Covid crash #2 started

GazzaBloom

Thrugelmir said:

123mat123 said:

How can "already priced in" possibly work - for example, the market can't price in both a Trump and Biden victory, yet either could win.
It could possibly price in a 70% Biden victory and a 30% Trump victory and the direct impact either could have (complex) , but in that case it would be wrong whoever won!
An arguement can be made for "staying in" the market - or "getting out" temporarily, but unless someone has one of these mystical crystal balls future events cannot be factored in...

Market just want certainty. No doubt the S&P 500 will bounce back once there's a definitive outcome.  Longer term a Biden win is going to less favourable to Corporate USA. 

Historically the US stock market has performed better under a Democrat President than a Republican one.

Sailtheworld

123mat123 said:

How can "already priced in" possibly work - for example, the market can't price in both a Trump and Biden victory, yet either could win.
It could possibly price in a 70% Biden victory and a 30% Trump victory and the direct impact either could have (complex) , but in that case it would be wrong whoever won!
An arguement can be made for "staying in" the market - or "getting out" temporarily, but unless someone has one of these mystical crystal balls future events cannot be factored in...

The markets are a pricing mechanism rather than a crystal ball. Markets issue a price and that's it - there's no A4 piece of paper with a summary of the reasoning. You take the price or leave it. Shouldn't forget it isn't abstract - it's based on the aggregate view of market participants i.e. people putting their money where there mouth is which is far more reliable than polls or whatever some talking head on the news thinks.

Lots of people look at markets with bemusement when they don't do the 'correct' thing. Better to assume the markets are right and you're wrong because that will almost always be the case.

As a simple armchair economist the way I would look at Trump / Biden is that part of the pricing mechanism is to work out the odds of one of then winning and the odds of what happens next. So, it might be the markets are pricing in a 70% chance of winning for Trump or Biden but when the election results comes through that 70% will be 100% because you don't need to predict past events. I wouldn't worry about it because the markets are pricing future returns many years ahead without knowing who will be president, PM or Chairman. The 2020 presidential election is just short term noise on the road to the future.

Keep some money in cash for opportunities if you have a knack for successfully spotting assets which are mispriced and will be correctly priced later because you'll be on the road to riches. 

Bobziz

bowlhead99 said:

the weighted average 'vote' 

This seems key, i.e. the vote of the majority of individual investors carry's negligible weight. The view of a few institutional investors is massively important ?

norsefox

Bobziz said:

bowlhead99 said:

the weighted average 'vote' 

This seems key, i.e. the vote of the majority of individual investors carry's negligible weight. The view of a few institutional investors is massively important ?

Well yes, the logic makes sense, but markets are worth many trillions representing assets of multiple times that.  If a fund/investor/whoever is going against the grain, then they are unlikely to warp the market in any meaningful way.  It is only once many start moving in that direction that any substantial change is seen, at which point everyone is going with it and the idea of a small number of big movers influencing things is therefore rather moot. 

Thrugelmir

Sailtheworld said:

Thrugelmir said:

Sailtheworld said:

Michael121 said:

Sailtheworld said:

Thrugelmir said:

Alexland said:

Thrugelmir said:

No one. Vanguard creates or cancels units accordingly.  As a market participant you helped push the market prices of the underlying stocks higher. 

Not quite the ETF units that Sailtheworld purchased were probably from a market maker's warehouse and only occasionally would the market maker swap a basket of assets with Vanguard for new ETF units. It won't be happening dynamically with each market order. It is possible some or all of the ETF units may have come from someone else selling them to the market maker.

Both March and April saw an extremely high volume of unit trade. If activity is correlated to the broader markets this would suggest net purchasing. 

New share creation is probably very small compared to shares outstanding and it's the capital direction that's important rather than volume. VWRL has attracted capital since launch so institutional investors have consistently been buying the underlying assets since then.

Most trading though will simply be transfer of shares from one holder to another via a broker on the open market.

Im confused what are you all talking about here, buying shares from etf or units from vanguard, whats the difference, are you all saying it was cheaper to buy an etf if you picked up the shares directly from someone selling? 

Another poster said I didn't buy them off anyone as they were simply created via new units. ETFs are shares not units so we had a meander down a rabbit hole.

Technically shares represent units of stock.  Easy enough to find trading volumes if one bothers to research. 

Technically yes. Not sure that's the context in which you were using the word unit but I'll take your word for it.

Net result is the same. 

Michael121

Thrugelmir said:

Technically shares represent units of stock.  Easy enough to find trading volumes if one bothers to research. 

Its not that im not researching, you have away of talking, where only someone with experience is going to fully understand what your talking about. 

Even when someone explains stuff on a level i can understand i have to re read it.

Thrugelmir

Michael121 said:

Thrugelmir said:

Technically shares represent units of stock.  Easy enough to find trading volumes if one bothers to research. 

Its not that im not researching, you have away of talking, where only someone with experience is going to fully understand what your talking about. 

Always happy to clarify and expand on anything I post. Unlike others I don't post to be obtuse or belittle others. We all never stop learning on our investment journeys.  Some things one only learns from experiencing events or situations first hand. 

Michael121

Thrugelmir said:

Michael121 said:

Thrugelmir said:

Technically shares represent units of stock.  Easy enough to find trading volumes if one bothers to research. 

Its not that im not researching, you have away of talking, where only someone with experience is going to fully understand what your talking about. 

Always happy to clarify and expand on anything I post. Unlike others I don't post to be obtuse or belittle others. We all never stop learning on our investment journeys.  Some things one only learns from experiencing events or situations first hand. 

Of course im not saying that, i enjoy having a browse through these forums and reading all of your comments. Just saying i am researching, this is new to me i haven't had my money in the market for 5mins. Most the time i don't like to ask to many questions and i try to find stuff myself but the conversation you was having with Sailtheworld i couldn't work out what i would be searching for exactly, that's why i asked.

EdGasketTheSecond

Sailtheworld said:

123mat123 said:

How can "already priced in" possibly work - for example, the market can't price in both a Trump and Biden victory, yet either could win.
It could possibly price in a 70% Biden victory and a 30% Trump victory and the direct impact either could have (complex) , but in that case it would be wrong whoever won!
An arguement can be made for "staying in" the market - or "getting out" temporarily, but unless someone has one of these mystical crystal balls future events cannot be factored in...

The markets are a pricing mechanism rather than a crystal ball.

I wouldn't worry about it because the markets are pricing future returns many years ahead without knowing who will be president, PM or Chairman.

The markets don't price in much more than about a week, if that. It's pure fear and greed. If they did as you say then prices would not change much day to day.

John464

thetimewill said:

John464,. The title of this thread is Covid crash 2 and the opening post , nor title, do not have any mention or question whatsoever with regards American politics. Perhaps another thread is required for those wishing to discuss and give their opinions re USA politics. Regards

Threads go off topic when posters are sidetracked into discussing the rights and wrongs of politics,
and berating the politicians they don't like.
Instead of remaining focused on how politics is affecting our savings and investments.