S&P 500 triggers 15-minute trading halt for the second time this week
bloomberg.com
bloomberg.com
"On Thursday, China said it had just 15 new coronavirus cases and 11 deaths over the previous day." See: https://www.nytimes.com/2020/03/12/world/coronavirus-news.ht...
China has controlled the problem. By taking drastic measures the rest of the world will too. In a couple of months the virus will be under control. The stock market will not recover as quickly as it crashed, but it will recover! How do I know that? Because crashes have happened in the past, and the world didn't collapse and disappear. A single company can collapse and disappear but not the entire stock market.
The only question is, how long will it take to recover. I think it will take 2 to 3 years. People who sold during the financial crisis of 2008 did not get to participate in the recovery that followed. There isn't an email or a notification that goes out when the market starts to recover. Attempting to time the market is futile. Staying out of the market will only mean that you will miss out on the largest portion of the recovery.
A lot of people are staring at economic ruin. We are staring at potentially multiple quarters of negative GDP growth. I don't think this has happened for a long time. And money printing won't fix it like it usually does.
Yeah. China covered this up at first, but it responded dramatically and authoritatively once the threat was understood. Being an authoritarian state, their power structures allow them to effectively restrict movement and manage the entire economy to limit the spread, and where they sit now is very nearly a best case scenario for what a response could look like barring that initial delay. And yet, even so, it will still result in countless second/third/nth order effects that will cause devastating public health and financial ramifications (the extent of which will only be slowly realized over time).
In comparison, the US is incredibly poorly situated. This country is a mishmash of loosely coupled quazi-independent governments, and its public health apparatus is mostly just de-facto run by the "invisible hand" of the market. The Federal Government has no ability to respond in the way China did, even assuming the people in control of it understood the potential severity here (which as yet they have not.)
Better that than to prolong things, like Italy did, and then make everyone stay home anyway.
There are a lot of advantages to spreading it out, by reducing the peak strain on our health care resources and possibly letting a vaccine or drug come about. But a vaccine is likely months off at best, and we can't shut down everything until then. So a two-week quarantine might reduce the death toll, but I'm not sure it will dramatically reduce the number of people infected.
How does that make any sense if you take a moment to really think about it? It's clear they are either deliberately not testing or skewing/hiding their numbers for political purposes. It's a bit similar to India's numbers. India (population 1.3B) has fewer cases than Iceland (Isolated island of 300k people), again, how does this make any sense? It only makes sense if they're not testing people or hiding numbers.
If China looks like they "fucked it up" then the people become more restless and start questioning the party. Also, they care deeply about their worldwide reputation and that the world sees that their "system" (top down authoritarianism) is seen as more effective than western progressive liberal democracies.
It makes them look a hell of a lot better if they can say to their people, "Look guys, look at how well we handled this crisis compared to the Western countries, this is why having an authoritatian one-party state with absolute control is better for you guys!"
Looking like the idiot country who totally fucked this up doesn't help the CCP at all, which is why they tried to silence the guy who was originally trying to blow the whistle on this whole thing.
But people not doing stuff basically means a recession, if not depression is guaranteed.
Only someone who had never visited China and seen the scale of the place woukd say such a thing. It's like saying I locked down all the termite colonies in Australia.
The U.S. is steering itself toward a year-or-more-long issue that has people fearfully avoiding stores, deliveries, workplaces, and the consequences of this will ricochet. A recession happens when people and businesses restrict spending and hiring, and that's exactly what this scenario causes in a chronic way.
But who knows? Maybe Gilead's experimental antiviral will be approved within a month or two, and maybe that will be enough to make people not fearful and regain economic confidence.
There was a theory that the virus doesn’t fare well in hot climates and that seems to be playing out.
A good example of this is Vietnam. Nearly all their cases have been in Hanoi which has quite temperate weather in the winter versus Ho Chi Minh City which is tropical all year around.
It’s not the only factor, but it does appear to have an impact.
Also consider that in India, there is not only a massive population, but access to tests per capita is probably quite low. Furthermore, the background noise of other infectious diseases is higher there, so many of these cases may go unnoticed or just attributed to common ailments. Death by infectious disease, while tragic, is somewhat more normalized there, and it might be hard to convince a lot of people not to go about their daily lives.
