By Guest Blogger Ryan Lewenza
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Let’s all take a big deep breath in and exhale. Then let’s turn off the TV with all those scary headlines, which will only stoke fear leading to emotional investment decisions. Finally, let’s remind ourselves of a few key investing facts – 1) 75% of the time US equity markets rise and on average return 9% over the long-run; 2) equity markets do sell-off from time-to-time, sometimes violently like at present, but they always recover; and 3) most investors still have years of market growth before retiring so this will end up being just a blip in that long-term plan and even for those in retirement, you’re not going to spend all your savings today so you have plenty of time for markets to recover from this recent sell-off. Now that we’re all calm as a Buddhist Monk, let’s take stock of this week’s market correction and try to make sense of it all.
I want to start today’s blog by helping readers get some perspective on this recent market decline. As Garth quoted me earlier this week “no one should be surprised by this sell-off”.
Since 2019 the S&P 500 and TSX had rallied an incredible 36% and 26%, respectively, coming into early February. Moreover, during this period there was little “give back” so with the huge gains and lack of market volatility, we were overdue for this pullback. You can see in the chart below that the S&P 500 and TSX have declined over 10% since the peak in February, but even with this correction, the S&P 500 and TSX are still up 23% and 17%, respectively since 2019. Sure 1,000 point drops in the Dow is scary but let’s not lose perspective of the larger trend.
North American Equity Performance Since 2019
Source: Stockcharts, Turner Investments
As of February 27, 2020
As markets head higher investors can become complacent and forget that equity markets often incur small pullbacks (greater than 5% declines), larger corrections (10%+ declines) and occasionally bear markets (20%+ declines). In fact, I crunched the numbers and on average the S&P 500 endures one 10% correction and three 5% pullbacks every year. So the 10%+ market correction since mid-February is entirely consistent with history.
And by the way I predicted this higher volatility in our market outlook. From our January 4th, 2020 blog post “That doesn’t mean we won’t see bouts of volatility and sell-offs occurring this year. In fact, I see the potential for higher volatility this year.” Admittedly, I didn’t see the Coronavirus causing this market pullback (or it being so violent) but this volatility is exactly what I called for in our outlook report.
So where do we go from here?
First let me state that I have no idea when this virus scare/pandemic will peak and get under control. But ultimately it will and the scary headlines will fade until some other scary thing takes its place. We’re currently in the “eye of the storm” but the storm will end. It’s important to remember this!
Looking back at previous pandemic scares such as the Ebola scare in 2014, the S&P 500 and TSX dropped 7% and 10%, respectively, but they then recovered in short order. Charles Schwab crunched the numbers of all the past pandemic scares and found that global equities are up 3% on average after 3 months and 8.5% after 6 months. As I said before, the storm will end.
Now what I’ll be focusing on to try to determine when the correction is over and when we’re “through the storm” will be the number of new Coronavirus cases in China and the Asian equity markets. Since China is at the epicenter, the bottom will probably start there.
Below is a great chart from Credit Suisse, which shows that the Hang Seng bottomed roughly one month after the peak in new SARS cases back in 2003. I think this could provide a similar road map for the current virus.
And on this front I am seeing some potentially positive developments. According to Johns Hopkins University data, the growth rate of new cases in China is slowing, which could be a positive first sign that we’re approaching the worst of this current scare. Now it’s spreading globally, which is the big concern, but we need to see a peak in Chinese cases before feeling confident the worst is behind us.
Asian Markets Stabilized One Month After SARS Infections Peaked
Source: Credit Suisse
Looking at the economic impact of this outbreak, it remains my view that this event will weigh on economic growth over the next quarter or two, but it will not derail this current economic expansion or bull market. In the US the labour market remains incredibly strong, confidence is high, manufacturing is potentially bottoming and the Fed could potentially cut rates adding further stimulus should their economy soften.
In China, Q1 will be a disaster as industry has come to a halt, travel is non-existent, while consumer spending will be greatly curtailed. But if, or rather when the outbreak fades, then economic activity should come surging back.
Finally, let’s step back and review the long-term trend of the US equity markets, which remains very bullish. Below is the technical chart of the S&P 500 and you can see that the recent decline has been relatively muted within the context and this incredible bull market and no major damage has been done to this trend. So yes we need to be vigilant in assessing the impact of this pandemic scare, but let’s not get ahead of ourselves as its not the end of the world and above all keep your emotions in check.
And if you still disagree with all this, then move way up north and buy lots of cans of tuna.
S&P 500 Remains in a Long-term Uptrend
Source: Stockcharts, Turner Investments
Ryan Lewenza, CFA, CMT is a Partner and Portfolio Manager with Turner Investments, and a Senior Vice President, Private Client Group, of Raymond James Ltd.
153 comments ↓
Sensible stuff, Ryan! Thanks for that.
What’s the best ETF to focus on tuna can production?
In the past week, I have ”lost” the equivalent of a house in terms of portfolio value. I hope the correction will continue for a while. I am still working and investing everything I can.
Great post Ryan. Keeping things in perspective. Much appreciate your contributions.
still some more downside based in the chart.
The SPX dropped 15% in a few days. Probably due to the market being excessively overbought, participants excessively bullish, and historically excessive expensive on a forward P/E multiple of 19+ .. second most expensive market in history next to the NASDAQ bubble.
Bond yields have inverted yet again. Interest rates at absolute historical lows, telling you the economy is going to slow down markedly. Which puts at risk earnings and multiples. Especially if the economy grinds to a halt for a quarter or two. What would 0% GDP growth do to stocks?
Maybe the correction is over. VIX levels hit extremes of 49. But participants are still not scared. Nobody is buying puts. And momentum on a weekly basis is collapsing.
Now .. if you told me the markets were at the Dec 2018 lows… I’d back the truck up. In the mean time, I’ll sit quietly waiting for a turn around having cashed out completely from stocks 3 weeks ago when this was all evident.
And on this front I am seeing some potentially positive developments. According to Johns Hopkins University data, the growth rate of new cases in China is slowing, which could be a positive first sign that we’re approaching the worst of this current scare.
———
Ryan, aren’t you the one that doesn’t trust data that comes out from the Chinese gouvernment and instead rely on other data such as PMI data, transportation data, etc. when it comes to getting a sense of what is really happening in China? Why now would you rely on data coming from the Chinese gouvernment?
Your prior methodology made sense. Your current reliance on rhetoric and propaganda does not. Very disappointing. The Chinese gouvernment has a reputation of lying through its teeth to suit its needs. Past behaviour is a good indicator of future behaviour, no?
My holdings are down a few percent year over year. I have not checked exactly how much cuz I have zero worries. I bought my dividend paying blue chippers in 09 and every dip since. They are mostly still valued at more than I paid for them and the 5%+ dividends keep rolling in and I drip them. I don’t buy anything that pays less than 5% div. I plan on buying more early next week.
2019 market forward p/e was 16x with nothing but sunshine for forecasted earnings and and end to the trade war.
2020 market forward p/e is currently 19x
Goldman downgrading us earnings growth to zero.
Your serious right? With these charts and past info that is irrelevant.
United states has tested a total of 476 people. Absorb that for a minute.
2/3rds of the us economy is based on spending
Maybe a chart for that might help.
There’s a flu going around. It’s called Corona something or other. The people are reacting strange to this flu.
Ironically the people are hurting themselves more than the flu is hurting them.
There are no new cases in Russia?
There are only 3 cases in all of Africa?
Cases are falling in China?
Give me a break.
Throw all the test kits into the trash befor the people hurt themselves even more.
#7 Well…. on 02.29.20 at 10:52 am
What are you buying?
——————————–
First look at your asset allocation percentages.
Volatile stocks can blink out in a downturn. During a downturn, volatility is the enemy of individual equities since investor confidence is low, so if something goes crazily low it could be a great bargain. Or it could go bankrupt.
If you’re buying, the entire market can now be bought at a better value, so it’s safest to buy the index.
I personally am avoiding Canadian since the economy seems to be churning internally without much support for resource export. Anybody see light in the TSX?
This is not a garden-variety correction. This virus has a reported fatality rate of +2%, which is more than 10x the common flu (0.1%). China’s PMI, released Friday evening, shows a complete shut down of the World’s Second Largest Economy. The CCP would not quarantine up to 700M people if this was a non-event.
Already the supply chain is stressed, with production closing around the globe, and FDA having issued an alert on Friday that the first shortages of medications in the US are evident. Korean auto manufacturing is dropping fast; Jaguar and Audi have stopped production of certain vehicles. Apple already announced it will not hit 1Q profit forecasts. Google and Microsoft are working to remove all production from China. The impact has just begun.
And as of Friday evening, the West Coast of the US has new cases with no known origin (“community spread”), affecting CA, OR, and WA states. And keep in mind, that the true numbers are really unknown since FDA just released test kits last Friday! Schools are already closing in the west coast. Amazon just announced that all essential travel will stop even within the US. Every major tech company is cancelling major development meetings. Even the Geneva Car show was just cancelled.
What irritates me is that you may be a brilliant financial guy, but you know jack about medicine, virology, or physiology. And yet you are advising people to “take a deep breath” and march blindly forward. Eventually, this will pass, but if you think that the Fed will bail this out in the next month or so, I respectfully predict you are dead wrong.
Corona beer or not….
I’m invested for the long term.
Good analysis based on 20/20.
What worries me are more QEs and bailouts coming.
Start the money printing presses, Gentlemen.
Says the Prez.
The Stock Market craze during the last 50 years was mostly driven by the Boomers, who were raised on the “keep calm and stay invested” mantra.
They are getting old now, and may just get off the roller coaster for good.
This could lead to a more severe and prolonged recession than in the past, as the Mills don’t have the means to step up.
Also, robots don’t have to save for retirement.
‘when you are a hammer everything looks like a nail’
When your a money manager (Ryan) every dip is a buying opportunity.
