Bottom is in!

[Joe Schmo]

As of 5pm PST there were 15 states with a 25% or greater increase in new cases vs total cases:

MA
KY
DE
KS
MD
MI
IA
FL
NJ
HI
TN
ME
IN
UT
MO

**@24%
PA
OH

[bthewalls]

joe you aint seen nothing yet.  I studied epidemiology in undergrad and have totally under estimated effect this will have, and subsequently on economy.  I dont think we are anywhere near the bottom and gonna have a stab at -40%+

the main issue only starts when hospitals become over run, then even moderate cases can become fatal....heres a very rough/basic calculation of potential spread in USA, based on infection doubling every 4 days (its actually 3 so the following is an underestimate). as you will see, actual figures for today 29th march are above that shown on third row (i.e 106,672 vs current 124000). Entire USA is after 42 days ish?

infected          day     date
26,668            1     21/03/2020
53,336            6     25/03/2020
106,672          9     29/03/2020
213,344          12   02/04/2020
426,688          15   06/04/2020
853,376          18   10/04/2020
1,706,752       21   14/04/2020
3,413,504       24   18/04/2020
6,827,008       27   22/04/2020
13,654,016     30   26/04/2020
27,308,032     33   30/04/2020
54,616,064     36   04/05/2020
109,232,128   39   08/05/2020
218,464,256   42   12/05/2020
436,928,512   45   16/05/2020

[Huskers1]

Vanguard Total Stock Market ETF (VTI) closed at $115.19 on Friday, March 20.  So per my earlier post, that's my prediction of the market bottom.

Markets are up +10.2% (Friday's close) since I called the market bottom.  For me, I was calling the end of the panic in the market.  Panic should be a low point for the market, and a good time to buy.  But not always the lowest point... so far, it's holding.

After the stock market closed for the weekend, Congress and the President signed the CARES Act into law, which is a $2.2 trillion relief package.  The largest relief bill in history finally passed, which markets couldn't predict with certainty.  Markets will probably open higher on Monday.

Given where we are today 21,600.00 and compared to where the market was priced in Dec 2018 ,aren't stocks over valued given the economic impact of the coming months?

[vand]

joe you aint seen nothing yet.  I studied epidemiology in undergrad and have totally under estimated effect this will have, and subsequently on economy.  I dont think we are anywhere near the bottom and gonna have a stab at -40%+

the main issue only starts when hospitals become over run, then even moderate cases can become fatal....heres a very rough/basic calculation of potential spread in USA, based on infection doubling every 4 days (its actually 3 so the following is an underestimate). as you will see, actual figures for today 29th march are above that shown on third row (i.e 106,672 vs current 124000). Entire USA is after 42 days ish?

infected          day     date
26,668            1     21/03/2020
53,336            6     25/03/2020
106,672          9     29/03/2020
213,344          12   02/04/2020
426,688          15   06/04/2020
853,376          18   10/04/2020
1,706,752       21   14/04/2020
3,413,504       24   18/04/2020
6,827,008       27   22/04/2020
13,654,016     30   26/04/2020
27,308,032     33   30/04/2020
54,616,064     36   04/05/2020
109,232,128   39   08/05/2020
218,464,256   42   12/05/2020
436,928,512   45   16/05/2020

Nope. Doesn’t work like that. Infections follow a logistic curve function. Once the rate of change slows you are past the peak and the rate will keep flattening.

For example, today Spain reported 5% new active cases, well down from their 20% rate of change a week ago. They are over the worst.


Calculus, not arithmetics holds the answer.

[bthewalls]

joe you aint seen nothing yet.  I studied epidemiology in undergrad and have totally under estimated effect this will have, and subsequently on economy.  I dont think we are anywhere near the bottom and gonna have a stab at -40%+

the main issue only starts when hospitals become over run, then even moderate cases can become fatal....heres a very rough/basic calculation of potential spread in USA, based on infection doubling every 4 days (its actually 3 so the following is an underestimate). as you will see, actual figures for today 29th march are above that shown on third row (i.e 106,672 vs current 124000). Entire USA is after 42 days ish?

infected          day     date
26,668            1     21/03/2020
53,336            6     25/03/2020
106,672          9     29/03/2020
213,344          12   02/04/2020
426,688          15   06/04/2020
853,376          18   10/04/2020
1,706,752       21   14/04/2020
3,413,504       24   18/04/2020
6,827,008       27   22/04/2020
13,654,016     30   26/04/2020
27,308,032     33   30/04/2020
54,616,064     36   04/05/2020
109,232,128   39   08/05/2020
218,464,256   42   12/05/2020
436,928,512   45   16/05/2020

Nope. Doesn’t work like that. Infections follow a logistic curve function. Once the rate of change slows you are past the peak and the rate will keep flattening.

For example, today Spain reported 5% new active cases, well down from their 20% rate of change a week ago. They are over the worst.


