The 2020 Stock Market Crash Thread

Lampwick

Woodpecker
Gold Member
Yes, if you want to ride bubbles, then Schiff is not the right person to listen to. But in this recent bear market, he has been right so far in what to hold. If you listened to him and held at least some gold, you didn't lose as much money. If you did the opposite of his advice and held crypto, you got destroyed. Two of his main points remain to be seen: whether gold will dramatically increase in value long term along with a dollar devaluation and fall in the bond market, and whether crypto is a bubble that has popped permanently. Too early to tell on those.

I know he's a tout and a broken clock, but in this case it paid to listen to him.
 

MichaelWitcoff

Hummingbird
Orthodox
The problem with the Trumps is that they believe in magical thinking, that if you constantly say everything is great and refuse to acknowledge problems, somehow the problems will disappear and reality will conform itself to your positivity. Trump has been doing this the entire time he’s been POTUS in regards to his own failures and shortcomings, and is one sign of a bad and dishonest leader. You don’t want the President telling you everything’s great when it isn’t, and you don’t want his son talking about how ATH’s are the best time to buy into record long bull runs. But that’s who they are, and it works for them in the short term.
 

Tail Gunner

Hummingbird
Gold Member
Lampwick said:
Yes, if you want to ride bubbles, then Schiff is not the right person to listen to. But in this recent bear market, he has been right so far in what to hold. If you listened to him and held at least some gold, you didn't lose as much money. If you did the opposite of his advice and held crypto, you got destroyed. Two of his main points remain to be seen: whether gold will dramatically increase in value long term along with a dollar devaluation and fall in the bond market, and whether crypto is a bubble that has popped permanently. Too early to tell on those.

I know he's a tout and a broken clock, but in this case it paid to listen to him.

His analysis is correct about the financial system, but his timing is often wrong -- which is certainly a big deal. But it is also all about perspective. For example, if you entered the market (e.g., the DJIA) in 2007, then it took you six years to break even. What were your opportunity costs during that six year period, while you sat on the sidelines waiting to break even? Would you have been better off listening to Peter Schiff during that period, when the price of gold actually doubled?

Someone who bought the NASDAQ in 2000 did not break even for 17 years! During that same period, gold tripled (it more than quadrupled, if you sold at the top two years earlier).

Right now, anyone who bought after the middle of 2017 is in the very same position (and we have not yet seen the bottom). If the Dow tanks 50%, it will eliminate paper profits back to the beginning of 2013 -- a seven-year period. If that happens, would the typical stock investor have been better off listening to Peter Schiff and sticking to more conservative investments? Again, what are the opportunity costs of waiting years to break even? Stated another way, what are the opportunity costs of not having a large sum of cash at a market bottom?

If you are not a sophisticated retail investor who has a proper exit plan in place, you might be much better off listening to someone such as Peter Schiff. There are plenty of "investors" who pile up paper profits for years (or even a decade) only to lose them in a few months. This cycle repeats endlessly. Rather than complain about analysts such as Peter Schiff when times are good, take the time to undertake a comparative analysis when things go awry. For many investors, right now might be a good time.

The fact is that if you are a "buy and hold investor," which is the retail holy-grail consensus strategy, the opportunity costs during a bear market or a financial panic kill you. You either need a workable exit plan (and self-discipline is a big part of such a strategy) -- or you should not be in the stock market. Have an exit plan, get into cash near the top, buy a mix of stocks and precious metals near the bottom. Or follow the herd and get butchered by the quants. I humbly suggest that you use this downturn as a learning opportunity. Do some analysis. Make a future game plan. Best of luck.
 

Leonard D Neubache

Owl
Gold Member
I'm not an expert on how this stuff works so forgive me if this line of thinking is errant.

1.5 trillion dollars is roughly $4,587 per American citizen or $18,348‬ per family of four.

Currently this unimaginable sum of money is going to prop up the interests of the richest 10% of Americans. In rough numbers this is like handing a debt of $4,587 to each man, woman and child and writing a cheque to the richest 10% of Americans right now for $45,871.

If you wanted to break down the numbers further then you'd probably end up writing cheques to the top 1% for 400k and the 9% below them would get perhaps 20k, but literally everyone else loses by a flat 4.5k.

Am I wrong on this?

I get that there are broader ramifications for a market crash that affect the poor as well as the rich. I'm just wondering to what extent the poor are now subsidizing the enormous wealth of the top 10% or 1%.
 

Lime

Kingfisher
Agnostic
Would it be sensible to start buying S&P 500 indexes bit by bit? Of course nobody knows but who are doing so already or thinking to?
 

It_is_my_time

Crow
Protestant
Leonard D Neubache said:
I'm not an expert on how this stuff works so forgive me if this line of thinking is errant.

1.5 trillion dollars is roughly $4,587 per American citizen or $18,348‬ per family of four.

