Liquidate entire portfolio until virus is over?

worldtraveller

Prism said:

2010 said:

worldtraveller said:

IMHO, I'm expecting, at least, a 30% decline in major western markets from peak, at this time. Just like in 2008/09, I'm planning on reinvesting accumulted cash, built up over the past 6 months or so, expecting a market correction, just as I did in late 2008.

I'm planning to start feeding accumulated cash back in to equities when we see c. 20% decline from peak, which we'll see, almost certainly, next week. It'll be measured, and it'll increase, if and when the markets declines further, which I expect.

It suited me very well in 2008/2009, when, TBH, I made more return on my equity investments, than any time in the previous 20 years, at least.

Quite frankly, I love these rare opportunities, in a lifetime, to make major returns on investments, when others are panicking...It's something you learn over time, and, for those that are prepared to take the risk, enjoy the ride...For those that aren't, then fine, I have no issue, whatsoever, with that. Your choice, your money!

Good luck!

Good post, unlike others like rabbits caught in the headlights and failing to see the blindingly obvious.
Markets are on the drop, big time.

There is nothing blindingly obvious to see. You have no idea which way the markets will go. Nobody does. Your guess is they will go down a long way. You might be right but since nobody actually knows the best thing to do is carry on like normal. Nothing to see here

Thanks for your post prism, but personally I won't "carry on like normal". I'll be taking advantage of any market drop, which has only just started, IMHO. I see gobal markets  falling considerably more over the coming months, and therefore I'm acting accordingly. If I'm wrong, so be it, but I don't believe that I am. Let's compare notes later this year....

It's rare to have opportunities like this, in very volatile markets, when I believe that you can increase your investment value considerably. I respect your view, but it's clearly very different from mine, at this particular time. But, then again, I tend to be a contrarian investor, and don't tend to listen to those that believe we should all just 'carry on as normal', especially in volatile times. I've always made my biggest returns, by far, by 'timing the market', especially when we have these rare volatile periods, selling equities for cash at what I perceive as a period when a correction is overdue, and then buying back in when the markets fall back.

bostonerimus

BrockStoker said:

So what are you going to do? I’m going to do nothing.

All I'm doing is making sure I have cash available if there is a drop in the markets. As others have said - you get more for your money if you buy after a significant fall.

But the money you didn't invest missed the ups and all the dividends. It comes down to the old arguments about market timing and time in the market. If you sold at the top and manage to time the bottom and buy back in then you will do very well. It's not a strategy that can be well implemented by most people.

Prism

worldtraveller said:

Prism said:

2010 said:

worldtraveller said:

IMHO, I'm expecting, at least, a 30% decline in major western markets from peak, at this time. Just like in 2008/09, I'm planning on reinvesting accumulted cash, built up over the past 6 months or so, expecting a market correction, just as I did in late 2008.

I'm planning to start feeding accumulated cash back in to equities when we see c. 20% decline from peak, which we'll see, almost certainly, next week. It'll be measured, and it'll increase, if and when the markets declines further, which I expect.

It suited me very well in 2008/2009, when, TBH, I made more return on my equity investments, than any time in the previous 20 years, at least.

Quite frankly, I love these rare opportunities, in a lifetime, to make major returns on investments, when others are panicking...It's something you learn over time, and, for those that are prepared to take the risk, enjoy the ride...For those that aren't, then fine, I have no issue, whatsoever, with that. Your choice, your money!

Good luck!

Good post, unlike others like rabbits caught in the headlights and failing to see the blindingly obvious.
Markets are on the drop, big time.

There is nothing blindingly obvious to see. You have no idea which way the markets will go. Nobody does. Your guess is they will go down a long way. You might be right but since nobody actually knows the best thing to do is carry on like normal. Nothing to see here

Thanks for your post prism, but personally I won't "carry on like normal". I'll be taking advantage of any market drop, which has only just started, IMHO. I see gobal markets  falling considerably more over the coming months, and therefore I'm acting accordingly. If I'm wrong, so be it, but I don't believe that I am. Let's compare notes later this year....

It's rare to have opportunities like this, in very volatile markets, when I believe that you can increase your investment value considerably. I respect your view, but it's clearly very different from mine, at this particular time. But, then again, I tend to be a contrarian investor, and don't tend to listen to those that believe we should all just 'carry on as normal', especially in volatile times. I've always made my biggest returns, by far, by 'timing the market', especially when we have these rare volatile periods, selling equities for cash at what I perceive as a period when a correction is overdue, and then buying back in when the markets fall back.