Calculus, not arithmetics holds the answer.

as I said, very rough.  anyone wanna through up an accurate curve?  the panic peak will be near the market bottom

[Huskers1]

joe you aint seen nothing yet.  I studied epidemiology in undergrad and have totally under estimated effect this will have, and subsequently on economy.  I dont think we are anywhere near the bottom and gonna have a stab at -40%+

the main issue only starts when hospitals become over run, then even moderate cases can become fatal....heres a very rough/basic calculation of potential spread in USA, based on infection doubling every 4 days (its actually 3 so the following is an underestimate). as you will see, actual figures for today 29th march are above that shown on third row (i.e 106,672 vs current 124000). Entire USA is after 42 days ish?

infected          day     date
26,668            1     21/03/2020
53,336            6     25/03/2020
106,672          9     29/03/2020
213,344          12   02/04/2020
426,688          15   06/04/2020
853,376          18   10/04/2020
1,706,752       21   14/04/2020
3,413,504       24   18/04/2020
6,827,008       27   22/04/2020
13,654,016     30   26/04/2020
27,308,032     33   30/04/2020
54,616,064     36   04/05/2020
109,232,128   39   08/05/2020
218,464,256   42   12/05/2020
436,928,512   45   16/05/2020

Nope. Doesn’t work like that. Infections follow a logistic curve function. Once the rate of change slows you are past the peak and the rate will keep flattening.

For example, today Spain reported 5% new active cases, well down from their 20% rate of change a week ago. They are over the worst.


Calculus, not arithmetics holds the answer.

I think you may be correct, however Italy maybe a better example to use. They are expeirencing a wave pattern after an intial peak and as a result new cass are again on the rise.

[MustacheAndaHalf]

When I sold some equities to time the market 3 weeks ago, I had specific predictions 1-2 weeks out for when I would buy back in.  I made a plan, watched predictions come true, and bought near the recent market bottom.

I would encourage others who time the market to have a plan based on specific predictions.  When your predictions fail, understand why, and consider ending the plan to time the market.

For example, many people have predicted that much higher infection rates will cause markets to correct.  U.S. has 145k cases after being at 99k Friday.  Today President Trump agreed with medical experts on his team that U.S. deaths could be in the 100k to 200k range, with millions infected.  Markets reacted by rising +2.4%.  To me, that seems like a failure of the prediction.  Cases go up, predicted cases go up... and markets go up.

[vand]

joe you aint seen nothing yet.  I studied epidemiology in undergrad and have totally under estimated effect this will have, and subsequently on economy.  I dont think we are anywhere near the bottom and gonna have a stab at -40%+

the main issue only starts when hospitals become over run, then even moderate cases can become fatal....heres a very rough/basic calculation of potential spread in USA, based on infection doubling every 4 days (its actually 3 so the following is an underestimate). as you will see, actual figures for today 29th march are above that shown on third row (i.e 106,672 vs current 124000). Entire USA is after 42 days ish?

infected          day     date
26,668            1     21/03/2020
53,336            6     25/03/2020
106,672          9     29/03/2020
213,344          12   02/04/2020
426,688          15   06/04/2020
853,376          18   10/04/2020
1,706,752       21   14/04/2020
3,413,504       24   18/04/2020
6,827,008       27   22/04/2020
13,654,016     30   26/04/2020
27,308,032     33   30/04/2020
54,616,064     36   04/05/2020
109,232,128   39   08/05/2020
218,464,256   42   12/05/2020
436,928,512   45   16/05/2020

Nope. Doesn’t work like that. Infections follow a logistic curve function. Once the rate of change slows you are past the peak and the rate will keep flattening.

For example, today Spain reported 5% new active cases, well down from their 20% rate of change a week ago. They are over the worst.


Calculus, not arithmetics holds the answer.

I think you may be correct, however Italy maybe a better example to use. They are expeirencing a wave pattern after an intial peak and as a result new cass are again on the rise.

Latest numbers from Italy are very good as their lockdown measures are really beginning to feed through to the bottom line.

Rate of growth of new cases has fallen from around 18% to 4%

Number of daily new cases has almost halved from peak.

All the major European countries are now over the worst and on some part of the flattening trajectory.

UK & US conversely are looking like they still in the exponential phase, but by the end of this week we should also see their numbers begin to flatten off.

As I said, while the headlines are focussing on the now, the market has moved to price at least the end of the first wave of this pandemic which can clearly be projected. We'll see if it has fully priced in the economic damage and long term changes that will inevitably arise as a result, but by the wisdom of the crowds the market is much wiser than any individual.

[wienerdog]

When I sold some equities to time the market 3 weeks ago, I had specific predictions 1-2 weeks out for when I would buy back in.  I made a plan, watched predictions come true, and bought near the recent market bottom.

I would encourage others who time the market to have a plan based on specific predictions.  When your predictions fail, understand why, and consider ending the plan to time the market.

For example, many people have predicted that much higher infection rates will cause markets to correct.  U.S. has 145k cases after being at 99k Friday.  Today President Trump agreed with medical experts on his team that U.S. deaths could be in the 100k to 200k range, with millions infected.  Markets reacted by rising +2.4%.  To me, that seems like a failure of the prediction.  Cases go up, predicted cases go up... and markets go up.

So you are saying Top Isn't In?  Please translate.

[Alternatepriorities]

When I sold some equities to time the market 3 weeks ago, I had specific predictions 1-2 weeks out for when I would buy back in.  I made a plan, watched predictions come true, and bought near the recent market bottom.

