Author Topic: Investing in Next Week's News  (Read 22133 times)

MustacheAndaHalf

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Investing in Next Week's News
« on: April 11, 2020, 02:24:04 AM »
Instead of interjecting into various threads, I thought I might collect where I'm at in one place.  That way my thread about an experiment won't have predictions mixed in, and the same with other threads.  I hope to show people ways that data could inform investment theories.  It will be easier for me if people provide a link to the source of data that supports any theories they bring up, so it can fit with the "data driven" theme of the thread.

(EDIT, to add disclaimer, below)

Disclaimer: I'm not trying to convince passive investors to switch, or that I am the source of market timing.  I'm saying I discovered an approach based on data that predicts the market slightly in advance, and I think sharing that approach can improve other people's decisions.
« Last Edit: April 13, 2020, 11:56:34 PM by MustacheAndaHalf »

MustacheAndaHalf

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Re: Data Driven Investing
« Reply #1 on: April 11, 2020, 02:24:57 AM »
Some people might not have seen my scattered posts, so here's a summary to catch people up.  I won't provide data here, but in future posts I'll accompany what I'm saying with links.

During Feb 2020, I predicted number of COVID-19 cases in China.  I just divided today's cases by yesterday's, and estimated growth could slow.  I successfully predicted 10,000 cases several days in advance, and watched the media broadcast it as "breaking news".  It gradually dawned on me that being able to predict an epidemic a few days in advance gives me an advantage in investing, if the rest of the market hasn't caught on.

I didn't evaluate the U.S. situation before March 7-8, so March 9 was my first chance to sell.  My thesis: COVID-19 is serious.  U.S. markets registered it as mild, so I sold ~13% of my stocks that week.  U.S. markets had several days of free fall, hitting -7% and triggering 15 min trading halts.  Like in China, I was predicting 10,000 US cases and keeping 13% of my portfolio outside the stock market.  At this point, I was more pessimistic than the market, and less than the experts - a great position to be in.

March 18, I listened to the same briefing everyone else heard, but I also checked the data.  Two weeks before, U.S. testing had been embarrassingly inadequate.  One week before, the NY Times wrote a story on it.  News wasn't keeping up: the U.S. increased testing at a rate of 8x to 10x a week, which is faster than the virus spreads.  My thesis was testing drives panic and uncertainty out of the market, so I called a bottom on March 19-20.  I pushed my stocks from around 60% to 100% very close to the market bottom (-33% vs -35%), with some purchases being early or late.

I had a new idea over that weekend: when people stop panicking, prices will start going up.  There was a risk some companies would go bankrupt, but Congress not acting in an election year seemed far fetched.  So I took about 1/4th of my index funds, sold them, and starting buying individual stocks in various industries.  I prioritized diversification, then apparent financial strength, and finally raw greed over their recovery prospects. I had to wait for T+2 settlement, and bought heavily on March 24-25.

While COVID-19 growth was slowing, the numbers were still going up.  I respected Dr Fauci's decision to warn of 100k-200k possible deaths, but the purpose of warnings from experts is to motivate people to avoid the tragic situation.  Seeing COVID-19 growth slow, I applied for a margin account.  On April 7, I bought stocks on margin, leaving a negative cash balance representing the loan amount.

BobTheBuilder

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Re: Data Driven Investing
« Reply #2 on: April 11, 2020, 07:33:24 AM »
Very respectable chain of thoughts. For the same reasons, I am too rolling into a portfolio of 15 predetermined stocks in tech and health, on basis of a 10year fixed loan I took at 2.5%.
My current positions are

Samsung, TSMC, Roche, Philips, Bayer, Tesla. Equal weight.
They where 70%, 23%, 55%, 48%, 70% and 48% below their discounted cash flows at the time of buying. I know what these companies do, and I am in for long term plays.

I will add 6 more in May, and 3 more in June and post if you care to know

The portfolio will contain 15% Gold for rebalancing and diversification.

Loan will be paid regularly, and bonusses and inflation will do the rest.

Once I am fully invested and volatility is back to normal, I will hedge that with far OTM puts.



MustacheAndaHalf

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Re: Data Driven Investing
« Reply #3 on: April 11, 2020, 10:12:10 AM »
Here's an example of what I typed from memory, versus my original source of data.  What I recall:

During Feb 2020, I predicted number of COVID-19 cases in China.  I just divided today's cases by yesterday's, and estimated growth could slow.  I successfully predicted 10,000 cases several days in advance, and watched the media broadcast it as "breaking news".  It gradually dawned on me that being able to predict an epidemic a few days in advance gives me an advantage in investing, if the rest of the market hasn't caught on.

And links to WHO situational reports from Jan 24 - Jan 27 (not Feb, as I thought):
China @ 830  https://www.who.int/docs/default-source/coronaviruse/situation-reports/20200124-sitrep-4-2019-ncov.pdf
China @ 1297  https://www.who.int/docs/default-source/coronaviruse/situation-reports/20200125-sitrep-5-2019-ncov.pdf
China @ 1985  https://www.who.int/docs/default-source/coronaviruse/situation-reports/20200126-sitrep-6-2019--ncov.pdf
China @ 2761  https://www.who.int/docs/default-source/coronaviruse/situation-reports/20200127-sitrep-7-2019--ncov.pdf

At 3000 cases I began prediction (or rather, 2761 as it says above).  I took the last several days, and divided each day by the prior, giving me the rate of spread (assuming all cases can spread to others):
1297 / 830 = 1.56
1985 / 1297 = 1.53
2761 / 1985 = 1.39

It appears history changes - those aren't the numbers I recall, so I went back to my original Jan 27 post:
"The spread of the virus is alarming: 1400... 2000... 3000.  That's +50% per day, and it's kept up that pace for awhile ... If you take 3,000 cases now and extrapolate +50% over the next few days: 4,500.. 6700.. 10,000. It couldpass 10,000 cases by the end of the week, which I'm guessing will cause more panic."

And 4 days later, on Jan 31:
"Since we're at ~9700 cases, and the market has dropped, I did half my rebalancing today."
https://www.who.int/docs/default-source/coronaviruse/situation-reports/20200131-sitrep-11-ncov.pdf

I don't know why WHO data doesn't match what I quoted - maybe I rounded 1320 (global total) to 1400?

That was my first experience with predicting.  I delayed rebalancing because I predicted stocks would drop 4 days later, and when they did, I rebalanced my portfolio.  At that point, the U.S. had just 6 cases.

MustacheAndaHalf

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Re: Data Driven Investing
« Reply #4 on: April 12, 2020, 09:56:13 AM »
Last weekend I noticed total cases from Saturday to Sunday showed a decline in growth from 12.7% to 8.5%.  In my experience, the media doesn't notice declines in growth, but will take notice when the raw numbers decline - which they also did.  Growth declining by 1/3rd also shows up in the raw numbers, which the media commented on.

There was diplomacy on the oil price war, which may have been resolved.  And President Trump planned a special press conference for Thursday, which hinted at a 4th relief package.  Either of those events coming true would lift markets.  Putting together fewer COVID-19 cases per day, and possibly positive events, I predicted a good week ahead.

I was already 100% stocks, but had opened a margin account.  So on Monday I went up to 120-125% stocks with a margin loan.  Neither of the positive events transpired Thursday, but "bending the curve" is working, and New York's peak demand may be better than the worst cases.

https://covidtracking.com/data/us-daily
With that sense of optimism, I compared China and U.S. data by hand.... and my optimism took a hit.  The U.S. looks like China's data from 2 months ago, suggesting 2 more months of lock down.  Has the market really priced in months of lock down and then time to recover while still afraid of COVID-19?

https://finance.yahoo.com/quote/VTI/performance?p=VTI
Yahoo Finance shows VTI (total stock market) has a YTD performance of -14.5%, which is not bad for a country where every state has a lock down order, followed by an uncertain opening of the economy.  I now felt markets could be wrong, but I had to check the data much more carefully.

https://github.com/CSSEGISandData/COVID-19/tree/master/csse_covid_19_data/csse_covid_19_time_series
John Hopkins provides time series data for every country, including China, with raw csv files.  I downloaded their data, uploaded it into a spreadsheet, and added up the totals for China over time.  I divided the total number of cases by the prior day's total in my private spreadsheet.  Here's an interesting section:
15.75%   11.47%   11.52%   7.93%   8.19%   6.34%   4.80%
China spent 2 days near 11.5% growth, 2 days near 8%, and a couple days in 5-6% range.

