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Just after the Lunar Holidays ended, China then Asian stocks were sold and US stocks were bought, a so-called "flight to safety", as traders buy what they think at the time are "safer" stocks, at least *relatively* safer. This behavior happened in a previous recession with US traders, who sold stocks for real estate (which then fell in prices). Now, China *seems* to have stabilized (if you believe their numbers), and US and other countries are reporting increased cases, so the "flight to safety" is back to Asian stocks. Asian stocks are rising while US stocks are falling (too many financial articles fail to tell you what investments are rising in prices). BTW, Despite the drop in the indices, most individual investors are *not* selling. They also didn't sell in previous recessions / corrections, and the market continued climbing, albeit as part of a bull market.

I've been following Ken Fisher for a few decades, and we're in a correction, during the latter third of a long bull market. I also started watching Chris Cavaccio's (sp) technical analysis videos on You Tube. Right now, both are discussing volatility. That's basically all the severe swings we've been having in the market. Basically, a correction is a sharp drop, but does not, in the long run, affect the direction of the market. A recession is a much slower decline in the market, often only seen with hindsight. John Templeton, founder of Templeton mutual funds, is often quoted, "Bull markets are born on pessimism, grown on skepticism, mature on optimism, and die on euphoria." Before the correction, investors weren't euphoric, though years past pessimism and skepticism. Chris, meanwhile, has a technical analysis series that's actually easy to understand. He compares the current volatility against historical cases, of which he found (only) ten. Interestingly, two were during bear markets, so he compares current stock market behavior versus those markets. (Spoiler: Still a bull market.)

Of course, there's always the possibility that, after China and the rest of the world recovers from the economic impact of CoVid, we enter a euphoric phase of the bull market. Maybe something like, "we've overcome the virus, taken measures to prevent it from happening again (eg. diversifying supply lines) and now the world economics are robust and growing". Myself, I'm retired, so invest in Dividend Growth Investing, which originated in the well-known investing book, A Random Walk Down Wall Street. Easy to understand book, and DGI is a good conservative strategy if you need dividend income (eg. college, house, retirement) and are not in the highest tax brackets. I've invested through two recessions, and can say that a) volatility kills and b) if real estate gets hit in Silicon Valley, go buy that house if you can afford it. As a landlord, I'm worry much less about my portfolio because of my income from a house I rent. Unfortunately, if the world's economy really does get worse, you may have to adopt previous generation's attitude of building financial security to pass down to the next one, rather than the current one.

I gotta admit I got the impact of Corona virus wrong - I didn't think it would be enough to have a major impact on the economy unless it caused some other fragile section of the economy to tip over. Turns out the impact will be more than enough by itself. Experts are already 0 growth this quarter and negative growth next quarter. What a difference a month makes.

 Easy E wrote:
Small businesses, local retail based businesses are getting hammered by this "Coronacession".

Has anyone heard any proposals to help these entities survive?

Here in Australia there's a bunch of different cash hand outs to different groups. Individual businesses can apply for up to $25,000 as a direct grant. I don't know the details as to whether you will need to prove some kind of impact from Covid-19. It's meant to allow businesses to keep employees despite reduced revenue, but I haven't seen any kind of test that actually requires you to keep people employed. Seems like businesses will probably fire who they can, and use the money to stay afloat. Which isn't necessarily a bad thing for when we come out the other side of this.

Personally I think the best approach would be direct payments to every person regardless of circumstances. And on top of that an income guarantee for anyone instructed by a medical professional in to quarantine or treatment - the employee should still be paid by the employer, but can claim that amount from the government.

 Easy E wrote:
Small businesses, local retail based businesses are getting hammered by this "Coronacession".

Has anyone heard any proposals to help these entities survive?

Switzerland has multiple prongs started. From subsidized Shortwork sessions to stimulus packages.
Some Kantons have gone further, preparing funds in order to let small and medium sized companies stay liquidated (those companies and their high expertise form the backbone of swiss internal economy and are more relevant in many cases for the overall outlook then say the big pharma and watchmakers overall)
Chances are the local level will get involved if it means and has the means to prevent medium sized companies to run dry of funds.