Currently this unimaginable sum of money is going to prop up the interests of the richest 10% of Americans. In rough numbers this is like handing a debt of $4,587 to each man, woman and child and writing a cheque to the richest 10% of Americans right now for $45,871.

If you wanted to break down the numbers further then you'd probably end up writing cheques to the top 1% for 400k and the 9% below them would get perhaps 20k, but literally everyone else loses by a flat 4.5k.

Am I wrong on this?

I get that there are broader ramifications for a market crash that affect the poor as well as the rich. I'm just wondering to what extent the poor are now subsidizing the enormous wealth of the top 10% or 1%.

The whole economy will crash if something isn't done quickly. Whether that is get a cure/vaccine and calm everyone to go back to their normal lives, or the federal govt. actually bail out the citizens and not the globalist bankers.

There are millions, probably a hundred million or more, who depend on a paycheck from a job where they are required to be there and the job is paid by the hour. If these business go belly up due to everyone staying home (Hotels, retail, industry, etc.) then all these people lose their income and they can't pay their rent. You have a giant domino affect. The time for a temporary UBI is here and if we can't get that done then our federal govt. is completely worthless in every sense of the word.
 

Sherman

Ostrich
Orthodox Inquirer
It appears the market is going to halt for a third time. The futures are dead this morning. This is insanity. Containment doesn’t work. They are literally destroying the economy for something that will give most people something like the common cold. The only hope for the economy is that this reaches the tipping point and everyone gets it so that people stop being afraid.
 

Emancipator

Hummingbird
Gold Member
It_is_my_time said:
Leonard D Neubache said:
I'm not an expert on how this stuff works so forgive me if this line of thinking is errant.

1.5 trillion dollars is roughly $4,587 per American citizen or $18,348‬ per family of four.

Currently this unimaginable sum of money is going to prop up the interests of the richest 10% of Americans. In rough numbers this is like handing a debt of $4,587 to each man, woman and child and writing a cheque to the richest 10% of Americans right now for $45,871.

If you wanted to break down the numbers further then you'd probably end up writing cheques to the top 1% for 400k and the 9% below them would get perhaps 20k, but literally everyone else loses by a flat 4.5k.

Am I wrong on this?

I get that there are broader ramifications for a market crash that affect the poor as well as the rich. I'm just wondering to what extent the poor are now subsidizing the enormous wealth of the top 10% or 1%.

The whole economy will crash if something isn't done quickly. Whether that is get a cure/vaccine and calm everyone to go back to their normal lives, or the federal govt. actually bail out the citizens and not the globalist bankers.

There are millions, probably a hundred million or more, who depend on a paycheck from a job where they are required to be there and the job is paid by the hour. If these business go belly up due to everyone staying home (Hotels, retail, industry, etc.) then all these people lose their income and they can't pay their rent. You have a giant domino affect. The time for a temporary UBI is here and if we can't get that done then our federal govt. is completely worthless in every sense of the word.
+1

Low interest rates and money printing won't make this pandemic go away, absolutely asinine reaction. This isn't a financial crisis, it's a health one. Bailouts for big corporations won't cure it, people still won't leave their homes.

Want to spend obscene amounts of money, do so on people and on a proper response.
 

CynicalContrarian

Owl
Other Christian
Gold Member
Cryptocurrency falling?

Guess folk realize you can't wipe your arse with digital money.

(I fully acknowledge that most cash is also essentially digital at the time of writing).
 

Leonard D Neubache

Owl
Gold Member
Sherman said:
It appears the market is going to halt for a third time. The futures are dead this morning. This is insanity. Containment doesn’t work. They are literally destroying the economy for something that will give most people something like the common cold. The only hope for the economy is that this reaches the tipping point and everyone gets it so that people stop being afraid.

You are incorrect.

If you get your wish then the mathematics indicates that tens of millions will die. This is not an opinion. This is a cold, hard fact. The resultant panic would then destroy your beloved markets regardless.

Increasingly I am seeing this plague as Godsent to punish those who value money over compassion. The Almighty gave the nations of men the choice of saving their people or their wealth, and those that choose their wealth will lose both.
 
Lime said:
Would it be sensible to start buying S&P 500 indexes bit by bit? Of course nobody knows but who are doing so already or thinking to?

Hmm... okay, we're at the point where I think "it depends" is a sensible answer. My mood is the same as WallStreetPlayboys, who are much better at stocks than I am:


BUT, on the other hand dollar cost averaging is usually an okay idea, since it limits your downside exposure. If you want to start now, it's not the dumbest idea in the world.

I sure as hell wouldn't do it though.
 

eradicator

Peacock
Agnostic
Gold Member
I’ve made decent cash this year and am waiting for the market to bottom out and so I can finally buy. Should I do that today or wait until we get the next major news break? :D
 

It_is_my_time

Crow
Protestant
If the govt. doesn't bailout the people with some form of UBI then the whole house of cards will collapse. If people can't work and they don't get paid they can't pay rent. If rent doesn't get paid the landlords go bankrupt. If they go bankrupt you have a run on banks and the entire system will collapse.
 

