Is this a bear market?

Thrugelmir

torrence said:

Your question infers you consider my confidence naive. But I just cannot accept all the reasons given for negativity.
Everyone knows the quote "be fearful when others are greedy and greedy when others are fearful" and sure enough there is fear in almost every response this thread has got and some really improbable doom scenarios. I see the outcome over the next few months very differently.

Your comments suggest that you are more recent to investing. With no previous experience of a deep recessionary period. We all hold differing opinions. That's what creates active markets. Warren Buffet & Co don't buy markets, they buy individual companies shares. That they have analysed and been monitoring. Most importantly the share price offers value and potential. 
Don't read too much in words. I've been actively trading this week. Though very selectively. 

Thrugelmir

Alexland said:

EdGasketTheSecond said:

That quote doesn't mean be stupid when others are fearful. Buffet was talking about undervalued companies in a favourable market. If you read up on his and Benjamin Graham's strategy, he actually recommends being in US TIPS for most of the time until stocks are undervalued. Right now stocks are way overvalued by any measure and that was before the virus hit.

But you were happy to hold stocks before the crash occurred as described in your Liquidate Entire Portfolio thread? I had similar concerns about how valuations would impact future returns so had already liquidated a couple of accounts where I had a better cash option.
However now investing at a material reduction might not be perfect if the market falls a bit further but then isn't particularly stupid as the world is highly likely to recover from this virus as it has in the past when millions were killed.

One impact of this crisis will be to see retail investors not chase share prices to extreme p/e ratios in the future. 

RetSol

Look, your invrestments will, in the short to medium term, go up and down like a tart's knickers. Just try to enjoy it.  Or, close your eyes and think of England.... .And don't invest beyond your risk tolerance.. 

Alexland

Thrugelmir said:

One impact of this crisis will be to see retail investors not chase share prices to extreme p/e ratios in the future. 

Investors might be cautious for a while as this is a good risk reminder but while interest rates remain low it seems unlikely this crash will cause any long term change in valuation approach. Shares will still be attractive for their yield and that will continue to push up prices when earnings recover and start growing again.

Linton

EdGasketTheSecond said:

Yeah I was stupid. I had to educate myself and quick about what was happening and why. I did manage to switch some stuff out without too much loss and some later with larger losses. Almost all of what I have sold is lower now than when I sold. I am in no rush to buy it back.

Looking back it was hard to see how far and fast the virus was coming and how much effect it would have; where I was stupid was not getting out anyway pre-virus as markets were so overvalued; that oversight cost me a lot.

How will you know when to buy back in?
When the markets recover and you buy back into equities, given your experience this time, at what % drop will you decide to cash in/convert to gold again?

Prism

Thrugelmir said:

Alexland said:

EdGasketTheSecond said:

That quote doesn't mean be stupid when others are fearful. Buffet was talking about undervalued companies in a favourable market. If you read up on his and Benjamin Graham's strategy, he actually recommends being in US TIPS for most of the time until stocks are undervalued. Right now stocks are way overvalued by any measure and that was before the virus hit.

But you were happy to hold stocks before the crash occurred as described in your Liquidate Entire Portfolio thread? I had similar concerns about how valuations would impact future returns so had already liquidated a couple of accounts where I had a better cash option.
However now investing at a material reduction might not be perfect if the market falls a bit further but then isn't particularly stupid as the world is highly likely to recover from this virus as it has in the past when millions were killed.

One impact of this crisis will be to see retail investors not chase share prices to extreme p/e ratios in the future. 

I'm not sure anything will change. One of the best performing strategies, aside from selling at the right time, has been to stick with the quality growth type companies like tech and staples. Yes we still have the US earnings season to go and the question of are those companies in general more defensive should get some form of answer. Most of those companies are comparably expensive with p/e ratios of 20+. This won't go unnoticed by retail investors. I expect some interviews with Train, Anderson and Smith over the next few months will turn some more heads.

So far this event has strengthened my convictions in that style rather than weaken it. I haven't sold anything during this crash and to be honest have barely noticed it so far. 

DuffHead

There are two main risks - 1st that the Coronavirus carries on longer than 3 months - which I see is highly likely given what's going on in the US - which will be a disaster which will take years to get over. 
The 2nd is inflation in response to the crisis in lost output. A crippled economy and a serious risk of prolonged inflation - a stagflation. 
 
I am sure we will run massive deficit spending to help get over this - but 
I really don't understand locking people down and also giving them huge sums of unearned money for nothing. Yes a rent and mortgage holiday -  universal income/welfare for basic bills, but not 80% of salary for 3 months paid by the taxpayer that's a waste.
  
You know this huge waste of money is going to rebound later. It makes a total mockery of all the austerity people have endured as the huge deficits have been systematically reduced. 
   

Thrugelmir

There's no inflation in the system. People will need to earn a living. Job losses haven't taken hold yet. 
Supporting people is to ensure that there's work to return to after this crisis is over. Company finances are fragile. Alternative would be mass redundancies. As companies rescale their operations. 

tropic_of_Username019

Most people spend nearly all their income, so replacing 80% of their income doesn't look like "huge sums" to them, it looks like something they might just get by on. And many other people are still facing huge drops in their income, because they fall through the holes in the Government's 80% schemes (e.g. zero-hours employees; recently self-employed; people forced to reduce work to look after their children during school hours).

EdGasketTheSecond

Linton said:

EdGasketTheSecond said:

Yeah I was stupid. I had to educate myself and quick about what was happening and why. I did manage to switch some stuff out without too much loss and some later with larger losses. Almost all of what I have sold is lower now than when I sold. I am in no rush to buy it back.

Looking back it was hard to see how far and fast the virus was coming and how much effect it would have; where I was stupid was not getting out anyway pre-virus as markets were so overvalued; that oversight cost me a lot.

How will you know when to buy back in?
When the markets recover and you buy back into equities, given your experience this time, at what % drop will you decide to cash in/convert to gold again?

Not for a long time. We have to get to the other side of the virus crisis and then see what the economic damage is. Companies would have to be generating profits and paying dividends again and the PE ratios would need to be reasonable; I don't see any of that near term which means (IMHO) markets are headed down for most of this year at least. Time for me to get back in would be when stocks are on the floor and gold has gone up as that is what I've switched to.

It should not a case of converting to gold after a % drop as you suggest (although the drop this time was a 'kick up the backside' for me to do something) but rather invest in a store of value that is not yet inflated while other assets are inflated and while the gov't pursues a reckless currency creation program that can only lead to inflation in the end with maybe a deep recession or depression first. They no longer have the tools to stop inflation once it kicks in; they can't afford to raise interest rates much at all now to stop it.