I went back to the us-daily data, but also dumped that into a spreadsheet instead of just doing it by hand.  I took each day's total, and again divided by the previous day (just like I did for the China COVID-19 data).  Here's a series from that data:
15.61%   14.69%   14.79%   13.30%   13.04%   13.18%   12.18%
8.40%   8.58%   8.36%   7.65%   8.03%   7.46%

Where China spent a couple days at both 11.5% and 8%, it looks like the U.S. spends 6 days or so at those same points.  It looks like U.S. cases are falling twice or three times as slowly as China's.  Instead of China's 2 month lock down, I'd have to guess the U.S. needs to lock down 3+ more months (sorry!).  That, in turn, suggests the 2020 Q3 impact is more severe than people think.  I'm assuming this trend holds for weeks or months, rather than growth collapsing quickly.

I predict a bad week ahead.  I predict some time this week, President Trump will extend the lock down by at least 2 more weeks.  If he doesn't, governors will start calling to extend the lock downs, and may take it upon themselves.  I expect most people will view this badly, and spoil their optimism, and cause markets to drop.

OPEC+ almost agreed to a small production cut, and the market didn't like the result.  And even that has been called into question by Mexico refusing to sign.  If they agreed to it, it's not enough, and they don't even have agreement.  It looks like Senate Leader McConnell pushed a bill he knew would fail, just to blame House Speaker Pelosi.  That delays a 4th relief package, and is why President Trump had nothing special to announce this past Thursday.

I almost forgot, I'm also disappointed with U.S. testing.  About 25% of people tested get a positive result, which is too high.  Testing should be more than double the current levels, instead of hovering at 150k tests/day for the past week.  It's actually growing very slightly slower than the virus, instead of the exponential growth when it was focused on by Dr Brix (lead of the White House task force).  Right now, contact tracing is not possible - I've heard anecdotal news stories of people being declined tests.  It all fits, and suggests not taking testing as seriously as 2 weeks ago.

Based on the bad news for this week, and probably weeks ahead, I plan to sell stocks and pay off my 20-25% margin loan.  I will probably drop somewhere below 100% stocks, but haven't decided how far.  If I'm wrong, can the market really recover +17% this month based on current conditions?
(YTD -14.5%.  Dropping from 100 to 85.5 is a -14.5% drop, going from 85.5 to 100 is a +17% gain).
« Last Edit: April 12, 2020, 10:12:47 AM by MustacheAndaHalf »

MDM

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Re: Data Driven Investing
« Reply #5 on: April 12, 2020, 10:10:53 AM »
Taking action on comparisons to anything China reported assumes that China's reported numbers match reality.  That seems unlikely.

StashingAway

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Re: Data Driven Investing
« Reply #6 on: April 12, 2020, 10:34:59 AM »
Sounds complicated. I built a hose stand out of scrap lumbar in my garage and am quite satisfied with the sunshine today while my index funds stayed where they are! It's not going to win any windfalls, but I'm OK with that.

waltworks

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Re: Data Driven Investing
« Reply #7 on: April 12, 2020, 10:52:34 AM »
This is just an efficient markets discussion, which has happened here approximately a trillion times.

For what it's worth, I'll just keep plugging in money and not spend any time or effort worrying about it, and go for a mountain bike ride instead.

-W

MustacheAndaHalf

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Re: Data Driven Investing
« Reply #8 on: April 12, 2020, 11:06:17 AM »
StashingAway - Okay, but that doesn't really add anything.

waltworks - I'm predicting President Trump will extend the lock down this week, and that over coming weeks the lock down will last longer than expected.  I claim markets have not priced it in, and so markets have not efficiently priced in this information.

MDM -

Agreed, China's data probably has systemic under counts - experts at The Lancet thought so, too.  But to impact my data, that bias needs to not be uniform.  If they only counted half the cases, the growth in raw numbers and biased numbers will be the same.  And the data I showed for China was in mid-Feb, when China still had 2 months of lock down left.  Why would China bias data in a non-systemic way, only to remain on lock down another 2 months?

I also believe experts don't have much choice - China has emerged from lock down, while other countries haven't.  If they ignore China's data, and lift the lock down much earlier, they better be very confident it won't trigger outbreaks.  At a stubborn +8% growth rate, that seems unlikely.  Both China's data and the U.S. situation point to a lock down continuing through mid-May.

Note a bias of mine: I'd like to move cash around, which can't be done until my cash balance is no longer negative - when I pay off the margin loan.  But paying off the margin loan requires selling stocks, which means I miss out on some or all of this week's gains (if any).  I think that's my stronger motivation, driven by a data comparison between U.S. and China growth rates and lock down timing.
« Last Edit: April 12, 2020, 11:14:08 AM by MustacheAndaHalf »

MDM

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Re: Data Driven Investing
« Reply #9 on: April 12, 2020, 11:22:54 AM »
Why would China bias data in a non-systemic way, only to remain on lock down another 2 months?
One can speculate on many reasons.  It's difficult for me to imagine suppressing the initial reports as China did, so there could be other actions equally difficult to imagine but occurring nonetheless.

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Re: Data Driven Investing
« Reply #10 on: April 12, 2020, 11:34:23 AM »
StashingAway - Okay, but that doesn't really add anything.

waltworks - I'm predicting President Trump will extend the lock down this week, and that over coming weeks the lock down will last longer than expected.  I claim markets have not priced it in, and so markets have not efficiently priced in this information.

MDM -

Agreed, China's data probably has systemic under counts - experts at The Lancet thought so, too.  But to impact my data, that bias needs to not be uniform.  If they only counted half the cases, the growth in raw numbers and biased numbers will be the same.  And the data I showed for China was in mid-Feb, when China still had 2 months of lock down left.  Why would China bias data in a non-systemic way, only to remain on lock down another 2 months?

I also believe experts don't have much choice - China has emerged from lock down, while other countries haven't.  If they ignore China's data, and lift the lock down much earlier, they better be very confident it won't trigger outbreaks.  At a stubborn +8% growth rate, that seems unlikely.  Both China's data and the U.S. situation point to a lock down continuing through mid-May.

Note a bias of mine: I'd like to move cash around, which can't be done until my cash balance is no longer negative - when I pay off the margin loan.  But paying off the margin loan requires selling stocks, which means I miss out on some or all of this week's gains (if any).  I think that's my stronger motivation, driven by a data comparison between U.S. and China growth rates and lock down timing.

We don't have a national lockdown, so I'm not sure what this even means.   Virginia has been locked down until June 10th (yes, June, though they announcement did say it could change) for a couple weeks now.  Other states have only very recently locked down. 

I think Trump has quite intentionally avoided a national lockdown order and will continue to do so, leaving it to the States. 

waltworks

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Re: Exponential Investing
« Reply #11 on: April 12, 2020, 11:49:35 AM »
I mean, if you really sit down and think about this, you're just betting that your understanding of the world/C19 situation is better than everyone else's. I personally think the situation has been, is, and continues to be very very unpredictable, so I'm not even going to try. We could have a miracle cure tomorrow, we could have a mutation that turns it into Captain Trips, we could muddle along for a while until there's a new normal.

If you have a long track record of being right about pandemics or the direction of the stock market or whatever is relevant here, awesome. You should be filthy rich and/or running the world in short order. If you don't have such a track record, maybe you should stop reading the news and go for a run.

