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We can all agree that we are not only in a recession but a Global Recession due to Covid-19
What are we going to have remains to be seen--we won't know till we're out of it.
I think they're self explanatory.
V-shaped recession
U-shaped recession
W-shaped recession
doubleW-shaped recession
L-shaped recession (Great Depression)
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I'd like one like OCT-DEC 2018 please.  Seriously though, I hope it is much shorter from than the last two real recessions. A five to seven year wait for a return to all-time S&P 500 high did not bother me during my accumulation years. It shouldn't bother anyone with a long investment horizon.
Reality is what actually matters. I try to view it as Chuck Carnivale does. It's a market of stocks, not a stock market. This is like no other recession so far. Near zero revenues and epic FED intervention. The following is 1000% just my opinion.
-It's my belief that a very select list of companies could return to their ATH within 12 months.
-Some companies have taken very significant damage to their balance sheet. Their credit rating is now junk status. They were somewhat overly in debt before this happened, and now they have no choice but borrow much more. It will take them years to restore it and will require they cut CAPEX, remain very conservative with dividends restoration. If the virus only lasts a few more months they might be back to normal by 2023-2024. I hope to avoid owning many of these. If I was 30 years old they would represent a wonderful buying opportunity if you are careful about your entry.
-Some companies are likely facing bankruptcy, re-organization, mergers etc., never returning to their all-time high. I'm hopeful it's a very short list. Some oil companies, airlines, restaurants and the hospitality business will likely be casualties if things don't change fast. Recessions always weed out the truly weak. It's normal in a capitalistic system. These are extremely risky DGI picks and only spec plays to me.
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U-shaped recessions tend to be the norm for the past 30 years. Personally, I think this attributable to stagnation in real wages over the same time period. Consumers drive the economy through demand. When consumers are strapped, economic recoveries are anemic.
$1,200 checks won't cover a month's rent, utilities, COBRA insurance, the 7-year subprime note on that Ford Raptor, and outstanding credit card debt, and the majority of Americans are lucky if they can cover a $400 emergency expense in good times.
A lot of small businesses are going to go under as a result of this, especially in areas where the economy wasn't so robust to begin with (middle America, small towns, and rural areas).
So, that's my prediction. The virus may have been the initial trigger, but I think the knock-on effects will mirror prior recessions of the past 30 years, where a strapped American consumer doesn't have much power to kick-start the economy.
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Well stated Otter. The small towns are dominated by small businesses and jobs that will never make the stimulus list as a critical industry. There will be no choice but to address that with a future bill as the effect is going to be widespread. Not that the specifics are important, by I live in a smallish town of 4000. It's a touristy little town with shops and restaurants. Very popular seasonally which is very soon. Not a bit of it is critical, but 15% of the working age people from this town probably work there. No way its all coming back. 80% of the businesses were just getting by well enough before this happened. My cousin called five minutes ago to cancel a vacation with us. She started a small travel business two years ago that was doing OK. She hasn't paid herself a dime for a month and the rent is due. She has zero business and there is zero hope of any for months. These little stories are surely playing out all over the country already. A loan they can't pay back with no revenue flow isn't going to fix it quick enough. The fiscal stimulus costs are going to be absolutely enormous. I am concerned how much of that we can get by with.
That said, I don't think the market will match up well with reality for awhile. The market should be down another 25%, but I'm not so sure it will with all this juice. We don't know of course. The last three days have been a good example of that. I do expect the market to rocket up higher a number of times on hope. There is still considerable faith out there. I better refine my trading skills if I don't want to wait years to be back to even.
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https://marketbusinessnews.com/financial...-recovery/
Hard to predict but I'm thinking V-shaped or W-shaped recession...depends on this covid-19 and if there is a relapse after things stabilize or a resurgence in the fall.
The U-shaped would give us a longer time to accumulate investments at reasonable prices.
Not sure which one is less stressful, guess it depends on your comfort level in certain market conditions.
This is when money is made fellas.
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(03-28-2020, 07:23 AM)rayray Wrote: https://marketbusinessnews.com/financial...-recovery/
Hard to predict but I'm thinking V-shaped or W-shaped recession...depends on this covid-19 and if there is a relapse after things stabilize or a resurgence in the fall.
The U-shaped would give us a longer time to accumulate investments at reasonable prices.
Not sure which one is less stressful, guess it depends on your comfort level in certain market conditions.
This is when money is made fellas.
It is but there is more than one way to do it. Been there and done that for 35 years Ray. It's how I semi-retired at age 54. It didn't happen because I have no spine for a down market. I wised up early during the GFC and missed half of that beating. I was slow to react this time. Last week was a gift and I was able to take back a significant portion of my losses. I won't cash out. Last week proved that a flawed plan, but I will invest defensively and ride it out. I'll play the cards this market deals me and that means there will be days I sell some stocks. It is a little different this time and I will adapt. This volatility is historical. When I can buy a good quality company for BK prices I will do that. If it happens to pop higher 20-30% in days, I will sell it and not look back.
In the end I think it will be a U shaped recovery, so perhaps 5-7 years from market top to top. Just like the last two significant recessionary events in my investing lifetime. I can't erase what actually happened. I am going to hope it is just three years instead. I don't underestimate the amount of money our Prez will coerce the FED into printing before the election. This will save us from a catastrophic drop, for now. The entire world is now all in on printing money. That has never happened before to my knowledge. Keep buying through it and you will be OK. As long as you have a 10 year horizon it will work out for you in the end. I'm not waiting 10 years so blind faith is not an option for consideration.