Money isn't really an isssue also thanks to the federal finances reglementation, which disallows the Federal government to run a deficit more then a 3rd of the BIP, (atm the federal council had the issue of having RUN again a surplus in Mrd numbers. infact alot of ideas havbe been thrown around. ) Also some infantry battalions have been mobilized ( well the medical ones and MP ) which can help the Police, medical staff and military hospitals.


I honestly doubt we could've avoided the bubble we created since 2008 and the further negative interest will seriously harm and has harmed us in the long term. economically speaking it would've been better to let the zombie banks been curbed then this situation right now, because monetary policy will not help anymore making the state the only likely operator strong enough to actually maintain or uphold the economy. And some of them have just too much debt to do so. Which is why i am concerned for italy or spain. Greece also got it's recovery more or less dashed in one go with this if this escalates more.

Quick, cut taxes on the wealthy!

(Sarcasm)

Looks like no one is biting on the Payroll Tax relief idea floated by the White House.

I've been buying put options on energy stocks since the Saudi / Russia conflict began. Mostly short term, counting on prices continuing to slide, have a couple long term shorts that might come up during the next year. Am cashing them out daily, wishing I bet bigger when this all began. I'm building up liquidity to do some bargain shopping and hopefully buy something ridiculous once the market comes back.

There's a cycle happening. The Dow falls steeply on Monday, there's activity throughout the week before a big rally on Friday. Then it repeats.

Everyone keeps talking about conoravirus when crude is selling for under $30 a barrel. Most stock indexes - the things the casual investor buys into - are gauged against the price of oil. That plus automated trading systems is responsible for the majority of the losses, those things only know how to pursue short-term profits and are not built to deal with recessions. They are selling stocks knowing it will drop the value and create better opportunities when the price hits bottom.

Fundamentally, the system is designed to rebound.

We're no where near the big market altering events that are going to come. China cut its exports by about 50% in February, it takes about 2 months for supply chain destabilization like that to hit the US. The real impact of businesses being closed hasn't been felt yet, Tencent is talking about buying Disney outright because the stock price is so low. The Senate is currently considering a bill that would move pharma production back into the US, and it's been supported by people on both sides.

It's important to remember the virus is one thing, there's a lot of other things going on that have an even bigger impact on the market. Yes, we are going to see a recession and, no, it's not the end of the world. It will be minor compared to 2008 and we will see growth happen almost immediately.

But try to remember the Fed is dealing with more than short-term liquidity issues brought on by the virus. We're fighting a cold-war against other players who want to de-stabilize the world order, whether we want to admit it or not. This creates opportunities.

 ced1106 wrote:
Just after the Lunar Holidays ended, China then Asian stocks were sold and US stocks were bought, a so-called "flight to safety", as traders buy what they think at the time are "safer" stocks, at least *relatively* safer. This behavior happened in a previous recession with US traders, who sold stocks for real estate (which then fell in prices). Now, China *seems* to have stabilized (if you believe their numbers), and US and other countries are reporting increased cases, so the "flight to safety" is back to Asian stocks. Asian stocks are rising while US stocks are falling (too many financial articles fail to tell you what investments are rising in prices). BTW, Despite the drop in the indices, most individual investors are *not* selling. They also didn't sell in previous recessions / corrections, and the market continued climbing, albeit as part of a bull market.

I've been following Ken Fisher for a few decades, and we're in a correction, during the latter third of a long bull market. I also started watching Chris Cavaccio's (sp) technical analysis videos on You Tube. Right now, both are discussing volatility. That's basically all the severe swings we've been having in the market. Basically, a correction is a sharp drop, but does not, in the long run, affect the direction of the market. A recession is a much slower decline in the market, often only seen with hindsight. John Templeton, founder of Templeton mutual funds, is often quoted, "Bull markets are born on pessimism, grown on skepticism, mature on optimism, and die on euphoria." Before the correction, investors weren't euphoric, though years past pessimism and skepticism. Chris, meanwhile, has a technical analysis series that's actually easy to understand. He compares the current volatility against historical cases, of which he found (only) ten. Interestingly, two were during bear markets, so he compares current stock market behavior versus those markets. (Spoiler: Still a bull market.)

