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Tips for surviving a correction
#11
Good, you understood what I meant Mike. I'm not looking for a 1:1 hedge for my entire portfolio, that really only ensures I can't possibly take advantage of the bull market. I am looking for that "inexpensive,high deductible insurance policy" that offers some downside protection. That, and some dry powder, would allow me to feel comfortable with a higher % in equities most all the time. In the absence of that, I am going to sit in my safe space with 50% cash l ikeI have been, then scurry around collecting up cheap shares, then sell them too soon on the next run trying to make sure I am safe again. I will give your VIX hedge a test drive next time it's low. I also wish I would have purchased some of that TLT when I was talking about it on the forum. I've been tracking it, and it is as advertised most of the time. A yield not that much less than SPY, and inverse when the market gets volatile. There is no guarantee of that, but it looks consistent enough for me. Looks better than gold to me long-term.

And IMO it's good that you shared your age. We are both very near "real retirement", and could get along well enough if we just retired now. Works i reverse as well. I'm glad vbin shared his age. Whether a poster is 35 or 75 years old offers a lot of context. On a side note, I can't help but think some here probably believe we are on some complicated and risky options mission, when the reality is it's generally producing reliable monthly income, and sometimes less risky than holding the common stock. I'm all about putting some of my assets in less peril, especially when I know I easily exceed the yield of the best oil majors, without enduring the pain that my some of my higher yielding DGI stocks do. MO and BP comes to mind. Quarter after quarter I can beat that with a boring insurance, paper or grain processing company, and not deal with all this draw down grief that seems to come at least annually. But hey, I'm way off topic yet again. Smile
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#12
Still not buying anything, dividends to cash, and watching my puts.

I am concerned that, if analogizing to prior downturn charts, we are closer to the Q1/Q2 2008 initial dip than the March 2009 lows.

Pandemic all but certain at this point. Highly infectious virus (R0 values as high as 6 estimated by a recent Los Alamos National Laboratory study funded by DARPA). Unchecked spread in South Korea and Italy, Germany's health minister saying an epidemic there is underway. Evidence of community spread in the U.S. (California case announced yesterday went untested for 1 week after being hospitalized, is on a ventilator, and patient had no known travel history or ties to other infected persons). With epidemiologists estimating 60-80% of global population becoming infected in a pandemic scenario (now highly likely), 15-20% of all infected developing pneumonia, 3-5% requiring ICU care, and ~2% mortality rate, those statistics don't augur well for global economic performance (it's around 100,000,000 dead globally, and so many people needing hospital/ICU care that most countries' health services will be overwhelmed).

By the infection numbers, South Korea and Italy are where China's Hubei province was in early/mid January, before things got really bad there and the Chinese government quarantined over 700 million people. Iran's reported death numbers are so high, and so many infected travelers have been detected after leaving Iran, that unless they just happen to have a far deadlier strain of the virus, it is likely that they have thousands (if not tens of thousands) of unreported infections.

I just can't see buying into this market at these levels. This is not your typical business-cycle downturn, but a serious external risk that was not accounted for well in advance by business. Current revenue/earnings warnings and suspension of guidance are probably just the tip of the iceberg. Economic models don't have a good past event to use as a baseline. The pathogenic characteristics of prior outbreaks (MERS, Ebola, H1N1, SARS) were markedly different. SARS and MERS are far deadlier than the new SARS-CoV-2 virus, but are far less contagious, and those outbreaks have been easy to contain and did not pose a serious risk of global pandemic (SARS killed a grand total of 774 people). H1N1 (Swine Flu), while somewhat contagious (R0 value of 1.4-1.6, so less than even the lowest estimates for SARS-CoV-2), was only marginally more deadly than seasonal influenza. Mortality rate of SARS-CoV-2 is estimated 10x-20x higher than seasonal influenza, per epidemiologists (who have accounted for the fact that a substantial number of mild cases have likely not been detected). Ebola was a non-event outside of Africa, and it is fairly straightforward to put controls in place to stop the spread (it is transmitted almost exclusively through infected bodily fluids, and not via aerosolized transmission like SARS-CoV-2).

