Autumn Stock Market Crashes / Second wave

Michael121

Sailtheworld said:

Thrugelmir said:

eskbanker said:

sebtomato said:

As a second Covid-19 wave in the Autumn/Winter looks very likely, I guess we can brace ourselves for another stock market crash.

Foreseeable events that are 'very likely' to happen would typically already be priced in by markets, it's generally surprises that tend to cause turbulence....

Much of the global economy looks pretty grim. Doesn't appear to be stopping retail investors piling into passsive investments. 

It was looking pretty grim in March as well....

Perhaps some people have learnt a valuable lesson about their investment skills in the intervening few months? Some definitely haven't and are probably still coming up with nonsense about bouncing cats to explain their wrongness.

USA looks grim what a freakshow no wonder half the stuff going on over there don't reach the news.

Thrugelmir

Sailtheworld said:

Thrugelmir said:

Sailtheworld said:

Thrugelmir said:

eskbanker said:

sebtomato said:

As a second Covid-19 wave in the Autumn/Winter looks very likely, I guess we can brace ourselves for another stock market crash.

Foreseeable events that are 'very likely' to happen would typically already be priced in by markets, it's generally surprises that tend to cause turbulence....

Much of the global economy looks pretty grim. Doesn't appear to be stopping retail investors piling into passsive investments. 

It was looking pretty grim in March as well....

Perhaps some people have learnt a valuable lesson about their investment skills in the intervening few months? Some definitely haven't and are probably still coming up with nonsense about bouncing cats to explain their wrongness.

Hindsight is what trips many investors up. 

Calling 365 of the last 1 crashes seems to trip a few up too.

Market volatility is part and parcel of investing. The term "crashes" originates from newbies who know little more than a placid period of an extended bull market. 

sebtomato

Prism said:

sebtomato said:

eskbanker said:

sebtomato said:

As a second Covid-19 wave in the Autumn/Winter looks very likely, I guess we can brace ourselves for another stock market crash.

Foreseeable events that are 'very likely' to happen would typically already be priced in by markets, it's generally surprises that tend to cause turbulence....

Given how high the US markets are currently, not sure they have factored in a second wave...or even the true impact of the first one. 

Investors will look at individual companies rather than just the index. Some of those largest companies which are able to move the index as a small group have been doing very well from lockdown and will likely continue to due to changes in peoples behaviour going forward.

If you take Microsoft for example, which is up 36% this year. They have been trying for years to encourage their corporate users to buy into Skype with some limited success. Last year they introduced Teams as a replacement and some companies were slowly moving over. This year that adoption has gone absolutely crazy. Companies that were using Skype are now signed up for Teams. Companies that had used neither are now setting up and using Teams. There were so many people moving into it that it stressed the Microsoft datacentres back in March and April and required certain temporary limits to be applied to other services. Once companies begin to work this way, they store data in Teams and its unlikely they go back. Each Teams user is an Office 365 user and requires a subscription and will continue to do so for years to come. This overall is a huge boost and has already been reflected in the numbers.

You could find similar stories for Amazon (retail, cloud, Prime), Paypal, Apple and others. These companies have pushed the US markets up almost on their own. Some of it is down to sentiment and could reverse, however some of it will be deserved and reflected in increased profits. 

Not sure I agree with Microsoft Skype vs. Teams example.
Microsoft has had a product called Lync and then "Skype for business" for years (completely different from the consumer Skype software), and Teams is just an evolution of that. Many companies were already using Lync and Skype for business before, and could have perfectly operated during Covid-19 with that software. Teams is a bit better in term of functionality, but nothing revolutionary or "must have" (and a lot of market shares taken by Zoom).
As for the consumer version of Skype, they have pretty much let it die: most people now use Zoom, WhatsApp, Google Duo or Facetime to make personal video calls. I don't know many people using Skype anymore.
I guess the point is: no, the increase of remote working because of Covid-19 cannot justify Microsoft's stock price increase by 36%. Most of their large customers already had the relevant software before (including Office 365).
Amazon however is quite different, as Covid-19 has significantly boosted their results.

DiggerUK

Sailtheworld said:

Thrugelmir said:

eskbanker said:

sebtomato said:

As a second Covid-19 wave in the Autumn/Winter looks very likely, I guess we can brace ourselves for another stock market crash.

