Please help me stay invested! I’m wobbling

masonic

EdGasketTheSecond said:

I don't believe we'll get deflation this time though. With supply shortages there can only be price increases and inflation.

Agreed, deflation is highly unlikely. Consumer demand for goods and services will not dry up (barring things like transportation), but supply will. This, and monetary policy, will be inflationary, which will probably drive nominal earnings and share prices higher, though in real terms the recovery will be weaker. As you've said elsewhere, this is unlikely to be a good time to be in cash (or non-inflation linked bonds for that matter).

Malthusian

EdGasketTheSecond said:

The Dow took 36 years to recover from the 1929 crash and I don't have that long to wait!

Not true. The data is sketchy because of the difficulty of obtaining total return data from the early 30s, but most estimates peg the recovery time from the Great Depression at less than the dotcom crash, around 5-6 years at most. Analyses that do not include reinvested dividends are irrelevant.

masonic said:

newatc said:

Malthusian said:

I hope your sentiment is right but I don't think the coronavirus is comparable with the above because of the scientific uncertainties about the duration of the crisis.

Nobody knew how long the 2008 and 2000 crises were going to last either.

Many businesses are going to  definitely suffer and no doubt some will fail.

As they did in the 2008 and 2000 crashes. Lots of them. So far there have been no major busts along the lines of Bear Stearns or Lehman Brothers due to coronavirus. (Flybe was already bankrupt before coronavirus.) If a travel agent or provincial airline goes bust, that will be to Lehman Brothers and Bear Stearns what my local pub closing is to a provincial airline.

There is only one important difference between the current crash and the ones you already lived through, and that is that 2008 and 2000 were in the past so you are analysing them factually, while 2020 is right now so you are going through it emotionally. Nobody looks at statements from 2009 and goes "Waaah, that was really scary when I "lost" half my money 10 years ago".

You are right in one respect that there is an emotional aspect. However I still think this is of deeper concern and we fall further than 2008 but we shall see if the market regains ground at a faster pace than in 2008 (nearly 5 years).

Which market took nearly 5 years to recover? The FTSE All world index took just over 2 years, FTSE All share took about 3 years, and S&P500 took 2.5 years.

But then there was another crash in 2011. It wasn't until 2013 that people who bought at the top of the market in 2007 finally left cash for dead for good.

masonic

Malthusian said:

masonic said:

newatc said:

You are right in one respect that there is an emotional aspect. However I still think this is of deeper concern and we fall further than 2008 but we shall see if the market regains ground at a faster pace than in 2008 (nearly 5 years).

Which market took nearly 5 years to recover? The FTSE All world index took just over 2 years, FTSE All share took about 3 years, and S&P500 took 2.5 years.

But then there was another crash in 2011. It wasn't until 2013 that people who bought at the top of the market in 2007 finally left cash for dead for good.

I just used popular index trackers of the time to see how quickly they regained ground according to Trustnet on a total returns basis. There was indeed another crash that came up right behind the GFC, but those who were waiting for their paper losses to disappear prior to selling up had a window of opportunity to do so.