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(03-28-2020, 08:08 AM)fenders53 Wrote: (03-28-2020, 07:23 AM)rayray Wrote: https://marketbusinessnews.com/financial...-recovery/
Hard to predict but I'm thinking V-shaped or W-shaped recession...depends on this covid-19 and if there is a relapse after things stabilize or a resurgence in the fall.
The U-shaped would give us a longer time to accumulate investments at reasonable prices.
Not sure which one is less stressful, guess it depends on your comfort level in certain market conditions.
This is when money is made fellas.
It is but there is more than one way to do it. Been there and done that for 35 years Ray. It's how I semi-retired at age 54. It didn't happen because I have no spine for a down market. I wised up early during the GFC and missed half of that beating. I was slow to react this time. Last week was a gift and I was able to take back a significant portion of my losses. I won't cash out. Last week proved that a flawed plan, but I will invest defensively and ride it out. I'll play the cards this market deals me and that means there will be days I sell some stocks. It is a little different this time and I will adapt. This volatility is historical. When I can buy a good quality company for BK prices I will do that. If it happens to pop higher 20-30% in days, I will sell it and not look back.
In the end I think it will be a U shaped recovery, so perhaps 5-7 years from market top to top. Just like the last two significant recessionary events in my investing lifetime. I can't erase what actually happened. I am going to hope it is just three years instead. I don't underestimate the amount of money our Prez will coerce the FED into printing before the election. This will save us from a catastrophic drop, for now. The entire world is now all in on printing money. That has never happened before to my knowledge. Keep buying through it and you will be OK. As long as you have a 10 year horizon it will work out for you in the end. I'm not waiting 10 years so blind faith is not an option for consideration.
No one ever went broke taking profits.
The best scientists and technology in the world is working on beating this covid19--it's going to happen.
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Taking a profit early is rarely good advice and I need to remind myself on every trade.
I went short ES on 3/6 @ 5:00PM @ 2996.
Took a quick 70 points and got twitchy and bought it back. My mechanics would have gotten me out on 3/27 @ 2627
I left 300 points on the table EEK. That's 15K per contract double EEK.
Was my 1st short trade with the setup after quite a few long trades
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This may be useful to some to understand what is happening.
A glossary of the Federal Reserve's full arsenal of 'bazookas'
https://finance.yahoo.com/news/glossary-...37473.html
A breakdown of the Fed's arsenal of tools launched to provide liquidity to the economy in the wake of the coronavirus.
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03-28-2020, 11:53 AM
(This post was last modified: 03-28-2020, 12:47 PM by fenders53.)
(03-28-2020, 11:09 AM)NilesMike Wrote: Taking a profit early is rarely good advice and I need to remind myself on every trade.
I went short ES on 3/6 @ 5:00PM @ 2996.
Took a quick 70 points and got twitchy and bought it back. My mechanics would have gotten me out on 3/27 @ 2627
I left 300 points on the table EEK. That's 15K per contract double EEK.
Was my 1st short trade with the setup after quite a few long trades
I agree, it's why the majority of my money stays invested in positions for years, though more defensively at times like these. This is one of those special times. The world has never faced a pandemic like this in my lifetime, or my parents.
Those of active on the forum shared some ideas on the active thread the past few weeks. Some restaurants truly went to BK like prices in some cases. I bought four, and all four ran 20-30% in 48HRS so I sold. Another 48HRs pass and 3 of them suspended their dividend. They crashed and I can re-enter most of them now for 25% off again. You can call it gambling if you like, but I was willing to hold all those restaurants for years. I'll prove that when I begin averaging into a few of them soon enough. Did the same thing with a half a dozen non-restaurant stocks. I'd like a little clarity before I get too deep in companies with damaged balance sheets and reduced credit ratings. That seems rational to me. Meanwhile 50% of my port remains in Pharma, Med equipment, UTES, defense contractors etc. I'll sleep a little better because that basket is notably less volatile than SPY.
Several active forum members have thrown in the towel and own no investments at all. I have no plans to do that, before the age of 80 anyway. I have spent 90% of my career investing just as Ray does. Nothing wrong with that because I truly believe the US market will go up and to the left over time. That said, I will learn and adapt to whatever the market throws at me. I won't stand by and passively take a 50% beating when most anyone knows it's coming. For now, I am going to remain defensively invested, partially hedged, and I'll hope I get more chances to fade the rally every time the market gives me a temporary 20% profit in the matter of days. Only way that happens is if I am willing to buy some fear.
We'll all get through this our own way. None of us posting this thread have chosen the same path. I truly do hope we all succeed. I think we are all hoping for Ray's short term recovery. I know that would please me for sure.
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03-28-2020, 11:57 AM
(This post was last modified: 03-28-2020, 11:59 AM by fenders53.)
(03-28-2020, 11:47 AM)MikeWa Wrote: This may be useful to some to understand what is happening.
A glossary of the Federal Reserve's full arsenal of 'bazookas'
https://finance.yahoo.com/news/glossary-...37473.html
A breakdown of the Fed's arsenal of tools launched to provide liquidity to the economy in the wake of the coronavirus.
I've been researching this subject lately and it's insane. The perma-bears have been warning us this will happen and end bad. The question is when? Long ago I stressed our total $4T FED deficit. That is going to be six months work now. Normal recessions clear out the companies who don't adhere to proper business practices, and here we are.
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