-W

MustacheAndaHalf

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Re: Investing in Next Week's News
« Reply #12 on: April 12, 2020, 11:53:37 AM »
MDM - China tried to cover up the initial outbreak.  Reporting tens of thousands of Chinese citizens being infected is not part of a cover up.

Villanelle - "About 95% of Americans have been ordered to stay at home"
https://www.businessinsider.com/us-map-stay-at-home-orders-lockdowns-2020-3

"Donald Trump prepares task force to lift coronavirus lockdown but health experts warn it is too soon"
https://www.telegraph.co.uk/news/2020/04/11/donald-trump-prepares-task-force-lift-coronavirus-lockdown-health/


I've renamed my first post "Investing in Next Week's News" since that seems like a more appropriate title.  But I still plan to go over my past predictions and the data behind them.

MustacheAndaHalf

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Re: Exponential Investing
« Reply #13 on: April 12, 2020, 12:06:44 PM »
I mean, if you really sit down and think about this, you're just betting that your understanding of the world/C19 situation is better than everyone else's. I personally think the situation has been, is, and continues to be very very unpredictable, so I'm not even going to try. We could have a miracle cure tomorrow, we could have a mutation that turns it into Captain Trips, we could muddle along for a while until there's a new normal.

If you have a long track record of being right about pandemics or the direction of the stock market or whatever is relevant here, awesome. You should be filthy rich and/or running the world in short order. If you don't have such a track record, maybe you should stop reading the news and go for a run.

-W
https://www.youtube.com/watch?reload=9&v=E3URhJx0NSw
"Michael Osterholm is an internationally recognized expert in infectious disease epidemiology."
First, we will not have a cure tomorrow.  If I recall the above YouTube interview correctly, Mr Osterholm said he could devise a vaccine tomorrow - but have no idea if it's the right dose, or if it's safe.  Drugs must be assumed to be toxic and ineffective until the process of testing them shows they can be used as a vaccine.

Yes, I'm betting my understanding of this outbreak is better than everyone else's.  That's correct.

The outbreak began in China in Dec 2019, and I've been making correct predictions since Jan 2020.  You can track down posts I summarized above.  I predicted 10,000 cases in China, and delayed rebalancing my portfolio to coincide with the drop.  I predicted the U.S. situation would be more than mild, while U.S. markets dropped -8% then gained +4% Mar 9-10.  On March 19-20 I predicted panic would ease, calling the bottom (-33%) a day early (-35%).  Just recently, I predicted the drop in growth rates would move markets upwards, and went in on margin.

That's why when you tell me not to read the news, I think you're missing the point: I've been predicting the news.  Even (especially) if I'm about to be wrong, paying off my margin loan is probably the right choice.
« Last Edit: April 12, 2020, 12:08:17 PM by MustacheAndaHalf »

BECABECA

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Re: Investing in Next Week's News
« Reply #14 on: April 12, 2020, 12:07:58 PM »
I expect the market will drop late next week when we have a new wave of extra covid cases that result from the in person Easter church services that the administration seems to be doing everything to encourage. The incubation time averages 5 days or so, so selling Wednesday should get you out in time for the ensuing drop.

I havenít taken any action outside of my investment policy statement, but I have been watching and predicting and testing my hypotheses. I might play around with one of my retirement accounts this week, once Iím past my wash sale date for some tax loss harvesting. I havenít made any decisions yet though. But if I do decide to play, I will definitely have reentry criteria written down before I pull the trigger to sell.

waltworks

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Re: Investing in Next Week's News
« Reply #15 on: April 12, 2020, 12:14:32 PM »
As I said, if you can consistently do this, you will be filthy rich really fast. Let us know in a couple years.

-W

MustacheAndaHalf

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Re: Investing in Next Week's News
« Reply #16 on: April 12, 2020, 12:16:15 PM »
waltworks - Okay, does that contribute to the thread somehow?

I expect the market will drop late next week when we have a new wave of extra covid cases that result from the in person Easter church services that the administration seems to be doing everything to encourage.
That's much more interesting: predictions can be examined in the light of COVID-19 data.  Do areas with concentrations of very religious people show an uptick in new COVID-19 cases?

But you'd also want to see if it matters to markets.  How would increased cases in certain states impact markets?  Right now the U.S. has over a half million cases of COVID-19, and you'd have to ask if those infected at Easter services would be significant by comparison - or how that behavior impacts the length of lock downs near them, or nationwide.

waltworks

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Re: Investing in Next Week's News
« Reply #17 on: April 12, 2020, 12:17:32 PM »
waltworks - Okay, does that contribute to the thread somehow?

Sure, isn't the whole point here to publicly document that you can beat the wider market? If that's the case, nobody here is going to care if you do it over a few weeks. Loads of people do that through dumb luck.

If you can do it for a few years, and get filthy rich, that's impressive and interesting.

-W

MDM

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Re: Investing in Next Week's News
« Reply #18 on: April 12, 2020, 12:36:00 PM »
MDM - China tried to cover up the initial outbreak.  Reporting tens of thousands of Chinese citizens being infected is not part of a cover up.
It is if hundreds of thousands (or more) have been infected (and the Chinese Communist Party knows this or deliberately avoids knowing it).  I don't know that they are, you don't know that they aren't, so one may speculate based on whatever one does know.

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Re: Investing in Next Week's News
« Reply #19 on: April 12, 2020, 06:32:29 PM »
MDM - China tried to cover up the initial outbreak.  Reporting tens of thousands of Chinese citizens being infected is not part of a cover up.

Villanelle - "About 95% of Americans have been ordered to stay at home"
https://www.businessinsider.com/us-map-stay-at-home-orders-lockdowns-2020-3

"Donald Trump prepares task force to lift coronavirus lockdown but health experts warn it is too soon"
https://www.telegraph.co.uk/news/2020/04/11/donald-trump-prepares-task-force-lift-coronavirus-lockdown-health/


I've renamed my first post "Investing in Next Week's News" since that seems like a more appropriate title.  But I still plan to go over my past predictions and the data behind them.

Yes, the are on lockdown, but not from Trump.  From their local governments.  Trump has not issued a lockdown order.  So I can't see why he'd be likely to start now (and even if he did, it wouldn't be an extension of a previous order.)

MustacheAndaHalf

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Re: Investing in Next Week's News
« Reply #20 on: April 12, 2020, 08:52:50 PM »
Sure, isn't the whole point here to publicly document that you can beat the wider market? If that's the case, nobody here is going to care if you do it over a few weeks. Loads of people do that through dumb luck.

If you can do it for a few years, and get filthy rich, that's impressive and interesting.
In my view, I got lucky and found an interesting method.  And I'm sharing that data-driven approach.  But I don't plan to make it about my inherent abilities - just the approach I'm using that others can examine.  Meaning, I won't be sharing my before/after wealth or even say I can continue this for years.

I don't expect to offer much to people who believe in efficient markets.  Efficient markets recognize there are anomalies that get corrected by the market - like small caps or value stocks doing better.  I discovered that markets were initially not pricing in exponential growth.  But I don't claim to have an inherent ability to find other anomalies - I did get lucky and happen to be over-prepared when this one mattered.

I believe people should invest beyond the stock market's time horizon.  If you look at historical data, over the years markets go up.  So when markets drop -10%, that doesn't reflect a 5 or 10 year time frame.  You could time the market and buy the dip - because your horizon is farther out than the markets.

The method of taking exponential growth and predicting the next number a few days was valuable, and might still be valuable.  When markets went -7% one day and +4% the next, that showed a time horizon of less than a day.  I looked at data showing 10,000 cases in the U.S., while markets priced in -4%.  The same data, and same approach, predicted 10,000 cases in China.  Italy and South Korea were opposites in their preparation and response - Italy considered to have a worse than average response, while Korea's was better than average.  Both countries went from 1k cases to 5k cases in 7 days (according to WHO data).  So based on data I had, the U.S. would follow the same path, which is not reflected in a -4% drop.