Maybe this drop is a buying opportunity (short term for sure) or maybe not.
Is it that hard to imagine that after 11 years this bull market may come to an end?
The reaction to coronavirus should scare every investor, planes are not flying, malls are empty, people staying home. There is no way the economy won’t take a hit, chances are we maybe entering a recession soon.
Market has been on stereoids for years courtesy of central bank intervention, if we get a recession market will go much much lower. What I’m saying is be careful, investors have been conditioned to buy every dip, but one of these dips will be a first of many to come (bear market)
sorry if this appears twice. Typed my email wrong
Personally to put it in prospective, there are 3.500 deaths every year from the flu in Canada. So I am not overly worried yet!
SARS was different as China was not a big player in the world markets.
Now all supply chains are being affected.
I went to get my cell phone repaired no parts and if I could find a part 10x times the price.
Now multiply that up to just in time manufacturing.
So this is far from over.
Let’s use my example
I came through a foreign airport a week ago, there were some travellers from a foreign country. No one was screened and I came in contact with them.
Assume I am now infected, in the past week I have come in contact with hundreds of people, on the plane, on public transport friends and family.
Now just saying of those hundred they then come in contact with another 100 each. Just saying.
What concerns me is two Canadians both knowingly sick entered Canada and not stopped at the border. Now in hospital, what about all those people they came in contact with?
As far a selling? The market is in panic mode, as I said to my broker I doubled my money on a stock in two years or $6,000 and I lost $500 last week. Why would I not sell and take a profit and wait till the panic is over.
But some dividend stocks I own are well oversold some are now yielding 6 percent. Again do I wait or buy now.
Anyway it will be interesting and yes 6 months from now everything with be better, but I think when panic grips the masses there is a stampede.
bought last week
buying again Monday
great blog entry Ryan!
what’s in the bag this year, Ryan? Callaway?
golf season soon!!!!!!!! cant wait!!!
Just invest in some doobies, you won’t care about the markets, bro!
Good post, thank you.
Ryan, do you have any comment regarding etf selloff vs general stocks. Seems dividend paying etfs were spared initially to selloff heavily Friday. Any special dynamics at play?
Thanks.
#8 Stone on 02.29.20 at 10:53 am
There is a reasonable argument to be made to trust these numbers out of China (since Feb 10th) here:
#89 crazyfox on 02.27.20 at 7:01 pm
https://gisanddata.maps.arcgis.com/apps/opsdashboard/index.html#/bda7594740fd40299423467b48e9ecf6
My coworkers are selling, i’m trying to convince them to buy and hold good ETFS and a balanced portfolio like Garth reccomends.
Their argument is that “the US is at a demographic peak just like Japan Nikkei in 1989/90 and Europe EuroStoxx 50 in 2000, both have not recovered. US Treasuries can only go to zero which is 1.18% from here, US unemployment is now inceasing on a rate of change term”
How do i argue against this? and do i need to change from Garth Portfolio?
DELETED
Camille “Good post, thank you. Ryan, do you have any comment regarding etf selloff vs general stocks. Seems dividend paying etfs were spared initially to selloff heavily Friday. Any special dynamics at play? Thanks.“
When markets sell off like we’re seeing, interest rates decline. This makes dividend stocks like utilities and telecom look more attractive as the dividend yield is far above government bond yields. So this partially explains why dividend stocks hold up relatively better in market declines. This is also why we’ve been increasing exposure to them over the last year. – Ryan L
#crazyfox
i like when you write, but do you ever write long, make it more entartaining add some humor, joke perhaps…
@ I’ll bite … to …Sept 2017? and 2020 is write off year
You are coming with number like those people on msnbc, before when i was watching them, sometimes they would even get enthusiastic and they would be predicting dji or snp past the decimal point… What i would like if you could vrite and compare how those schiller and other numbers will compare to loss of consumer purchasing power.
You did mention entry and exit point, around tax rebate time, i don’t see any of those funds making it way in to market to prop it, if layoffs start to accelerate around march. You a problem with those decimal points now, works for computer fine but not for people.
To be honest every year I am secretly hoping for decent pullback first half because tax rebate, but not this year, mainly because rebate will go in roof and ac. Now i am wondering how many more like me is out there, probably lot more that i think…
@left vs right media
I generally, i actually dont watch tv any more what i pick from youtube and around internet (dont reddit) is news and entartainment that i consume, and what i experience is exactly opposite what you are saying from lateral information travel. But i did se youtube demonetizing videos and doing funny thing with search every time covid19 is mention. Just remember you came here and told me month ago this is non event…
here is from right media list of disinfectants that kill covod19, ok date is late, but those virdos on a hard right were talking about it for some time ago…
https://www.fox23.com/news/trending/coronavirus-checklist-more-than-150-disinfectants-that-may-kill-coronavirus-surfaces/D5J5ZJ7QK5B4DDP4ZZ7GQGWQVA/
as for when i was a kid and jaundice was going around i remember diluted bleach was in bucket on both sides of class room doors… I remeber a smell bleach in cold water, simple and works like magic. 1 bleach 99 waters. Now when you enter a public toilet and smell a bleach you’ll know how my school smells whole winter when i was in grade 3 or 4.
@BNN and healtcare
ill skip i hope our interest rates/healtcare/Toronto-BPOE resident expert will chime in and learn us a thing or two.
@numbers
Numbers coming from some country are way off, they are steel licking. but on a brite not they also start spraying a fence, i just hope its not alcohol or bleach based disinfectant…
@alarming
it was alarming two months ago
@cruise ship
Is god sent so we could do some decent transmission testing (i am not saying that it was test facility but lots from was it learned), and we know some, just research how food was dispensed. Luckily jap gov gave them iphones so people in quarantine can communicate with hc professionals.
@ CDC or WTO
Tests are not as accurate to many false positives or negatives cant remember.
@Supply demand fundamentals have shifted.
I remember me blundering something about that some time ago…
Ask yourself. All weekend newspapers with their Repeaters err I mean Reporters are carrying the same meme on their front pages. A coordinated effort. If you ignored all media would you know that there is supposedly a pandemic? Nope. Look around.
2020-21 is crisis time for our elites. Last chance to enslave us. Let’s review 2020 thus far.
Relentless
– Well funded Climate protests shut down cities.
– Iran blasts citizens out of the sky.
– Well funded protesters shut down rail infrastructure.
– Corona non stop.
– Teck Resources project denied.
– Market correction.
NoN Stop. There’s more to come. Kanada must be softened up for the Kommunism coming.
Ryan, the past 3 decades have been fake money from the fed driving the markets. So it’s changed the foundational structure of markets. Using historical trends is no longer valid. This is a whole new beast. Money is no longer tied to gold. It’s not tied to anything since 3 decades ago. I’ve lost 2 years of profit from my balanced etf in just one week. At this rate I could lose it all if it mean reverts back to 2010. Meanwhile I can’t even write some of it off it’s in registered accounts. I have real estate which is all that I have left with a sizeable appreciation and even today the price of my home is increasing while markets sour badly.
China is shutdown. That’s why the virus is spreading slower.
The rest of the globe is business as usual. The virus will spread indefinitely if the global population doesn’t hit a big pause button.
Cases are popping up globally and those patients have never travelled or haven’t been around anyone who has…… so they think.
Thank goodness I live in a small town far from Toronto
https://www.toronto.ca/community-people/health-wellness-care/diseases-medications-vaccines/coronavirus/
T “ 2019 market forward p/e was 16x with nothing but sunshine for forecasted earnings and and end to the trade war.
2020 market forward p/e is currently 19x
Goldman downgrading us earnings growth to zero.
Your serious right? With these charts and past info that is irrelevant.
United states has tested a total of 476 people. Absorb that for a minute.
2/3rds of the us economy is based on spending
Maybe a chart for that might help.”
I’m not saying things are roses and there won’t be more downside, I’m just putting things into perspective and reminding readers we’ll get through this. But enjoy your cans of tuna! – Ryan L
The growth rate of the cases in China IS slowing. What you need to know is how they accomplished this. Can this be done in North America? Think hard about that.
Next thing. Many people reading this blog are over 50. Pay attention now….the problem cases in this virus are in your age group. Kids and younger people will skate through this, like a cold and flu. Not likely if you are a senior or have underlying issues. The stats are great and show even though worse than a flu, not that bad. However dig deeper into the numbers if you are 60 and over and the numbers are NOT pretty.
Ryan, you’re a number guy, you need to do some homework.
Finally, where the hell did the masks go? If they are not useful as the experts are telling us, why did the Chinese CCP mandate it or risk fines and detention if caught not wearing a mask. Hey they know how to contain it, but we are choosing to ignore their experience.
There’s panic and there is preparedness and caution. They are different.
| #12 Sail Away on 02.29.20 at 11:23 am
| #7 Well…. on 02.29.20 at 10:52 am
|What are you buying?
——————————–
|If you’re buying, the entire market can now be bought
|at a better value, so it’s safest to buy the index.
|I personally am avoiding Canadian since the economy
|seems to be churning internally without much
|support for resource export. Anybody see light in the
|TSX?
____________________
As this is a Canadian Blog, I do wonder what folks think of the TSX lately. Canada seem to be in a funk with respects to investing– is this going away? Ryan any thoughts?
#15 Ponzius Pilatus on 02.29.20 at 11:54 am
The Stock Market craze during the last 50 years was mostly driven by the Boomers, who were raised on the “keep calm and stay invested” mantra.
They are getting old now, and may just get off the roller coaster for good.
This could lead to a more severe and prolonged recession than in the past, as the Mills don’t have the means to step up.
Also, robots don’t have to save for retirement.
