The 2020 Stock Market Crash Thread

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Ostrich
Gold Member
Today the Fed signaled that they don't want the stock market to drop more than a few percent and will pump more money in to prevent it from reaching what it's actually worth. The S&P 500 is probably worth around 1,800 to 2,550.

I've started selling S&P 500 put options to generate a nice return. Looks like I can generate an 6% to 8% return annualized.
The two downsides are:
1) I would have to buy at my strike price but since I set my strike price in line with the numbers above I wouldn't mind them getting exercised.
2) Locks up a lot of cash since I don't use margins.
 

SlickyBoy

Ostrich
Robin Hooding 20 year old offs himself when he thinks he's $730k in the hole from a bad trade. You can probably tell a lot from his picture.

How short sighted to think he would have to be held accountable, even if the trade turned out to be a genuine loss (wasn't clear from the story). He never heard of bankruptcy?

Also,
You're quoting from the James Rickards article, linked in the same web page, right? The one by Maher reads like typical Daily Reckoning marketing hype, but they do have good authors like Rickards here and there.

Seems apt to bring this up, but Rickards isn't credited with what just happened to the markets - it wasn't so much Coronavirus since all the hedgies knew about it well before February, it was the reaction to it, likely driven by algorithmic trades.

The Market Physics Behind The $4.6 Trillion Crash
 
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gework

Ostrich
Gold Member
Today the Fed signaled that they don't want the stock market to drop more than a few percent and will pump more money in to prevent it from reaching what it's actually worth. The S&P 500 is probably worth around 1,800 to 2,550.

As this pans out it's looking more and more like The Fed and Treasury are going to rig the game; so those of us who were waiting for the crash don't get the buying opportunity we have been waiting for.

So I am moving my search for stocks to Asia. Those countries don't have the rope to fluff their currency to avoid recession; and I am generally more bullish on them.

If The Fed can execute a bailout of the market I think that US stocks are broadly toast for prospective speculators. If you can only buy in at a fake bottom that is severely overbought it's not worth the risk. The US could be heading for a Japanified stock market.



Robin Hooding 20 year old offs himself when he thinks he's $730k in the hole from a bad trade. You can probably tell a lot from his picture.

I don't know why any platform allows you to trade margin over what you have in the account. In crypto it is standard practice to liquidate positions once the holder can't sustain it. And in crypto you can usually set up sub-accounts to margin trade in, so as not to burn your entire account.
 
To piggyback onto the Unlimited QE discussion. I was listening to one of Hedgeye's presentations (highly recommend them to anyone seriously interested in this stuff), and they were talking about the diminishing returns of the money pumped into the economy. The latest figures showed that it takes $7 of Fed money to generate $1 of real GDP growth. Needless to say, this can't continue forever.

So I am moving my search for stocks to Asia. Those countries don't have the rope to fluff their currency to avoid recession; and I am generally more bullish on them.

Any countries in particular that you're looking at?
 

Troller

Kingfisher
FACT: Nearly 95 per cent of Australian companies from ASX200 Index have not repaid their debts since 2005.

The firms refinanced, restructured or simply replaced with bigger bank loans.

The dividends and top management salaries and bonuses were paid from these bank loans - as cost.


This strategy is being called in media by academics and other talking heads as business expansion or growth- oriented performance.

BACKGROUND: The only debt which is being paid on time is household debt.

The affluent individuals often put their household expenses on the list of costs generated by their firms.
The feasibility business culture has crushed after the CEO convinced themselves than any economic problem can be resolved by bank bailout or the state subsidies.
 

Deepdiver

Crow
Gold Member
Excerpts From Strategic Intelligence Lifetime Subscribers section behind paywall by Jim Rickards:

The Great Depression of 2020 Has Begun. Your Roadmap To Recovery:

Forget 2008.

For that matter, forget every recession, financial panic or crisis in your lifetime. Almost no one alive today has a living memory of the market crash of 1929, but even that does not capture the full magnitude of what happened to the U.S. economy in the past three months.

It is unprecedented in U.S. economic history.

We all know the reason. The U.S. economy was locked down to prevent the spread of COVID-19, which was unleashed on the world from Wuhan, China, late last year.

In this edition of Strategic Intelligence, we leave the origin of the virus and the pandemic to one side and focus on the consequences. The Great Depression of 2020 is as dramatic and disturbing as the pandemic itself.

In particular, gold has been a superstar, up 75% since the start of the new bull market in December 2015 and up 35% in the past year alone. We expect this rally in physical gold to continue and for performance in gold mining shares to do even better.

