World Indices Roundup 2020

$2 trillion stimulus

perspective from Batnick

 

Well US Futures are not excited yet but anything’s possible:

 

Buy the rumour, sell the news

 

Two things worry me about XJO.

Let's assume that the low of 4402.5 was the end of Intermediate wave (A) of Primary wave ((2)), which by the way took all the gains from 23 November 2012, then firstly it's already in the 0.618 - 0.786 retracement zone of the entire advance from March 2009. That's already enough of a pull-back to comprise the whole (A) - (B) - (C) three-part move a correction comprises.

Secondly, if Intermediate wave (B) is now underway it could advance all the way into say 2024 - 2026, being mistaken for a bull market and then Intermediate wave (C) commences with the real end of (real estate) cycle melt down. Yes, it's hard to believe that this (i.e. now) could just be the mid-cycle share market pull-back. In this scenario, the collapse after 2024 -2026 is going to be...

 

Or another take on 144. 576 weeks from 10 March 2009 is 24 March 2020. So, was yesterday important in some way?

 

I would say the next big test for markets is the end of this quarter. There will be liquidations occur then. So, the week ending 6 April 2020 will be interesting and may be the time for further weakness in markets.

 

Yes, agree. Earning season reporting is next month also in the US and tomorrow the jobs numbers come out. Also I believe at the end of March, the US President will announce whether full blown lock down occurs or as he would want people are back at work before Easter

Volatility and more downside to come

 

So, as I have no idea how to quote myself or link an older post, on the World indices 2019 thread, post #444, around mid October of last year I had predicted we would see falls to circa 4800 followed by a HUGE bounce, I even went as far as naming this scenario the wealth divider.

It is far to early to tell if my research and analysis was correct (crystal ball) however one thing I will give myself a pat on the back for is sticking to my plan.

The first few days/weeks of falls (my first real correction/crash experience with money on the table) was.... tough. In all honesty and I am not afraid to admit this, it made me feel physically sick, there was a night I watched my partner as she slept thinking of discussions we had about starting a family, our first o.s holiday (been together 10years) and then thinking of the amount of value my shares/capital had dropped by. Had me thinking if I truely am cut out for this share investing. After not much sleep I woke the following morning, stood over the sink as I prepared for another day of work and was about to grab my iPad to sell, stop the bleeding, invest in something ‘safer’ or just save.
It was what followed that possibly changed my life forever, I lay back on the bed, grabbed the iPad, and placed BUY orders! Every stock I had on my buy list I placed an order for, I also did my usual dca plus 20% as I said if the markets fell by 20 I would buy 20% extra etc.

I stuck to my plan.

As I type this, I am still far off where I was on the 20th of Feb in terms of portfolio value, I am also however far ahead of where I was on that very day as I proved to myself that I could stick to my plan, for me this is priceless.

In all honesty every time there’s a day of heavy losses now my reaction differs vastly from the me a month ago, I feel as if I can disassociate emotion and investing, I can make decisions based on calculated assessment and most importantly I can stick to my plan. Absolutely invaluable, quite a satisfying feeling which is hard to describe as it makes no sense when coupled with the loss of super hard earned capital.

Also, I would like to drift a tad off topic, driving to work most mornings I have driven past Centrelink, the lines at even 6am, is something that really hits me. There are real people sitting in those lines, many of which have never relied on help, many who have been perfect citizens, mothers, fathers, brothers, sisters and children, people who love and people who are loved. I can’t begin to imagine how some may be feeling, some who where/was the only working person in the household now stressing not about what share to buy next but where the next meal will come from for their family. Whilst it’s easy for us to say that many are in that position by choices they had made and being a bit judgmental in general, it is also very very important to remember that in life anything can happen and sometimes it does.

If you or anyone you know is going through a hard time at the moment there are many places you can call and reach out to for help.
My thoughts are with everyone.
Stay safe.

