Corona Virus..... Govt Stimulus? Where to now?

Nothing’s perfect but my fund has gone into this with 10% gold, 50% longs, 10% shorts, 40% cash - so I got hit initially. As the thing exploded I swapped to 20% gold (got killed on that), 30% shorts, 40% longs. Towards early March I swapped to net short. Currency is also important. Some of my longs are in Nasdaq/Hk which provides a natural imperfect hedge for me in a fall.

At a different time when valuations were cheap I might have been 80% longs, 10% gold, like 2016. So it’s really dependent on where I think we are at in the cycle.

It’s same as my approach to properties. I was buying say 12, 13, 14 in Melb. But then I stopped in 15 onwards because it seemed to get expensive. Obviously that was too early a call and it kept going in 18-19 before basically falling 15-25%.

So my stuff is pretty vanilla. Properties, shares and maybe some options. I’ve got friends who do crazy things - eg I had a uni friend writing massive amounts of S&P500 2800 calls on Friday (I mean pretty ballsy stuff, now he’s going to kill it tonight and close his position, but I reckon the average punter would’ve had a heart attack doing this over the weekend), another writing 1 week puts on oil at $35/bbl. I get that stuff but it’s too much technical work and can’t sleep at night. Can blow up any day.

 

@Omnidragon bank stocks are looking low some post gfc. Although their profitability will hurt while interest rates continue to drop do you see any value in them atm or wait longer? What's your thoughts on the property market atm? Will it be like 1987, ppl flood to property 2 years later, the market slows up

 

No idea but it’s probably binary.

I think property just depends on unemployment. If for whatever Main St or Wall St shock, unemployment rises rapidly, properties will probably be in trouble. Even low rates wouldn’t rescue us - don’t forget the rates are low for a reason.

There’s a silver lining path where somehow employment remains solid, rates are low, stocks have cratered, then money may move into properties. Sounds like 2009 Melb/Syd. Don’t forget though, America didn’t play out like this - we are super conditioned to think every cycle is the same because of past experiences. So really it just depends how badly the economic situation deteriorates.

I don’t like banks because margins are squeezed, the book is horrendous (mainly resi loans), AUD is falling so offshore funding moves inversely. Good thing is there’s lots of fat. Not that I think we are at the bottom but let’s say you did think that, I’d rather buy something with a higher beta like Afterpay (mind you I wouldn’t buy either now).