—————————————————————-
You don’t give the boomers enough credit Ponzi. We have been through many of these corrections and crashes in our invested lifetimes and are not the nervous nellies that some would like to believe. As for myself. Fully invested and staying the course. A 4.69% drop in the TSX since January 1st after a 15% return in 2019 is hardly worth losing sleep over. Even 10%. Time for my morning coffee.
eric denhoff
@EDenhoff
Cautionary tale for Premier Kenney putting Govt $ into energy co’s—AIMCO, essentially an Alta Crown Corp, bought $10 million of Peridae Energy (LNG play) @ $2.00 months ago. Today .38, lost over $8 million!! Loaned them $60 million. Ouch. Pension funds. Double ouch. #cdnpoli
12:16 PM · Feb 26, 2020·Twitter for iPhone
xxxxxxxxxxxxxxxxxxxxxxxxxxxxx
Things could always be worse; you could’ve taken investment advice from Jason Kenney.
Remember over the last few years, some commenters on this blog who happened to live in specific geographic areas, decried the high Canadian “petrol dollar”. That was based on the assumption that it hurt Canadian manufacturing.
Of course this was for selfish, local reasons.
Well there just was another 1500 job layoffs at Fiat-Crysler.
The destruction of our resource exports, like fossil fuels, will result in a $.70 CDN dollar. Thus imports, like food will skyrocket in price. Include the carbon taxes and we have a disaster.
Of course the poor will suffer.
Why do you these people hate the poor?
Mr. Fluenza,
Why do you and Garth keep insisting that the US labour market is strong when the labour force participation rate is just 63% as of January, 2020. That means nearly 37% of all potential workers (working age adults) have opted out of the employment market.
That is nearly 120 MILLION Americans without a formal income or paycheque. So if you stop looking for work, if you are a professional drug dealer, if you’re in prison – you don’t count as unemployed.
When over 1/3 of your eligible workforce is not working, these are signs of DEEP, deep structural problems in the economy.
Saw this stat on Twitter by some dude “Christopher”:
“…91% of the price appreciation for the classic portfolio over 90 years came from just 22 years between 1984 and 2007. Large capital flows from boomers, falling interest rates (19% to 0) made this happen. Ask your advisor or pension the trillion-dollar question, is this repeatable?”
https://twitter.com/vol_christopher/status/1232299486443122689?mc_cid=424adb3535&mc_eid=f2177a8f7b
at least FOMO is alive & well:)
https://www.kitchenertoday.com/local-news/potential-buyers-camp-out-at-new-kitchener-development-for-a-spot-in-line-2129049
Does anyone else follow Ben Hunt at Epsilon Theory?
I think his latest article is telling us all to go to cash:
https://www.epsilontheory.com/the-mozilo-market/
He’s saying that the political handling of the COVID-19 is exactly the same as the political handling of the sub-prime mortgage crisis in 2008.
“Everything is fine.” Until it isn’t.
George “ bought last week
buying again Monday
great blog entry Ryan!
what’s in the bag this year, Ryan? Callaway?
golf season soon!!!!!!!! cant wait!!!”
I had some cash building up and put some to work on Friday (in between a barrage of client calls). If it dips again I’ll put some more to work. As far as golf goes I picked up the new Calloway Epic drivers last year and just purchased the new Taylor Made P790 irons (my old irons were nearly 15 years old). Like you I can’t wait for the golf season!! And that reinforces my point. In a couple of months this scare should fade and we’ll go back to living and doing the things we love to do. This storm will pass.
– Ryan L
Agreed, if you’re in it for the long haul it’s a buying opportunity now. Corona you say? I went on a road trip to Kentucky to get a front row seat for the solar eclipse of August 21, 2017 and the corona was an awesome sight to see. I think a long road trip like that one was a greater threat to my life than this virus.
Leap year?
Yeahhhh buddy!
Finally found some time and some motivation to do my TFSA contribution for the year.
I have a brief look at my portfolio every four years whether it warrants it or not.
I will pull it out in 2024 and hold it against an architrave and see how much it has grown…
M45BC
Well, to my knowledge, very few predicted and were actually prepared for the 2007-2009 bear market. I suspect the next time we have a serious bear market, very few will be prepared again. This may be the one, but only time will tell. All I can say is that it bears (extreme) caution after an 11-year bull market, fueled primarily by debt.
#33 Ronaldo on 02.29.20 at 1:37 pm
#15 Ponzius Pilatus on 02.29.20 at 11:54 am
The Stock Market craze during the last 50 years was mostly driven by the Boomers, who were raised on the “keep calm and stay invested” mantra.
They are getting old now, and may just get off the roller coaster for good.
This could lead to a more severe and prolonged recession than in the past, as the Mills don’t have the means to step up.
Also, robots don’t have to save for retirement.
—————————————————————-
You don’t give the boomers enough credit Ponzi. We have been through many of these corrections and crashes in our invested lifetimes and are not the nervous nellies that some would like to believe. As for myself. Fully invested and staying the course. A 4.69% drop in the TSX since January 1st after a 15% return in 2019 is hardly worth losing sleep over. Even 10%. Time for my morning coffee
————————————————————-
Hey we can play that game.
Using round numbers, the TSX returned -12% in 2018, +21% in 2019 and -5% thus far in 2020 Therefore your returns since Jan 1st 2018 or 26 months….drum roll please…+1.115% total, yay! Or a rocking .372% annualized over 26 months and not looking good going into the immediate future.
Allow me to break that down:
$10,000 in 2018 loses 12% becomes $8800
$8800 in 2019 gains 21% becomes $10648
$10648 in 2020 loses 5% so far or $10,115 as of March 1st
That’s not even taking into account management fees or MER’s.
But…it’s actually worse when using exact numbers.
The TSX opened January 1 2018 at 16,209 and closed at 16,263 yesterday. That’s right boys and girls, a mind bending .33% total in 26 months minus management fees plus dividends if you received any.
Ain’t real math awesome?
You’d better spike that coffee Ronaldo.
Regardless of the technicalities of markets taking a hit from corona virus insignificance, the opportunity is a no brainer. I’m with Ryan on this one.
Backing up the eighteen wheeler next week. Ten percent maybe but not enough downside?
Tough call.
You have some scale bias there Ryan. The TSX is up a mere 6.5% in the past 5 years while the S&P is up more than 40%. S&P is returning almost double digits on a an annualized basis. TSX has basically flatlined not even exceeding inflation.
The Friday close on the TSX is a hair above numerous peaks hit in 2019, 2018, 2017 and several in 2015. An index that keeps retracing back to multiple previous closes from years ago and gives up all its gains in a single correction is a clear sign of a sputtering economy.
The S&P can take the hit, I argue that worse days for the TSX are still to come.
#28 Alessio on 02.29.20 at 12:46 pm
Ryan, the past 3 decades have been fake money from the fed driving the markets. So it’s changed the foundational structure of markets. Using historical trends is no longer valid. This is a whole new beast. Money is no longer tied to gold. It’s not tied to anything since 3 decades ago. I’ve lost 2 years of profit from my balanced etf in just one week. At this rate I could lose it all if it mean reverts back to 2010. Meanwhile I can’t even write some of it off it’s in registered accounts. I have real estate which is all that I have left with a sizeable appreciation and even today the price of my home is increasing while markets sour badly.
—————————————————————-
If you are down 2 years profits you cannot be balanced. A diversified 60/40 portfolio should still be up 10% since the start of 2019 and after current year correction.
Would is your take on this Ryan? Am I close?
Keyboard Smasher “ Mr. Fluenza, Why do you and Garth keep insisting that the US labour market is strong when the labour force participation rate is just 63% as of January, 2020. That means nearly 37% of all potential workers (working age adults) have opted out of the employment market.
That is nearly 120 MILLION Americans without a formal income or paycheque. So if you stop looking for work, if you are a professional drug dealer, if you’re in prison – you don’t count as unemployed.”
120 million eh? The participation rate has declined from a high of 67% in 2000s to 63.5% currently. This decline equates to 6-7 million workers versus your 120 million number. Part of this decline is due to aging demographics. Yes some have left the labour market due to skills mismatch or they’ve just given up but it’s far less than you’ve cited. Also when we look at a whole number of employment stats it’s clear the US labour market is strong. The unemployment rate is 3.5%, initial jobless claims at record lows around 200k, jobs openings are above available and qualified workers and I could go on. So yeah, the US labour market is strong. – Ryan L
#32 PA
As this is a Canadian Blog, I do wonder what folks think of the TSX lately. Canada seem to be in a funk with respects to investing– is this going away? Ryan any thoughts?
——————————————————————
Personally I think its great. 72% of the TSX is made up of Financials 33%, Energy 17% Materials 11% and Industrials 11%.
From this you can decide which sectors you think will do well once the virus thingy and China’s economy turns around in the next 12 months or so. My weightings in my 60/40 portfolio currently are Cdn 21%, US 21% and Intl 18% and this has worked out very well for me with little need to adjust. I let the managers of the funds do that. Has worked for me over the past 30 some years. It may be that you are too overweight in one particular sector. Sounds like you need to have someone like Ryan review your portfolio.
Markets discount uncertainty.
The current health scare with the new virus is once in century event from health issue to economic impact perspective.
The global supply chain is seriously disrupted with possible major impact to global production and services. 1/3 of China’s workforce is back to work more than a month after the end of the lunar new year.
The timeline to ‘go back to normal’ if possible in short to mid term is unknown. And it might very well not be the ‘good old normal’.
China, South Korea, Japan, Italy governments are acting with urgency amid huge concerns, so things are not rosy at all.
The selloff from the last week was with huge volumes, so it is not individual investors who are selling.
Can the markets go further down? Absolutely.
Is it time to act like nothing is happening? Hardly.
Ask the people in the locked-down areas in the cities in crisis.
Something is happening, it is significant and smart investors are selling which is very normal.
Thinking it does not impact you? Just wait.
Will the markets recover and life go on? Certainly, in long run. Mid to short term? Hard to say but the high level look of it is not good.
Want to pick pennies in front of a steamroller?
Sure, be my guest.
But to downplay the risks? I did not expect that, Ryan.