If you think the market has been panicky since Friday, imagine what it will be like if millions suddenly have pneumonia and require ICU-level care, in a country that has a grand total of ~930,000 hospital beds and 20,000 ICU beds. Nowhere close to that number of beds is actually available on any given day, and patients with COVID19 infections have to be isolated from all other patients in a facility, otherwise the other patients get infected. Italy had this problem with a case going undetected in a Hospital, spreading the infection to numerous other patients and healthcare providers, and that is how they initially detected the outbreak there. There is no vaccine, and there won't be one, at the earliest, for roughly a year. Some early attempts at a SARS vaccine ran into huge problems, as the trial vaccines caused test animals' immune systems to overreact, killing them. There is still no SARS vaccine for that coronavirus 17 years later, despite a fair amount of effort. Humans have no inbuilt immunity to this new infection, as they do to seasonal influenza (mortality rate of 0.1%).

I'm content to sit on the sidelines and see how this plays out. If I am wrong, I can close out my put options and put dividends/cash back to work in the market. If I'm right, I think a 2008-2009 scenario is not out of the question. The objective indicators should be pretty clear in the coming weeks. It's not like I'm statistically likely to miss out on a sudden doubling of the market from close to all-time-highs in the same time period.
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#13
(02-27-2020, 01:58 PM)Otter Wrote: Still not buying anything, dividends to cash, and watching my puts.

I am concerned that, if analogizing to prior downturn charts, we are closer to the Q1/Q2 2008 initial dip than the March 2009 lows.

Pandemic all but certain at this point. Highly infectious virus (R0 values as high as 6 estimated by a recent Los Alamos National Laboratory study funded by DARPA). Unchecked spread in South Korea and Italy, Germany's health minister saying an epidemic there is underway. Evidence of community spread in the U.S. (California case announced yesterday went untested for 1 week after being hospitalized, is on a ventilator, and patient had no known travel history or ties to other infected persons). With epidemiologists estimating 60-80% of global population becoming infected in a pandemic scenario (now highly likely), 15-20% of all infected developing pneumonia, 3-5% requiring ICU care, and ~2% mortality rate, those statistics don't augur well for global economic performance (it's around 100,000,000 dead globally, and so many people needing hospital/ICU care that most countries' health services will be overwhelmed).

By the infection numbers, South Korea and Italy are where China's Hubei province was in early/mid January, before things got really bad there and the Chinese government quarantined over 700 million people. Iran's reported death numbers are so high, and so many infected travelers have been detected after leaving Iran, that unless they just happen to have a far deadlier strain of the virus, it is likely that they have thousands (if not tens of thousands) of unreported infections.

I just can't see buying into this market at these levels. This is not your typical business-cycle downturn, but a serious external risk that was not accounted for well in advance by business. Current revenue/earnings warnings and suspension of guidance are probably just the tip of the iceberg. Economic models don't have a good past event to use as a baseline. The pathogenic characteristics of prior outbreaks (MERS, Ebola, H1N1, SARS) were markedly different. SARS and MERS are far deadlier than the new SARS-CoV-2 virus, but are far less contagious, and those outbreaks have been easy to contain and did not pose a serious risk of global pandemic (SARS killed a grand total of 774 people). H1N1 (Swine Flu), while somewhat contagious (R0 value of 1.4-1.6, so less than even the lowest estimates for SARS-CoV-2), was only marginally more deadly than seasonal influenza. Mortality rate of SARS-CoV-2 is estimated 10x-20x higher than seasonal influenza, per epidemiologists (who have accounted for the fact that a substantial number of mild cases have likely not been detected). Ebola was a non-event outside of Africa, and it is fairly straightforward to put controls in place to stop the spread (it is transmitted almost exclusively through infected bodily fluids, and not via aerosolized transmission like SARS-CoV-2).