I also think its sensible to take advantage of a market drop if you can however to do that you have to sit on a wedge of cash for possibly an extended period to make a meaningful difference and guessing when that correction is overdue. So lets say I had decided to sell some equities to raise cash a year ago - I would have missed out on a 10% gain. Two years ago I would have missed 30% etc. I have invested a regular and increasing amount every month for the last 23 years - I don't have an awful lot of spare cash to make much difference. Saying that I am likely to sell a small bond allocation this week that has risen several percent to add a bit more to my equities but this is nothing close to an opportunity yet.

BrockStoker

But the money you didn't invest missed the ups and all the dividends. It comes down to the old arguments about market timing and time in the market. If you sold at the top and manage to time the bottom and buy back in then you will do very well. It's not a strategy that can be well implemented by most people.

Most of the money I'm planning to invest has only just become available to me (inheritance), and the rest came from the sale of a couple of funds a few months back (fundamentals changed, and they have since fallen significantly), since which I've not really had a chance to re-invest.

I do like trying to time the market anyway (it has worked for me in the past), but this time it's just the way things have worked out.

chucknorris

John_ said:

chucknorris said:

EdGasketTheSecond said:

How will you assess when we have 'really crashed' though? What would be your criteria and how would you know it wasn't a bull trap?

Well as most of my additional funds are not available for over 2 years, it would be a fairly long bull trap

Do you know that phrases like “bull trap” are simply not used in professional trading? They are used by technical analysts, who are no better than astrologers, and pundits.

I’ve traded for over twenty years now as my job, and have not once heard anyone say “bull trap” ever.

Why are you saying that to me? I was responding to a poster who used that phrase to me! If you had any sense at all you would have said it to him.

Alexland

Prism said:
I am likely to sell a small bond allocation this week that has risen several percent to add a bit more to my equities but this is nothing close to an opportunity yet.

I agree staying mostly invested over the years and rebalancing gradually into risk as the market falls is the most likely way to get advantage from the situation. There seems to be a long queue of people eager to buy at the bottom which suggests pent up demand may be sufficient that the bottom won't be as low as people might hope for. Unless perhaps the market listed companies become so fundamentally damaged their share units are permanently worth less - in which case there isn't advantage buying them at the lower prices.

Username999

Some good news!
Daily cases reported in China is reducing.

coastline

tropic_of_Username004 said:

coastline said:

I'm not making bold claims its over and we recover from here. All I posted recently was SP 500 has a low of 2855 and over a week its never been broken. A line in the sand but next week who knows.
 

So what you're saying is: the recent low is 2855, and either that will remain the recent low, or there will be a new, lower low. Wow, I'd never have know that without the help of technical analysis

All TA gives us is some terminology to describe what's happened when markets have gone up or down. It doesn't tell us what will happen next, or even the probabilities of different outcomes. So what is the point?

You might argue that the terminology is meaningful in the sense that it is describing the mood of traders, which is itself one of the factors which does influence future market moves. And that may be true. But that doesn't make TA actually useful (i.e. predictive).

If the market had gone down for 7 straight sessions then no line in the sand could be suggested. The fact that 2855 was a low a week gone Friday is just about all we have to go on. Both Fridays there was a massive rally from lows and I think this Friday got around 2880 ?
The 2008 crash ended in a similar fashion with a massive daily rally from a low and this is the nature of things market related. Recently the 2019 correction ended similar.
Did you know 2855 was a low without it being posted here and did you know about the daily reversals both Fridays ? It's hard to see this behaviour without looking at a chart and candle charts show Open, High, Low and Close of the daily price. Very useful to me but for other people 
I doubt it ?
Everybody to their own I suppose and I happen to like charts and indicators. Buy and hold ain't for me anymore.

HardCoreProgrammer2

NorthernJoe said:

chucknorris said:

Reaper said:

Here's my opinion for what it's worth...

1) I think the scare is overdone. Season flu kills an average of 17,000 in the UK every year but doesn't cause this level of panic. Both diseases are of most risk to those who are old or have existing conditions, but unlike the flu Coravid-19 does not seem seem to be particularly dangerous to children. BUT...

2) Despite what I said above I think the reaction of people and governments limiting movement, shutting down places of work and cancelling events means it will have a significant effect on businesses and therefore stock market.

Taking those 2 facts together I don't plan to sell anything but will wait until I feel the disease is approaching its peak them buy whatever I can with whatever spare cash I can get my hand on. That's because demand has not gone away. It's only supply that is being affected so I am expecting a rapid bounce back to levels not much short of where they were.