This is not the eye of the storm.You have seen nothing of it yet. Go to China and Italy, South Korea and then make conclusions.
Your statement that there will be no significant economic impact from the health pandemic is naive at best.
Is the current ‘just in time’, global supply chain resistant to pandemics? No. It is complex and fragile.
‘Too soon to tell’: Coronavirus could take big toll on US economy
https://www.aljazeera.com/ajimpact/coronavirus-big-toll-economy-200226215552868.html
Coronavirus Hits U.S. Business Activity
https://www.wsj.com/articles/coronavirus-impact-on-global-economy-more-muted-than-expected-11582285372
https://foreignpolicy.com/2020/02/18/coronavirus-economic-impact-worldwide-supply-chain-disruptions/
Enough with this sugar coating and wishful thinking.
And if you still disagree with all this, then move way up north and buy lots of cans of tuna.
There were people in Italy who said on TV that they got into fight for 4 sandwiches when the lock down was implemented. I am sure they will appreciate your sense of humor along with those stranded on the cruise ships.
The time to be ignorant is now now. Not the time to panic either.
Just assess your risks and short term goals and act on it.
Cheers,
I meant:
The time to be ignorant is not now.
———————————————-
MP Suggested U.K. Could Put Morgue in Hyde Park if Virus Hits
https://www.bloomberg.com/news/articles/2020-02-28/corpses-in-hyde-park-london-s-worst-case-plan-for-coronavirus
Ebola co-discoverer Peter Piot on how to respond to the coronavirus
https://www.ft.com/content/de0a7c9e-56ff-11ea-a528-dd0f971febbc
Juventus vs. Inter Milan to Be Played in Empty Stadium Due to Coronavirus Outbreak
https://www.si.com/soccer/2020/02/28/juventus-inter-milan-empty-stadium-coronavirus-italy
China Reports Catastrophic Data: PMIs Crash To Record Low, Confirming Coronavirus Collapse
https://www.zerohedge.com/economics/china-reports-catastrophic-data-manufacturing-non-mfg-pmis-crash-record-lows
Of course you always can light up some ganja and continue to be ignorant.
Cheers,
While the selling has to end at some point, I think we are several weeks maybe months away from that moment. There will be more panic selling before this one is done once companies start reporting the negative impact on growth and earnings caused by the coronavirus.
I’m going to buy now a small position just in case the correction is over, but in general I share El-Erian opinion:
https://www.cnbc.com/2020/02/25/mohamed-el-erian-continues-to-warn-against-buying-coronavirus-dips.html
#44 Returns
Ain’t real math awesome?
You’d better spike that coffee Ronaldo.
—————————————————————-
Math is something I do well. If you are basing your numbers simply on the TSX returns of course the numbers will look different but I don’t invest only in XIU. I have a balanced and diversified portfolio which has returned over 7% on average since the GFC. My returns in the periods you speak of were 2018 plus 2%, 2019 plus 15.5%, YTD -2%.
The TSX by itself is not a measure of a balanced and diversified portfolio unless you are simply investing in XIU which would be stupid.
For example, in March of 2001 at the height of the Tech bubble Nortel itself made up 35% of the TSX and Tech later that year made up 45% of the TSX. Any fool could have seen that this was a major bubble in that one particular sector. Today Tech is only around 5.5% of the TSX.
You need to review your portfolio.
Grabbin’ some xsc fer my tfsa, cause it barely moves and keeps throwin’ a nickel a month. When I run the quarterly proceeds of xiu versus the monthly of xsc, there’s only a few bucks difference, but xsc barely ripples in all this. Thanks for your post.
#49 Ryan Lewenza on 02.29.20 at 3:09 pm
120 million eh? The participation rate has declined from a high of 67% in 2000s to 63.5% currently. This decline equates to 6-7 million workers versus your 120 million number. Part of this decline is due to aging demographics. Yes some have left the labour market due to skills mismatch or they’ve just given up but it’s far less than you’ve cited. Also when we look at a whole number of employment stats it’s clear the US labour market is strong. The unemployment rate is 3.5%, initial jobless claims at record lows around 200k, jobs openings are above available and qualified workers and I could go on. So yeah, the US labour market is strong. – Ryan L
1. Labour force participation rate is NOT due to demographics.
Labour force participation rate. The labour force participation rates is calculated as the labour force divided by the total working-age population. The working age population refers to people aged 15 to 64. This indicator is broken down by age group and it is measured as a percentage of each age group.
2. 120 millions with no job in total aligns much closer to 36.5 % not working than 6-7 millions. Read what the poster said. He said that there are 120 millions with no paycheque, not that there are 120 millions more with no paycheque.
3. True that the US labour market is better when compared to others, makes you wonder what these ‘others’s’ state is.
Cheers,
“Admittedly, I didn’t see the Coronavirus causing this market pullback ”
====================================
It needed to be something non-economic to get through the stubborn arrogance of central bankers. They have lost all humility and that can be economically dangerous
Sadly, I don’t think this potential crisis will be enough to bring that humility back
Saved my money all year for this. I bought quite early into the dip though. Lesson for next time, dollar cost averaging. Will ya pass the tuna?
@#30 KNOW IT ALL on 02.29.20 at 12:53 pm
China is shutdown. That’s why the virus is spreading slower.
The rest of the globe is business as usual. The virus will spread indefinitely if the global population doesn’t hit a big pause button.
Cases are popping up globally and those patients have never travelled or haven’t been around anyone who has…… so they think.
Thank goodness I live in a small town far from Toronto
https://www.toronto.ca/community-people/health-wellness-care/diseases-medications-vaccines/coronavirus/
_____________________________________
i live in Toronto but visit various small town every weekend :)
This boomer stays the course , always did over the last 30 years. Never pulled my investments . Faired out better than ok.
I have a cash reserve but wont be putting it into the markets , as I don’t need to.
If you don’t need the returns why take the risk .
Out of the workforce now and live off dividend income
from the blue chip companies I own stock in .
Along with CCP and OAS in the near future my long term plan worked out for me.
After-tax income is barely budging and not keeping up with the cost of living
https://ca.finance.yahoo.com/news/aftertax-income-is-barely-budging-and-not-keeping-up-with-the-cost-of-living-180913250.html
The top comment (with 91 % approval):
The real inflation rate is between 7% and 10%, based on the real aggregate of all household purchases over the last 10 or more years. Wages, in terms of the ratio of time spent working to buy units of basic goods (gas, food, housing, electricity, materials, services) have more than HALVED in the last 30 years. This is the sad truth no media dares report – but that every middle class wage earned KNOWS – and the biggest culprit has been TAXES (up 300% in inflation adjusted $ since 1960).
“take a deep breath” and repeat with me:
‘Inflation is under 2 %, inflation is under 2 %…’
It seems to work for the BoC boss.
A wee peak into the past to show how one company can skew the TSX index as was the case with Nortel back in 2001. This is why investors need to pay attention to the composition of the exchange and determine when something is out of whack from the norm and take measures to correct their portfolios.
https://www.theglobeandmail.com/report-on-business/nortel-market-giant-cut-down-to-size/article20460491/
Every day most of the comments on here are bananas-either from uninformed paranoid armchair generals or total basket cases.
You should see what I just trashed. – Garth
#10 T on 02.29.20 at 11:18 am
2019 market forward p/e was 16x with nothing but sunshine for forecasted earnings and and end to the trade war.
2020 market forward p/e is currently 19x
Goldman downgrading us earnings growth to zero.
Your serious right? With these charts and past info that is irrelevant.
United states has tested a total of 476 people. Absorb that for a minute.
2/3rds of the us economy is based on spending
Maybe a chart for that might help.
—————
Dammit. I need a new name. Sometimes a random Thing pops in a comment. I don’t want to be confused as a poster with a fear complex. Lol!
Any suggestions?
Rallies are to be sold, 70% CRASH WILL COME! DOW – 5000 level. Real unemployment is 28%. Federal Reserve Ponzi Scheme for the markets will end badly!!! Fake economy is debt driven!! The world is in for a rude awakening!
I question why anyone would invest in Canadian markets as a whole when the US markets have beaten Canada’s soundly over pretty much any time frame, ever.
We have full access to US markets. It’s only logical to invest in the best place.
From time to time, a decent individual equity can be found here. Canadian bond and preferred share markets are nearly equivalent.
More evidence that once TSHTF it is too late to get ready;
https://www.investmentwatchblog.com/video-panic-buying-at-costco/
Why everyone wants a full cart of toilet paper is beyond me. Stock up sure but food is more important. One of those Costco packages lasts us a month.
Ryan, one question for you. Why you using the graph from 2010 only….
I’m not saying things are roses and there won’t be more downside, I’m just putting things into perspective and reminding readers we’ll get through this. But enjoy your cans of tuna! – Ryan L
Nice hedge. A graph of 20 years but the odd sentence like “I’m not saying things won’t get worse”.
Here is a thought. If they do. And you cashed out last week on Monday when it was obvious you could buy back at half the price in a few months.
Unless you feel 19xs forward earnings is a screaming deal.
#64 T on 02.29.20 at 4:36 pm
#10 T on 02.29.20 at 11:18 am
Dammit. I need a new name. Sometimes a random Thing pops in a comment. I don’t want to be confused as a poster with a fear complex. Lol!
Any suggestions?
—————————-
T2?
Balanced medical info on Covid19 by experienced UK physician…
https://youtu.be/5rOTz9duXwo
Also…
https://www.politicalite.com/exclusive/stop-the-spread-doctor-john-campbell-gives-advice-on-how-to-tackle-
covid-19/
#66 Sail Away on 02.29.20 at 4:48 pm
I question why anyone would invest in Canadian markets as a whole when the US markets have beaten Canada’s soundly over pretty much any time frame, ever.