If you think the market has been panicky since Friday, imagine what it will be like if millions suddenly have pneumonia and require ICU-level care, in a country that has a grand total of ~930,000 hospital beds and 20,000 ICU beds. Nowhere close to that number of beds is actually available on any given day, and patients with COVID19 infections have to be isolated from all other patients in a facility, otherwise the other patients get infected. Italy had this problem with a case going undetected in a Hospital, spreading the infection to numerous other patients and healthcare providers, and that is how they initially detected the outbreak there. There is no vaccine, and there won't be one, at the earliest, for roughly a year. Some early attempts at a SARS vaccine ran into huge problems, as the trial vaccines caused test animals' immune systems to overreact, killing them. There is still no SARS vaccine for that coronavirus 17 years later, despite a fair amount of effort. Humans have no inbuilt immunity to this new infection, as they do to seasonal influenza (mortality rate of 0.1%).

I'm content to sit on the sidelines and see how this plays out. If I am wrong, I can close out my put options and put dividends/cash back to work in the market. If I'm right, I think a 2008-2009 scenario is not out of the question. The objective indicators should be pretty clear in the coming weeks. It's not like I'm statistically likely to miss out on a sudden doubling of the market from close to all-time-highs in the same time period.

I agree with your thoughts, I think this is the start of a fairly big correction.

The worldwide economy is going to slow significantly for at least the first half of the year. Auto stocks, airlines, travel companies, oil & gas, and others are going to be impacted bigly.

I keep seeing people buying Ford, but I think it's in a world of hurt in the coming weeks/months.
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#14
(02-27-2020, 02:09 PM)EricL Wrote:
(02-27-2020, 01:58 PM)Otter Wrote: Still not buying anything, dividends to cash, and watching my puts.

I am concerned that, if analogizing to prior downturn charts, we are closer to the Q1/Q2 2008 initial dip than the March 2009 lows.

Pandemic all but certain at this point. Highly infectious virus (R0 values as high as 6 estimated by a recent Los Alamos National Laboratory study funded by DARPA). Unchecked spread in South Korea and Italy, Germany's health minister saying an epidemic there is underway. Evidence of community spread in the U.S. (California case announced yesterday went untested for 1 week after being hospitalized, is on a ventilator, and patient had no known travel history or ties to other infected persons). With epidemiologists estimating 60-80% of global population becoming infected in a pandemic scenario (now highly likely), 15-20% of all infected developing pneumonia, 3-5% requiring ICU care, and ~2% mortality rate, those statistics don't augur well for global economic performance (it's around 100,000,000 dead globally, and so many people needing hospital/ICU care that most countries' health services will be overwhelmed).

By the infection numbers, South Korea and Italy are where China's Hubei province was in early/mid January, before things got really bad there and the Chinese government quarantined over 700 million people. Iran's reported death numbers are so high, and so many infected travelers have been detected after leaving Iran, that unless they just happen to have a far deadlier strain of the virus, it is likely that they have thousands (if not tens of thousands) of unreported infections.

I just can't see buying into this market at these levels. This is not your typical business-cycle downturn, but a serious external risk that was not accounted for well in advance by business. Current revenue/earnings warnings and suspension of guidance are probably just the tip of the iceberg. Economic models don't have a good past event to use as a baseline. The pathogenic characteristics of prior outbreaks (MERS, Ebola, H1N1, SARS) were markedly different. SARS and MERS are far deadlier than the new SARS-CoV-2 virus, but are far less contagious, and those outbreaks have been easy to contain and did not pose a serious risk of global pandemic (SARS killed a grand total of 774 people). H1N1 (Swine Flu), while somewhat contagious (R0 value of 1.4-1.6, so less than even the lowest estimates for SARS-CoV-2), was only marginally more deadly than seasonal influenza. Mortality rate of SARS-CoV-2 is estimated 10x-20x higher than seasonal influenza, per epidemiologists (who have accounted for the fact that a substantial number of mild cases have likely not been detected). Ebola was a non-event outside of Africa, and it is fairly straightforward to put controls in place to stop the spread (it is transmitted almost exclusively through infected bodily fluids, and not via aerosolized transmission like SARS-CoV-2).