I sometimes forgot to say things like "based on the data", but that's my meaning.  My audience is people who either think I'm wrong about the data, or calculated wrong, or have their own market timing that could benefit from using data.  I'd like to see people using data to support or discredit market timing ideas, including the approach I'm using.  I got lucky and noticed exponential growth a few days out is better data than markets were using.

MustacheAndaHalf

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Re: Investing in Next Week's News
« Reply #21 on: April 12, 2020, 09:02:10 PM »
MDM - China tried to cover up the initial outbreak.  Reporting tens of thousands of Chinese citizens being infected is not part of a cover up.
It is if hundreds of thousands (or more) have been infected (and the Chinese Communist Party knows this or deliberately avoids knowing it).  I don't know that they are, you don't know that they aren't, so one may speculate based on whatever one does know.
You're right - there could more cover ups after the initial cover up.

(EDIT from here)
A key question: what data will markets use?

For pandemic lock downs, I think China is the only country to have lifted their lock down.  So I'm using the only place where a lock down has ended to predict what happens in the U.S.  As long as experts and markets are relying on the same data, analyzing that data is valuable.

If countries other than China lift their lock down, I need to take a look.
« Last Edit: April 12, 2020, 10:46:58 PM by MustacheAndaHalf »

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Re: Data Driven Investing
« Reply #22 on: April 12, 2020, 10:46:19 PM »
I almost forgot, I'm also disappointed with U.S. testing.  About 25% of people tested get a positive result, which is too high.  Testing should be more than double the current levels, instead of hovering at 150k tests/day for the past week.  It's actually growing very slightly slower than the virus, instead of the exponential growth when it was focused on by Dr Brix (lead of the White House task force).  Right now, contact tracing is not possible - I've heard anecdotal news stories of people being declined tests.  It all fits, and suggests not taking testing as seriously as 2 weeks ago.
Trump said as much. Itís not smart. We need to test, test, test and trace. Weíll get there, some time after we see that the virus doesnít magically disappear in warmer weather.

Quote
Based on the bad news for this week, and probably weeks ahead, I plan to sell stocks and pay off my 20-25% margin loan.  I will probably drop somewhere below 100% stocks, but haven't decided how far.  If I'm wrong, can the market really recover +17% this month based on current conditions?
Thatís a good move. Just the thought of margin makes me shudder. You did well. Time to de-risk.

moneytaichi

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Re: Investing in Next Week's News
« Reply #23 on: April 12, 2020, 10:57:57 PM »
What enabled China is existing from a lock-down is their hyper-focus on tracking coronavirus on every level: from the national level down to the neighborhood and the gate men who are checking temperatures of every person who come in. People are mandated to wear masks. In comparison, many people in US go around now as if they were on extended vacations: no masks, no social distancing... We also don't trace and isolate contacts from Coronavirus patients.

In China, a much higher percentage of people in big cities are using delivery services because it's their life style, whereas US delivery services are jokes now - my grocery order was postponed for 5 days from its initial promised date, and I live in a mid-size city. No new slots available on Instancart for a long time. This would push people who have to go grocery shopping physically. When I occasionally brave into grocery stores, I always run into people who still think the virus is a fake news. Urgh!

My prediction is that US will unfortunately continue struggling for controlling coronavirus rates unless all the levels co-operate and share the same understanding that this virus is dangerous.

MustacheAndaHalf

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Re: Investing in Next Week's News
« Reply #24 on: April 12, 2020, 11:10:56 PM »
moneytaichi - I hope the people calling it fake news are fewer and fewer.... some people probably need to screw up badly to prevent others from doing so.

https://edition.cnn.com/2020/03/23/health/arizona-coronavirus-chloroquine-death/index.html
Maybe ask if they heard about Trump touting a drug to help with COVID-19, and then mention an Arizona man took that advice and ingested that drug.  He died.


AdrianC - Thanks.  I want to emphasize the data's role in decision making, but I think saying what action I take helps show what I mean.

There's some new drug tests that take under an hour - maybe companies are switching to those, and not investing in older tests.  Existing testing (150k/day) might be enough to do contact tracing once COVID-19 cases decline far enough - but like you mention, that seems a ways off.

StashingAway

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Re: Investing in Next Week's News
« Reply #25 on: April 13, 2020, 06:44:46 AM »

https://edition.cnn.com/2020/03/23/health/arizona-coronavirus-chloroquine-death/index.html
Maybe ask if they heard about Trump touting a drug to help with COVID-19, and then mention an Arizona man took that advice and ingested that drug.  He died.


Interestingly, THIS is also a form of "fake news", in that it doesn't really relay the whole story. The couple in Arizona took fish-tank cleaner, labeled as such, which happens to be a different derivative of the chemical. It was literally packaged tank cleaner. That's not really different from me taking my dog's tick medicine to prevent fleas from an intellectual standpoint. Trump never said to self-administer and certainly didn't indicate that people might already have the drug in their house, ready to go. There is some preliminary evidence that chloroquine might aid in treating those with coronivirous. This is also true (not fake). There is plenty to be pissed about Trump without needing to rely on this kind of news.

This highlights the insanity of the current reality show that is the news. Everyone is sitting around pointing fingers and playing political games and that's how we turned the office of President of the United States into a popularity contest in the first place. And how stable politicians don't stand a chance against eccentric personalities. Politics should be boring and tedious, not some battle of red vs blue at all costs, ends-justify-the-means "slamming" of each other.

/rant

MustacheAndaHalf

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Re: Investing in Next Week's News
« Reply #26 on: April 13, 2020, 07:32:47 AM »

https://edition.cnn.com/2020/03/23/health/arizona-coronavirus-chloroquine-death/index.html
Maybe ask if they heard about Trump touting a drug to help with COVID-19, and then mention an Arizona man took that advice and ingested that drug.  He died.


Interestingly, THIS is also a form of "fake news", in that it doesn't really relay the whole story. The couple in Arizona took fish-tank cleaner, labeled as such, which happens to be a different derivative of the chemical. It was literally packaged tank cleaner. That's not really different from me taking my dog's tick medicine to prevent fleas from an intellectual standpoint. Trump never said to self-administer and certainly didn't indicate that people might already have the drug in their house, ready to go. There is some preliminary evidence that chloroquine might aid in treating those with coronivirous. This is also true (not fake). There is plenty to be pissed about Trump without needing to rely on this kind of news.

This highlights the insanity of the current reality show that is the news. Everyone is sitting around pointing fingers and playing political games and that's how we turned the office of President of the United States into a popularity contest in the first place. And how stable politicians don't stand a chance against eccentric personalities. Politics should be boring and tedious, not some battle of red vs blue at all costs, ends-justify-the-means "slamming" of each other.

/rant

If your point is people shouldn't strip away context, take a look at how you quoted me.  You stripped away key context showing my intent, and then assumed it involved "plenty to be pissed about Trump".  Here's the original, with the part you stripped away added back in:

moneytaichi - I hope the people calling it fake news are fewer and fewer.... some people probably need to screw up badly to prevent others from doing so.

https://edition.cnn.com/2020/03/23/health/arizona-coronavirus-chloroquine-death/index.html
Maybe ask if they heard about Trump touting a drug to help with COVID-19, and then mention an Arizona man took that advice and ingested that drug.  He died.
The context of my quote wasn't "plenty to be pissed about Trump", which I never said.  it was instead "some people probably need to screw up badly to prevent others from doing so."

StashingAway

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Re: Investing in Next Week's News
« Reply #27 on: April 13, 2020, 08:02:40 AM »

https://edition.cnn.com/2020/03/23/health/arizona-coronavirus-chloroquine-death/index.html
Maybe ask if they heard about Trump touting a drug to help with COVID-19, and then mention an Arizona man took that advice and ingested that drug.  He died.