——————————————————————Canadian Banks up 300% plus dividends since Feb. 23/09. I’d say that’s pretty good return considering that a 6% return over a 12 year period would only represent a doubling of your portfolio.
ryan
Who sang the volatility is going to go up next year does not mean you predicted anything you have to be specific on all prediction to do not count them for example on the S&P you saying it’s going to go up but you’re not saying where when what direction I appreciate your efforts however do not take credit for something you did not do the great president calls fake news I agree with him
#54 Ronaldo on 02.29.20 at 3:48 pm
#44 Returns
Ain’t real math awesome?
You’d better spike that coffee Ronaldo.
—————————————————————-
Math is something I do well. If you are basing your numbers simply on the TSX returns of course the numbers will look different but I don’t invest only in XIU. I have a balanced and diversified portfolio which has returned over 7% on average since the GFC. My returns in the periods you speak of were 2018 plus 2%, 2019 plus 15.5%, YTD -2%.
The TSX by itself is not a measure of a balanced and diversified portfolio unless you are simply investing in XIU which would be stupid.
For example, in March of 2001 at the height of the Tech bubble Nortel itself made up 35% of the TSX and Tech later that year made up 45% of the TSX. Any fool could have seen that this was a major bubble in that one particular sector. Today Tech is only around 5.5% of the TSX.
You need to review your portfolio.
—————————————————
I figured you would try to turn this around on me by ignoring what you posted. I was citing your post and your observation which you actually used yesterday as well. And you distinctly referred to the TSX as a composite index, being down 5% after last year’s gain by only using using 14 months of data. Please read your post(s) again if you doubt me. There was no mention about your Diversified portfolio or sectors. The TSX as an index has only returned 3.3% annually in the past 21 years on average (the length of times it takes to double your money) before management and Mer expenses. Certain sectors have done just fine but that was not what you were stating in your original post.
My portfolio is doing just fine by the way because I gave up on the TSX a long time ago. Preferreds? Pahhhlease no thanks! I went 100% cash back in late November after a 23% gain in 2019. In retrospect the exit was slightly premature as I missed out on more than 2 months of gains in US equities and international markets that were up about 5% by the time early February came around but these were wiped out and much more in the past week so I am way ahead and ready to vulch with a significant amount of money somewhere near the bottom (hopefully) of all this. Obviously nobody gets out at the very top and back in at the very bottom. That should return 20% or more after the recovery and considerably more after that. And not a dime of it will go into the TSX or any of its sectors. There are far better places to invest.
The NASDAQ is up 700% since the dot com crash, the S&P 500 over 300% and the TSX has less than doubled since then. Let’s not even get into performance comparison since the financial crisis.
Let’s just leave it at that.
May favourite: “the markets are only where they are due to the central banks!”
And you think they’re going to abandon them now?
Ok, preppers.
Here’s what’s actually needed if things go sideways:
……………………
A little hardship would do us good. Everybody’s carrying a month of reserve fat and most people way more.
But definitely feel free to pick up piles of unnecessary crap at Costco; it’s helpful to my bottom line if nothing else.
Expect the selling to continue. Not because I think the markets won’t go back up (they will), or that it is the end of days. Rather, it’s because this virus is just getting started outside China. It will become pandemic. Basically already is. The news keeps getting worse. The WHO, and every other government, has basically said to brace for impact.
This isn’t like Brexit, where there was a quick sell off and then a bounce back the next day as people assessed the impact and saw the market reaction was overblown.
This will take a few months to assess. There will be big positive days, and big swings, but expect losses for a while longer.
Buying opportunity? Yes. But like Ryan said, be cautious. This thing is real. It is NOT just another flu.
MF
Actually I need the market to keep bleeding down 3% a day rather that crash. The circuit breakers kick in at 7%. Like the TSX did last week.
The new forward p/e forecast of zero by goldman will be fully priced in over the next 4 weeks.
SPXS…should be up another 12% Monday at 9:32am…..sell. Buy back at 3:55 PM.. seeyou tuesday…..
Rinse repeat.
#72 Ronaldo on 02.29.20 at 5:12 pm
#66 Sail Away on 02.29.20 at 4:48 pm
I question why anyone would invest in Canadian markets as a whole when the US markets have beaten Canada’s soundly over pretty much any time frame, ever.
———————————-
Canadian Banks up 300% plus dividends since Feb. 23/09. I’d say that’s pretty good return considering that a 6% return over a 12 year period would only represent a doubling of your portfolio.
———————————–
I agree. However, the banks are not the Canadian market as a whole, which was my statement.
If we’re cherrypicking individual equities, APT is up 350% in the last month.
And the MSM just can’t help stumbling over themselves in the quest for clicks and ad revenue:
https://www.zerohedge.com/political/msm-peddling-fake-news-about-trump-calling-virus-hoax
I watched a couple of the videos and it is clear that Trump is referring to the democrats as a hoax and not the coronavirus. It is simply amazing how many people fall for this stuff. This one is spreading even faster than the “fine people” hoax, which Joe Biden still refers to as if it happened. It’s amazing when the video and the transcript is readily available that people fall for the edits put together by the MSM.
#65-Ed on 02.29.20 at 4:43 pm
Rallies are to be sold, 70% CRASH WILL COME! DOW – 5000 level. Real unemployment is 28%. Federal Reserve Ponzi Scheme for the markets will end badly!!! Fake economy is debt driven!! The world is in for a rude awakening!
————–
Let me guess, even with all that above you probably think that house prices in the GTA will just continue to skyrocket ,right?
Yup , real estate to the moon , financial assets to the dump.
#76 Sail Away
Are you just trolling? A little hardship as a response to potential quarantines? I don’t think so and I hope my neighbors don’t either, especially the ones with guns. When people get desperate they do desperate things so I hope they are all well prepared for any eventuality. I doubt it will come to that here but you are going to use the toilet paper eventually anyway so having a few extra rolls in the closet isn’t going to hurt. The same applies to non-perishable food items.
#70 Sail Away on 02.29.20 at 5:07 pm
#64 T on 02.29.20 at 4:36 pm
#10 T on 02.29.20 at 11:18 am
Dammit. I need a new name. Sometimes a random Thing pops in a comment. I don’t want to be confused as a poster with a fear complex. Lol!
Any suggestions?
—————————-
T2?
————
Yes, excellent. Thank you.
#69 T on 02.29.20 at 5:07 pm
I’m not saying things are roses and there won’t be more downside, I’m just putting things into perspective and reminding readers we’ll get through this. But enjoy your cans of tuna! – Ryan L
Nice hedge. A graph of 20 years but the odd sentence like “I’m not saying things won’t get worse”.
Here is a thought. If they do. And you cashed out last week on Monday when it was obvious you could buy back at half the price in a few months.
Unless you feel 19xs forward earnings is a screaming deal.
—————
Here’s a thought, relax.
19x forward earnings is no problem with growing earnings and inflation.
What indicators do you use to predict being able to buy something at 1/2 price at some future point in time?
Why are you so angry? Do you think someone has led you astray with guidance around being balanced in all things life and investments?
#74 Returns
Sounds like you’re doing a good job but I believe you missed my point and maybe I wasn’t clear enough but we can leave it at that. No hard feelings.
I am so awesome. Really I am.
I’m going to have a statue of me made in my honor and place it in my business.
That way my workers can honor me every day when they arrive to work at my business.
Is it just me or am I truly so great?
Stan Brooks “ 1. Labour force participation rate is NOT due to demographics.
The labour force participation rates is calculated as the labour force divided by the total working-age population. The working age population refers to people aged 15 to 64. This indicator is broken down by age group and it is measured as a percentage of each age group.”
Correct about working age population definition. Boomers age range is currently 55 to 75 and represent 23% of US population. Lots of these boomers are retiring and therefore some (those age 55 to 64) are retired yet still included in the working age population. So how would these demographics not show up in the participation rate? You’re assuming everyone retires at 65 which is not the case. So yeah demographics is a factor in the declining participation rate. – Ryan L
#76 Sail Away on 02.29.20 at 5:18 pm
Ok, preppers.
Here’s what’s actually needed if things go sideways:
……………………
A little hardship would do us good. Everybody’s carrying a month of reserve fat and most people way more.
But definitely feel free to pick up piles of unnecessary crap at Costco; it’s helpful to my bottom line if nothing else.
1. How is toilet paper unnecessary crap?
2. How is it helpful to your bottom line as it just moves purchase to earlier point in time but does not increase overall sales or consumption?
3. Are you really caring that much extra fat to sustain on for a month with no food?
4. ‘A little hardship’… ?? That was pretty arrogant. How about volunteering and going to a hospital serving virus patients in China or Korea?
——————————————-
This is what is in the news:
https://eu.usatoday.com/story/money/2020/02/28/coronavirus-2020-preparation-more-supply-shortages-expected/4903322002/
https://www.theguardian.com/world/2020/feb/29/it-just-seems-sensible-the-australians-stockpiling-for-the-coronavirus
https://www.businessinsider.com/coronavirus-update-photos-of-empty-shelves-in-us-stores-2020-2
https://english.kyodonews.net/news/2020/02/991d518fe407-japan-store-shelves-stripped-of-toilet-paper-amid-coronavirus-fears.html
What do you expect the people behavior will be, rational or not when they read the news?
You do not understand the psychology of the crowd.
Remember to be cool when it hits the fan.
————————————
WHO Raises Global Risk from Coronavirus to ‘Very High’
https://www.usnews.com/news/world-report/articles/2020-02-28/who-global-risk-from-coronavirus-very-high
https://www.euronews.com/2020/02/26/covid-19-man-in-critical-condition-in-germany-as-virus-spreads-in-europe
Ed “ Ryan, one question for you. Why you using the graph from 2010 only….”
Because that was the start of the new and current bull market. When doing technical analysis you’re always trying to isolate the main trend which is what I’m doing with that chart and timeline.
