Autumn Stock Market Crashes / Second wave

MinuteNoodles

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.

Nope. The markets already factored the possibility in months ago, a second pandemic is factored in the price already.

Read the following and inwardly digest.

https://theescapeartist.me/2020/06/09/its-in-the-price-the-stockmarket-has-already-taken-that-stupid-internet-article-into-account/

noClue

Prism said:

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.

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.

yes, our organisation turned almost all communication onto teams within a couple of months with odd zoom sessions. Basically setting up the whole system under microsoft umbrella...

Sailtheworld

DiggerUK said:

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..._

Not sure I disagree but time has a diluting affect. The impact of what has happened in the last six months has a bigger impact on our daily lives than the GFC of 12 years ago.

That's what can kicking is for. The logic being it's better to let time to do some of the healing rather than rush into an immediate 'cure'.

In a lot of cases can kicking is the only option. WWII for example which the UK didn't have the cash flow to support and for which the UK didn't make the final installment on the loan from the USA until 2006 when WWII was history.

coastline

MinuteNoodles 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.

Nope. The markets already factored the possibility in months ago, a second pandemic is factored in the price already.

Read the following and inwardly digest.

https://theescapeartist.me/2020/06/09/its-in-the-price-the-stockmarket-has-already-taken-that-stupid-internet-article-into-account/

If you google the question the answers reflect it wasn't priced in around mid June. The USA has since gone on to all time highs after all that fear.
The latest from GS has other ideas. I tend to agree anything major regarding the virus and progress will tip the markets. How far who knows.
https://pbs.twimg.com/media/EfzwKZsXsAIRryF?format=jpg&name=900x900

Sailtheworld

coastline said:

MinuteNoodles 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.

Nope. The markets already factored the possibility in months ago, a second pandemic is factored in the price already.

Read the following and inwardly digest.

https://theescapeartist.me/2020/06/09/its-in-the-price-the-stockmarket-has-already-taken-that-stupid-internet-article-into-account/

If you google the question the answers reflect it wasn't priced in around mid June. The USA has since gone on to all time highs after all that fear.
The latest from GS has other ideas. I tend to agree anything major regarding the virus and progress will tip the markets. How far who knows.
https://pbs.twimg.com/media/EfzwKZsXsAIRryF?format=jpg&name=900x900

All that's changed is the passage of time - in June the markets were pricing in the possibility of a second wave in July (for example). At the start of July the price adjusts to reflect that the chance of a second wave in June is zero.

sebtomato

MinuteNoodles 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.

Nope. The markets already factored the possibility in months ago, a second pandemic is factored in the price already.

Read the following and inwardly digest.

https://theescapeartist.me/2020/06/09/its-in-the-price-the-stockmarket-has-already-taken-that-stupid-internet-article-into-account/

How can the stock market already factored in something unknown? What about a vaccine available? Is that already factored in? By when?
I am pretty sure that if Covid-19 triggers some large scale lockdowns in several countries, the stock market will crash again.

Sebo027

sebtomato said:

MinuteNoodles 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.

Nope. The markets already factored the possibility in months ago, a second pandemic is factored in the price already.

Read the following and inwardly digest.

https://theescapeartist.me/2020/06/09/its-in-the-price-the-stockmarket-has-already-taken-that-stupid-internet-article-into-account/

How can the stock market already factored in something unknown? What about a vaccine available? Is that already factored in? By when?
I am pretty sure that if Covid-19 triggers some large scale lockdowns in several countries, the stock market will crash again.

https://smartasset.com/financial-advisor/efficient-market-theory#:~:text=Efficient%20market%20theory%20holds%20that,is%20doing%20the%20same%20thing.

Sailtheworld

sebtomato said:

MinuteNoodles 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.

Nope. The markets already factored the possibility in months ago, a second pandemic is factored in the price already.

Read the following and inwardly digest.

https://theescapeartist.me/2020/06/09/its-in-the-price-the-stockmarket-has-already-taken-that-stupid-internet-article-into-account/

I am pretty sure that if Covid-19 triggers some large scale lockdowns in several countries, the stock market will crash again.

If you saw a horse in a race at 3/1 when you thought it was a dead cert what would you do - call the bookie an idiot and try and get him to agree with you or place a bet and take him to the cleaners?

Go make bank.

zagfles

Sailtheworld said:

sebtomato said:

MinuteNoodles 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.

Nope. The markets already factored the possibility in months ago, a second pandemic is factored in the price already.

Read the following and inwardly digest.

https://theescapeartist.me/2020/06/09/its-in-the-price-the-stockmarket-has-already-taken-that-stupid-internet-article-into-account/

I am pretty sure that if Covid-19 triggers some large scale lockdowns in several countries, the stock market will crash again.

If you saw a horse in a race at 3/1 when you thought it was a dead cert what would you do - call the bookie an idiot and try and get him to agree with you or place a bet and take him to the cleaners?

Go make bank.

First you try to convince the bookie and other punters that the horse has no chance, so the odds lengthen even more.

Then you place your bet...

Linton

sebtomato said:

MinuteNoodles 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.

Nope. The markets already factored the possibility in months ago, a second pandemic is factored in the price already.

Read the following and inwardly digest.

https://theescapeartist.me/2020/06/09/its-in-the-price-the-stockmarket-has-already-taken-that-stupid-internet-article-into-account/

How can the stock market already factored in something unknown? What about a vaccine available? Is that already factored in? By when?
I am pretty sure that if Covid-19 triggers some large scale lockdowns in several countries, the stock market will crash again.

If everybody was as sure as you as to the future then they would already have sold, no-one would want to buy, and prices would have collapsed.  Since that hasnt happened, most investors clearly don't share your views although some may with some affect on prices. That is what is meant by being priced in.  

Do you really believe that you have been granted a special insight into the future not available to most other people?

Personally, I have not got the faintest idea as to what will happen.  Therefore it makes sense for me to invest broadly so that barring global economic collapse I wont get wiped out.