India: 1.3B population and right next to China. Greece 10M population and no close land links to China.
These numbers don't pass the common sense test.
In early stage of Wuhan(Jan 2020), there's hiding numbers, and there's lots 'rumours' widely spreaded on social network, e.g. Lots messages from medical staffs in Wuhan, so we known the numbers of Wuhan is not correct. But in recent weeks there's no such 'rumours', the gov may have strong control on many things, but it's not possible to control all(most?) 'rumours'..
From WHO stats in the last day China has 50 new cases.
Let's take South Korea instead, they have tested more per capita than anywhere else on Earth by far and conduct over ten thousand a day. Since yesterday they've had 100 new cases.
Sorry to disappoint the doomsayers but all these big grandiose predictions seem far off the mark with a proper response.
It's exactly the argument that gets made here from time to time about doing maintenance and paying down tech debt.
The people that do it get called over-cautious and reactionary because shit never actually hits the fan.
Those countries were very well prepared because of SARS.
South Korea is sharing everything they can on how they've handled their response: https://twitter.com/HannahNamMD/status/1237618159840100353
I’m being facetious with this specific instance, but how would you know? If many worlds had disappeared after catastrophes many times before, we might have no ability to know.
This is “survivor bias”, no?
I wish the U.S. would test more people like South Korea did.
That seems optimistic, given the lack of significant action in the rest of the world so far. Personally I think the more likely scenario is that the world plays whack-a-mole with citywide outbreaks over the coming year and a half until a vaccine is available.
No, that's not an apocalypse, but I wouldn't put money down on this being over by the summer.
FWIW this is not uncommon with pandemics. For example, WHO[0] says "During the post-peak period, pandemic disease levels in most countries with adequate surveillance will have dropped below peak observed levels. The post-peak period signifies that pandemic activity appears to be decreasing; however, it is uncertain if additional waves will occur and countries will need to be prepared for a second wave."
For example, during the spanish flu, the second wave was far deadlier than the first. But there were additional factors (WWI and a mutation that made it more dangerous to the young).
This can continue until enough of the population has been infected that we have herd immunity. This is why there's long-term estimates of 20-60% of population being infected[1][2]
[0] http://www.euro.who.int/en/health-topics/communicable-diseas...
[1] https://www.nytimes.com/2020/03/11/world/europe/coronavirus-...
[2] https://www.axios.com/congressional-physician-predicts-75-15...
However, China is motivated to resume society of other cities otherwise more people will get into economical troubles and it spirals.
You do not know much about China, do you?
President Xi's job (and possible life) is on the line if he fails. The CCP MUST be seen as perfect and Uncle Xi will ensure it is perfect by lying to anyone and everyone.
Edit: s/hosts/human or animal hosts/
At least for influenza that's partially the case and going around the globe.
I don't think you understand what you are proposing.
We think it came from some form of animal, and I've seen a report of a low level infection in a dog.
Edit: While I think the former is common knowledge, here is a source for the latter: https://www.cbc.ca/news/health/coronavirus-dog-spread-humans...
China is lying.
The "Start-up Party" is over. Startups will need to plan make profits within 3 yrs. There will never be another WeWork or even another Uber.
The world is returning to normal. Capital will not be free. People will need to earn it.
To protect myself, when I see sharp dips in the markets like this, I usually buy a put (option) just in case 2008 repeats itself. I bought a put last week for 2k (CMG) and now its worth 18k. If the markets keep falling, I may end up with around 30k, which is enough for me to pay my mortgage for a year and a half.
Maybe someone finds this helpful, maybe not. Be safe, play responsibly.
You, sir, are made of sterner stuff than I.
If the market gets bad enough for him to have to be laid off, his presumption is that the puts will be valuable enough to get him along for a little while. If it doesn't, then he probably loses money on the puts, but he's still employed, so it doesn't make much difference.
edit: I'm an engineer, not an economist, so this is probably wrong, but I think it's the line of thinking that songzme is on too.
If you understand which calls they are making and at what times they make them, then you can buy the corresponding put and make a lot of money. That he increased his investment by a factor of 9 in a week or so shows how much money we are talking about.
If the fed stops doing these daily calls though you can get holding the bag. Also in the event of a total collapse you can end up never being able to redeem your gains.
