Has the dead cat finished bouncing?

Filo25

There is still the potential of the Oxford vaccine candidate getting emergency approval by September/October, given the level of production AstraZeneca are talking about (and the fact that they are already starting to work on manufacturing capacity ahead of approval) that could make a masive difference, although I imagine it would be a pretty slow process vaccinating the population even after approval was granted.

The Moderna vaccine candidate and I think one of the Chinese vaccines are moving to Phase 3 trials imminently as well, although the UK probably isn't well placed to get early access to either of those in significant amounts.

Just not very well informed speculation from me but I suspect the Oxford candidate won't be perfect (may only signifcantly reduce severity of disease rather than grant complete immunity) and/or may need 2 doses (which would obviously halve the speed of rollout), but even that would be enough to make a big difference and get approval.

bogleboogle

There are currently three vaccines in Phase 3: AstraZeneca/Oxford, Sinopharm (China) and MCRI (Australia). Moderna is also due to enter Phase 3 trials next month. 

Of these, AZ seems to be furthest ahead and has signed 10 manufacturing contracts with countries around the world. AZ is aiming to start delivering vaccines in October but will probably take until early 2021 for large-scale production and distribution.
By that time, a steady stream of other vaccines should be becoming available. Thus, the stock markets should have plenty of good news by the end of 2020 (unless the results of the Phase 3 trials are not as good as expected of course). 

Sailtheworld

The market has priced in the chances of success & failure of a vaccine, the chances of a Trump/Biden win and the chances of US/UK & EU/UK trade deals. To beat the market someone needs to know what the chances are and the outcomes expected by the market (impossible) and then calculate what the real chances and outcomes would be (impossible) and then bet against the market. 

These are all news driven discussions and to a degree irrelevant. For example the chances of a US/UK trade deal don't really matter because the expected return is lost within the margins of error. The market is also looking far ahead and taking a view on expected returns decades from now when whoever the UK PM of the time probably hasn't even started at Eton yet.

vitamin_joe

Personally, I think there's a heck of a lot that the market hasn't priced in. The market, to me, looks delusionally optimistic. That's been my position since April at least. I'd say that the market prices-in various probabilities much better in relatively stable times, maybe? I think there are so many potential 'black swan' events out there now, it becomes very hard to predict anything with accuracy. (Not all the black swan events are necessarily negative either.) Pricing in various factors strikes me as reactive, and lately it seems to react quite greatly to the latest news. I'm not sure if that's always the case? But of course the news is just one perspective on what is happening within the economy and greater society.

I don't think we're going to agree; we both have our viewpoints. But I find the discussion interesting. 

Prism

The market is basically saying that big tech companies are going to make more money than previously thought due to an acceleration of remote working/deliveries/digital consumption. Other sectors are not likely to be significantly affected over the long term but are generally cheaper to own than they were last year. Equities are worth more because bond returns are so low. Inflation will likely rise therefore an increase in gold price - also helped by a weakened dollar. All these factors are combining to create the current market. 

I am still ignoring much of that and just doing what I previously did since I didn't predict any of this. The vast majority of my investments are completely untouched.

InA

vitamin_joe said:

Personally, I think there's a heck of a lot that the market hasn't priced in. The market, to me, looks delusionally optimistic.

I agree. I recall that the freefall in March was instigated more by the collapse in oil price than the pandemic. IMO, the market can't price in the long-term impact of the pandemic because it's biological and is affected by many factors which are impossible to predict. Also, if you try to control the virus (by implementing a lockdown), you damage the economy. It seems to me that investors are too focussed on the silver lining. When lockdown is imposed, they focus on the fact that this will help to eliminate the virus; when lockdown is eased, they focus on the fact that this will be good for businesses and the economy. Too much optimism, especially in this uncertain environment is driving the kind of irrational exuberance that creates bubbles.

Free trading platforms, like Robinhood, are also driving up speculative stock buying to the extent that bankrupt companies have seen their stock prices surge. Tech stocks are being treated as "safe havens" but they were already overvalued. The stock price for Tesla is just ridiculous, and you have wonder how many people will want to update their iphone as we enter a depression and more people lose their jobs.

In the US, the states that are seeing Covid-19 spikes (Arizona, Florida, Texas, California, South Carolina) account for 37% of the country's GDP. IMO, we are going to see a protracted bear market that will fall steadily over a period of years to hit a new bottom (as seen during the Great Depression and after the dot com boom).

Thrugelmir

Sailtheworld said:

The market is also looking far ahead and taking a view on expected returns decades from now 

Goes someway to explaining the current irrationality of the market if that's the thinking of retail investors. 

ProDave

The cat has found a new piece of elastic this morning to make up for the losses last week.  I still see no logic to this market right now, but I am enjoying watching my SIPP grow.

Sailtheworld

Thrugelmir said:

Sailtheworld said:

The market is also looking far ahead and taking a view on expected returns decades from now 

Goes someway to explaining the current irrationality of the market if that's the thinking of retail investors. 

Yeah, those pesky retail investors just putting money away month in and month out and doing pretty much nothing else for a working life. Talk about headless chickens.

You can't keep tinkering because you think you can assess the long term impact of every minutiae of news. The market does it better and is apt to make a mug of you in the process. A few decades thinking a bad thing is just around the corner and then, when it arrived, you weren't ready - funny and tragic at the same time.

To beat the market you need information the market doesn't have or you need to be better at analysing the available information AND you need the market to come around yo your way of thinking in a reasonable timescale. What are the chances?

Would a quote help? 'In the short run the market is a voting machine but in the long run, it's a weighing machine'

Sailtheworld

The markets will continue to go up and down (mainly up over the long term) irrespective of what names people dream up for being wrong.

Dead cat bounce = I called a crash and markets went up.