I would encourage others who time the market to have a plan based on specific predictions.  When your predictions fail, understand why, and consider ending the plan to time the market.

For example, many people have predicted that much higher infection rates will cause markets to correct.  U.S. has 145k cases after being at 99k Friday.  Today President Trump agreed with medical experts on his team that U.S. deaths could be in the 100k to 200k range, with millions infected.  Markets reacted by rising +2.4%.  To me, that seems like a failure of the prediction.  Cases go up, predicted cases go up... and markets go up.

To me, that looks like more evidence that the market likes the feeling of certainty even if it proves to be an illusion. A "believable" estimate of the death toll is much better than complete wishful thinking at the top and wildly pessimistic speculation by the talking heads. Also 99k -> 145k in three days is not doubling despite testing a lot more people which could be taken as good news.

I've been following your predictions with interest and hope you keep sharing them.

[bthewalls]

UK has just announced (30/3/2020) that covid in london alone is 2 to 4 weeks from peak...but who would invest in ftse anyway....

USA will be some time behind uk....

odd times

[vand]

What have the bears got left?

The trajectory of the virus is now pretty clear and the end is in sight, even if it a little ways away. The market has priced it in.  Sorry, permabears, but looking at the daily numbers now it's about as uesful as yesterday's newspaper as far as the market cares.

There seems to be a lot of money waiting for the market to hit a particular price before buying.. eg S&P 2000 & Dow 15k seem common targets..which is why it probably won't ever see those prices. Can't have everyone outwitting the market and getting rich now, can we?

[Joe Schmo]

There seems to be a lot of money waiting for the market to hit a particular price before buying.. eg S&P 2000 & Dow 15k seem common targets..which is why it probably won't ever see those prices. Can't have everyone outwitting the market and getting rich now, can we?

Shorten that a little and it could be a great "Don't try and time the market" bumper sticker :)

[Full_Beard]

The trajectory of the virus is now pretty clear and the end is in sight, even if it a little ways away. The market has priced it in.  Sorry, permabears, but looking at the daily numbers now it's about as uesful as yesterday's newspaper as far as the market cares.

That's some quality confidence, which I would like to share, but alas, I don't believe the current prices on U.S. markets accurately reflect the situation to come. Reasonable minds can disagree. I'll revisit this thread in 3 months.

[MustacheAndaHalf]

vand - I thought Italy's testing failed to keep up, in which case the number who passed away might be more reliable than the number of cases.  It still supports your view.  Dividing each day's toll by the prior day's toll, I arrive at: 11.9%, 9.7%, 7.6%.

Alternatepriorities - I would paraphrase your idea as "markets prefer certainty to reality".  You don't mention what signals shift you (partly?) into cash, and when to buy equities again.  One of the market impacts is job losses and bankruptcies, both of which were greatly softened by the CARES Act (the relief bill).  If your thesis can't predict Congress blunting the market impact, it might predict illnesses correctly but fail to track market performance.

wienerdog - I'm trying to warn other March market timers they might be in trouble.  My own prediction was a bottom Mar 19-20 (-33% off peak), based on testing catching COVID-19 cases and expecting Congress to provide relief.  Both of those came true, and Congress continues to work on relief efforts for the economy.  Although the actual bottom so far was one day after my prediction (Mar 23, a Monday, -35%), I'm waiting to see if I was one day early off the market bottom.

---
I had planned to wait a few days before mentioning here what Alternatepriorities pointed out - the curve seems to be bending.  Since I can't use data from two weeks ago, when testing caught up, I don't have enough data to make a prediction yet - but I'm optimistic about what I see.

When I started my market timing, there was a huge gap between experts and the markets.  President Trump wanted COVID-19 to disappear, and experts talked about millions of people infected.  Now that gap has closed, with everyone agreeing to "flatten the curve", which refers to exponential growth.  Almost every government takes it seriously, and is trying to preserve life, and preserve economies (unemployment does correlate with suicide rates, so it's not entirely callous to lump those together).  I no longer see an opportunity in predicting exponential growth in cases, which is why I'm 100% equities.

[vand]

vand - I thought Italy's testing failed to keep up, in which case the number who passed away might be more reliable than the number of cases.  It still supports your view.  Dividing each day's toll by the prior day's toll, I arrive at: 11.9%, 9.7%, 7.6%.

Deaths are a very lagging indicator, for very obvious reasons. They're like unemployment figures as a proxy for the trend of the economy.

[vand]

The trajectory of the virus is now pretty clear and the end is in sight, even if it a little ways away. The market has priced it in.  Sorry, permabears, but looking at the daily numbers now it's about as uesful as yesterday's newspaper as far as the market cares.

That's some quality confidence, which I would like to share, but alas, I don't believe the current prices on U.S. markets accurately reflect the situation to come. Reasonable minds can disagree. I'll revisit this thread in 3 months.

If we can close above about 2660 on the SP500 then we will have broken the primary downtrend and my confidence will further increase. The chances are pretty good given upside momentum and also that the Nasdaq has already taken out its equivilent level but we shall see what plays out over the rest of the week.