Of course, there's always the possibility that, after China and the rest of the world recovers from the economic impact of CoVid, we enter a euphoric phase of the bull market. Maybe something like, "we've overcome the virus, taken measures to prevent it from happening again (eg. diversifying supply lines) and now the world economics are robust and growing". Myself, I'm retired, so invest in Dividend Growth Investing, which originated in the well-known investing book, A Random Walk Down Wall Street. Easy to understand book, and DGI is a good conservative strategy if you need dividend income (eg. college, house, retirement) and are not in the highest tax brackets. I've invested through two recessions, and can say that a) volatility kills and b) if real estate gets hit in Silicon Valley, go buy that house if you can afford it. As a landlord, I'm worry much less about my portfolio because of my income from a house I rent. Unfortunately, if the world's economy really does get worse, you may have to adopt previous generation's attitude of building financial security to pass down to the next one, rather than the current one.

Thats all well and good, but that assumes that recessions are caused by the performance of the market, which is incorrect. While the markets can predict a recession, the drivers of the recession generally exist outside of the market (the rare exception to this would be asset bubbles, but even then those are generally behaviors and trends that exist outside of the market itself but are priced into it). You can in fact have a bull market recession (they are incredibly rare), as well as a non-recession bear market (which are fairly common). Recessions are the result of a decline in economic activity (hint: the market is not the economy, and the economy is not the market - the two are independent but inter-related concepts). The almost universally accepted definition of a recession is "a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales". Notice what is not mentioned there - the markets.

What we saw in China, and what we are seeing now everywhere else, is a decline in economic activity as a result of the virus. This decline will be compounded as entire industries are now being shutdown, which means large numbers of people aren't generating income, which in turn means people are not spending money and purchasing goods, and defaulting on debt and missing bills, which in turn compounds further down the line. That doesn't even begin to address the business side of the situation with missed earnings, etc. Thats where a recession comes from. Goldman Sachs estimates China's economy took a 9% hit as a result of Coronavirus (I.E. their economy receded 9%), if it continues to contract in the 2nd quarter (which is likely as the rest of the world will be battling with coronavirus for what will probably be several more weeks at least which will no doubt hurt demand for Chinese goods and imports), they are officially in a recession. Whether we follow suit will depend on how long lockdown activity continues for and how many people lose their jobs and how many businesses get shuttered as a result. Thats not something the markets can predict.

By the way, we are officially in a bear market as we are more than 20% down from the recent high. Doesn't mean its going to last very long, but to say we are still in a bull market when we are not by any measure of the definition is simply wrong. I also disagree with your assertion that the market was not euphoric, there are plenty of headlines over the last 3-6 months before Coronavirus hit calling it exactly that, in fact by a few metrics the market did in fact reach official euphoria. In much less technical terms, you can consider euphoria to be a state in which investments continue to push new highs (check), the valuation of those investments is no longer strictly tied to the "fundamentals" of the investments performance (check), investors establish alternative metrics to justify positions in investments which are not backed by fundamentals (check), main street investors are pushing further into riskier investments (check - though this is also in part being driven by accessibility provided by various apps that appeal to millennial and amateur investors), etc. All the behavior is and has been there for months.

The US Treasury Secretary told senators about an hour ago he believes US unemployment could hit 20% due to coronavirus fallout.

Going to be an amazing day on wall street tomorrow.

The service industry is getting slaughtered, and it's in large part iconic local places that are getting it worst. Powell's Books in PDX and the McMenamins pub chain in the PNW are laying off a gazillion staff and are closing locations en masse, eateries are finding themselves unable to sustain off take out orders only, and bars are shuttering.

I would not be surprised to see strip malls experience a period-extinction level event in many locations.

chaos0xomega wrote:
By the way, we are officially in a bear market as we are more than 20% down from the recent high. Doesn't mean its going to last very long, but to say we are still in a bull market when we are not by any measure of the definition is simply wrong. I also disagree with your assertion that the market was not euphoric, there are plenty of headlines over the last 3-6 months before Coronavirus hit calling it exactly that, in fact by a few metrics the market did in fact reach official euphoria. In much less technical terms, you can consider euphoria to be a state in which investments continue to push new highs (check), the valuation of those investments is no longer strictly tied to the "fundamentals" of the investments performance (check), investors establish alternative metrics to justify positions in investments which are not backed by fundamentals (check), main street investors are pushing further into riskier investments (check - though this is also in part being driven by accessibility provided by various apps that appeal to millennial and amateur investors), etc. All the behavior is and has been there for months.

