Unprecedented Crisis Looming.
https://www.economist.com/graphic-detail/2020/03/14/control-of-the-coronavirus-gives-china-the-worlds-best-performing-stockmarket
Looking at this website, I'm not comforted at all that China is the best performing stock market. It is scant consolation when the rest of the world falls by 70% and China falls by 50%!
Here's the problem: this is unprecedented in modern history. There may be a series of lockdowns, not ONE lockdown. It may not end until either a vaccine or a cure is found. Vaccines and cures are at least 12 months away according to experts.
https://www.youtube.com/watch?v=4kWXI8zMsGs&t=510s
Watch Fallible above. As long as a few people are walking around with the virus, it will spread very quickly.
In the 1930s, the Dow Jones Index collapsed 70%. That was during the Great Depression. This is likely to be a sharp Great Depression that lasts 12 to 18 months, until a cure is found. It is likely to be shorter but sharper than the Great Depression. The Lock Down virtually ground the entire global economy to a halt.
So maybe an 80% crash for the S&P500 is possible, also for stock markets world wide. Real estate may fall 40%, half of stock markets. However, in the last 10 years, governments have taken on the playbooks of 2008 / 09. They will print money to support the people, the masses. As long as you have your own currency, you are able to print as much as you want. Countries with external debt, e.g. USD debt will find it virtually impossible to print money though. Indonesia, Turkey, Pakistan, India, Brazil, Russia may find themselves in trouble. But the much of the western world will be able to print money out of trouble. I worry for the EU as it depends on ECB, which is a centralised bank.
How much "support" these fiscal and monetary measures are able to prop up the stock and property markets is unknown. How do you legislate landlords to stop collecting rent, for companies to continue to pay salaries, for banks to stop collecting interest?
I reckon the hardest hit sectors are obviously travel and transport related, energy, hotels. But hidden dangers arise from REITs, banks especially.
Perhaps the measures from governments will blunt the collapse by 25 to 40% of the supposed crash. If so, most stock markets will still fall by between 60% and 48%. That be the case there is much more to fall. Most stock markets have only fallen by 35%.
I'm holding at least 60% cash now.... the rest are just tactical trades.
This is unprecedented and I'm happy to miss the first 10 - 20% of any rally.
The human costs will be unprecedented too. We could end up with 2 million people infected and 200,000 people dead. The wave hasn't hit Northern Europe and the US yet. Northern Italy and Spain has hit the peak. New York is the start and it will sweep west ward.
https://www.worldometers.info/coronavirus/
Last but not least, make your own decisions. This is NOT investment advice. Advisory is difficult. I can recommend 10 investments, to enter at a certain time, and exit at a fixed time. You cannot choose to follow just 5 or 3 of them and expect the same results. Therefore YOU HAVE to make your own decisions.
Looking at this website, I'm not comforted at all that China is the best performing stock market. It is scant consolation when the rest of the world falls by 70% and China falls by 50%!
Here's the problem: this is unprecedented in modern history. There may be a series of lockdowns, not ONE lockdown. It may not end until either a vaccine or a cure is found. Vaccines and cures are at least 12 months away according to experts.
https://www.youtube.com/watch?v=4kWXI8zMsGs&t=510s
Watch Fallible above. As long as a few people are walking around with the virus, it will spread very quickly.
In the 1930s, the Dow Jones Index collapsed 70%. That was during the Great Depression. This is likely to be a sharp Great Depression that lasts 12 to 18 months, until a cure is found. It is likely to be shorter but sharper than the Great Depression. The Lock Down virtually ground the entire global economy to a halt.
So maybe an 80% crash for the S&P500 is possible, also for stock markets world wide. Real estate may fall 40%, half of stock markets. However, in the last 10 years, governments have taken on the playbooks of 2008 / 09. They will print money to support the people, the masses. As long as you have your own currency, you are able to print as much as you want. Countries with external debt, e.g. USD debt will find it virtually impossible to print money though. Indonesia, Turkey, Pakistan, India, Brazil, Russia may find themselves in trouble. But the much of the western world will be able to print money out of trouble. I worry for the EU as it depends on ECB, which is a centralised bank.
How much "support" these fiscal and monetary measures are able to prop up the stock and property markets is unknown. How do you legislate landlords to stop collecting rent, for companies to continue to pay salaries, for banks to stop collecting interest?
I reckon the hardest hit sectors are obviously travel and transport related, energy, hotels. But hidden dangers arise from REITs, banks especially.
Perhaps the measures from governments will blunt the collapse by 25 to 40% of the supposed crash. If so, most stock markets will still fall by between 60% and 48%. That be the case there is much more to fall. Most stock markets have only fallen by 35%.
I'm holding at least 60% cash now.... the rest are just tactical trades.
This is unprecedented and I'm happy to miss the first 10 - 20% of any rally.
The human costs will be unprecedented too. We could end up with 2 million people infected and 200,000 people dead. The wave hasn't hit Northern Europe and the US yet. Northern Italy and Spain has hit the peak. New York is the start and it will sweep west ward.
https://www.worldometers.info/coronavirus/
Last but not least, make your own decisions. This is NOT investment advice. Advisory is difficult. I can recommend 10 investments, to enter at a certain time, and exit at a fixed time. You cannot choose to follow just 5 or 3 of them and expect the same results. Therefore YOU HAVE to make your own decisions.
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