Anecdotally, I work for a firm that produces risk analysis software. On 20th March we got a firmwide memo from the MD basically explaining that the software was falling short because the models underlying it have never seen this level of volatility before without any counter-rally. He also assured us that if our models were failing, then everyone else's were also failing. Fat tails, black swans etc etc.

When everyone is flying blind then you can be sure that there is a very decent level of fear in the market, and I knew that when I saw this, we would be close to at least a short term bottom.

[bthewalls]

when USA production grinds to a relative halt, wont this drinve sp500 lower?

baz

[vand]

when USA production grinds to a relative halt, wont this drinve sp500 lower?

baz

Do you read anything I write?

I repeat: The market is a future discounting mechanism

that means it anticipates the shape of the future, it doesn't react to it in real-time. What do you think the market has been doing for the last 5 weeks except pricing in a big economic shitshow?

[VaCPA]

when USA production grinds to a relative halt, wont this drinve sp500 lower?

baz

Do you read anything I write?

I repeat: The market is a future discounting mechanism

that means it anticipates the shape of the future, it doesn't react to it in real-time. What do you think the market has been doing for the last 5 weeks except pricing in a big economic shitshow?

What you're describing is hindsight. Not some market specific phenomenon. Obviously, the markets move fast and by the time you're sure we've hit a high or low we're already past it. We don't know if the markets are adequately pricing everything in right now, because nobody is quite sure what's going to happen the next few months. I read an article yesterday that the USPS might have to close by June. I don't believe our gov't would let that happen, but it's just an illustration that the economic impacts of this will be a slow burn. I think the economy not reaching new lows over the summer is going to be dependent on the 4th round of stimulus coming to fruition that's already being discussed.

[LuigiNMario]

What happens when the social distancing and economy shutdown measures now in place are lifted and we "go back to normal"?

The virus will start spreading again at an alarming rate, and more shutdowns/measures will again be needed. As long as we don't have a vaccine (which does not seem to be here anytime soon) we are going to have restrictive measures on businesses/people to curb the spread until everyone has gotten it and healed. If cases are only ~150K now in the US, that leaves a lot of people that still need to get the virus and heal before we're through. Epidemiology experts say we are basically fucked for the next few months up to possibly a year (flattening the curve has this effect) as several waves of the virus hit.

These measures are going to have a very significant impact on the economy. It's been barely more than two weeks and the impact on the economy is like nothing we've seen before. Unemployment rates are going way higher than initially projected, and are now projected to go in the 15%-30% range. Business revenue is 0$ for many of them right now (restaurants, bars, anywhere really is closed). Expecting anything less than a very severe recession is unrealistic.

SP500 is overvalued right now - it's only back to 2017 values, and we have no visibility yet on what the impact will be on company earnings/dividends. I'm sure it will be a lot worse than whatever "expectations" are at the moment. I'm not so pretentious as to try market timing, I'll just keep using a nice DCA strategy.

Stay safe

[vand]

when USA production grinds to a relative halt, wont this drinve sp500 lower?

baz

Do you read anything I write?

I repeat: The market is a future discounting mechanism

that means it anticipates the shape of the future, it doesn't react to it in real-time. What do you think the market has been doing for the last 5 weeks except pricing in a big economic shitshow?

What you're describing is hindsight. Not some market specific phenomenon. Obviously, the markets move fast and by the time you're sure we've hit a high or low we're already past it. We don't know if the markets are adequately pricing everything in right now, because nobody is quite sure what's going to happen the next few months. I read an article yesterday that the USPS might have to close by June. I don't believe our gov't would let that happen, but it's just an illustration that the economic impacts of this will be a slow burn. I think the economy not reaching new lows over the summer is going to be dependent on the 4th round of stimulus coming to fruition that's already being discussed.

There is a lot of uncertainty at the moment with a wide range of possible outcomes. When that is the case, investment horizons get flattened out, and investors are not willing to pay as much today for tomorrow's less certain cashflows. This is all entirely logical.

However, as the bulls were often keen to remind us on the way up, the market is not the economy.  The economy may slide in the coming months but that doesn't mean the stock market is going to follow it lock-step. The market has already anticipated a lot of bad data in the short term. Only if that bad data continues into the long term then it will drag the market lower. Of course, I use "short" and "long" term without solid definitions... that is for each market participant to determine for themselves.

[VaCPA]

when USA production grinds to a relative halt, wont this drinve sp500 lower?

baz

Do you read anything I write?

I repeat: The market is a future discounting mechanism

that means it anticipates the shape of the future, it doesn't react to it in real-time. What do you think the market has been doing for the last 5 weeks except pricing in a big economic shitshow?

What you're describing is hindsight. Not some market specific phenomenon. Obviously, the markets move fast and by the time you're sure we've hit a high or low we're already past it. We don't know if the markets are adequately pricing everything in right now, because nobody is quite sure what's going to happen the next few months. I read an article yesterday that the USPS might have to close by June. I don't believe our gov't would let that happen, but it's just an illustration that the economic impacts of this will be a slow burn. I think the economy not reaching new lows over the summer is going to be dependent on the 4th round of stimulus coming to fruition that's already being discussed.