I agree with you, but I have also (I think) have prepared for a much worse scenario. By having money available for substantial future equity investment if the market really crashes'

I disagree. The government has been treading carefully to try and prepare people for the inevitable, try not to cause panic and yet plan behind the scenes. As a result, in my view, as someone involved in that planning, the risks have been significantly underplayed in public. 

I too am cautious not to be seen to scaremonger but the reality is, this is bad - worse than anything we as a society & health care system have face outside of wartime in 100 years. I am dismayed by the general level of ambivalence to it all - call it British humour, stiff upper lip and all that but we would all do well to recognise the reality of what is upon us and prepare for this, individually & collectively. 

Italy is the first developed country to have dealt with a significant outbreak of Covid19. It’s also the first country that has reliable figures that we might extrapolate to our own population to inform planning & the figures are stark -

Currently 64% of Covid19 infected are in hospital.  10% of currently infected are in intensive care. So far, ~11% of total cases have recovered and 3.8% died. 10% of the hospitalised are doctors. 

Given the vast majority of us will get this, this will, at the very least be a major test for the NHS. At it's worst, this will collapse our healthcare system. A lot of hopes are being pinned on this virus fading away in our typically tropical British summer but the reality is, there is very little data to support that. 

Quite what that means for markets/investments & the economy is not clear and is obviously a secondary consideration far behind the health & wellbeing of our population. . . but then this is a finance forum; 

School/businesses will undoubtably be forced to close en masse, those that attempt (or are permitted) to stay open will face major staffing issues. Globalisation has meant that small & medium sized businesses etc are very vulnerable to supply chain issues (remember that "hard Brexit" business?). Abrupt supply & demand shortages and an inability to move goods/services will result in almost immediate cash crunch. 

With significant central bank & government aid they may weather the storm but for how long? Two months? Six months? Roll on Summer eh? 

Significant defaults & second credit crunch are not beyond the realms of possibility. How much leverage do central banks have this time round to avert that and maintain liquidity? 

NorthenJoe,
I cannot agree more. When I heard comments this week that the food supply may not hold, that the police will only be able to investigate the most serious crimes, I felt a shiver down my spine. The latter is akin to telling the [insert derogatory term of your choice] in the estates that there will be a free-for-all once the virus outbreak takes hold - because no one will care (as long as you are not going on a mass-killing spree, burning down the police station, or smashing up their favorite chippy). I really have a feeling that the people above know that things will get much, much worse, and not telling us.
In Hong Kong, schools have been suspended, border crossings have been closed, people are wearing masks when they go out, working from home, avoiding meals and gatherings, etc. and still there are a few cases every day (although the recent cases were mainly caused by people with too much time and money travelling abroad and bringing it back). If these measures were relaxed, Hong Kong would become another Wuhan in no time.

I was on buses and trains this week, and saw lots of people sneezing and coughing without covering their mouth or using a handkerchief. If one person in a packed commuter train is a carrier, he/she can infect hundreds in a 15 minute ride.
I talked to a teacher this weekend, who apparently was told by the head of school to allow pupils who returned from Italy back into the class without 14 day quarantine, because "otherwise they will need time to catch up on 2 weeks worth of lessons and slow everyone down (thus affect targets, etc.)". If one child has the virus and goes into school, we are looking at hundreds of families taken out of action at the best case scenario.
Then we have lots of people saying it is "just a flu" (e.g. the person you replied to). Hello, if it is indeed the case, why do we have Chinese cities and entire Italian regions in lockdown, health system collapsing, field hospitals built (about 20% of cases require hospitalisation), dead bodies piling up on the streets, etc.? [Actually, I feel much offended by the glib remark, as I have just come back from a place where the virus is active and despite not being required, decided to self quarantine for 2 weeks anyway. I am taking measures to avoid infecting others inadvertently - why did I bother if others don't care?]
With such complacent attitudes UK, I think it is just a matter of time before UK becomes another Italy. There were 64 cases yesterday and the number is increasing daily. I give it about 1 month max.

I do not subscribe to the "time in the market not timing the market" nonsense, and do not believe that I have to watch my investments fall in value just to adhere to some dogma.
I just ask myself: if I am investing now, would I still want do so? The answer is no, so I sell. Simples. Nothing to do with having "invested above my risk profile".

eskbanker

HardCoreProgrammer2 said:

why do we have Chinese cities and entire Italian regions in lockdown, health system collapsing, field hospitals built (about 20% of cases require hospitalisation), dead bodies piling up on the streets, etc.?

Exactly where are there "dead bodies piling up on the streets"?