#73 Naresh on 02.29.20 at 5:13 pm
ryan
Who sang the volatility is going to go up next year does not mean you predicted anything you have to be specific on all prediction to do not count them for example on the S&P you saying it’s going to go up but you’re not saying where when what direction I appreciate your efforts however do not take credit for something you did not do the great president calls fake news I agree with him
———
I predict the sun will rise tomorrow morning and then set in the evening.
Can I have a prize now?
#64 T on 02.29.20 at 4:36 pm Tee? Tea?
T2 is already taken. T1 too.
And if you still disagree with all this, then move way up north and buy lots of cans of tuna.
————————————————-
I’m still living on moose meat …
#59 oh bouy on 02.29.20 at 4:01 pm
@#30 KNOW IT ALL on 02.29.20 at 12:53 pm
China is shutdown. That’s why the virus is spreading slower.
The rest of the globe is business as usual. The virus will spread indefinitely if the global population doesn’t hit a big pause button.
Cases are popping up globally and those patients have never travelled or haven’t been around anyone who has…… so they think.
Thank goodness I live in a small town far from Toronto
https://www.toronto.ca/community-people/health-wellness-care/diseases-medications-vaccines/coronavirus/
_____________________________________
i live in Toronto but visit various small town every weekend :)
///////////////
Nothing to see here in Welland.
@#65 Erectile Dysfunction
“70% CRASH WILL COME! DOW – 5000 level. Real unemployment is 28%. Federal Reserve Ponzi Scheme for the markets will end badly!!! Fake economy is debt driven!! ”
+++++
Apocalypse2020 I presume……..
Take a blue pill for that.
#64 T on 02.29.20 at 4:36 pm
Dammit. I need a new name. Sometimes a random Thing pops in a comment. I don’t want to be confused as a poster with a fear complex. Lol!
Any suggestions?
/////////
Tee?
New and Improved T
Ask Turnernation, he’s got the list
#63 Blair on 02.29.20 at 4:34 pm
Every day most of the comments on here are bananas-either from uninformed paranoid armchair generals or total basket cases.
You should see what I just trashed. – Garth
////////////////////
Remember the good Ol days, when people used to complain about too much real estate talk on here?
Ah, the memories…
M45BC
@#91 Penny Henny on 02.29.20 at 6:36 pm
#59 oh bouy on 02.29.20 at 4:01 pm
@#30 KNOW IT ALL on 02.29.20 at 12:53 pm
China is shutdown. That’s why the virus is spreading slower.
The rest of the globe is business as usual. The virus will spread indefinitely if the global population doesn’t hit a big pause button.
Cases are popping up globally and those patients have never travelled or haven’t been around anyone who has…… so they think.
Thank goodness I live in a small town far from Toronto
https://www.toronto.ca/community-people/health-wellness-care/diseases-medications-vaccines/coronavirus/
_____________________________________
i live in Toronto but visit various small town every weekend :)
///////////////
Nothing to see here in Welland.
_________________________________
thats for sure
#94 Flop… on 02.29.20 at 6:47 pm
#63 Blair on 02.29.20 at 4:34 pm
Every day most of the comments on here are bananas-either from uninformed paranoid armchair generals or total basket cases.
You should see what I just trashed. – Garth
////////////////////
Remember the good Ol days, when people used to complain about too much real estate talk on here?
Ah, the memories…
M45BC
———
I always thought what got published here was the cream of the crop. LMAO
I love fear
The VIX fills it’s gaps , always . ALWAYS
Large gap below current level ,it’s inversely related to the SPY .
Gives it some time …and watch
Time to rebalance over the next 2 weeks IMO.
In the correction at the last quarter of 2018 I was selling bonds and buying equities. Went from 60/40 to 80/20 by early Jan 2019. Around April 2019 up double digits with the new equities I just bought a few months earlier I started rebalancing to 60/40 and buying treasuries with the cash from the equities I sold.
Yesterday TLT (long treasury etf) was up over 20% since April 2019 when I bought them and the S&P 500 was down to around April 2019 level. I am now selling the treasures (up 20%) and buying the S&P 500 (down 13% so far from the high) and will go back as high as 80/20 over the next few weeks if the market falls to 20% off the highs. Then when markets rise closer to the end of 2020 I will do the reverse and go back to 60/40 selling equities and buy back the treasuries when yields rise and the TLT falls.
That is why you hold bonds (preferably US treasuries) and why portfolios holding both bonds and equities can outperform portfolios with just equities. Works much better than holding cash as a hedge. But you must be able to buy the equities when there is fear (right now) and buy the bonds when there is no fear (3 to 6 months from now) when everyone says why own bonds that yield 2% per year. As Garth often points out you don’t own bonds for the yield. You own them for when there is fear like right now and prices spike.
Sail Away on 02.29.20 at 5:50 pm
I am so awesome. Really I am.
I’m going to have a statue of me made in my honor and place it in my business.
That way my workers can honor me every day when they arrive to work at my business.
Is it just me or am I truly so great?
Well in any half decent country you would search for scraps in containers…..
#52 Stan Brooks and #53
Glad to see someone else with a sensible take on things.
As Chris Martenson likes to say, we Westerners only seem to have two states of being which are:
1) blissful ignorance and
2) blind panic.
Those who express simple concern or ask questions are automatically deemed to be in the “blind panic” group no matter what points they try to raise.
Canadian born citizens literally cannot process the idea that the authorities might not take care of their best interests at all times. You’d think the government’s reaction to the recent… err… “Civil disobedience” would shake that faith, but no.
In Canada, valid opinions come from “experts” and the authorities are “experts” by definition, so that’s two reasons no one has any business questioning what they are told.
I’m glad that the data indicates we have really good absolute survival odds when (not if) we get this virus. But this entire affair has made me lose all remaining faith that the state will do a thing for us when the actual airborne Ebola type virus comes our way.
A few governments have done a fantastic job of testing and reporting real data to their citizens. Thats what makes the Canada and the US response so frustrating.
As for the markets, stay up late on Sunday to wait on news of “coordinated central bank intervention” or changes in the short selling rules. If those come, the market goes up like a champagne cork on Monday. If not, then “down she goes” until such news comes.
As Stan explained, you can’t just shut down the manufacturing center of earth for weeks on end without consequence. Its really not that outlandish a theory.
Hahaha
I finally get my personal doppelganger! Knock yourself out, but please don’t use improper grammar, as there is no excuse for that. And the statue has already been in place for some time.
——-
Regarding emergency supplies: most everybody already has 10x the food needed for 2 months. Open the freezer and pantry for a quick inventory. A few years back, my wife and kids were away for 1 1/2 months, so I decided to do zero shopping as a test. Result: no problem. First perishables, then frozen food, then canned, then rice/beans/noodles, etc.
Never got into the dog or cat food, and didn’t have to eat a pet.
Buying toilet paper to stock up for a true emergency? That’s just funny.
#80 Nonplused on 02.29.20 at 5:28 pm
#76 Sail Away
Are you just trolling? A little hardship as a response to potential quarantines? I don’t think so and I hope my neighbors don’t either, especially the ones with guns. When people get desperate they do desperate things
————————-
My experience with desperate people in war zones is that they band together, become secretive toward outsiders, and share amongst themselves. Group dynamics are far more important than individual need. The guy with the gun will contribute it toward group benefit.
Ryan,
I generally agree with you, Garth, and Doug that it is best to stay invested especially with long term savings and investments because timing is hard. But also “Never catch a falling knife.” So while there is no reason for people to rush out and sell, they shouldn’t be rushing out to buy either, unless they consider themselves to be professional market timers. For most people, stick to the usual annual or semi-annual rebalancing plan. Don’t let the blinking lights and fancy charts suck you into putting money in the VLT side of the market. As Garth says and I am sure you agree, it is all just noise. Most people should not change anything about their long term plan. Rebalancing is how you gain from these sorts of events, but stick to the plan there too. There is no such thing as a “buying opportunity” for most people.
On the employment and economy front, well there is a lot to talk about there. Let’s get Covid-19 out of the way first by comparing it to the worst case scenario: The black plague. Millions died and the economy was terrible. But what happened after? A huge economic boom. Or we could look at the Spanish flu. Again millions died but the economy is up a lot, and that is an understatement, since then. So yes I agree no matter how bad this thing gets and how tragic it will be, the sun will still rise tomorrow and the rivers will flow and the human spirit will march forward. But people making speculations at this point are guessing at things about which they do not know. Stick with the plan, a Garth ™ portfolio rebalanced periodically.
The economic numbers like employment, GDP, labor participation rates, etc. are hard to figure out. For instance I am not currently in the labor market for tax reasons. How are those people calculated? Consider: If you get laid off and get a nice settlement often you can carry a large portion into the following year so you don’t have to pay your marginal tax rate on the whole thing (although I am sure Monreau is looking to take that away too). So, since I can’t claim UI until that runs out and I can’t get a job unless I want to pay 50% tax, what am I? Unemployed? Not participating in the work force? A Martian?
As you have pointed out the large boomer demographic and also the fact that so many adults don’t enter the work force until their mid-20’s now makes it hard to compare labor participation rates over long periods of time. Add to that technology (which means more GDP with less labor) and perhaps people don’t need to work as many hours to buy their Costco toilet paper stockpile. Since the tax code is so aggressive, there is a huge economic incentive for high income earners to cut back on hours worked if they don’t need the money, or turn to the black market. So I think GDP is by far the best measure of what is going on in the economy, not unemployment. Sure, unemployment is a good measure to track people who are not participating in the growth, but long term a growing economy means there will be jobs for them once they retrain or otherwise decide to re-enter the workforce.
Trump’s (love him or hate him) tax cuts did help reduce unemployment in the US. Why? The lower your tax bill, the more incentive you have to work. That is something the socialists just don’t understand. Let’s look at a person who has no debt and a good amount invested in a Garth ™ plan. What incentive does he/she have to work at a marginal tax rate of 50%. As Garth says, time is the most valuable commodity. So if you don’t need the money you don’t work for 50%.