There is a lot of uncertainty at the moment with a wide range of possible outcomes. When that is the case, investment horizons get flattened out, and investors are not willing to pay as much today for tomorrow's less certain cashflows. This is all entirely logical.

However, as the bulls were often keen to remind us on the way up, the market is not the economy.  The economy may slide in the coming months but that doesn't mean the stock market is going to follow it lock-step. The market has already anticipated a lot of bad data in the short term. Only if that bad data continues into the long term then it will drag the market lower. Of course, I use "short" and "long" term without solid definitions... that is for each market participant to determine for themselves.

How do you know exactly what S&P 2600 is baking in, and that it's already accounting for an economic shitshow this summer? You somehow know that S&P 2600 is the appropriate level for the curbstomping the virus is going to give our economy this summer? The market doesn't move lockstep with the economy because the stock market is a game, driven by traders all over the world. I actually think there's a ton of uncertainty still, with the virus and the ensuing impacts on the economy even once it's contained. How that uncertainty manifests itself the rest of the year, I have no idea but I'm also pretty sure nobody else does. Like I said in my previous post, I think what the gov't does will have a substantial impact.

[bthewalls]

when USA production grinds to a relative halt, wont this drinve sp500 lower?

baz

Do you read anything I write?

I repeat: The market is a future discounting mechanism

that means it anticipates the shape of the future, it doesn't react to it in real-time. What do you think the market has been doing for the last 5 weeks except pricing in a big economic shitshow?

Not much tbh...your too hostile so can't be bothered

All the best 😉

[VaCPA]

States are starting to issue the 'stay-at-home' orders. Within the last 2 days MD, VA and DC all did it. It's not a full on lockdown, but it does further hit businesses, forcing even more to close. Businesses are taking an absolute beating right now and it's not ending anytime soon. I think Virginia's proclamation goes into June. I know how this will affect the economy and markets but it seems like we won't really know the true damage for awhile.

[vand]

when USA production grinds to a relative halt, wont this drinve sp500 lower?

baz

Do you read anything I write?

I repeat: The market is a future discounting mechanism

that means it anticipates the shape of the future, it doesn't react to it in real-time. What do you think the market has been doing for the last 5 weeks except pricing in a big economic shitshow?

What you're describing is hindsight. Not some market specific phenomenon. Obviously, the markets move fast and by the time you're sure we've hit a high or low we're already past it. We don't know if the markets are adequately pricing everything in right now, because nobody is quite sure what's going to happen the next few months. I read an article yesterday that the USPS might have to close by June. I don't believe our gov't would let that happen, but it's just an illustration that the economic impacts of this will be a slow burn. I think the economy not reaching new lows over the summer is going to be dependent on the 4th round of stimulus coming to fruition that's already being discussed.

There is a lot of uncertainty at the moment with a wide range of possible outcomes. When that is the case, investment horizons get flattened out, and investors are not willing to pay as much today for tomorrow's less certain cashflows. This is all entirely logical.

However, as the bulls were often keen to remind us on the way up, the market is not the economy.  The economy may slide in the coming months but that doesn't mean the stock market is going to follow it lock-step. The market has already anticipated a lot of bad data in the short term. Only if that bad data continues into the long term then it will drag the market lower. Of course, I use "short" and "long" term without solid definitions... that is for each market participant to determine for themselves.

How do you know exactly what S&P 2600 is baking in, and that it's already accounting for an economic shitshow this summer? You somehow know that S&P 2600 is the appropriate level for the curbstomping the virus is going to give our economy this summer? The market doesn't move lockstep with the economy because the stock market is a game, driven by traders all over the world. I actually think there's a ton of uncertainty still, with the virus and the ensuing impacts on the economy even once it's contained. How that uncertainty manifests itself the rest of the year, I have no idea but I'm also pretty sure nobody else does. Like I said in my previous post, I think what the gov't does will have a substantial impact.

Simple answer is that I don't know, and neither does anyone else.

But my own experiences of the market tell me that when everyone is gnashing their teeth and feeling anxious about their rapidly decreasing net worth as I have sensed on the forum over the last 3 weeks then that is usually a pretty good time to be buying.

Do I detect in the tone of your writing that you're someone with cash on the sides who has missed out on the 20% move since the bottom and hoping, praying that you'll get another bite at the cherry?? Couldn't be, could it?!

[VaCPA]

when USA production grinds to a relative halt, wont this drinve sp500 lower?

baz

Do you read anything I write?

I repeat: The market is a future discounting mechanism

that means it anticipates the shape of the future, it doesn't react to it in real-time. What do you think the market has been doing for the last 5 weeks except pricing in a big economic shitshow?

What you're describing is hindsight. Not some market specific phenomenon. Obviously, the markets move fast and by the time you're sure we've hit a high or low we're already past it. We don't know if the markets are adequately pricing everything in right now, because nobody is quite sure what's going to happen the next few months. I read an article yesterday that the USPS might have to close by June. I don't believe our gov't would let that happen, but it's just an illustration that the economic impacts of this will be a slow burn. I think the economy not reaching new lows over the summer is going to be dependent on the 4th round of stimulus coming to fruition that's already being discussed.

There is a lot of uncertainty at the moment with a wide range of possible outcomes. When that is the case, investment horizons get flattened out, and investors are not willing to pay as much today for tomorrow's less certain cashflows. This is all entirely logical.