Interestingly, THIS is also a form of "fake news", in that it doesn't really relay the whole story. The couple in Arizona took fish-tank cleaner, labeled as such, which happens to be a different derivative of the chemical. It was literally packaged tank cleaner. That's not really different from me taking my dog's tick medicine to prevent fleas from an intellectual standpoint. Trump never said to self-administer and certainly didn't indicate that people might already have the drug in their house, ready to go. There is some preliminary evidence that chloroquine might aid in treating those with coronivirous. This is also true (not fake). There is plenty to be pissed about Trump without needing to rely on this kind of news.

This highlights the insanity of the current reality show that is the news. Everyone is sitting around pointing fingers and playing political games and that's how we turned the office of President of the United States into a popularity contest in the first place. And how stable politicians don't stand a chance against eccentric personalities. Politics should be boring and tedious, not some battle of red vs blue at all costs, ends-justify-the-means "slamming" of each other.

/rant

If your point is people shouldn't strip away context, take a look at how you quoted me.  You stripped away key context showing my intent, and then assumed it involved "plenty to be pissed about Trump".  Here's the original, with the part you stripped away added back in:

moneytaichi - I hope the people calling it fake news are fewer and fewer.... some people probably need to screw up badly to prevent others from doing so.

https://edition.cnn.com/2020/03/23/health/arizona-coronavirus-chloroquine-death/index.html
Maybe ask if they heard about Trump touting a drug to help with COVID-19, and then mention an Arizona man took that advice and ingested that drug.  He died.
The context of my quote wasn't "plenty to be pissed about Trump", which I never said.  it was instead "some people probably need to screw up badly to prevent others from doing so."

I indeed failed at my own point

Buffaloski Boris

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Re: Investing in Next Week's News
« Reply #28 on: April 13, 2020, 08:10:34 AM »
What enabled China is existing from a lock-down is their hyper-focus on tracking coronavirus on every level: from the national level down to the neighborhood and the gate men who are checking temperatures of every person who come in. People are mandated to wear masks. In comparison, many people in US go around now as if they were on extended vacations: no masks, no social distancing... We also don't trace and isolate contacts from Coronavirus patients.

In China, a much higher percentage of people in big cities are using delivery services because it's their life style, whereas US delivery services are jokes now - my grocery order was postponed for 5 days from its initial promised date, and I live in a mid-size city. No new slots available on Instancart for a long time. This would push people who have to go grocery shopping physically. When I occasionally brave into grocery stores, I always run into people who still think the virus is a fake news. Urgh!

My prediction is that US will unfortunately continue struggling for controlling coronavirus rates unless all the levels co-operate and share the same understanding that this virus is dangerous.

My city currently rates an ďFď on social distancing. Not many cases. Yet. The problem with this crud is that once you notice people coughing and keeling over around you, itís already well established. Two of the pockets of infection in my region are both relatively thinly populated counties, mostly rural.

That NYC is seeing fewer infections and deaths is very good news. To extrapolate that to say that the threat is largely gone is folly. My fear, which I think is going to be realized to some extent, is that we get both economic destruction and widespread COVID.

MustacheAndaHalf

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Re: Investing in Next Week's News
« Reply #29 on: April 13, 2020, 11:21:39 AM »
Disclaimer: I'm not trying to convince passive investors to switch, or that I am the source of market timing.  I'm saying I discovered an approach based on data that predicts the market slightly in advance, and I think sharing that approach can improve other people's decisions.

Earlier in this thread, I posted China Feb 5-11 data:  11.5% (2d), 8%(2d), 5.5%(2d)
And also U.S. data from Mar 29 - Apr 10:  15% (3d), 13% (4d), 8% (6d)

If the U.S. "stay at home" is working, why are there 30k new cases per day?  It may be working, but more slowly - as shown in the data.  If tomorrow the U.S. drops to 5.5% growth followed a week later by 3% growth in new cases, that's still a million cases near the start of May.  Will it make sense to lift a lock down with 10k or 20k new cases per day?

Last week I optimistically bought stock on margin, going 120% equities.  Hours ago I sold and paid off that margin loan.  Then I kept selling, down to 85% equities.  I think the weeks are about to drag on, and drag on investments specifically.

BECABECA

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Re: Investing in Next Week's News
« Reply #30 on: April 13, 2020, 11:50:07 AM »
waltworks - Okay, does that contribute to the thread somehow?

I expect the market will drop late next week when we have a new wave of extra covid cases that result from the in person Easter church services that the administration seems to be doing everything to encourage.
That's much more interesting: predictions can be examined in the light of COVID-19 data.  Do areas with concentrations of very religious people show an uptick in new COVID-19 cases?

But you'd also want to see if it matters to markets.  How would increased cases in certain states impact markets?  Right now the U.S. has over a half million cases of COVID-19, and you'd have to ask if those infected at Easter services would be significant by comparison - or how that behavior impacts the length of lock downs near them, or nationwide.

An acceleration in certain states would negate the deceleration we might be starting to see in NY. At the moment, NYís cases are having an outsized effect on the publicís perception of how the pandemic is going. The administration and the media are grasping for any good news to report, so when NY has less new cases than the day before (as it did the last few days) thatís reported widely, and so itís much more common knowledge (and so itís priced into the market) than acceleration in states with much smaller absolute covid numbers. Iíve been watching each stateís daily changes from this page.

In the next week, I expect to see the biggest acceleration in the day-over-previous-day covid rates of these states that have exempted churches from any restrictions: Florida, New Mexico, West Virginia. I also expect to see an acceleration in Kansas, since they exempted churches explicitly on Easter.

I think youíre spot on about how the market is responding to the absolute covid numbers and not looking at the relative rates of increase. So itís plausible that the Easter effect could go unnoticed by the market until it causes big enough absolute numbers that it gets onto the national radar. That point in time could be predicted once we see acceleration in Florida, and I think thatíll be the place people notice, since itís got much more absolute cases than the other states that exempted churches.
« Last Edit: April 13, 2020, 11:59:32 AM by BECABECA »

BicycleB

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Re: Investing in Next Week's News
« Reply #31 on: April 13, 2020, 01:17:00 PM »

Last week I optimistically bought stock on margin, going 120% equities.  Hours ago I sold and paid off that margin loan.  Then I kept selling, down to 85% equities. 

I'm glad you did that! Not sure what the right % of equity investment is, just glad you're not on margin.  :)

Best wishes for any remaining adventures. I continue to follow your reasoning and moves with curiosity.

FrugalSaver

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Re: Investing in Next Week's News
« Reply #32 on: April 13, 2020, 10:14:53 PM »
Pre market up 300 or 1.4% or so in Dow

Bank and retail earnings coming. No news has been bad enough lately experts say we will re-test the lows.

Time will tell. Could take 6 months even if ever

MustacheAndaHalf

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Re: Investing in Next Week's News
« Reply #33 on: April 13, 2020, 11:55:44 PM »
Disclaimer: I'm not trying to convince passive investors to switch, or that I am the source of market timing.  I'm saying I discovered an approach based on data that predicts the market slightly in advance, and I think sharing that approach can improve other people's decisions.

... Iíve been watching each stateís daily changes from this page.

In the next week, I expect to see the biggest acceleration in the day-over-previous-day covid rates of these states that have exempted churches from any restrictions: Florida, New Mexico, West Virginia. I also expect to see an acceleration in Kansas, since they exempted churches explicitly on Easter.

I think youíre spot on about how the market is responding to the absolute covid numbers and not looking at the relative rates of increase. So itís plausible that the Easter effect could go unnoticed by the market until it causes big enough absolute numbers that it gets onto the national radar.
That wiki page shows 195,031 cases in NY, which exactly matches the website I'm using:
https://covidtracking.com/data/state/new-york
Let's assume your prediction is correct for Florida and West Virginia.  What happens next?  Meaning, do stock markets react significantly to the outbreak in those states?