Elite traders know this game and are happily taking the billions that the fed is shoveling to them.
For the public, we'll see the elite doing well and able to afford the inflated cost of goods that results from pursuing this policy over an extended time period when it has repeatedly been shown to be a failing strategy since there are actual fundamental problems with the market right now, such as supply chain issues, likely loss of large numbers of staff, and upcoming mass unemployment and a global Depression.
Luckily he was right 1 week ago. But it was luck only.
However, I'd recommend always having a put contract outstanding, not just when you predict things getting worse. You got lucky this time, but next time you may be too late.
Today, those puts hit a high of $310,000
It's a shame I sold them too early!!! But still made about $20K.
Although I'm holding off on investing for now. Sold some of my 'play' money stocks (tesla etc) and put it in trackers. Might sell off those too and just wait it out a bit.
You should really spell out the risk you're taking to get a return like that.
Chipotle Mexican Grill? Or is that something related to Chicago Mercantile Exchange?
Cuz like, the terms of my RSU package expclitly forbid dealing in related derivatives. I cannot offset downside risk like this with options.
Until the last few weeks I avoided looking. Now I'll avoid checking my company's stock for a while and look at the shorts instead if I want to waste time patting myself on the back.
Hope you're factoring in the additional tax burden of extra income. That may decrease your runway from 18 months down to 13-14.
With Schwab you have to apply for level 1 access to option trading, but it's pretty straight forward and quick since buying is low risk.
You could do the same with Tesla, Google, AMZN. Any strong stable company with reason to fall other than the market trend would do.
Again, these are my thoughts, please take it with a grain of salt and do your own research.
You may need to call up Schwab and Etrade and tell them you want your account approved for trading Options. Or maybe you can already do it, check to make sure.
You could do the same with Tesla, Google, AMZN. Any strong stable company with reason to fall other than the market trend would do.
Again, these are my thoughts, please take it with a grain of salt and do your own research.
You probably won’t get caught, but buying puts, or anything modeled to behave like one, for your employer’s stock is almost certainly a violation of your employment contract if they’ve granted you RSUs.
“You will not short, or otherwise participate in derivatives associated with the stock” is standard RSU boiler plate.
Unless you're very sure that you're donating to people who will help you in return (a church?), it's wise to see to your own financial oxygen mask before helping others.
Personally, I believe that giving should be done without expecting anything in return, otherwise it becomes an exchange, which I find incredibly exhausting.
Pay attention to unwind it before April please IF it is short duration. Mainly sharing since you state you donate your income (much applauded!). There will be a sharp short slaughter rally in April, but then dropping off a cliff.... (do own due diligence). If you have a put into summer you're fine.
Link for you: https://news.ycombinator.com/item?id=22556929
[1] https://finance.yahoo.com/quote/%5EN225?p=^N225&.tsrc=fin-sr...
If we see that type of shift, we're going to be living in a very, very different world where American's general way of living will need drastic change.
I hedge my bets, but somethings go well beyond y control.
[1] https://dqydj.com/nikkei-return-calculator-dividend-reinvest...
If it's just a dip - then I'll have to live with not making that money - whatever. But if it is the beginning of a recession then investing earlier than one year from now is financially inefficient.
For now I'll stick to me regular investment strategy/cycle aiming at long term gains.
You don't have to be a daredevil to be participating in the market right now, but study and practice are probably an essential, along with an allowance for the proverbial bop on the nose.
Frankly I won't be surprised even if S&P loses more than 30% from the current price. It is simply not a unthinkable scenario, considering that the historical median of S&P500 P/E is around 16.
Population Growth worldwide is expected to be lower. And most people think productivity growth is also going to be lower (harder to predict, this jumps with major new inventions).
As long as interest rates sit at 0, the P/E ratio is not returning to historical norms.
Prices are still 50% above historical norms. They're not falling that far. Retirees and home owners would riot in the streets.
I don't see why the current economy is substantially different from the past and sustained losses over a decade or longer aren't possible.
Buy-the-dip and dollar-cost-average work but you don't need to go in blind. I advise waiting until there's actually repeat good news before you buy in.
If you don't see some sudden positive in the next quarter, there's no reason to buy in now.