Foreseeable events that are 'very likely' to happen would typically already be priced in by markets, it's generally surprises that tend to cause turbulence....

Much of the global economy looks pretty grim. Doesn't appear to be stopping retail investors piling into passsive investments. 

It was looking pretty grim in March as well....

This observation I share, what gobsmacks me is that everybody and their bouncing cat is blaming Covid  instead..._

Sailtheworld

A lot of businesses buy an O365 sub just so they can have locally installed Outlook / Word / Excel & Powerpoint - just add a Sage accounts package and you pretty much have a back office.

It's during lockdown that businesses have been exploring all the other stuff that comes with their subscription - MS seem to do a godawful job of explaining where the added value is. Lockdown has accelerated the move towards cloud solutions. It had already started (not many businesses run an Exchange server for email now) but when people start thinking about contingencies for having to leave the office in a hurry and how to access the data there they realise (give or take) an O365 subscription allows them to authenticate users in the cloud / access data via sharepoint and the last few months must have taught them the value of all that paper in the office (none).

The rub is that when you sweat an O365 sub you save money on physical kit / backup costs / paper but you become bound to Microsoft. Some of the share price increase is probably because the future cash flows can now be considered more secure.

Whether that alone justifies a 36% share price increase I don't care. I assume the market has priced it better than I could. If you're sure there are no valid reasons to justify this, think there's a tech bubble, a second winter wave and a certain stock market crash in Autumn you know what to do.

Sailtheworld

DiggerUK said:

Sailtheworld said:

Thrugelmir said:

eskbanker said:

sebtomato said:

As a second Covid-19 wave in the Autumn/Winter looks very likely, I guess we can brace ourselves for another stock market crash.

Foreseeable events that are 'very likely' to happen would typically already be priced in by markets, it's generally surprises that tend to cause turbulence....

Much of the global economy looks pretty grim. Doesn't appear to be stopping retail investors piling into passsive investments. 

It was looking pretty grim in March as well....

This observation I share, what gobsmacks me is that everybody and their bouncing cat is blaming Covid  instead..._

Instead of what? Unless it's something known only to yourself the market's heard about it, assessed it and adjusted prices accordingly.

DiggerUK

Sailtheworld said:

DiggerUK said:

Sailtheworld said:

Thrugelmir said:

eskbanker said:

sebtomato said:

As a second Covid-19 wave in the Autumn/Winter looks very likely, I guess we can brace ourselves for another stock market crash.

Foreseeable events that are 'very likely' to happen would typically already be priced in by markets, it's generally surprises that tend to cause turbulence....

Much of the global economy looks pretty grim. Doesn't appear to be stopping retail investors piling into passsive investments. 

It was looking pretty grim in March as well....

This observation I share, what gobsmacks me is that everybody and their bouncing cat is blaming Covid  instead..._

Instead of what? Unless it's something known only to yourself the market's heard about it, assessed it and adjusted prices accordingly.

No, it's not my secret insight. There is more than enough evidence that the can kicking from GFC1 had not resolved the outstanding issues of that meltdown. The international reactions to Covid are beyond mystifying for now, it's almost as if we are in a Jules Verne cataclysm. It's just barmey.

Quite why there is an international murmuration of government organised lockdowns, aka general strike, is mind boggling. 

How the hell can economies function viably if little is being produced; how do you even overcome a recession, let alone defend against a possible depression..._

Prism

sebtomato said:

Prism said:

sebtomato said:

eskbanker said:

sebtomato said:

As a second Covid-19 wave in the Autumn/Winter looks very likely, I guess we can brace ourselves for another stock market crash.

Foreseeable events that are 'very likely' to happen would typically already be priced in by markets, it's generally surprises that tend to cause turbulence....

Given how high the US markets are currently, not sure they have factored in a second wave...or even the true impact of the first one. 

Investors will look at individual companies rather than just the index. Some of those largest companies which are able to move the index as a small group have been doing very well from lockdown and will likely continue to due to changes in peoples behaviour going forward.

