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Today is a good example of why you have to be very careful in the market

And if you bought in one month ago today, you're up 29%.

Yes, this lunacy will cost us in immeasurable ways including completing wiping out many. But while I'm not putting any cash in the market today, I sure hope to before this year ends.

Look at a chart for 1929 through 1932. Somebody who invested in November or December 1929 did great (like your "up 29%" comment). And then April of 1930, a long, painful ride down happens. There are similar patterns in the 1960s to 1970s.

My point: Trying to guess the bottom is a fool's errand. For somebody who has $50K that they will never need to live on (job will never go away, or other sources of wealth), sure, risk it.

What I'm saying: Don't assume the worst is behind us. Foolish to bet your lunch money.
 
Look at a chart for 1929 through 1932. Somebody who invested in November or December 1929 did great (like your "up 29%" comment). And then April of 1930, a long, painful ride down happens. There are similar patterns in the 1960s to 1970s.

My point: Trying to guess the bottom is a fool's errand. For somebody who has $50K that they will never need to live on (job will never go away, or other sources of wealth), sure, risk it.

What I'm saying: Don't assume the worst is behind us. Foolish to bet your lunch money.
I won't disagree with any of that but for every historical 'gotcha' you can find there's a historical "do it now!".

Depending on the elections, I suspect a smooth and relatively rapid recovery is more likely than not. To those that have been and will be personally devastated by this, it'll be little consolation.
 
That strikes me as a bit near-sighted.

Some types of things that will lead to what you view as "taxable" events:

1) Airplanes that would otherwise be flying, parked on tarmacs
2) Major events (trade shows, conferences) being cancelled
3) Hotels empty
4) Ships sitting in ports instead of moving people and cargo
5) Auto and major hard goods factories idled
6) Energy companies unable to sell energy at even a gross profit
7) Lost earnings that remove the ability of businesses and individuals to make spending choices
8) Housing market slowdown (people without a paycheck can't build / buy houses)
9) Jobs that will take a long time to recreate, thereby reducing spending power, not just here, but worldwide
10) Lost income taxes to fed and state treasuries that won't turn into navy ships, airplanes, road maintenance contracts, etc.

Great list of events. How about the magnification of the results by the collateral damage from these events such as the supply chain of goods and services from closed stores, hotels, no flights, no hotels, etc. Gov't and their pension funds bankrupt, bank foreclosures and then failure. All that worthless printed money turns deflation into inflation. We have no idea where this will lead but people will definitely flee to the government for help and guess who luuuuves big government.

You're assuming those things won't happen. I'm saying there's a real chance another shoe will drop.

Yes, some things are different. There are winners: Amazon, Walmart, Netflix. The banking system isn't teetering and people, if they had savings or credit, can still use it. That's an important difference vs. 1930. But that was also true in the late 1960s and early 1970s (durable institutions), however we still had a very long economic malaise and a tremendous loss of value in the market.



I hope you're right. But your way of thinking is familar to the type of thinking that had people ride the market down from April 1930 to June 1932, which was much harsher economic carnage than the October 1929 event.
 
Great list of events. How about the magnification of the results by the collateral damage from these events such as the supply chain of goods and services from closed stores, hotels, no flights, no hotels, etc. Gov't and their pension funds bankrupt, bank foreclosures and then failure. All that worthless printed money turns deflation into inflation. We have no idea where this will lead but people will definitely flee to the government for help and guess who luuuuves big government.
 
regarding oil prices I find that market interesting (not investible to me) but interesting. Oil prices are $12 or so a barrel but you must take delivery in May. June delivery is much higher.
 
rbstern rbstern
So far, even now, these downturn is nothing but temporary. Meaning, as soon as there is good news, the market jumps 1000 pts. So that means, as the market has priced in correctly, a return of the economy is inevitable.

I will agree that the longer this goes, the effects of this downturn has deeper impacts.

Like I wrote, we havent hit bottom. Not sure if we ever will. You know the bottom is here when:
  1. Satyircally...when there is blood on the streets
  2. People jumping out the window to take their lives. There is no hope.
  3. Running car in the garage for carbon monoxide suicides
  4. Plain and simple...despair
What despair is not...unemployment (temporary). If an unemployment check is cut, we are not there yet. It's when the unemployment benefits end. then...at that point...you will see something resembling despair.

Today, after a film is made, everyone on the production crew files unemployment until the next movie begins production. This isnt truly unemployment.

Yes, unemployment is thru the roof. But this is not permanent. But the longer this goes on, the more likely this becomes permanent
 
rbstern rbstern
So far, even now, these downturn is nothing but temporary. Meaning, as soon as there is good news, the market jumps 1000 pts. So that means, as the market has priced in correctly, a return of the economy is inevitable.

Everything is temporary on a long enough timescale. Measured in billions of years, the Earth is temporary.

I will agree that the longer this goes, the effects of this downturn has deeper impacts.

Like I wrote, we havent hit bottom. Not sure if we ever will. You know the bottom is here when:
  1. Satyircally...when there is blood on the streets
  2. People jumping out the window to take their lives. There is no hope.
  3. Running car in the garage for carbon monoxide suicides
  4. Plain and simple...despair
What despair is not...unemployment (temporary). If an unemployment check is cut, we are not there yet. It's when the unemployment benefits end. then...at that point...you will see something resembling despair.

Today, after a film is made, everyone on the production crew files unemployment until the next movie begins production. This isnt truly unemployment.

Yes, unemployment is thru the roof. But this is not permanent. But the longer this goes on, the more likely this becomes permanent

I don't see any great economic theories embedded in your argument. Just hyperbole..."if people aren't jumping out a window, all is well."

Just as nothing is temporary, neither is anything permanent.

My argument remains: We're seeing initial evidence of the economic damage (energy prices plummeting, even as we close in on reopening the economy). This will likely result in long term damage to the oil business. For example, a number of major oil producers have suspended dividends and cut their capital expenditures. That was in response to oil at $20/bbl. At $10/bbl, pretty much only the Saudis can stay in the game. Some of the more vulnerable producers will likely topple: Those with weak balance sheets. And that will happen fast. And that doesn't even begin to address geopolitical instability. Kuwait was borrowing money to stay alive when oil was $50/bbl. At these prices, they might end up in a violent revolution, taking a bunch of creditors with them when they fall.

We'll soon see corporate fatalities in other industries as well. Airlines, entertainment (XFL, anyone?), transport, automotive.

Again, the point is, people shouldn't be putting their lunch money in the market, thinking we've hit bottom. The bottom may still be a long time coming.

Again, I hope not. I prefer optimisim, but this situation demands extreme consideration before betting the wad on the U.S. (or global) economy.
 
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