This virus will bring about significant collateral damage to the global economy. Already airlines, cruises are hurt. Soon, tourism and hospitality industry will be hit. Transport and logistics will be next followed by retail. So the cascading collateral damage is quite unpredictable at this time. Double this with plunging oil prices.
So unless you are willing to wait for 10+ years from now, it's unwise to invest a lump sum amount at once. If it were me, I will just invest small amounts periodically. Like every couple of weeks or so.
Obviously if you do not hold significant cash and are going to invest your savings monthly there is no difference between DCA and lump sum investing.
This is even more true in cases of bear markets. Since the market will most likely rise compared to where it is now, going all-in in a severely depressed market is usually advantageous.
Psychologically, of course, it is more difficult to do so as you have to go against "common wisdom".
Don't get me wrong though,dollar-cost averaging is a great strategy if you don't have lump sums laying around.
If you've already accumulated a large cash position, yes, it's almost always better to dump it in the market, but unless it was an unexpected windfall, that just means you were suboptimally failing to use DCA before.
I don't think it's wise to judge based on the peaks and bottoms. Those are the outliers. The price touched there for a fleeting moment and then backed away. I'd rather calculate a trend-line over a long timespan that covers multiple boom-bust cycles, and note when the price crosses it. When the price is below the line, that's a relatively better time to be buying, if you have spare cash, and when it's above the line, that's a relatively better time to be selling, if you have the stocks.
You'll drive yourself crazy trying to predict the optimal timing for large orders.
Putting in a little at a time, or taking out a little at a time, based on broad criteria and your own goals as an investor, is way better than intensive analysis or day-trading. Once a paycheck or once a month is fine. Even better if you can set it up to be automatic, and you don't have to think about it too much.
Unfortunately, I don't have any spare cash, but those who heeded the warning of inverted yield and switched from "gradually buy" to "gradually sell" back then probably have enough cash savings and downward movement to switch back, or to at least stop selling for a while.
Note that even if you are retired you should still have some stocks as a hedge against your retirement having more than a year left before you die.
You shouldn't be. Unless you plan to die soon and really live it up, you should be have money you need now, money you need next year, money you need next decade, etc. When you approach retirement, you should start moving the money you need now (at the point of retirement) into much less volatile investments. A year later you should move the money you need next year (at the point of retirement) into a similar vehicle. As you get closer, each bucket of money eventually moves into the safest vehicle possible (FDIC insured savings/checking account, ready for you to use it in day to day transactions). At the point of retirement, assuming you plan to live for a few more decades, most of your money should still be in the market but what you need in the short term should be in cash already and what you need in the medium term should be in a low risk investment to protect against inflation.
This is the general pattern, the exact situation depend upon your own financial situation, health situation, family situation, and many other factors that a financial/investment adviser would be able to help you with.
Hedge your investments. Rather then dump 100k at once into SPY (SPX if not using your 401k) or similar. Invest 10k per week/month. Thousands of people way smarter than you and with 20-30 years of experience fail at timing the market. You will not be able to time the market. Hedge into your investments.
Dollar cost averaging is always a solid investment strategy.
Who knows how long oil prices will be falling? In the end it's a pissing contest between Russia, Saudi-Arabia and the US. It may be over tomorrow, it may be over in a year...
But the small amounts is a wise advice.
The h1n1 prior to that was the 1918 one that killed 500M people.
Just because the pandemic ends doesn't mean the value of companies returns - some will have shrunk, some will have failed.
I don't trust Trump to handle this situation with any more grace than he has till now so I predict more crash days.
Buckle up. It's going to be a hell of a ride.
I don’t think you can be so sure of this
That being said I do think that some segments won't be the same for a long time - especially the type of superficial travel, where people only go to a place because other people did it and seemed so cool.
I think "instagram travel" will have lost its shine.
At the current growth rate (of confirmed cases) in the US, in about two weeks there will be more cases in the US requiring hospitalisation than there are ICU ventilators in the entire United States.
We need to get that growth rate down, or a decent chunk of the people who are hospitalised and unable to get a ventilator will die.
The simultaneous drop in value is the very textbook definition of correlation, and therefore suggests that the same decision processes (perhaps even the same decision-makers) are operating in both types of markets and that, consequentially, bitcoin and crypto-assets are factually not alternatives at all.