According to my searches ("florida gdp", "west virginia gdp", "us gdp") Florida is 4% of U.S. GDP, and West Virginia is about 0.3%.  In GDP terms, California is "3 Floridas", and New York is "2 Floridas".  Is it reasonable to say GDP equals stock market impact?  It's an assumption on my part.  The outbreak might or might not happen, but an additional risk is that when it happens it has little stock market impact.


BicycleB - I later logged back in and sold another 5%, so 80% equities.  If market sentiment switches to pessimistic, and data shows things are better than expected, I may use the 20% cash to act on it.  But if there's no opportunity, I'm fine riding it out with 80% equities.


FrugalSaver - What makes these earnings reports significant?
(I almost dismissed the idea without asking!  I'm glad with that kind of sloppiness, I'm no longer on margin)  Previous reports have been ignored as irrelevant to COVID-19 conditions.  CA and NY went into lock down Mar 20 and 23, suggesting only the last week of March is interesting for markets.

To me, many companies are on count down timers to bankruptcy.  What is their access to cash, credit lines, floating bonds (junk or investment grade?)... how long until they run out?  I expect most questions will be about this count down timer, rather than how business is going.

MustacheAndaHalf

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Re: Investing in Next Week's News
« Reply #34 on: April 14, 2020, 08:31:57 AM »
I'm trying to expand on parts of my initial summary, like this comment:
"Seeing COVID-19 growth slow, I applied for a margin account.  On April 7, I bought stocks on margin, leaving a negative cash balance representing the loan amount."
(I'll leave the discussion for buying on margin and risk reduction for another post some time.)

https://covidtracking.com/data/us-daily
When I say "growth", I mean the growth in total new cases over the prior day.  For example:
U.S. cases Apr 12:  551,826
U.S. cases Apr 13:  576,774
divide:   1.0452, or about +4.5% growth

The key concept, to me, is how much COVID-19 is spreading.  The growth tells me how often infected people transmit to others, causing new cases.  When people aren't social distancing, the growth will stubbornly stay the same, like it did from Mar 30 - Apr 3.  But the growth was declining - just slowly.

On Apr 4th growth was +12.2% and the next day +8.4%.  That's what I saw.
What the media saw was 33.5k new cases Saturday, and 26k Sunday.
I wasn't sure if the media would be cautious, afraid of ruining "stay at home", or if they'd publish it the first day.... they published.  That's what drove stocks higher the next day, on April 6th.

https://www.whitehouse.gov/briefings-statements/remarks-president-trump-signing-h-r-748-cares-act/
I've seen people claim the $2.2 trillion relief ("The CARES Act") caused that spike, but the timing is wrong.   President Trump signed the bill on March 27, ten days earlier.  Even before that, markets were moving up whenever news leaked about it, like when both sides were close to a deal or when it bumped up from $1 trillion to $2 trillion.

BECABECA

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Re: Investing in Next Week's News
« Reply #35 on: April 14, 2020, 09:33:40 AM »
...
Let's assume your prediction is correct for Florida and West Virginia.  What happens next?  Meaning, do stock markets react significantly to the outbreak in those states?

According to my searches ("florida gdp", "west virginia gdp", "us gdp") Florida is 4% of U.S. GDP, and West Virginia is about 0.3%.  In GDP terms, California is "3 Floridas", and New York is "2 Floridas".  Is it reasonable to say GDP equals stock market impact?  It's an assumption on my part.  The outbreak might or might not happen, but an additional risk is that when it happens it has little stock market impact.
...

To me, itís less about what percent those states are of our GDP and much more about showing that we are not past the peak. According to this model, which the covid task force has been referring to, our entire country peaked on 4/10. This looks to explain the rationale for the market rise and all the calls for reopening the country. But this conclusion that we have peaked is wrong (since new active cases are still outgrowing new recoveries each day) and itíll be doubly wrong if we accelerate from the Easter craziness.

Today we seem to be up on the news that some west coast states and some east coast states have formed pacts to determine reopening criteria. The market seems to think that means reopening is coming May 1st, but that is so woefully optimistic. We are at a crossroads:
1. The country reopens on May 1st as the stock market is assuming. Result: since we will still have hundreds of thousands of active cases, thereís no way we can manage contact tracing for all of that and we have a huge surge of new cases. Thatíll lead to a big market crash.
2. The country gets real and ties its reopening to when our new cases are growing slower than our new recoveries, and the total active cases has gotten down to a low enough number that we can manage contact tracing for all of them. Result: country reopening date gets pushed way back from when the stock market is assuming and the market crashes big.

I am personally convinced, and will be reducing my stock exposure this week (already did 15% yesterday, and will do another 15% today, and another 15% later this week). I will renter when new cases fall below new recoveries. After that, itíll only be a matter of time before total active cases drop low enough that we can try to manage contact tracing and reopen. But even after that, Iíll be continuing to monitor the case numbers and if it looks like we will have another wave thatíll require another shutdown, I may opt to jump out again.
« Last Edit: April 14, 2020, 09:35:15 AM by BECABECA »

js82

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Re: Investing in Next Week's News
« Reply #36 on: April 14, 2020, 12:29:09 PM »
Today we seem to be up on the news that some west coast states and some east coast states have formed pacts to determine reopening criteria. The market seems to think that means reopening is coming May 1st, but that is so woefully optimistic. We are at a crossroads:
1. The country reopens on May 1st as the stock market is assuming. Result: since we will still have hundreds of thousands of active cases, thereís no way we can manage contact tracing for all of that and we have a huge surge of new cases. Thatíll lead to a big market crash.
2. The country gets real and ties its reopening to when our new cases are growing slower than our new recoveries, and the total active cases has gotten down to a low enough number that we can manage contact tracing for all of them. Result: country reopening date gets pushed way back from when the stock market is assuming and the market crashes big.

I think this is likely to play out as a variant of #2: There's no such thing as a singular "reopening date".  "Reopening" is not an all-or-nothing deal: It happens in less-hard-hit areas sooner, but it's still gradual.  We reopen things in a measured manner, where we prioritize things with larger economic impact but smaller transmission risks.  This is longer and slower than most people want to admit.  Even if public officials want to "flip the switch", it's going to be gradual, simply because a lot of people are going to be cautious about going out in public and putting themselves(or loved ones) at risk until this whole thing appears to be under control.  Markets don't crash, but spend quite a while wandering (or slowly sagging) until the positive momentum is truly solid.

That said, the bad ending of your scenario #1 is definitely a plausible outcome in the event that our leaders(and by extension, society as a whole) are too reckless with their plans.

ChpBstrd

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Re: Investing in Next Week's News
« Reply #37 on: April 14, 2020, 01:51:15 PM »
Today we seem to be up on the news that some west coast states and some east coast states have formed pacts to determine reopening criteria. The market seems to think that means reopening is coming May 1st, but that is so woefully optimistic. We are at a crossroads:
1. The country reopens on May 1st as the stock market is assuming. Result: since we will still have hundreds of thousands of active cases, thereís no way we can manage contact tracing for all of that and we have a huge surge of new cases. Thatíll lead to a big market crash.
2. The country gets real and ties its reopening to when our new cases are growing slower than our new recoveries, and the total active cases has gotten down to a low enough number that we can manage contact tracing for all of them. Result: country reopening date gets pushed way back from when the stock market is assuming and the market crashes big.

I think this is likely to play out as a variant of #2: There's no such thing as a singular "reopening date".  "Reopening" is not an all-or-nothing deal: It happens in less-hard-hit areas sooner, but it's still gradual.  We reopen things in a measured manner, where we prioritize things with larger economic impact but smaller transmission risks.  This is longer and slower than most people want to admit.  Even if public officials want to "flip the switch", it's going to be gradual, simply because a lot of people are going to be cautious about going out in public and putting themselves(or loved ones) at risk until this whole thing appears to be under control.  Markets don't crash, but spend quite a while wandering (or slowly sagging) until the positive momentum is truly solid.