Cash is another star asset. It’s essential to preserve wealth and can even be your best-performing asset (in real terms) during periods of deflation, which we expect.

Following is an incisive view of the Great Depression of 2020. We will be with you every step of the way as we continue through this crisis with specific actionable recommendations for financial survival and even spectacular gains as the new depression unfolds.

Every Job Loss Is an Individual Trauma
The U.S. lost over 21 million jobs in March and April 2020. The May job losses (not shown on Chart 1) will add another 17 million to the unemployment rolls. (June now 45 Million UI applications running 1.5 Million per week and slowing dropping each week but above White House happy talk estimates) In total, the U.S. has lost over 45 million jobs in just three months. Total employment is back to levels last seen in the 1990s. It’s as if the economy had been on hold for three decades. It took only three months to wipe out the job gains of the last 30 years. Reports of continuing UI claims of 21 Million beggars belief.

Small and medium-sized enterprises (SMEs) contribute over 40% hof GDP and provide almost 50% of total employment. By gutting these jobs, we have gutted the U.S. economy in ways that may take a decade to repair.

Almost overnight, the Great Depression of 2020 slammed the LFPR (Labor Force Participation Rate) down to 60%, about where it was in 1970. Again, it was as if the U.S. economy had been transported in a time machine to where it was 50 years ago. A half-century of gains for women, minorities and the disadvantaged were wiped out in the blink of an eye.

Many of the businesses that closed for the lockdown will never reopen. It’s not a question of lockdown orders. They’re broke and out of business. The owners may start a new business someday, somewhere, but the old business is gone.

The assets are up for sale at fire-sale prices. The employees will never get their old jobs back. The lease is broken and the storefront is vacant. That’s reality for much of America.

Big business is not immune. We’ve already seen bankruptcies by household names like J.C. Penney, J. Crew, Neiman Marcus, Pier 1 Imports and Hertz. They will not be the only ones. You can expect at least one major bankruptcy coming from the airline sector. Even giants like Boeing are not immune.

Bankruptcy does not mean the company goes away. Some do (like Pier 1) because they are put into liquidation. But many companies are put into “reorganization”-style bankruptcies.

This generally means equity holders get wiped out, bondholders get a reduced claim (with some equity in lieu of principal), some stores or locations are shut, some assets are sold, leases are broken or renegotiated and workers are rehired in smaller numbers with reductions in pay and benefits. The company survives, but many landlords, stockholders and employees do not — their claims or jobs are wiped out.

The Great Depression of 2020 has just started. The big-name bankruptcies are popping up almost daily. There’s every reason to believe stocks will end up much lower before all is said and done.

Above all, there is uncertainty. Our expectation is that economic growth will grind lower before turning around. When it does turn around the recovery will be slow and uneven. We may not reach 2019 levels of output again until 2022 or later.

Stocks have not hit bottom. We may see the S&P 500 fall to 1,700 before the market turns around. That would be an almost 50% decline from the mid-February peak. Not as bad as the first Great Depression, but still one of the worst stock market drawdowns since the 1930s.

How to Protect Your Assets:
At a minimum, investors should reallocate their portfolios to include about 10% in gold or gold mining stocks and 30% in cash. A rise in the dollar price of gold is really a devaluation of the dollar, which is needed to promote growth in the U.S.

Cash can be your best-performing asset in real terms as deflation takes hold. Deflation means your cash is more valuable in real terms even as debt becomes more onerous in real terms.

For your remaining stock portfolio, the key is selectivity. Even in down markets, some stocks do well and outperform. During the first Great Depression, shares in Homestake Mining, which operated a huge gold mine in Lead, South Dakota, soared.

Jim at StratIntel is not a gloom and doomer just a realist...

Q2 and Q3 Earnings will be a horror show - all the zombies buying back stock with 0% Debt will wipe out their balance sheets and become technically bankrupt without further Treasury and Fed bailouts.

After the Fed pumps wave 5 back to a technically valid double top to finish the 5 Wave larger B wave we will enter larger Wave C down in a slightly slower in time 3 impulse zig zag C Wave similar to the Large A wave down - to a target 1700 to 2000 S&P range. Unless the Fed & Treasury pulls a multi Trillion bunch of rabbits out of their mysterious hats.

Since subwave 2 of the first major Retracing B wave was extremely fast, we expect the rules of alternation to extend wave B subwave 4 to kickin slowly trading sideways during the remaining June July summer covid cabin fever Vacation period to a target of 3890 a .38 retrace of B subwaves 1 thru 3.

