How low can the stock market go due to the corona virus ?

[lamachin007]

How long do you think it will go ? How do you find the courage to buy  ? How do you know you are right ?

[Bernard]

I believe it may be volatile for another month or two. I'm buying once or twice per week some shares of VTI and VOO. I'll continue doing this on the way down and back on the way up. I don't know, which is why I use DCA.

[One]

25 to 30 percent?

[Tasse]

Having the courage to buy is unrelated to how low it will go. Do you think it will recover eventually? Are you still in the accumulation phase? If yes to both, then buy. It doesn't matter what the market does between today and when I sell (decades from now). It only matters that it eventually goes up!

There are about 30 other threads on this subject cropping up right now. Look around and you will find this same advice phrased in a million different ways. Keep reading until you find a phrasing that convinces you.

[lamachin007]

thank you, will do

[facepalm]

How long do you think it will go ? How do you find the courage to buy  ? How do you know you are right ?

1. I have no idea.
2. Courage? I buy once a month, automatically. Automating your investing means you never have to base your investments on a feeling.
3. Dollar cost averaging tends to reduce risk.

[MustacheAndaHalf]

How low "can" it go implies the worst case scenario - one of the least likely scenarios.  So if you plan for a worst case pandemic, you will almost never plan correctly.  And I have an "edge" view - I'm more pessimistic than the general market.

I think the U.S. should expect 5,000 cases by Tuesday, March 17.  France, Germany and Spain all have 1000-2000 cases, while Italy and Iran passed 10,000 cases.

[driftwood]

It takes courage to buy when the market is high. Imagine how brave you'd have to be to buy bitcoin when it was popular and booming? So much room for it to fall and you lose your investment. I am amazed at how brave people are in buying houses in a booming housing market in Colorado Springs... your house value may grow, but it's already high for that size house and it can fall a large amount.

On the other hand, gas and investment prices are dropping, if I could freely store a year's worth of gas I'd be buying it like crazy, no courage needed.

[vand]

S&P 1200 is a realistic possibility imo - not due to CV itself but if it kicks off a wider recession, which we are overdue anyway.

When you consider that at the bottom of the GFC the S&P bottomed at 666 and GDP is about 70% higher in nominal terms since then... if valuations reach those levels again then that converts to about ~ S&P 1150.

Would I bet on it? Not necessarily, and it may well not be anywhere near that bad, but I would not rule it out either. When you've followed markets (not just stock markets) for 20+ years then you eventually learn not to rule anything out.

[AdrianC]

In 08/09 the S&P500 went down 51%. Different problems, but it felt very similar to me. Lots of unknowns. Foot dragging by those in power.

I don’t see why the market wouldn’t do something similar. So down to 1700ish?

This could be worse, what with people dying and all.

The recovery after the 08/09 crash took three years.

[maizefolk]

How long do you think it will go ? How do you find the courage to buy  ? How do you know you are right ?

1) I don't know.
2) That's the amazing thing about automatic investments. I don't have to find the courage to buy. I just have to find the courage not to file the complicated paperwork it'd take for me to not buy.
3) I don't know. But if the market goes down forever, I'll have bigger problems than poorly performing investments.

[lamachin007]

Thank you all

[chowdan]

How long do you think it will go ? How do you find the courage to buy  ? How do you know you are right ?

#1 - I don't think this will last more than a year. Reasoning:
* I don't view this outbreak as a "major" scary event
* I believe the media is pushing this into our "feeds" to drive this fear and scariness
* We(humanity) has no problem accepting deaths, why is this any different? Because its "unknown"?
* I question if the government is behind pushing this fear driven event as such the president wants to be known as someone who "defeated the enemy - vote for me because I'm amazing"

#2 - I am fortunately still employed and willing(ie my risk is high) to put capital into the markets in an attempt to put it to work.

#3 - I don't know if I'm right and I accept I could be wrong. Its a $20k bet I'm willing to take and risk.
* The markets on a long term basis WILL be higher than it is today or yesterday. It's a matter of time and IF I dont need that capital in the time it takes for things to recover. IF I don't need that capital in this time frame(1-5 years), it makes absolute no sense to sit on it in cash as the $20k invested could easily be double or triple the value when things recover.

[American GenX]

S&P 500 is up to 2630.07 with today's close.

That's way too high.   Starting with overvalued stocks and now a spreading coronavirus that is still in its infancy in the U.S., I'm expecting things to get much worse and for the S&P 500 to drop back down.  This will be along recovery when we finally hit bottom.  Hard times are ahead.

[Buffaloski Boris]

How long do you think it will go ? How do you find the courage to buy  ? How do you know you are right ?

1. We can look at history:



Personally I think we have some time to go. We just added what, 3.5 million unemployed this week? Shutting down the economy is going to leave a mark.

2. I haven’t bought yet.  I still think the market is relatively pricey. I set a threshold of CAPE 20 for the SP 500. Not there yet. Over long periods of time, risk assets are usually compensated. History doesn’t repeat, but it rhymes. Every time since the 19th century, the markets have recovered and compensated holders of equities. This time most likely won’t be any different.

3. I don’t. No guarantees. Risk assets mean risk. Will this time be different from every other bear market in the last 120 years? Probably not. But it could be.

[John Galt incarnate!]

How long do you think it will go ?

I am sure I don't know.

How do you find the courage to buy ?

I am well familiar with the long-term history of stock-market fluctuations.

I think stocks have been on sale so I've been  buying  them.

 How do you know you are right ?

I am sure I cannot positively know I'm right.

[John Galt incarnate!]

How low "can" it go implies the worst case scenario - one of the least likely scenarios. 

At the beginning of the Great Depression in the early 1930s the stock market declined by ~89% in <3 years.

Could it happen again?

Yes.

Why do I say so?

Because it happened before.

[MustacheAndaHalf]

@Buffaloski Boris - The original slide has "Source: Dow Jones Market Data" just below that graphic, for those who want to confirm the data.  I assume "bear market" means a -20% decline from the high, when they mention the average of average -35.6% and median of -32.9%.

Relying on Yahoo! Finance "Adj Close" data for 2020, the highest price of VTI (Vanguard Total Stock Market ETF) was $171.32.  A bear market would be 80% of that value:
171.32 x 0.80 = 137.056 or below

171.32 on Feb 19 (peak price)
123.97 on Mar 12 (price drop equal/exceeds -20%)
111.36 on Mar 23 (lowest price so far, -35.0% from peak)
131.11 on Mar 26 (yesterday's adj closing price, -23.5% from peak)

If this is a -35% bear market like the data shows, then if the stock market goes up +4.5% from yesterday's close it exits the bear market.  The calculations I made above come from Yahoo! Finance "historical data" for VTI.
https://finance.yahoo.com/quote/VTI/history?p=VTI