 

My thoughts go out to these that are suffering as well (been there myself)...someone continually posting on here that being successful is all about mindset, but like you said, life can throw a lot of **** at you, and sometimes it just doesn’t let up. I guess it’s a blessing in some way, because then you can relate and have empathy towards those that are really struggling. Hopefully most can pull through.

 

Yep - takes balls to keep buying when the value of your portfolio keeps going down.

I bought some VAS after the first ~15% down, then after it kept dropping my portfolio value was less than before adding the extra!

 

Interesting

Technically Speaking, the Dow Just Rocketed Out of a Bear Market

"The steep decline that brought the Dow down 37% from a record resembled a “waterfall decline,” according to strategists at Ned Davis Research, marked by persistent selling over weeks, surges in volume, and a collapse in confidence. While no two scenarios are the same, usually such fast falls see the lows tested again."

Of 13 similar plunges since 1929, nine of them saw the Dow break the initial lows. And of the four instances in which the benchmark didn’t fall to fresh lows, it at least retested the bottom in three of them. The only exception was the most recent case: December 2018.

“We caution against recency bias,” wrote strategists including Ed Clissold. “The temptation is to breathe a sigh of relief that the waterfall is over and jump back into the market. History suggests that a more likely scenario is a basing and testing period that includes a breaching of the waterfall lows.”

 

The gfc was more complex because it was multiple crash events. Initially at the end of 07, then again when investment banks failed in 2008.

in the current case, potential causes of a second leg down might be unexpectedly worse coronavirus results or a major bankruptcy.

 

I consider those to be a certainty especially the latter, only in plural.

It aint over yet.

 

Today's Age: The Dow was up 21 per cent from its Monday low, establishing it in a bull market, according to a widely used definition. It was the Dow's strongest three-day percentage increase since 1931.

Reminds me of the parody of Kipling: "If you can keep your head when all about are losing theirs, you obviously don't understand what's going on".

 

The velocity of the down and now up movements tells me one thing. There is more downside to come. It isnt going back to old highs, period.

 

There are plausible scenarios for anything you observe, but it doesnt mean theyre actually a trend.

You could say the market has priced in all the bad news, so its now looking forward to the future after the coronavirus subsides.

However, since there is no timetable about when the coronavirus subsides, or how bad things might get until then, its hard to understand how the market thinks its priced in 'everything' when you dont know what 'everything' is.

Everyone is trying to predict the future, and those that are right will make money.

The bounceback seems too fast, without any news to back it up. Gut feel says some negative event will happen (another country with out of control coronavirus, bankruptcy of a major company, worse economic figures than expected) that will cause the market to fall again in the short term.

5 years from now, though...... You buy VAS at $65. And more at $60. And $55. And $50. And more when it bounces back to $70 before markets return to normal. What will you think in a few years when it hits $100? Sure you would have been better off buying everything at $50. But thats just regretting not making more money.

 

Sold some MSFT shares last night above $US150. I like them as a long term hold but we were seriously overweight in them (45% portfolio) and I think this bump was a great opportunity to take some money off the table with the $AU so low as well.

 

Trump has put a timetable of things getting back to normal by Easter. I am not sure if he is looking at the latest stats that shows that the USA is now leading the Total Covid-19 cases

 

I suspect a debt crisis in the Eurozone is another possibility after the virus itself becomes less of an issue?

Any number of potential issues could arise but then again what’s new, situation normal for sharemarkets. Just gotta accept this as a “feature” not a “bug” in the system. That’s why the equity risk premium exists. If one can’t stand the heat then get out of the kitchen.

I don’t like seeing bad things happen to good people as a result of the economic fallout from these crisies. Personally when it comes to investing I’m not as interested in market crashes nowadays but would be content if for a decent period of time I have the opportunity to average in at lower valuations relative to recent years. For most that’s likely more conducive to wealth accumulation than hoping for and trying to time market crashes.