A technically valid B wave subwave 5 high target with the Fed pedal to the metal is 3400 which will top turn around election day to give Trump 401K bragging rights into a relative impulsing down Major C to 1700 to 2000 SPX or "S&P Cash". Admin Fed/Treasury wizards don't expect this correction till Q3 21 to Q2 22 timeframe. Bearing in mind the stone cold sober Rickards Strategic Intelligence Report above...

Takeaways... Go to cash at S&P SPX 3400 to preserve gains and use no more than 20% of trading cash for Shorting S&P to 1700 to 2000 range or SPY Put Options at least 120 day puts to 200 to 170 range always take Put and Call Profits with no less than 2 weeks till expiration. I like to use 5% SPY trailing stop Loss to capture impulsing waves profits... Even if stopped Out on these I keep 30% of puts as fliers with no trailing stops to catch bonus Fib final 38% moves while using trailing stops to lock in first 62% moves.
 
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tigerbass

Newbie
Today the Fed signaled that they don't want the stock market to drop more than a few percent and will pump more money in to prevent it from reaching what it's actually worth. The S&P 500 is probably worth around 1,800 to 2,550.

I've started selling S&P 500 put options to generate a nice return. Looks like I can generate an 6% to 8% return annualized.
The two downsides are:
1) I would have to buy at my strike price but since I set my strike price in line with the numbers above I wouldn't mind them getting exercised.
2) Locks up a lot of cash since I don't use margins.

Why not do a vertical spread instead of selling cash secured puts?
 
Excerpts From Strategic Intelligence Lifetime Subscribers section behind paywall by Jim Rickards:

The Great Depression of 2020 Has Begun. Your Roadmap To Recovery:

Forget 2008.

For that matter, forget every recession, financial panic or crisis in your lifetime. Almost no one alive today has a living memory of the market crash of 1929, but even that does not capture the full magnitude of what happened to the U.S. economy in the past three months.

It is unprecedented in U.S. economic history.

We all know the reason. The U.S. economy was locked down to prevent the spread of COVID-19, which was unleashed on the world from Wuhan, China, late last year.

In this edition of Strategic Intelligence, we leave the origin of the virus and the pandemic to one side and focus on the consequences. The Great Depression of 2020 is as dramatic and disturbing as the pandemic itself.

In particular, gold has been a superstar, up 75% since the start of the new bull market in December 2015 and up 35% in the past year alone. We expect this rally in physical gold to continue and for performance in gold mining shares to do even better.

Cash is another star asset. It’s essential to preserve wealth and can even be your best-performing asset (in real terms) during periods of deflation, which we expect.

Following is an incisive view of the Great Depression of 2020. We will be with you every step of the way as we continue through this crisis with specific actionable recommendations for financial survival and even spectacular gains as the new depression unfolds.

Every Job Loss Is an Individual Trauma
The U.S. lost over 21 million jobs in March and April 2020. The May job losses (not shown on Chart 1) will add another 17 million to the unemployment rolls. (June now 45 Million UI applications running 1.5 Million per week and slowing dropping each week but above White House happy talk estimates) In total, the U.S. has lost over 45 million jobs in just three months. Total employment is back to levels last seen in the 1990s. It’s as if the economy had been on hold for three decades. It took only three months to wipe out the job gains of the last 30 years. Reports of continuing UI claims of 21 Million beggars belief.

Small and medium-sized enterprises (SMEs) contribute over 40% hof GDP and provide almost 50% of total employment. By gutting these jobs, we have gutted the U.S. economy in ways that may take a decade to repair.

Almost overnight, the Great Depression of 2020 slammed the LFPR (Labor Force Participation Rate) down to 60%, about where it was in 1970. Again, it was as if the U.S. economy had been transported in a time machine to where it was 50 years ago. A half-century of gains for women, minorities and the disadvantaged were wiped out in the blink of an eye.

Many of the businesses that closed for the lockdown will never reopen. It’s not a question of lockdown orders. They’re broke and out of business. The owners may start a new business someday, somewhere, but the old business is gone.

The assets are up for sale at fire-sale prices. The employees will never get their old jobs back. The lease is broken and the storefront is vacant. That’s reality for much of America.

Big business is not immune. We’ve already seen bankruptcies by household names like J.C. Penney, J. Crew, Neiman Marcus, Pier 1 Imports and Hertz. They will not be the only ones. You can expect at least one major bankruptcy coming from the airline sector. Even giants like Boeing are not immune.