That said, the bad ending of your scenario #1 is definitely a plausible outcome in the event that our leaders(and by extension, society as a whole) are too reckless with their plans.

I've always thought the IHME model was an overly-optimistic bad joke, particularly in a situation where half of the infected are asymptomatic and testing is not widely available. I.e. This isn't the flu or smallpox, it's something that spreads via the asymptomatic people even after you've done thorough contact tracing and 100% testing of all symptomatic people. And considering we now have thousands of cases for each public health officer, I think thorough contact tracing is unlikely.

However, even the IHME's projected curve would appear to show it is not possible to open urban economies until mid-June / early-July at the earliest, and even that risks a new outbreak because at that time there will still be as many hospitalizations as we had in early March.

Small businesses only had enough cash on hand on average to last 27 days. 69% of Americans had less than $1k in savings going into this. 31% of rents that were due on April 1 have not been paid. If we want to talk about next week's news, let's discuss what will happen to banks, mortgage companies, landlords, automakers, lenders of all varieties, consumer discretionaries, etc. starting in May! 7 million jobless claims and counting....

Buffaloski Boris

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Re: Investing in Next Week's News
« Reply #38 on: April 14, 2020, 02:04:58 PM »
To me, many companies are on count down timers to bankruptcy.  What is their access to cash, credit lines, floating bonds (junk or investment grade?)... how long until they run out?  I expect most questions will be about this count down timer, rather than how business is going.

This is where I think there is a flaw in your analysis. What the Fed is doing is essentially backstopping publicly traded companies by buying their debt.  There is no risk of bankruptcy in the short term as these companies can sell their debt regardless of how bleak their long term prospects are.

FrugalSaver

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Re: Investing in Next Week's News
« Reply #39 on: April 14, 2020, 02:22:17 PM »
To me, many companies are on count down timers to bankruptcy.  What is their access to cash, credit lines, floating bonds (junk or investment grade?)... how long until they run out?  I expect most questions will be about this count down timer, rather than how business is going.

This is where I think there is a flaw in your analysis. What the Fed is doing is essentially backstopping publicly traded companies by buying their debt.  There is no risk of bankruptcy in the short term as these companies can sell their debt regardless of how bleak their long term prospects are.

I think heís referring to the small businesses in addition to the larger ones that 50% or more of americans work for

ChpBstrd

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Re: Investing in Next Week's News
« Reply #40 on: April 14, 2020, 02:40:03 PM »
To me, many companies are on count down timers to bankruptcy.  What is their access to cash, credit lines, floating bonds (junk or investment grade?)... how long until they run out?  I expect most questions will be about this count down timer, rather than how business is going.

This is where I think there is a flaw in your analysis. What the Fed is doing is essentially backstopping publicly traded companies by buying their debt.  There is no risk of bankruptcy in the short term as these companies can sell their debt regardless of how bleak their long term prospects are.

Will the $504 billion allocated to bond purchases, some of which are municipal bonds, be enough to prop up the US bond market? (size of US bond market: $39 trillion or 77x bigger than stimulus)

waltworks

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Re: Investing in Next Week's News
« Reply #41 on: April 14, 2020, 02:50:29 PM »
They can allocate as much more as they want anytime. The announced number is meaningless.

I'm not saying that's good or bad, but I don't think the Fed will let the bond markets collapse.

-W

Buffaloski Boris

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Re: Investing in Next Week's News
« Reply #42 on: April 14, 2020, 03:45:31 PM »
They can allocate as much more as they want anytime. The announced number is meaningless.

I'm not saying that's good or bad, but I don't think the Fed will let the bond markets collapse.

-W
What we know theyíre buying is investment grade, fallen angels, munis,  and mortgage backed. And Iím probably forgetting something. While theyíre not yet publicly buying junk bonds, thatís probably next on the agenda.

No part of the 1% left behind.

MustacheAndaHalf

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Re: Investing in Next Week's News
« Reply #43 on: April 14, 2020, 08:37:31 PM »
Buffaloski Boris - My bad, I should have clarified "in the context of the earnings call".  I generally agree that the Fed and Congress are preventing bankruptcies, although there's always a risk for mistakes.  Actually, 30% of my portfolio is riding on individual stock picks that will only perform well if they survive bankruptcy (like Macy's, one of my publicly revealed picks).

Before replying to other comments, I wanted to go over Tuesday's +3% market gain (meaning if VTI gains another +18.3%, it breaks even YTD).  Even though COVID-19 controls the news and markets now, it's getting more complex to understand as the situation gets more complicated.  I'm confused, again.

My initial reaction to +3% was markets being overly optimistic to governors making plans to reopen.  No governor was willing to give a date, and governors love to be the ones to give good news.  The data I see suggests the lock down will continue longer than people expect, and the +3% gain doesn't reflect that.

My second thought is reopening goes in stages.  Some companies are lower risk to re-open, and provide valuable services/products.  Maybe some of the +3% reflects the possibility of companies going partly back online, if the risks to public health are low.  But at least in NY, schools (childcare) and transportation (getting to work) are required to make anything else happen, per NY gov Cuomo's briefing.

Third thought, I hate claims for cures coming from CEOs.  Mislead people and cash in on investors - I wish it was considered "pump and dump" and resulted in fraud charges, since a drug needs to be assumed useless and toxic until testing shows otherwise.  I had that initial reaction to a claim made this week, but the more I checked the more they seem to be the real deal.  Before the U.S. had a big outbreak, large human trials for another corona virus were already being conducted.  The new technique allows re-use, while adding a new signature for the body to react and make T-cells, providing immunity.   I need to watch this carefully while I'm 20% in cash.  Markets might be reacting to that information - but until I see specific data about human trials for COVID-19, I'm not comfortable calling this more than a speculation.

I initially agree that the +3% looks overly optimistic, but I'm confused.  I need to answer two general questions: what does Europe's data show for COVID-19 cases?  What impact will partial reopening of some companies have on the stock market (those with low risks to public health)?
« Last Edit: April 14, 2020, 08:39:29 PM by MustacheAndaHalf »

waltworks

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Re: Investing in Next Week's News
« Reply #44 on: April 14, 2020, 09:47:20 PM »
The market does not really move directly in response to news headlines, as much as the financial news industry might like you to think so.

If you just accept that almost all of the day to day variation is random, and that over long time periods the trend is up, you can formulate a strategy.

-W

MustacheAndaHalf

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Re: Investing in Next Week's News
« Reply #45 on: April 15, 2020, 08:49:23 AM »
BECABECA - If you have more information about the link between IHME model and the White House, I'd like to read an article or two.
I just listened to yesterday's White House briefing, and my impression is populous states like NY or CA aren't what President Trump refers to - it's more rural states.  Which makes your theory more relevant: the states ignoring social distancing over Easter might accidentally become the testing ground for re-opening the economy.  So rather than their economic impact, the relevance could be if they fare badly then other states need to slow down and be more cautious (which would cause markets to drop).

ChpBstrd - I found this dated within the past 24 hours - the latest numbers might be 17 million...
https://edition.cnn.com/2020/04/15/politics/unemployment-benefits-state-trust-funds/index.html
"About 16.8 million people, roughly 11% of the labor force, filed initial unemployment claims over three weeks ending April 4 -- dramatically higher than during the Great Recession. Economists expect job losses to continue."

js82 - I heard CA Gov Newsom say it's more like a "dimmer switch" where you slowly turn up the brightness on the economy.  NY Gov Cuomo said you need transportation and schools in place first.  I suspect less populated areas will be guinea pigs: if a city of 90,000 can't open, a city of 9 million (NYC) shouldn't re-open.  My guess is less crowded areas open first - it's also more complicated to coordinate reopening larger, more complex infrastructure.