Unfortunately for current cryptocurrencies, they just don't have what it takes to compete with decades of trust to get everyone to put their daily spending money in them, that is what will make a future system valuable. The current role they play as a speculative investment seems quite silly to me, literally they only thing they are good for is transactions, if you can't do that effectively I don't see value in the tokens at all.
Imagine if someone started a stock exchange and listed a single stock, their own, the stock for the exchange itself, and no one else's. While you can buy some things with bitcoin or ethereum, it's nowhere near widespread, so that really seems to be effectively what it functions as for now, which looks very bizarre on its face. Unfortunately for the people who do want to get rich, if there is an eventual winner in crypto, their rise will probably look something like what we see now, limited buy in from speculators followed by some inflection point, so it's entirely possible buying this dip of ethereum or some other coin might be the right thing, but I'm just not sure any of them are ready yet. Even with SegWit and other stuff happening in bitcoin, it just isn't clear to me that becoming a cash or credit card replacement system is even the goal anymore, which seems like they are just riding on their first mover advantage to prop up the value more than anything at this point.
1. People who buy bitcoin also are in wallstreetbets selling options they don't understand.
When they get a margin call and have to cover the money they lost, they sell bitcoin.
2. people in bitcoin are selling to transfer into stocks
Most people think of bitcoin as an investment, and a risky one at that. So they are taking their money out and putting it in safer places
Cryptocurrency has been used as a speculative investment.
It's riskier than stocks, so it has fallen further.
Not that I know anything about charts, but it did look like a head/shoulder chart as well a while back that would have suggested a dip was coming anyways.
The high at 12:00 am today was 7k now it's down to 5700 euro.
People are selling at 5500
"but the cryptos"
Please say cryptocurrencies.
Like it or not, "crypto" now means cryptocurrency, and "cryptography" means cryptography
The economic outcomes of the interventions could end up being worse than the disease, as people will lose their jobs, houses, and healthcare.
The flu is consistently among the leading cause of death annually, often higher than car accidents. Is it just that the flu is so commonplace that we've gotten numb to its impact?
Schools are cancelled, offices are closed and people that work in any form of travel related industry are going to be unemployed with essentially no welfare net.
It sucks but there really is not a long term alternative. Eventually we will have a yearly corona vaccine.
Unless you are planning on retiring in the next few years, you should be looking at this as the buying opportunity of a life time. This is at least the 4th panic sell off I've seen.
Of course, still doesn't change the fact that everyone should be investing fairly normally. A chunk of my next paycheck is still going into the market, just like every other paycheck I've ever received.
DO the opposite of whatever the top comment here says
Joe Kennedy, a famous rich investor in the 1930's, exited the stock market in timely fashion after a shoeshine boy gave him some stock tips. He figured that when the shoeshine boys have tips, the market is too popular for its own good.
In general the public consensus seems to be always one step behind after the developments on the stock market. It might actually make sense to do exactly the opposite of what everybody is advising.
Apparently not only can the powers that be halt trading momentarily, they can simply close the market altogether if trading is "bad" enough. How is that not manipulating the market? Why shouldnt we all be able to sell?
disclosure: Im firmly in the blue collar worker category. I dont own stocks.
If there is sudden mass sell-off, the buy side of the order book can run thin. The order book is supposed to be a representation of people's intentions to buy or sell, but it's no a true representation because people don't necessarily bother putting in limit orders far away from the current price. The halt gives time for people to put in their buy orders and put some back-pressure on the sell-off.
It also gives time for traders to tweak or turn off their algos if they are behaving badly.
If the crash is a "true" crash caused by fundamentals, in other words the economy is going to shit, I don't see how halting can help much.
Nobody said it isn't. In fact, that's the whole point: manipulate people to chill out, take a few minutes to think, and then get back to it.
The circuit breakers are a neutral addition. In some cases they may be triggered unnecessarily and are just delaying the inevitable. In others they may have a very real benefit in giving people time to figure out what’s really going on.
To be fair, I’m not sure how this affects algorithmic trading, which is not gonna be affected by the emotional aspect and are the dominant players today.
In 2008 this bear market lasted well over a year.
If you're already in the market, well you're kind of stuck now. Who knows how much further it will fall or even if it will? If anyone knew that, they'd be rich.