Bankruptcy does not mean the company goes away. Some do (like Pier 1) because they are put into liquidation. But many companies are put into “reorganization”-style bankruptcies.

This generally means equity holders get wiped out, bondholders get a reduced claim (with some equity in lieu of principal), some stores or locations are shut, some assets are sold, leases are broken or renegotiated and workers are rehired in smaller numbers with reductions in pay and benefits. The company survives, but many landlords, stockholders and employees do not — their claims or jobs are wiped out.

The Great Depression of 2020 has just started. The big-name bankruptcies are popping up almost daily. There’s every reason to believe stocks will end up much lower before all is said and done.

Above all, there is uncertainty. Our expectation is that economic growth will grind lower before turning around. When it does turn around the recovery will be slow and uneven. We may not reach 2019 levels of output again until 2022 or later.

Stocks have not hit bottom. We may see the S&P 500 fall to 1,700 before the market turns around. That would be an almost 50% decline from the mid-February peak. Not as bad as the first Great Depression, but still one of the worst stock market drawdowns since the 1930s.

How to Protect Your Assets:
At a minimum, investors should reallocate their portfolios to include about 10% in gold or gold mining stocks and 30% in cash. A rise in the dollar price of gold is really a devaluation of the dollar, which is needed to promote growth in the U.S.

Cash can be your best-performing asset in real terms as deflation takes hold. Deflation means your cash is more valuable in real terms even as debt becomes more onerous in real terms.

For your remaining stock portfolio, the key is selectivity. Even in down markets, some stocks do well and outperform. During the first Great Depression, shares in Homestake Mining, which operated a huge gold mine in Lead, South Dakota, soared.

Jim at StratIntel is not a gloom and doomer just a realist...

Q2 and Q3 Earnings will be a horror show - all the zombies buying back stock with 0% Debt will wipe out their balance sheets and become technically bankrupt without further Treasury and Fed bailouts.

After the Fed pumps wave 5 back to a technically valid double top to finish the 5 Wave larger B wave we will enter larger Wave C down in a slightly slower in time 3 impulse zig zag C Wave similar to the Large A wave down - to a target 1700 to 2000 S&P range. Unless the Fed & Treasury pulls a multi Trillion bunch of rabbits out of their mysterious hats.

Since subwave 2 of the first major Retracing B wave was extremely fast, we expect the rules of alternation to extend wave B subwave 4 to kickin slowly trading sideways during the remaining June July summer covid cabin fever Vacation period to a target of 3890 a .38 retrace of B subwaves 1 thru 3.

A technically valid B wave subwave 5 high target with the Fed pedal to the metal is 3400 which will top turn around election day to give Trump 401K bragging rights into a relative impulsing down Major C to 1700 to 2000 SPX or "S&P Cash". Admin Fed/Treasury wizards don't expect this correction till Q3 21 to Q2 22 timeframe. Bearing in mind the stone cold sober Rickards Strategic Intelligence Report above...

Takeaways... Go to cash at S&P SPX 3400 to preserve gains and use no more than 20% of trading cash for Shorting S&P to 1700 to 2000 range or SPY Put Options at least 120 day puts to 200 to 170 range always take Put and Call Profits with no less than 2 weeks till expiration. I like to use 5% SPY trailing stop Loss to capture impulsing waves profits... Even if stopped Out on these I keep 30% of puts as fliers with no trailing stops to catch bonus Fib final 38% moves while using trailing stops to lock in first 62% moves.

Is Rickards' still standing firm on gold to $10,000/ounce?
 

Deepdiver

Crow
Gold Member
Is Rickards' still standing firm on gold to $10,000/ounce?

$2000 then $5000 and yes then $10K in 5 years or so...

Especially after 2021 Deflation in prices due to collapsed demand converts to strong inflation due to Fed/Treasury flooding liquidity into both Wall Street and Main Street...

Gold today:
Coin value calculations use the 11:55 AM PDT gold price for June 23, 2020:
Gold $1769.57/oz
14.12

Silver Today:
Coin value calculations use the 11:56 AM PDT silver price for June 23, 2020:
Silver $17.98/oz
0.26

Gold/Silver ratio:

$1769.57/$17.98 = 98.42 Silver is still a comparative and historical bargain...
 
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$2000 then $5000 and yes then $10K in 5 years or so...

Especially after 2021 Deflation in prices due to collapsed demand converts to strong inflation due to Fed/Treasury flooding liquidity into both Wall Street and Main Street...

