Liquidate entire portfolio until virus is over?

Thrugelmir

adonis10 said:

Why are traders dumping everything? Are they all in it for the short term? I am a novice and so trying to learn about the stock market but cannot understand why it is tanking so much. Surely unless all the constituents of the FTSE100, for example, go bust it is only a paper loss. Is it largely due to investment bankers chasing short term gains for bonus reasons? That I could understand. But the investor in it for the next 30 years, why would they need to dump everything at the first sight of a crash?
Genuine questions for a newbie.

Traders are not dumping every stock. That's a fallacy. Market makers will adjusting prices downwards as sellers exceed buyers. Trade could be very thin a particular stock. Also as specific company news is released such as a profit warning (WH Smith) or debt issues (Cineworld / Intu). 
In any downturn there's likely to be casaulties. When a company goes bust there's no recovery. Holding the stock results in a 100% loss. The capital is gone forever. 

adonis10

Thrugelmir said:

adonis10 said:

Why are traders dumping everything? Are they all in it for the short term? I am a novice and so trying to learn about the stock market but cannot understand why it is tanking so much. Surely unless all the constituents of the FTSE100, for example, go bust it is only a paper loss. Is it largely due to investment bankers chasing short term gains for bonus reasons? That I could understand. But the investor in it for the next 30 years, why would they need to dump everything at the first sight of a crash?
Genuine questions for a newbie.

Traders are not dumping every stock. That's a fallacy. Market makers will adjusting prices downwards as sellers exceed buyers. Trade could be very thin a particular stock. Also as specific company news is released such as a profit warning (WH Smith) or debt issues (Cineworld / Intu). 
In any downturn there's likely to be casaulties. When a company goes bust there's no recovery. Holding the stock results in a 100% loss. The capital is gone forever. 

How do market makers adjust the price downwards?

I understand about a company going bust and the loss being 100%. What is the likelihood of any current FTSE 100 company going bust? Who are the prime candidates?

quirkydeptless

BREAKING NEWS...
News sites globally are running out of stock images of shocked looking traders 

Username999

adonis10 said:

I understand about a company going bust and the loss being 100%. What is the likelihood of any current FTSE 100 company going bust? Who are the prime candidates?

NMC.L

Thrugelmir

adonis10 said:

Thrugelmir said:

adonis10 said:

Why are traders dumping everything? Are they all in it for the short term? I am a novice and so trying to learn about the stock market but cannot understand why it is tanking so much. Surely unless all the constituents of the FTSE100, for example, go bust it is only a paper loss. Is it largely due to investment bankers chasing short term gains for bonus reasons? That I could understand. But the investor in it for the next 30 years, why would they need to dump everything at the first sight of a crash?
Genuine questions for a newbie.

Traders are not dumping every stock. That's a fallacy. Market makers will adjusting prices downwards as sellers exceed buyers. Trade could be very thin a particular stock. Also as specific company news is released such as a profit warning (WH Smith) or debt issues (Cineworld / Intu). 
In any downturn there's likely to be casaulties. When a company goes bust there's no recovery. Holding the stock results in a 100% loss. The capital is gone forever. 

How do market makers adjust the price downwards?

I understand about a company going bust and the loss being 100%. What is the likelihood of any current FTSE 100 company going bust? Who are the prime candidates?

Market makers quote prices to buy and sell a particular stock. They make their money from the spread difference. Market Makers are obliged to quote an Exchange Minimum Size. For BP this is 3,000 shares for example (trade value around £8,500).  
Market makers will follow RNS announcements for the stocks that they cover. They'll react before you've even seen the news. 

Those that are heavily indebted / overleveraged will be most at risk. The full financial impact of the virus hasn't been felt yet. 

kinger101

EdGasketTheSecond said:

I bet you all wished you had liquidated your portfolio, even a week after the market started dropping. I wish too; I did liquidate some but by no means all. Have started rebuying but keeping some fire power. Still down hugely overall so I'm not being smug but if I had lived up to the thread title I would have been in a much better place now.

Only in the same way I'd regret not backing on odds-on favorite winner in a race after the results come in.
I see today's prices as having little bearing on the price I'll eventually sell in the lead up to, and during retirement.  If anything, it's reassuring to know I didn't !!!!!! the bed in this crash.  For the past three years at least, I've been wondering when this would be coming.  If I was twitchy, I might have sold in the two crashes that didn't happen in Feb 2018 and Sept/Oct 2018.

I have approx 20 years of putting money in monthly ahead of me, and I'll take some comfort in knowing the next units I buy will be much better value.

bostonerimus

I just looked at my asset allocation and I'm at 73/27 so not far enough off my target of 75/25 to bother rebalancing yet. If it hits 70/30 I will sell bonds and buy equities.

When the market was on the rise I wondered why I kept 3 years spending in cash and a deferred annuity paying 4.5% - well those at least haven't lost any money in the last two weeks. I thought about using some of the cash to buy equities today, but I like the relative safety of cash and I'm going to stick to the plan. Bear markets might, in hindsight, also make paying down the mortgage look quite attractive.

DairyQueen

123mat123 said:

The American's have only just accepted the severity of CV, and the market downturn has shifted focus to their economic weaknesses.
...
Despite Trump claiming this morning the USA is the biggest and best country able to deal with the crisis it will be interesting to see how it copes with the "usual" % of Corona Virus sufferers needing hospital care plus the extra 10% of the population who are obese and more prone.
...And they have guns.... Are they going to queue up orderly in "parking lots" waiting for ventilators ? - Hell no...!

No they haven't, but US markets have. 

The US has a major problem as its lack of (and botched) testing has been masking the infection rate in the US for some time. Worse still, they don't have socialised medicine so are reliant on individual health insurance to manage the risk and consequences. Many people have no health insurance. Testing kits have only just been made available but many insurers are refusing to pay for the test let alone the treatment. 

Unsurprisingly, Trump is desperate to offload responsibility for the soon-to-be-obvious crisis in the US to some 'other'. Looks like the EU is the target. The US is particularly vulnerable as it has a buffoon in charge whose priority isn't the health of the US population but in hiding the truth in a half-baked attempt to gain re-election.

So far, every step he has taken has been mismanaged and has increased the risk stateside. I anticipate that our situation will look like a walk in the park compared to what the US will suffer.

The US markets are now reflecting reality and not Trump rhetoric. I have a nasty feeling that our stateside friends will be suffering much worse than us.

Reaper

Well my decision to buy earlier is looking embarrassingly premature. I still think the virus panic is overdone but that matters little when businesses and trade are affected by the measures being taken. I'll be holding off buying any more for a couple of weeks I think. It feels now like there is more to come in Western Europe and the US.

Ceme3000

Reaper said:

Well my decision to buy earlier is looking embarrassingly premature. 

I'm glad I'm not the only one! The cheap shares I bought on Friday are now 32% cheaper today.  
I'm going to resist further 'bargains' for a bit! Lesson learned as they say.