The 2020 Stock Market Crash Thread

NoMoreTO

Ostrich
I was thinking about Buffet / Berkshire Hathaway. He might want to be even heavier cash but my understanding is that he is involved in a lot of complicated dealings with pref shares and board positions etc etc.. I'm not sure how much of this is the case.

I'll echo tailgunner, happy to be on the sidelines right now.
 

Tail Gunner

Hummingbird
Gold Member
Arado said:
If you have time, this is another interesting podcast discussing inflation/deflation triggers due to debt (start around 24:00 for the main discussion).


The Lacy Hunt interview was great. I have listened to a few of his prior interviews. He is a brilliant economist. Well worth the time listening to him.
 

joost

Kingfisher
Tail Gunner said:
Those of us waiting on the sidelines to re-enter the market are in good company with Warren Buffet.

True. One of the few bank stocks that I had was Westpac (WBK) came with quite bad news:

Westpac Profit Plunges 70% on Bad Loans; Dividend Deferred.
Westpac Banking Corp. deferred its dividend after soaring bad-debt provisions and a potential record anti-money laundering fine sent first-half earnings plummeting to the lowest in almost two decades.


Cash earnings fell 70% to A$993 million ($636 million) in the six months ended March 31, Sydney-based Westpac said Monday, its smallest profit since 2002. The bank is also considering selling smaller units, including its wealth and insurance operations, as part of new Chief Executive Officer Peter King’s overhaul plan.
“This is the most difficult result Westpac has seen in many years,” King said in a statement. “The bank is dealing with the twin impacts of Covid-19 and some of our own issues.”

The profit plunge adds to a dismal earnings season for Australia’s biggest banks, which have historically been among the world’s most profitable. None made a loss even during the global financial crisis and shareholders had grown accustomed to generous dividend payouts.

That’s now a fading memory, as the combination of the coronavirus crisis and the cost of cleaning up years of misconduct slashes earnings across the industry. National Australia Bank Ltd. and Australia & New Zealand Banking Group Ltd.’s first-half profits both slumped more than 50%.

Like ANZ Bank, Westpac deferred its decision on whether to pay a dividend -- a move that will hurt retail shareholders -- until the economic outlook is clearer. Australia is heading for its steepest downturn in 90 years, according to James McIntyre, Australia economist at Bloomberg Economics.

‘Difficult Decision’
“This was a difficult decision given many retail shareholders rely on Westpac dividends,” the bank said. Last year it paid a first-half dividend of 94 Australian cents a share, for a total of about A$3.3 billion. Options for the dividend will be reviewed over the course of the year, the bank said.

The stock fell 0.9% in early Sydney trading, taking its decline this year to 37%.

Like banks globally -- HSBC Holdings Plc last week took its biggest charge for bad debt in almost nine years -- Australia’s big lenders have reported soaring provisions for bad debts as they brace for the fallout from the near-shuttering of the economy.

Westpac’s are the biggest of the local banks. Loan-loss provisions increased to A$5.8 billion, which includes about A$1.6 billion predominantly related to the impact of Covid-19. It had already disclosed A$1.43 billion of charges to cover customer-compensation costs and the potential penalty to settle allegations it committed Australia’s biggest breach of anti-money laundering laws, including failing to detect payments linked to child abuse.

In addition to steering the bank through the coronavirus crisis, King, who was appointed permanent CEO a month ago, is also leading efforts to restore the reputation of Australia’s second-biggest bank after the money-laundering scandal cost the previous CEO and chairman their jobs and raised questions about its risk controls.

Asset Sales
As part of his overhaul, King said he will simplify the bank to focus on its Australia and New Zealand businesses. Several units, which lack sufficient returns or scale -- including wealth platforms, life insurance and auto finance -- will be moved into a new Specialist Businesses division.

The bank will then conduct a strategic review of the units, including whether to sell them. Australia’s other major lenders have already sold peripheral businesses, particularly in wealth management and advice, as they retreat to focus on traditional banking operations.

“It’s the next step in a process of the entire banking system” getting leaner, said Kyle Rodda, an analyst at IG Markets “The banks themselves got bloated and moved into areas which they didn’t have much of a competitive advantage in.”
Source: Bloomberg
 
Overall very pleased with the Q1 Earnings calls. Only one of my three picks that reported today missed it’s earnings ( though by a big margin); the other two beat them. And the one that undershot earnings still had record-high revenue and massive YOY growth. All in all it’s been a good day, hopefully that company stops paying out such big bonuses so these record-setting revenue numbers translate into big EPS growth soon.
 

Emancipator

Hummingbird
Gold Member
Meanwhile SHOP hits an all time high (my best and currently only TSX pick)

Bit of anecdote, my friends run various e-commerce ventures mostly of frivolous items, and they're seeing more demand and sales than even Christmas season. Baffling

SHOP is now the largest Canadian company by market cap, surpassing the country's largest bank RBC.

Normally an ominous sign, from Nortel to Blackberry to Valeant Pharma, all soared to top spot only to get rekt later.

Been riding this since IPO in 2015, followed my usual homerun strategy it's only house money as I sold along the way (at $60-70 initial principal, at $100 and at $420), small but not insignificant amount remaining due to appreciation, I'll probably offload some more now but at $420 I told myself I'll ride it out.
 