If you take Microsoft for example, which is up 36% this year. They have been trying for years to encourage their corporate users to buy into Skype with some limited success. Last year they introduced Teams as a replacement and some companies were slowly moving over. This year that adoption has gone absolutely crazy. Companies that were using Skype are now signed up for Teams. Companies that had used neither are now setting up and using Teams. There were so many people moving into it that it stressed the Microsoft datacentres back in March and April and required certain temporary limits to be applied to other services. Once companies begin to work this way, they store data in Teams and its unlikely they go back. Each Teams user is an Office 365 user and requires a subscription and will continue to do so for years to come. This overall is a huge boost and has already been reflected in the numbers.

You could find similar stories for Amazon (retail, cloud, Prime), Paypal, Apple and others. These companies have pushed the US markets up almost on their own. Some of it is down to sentiment and could reverse, however some of it will be deserved and reflected in increased profits. 

Not sure I agree with Microsoft Skype vs. Teams example.
Microsoft has had a product called Lync and then "Skype for business" for years (completely different from the consumer Skype software), and Teams is just an evolution of that. Many companies were already using Lync and Skype for business before, and could have perfectly operated during Covid-19 with that software. Teams is a bit better in term of functionality, but nothing revolutionary or "must have" (and a lot of market shares taken by Zoom).
As for the consumer version of Skype, they have pretty much let it die: most people now use Zoom, WhatsApp, Google Duo or Facetime to make personal video calls. I don't know many people using Skype anymore.
I guess the point is: no, the increase of remote working because of Covid-19 cannot justify Microsoft's stock price increase by 36%. Most of their large customers already had the relevant software before (including Office 365).
Amazon however is quite different, as Covid-19 has significantly boosted their results.

Yeah I didn't want to do the whole Lync to Skype for Business to Teams history so I just called it 'Skype' for ease. Teams is also a kind of sideways move for SharePoint too.  I have worked with a lot of businesses using Office 365 over the years (I guess we should call it Microsoft 365 now) and very few made much use out of Lync or Skype for Business but now they is a big uptick in Teams interest and I have recently met several companies using Office 365 for the first time, where their first experience with it was Teams rather than Outlook. The reason that they couldn't use on premises software to work remotely was that their infrastructure could cope with the volume. 

I absolutely agree that once again Microsoft hasn't grabbed the consumer market. People are moving off Skype on to other things like Zoom and Whatsapp. Teams is actually free for consumers but most people don't care.

What Microsoft want to do with Teams is sell more expensive licenses but they can't easily do that until people begin to use the service with its basic features. The product range goes well beyond Office 365 (and the prices do to). The remote working part just accelerate the adoption of Microsoft 365 services and encourages a higher spend per user to get access to all of the features.

Amazon has also of course done very well but in most ways it is quite a different type of company

Bobziz

Any views on the current p/e or CAPE version of it ? Lots of commentary in the media as would be expected. Carry on regardless if you're already invested, and invested long term I assume, but would it put you off entering the market for the first time, or is it not worth considering unless you're looking at individual companies?

coastline

Bobziz said:

Any views on the current p/e or CAPE version of it ? Lots of commentary in the media as would be expected. Carry on regardless if you're already invested, and invested long term I assume, but would it put you off entering the market for the first time, or is it not worth considering unless you're looking at individual companies?

P/E values are difficult to pin down as far as I can see. On the cheap side you could say P/E 8 or even P/E 12 which sound reasonable but one is 50% higher than the other. The same could be said for expensive values eg. 18 and 25. History shows well above 20 is on the high side.
https://pbs.twimg.com/media/EZ_91bOXQAAp1Zo?format=jpg&name=large
Analysts are still pricing in an improving situation . First chart is from June and second this month. If earnings are $180 by 2022 as expected that gives a P/E of 18 at current SP 500.
https://pbs.twimg.com/media/EaKs-ESWkAccon0?format=jpg&name=900x900
https://pbs.twimg.com/card_img/1295888477704290306/sSFWxBbW?format=jpg&name=900x900
The USA markets have been supported by the FAANGM performance so many stocks just like UK stocks still lag despite being on an all time high. There'll be a correction of some sort but who knows when. ? Maybe with the elections around the corner or more virus problems.?
https://pbs.twimg.com/card_img/1295403495453896707/CpITGdPQ?
format=jpg&name=900x900
Regarding P/E's history shows when bank rates were lower P/E values were higher. Look at the 1960's on the chart.
https://pbs.twimg.com/card_img/1295500403585495041/a9B9ATsM?format=jpg&name=900x900