If you think the market has been panicky since Friday, imagine what it will be like if millions suddenly have pneumonia and require ICU-level care, in a country that has a grand total of ~930,000 hospital beds and 20,000 ICU beds. Nowhere close to that number of beds is actually available on any given day, and patients with COVID19 infections have to be isolated from all other patients in a facility, otherwise the other patients get infected.  Italy had this problem with a case going undetected in a Hospital, spreading the infection to numerous other patients and healthcare providers, and that is how they initially detected the outbreak there. There is no vaccine, and there won't be one, at the earliest, for roughly a year. Some early attempts at a SARS vaccine ran into huge problems, as the trial vaccines caused test animals' immune systems to overreact, killing them. There is still no SARS vaccine for that coronavirus 17 years later, despite a fair amount of effort. Humans have no inbuilt immunity to this new infection, as they do to seasonal influenza (mortality rate of 0.1%).

I'm content to sit on the sidelines and see how this plays out. If I am wrong, I can close out my put options and put dividends/cash back to work in the market. If I'm right, I think a 2008-2009 scenario is not out of the question. The objective indicators should be pretty clear in the coming weeks. It's not like I'm statistically likely to miss out on a sudden doubling of the market from close to all-time-highs in the same time period.

I agree with your thoughts, I think this is the start of a fairly big correction.

The worldwide economy is going to slow significantly for at least the first half of the year. Auto stocks, airlines, travel companies, oil & gas, and others are going to be impacted bigly.

I keep seeing people buying Ford, but I think it's in a world of hurt in the coming weeks/months.
Here's the thing Eric. We dont know where the market is headed. It's anyone's guess. There is blood on the streets right now which is just where I like to see it. Better buying opportunities. We have been saying for months this market is over valued. Now you have over 250 stocks hitting all time lows. And that was just because of the last 3 days. These money managers need to buy stocks. They have no choice. We don't get buying opportunities that often. Sometime you have to take it when you have them.  I know a lot of people bought XOM in the 70's. Now you get a chance under $51 to buy. Its sitting at a 15 year low. Its not going back to $70 but $60 could happen. You know with the the best of them. You cant time your buy's. Buy quality over quantity. Take what you think are the best stocks to own for now and the future and add to them in small amounts. They ones who have had a great history of raising its dividend and have outperformed the market. And I don't mean Ford   Big Grin  I will add to my core holdings.
 
Don't forget interest rates are still low and no one is keeping money in the banks these days. So you have to put your money somewhere right lol. Gold, bitcoin and utilities have all been doing well of late. There's always a bull market somewhere lol
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#15
Maybe, maybe not. I disagree, but of course I don't know. Revenue and earnings growth for much of my port was about zero for 2019. Yet most of them ran 20-40% higher. Anyone have a rational explanation for that? So flat last year and maybe we pull back growth 2% this year? (I'm making numbers up BTW). So does the market pull back 30% this time, or just give any quality a company a pass as they quietly guide their analysts down so earning are OK enough? Which is exactly what they did last year. I don't discount the human element of the coronavirus, but it's about my third epidemic and the financial result was not so terrible that I can even remember what year they occurred.
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#16
8400 cases in Cali being monitored, even if 2.5% of that is positive, that's 200 people in 1 state, that is going to scare people . Market is going to test 2800
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#17
(02-27-2020, 03:19 PM)vbin Wrote: 8400 cases in Cali being monitored, even if 2.5% of that is positive, that's 200 people in 1 state, that is going to scare people . Market is going to test 2800

Bring it, I plan for these days. What's 2800? 200 DMA?
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#18
Were down over 1,000 points again. Keep going down. I want AAPL again at $100 lol

This market is being controlled by the machines right now. All the humans went home an hour ago lol
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#19
(02-27-2020, 03:55 PM)divmenow Wrote: Were down over 1,000 points again. Keep going down. I want AAPL again at $100 lol

This market is being controlled by the machines right now. All the humans went home an hour ago lol
Index funds are controlled by machines. Managed funds by humans.
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#20
TRUMP will be tweeting like crazy after this dismal day lol
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