However, as the bulls were often keen to remind us on the way up, the market is not the economy.  The economy may slide in the coming months but that doesn't mean the stock market is going to follow it lock-step. The market has already anticipated a lot of bad data in the short term. Only if that bad data continues into the long term then it will drag the market lower. Of course, I use "short" and "long" term without solid definitions... that is for each market participant to determine for themselves.

How do you know exactly what S&P 2600 is baking in, and that it's already accounting for an economic shitshow this summer? You somehow know that S&P 2600 is the appropriate level for the curbstomping the virus is going to give our economy this summer? The market doesn't move lockstep with the economy because the stock market is a game, driven by traders all over the world. I actually think there's a ton of uncertainty still, with the virus and the ensuing impacts on the economy even once it's contained. How that uncertainty manifests itself the rest of the year, I have no idea but I'm also pretty sure nobody else does. Like I said in my previous post, I think what the gov't does will have a substantial impact.

Simple answer is that I don't know, and neither does anyone else.

You don't say?

[vand]

when USA production grinds to a relative halt, wont this drinve sp500 lower?

baz

Do you read anything I write?

I repeat: The market is a future discounting mechanism

that means it anticipates the shape of the future, it doesn't react to it in real-time. What do you think the market has been doing for the last 5 weeks except pricing in a big economic shitshow?

What you're describing is hindsight. Not some market specific phenomenon. Obviously, the markets move fast and by the time you're sure we've hit a high or low we're already past it. We don't know if the markets are adequately pricing everything in right now, because nobody is quite sure what's going to happen the next few months. I read an article yesterday that the USPS might have to close by June. I don't believe our gov't would let that happen, but it's just an illustration that the economic impacts of this will be a slow burn. I think the economy not reaching new lows over the summer is going to be dependent on the 4th round of stimulus coming to fruition that's already being discussed.

There is a lot of uncertainty at the moment with a wide range of possible outcomes. When that is the case, investment horizons get flattened out, and investors are not willing to pay as much today for tomorrow's less certain cashflows. This is all entirely logical.

However, as the bulls were often keen to remind us on the way up, the market is not the economy.  The economy may slide in the coming months but that doesn't mean the stock market is going to follow it lock-step. The market has already anticipated a lot of bad data in the short term. Only if that bad data continues into the long term then it will drag the market lower. Of course, I use "short" and "long" term without solid definitions... that is for each market participant to determine for themselves.

How do you know exactly what S&P 2600 is baking in, and that it's already accounting for an economic shitshow this summer? You somehow know that S&P 2600 is the appropriate level for the curbstomping the virus is going to give our economy this summer? The market doesn't move lockstep with the economy because the stock market is a game, driven by traders all over the world. I actually think there's a ton of uncertainty still, with the virus and the ensuing impacts on the economy even once it's contained. How that uncertainty manifests itself the rest of the year, I have no idea but I'm also pretty sure nobody else does. Like I said in my previous post, I think what the gov't does will have a substantial impact.

Simple answer is that I don't know, and neither does anyone else.

You don't say?

Great. I don't even know what we're arguing about tbh.

You seem to be suggesting that the market requires a GDP print better than -4.567% next quarter to exceed expectations and therefore go up.

I'm saying that numbers matter much less than sentiment, which is (still) very depressed and likely to further improve, thereby pulling stocks up with them.

Fundamentals and sentiment sing from the same songsheet only occassionally.

[VaCPA]

"you seem to be implying market GDP blah blah -4.5% blah" cmon man, I'm not throwing out any detailed predictions and you know it. I believe that's what they call a strawman argument

I don't know if we're actually arguing about anything, but there seems to be chest thumping from some people about the market already cratering and having baked in all the bad stuff coming this year. I'm stating I don't know if that's true. You admitted as much in your last post, so yeah not sure what the back & forth is about.

And to answer one of your accusations, no I'm not sitting on a pile of money I'm waiting to invest and am rooting for the market to fail and thus letting it bias my posts. What I'm doing is already on record in another thread. Nothing, my existing investments and allocations haven't changed. I do have my annual backdoor Roth contribution which I was considering putting in soon with the market sputtering, although I do think I'll wait it out a few months and see what happens. I think there's lots more downside right now than upside.

[Alternatepriorities]

Alternatepriorities - I would paraphrase your idea as "markets prefer certainty to reality".  You don't mention what signals shift you (partly?) into cash, and when to buy equities again.  One of the market impacts is job losses and bankruptcies, both of which were greatly softened by the CARES Act (the relief bill).  If your thesis can't predict Congress blunting the market impact, it might predict illnesses correctly but fail to track market performance.
---
I had planned to wait a few days before mentioning here what Alternatepriorities pointed out - the curve seems to be bending.  Since I can't use data from two weeks ago, when testing caught up, I don't have enough data to make a prediction yet - but I'm optimistic about what I see.