But this, as always, is a question of probabilities. In the short term there seems to be way more downside than upside potential. As much as it may have fallen in the last month, we're only now really getting back to the long term mean. Typically, during a market correction, the market oversells so further drops are entirely possible, even likely. Another 10-20% drop is (IMHO) completely realistic.
We have no idea what kind of disruption is going to happen to global GDP. As the situation clarifies itself, it may very easily become worse, which would continue to drive it down.
I don't think this really makes sense, unless there is some barrier to entry to selling. If you wouldn't advise someone with a free $20k to invest, why would you advise someone with $20k in investments to hold on, just because of sunk cost? It's effectively the same thing. If you don't need the money for a long time, you should invest regardless of what the market is doing. If you do need the money soon, you shouldn't be in the market at all.
But there is a difference. Like if you're in the market now, it's for a reason. Likewise, if you're out of the market now, there's a reason. Hopefully your reason for being in is long term (5+ years), at which point, not a lot has changed. If you still have gains and those aren't in a tax-deferred account, you may accrue a tax debt by selling now.
But for those not in yet, there will be opportunity here. There always is because at some point the market is oversold. My point is that we're nowhere near that yet because the number of cases is only going to go up for at least another 3-6 months and the likelihood that you miss a sustained rally in that period is pretty low.
So they’re selling anything that can be sold to raise the cash to make those interest payments - in a strongly deflationary environment you’d expect $/£/€ to rise against everything, including gold and bitcoin, which is exactly what’s happening.
The point of gold is to have buying power in times where very few have any of it. So liquidate some gold and start buying healthy companies for the cheap.
Keep putting money into low cost mutual funds, preferably though some tax efficient vehicle (e.g. a pension if possible).
http://s9w.io/corona_2020-03-12.png
US point of highest increase according to this is in "2.6" days with a standard deviation of 0.76.
I've seen precious metals move a lot more than this for no apparent reason.
The only problem is that I've only got $5k to invest, especially if I'm maintaining a healthy rainy day fund. And I'm not throwing all $5k into a single stock. That's why I'm not on a gold plated yacht.
The truth is you could be a financial genius but if you grew up in a middle class family and have basically zero inherited wealth, you're not going to have the money to invest.
It's far more likely that those financial geniuses are just not worried about retirement or college tuition for their kids. Because the strongest correlating factor for getting richer is already being rich, and not being smart with money.
The real question is... why aren't all yachts now gold-plated yachts? If my father gave me $1 billion 40 years ago, I would have to be literally the dumbest idiot in the world--or the unluckiest schliemazel in the world--to have less than that now. Instead, I just got a debt-free bachelor's degree, and so I'm not rich now, but still doing okay.
I don't think I can beat wall street except when wall street doesn't know how to respond.
Do not make "all or nothing" investment choices. It's perfectly reasonable to stay the course with bi-monthly investment purchases in your 401k.
We will bottom out eventually, but you're unlikely to call the exact bottom.
Sure, I wouldn't put 100% of my cash to work right now, but I think it's sensible to come up with a list of stocks you feel are beat up, and dollar cost average buying them.
Of course this is hard to do if your portfolio is 100% invested already, and you have little cash left.
S&P crashed in 2008 and recovered in 2013.
1 year is way too short a timeline. Maybe 5-10 years is the shortest time horizon to not be worried about market timing
EDIT: what part of this comment merited the cascade of downvotes (-5 at this moment)? You can verify the first two points fairly easily, and the last line is general advice given by many financial professionals and evidenced by the first two.
Do not average down.
The infected numbers will rise precipitously as testing rolls out, and the apparent growth rate will freak people out and roil the market more.
By all means, please keep selling! Personally, I'm betting that the markets will recover pretty quickly after things actually start to improve, and I'll be surprised if this skittishness doesn't pay for the trip to Venice that I'm now planning to take in the Spring :D
It'll still be gamble, but I like these odds.
Indeed it’s clear that a bottom must exist. Being unable to infer where it may be does not negate that certainty.
[0] https://9to5mac.com/2019/09/05/apple-is-borrowing/
[1] https://wolfstreet.com/2020/03/11/boeing-crashes-as-43-billi...
Both return capital to share holders but dividends yields a negative impact to their Market Value since it's dispensing their profits outside of the company.
