Current stock market ups and downs, downs, downs, downs

Hopefully we can talk about the markets without getting overly political.  Last week the DJI dropped roughly 3500 points, the biggest drop since the 2008 crisis and had the single largest one day drop in history at around 1200 points.  Right now at 8:48AM EST the DJI futures are down around 140 and have been fluctuating wildly.  Personally I'm expecting it to continue.

I read that the Fed is expected to cut interest rates soon, and might possibly follow up with another cut in a few months.  They're trying really hard to stimulate the economy and keep the markets from crashing it seems.  Well, a lower interest rate would be nice, as I'm trying to sell a house (and then buy one shortly after).  

What are your expectations for the stock market?  I'm no expert but I'm thinking this week it'll continue to go down, perhaps not as badly as last week.

2020 was expected to be a rough year for most industrial/manufacturing companies anyway, before all of these COVID-19 concerns and shutdowns. I still think that's going to be the case. The virus stuff just makes those worse.

The lack of manufacturing and overall commerce in China right now is going to have a negative impact on everybody's Q1, and possibly Q2, but I think the market is trying to price that into it's current valuations too which would explain some of the recent drop. I'd still think a dip around the time Q1 results start to come out is probably likely though.

If we can get past the virus stuff, and restore basic operations for most of these companies, I think it could actually lead to stronger than expected results later in the year as everybody tries to catch up. That might reduce the duration of any slowdown.

The traditional stimulus is tax cuts, cuts in interest rates, and big deficits. There really isn't much else. Those bullets have, for the most part, already been fired.

In reply to STM317 :

Part of the problem with getting those larger companies up and running again is that the smaller companies that support them and their workers have cratered.  Like most places, the poorer/smaller business owners have trouble getting loans to sustain them while no one is out and about. 

China is starting to roll out provisions to help small business owners, but for a lot of them it may already be too late.

Just like every other recession it will go down some more.  I would say that in 6 or 7 months from now, be ready to buy back in.  

If one has not sold off, DON'T DO IT.  It will come back, just like every other loss.  You don't actually lose money until you sell.

For things to recover, the #1 thing required are consumers.  Once the population starts buying stuff, then corporations will expand to sell more stuff, creating more jobs, making more consumers to buy stuff.

It really depends on the extent to which the virus spreads to Europe and the U.S., but if early indications hold true, there's no stopping this thing.  The impact on every sector will be significant.  If all your manufacturing is in China (or wherever) and all your plants are shut down in response to Da Wuhan, what are you going to sell?  Nothing, that's what. 

The next few weeks will be telling.  If this thing fizzles out, then look for a slow rebound.  If the spread continues across developed economies, look out below.

Disclaimer:  I am neither an economist nor an epidemiologist.

Edit:  Oh, and this is not a "recession."  This is a "Black Swan" event that could cripple production worldwide and leave a huge medical bill behind.

But don't panic.  Stay the course.  This too shall pass.  In time.

Stimulate the economy? "Every other recession?"

I didn't realize the economy had stop adding jobs every month, just because it's not growing as fast, doesn't mean it's not growing.
 

Alfa, what recession? We need a fall in GDP for consecutive quarters, I don't remember that being the case.

The market will recover, but it will take time. The Corona thing will blow over in a few months then we will have the election to deal with. Once that is passed things will get back to normal. Just sit on your stocks (or buy now while they are on sale).  I guess 18-24 months.

DJI started up today, about 200 something points.  I'm tempted to try to buy a stock or two at a discounted price but my concern is that this could just be a dead cat bounce and it'll continue to go down.

Riding this one out like the last ones. I'm still way up overall because I sit on stocks forever. I finally sold off my Citigroup stock though, I gave them a decade to recover and finally decided to just take the tax loss writeoff.

I just hope for downs days when my dividend reinvestment purchases happen.

The part that sucks is that NAFTA has been the lone region still running strong until this recent hit.  I suspect the spread across NAFTA is enviteable given it's relative contagion level.  I am just thinking of where the floor is at to toss some money at the market.

Very cool info graphic that hit Linkedin this am.

corona virus spread info graphic

alfadriver said:

Just like every other recession it will go down some more.  I would say that in 6 or 7 months from now, be ready to buy back in.  

If one has not sold off, DON'T DO IT.  It will come back, just like every other loss.  You don't actually lose money until you sell.

For things to recover, the #1 thing required are consumers.  Once the population starts buying stuff, then corporations will expand to sell more stuff, creating more jobs, making more consumers to buy stuff.

SO MUCH THIS.  Unless you need the money to avoid imminent starving homelessness, just leave it where it is and wait it out.

This will do exactly what every other cyclical virus panic of the last few decades has done.  This time next year it won't even be a blip on the world's radar... UNLESS people insist on freaking out about it.

Floating Doc said:

The traditional stimulus is tax cuts, cuts in interest rates, and big deficits. There really isn't much else. Those bullets have, for the most part, already been fired.

Nailed it. We could go negative with interest rates if needed I guess. How'd that work out for Japan?

Was going to refi a rental property on Tuesday. Am at 3.62% currently. 
 

with current thoughts all around that interest rates may be cut to stimulate economy - definitely gonna hold of. My ARM on that property expires 7/2021

z31maniac said:

Stimulate the economy? "Every other recession?"

I didn't realize the economy had stop adding jobs every month, just because it's not growing as fast, doesn't mean it's not growing.
 