T, T2?
I’ve always liked ‘Vlad the Impaler’. Yours if you want it…
72 returns
“The NASDAQ is up 700% since the dot com crash, the S&P 500 over 300% and the TSX has less than doubled since then. ”
Sorry, I couldn’t just “leave it at that”
Visited megatrends and yahoo for some data. Looked at
market high/lows in 99 and 2020. Best to compare changes from lows in both years to highs in both years to get a better overall picture.
Nasdaq 141% highs 288% lows
S & P 130% highs 144% lows
tsx 112% highs 154% lows.
If we just go low 99 to high 2020
Nasdaq 345%
s & P 179%
Tsx 178%
#78 People Panic on 02.29.20 at 5:22 pm
And the MSM just can’t help stumbling over themselves in the quest for clicks and ad revenue:
https://www.zerohedge.com/political/msm-peddling-fake-news-about-trump-calling-virus-hoax
I watched a couple of the videos and it is clear that Trump is referring to the democrats as a hoax and not the coronavirus. It is simply amazing how many people fall for this stuff. This one is spreading even faster than the “fine people” hoax, which Joe Biden still refers to as if it happened. It’s amazing when the video and the transcript is readily available that people fall for the edits put together by the MSM.
xxxxxxxxxxxxxxxxxxxxxxxxxxxxx
Its prudent to check in with yourself periodically and ask this question, “Am I as smart as I think I am?” If you only ever answer affirmatively, you need to ask a smarter person.
What’s up with all this talk about toilet paper hoarding? Its everywhere, people are in absolute panic over this stuff. FORU on TP. I even read a piece of news earlier this week that in China there were actual robberies and hiijacking of delivery trucks for the T.P.
I mean, yeah, I get that this situation is the “sh*ts” for everyone closely involved. But its not like the toilet paper is gonna help much.
In a problematic situation such as a pandemic, you need a lot more than toilet paper!
Ryan,
What do you think of diversifying short term risk by purchasing a small (say 5% of portfolio) deep out of the money puts on ETFs? Basically, give up a small (5% max) return, but limit downside to this same amount, and that’s only if the market stays flat. If it goes down, the puts offset portfolio losses, and if we recover, the portfolio gains cover the put costs.
Essentially, it’s an insurance policy. I personally bought SPY $200 June puts a week ago and am quite happy with my overall holdings increasing in value this past week due to this policy. Until cases start plateauing worldwide, I don’t see a downside to this strategy.
By the way, China is no longer the canary. It is now Italy, Iran, and Korea. And anywhere else where infections are growing quickly. Also, your statement “this event will weigh on economic growth over the next quarter or two”, let’s remember than 2 quarters of negative growth is the definition of recession, and this catalyst may extend that beyond more than we hope if things don’t improve soon. Time will tell as we unfortunately don’t have crystal balls at our disposal (they’re made in China, and on backorder..)
#106 Sold Out on 02.29.20 at 7:54 pm
“Its prudent to check in with yourself periodically and ask this question, “Am I as smart as I think I am?” If you only ever answer affirmatively, you need to ask a smarter person.”
Is that an insult against me or an agreement? Not sure but anyway to your question “Am I as smart as I think I am?” Unfortunately the answer is yes, but I am the one doing the thinking so that may not be so smart. You cannot understand what you cannot comprehend.
I’ll check in with the Flat Earth society here. These people are quite sure they know things that NASA doesn’t, the moon landings were a hoax, the space station is a hoax, and airplanes don’t go 500 mph because look at how fast they are going when they land (which is admittedly a lot slower).
Or we could look at the people who think oil is “abiotic”, by which they mean it is unlimited, even though they don’t try and explain why we aren’t swimming in oceans of it then. But no, it is a conspiracy to keep prices high and all the geologists in the world are in on it.
Or the folks who think the world is only 6,000-10,000 years old, despite all the geologists and paleontologists out there who say that can’t be right, and we aren’t talking about a small error. “But that is what the bible says!” Except the bible is a moral textbook not a scientific textbook. And it spends all of 1 chapter on the subject. The people who wrote it understood human morality not paleontology. There wasn’t a lot of time back then to dig up fossils and catalog them.
I would say the less you know the smarter you think you are. What a little knowledge does is make it apparent that that there is much more to know than you could have possibly imagined.
@Sail Away
Toilet paper is funny thing…
I actually go out of my way not to look perepping videos, thay are all garbage all those that I’ve seen so far, by me judging them from past experience.
But somehow gargle will trick me send me something like “this one”, that I just can’t to resist, and I have to click on it. I always wonder what my friends do all day long…
I posted this video here once way back it was cutest and funniest prepping thing. In my estimations dude is doing ok with his investments in to, definitely is keeping up with inflation, since he mad two follow up videos. 1st video went up in 2013. Probably he collected enough on gargle advert that he broke even on original investments in toilet paper or at lest broke even.
Here is the best prepping video ever.
https://youtu.be/zvGP7ZQ3ixo
#107 John in Mtl
I mean, yeah, I get that this situation is the “sh*ts” for everyone closely involved. But its not like the toilet paper is gonna help much.
In a problematic situation such as a pandemic, you need a lot more than toilet paper!
—————————————————————
Since we don’t have the Sears catalogue any more I’ve been accumulating newspapers instead. You just never know.
Interesting Chart
https://upload.wikimedia.org/wikipedia/commons/a/ad/S%26P_TSX_Composite_Index.png
We aren’t getting the support we need to get protesters off our land. If native land is sacred, so is ours. Starting soon, we will start to make arrests ourselves, and the trains will slow down to give people time to get out of the way but they won’t stop. We will, as a humanitarian exercise, fit old style cattle guards to our trains. We’ve been building them.
>Washington State is in a state of emergency.
BREAKING
5,134 views
Feb 29, 2020, 05:31pm
Washington State Reports 1st U.S. Coronavirus Death, Declares Statewide Emergency
Rachel Sandler
Forbes Staff
Topline: Washington State health officials announced Saturday the first U.S. death related to the coronavirus, as health officials prepare for the possibility the disease could spread throughout the U.S.
The patient was a man in his 50s with underlying chronic health conditions.
Health authorities do not know how the man became infected.
He was admitted to a hospital in the Seattle area with severe respiratory issues, but was not immediately identified as a coronavirus patient.
Health officials said the man was only tested for Covid-19 on Friday after the CDC expanded its testing criteria to include people who are severely ill with no other known cause (though it is unclear when the man was first admitted).
At the same time, Washington state health officials are investigating the possibility of an outbreak at a nursing living facility after two residents there were infected.
Washington Governor Jay Inslee declared a state of emergency in response to the uptick in cases…
https://www.forbes.com/sites/rachelsandler/2020/02/29/washington-state-reports-1st-us-coronavirus-death-declares-statewide-emergency/#7a41120b18f0
Not sure why everyone tries to base their strategy on the past. Each moment in time is different and history does not repeat itself. This mistake is akin to the old saying of generals using the obsolete strategy from the last war in the current battle., kind of like a financial Maginot line. I fear a depression will arise from all of this and several industires may never recover such as cruise lines. Would you want to travel on a boat or plane where infected people have previously been.
#27 NoName on 02.29.20 at 12:40 pm
Yes… I did dismiss Corona Virus at first, thought it was another SARS variant and dismissed it. Broke some old research rules and that’s what you get.
#73 crazyfox on 01.27.20 at 9:44 pm
But then, as I researched it more the next day that all changed and evolved as I looked at it more in late Jan. Basically, I did a 180 on it a month ago and ever since:
121 crazyfox on 01.28.20 at 1:07 pm
#125 crazyfox on 01.28.20 at 3:11 pm
The Case Fatality Rate risk and the transmission rates opened my eyes as I researched COVID-19 more online. Reported CFR is going to clock in somewhere around 7 to 8% with best guess modelling around 4% of anyone it infects so its a killer, its quite contagious as Wuhan and the Diamond Princess suggests giving it pandemic potential and one can say now that this is a pandemic. There’s a chance that the virus will die down in summer and clusters can be controlled from there, but I doubt it. At this point I’m not sure it will even die down, Singapore might hold answers over the next few weeks what it does. Since the the 28th of Jan, as more information came to light for me, peer viewed studies from the lancet:
https://www.thelancet.com/coronavirus
Plus adding news sources and you tube lectures from Dr. John Campbell and Med Cram and others and some research on virus’s in general, I’ve concluded that people have every right to be freaked out over COVID-19.
We are now in the early stages of a global pandemic with at least 8 or more nations experiencing community spread (U.S., France, Italy, Iran, Japan, Singapore, Germany, China) with no working vaccine against Corona virus past phase 1. We are looking at a virus that is likely going to kill 4% of the population it infects and as the Diamond Princess and Wuhan suggests, is quite contagious.
Sometimes the best and only way to the truth of it is turn off the media and research it for yourself. Do the nerd work, that’s what makes you money and saves life savings and lives.
Of course, it helps to recognize the motives behind what Dr.’s say and do. Here’s an example of someone who’s saying something one day on CNBC and something completely different the next (for example, he’s saying the CFR will be .2 to .5% which is rubbish. Common sense suggests a CFR this low wouldn’t generate the response we saw out of China. Studies don’t suggest this either). In the video below, Scott says a vaccine will be at least 12 to 18 months:
https://www.youtube.com/watch?v=Rel6TDmAnbE
Who is Scott Gottlieb? Trump picked 23rd Commissioner of the FDA for 2 years until April 5th, 2019:
https://en.wikipedia.org/wiki/Scott_Gottlieb
Here he is 2 days later saying a vaccine could be found in 6 months for Corona, a complete contradiction from 2 days before:
https://www.youtube.com/watch?v=wVeCJF_FpsA&t=126s
Which version is true? Well, both when one thinks about it. The FDA has the power to fast track any drug or vaccine for humanitarian reasons (or profit). Sure, we could have a working vaccine in 6 months and we become the clinical trial, its possible. And, its also quite possible that the vaccine he speaks of will only last for 6 months and fade from there. Is it a cure if most of the general population doesn’t take it or it isn’t offered outside of the U.S. etc.? A global economy saver? It’s a leap to think so.