We'll agree to disagree, then. Ken Fisher's definition of a bear market is a slow slide that's only seen in hindsight. As someone who's lived through two recessions, I haven't had the equivalent of Peter Lynch's cocktail theory that a bear market is imminent when people are giving *him* stock advice. Way back when, I knew the market was in trouble when my Dad's 80-year old friend was asking if she should still hold Lucent. I'm waiting for my gaming buddies, Meetup groups, and classmate at the YMCA to talk about stocks.

Anyway, wanted to let you all know of another indicator that may be of use, the AAII (American Association of Individual Investors) Sentiment Guide. Again, back to Ken Fisher, one of his contrarian market prediction methods is to wait for everyone else to predict the market, and look for what numbers *aren't* being selected. Then make a decision from these numbers. The sentiment guide surveys its members (self-selected, though) if they're feeling bullish, neutral, or bearish. I don't make decisions purely on these numbers, but find still find them interesting. I'm waiting out the volatility, myself.

https://www.aaii.com/sentimentsurvey/sent_results

 ced1106 wrote:

Ken Fisher's definition

Ken Fishers personal opinion is not a substitute for long-standing internationally recognized definition.

The sentiment guide surveys its members (self-selected, though) if they're feeling bullish, neutral, or bearish.

Market sentiment != the market. I am feeling bullish. Why? Because this is the Black Friday of market sales and will probably be a once in a lifetime buying opportunity (the market is going to continue to drop even lower unless God himself comes down from heaven and suddenly makes Coronavirus disappear), of course I feel bullish - I'm locked, cocked, loaded, and ready to buy. That doesn't mean its a bull market - its very much a bear market.

I really don't know what you're trying to accomplish by convincing yourself that everything is fine and dandy and things will be back to normal in a few days. The government is planning for an 18 month long health crisis, millions of people aren't working. We *are* in a recession, and we *are* in a bear market, and that won't change in the short term.

> Ken Fishers personal opinion is not a substitute for long-standing internationally recognized definition.

EDIT: No, but he's made me *lots* of money, by staying in the market.

> We *are* in a recession, and we *are* in a bear market

Disagreeing based on my learning. Or, rather, though DGI, I'm investing in a conservative strategy that's suitable for both bear and bull markets.

EDIT: Found some Marketwatch articles useful for investors who haven't been through a market like this, as well as a Jeffries list of stocks to consider purchasing. I own several stocks on this list, which is usually how I become interested in a stock strategy or purchase article. As ever, use your own due diligence, such as corroborating different stock strategies and recommendations. If you're new to purchasing stocks, there's nothing wrong with starting with stocks of companies you purchase from in everyday life. I only wish I could have picked up more Amazon when I started ordering from them regularly for everyday stuff. This table looks better in the last article.

TOTAL RETURN - FEB. 19 THROUGH MARCH 20 TOTAL RETURN - 2020 TOTAL RETURN - 2019 DIVIDEND YIELD MARKET CAP. ($ BILLIONS)
Amazon.com Inc. US:AMZN -15% 0% 23% 0.00% $919
Visa Inc. Class A US:V -31% -22% 43% 0.82% $250
Home Depot Inc. US:HD -37% -30% 31% 3.94% $166
Cisco Systems Inc. US:CSCO -23% -25% 14% 4.04% $151
Adobe Inc. US:ADBE -23% -10% 46% 0.00% $143
Nvidia Corp. US:NVDA -35% -13% 77% 0.31% $126
Abbott Laboratories US:ABT -24% -21% 22% 2.12% $120
Chevron Corp. US:CVX -46% -50% 15% 8.69% $112
McDonald's Corp. US:MCD -31% -24% 14% 3.37% $111

https://www.marketwatch.com/story/this-stock-market-is-full-of-drunken-sailors-and-you-want-to-buy-what-theyre-foolishly-selling-2020-03-25?mod=MW_article_top_stories
https://www.marketwatch.com/story/what-401k-investors-can-learn-from-tuesdays-massive-market-bounce-2020-03-24?mod=article_inline
https://www.marketwatch.com/story/you-can-be-practically-stealing-quality-stocks-now-according-to-jefferies-2020-03-23?mod=article_inline