Gold today:
Coin value calculations use the 11:55 AM PDT gold price for June 23, 2020:
Gold $1769.57/oz
14.12

Silver Today:
Coin value calculations use the 11:56 AM PDT silver price for June 23, 2020:
Silver $17.98/oz
0.26

Gold/Silver ratio:

$1769.57/$17.98 = 98.42 Silver is still a comparative and historical bargain...

Thanks, I thought so. I've always liked Rickards' writing. His picks have been hit/miss over the years though.

To those looking at some gold related investments, another option is gold streaming/royalty stocks, rather than pure mining plays. These are companies that provide financing to miners in exchange for a % of the mine's output. You get the upside of gold prices, while limiting the downside risk of the mining operations.

To give some recent context between 2008 and 2018, gold prices rose by 45%. Mining companies were down 38% in this 10 year period. Yet gold streamers’ rose by 189% during this time.

Franco-Nevada is the largest one. Sandstorm Gold is another strong player. Wheaton Precious Metals if you want exposure to silver as well.
 

tigerbass

Newbie
Schiff just talked about the miners, they're underperforming the metal itself.

That's in the case if you're talking purely buying shares of stock.

This isn't the the case with the options. Volatility for the miners is much higher GLD or SLV. I have a few credit spreads on them right now. Most of the primary silver miners are too thinly traded for options. Gold miners are juicy though, Barrick and Newmont of course.
 

Pointer

Woodpecker
The Spanish IBEX 35 is still far from the February high.

There are some decent opportunities there. I've been pumping and dumping SAB and IAG since mid-May and made some small gains (5% so far). SAB is valued at around 0.40-0.46 depending where you look and the CEO bought in at 0.30 in mid-May. If you can buy between 28-32 this should see large gains once the bailout money starts flowing in (especially that EU relief money that Spain has been begging for lately).

IAG is nearing historical lows again and they have not requested so far any massive government handouts like Lufthansa or Air France. This should change in the future.

Unfortunately the Asian or European stocks behave in much the same way as the US stocks. 2 weeks ago the DOW crashed 10% in one day, everyone else followed through so not only do you have to keep an eye out on what happens locally, you also have to check on the US situation. I prefer to put most of my money in a investment fund and forget about it but I wouldn't do that until after the US elections. Right now it's better to do your own active investing and look for undervalued stocks.
 

Deepdiver

Crow
Gold Member
Holy Ballz...

Mark Skidmore - $90 Trillion in Treasury Debt - It’s Not Just Bad Accounting


Join Greg Hunter of USAWatchdog.com as he goes One-on-One with Economics Professor Mark Skidmore from Michigan State University.

Michigan State Economics Professor Mark Skidmore’s latest update to the “Missing Money” question is now the biggest in history by a long way. Skidmore’s research reveals the US Treasury market is rolling over $90 trillion to support the official debt of $22 trillion (2019.) That’s on top of the $21 trillion Skidmore revealed in so-called “Missing Money” in late 2017. Why do you need to churn $90 trillion in debt? Is the US debt really $90 trillion? What could go wrong with this much hidden debt? Skidmore says, “Yes it is concerning to me because this could blow up. We don’t know when or how, but if people lose confidence in our government, they could lose confidence in the currency. That could have severe impacts on lots of people in the whole global economy above and beyond what we are experiencing now. . . . Is there some reset in play? Is there some bigger issue at stake? Is this pulling away with other goals in mind? Yes, I think so. I don’t know how this all fits together but I do know there is something else going on that we all need to pay attention to. . . . I have documents that say something is really, really wrong, and it’s not just bad accounting.”
 

Deepdiver

Crow
Gold Member
Yo Diggity S&P ESU20 Sept Futures Just Gapped Down to 2883.50 on the Sunday Nite Asia Globex open June28-ESU-SunNiteAsiaOpen.jpgwithin the 9 Point Range of the Technical Number 2980... End of Subwave 4...

Subwave 5 Adjusted to hit the double top 3400 on 17 July on the RMS Midpoint Trendline ... Note due to summer vacation season this could revise to the lower Waves 1-3 Baseline in the first or second week of August. C wave will bottom at Fibonacci 38%, 50%, 61.8%, or full 100% retrace of Major Wave A though with the Fed/Treas likely to pump several Trillions of more Stimulus into Wall Street and Main Street End of July... 38% to 50% most expected by Institutions.

Click Twice On Thumbnail image in Chrome to view full-size chart

Reminder when we hit 3400+ we will top turn into Major Wave C Down so good time to go to Cash if you do not like to go short.
 
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