When I started my market timing, there was a huge gap between experts and the markets.  President Trump wanted COVID-19 to disappear, and experts talked about millions of people infected.  Now that gap has closed, with everyone agreeing to "flatten the curve", which refers to exponential growth.  Almost every government takes it seriously, and is trying to preserve life, and preserve economies (unemployment does correlate with suicide rates, so it's not entirely callous to lump those together).  I no longer see an opportunity in predicting exponential growth in cases, which is why I'm 100% equities.

I am also 100% equities, but that hasn't changed in several years. So far my market predictions have been a mixed bag at best with a couple of good purchase making up for several bad ones. The majority of my investments are split 70/30 between the US and international equity indexes. I have a small but growing pile of cash for recent earnings that I could invest now but could also pad our emergency fund...

I was in general overly optimistic about this whole thing. The virus is bad, maybe even a little worse than I thought it would be, but fear that has gone viral and is much worse than I anticipated. It's spreading faster than the virus and doing at least as much damage (BBC reported this morning that at least 24 million less people will escape poverty ($5.5/day) in 2020 because of this).

Knowing I can't predict the fear and when it will reverse makes me hesitant to predict the market, but you've done well at it, so I read with interest.

[hodedofome]

I have it on good authority that the worst of this will be done by Passover.

[bthewalls]

VUSA london down almost 5% on open....that a purchase marker for me...

awful hardship ahead for USA in coming weeks.

[MustacheAndaHalf]

Do most people here believe, like I do, that the U.S. stock market is an "efficient market"?

when USA production grinds to a relative halt, wont this drinve sp500 lower?

If that is already known, no.  If it's new information, yes.

We don't know if the markets are adequately pricing everything in right now, because nobody is quite sure what's going to happen the next few months.

All known information is priced in.  Future events have their probability and impact priced in, which can change as new information arrives.  Once something happens, if it matches predictions, nothing changes.  All of this assumes efficient markets.
By priced in, I mean high speed computers parse  even the obscure news feeds, generate stock orders, and race to be the first high-frequency trader to profit on new information.

[VaCPA]

You're stating the obvious and talking to people like they don't understand how the stock market works. This summer will be an interesting time. The virus is not close to being contained yet, although our country is finally getting it and taking the necessary precautions that hopefully will get us there. And the economy has taken hits that I don't think are even known yet. The market is probably pricing in an outcome somewhere in the middle right? Kind of like when I'm taking a complete guess at how something will happen and I pick in the middle of the extremes.

I've seen people(not sure if it was you or not) claim that there's certainty now and the market had found it's bottom after Trump discussed opening by Easter. Then days later he goes on tv walking that back and projecting lots of deaths. There is no certainty right now and the markets are just trying to figure it out as we go along.

[bthewalls]

Do most people here believe, like I do, that the U.S. stock market is an "efficient market"?

when USA production grinds to a relative halt, wont this drinve sp500 lower?

If that is already known, no.  If it's new information, yes.

We don't know if the markets are adequately pricing everything in right now, because nobody is quite sure what's going to happen the next few months.

All known information is priced in.  Future events have their probability and impact priced in, which can change as new information arrives.  Once something happens, if it matches predictions, nothing changes.  All of this assumes efficient markets.
By priced in, I mean high speed computers parse  even the obscure news feeds, generate stock orders, and race to be the first high-frequency trader to profit on new information.

cool, thanks.

i suppose the only real unknown now is the scale of USA death toll.  240,000?.....I'd suspect more.  what of the idea that the market is going to re-inflate afterwards..... can that be guaranteed with proposed QE?

[Jack0Life]

I've been guessing Dow at 15k but it looks like the market is much less volatile than the past 2 weeks.
Even thought we might be heading into the worst 2-3 weeks economic wise, the market might not react as much.
2nd day in a row market is down, I might move some back equities before today's end.

[Jack0Life]

You're stating the obvious and talking to people like they don't understand how the stock market works. This summer will be an interesting time. The virus is not close to being contained yet, although our country is finally getting it and taking the necessary precautions that hopefully will get us there. And the economy has taken hits that I don't think are even known yet. The market is probably pricing in an outcome somewhere in the middle right? Kind of like when I'm taking a complete guess at how something will happen and I pick in the middle of the extremes.

I've seen people(not sure if it was you or not) claim that there's certainty now and the market had found it's bottom after Trump discussed opening by Easter. Then days later he goes on tv walking that back and projecting lots of deaths. There is no certainty right now and the markets are just trying to figure it out as we go along.

I actually share a lot of your sentiments. I feel like the worst is yet to come in the next 2-4 weeks.
But the market seems to be less volatile(as in the downward spiral like weeks before). We might never see the reaction of a 1500-2000 point drop ever again.
I will probably go back all in way before the Dow 15k I predicted and end my market timing scheme.

[bthewalls]

why haven't Berkshire bought yet?

[Alternatepriorities]

Do we know that they haven't? I was under the impression that they were only required to report that information quarterly?

[bthewalls]

Do we know that they haven't? I was under the impression that they were only required to report that information quarterly?

very good point. I assumed it would be to bit to keep quiet.....

[AdrianC]

Do most people here believe, like I do, that the U.S. stock market is an "efficient market"?

Sure, over the long term.

You don’t think emotion plays a part in short term movements? There’s liquidity needs also.

The market is down about 5% today. Is it pricing in new information? I don’t think so.