AAPL is currently valued at a 20.38 P/E ratio, the lowest of all FAANG stocks, hardly overvalued.
Shareholders were clearly happy with receiving slightly less capital (that which will be lost to debt costs) in exchange for receiving it sooner. That is not a bad exchange, so long as the debt cost is not steep.
Apple can trivially afford their low-cost debt, both out of their extreme cashflow and their cash hoard.
However, I still see it as a bit of a problem. I think it is partially a symptom of a market that has become too focused on a single metric (P/E ratio). The result is that reducing shares is more important than boosting book value.
I'd love for this hypothesis to be proven wrong, but I'm afraid that it is part of what is driving some very questionable practices.
Still, it was the first time when lowering interest rates didn't have a huge effect on the market, so the signs are there.
That article says nothing of the sort. It says Apple issued $7B in bonds despite sitting on $200B in cash, and independently mentions Apple having spent $122B on stock buybacks in the past 18 months. The article also explicitly states the new bond issue is being used to pay off existing, higher-interest bonds that are coming due this year.
> Boeing took out $43 billion in loans for stock buybacks[1]
Again, the article says nothing of the sort. It says Boeing spent $43.4B in cash over a six-year period on stock buybacks. As a result, it does not have sufficient cash reserves to handle the financial fallout from the 737MAX incidents, and so has to borrow to cover those costs and keep the company solvent. The amounts cited in the article are significantly less than $43.4B, though still significant in the absolute.
In the last two weeks or so the doomsayers have seen their bullhorns acquire large volume increases, they're being given far too much credibility (like Merkel's obscene, wildly irresponsible statement about how up to 70% of Germans could get Covid; back in reality, it'll be a tiny fraction of that). The emotion and irrationality has now swung too far, per typical herd behavior. That irrationality may get worse yet, the panic is beginning to set in more fully.
I've been waiting for this moment since 2018
People bought boeing stocks at the dip, a few months ago, needless to say this wasn't the best time to buy.
You should max out your IRA and 401k plans, or whatever similar applies to you. However that should be regular investments by a plan that you arranged years ago and don't even bother to revisit. When asked their 401k strategy the most common answer of those with the best returns "I don't have a 401k" - which is to say you set it up at 30 and forget about it until you retire.
In all likely hood it will recover, but no-one knows when how far long out that will be and you never want to be in a position where you're forced to sell.
You're getting a lot of bad advice here, but you also haven't given us the full picture.
First question is: What is your goal? Are you planning to invest this money for retirement and not withdraw it for several decades? Or do you expect to need these funds for some major purchase in the next 5 years? The answer to that question will greatly influence the correct course of action.
Second, what's your risk tolerance? Most people don't know their own risk tolerance until they see their portfolio drop 20% like this. If you invested today and the market dropped another 20%, would you be able to sleep at night? Would you be tempted to panic sell to limit your losses? Would you check your balance so much all day every day that you can't perform well at your job? If so, you should start slower with something like investing 1% of your savings per week. Do not invest that entire 20% all at once.
While shares have been pummeled, for many large caps this just erases a few months of gains during a particularly frothy period. If some airlines start declaring bankruptcy, Boeing declares bankruptcy, etc., things can get a lot worse.
In the coming months the actual financial impact is going to start hitting a lot of organizations.
There’s non-zero volume and interest in S&P future puts striking at 1000. There’s plenty of potential downside.
This will get worse before it gets better.
"Turn those machines back on! Turn those machines back on!"
That said I'm no where near close to informed or experienced enough on these things to say for certain.
I still have a decent amount in my 401k and stocks, sold 70% of them incase shit hits the wall (I quit my job earlier this year to be an indie hacker)
Plus the upcoming election usually slows things down. So my prediction is until 2021 we’re deffo in for a ride.
I transferred most of my retirement savings out of stocks in early March, realizing a 9% loss. The market had a little upswing that day, so that worked out as well as possible for me, considering.
I was hearing advice from an acquaintance to just "ride it out".... yeah, no. After hearing about the inadequate testing and other half-measures taken by the Administration, I was convinced it would get much worse before it got better.
I had thought about cashing out on January 31st, because I figured Brexit would trigger an Europe-wide recession, which would lead into a worldwide recession. But I didn't get around to that (lazy).