If you just accept that almost all of the day to day variation is random, and that over long time periods the trend is up, you can formulate a strategy.
https://covidtracking.com/data/us-daily
U.S. COVID-19 cases Apr 4: 33.5k  on Apr 5: 26k.  First time new COVID-19 cases were lower.
https://finance.yahoo.com/quote/VTI/history?p=VTI
I bought on margin on Monday, Apr 6 and markets went up +7%.  That was not random.

BECABECA

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Re: Investing in Next Week's News
« Reply #46 on: April 15, 2020, 09:27:44 AM »
BECABECA - If you have more information about the link between IHME model and the White House, I'd like to read an article or two.
Hereís context for this first time it was brought up:
http://www.healthdata.org/acting-data/our-covid-19-forecasting-model-otherwise-known-chris-murray-model

And hereís how theyíve been using it to push back on individual stateís requests for more ventilators:
https://www.washingtonpost.com/health/2020/04/06/americas-most-influential-coronavirus-model-just-revised-its-estimates-downward-not-every-model-agrees/

BECABECA

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Re: Investing in Next Week's News
« Reply #47 on: April 15, 2020, 12:03:17 PM »
...
Before replying to other comments, I wanted to go over Tuesday's +3% market gain (meaning if VTI gains another +18.3%, it breaks even YTD).  Even though COVID-19 controls the news and markets now, it's getting more complex to understand as the situation gets more complicated.  I'm confused, again.
...
When I saw the market up yesterday, I speculated that it was because the feds and the two coasts governors pacts had all mentioned reopening plans (and since the governors didnít include any details, the market incorrectly assumed it was similar to the May 1st reopen date the president has been signaling). That, coupled with the start of earnings reports coming out, and that the first day had a couple companies that had done well (like Johnson and Johnson).

According to my plan from the day before, I sold another 15% of my stocks yesterday. But instead of waiting for later this week to sell the next 15%, I decided to also do those yesterday. I didnít think weíd be back to yesterdayís price for quite a while.

Looking ahead, since the banks that reported earnings yesterday did badly, and since today was going to have a bunch more big banks reporting earnings and didnít have a big company like Johnson & Johnson that was going to be positive, and the number of new US covid deaths was already above our highest previous mark before the market even closed and any west coast deaths got reported, I guessed that today was going to be a down day.

Tomorrow will likely be a new record for weekly unemployment claims, so that will not be good for the market. And NY is adding 3800 probably covid deaths to their count from the last few weeks, so itís getting harder and harder to claim we have peaked.

And by Friday we start to see some repercussions from the Easter gatherings, and then we will have to start getting realistic that we arenít going to be reopening anytime soon without massive consequences.

Now, I want to speculate further on what is causing the disconnect between the reality on the ground and the marketís performance. I think itís a few things that are all combining to make this irrational exuberance:
1. The effects of this covid outbreak are felt less the higher up the income bracket you are. Most lowest income earners have lost their jobs, and if they still have a job then theyíre getting exposed and getting sick at it. And since poor people donít have the level of access to healthcare and prevention that rich people have, theyíve got higher rates of negative health conditions that result in them dying at a higher rate when they get the virus. And since 38% of the stock market is owned by the richest 1% of Americans, the market is underestimating the severity of outbreakís effects.
2. Half of the country is getting their info from the presidentís daily Coronavirus task force briefings, which are basically rambling campaign rallies full of misinformation to get him re-elected. The state of economy is a huge part of re-election chances, and the president has repeatedly confused the stock market performance with the state of the economy, so these briefings are all about propping up the stock market.
3. Stock market investors and analysts are used to making investment decisions based on financials and obvious first order effects. So theyíre overly weighting a big congressional bailout while ignoring that the virus is still not under control and will cause a massive global recession. This is likely also being ignored because half the US actively distrusts any international organization.
4. Stock market investors are not worried about food security, because theyíve been able to continue getting their food through delivery apps and online shopping. They arenít going to the stores themselves so they might not even be aware of the continuously empty shelves. They also have plenty of money to buy extra to stock up. And if (or more likely, when) we have food shortages in the fall, theyíll be the few who are able to afford to buy food at high prices when demand far outstrips supply. Meanwhile, thereís been a massive increase in new people needing food bank assistance while food banks are struggling to even maintain their pre-covid level of supplies.

Buffaloski Boris

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Re: Investing in Next Week's News
« Reply #48 on: April 15, 2020, 12:19:38 PM »
...
Before replying to other comments, I wanted to go over Tuesday's +3% market gain (meaning if VTI gains another +18.3%, it breaks even YTD).  Even though COVID-19 controls the news and markets now, it's getting more complex to understand as the situation gets more complicated.  I'm confused, again.
...
When I saw the market up yesterday, I speculated that it was because the feds and the two coasts governors pacts had all mentioned reopening plans (and since the governors didnít include any details, the market incorrectly assumed it was similar to the May 1st reopen date the president has been signaling). That, coupled with the start of earnings reports coming out, and that the first day had a couple companies that had done well (like Johnson and Johnson).

According to my plan from the day before, I sold another 15% of my stocks yesterday. But instead of waiting for later this week to sell the next 15%, I decided to also do those yesterday. I didnít think weíd be back to yesterdayís price for quite a while.

Looking ahead, since the banks that reported earnings yesterday did badly, and since today was going to have a bunch more big banks reporting earnings and didnít have a big company like Johnson & Johnson that was going to be positive, and the number of new US covid deaths was already above our highest previous mark before the market even closed and any west coast deaths got reported, I guessed that today was going to be a down day.

Tomorrow will likely be a new record for weekly unemployment claims, so that will not be good for the market. And NY is adding 3800 probably covid deaths to their count from the last few weeks, so itís getting harder and harder to claim we have peaked.

And by Friday we start to see some repercussions from the Easter gatherings, and then we will have to start getting realistic that we arenít going to be reopening anytime soon without massive consequences.

Now, I want to speculate further on what is causing the disconnect between the reality on the ground and the marketís performance. I think itís a few things that are all combining to make this irrational exuberance:
1. The effects of this covid outbreak are felt less the higher up the income bracket you are. Most lowest income earners have lost their jobs, and if they still have a job then theyíre getting exposed and getting sick at it. And since poor people donít have the level of access to healthcare and prevention that rich people have, theyíve got higher rates of negative health conditions that result in them dying at a higher rate when they get the virus. And since 38% of the stock market is owned by the richest 1% of Americans, the market is underestimating the severity of outbreakís effects.
2. Half of the country is getting their info from the presidentís daily Coronavirus task force briefings, which are basically rambling campaign rallies full of misinformation to get him re-elected. The state of economy is a huge part of re-election chances, and the president has repeatedly confused the stock market performance with the state of the economy, so these briefings are all about propping up the stock market.
3. Stock market investors and analysts are used to making investment decisions based on financials and obvious first order effects. So theyíre overly weighting a big congressional bailout while ignoring that the virus is still not under control and will cause a massive global recession. This is likely also being ignored because half the US actively distrusts any international organization.
4. Stock market investors are not worried about food security, because theyíve been able to continue getting their food through delivery apps and online shopping. They arenít going to the stores themselves so they might not even be aware of the continuously empty shelves. They also have plenty of money to buy extra to stock up. And if (or more likely, when) we have food shortages in the fall, theyíll be the few who are able to afford to buy food at high prices when demand far outstrips supply. Meanwhile, thereís been a massive increase in new people needing food bank assistance while food banks are struggling to even maintain their pre-covid level of supplies.

I think your reasons are good.  I would also add, from a philosophical perspective, that the market does not digest information in an efficient way, at least in the short term.  COVID is one of the best examples of this I've seen.  That something was terribly wrong in China has been known since early January.  I remember reading stories about it at the time.  What the market failed to digest (as did I) were the implications.  It took 4 or more weeks before the drop in equities. 

ChpBstrd

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Re: Investing in Next Week's News
« Reply #49 on: April 15, 2020, 12:39:20 PM »
Now, I want to speculate further on what is causing the disconnect between the reality on the ground and the marketís performance.