Zenta

Woodpecker
Gold Member
3 million more unemployed and another green day for the market.

Call me stupid but I sold the rest of my portfolio last week because I thought there is no way we stay green and keep going. When you see things like this and still see it close green today, It makes my head hurt. I feel that at some point everything has to catch up to the oh shit and go much further down.
 

Blade Runner

Kingfisher
Don't forget, the typical time (that that these are such times) of the pullback from the bear rally was mid May to June. I still think this is going to happen, but it's a guess. It likely won't be as bad as I initially thought given all the confidence, but I can certainly see at 15-20% pullback from the new (retracement) high that looks to be around 3000 S&P, to back around 2500. I believe it's worth the "risk" of missing out a slightly higher move for the possibility of considering new positions after a large pullback.
 
Call me stupid but I sold the rest of my portfolio last week because I thought there is no way we stay green and keep going. When you see things like this and still see it close green today, It makes my head hurt. I feel that at some point everything has to catch up to the oh shit and go much further down.

Whenever you feel like beating yourself up, keep in mind that nobody can perfectly time the market unless you're using insider trading. You can only sit on the sidelines while the bubble gets larger and larger. Each day it inflates, the risk of losing it all also massively increases. I've moved away from equities for this reason and am actively pursuing real estate as an inflation hedge, even though we're likely to see deflation for a while longer first. Keep in mind that once you're in the middle of a cycle, it is already too late to get a good cost basis on just about any investment. You have to be at least a little bit ahead of the curve or the beginning of the upswing of the curve to capture value. Everything else is a speculative bubble.
 

Blade Runner

Kingfisher
As a recent realvision video pointed out (with Mr. Dillian) "Don't Hate the Fed, hate the Game"

We will see deflation for many reasons, for the time being, by far the brightest minds have spoken. The inflation worry warts of the last decade are too short sighted on their predictions and are essentially ideologues on these matters (the best examples are guys like Peter Schiff). I don't think they are fundamentally wrong about what makes a healthy economy, but they miss out entirely on how to actually invest with the changing game of global analysis and central bank patterns. Yes, eventually we will get to an inflationary environment but you'll know why, and when this is going to happen if you are paying attention. Until then, don't limit yourself to not making money in literally decades + time periods just because you don't like that the game is manipulated by central banks and out of control governments.
 

joost

Kingfisher
Elon Musk is another one selling all his assets (including houses). Joe Rogan asked him why and he said it was so people won't use his fortune to criticize him. Going to Mars is more important than anything else.

Since he's so full of s#!t, I wonder if he knows the market will implode and he knows he will need liquidity in the future, specially after many lawsuits. Also, even expecting the housing market to implode and market prices falling 50%, it's not like a few million will make difference for him. It's hard to understand the guy. I just watched a short clip (Joe Rogan Clips). Musk looks tired.
 

gework

Ostrich
Gold Member
actively pursuing real estate as an inflation hedge

Why is that?

Do you mean actual real estate or REITs?

REITs are one of the main things I am looking at buying on the other side of this. Some funds are currently at 10-15% forward dividends. I imagine in the short-term that won't hold, but in the long-term I would expect them to be maintained.

I am also looking to get real estate to live in. But I'm thinking I may rent for a few years, as I think that my cash reserves will reap more gains after a few years in stocks or crypto. Currently I am about 30% crypto, 68% cash, 2% stocks (gold miner) and bonds.

I think all that crypto will need to be sold soon. I was initially looking at mid-May for prices to start going back down, but now I think that will be mid-June, at the latest end of July, when the stimulus runs out. But with The Fed et. al. ready to make moves it's hard to know what will happen. If The Fed steps in as much as they do then the zombie economy will be here.
 
Gework,

If you can buy raw land or developed properties at a strong discount and with a fixed interest rate loan, you can sell or rent them out in the future with inflated dollars while paying down the relatively smaller loans you bought the properties with devalued dollars. If it is intrinsically a good property, it will stay so during the paydown period with your devalued dollars. With historically low fixed interest rates, I want to directly buy real estate and hold for the long term.

While you can go the REIT route, that will give you some exposure to the real estate market, more so for cash flow as long as the rents get paid. I like buying raw law as a niche, looking for parcels that are in the path of long term growth. If you can find ones with low property taxes, your holding costs are minimal while you ride an inflation/appreciation curve. I'm also pitching any raw land I own to developers who wish to buy the land outright or build on it with a partnership.
 

Tail Gunner

Hummingbird
Gold Member
A chart that explains how deflation and inflation can co-exist at the same time in different sectors. Goods and services provided by workers overseas decline in price while goods and services provided domestically rise in price. Not shown on the chart is the asset inflation caused by the injection of liquidity from government intervention.

a inflation.jpg
 

Freebird Flying

Woodpecker
Call me stupid but I sold the rest of my portfolio last week because I thought there is no way we stay green and keep going. When you see things like this and still see it close green today, It makes my head hurt. I feel that at some point everything has to catch up to the oh shit and go much further down.

I did the same. I sold out last Friday on May 1. I plan to start getting back in but slowly later this month, over the course of the year, and systematically based on some dollar cost average...

Yeah I hated seeing myself miss those profits this week also haha.
 
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