts were in place in the UK and USA. And EVERYONE on the Right of politics, and I mean EVERYONE, said that cutting Govt spending was the solution. If they do that THIS time, we will have a repeat of the 1930s. Let's see if they really meant it back then, or if it was just a political ploy to hammer the Left.

I truly, truly hope it was the latter. That would mean they are just unprincipled hypocrites, not dangerously ignorant ideologues.

[nightporter]

I wonder if there's a danger to the whole banking system coming. We've seen how quickly people can panic eg bog rolls, what if people start to think cash is king?

[BillyStubbsTears]

The big central banks played their Fil Rouge last night. Massive injection of liquidity into the banking system. That ought to provide some underpinning to the banks - what matters now is the extent to which banks have sorted out their shit since 2008.

[BobG]

What price galloping inflation in two years time?

BobG

[BillyStubbsTears]

There will need to be some Bob. It'll be a positive sign. After this, the economy needs to overheat for a while to make up lost ground.

And inflation is a sure-fire way of decreasing the importance of the debt we will have run up...

[Padge_DRFC]

Anyone invested in crypto on here?

[Filo]

I don’t think traders know what to make of the markets at the moment, watching the markets last week, although on a downward trend there were huge fluctuations on share values during each trading day. I don’t think we’ve bottomed out yet, but when it does, and it’s all about the timing there will be huge profits to be made as the markets rebound, which they will, it’s just when

[Colemans Left Hook]

I don’t think traders know what to make of the markets at the moment, watching the markets last week, although on a downward trend there were huge fluctuations on share values during each trading day. I don’t think we’ve bottomed out yet, but when it does, and it’s all about the timing there will be huge profits to be made as the markets rebound, which they will, it’s just when

which reminds me of this old chestnut sorry "sardine"

taxi Uber for CLH   


https://draytonbird.com/2017/12/sardines/

[BillyStubbsTears]

Anyone invested in crypto on here?

You have to be insane to gamble on Bitcoin.

On 12 March,it went down by 37%.

It's not investing. You can't invest in something that volatile. It's just gambling. You might make a fortune. You might lose every penny. But there's absolutely nothing tangible to base your decision on.

With a stock market share, you can look at the fundamental state of the company.

With a gamble on the horses, you can look at form and breeding and going and jockey.

With Bitcoin, you are gambling on how much confidence people have in Bitcoin. Because it is literally worthless without people having confidence that other people think it is worth something.

[Superspy]

Anyone invested in crypto on here?

I picked up a bit of XRP and tiny amounts of some other alt coins back before the XMAS 2017 rush. Still got them. No plans to sell as it isn't worth it, and no plans to buy any more.

[drfchound]

Anyone invested in crypto on here?

Totally unregulated so a massive risk.

[Superspy]

In other stock-market related stuff...I've been forced to sell some shares due to me leaving my current employer and  therefore the shares no longer being part of the work-based plan...obviously they've dropped a huge amount.
I've still made a little on them but nowhere near what I would have if all of this wasn't going on...looking for the silver lining...every month we're in this situation is the best part of a grand in childcare and fuel I won't be spending, so I'll get some of it back that way.

[Colemans Left Hook]

Anyone invested in crypto on here?

Totally unregulated so a massive risk.

Your mention of bit coin just reminded me of my investment of a few hundred pounds in not  "bitcoins"  but "bits of coins" made a few years ago.

The world "effectively" went bankrupt in 2008 and expecting the euro eventually to be decommissioned CLH   to spell it out made an investment at around 20% face value in old french ten FRENCH FRANC !! coins (hard work for english people to try and exchange them at the Bank of France even if they would do a swopsi) the rate was about 1.45 euros to the pound . Each coin sells on eBay for over a pound or a lot more if you are lucky. One day thought they might become legal tender again.  Plus other angles to make a profit on them.

[GazLaz]

Anyone invested in crypto on here?

I’ve got some bitcoin. Bought it when it was under $1000 a unit. Keeping it till it’s worth either 100k or 0.

[nightporter]

I have little Bitcoin and Ethereum.
Also a few BAT  which you earn while using BRAVE browser. 
https://brave.com/pur811

[selby]

  Looked sick over the last two weeks with real shares, shorting was easy and a payer. Today started to realise profit on tranches of real shares when tanking first two tranches sold nice little 6% profit still some way to go on other tranches but patience over a long term will pay off with banks and pharmacies.
  Banks will take a long term view but will eventually hoover up most of the money released by the governments.

[Filo]

Three consecutive days of big gains, but for how long?