Sherman

Ostrich
Orthodox Inquirer
Last night, the selloff was close enough to test the December 2018 low, and the market did open this morning. This could form the basis for a low.
 

Foolsgo1d

Peacock
Some Eurotrash countries banning shorts and this could come to the US. The Bigs dont want the plebs getting a lot of $$ off of their misfortune. They are screaming for corporate welfare (they got it) and more (unlimited funds/loans).

Please tell me how this market isn't a manipulated side show just to make the rich richer.

Trillions injected and still Americans have to deal with the shitty American health system. :laugh:
 

Coja Petrus Uscan

Crow
Orthodox Inquirer
Gold Member
Leonard D Neubache said:
I'm not an expert on how this stuff works so forgive me if this line of thinking is errant.

1.5 trillion dollars is roughly $4,587 per American citizen or $18,348‬ per family of four.

Currently this unimaginable sum of money is going to prop up the interests of the richest 10% of Americans.

Am I wrong on this?

This money will largely go into M3 money, which includes all the instruments financial institutions have on their books that don't usually circulate publicly. The repurchases (repos) which this $1.5 trillion will be used for is in M3 money. The Fed has stopped publishing how much M3 money there is.

This is a good chart to show what has been going on:

UK-Money-Velocity-Money-Supply-and-GDP-data-graph.png


As they created more shadow banking money, it didn't circulate, so the speed at which money circulates has gone down.

There is a relationship between goods and money. As one grows the other falls. And the speed (velocity) at which it circulates affects the price. There are X amount of goods in the society being chased by Y amount of money. If the speed at which money circulates increases then it outpaces production. The value of goods is more than money. The price of goods goes up - inflationary. On the other hand, if people are increasingly saving then the value of money goes up and goods down - deflationary.

Some of the money is going to buy treasuries, which will then be sent by the government. But this is in a deflationary environment (people are running to cash and sitting on it) - deflationary. Injecting new money is inflationary.

The top 10%, who hold more stocks and real estate, are the beneficiaries, as The Fed is inducing excessive values on their assets by stepping in to buy when the market doesn't want to. That is so long as the sell their assets before the bubble bursts.

If they threw that $1.5 trillion into the gen. pop. it would cause a bit more inflation. And rather than the economically integral functions of the government that treasury purchases would induce, the general population would spend it on dead-ends like eGirls, Netflix, beer. I think it would also cause a quite severe erosion of trust in the big players who have to take on risk or sell something to get dollars.

As this is a shell game The Fed can continue this until people want to dump the dollar. One big issue is that their policies are inducing people to make reckless and unproductive decisions. Why work 60 hour weeks when you could make 10% pa from sitting on stocks and have a side game in flipping condos to Chinese? Companies have been buying back their stocks with cheap money, pulling retail in at higher prices. Whatever you are doing you are now directly or indirectly propped up by The Fed.

This steals from the future. The growth of tomorrow is lost in the exuberance of today. I think they can keep it up as long as their is economic growth, no social unrest, major war etc. At the point they can't stimulate economic growth they will probably throw huge amounts into the general money supply and inflate the dollar away. That or something like it will be the real time for gold and maybe crypto.
 

Samseau

Owl
Orthodox
Gold Member
This is a worldwide global depression brought about by a plague. People are still in denial about it, calling it a recession and such. This is going straight down to 15K on the DJI or lower. Whole world is tanking, China already suffered their worst crash in history, Europe is currently crashing at all time records.

If China, Europe, or America experienced the Cornavirus and it crashed their economy but not the other two, we'd still have a recession as fallout from one of the major pillars of the world economy crashing.

But all 3 pillars coming down at once? With an oil price war on top? Get ready for the hard, hard, hard times boys. Great Depression 2.0 will be just as bad, if not worse than the first one.

Short while you can, I envy those who are in a position to short this disaster of a market. No amount of money printing will save shit, if anything it could make things 10x worse for stocks. The rich will use the liquidity to sell and move into bonds. The fundamentals of the markets have evaporated, there is no supply due to the virus, this is going to be intense.
 

El Chinito loco

 
Banned
Gold Member
I'm going to have to disagree with some of the apocalyptic doom and gloom Mad Max prognostications here. I've seen this before and if I could bottle the sentiment back then and let you experience the past the panic was palpable back in 2008 as well.

You should have seen the cascading waterfall of red when the market truly broke in 2008 and plummeted down. This was months and months of deep red waterfalls of blood.

People were freaking the fuck out. There were many people who committed suicide just like back in the great depression.

Like I said before, think rationally and logically.

There needs to be evidence of economic contagion to signal a deep recession and a full blown bear market. I'm not saying the conditions aren't there..because they certainly are but you also need to put a big drop like this into perspective and react to it appropriately.

The funny thing about bear markets is that there is actually plenty of time to react.
 
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