Alfa, what recession? We need a fall in GDP for consecutive quarters, I don't remember that being the case.

Since Wall St always drives the economy (which is really odd to me, sometimes), the fact that they are starting to panic will start to drive consumer buying- mostly in the restriction of loans (which is the core of what happened in 2008).  Once consumers stop buying, the economy will go down.  Starts with the high dollar items like where I work, and it will filter it's way down.  Just like every other time.

If you really don't think this is going to end up as a recession, then don't worry about the stock market.  

As for what to call it- recession or black swan- it does not matter- the end results will be the the same if there is a problem.  Sick people = less productivity = less money for consumers = less consumption of stuff.

I sometimes think that we need a consumer banking system that is more separate from Wall St, so that when something happens to them, we are not stuck with higher loan rates even when a majority of consumers are doing the right thing.

Fueled by Caffeine said:

Floating Doc said:

The traditional stimulus is tax cuts, cuts in interest rates, and big deficits. There really isn't much else. Those bullets have, for the most part, already been fired.

Nailed it. We could go negative with interest rates if needed I guess. How'd that work out for Japan?

I don't think that the government has reached its limit- now is the time that we can do some major investment into infrastructure.  That will feed many mouths directly.  And that path has worked in the past, as well- as distasteful as it is for many.

We had such a fantastic 2019 (averaged 24% increase for the year across all our investments)I expected there to be a little correction this year. We're handling it like always, doing nothing, putting money back and let it ride. In 15 years I'll start to get concerned over these dips but not right now. 

mr2s2000elise said:

Was going to refi a rental property on Tuesday. Am at 3.62% currently. 
 

with current thoughts all around that interest rates may be cut to stimulate economy - definitely gonna hold of. My ARM on that property expires 7/2021

Same here, I was just getting ready to refinance our house............but I also think I'll wait until closer to summer.

z31maniac said:

mr2s2000elise said:

Was going to refi a rental property on Tuesday. Am at 3.62% currently. 
 

with current thoughts all around that interest rates may be cut to stimulate economy - definitely gonna hold of. My ARM on that property expires 7/2021

Same here, I was just getting ready to refinance our house............but I also think I'll wait until closer to summer.

Yup. We closed on a property 2/20. 3.37% on that. 
 

i will do same as you. Rest of portfolio - I am in buy mode always. Law of averages and all that. No need to panic (for me). Will increase some liquid asset/ as I am seeing some short sales pop up - and if economy is in more "correction mode," hopefully we can pick up two more rental investments . Market is always tight and pricey here in So Cal,  I am seeing some changes ..... 

Market is going pretty strong still so far.  Up 350 points.  I pulled the trigger and picked up some Apple stock, hopefully that pans out well.

Passive investor here…I just buy and hold low load index funds for the most part.

If I had to guess, I’d say we’re in the middle of a dead cat bounce.

The S&P 500 landed 12.8% below it’s all time high at the close last Friday. As the infection rate continues to increase and we start seeing the impact in corporate earnings / forward guidance, we’ll see further drops in equity valuations.

I’m thinking we’ll shed another 10%ish over the next month or two (though there’ll be temporary fake-out reversals along the way). At that point, we’ll have much better visibility into what the ultimate impact will be and P/E ratios will be too attractive for investors to continue standing on the sidelines.

I usually update my portfolio daily, I’m not bothering right now not because I can’t face the numbers but because the situation is too fluid for it to really matter.

I’m down about 260K, I suspected we were going to have a major sell-off about three weeks ago and yet I took no action.

I’m fine with my decision as the only alternative would have been to move out of equities many times in the past when it wasn’t necessary. That would have caused me to miss so many advances that I’d be well behind where I am now despite last week’s train wreck and the continued carnage I anticipate.

Basically, as is always the best strategy, I’ve got my Braveheart cranked up to eleven…HOLD…HOLD.

alfadriver said:

Fueled by Caffeine said:

Floating Doc said:

The traditional stimulus is tax cuts, cuts in interest rates, and big deficits. There really isn't much else. Those bullets have, for the most part, already been fired.

Nailed it. We could go negative with interest rates if needed I guess. How'd that work out for Japan?

I don't think that the government has reached its limit- now is the time that we can do some major investment into infrastructure.  That will feed many mouths directly.  And that path has worked in the past, as well- as distasteful as it is for many.

Sure, infrastructure spending is badly needed and could make a big difference. The big question though, is whether all of this spending just gets used to reward political allies. 

Market has stayed pretty strong today.  Apple and Gladstone Investment, two of my favorites, have both performed well.  So there's some good news.  Now if I only had enough money to invest to actually make a difference!

alfadriver said:

Fueled by Caffeine said:

Floating Doc said:

The traditional stimulus is tax cuts, cuts in interest rates, and big deficits. There really isn't much else. Those bullets have, for the most part, already been fired.

Nailed it. We could go negative with interest rates if needed I guess. How'd that work out for Japan?

I don't think that the government has reached its limit- now is the time that we can do some major investment into infrastructure.  That will feed many mouths directly.  And that path has worked in the past, as well- as distasteful as it is for many.

Because the best way out of near-catastrophic debt is... to spend more money. 

In reply to Duke :

Not to founder this horribly, but if debt mattered, then there would not have been tax cuts.  So...  Apparently it does not matter anymore.