[Alternatepriorities]

Do most people here believe, like I do, that the U.S. stock market is an "efficient market"?

Sure, over the long term.

You don’t think emotion plays a part in short term movements? There’s liquidity needs also.

The market is down about 5% today. Is it pricing in new information? I don’t think so.

My guess? Monday it seemed like trump was being more realistic about the whole thing and the numbers weren't as bad as people had priced in. Yesterday and today the numbers got worse breaking the illusion that Monday's news was realistic... That's the new information you asked about.

[vand]

The market pretty decisively failed the test at 2640 yesterday, so the bears remain in control. Accordingly, I'm less optimistic that I was at the start of the week and think that a retest of the bottom could be on the cards in short order. We need to close above about 2620 for the bulls to have something to cling to.

[bthewalls]

what impact do you foresee if 250,000+ people die in USA over next months guys? social upheaval, mass unemployment, social unrest.....

Are we fooling ourselves that this just corrects and bounces back up in a few months?

[PDXTabs]

I don't know what will happen. I would say that the closest we have experienced was the 1918 pandemic. I don't remember lasting social upheaval, mass unemployment, or social unrest in my history class.

[Jack0Life]

what impact do you foresee if 250,000+ people die in USA over next months guys? social upheaval, mass unemployment, social unrest.....

Are we fooling ourselves that this just corrects and bounces back up in a few months?

Sorry but we are not seeing 250K+ death "over next months".
If we reach 200K by the end of the year, I'd still be shocked.

[bthewalls]

what impact do you foresee if 250,000+ people die in USA over next months guys? social upheaval, mass unemployment, social unrest.....

Are we fooling ourselves that this just corrects and bounces back up in a few months?

Sorry but we are not seeing 250K+ death "over next months".
If we reach 200K by the end of the year, I'd still be shocked.

that will be good then, figures quoted ranging from 100k to 240k, over 2mill without mitigation reported.

hopefully it will be lower end.

[MustacheAndaHalf]

Do most people here believe, like I do, that the U.S. stock market is an "efficient market"?

Sure, over the long term.

You don’t think emotion plays a part in short term movements? There’s liquidity needs also.

The market is down about 5% today. Is it pricing in new information? I don’t think so.

Looking at Yahoo Finance data, most of the drop happened when markets were closed.  Wednesday's open was -3.7% lower than Tuesday's close, suggesting not all of the -4.6% drop happened Wednesday.  During market hours, there was only a -1% drop from the opening price.

When I hear about a -5% drop on no news, I want to learn why.  I want to test the thesis - even looking for mistakes in my own ideas.  Predictions are either borne out by data, or shown false.  To me, an untested prediction lacks feedback.

I'm not tracking news and markets closely now that I'm just waiting.  But peeking at the U.S. news section on Google News, there's plenty of bad news - some significant.  There's a chance Washington DC could be paralyzed by COVID-19, some new estimates of unemployment are higher than the last record-breaking numbers, and the leader of the Senate feels a 4th relief bill should be dropped.  President Trump discussed the oil price war with Putin, and that first attempt at diplomacy went nowhere.  Finally, there's an absence of news contradicting the estimates of 100k-200k Americans dying over the course of COVID-19 (plus Fauci saying it will return in the fall), so that may still be sinking in (revising prior, lower estimates as it becomes more accepted).

[VaCPA]

You're stating the obvious and talking to people like they don't understand how the stock market works. This summer will be an interesting time. The virus is not close to being contained yet, although our country is finally getting it and taking the necessary precautions that hopefully will get us there. And the economy has taken hits that I don't think are even known yet. The market is probably pricing in an outcome somewhere in the middle right? Kind of like when I'm taking a complete guess at how something will happen and I pick in the middle of the extremes.

I've seen people(not sure if it was you or not) claim that there's certainty now and the market had found it's bottom after Trump discussed opening by Easter. Then days later he goes on tv walking that back and projecting lots of deaths. There is no certainty right now and the markets are just trying to figure it out as we go along.

I actually share a lot of your sentiments. I feel like the worst is yet to come in the next 2-4 weeks.
But the market seems to be less volatile(as in the downward spiral like weeks before). We might never see the reaction of a 1500-2000 point drop ever again.
I will probably go back all in way before the Dow 15k I predicted and end my market timing scheme.

Yeah, I don't think it's going to 15k but the next month or two will be interesting. I think there's far more downside than upside right now. I think we were primed for a pullback anyways with this unprecedented bull market run and then got hit with this virus and economic shutdown. It's not apocalypse now but it's going to hurt, at least in the short term.

[vand]

what impact do you foresee if 250,000+ people die in USA over next months guys? social upheaval, mass unemployment, social unrest.....

Are we fooling ourselves that this just corrects and bounces back up in a few months?

The problem with this sort of thinking is that not only are you speculating on a future outcome which is unknown, but also on the market's reaction to that scenario, which is doubly unknown.  It's mystic meg stuff.

250k covid-19 deaths sounds terrible, but the reality is also that the natural death rate is about 1%, so >3m people will have naturally died over the course of the year anyway.  Perspective is needed. Covid-19 is not going to be the end of the world, the end of capitalism, or anything approaching it.