Here’s Scott nodding his head to a Dr. Quigley who claims 80%+ of those infected will not show symptoms or be entirely asymptomatic. In other words the Dr. claims at least 4 in 5 can be infected by the virus and the immune response kills it before symptoms show or you get sick:
https://www.youtube.com/watch?v=40XGcn6cBMk
There is absolutely no proof of this anywhere online. Not in any medical journals, not online, not anywhere.
Lets do the math, 4 in 5 won’t get sick. A further 4 in 5 who do get sick will only have mild symptoms so 1 in 25 will have serious symptoms according to Dr. Quigley and of this number, 1 in 6 will be critical or, 1 in 150. What’s the percentage of those getting infected, lets be generous, 1 in 5 perhaps in the first year, 1 in 750 will be critical do these sound like numbers China and South Korea are risking their economies for, does that sound right to you? With a working vaccine around the corner to bail them out of trouble next winter perhaps? No, it does not.
We’ve got a former FDA commissioner on CNBC telling people the CFR on COVID-19 is .2% to .5%, that a vaccine can come within 6 months (possible but not probable) and a Dr. colleague is saying that 4 in 5 infected cases will never show symptoms. The effect is that this virus isn’t so bad, a vaccine is coming soon, exactly what the market wants to hear right? Don’t panic, buy in, this virus isn’t so bad, we’ve got the science for a drug and a vaccine, the market will solve it, it’s what the market wants to hear but is it true? Should we be so optimistic?
Do the research. Be the nerd. Its the only way you will ever truly know.
Blackdog, it’s been good chatting with you, and our conversations have brought back childhood nostalgia. Here’s a little story, called ‘Mike and the Rat’
Mike and the Rat, Part 1
My closest boyhood friend was Mike- the same buddy who eventually owned the beagle Red. Our family farms were adjacent, we were the same age and in the same classes.
In fourth grade, Show and Tell was popular and a bit of a one-upmanship contest amongst the farm kids, since naturally everybody brought in their pup or kitten or chick, or whatever. Mike really wanted to impress Annemarie, and hit on the idea of bringing in his pet rat. Nobody else had a pet rat. The only problem was that he didn’t have one either.
That little wrinkle didn’t stop him from telling everyone he’d be bringing his pet rat.
Luckily, there were plenty in the manure pile.
Operation Pet Rat began.
We spent a week of after-chore time building a cage, using scraps and spare bits. The final monstrosity was about as should be expected from two 9-year olds: it weighed around 30 pounds, with rusty nails and bailing wire sticking out everywhere and a removable door held in place with bent nails. We thought it was a fine piece of work. As we were to eventually discover, though, this wasn’t exactly the case.
Next we had to catch a rat alive. If you know nothing else about farm rats, you should know they are wily. They’re constantly on the menu for farm cats, farm dogs, owls and hawks, so they keep their head down and are suspicious of everything.
This would take some doing…
Cruise ships have become like floating versions of the Jerry Springer show…..pepper spraying passengers??? Heavens to murgatroyd!
https://www.mirror.co.uk/news/world-news/coronavirus-cruise-ship-crew-pepper-21604587
#95 oh bouy on 02.29.20 at 6:55 pm
@#91 Penny Henny on 02.29.20 at 6:36 pm
#59 oh bouy on 02.29.20 at 4:01 pm
@#30 KNOW IT ALL on 02.29.20 at 12:53 pm
China is shutdown. That’s why the virus is spreading slower.
The rest of the globe is business as usual. The virus will spread indefinitely if the global population doesn’t hit a big pause button.
Cases are popping up globally and those patients have never travelled or haven’t been around anyone who has…… so they think.
Thank goodness I live in a small town far from Toronto
https://www.toronto.ca/community-people/health-wellness-care/diseases-medications-vaccines/coronavirus/
_____________________________________
i live in Toronto but visit various small town every weekend :)
///////////////
Nothing to see here in Welland.
_________________________________
thats for sure
/////////////
thanks for not visiting.
Please don’t come again
Blackdog there is no reason to hate me, even if I eat dog meat.
You heard the term dog eat dog no?
Just love me for who I am, as I did twice today ;)
#32 Ronaldo on 02.29.20 at 1:37 pm
#15 Ponzius Pilatus on 02.29.20 at 11:54 am
The Stock Market craze during the last 50 years was mostly driven by the Boomers, who were raised on the “keep calm and stay invested” mantra.
They are getting old now, and may just get off the roller coaster for good.
This could lead to a more severe and prolonged recession than in the past, as the Mills don’t have the means to step up.
Also, robots don’t have to save for retirement.
—————————————————————-
You don’t give the boomers enough credit Ponzi. We have been through many of these corrections and crashes in our invested lifetimes and are not the nervous nellies that some would like to believe. As for myself. Fully invested and staying the course. A 4.69% drop in the TSX since January 1st after a 15% return in 2019 is hardly worth losing sleep over. Even 10%. Time for my morning coffee.
————-
How old are you?
I’m talking about 70+.
#108 Tom
You just wasted your money. When you buy out of the money options you overpay for what you get. You think you hedge on the cheap, but it’s other way around.
The increase in value that you see is due to the increase in implied volatility: you had little to no sensitivity to the underlying in those options two weeks ago, and now all of a sudden you got it.
What this means for you is that your options will quickly lose value if the market stays flat and/or the volatility goes down. It’s very likely that next week SPY will be going down AND your options will be losing value at the same time. Take it easy if that happens.
I doubt you’ll be able to liquidate them anywhere near the price you see in your broker account.
Garth stay safe.
i work in a hospital in alberta. there arent enough beds or ecmo machines. The death rate of covid is much higher than influenza.
what to do? flu shot. Immunity: vit c 2 gm day, zinc 10-20 mg day, vit d3 3000-5000 units a day. Colloidal silver if very sick. Probiotic yogurt. Sauerkraut. Honey on foods. Magnesium in oats and spinach. MSM 1 gm a day, metylsulfonyl methane. Glutamine in whey protein. Coconut oil with breakfast. Black tea for interferon source.
my hospital has no plan. YOU ARE ON YOUR OWN.
#105 Dr V on 02.29.20 at 7:50 pm
72 returns
“The NASDAQ is up 700% since the dot com crash, the S&P 500 over 300% and the TSX has less than doubled since then. ”
Sorry, I couldn’t just “leave it at that”
Visited megatrends and yahoo for some data. Looked at
market high/lows in 99 and 2020. Best to compare changes from lows in both years to highs in both years to get a better overall picture.
Nasdaq 141% highs 288% lows
S & P 130% highs 144% lows
tsx 112% highs 154% lows.
If we just go low 99 to high 2020
Nasdaq 345%
s & P 179%
Tsx 178%
————————————————–
Nasdaq was down as low as 1100 after the dot com crash as per my post. That was in 2002 and not 1999, please don’t mix up the 2 dates. It was up over 9800 or 890% before this week’s correction and still near 8500 or up 770%. S&P 500 was as low as 770 after the dot.com crash and went as high as 3390 or 440% and currently still up 385%. TSX was down under 7800 around this time, up as high as 14800 in 2008 before the financial crisis and now hovering just over 16200 or 9.5% since it’s pre financial crisis high after a 2020 high of 17900. The Nasdaq and S&P 500 have delivered 242% and 190% as of Friday’s close from their highs before the financial crisis let alone their lows.
My statement still stands even though was being conservative at 700% and 300%. Currently 770% and 385% since the dot com crash with TSX barely doubling and doing far worse in the past dozen years as you can see from the numbers above. As a composite index, it’s a dog.
I have no idea how you can compare them as investments. Not even close and getting worse.
Re: #108 Tom on 02.29.20 at 8:56 pm
Wrong year try next year shortly after the 2020 election. If Trump wins in 2020 he probably will allow a bear market in 2021 but not this year in an election year. The plunge protection team will try to hold the DOW 25,000 level because DOW 24,000 is too close to the 23,500 level which is on the cusp on bear market territory.
#108 Tom
Almost all options expire out of the money. The people that write them are not idiots. I know, because I have experience. I was long Nortel puts (so short Nortel) all the way down, sometimes in size, and I did better than most in that I broke even.
It is the people who write options and sell them that make money on them. If they weren’t making the money, they wouldn’t be writing them.
And as for crystal balls, don’t you have a magic 8-ball? Just as good. Maybe better because the answers are mostly vague.
Ryan, thanks for the wise words.
Do you like the CDN banks at these levels? The green one has been stuck for a number of years now, but still pays a nice divy ( just increased again )
Would you buy more at these levels?
Thanks
I can’t help but wonder what the world would be like today if instead of SCARY CHINA WUHAN VIRUS FROM EATING BATS the narrative was just “this is a bad flu season, everyone please wash their hands, get the vaccine, and stay home if you feel unwell”.
Would the end death toll be any different? I doubt it somehow. Would the amount of paranoia, xenophobia, and anxiety (financial and mental) be reduced significantly? Absolutely.
No one knows when the storm will end and how much damage this virus will make by the time it does end. With so much incompetence displayed by world governments and there is no end in sight. This has the potential to be the equivalent of the Spanish flu or worse. I am usally not a doom and gloom guy, I have always disagreed with Garth’s doom of the housing market and I also disagree that this virus is just a blip, but I do hope you are right, but not likely.
Shows chart since 2010: long term uptrend! Lol. Rates are going to 0. Small percentage in appropriate hedge aka scarce asset. I wish everyone good health.
Interested to discover what a coordinated central bank intervention may mean to this new global economic threat and to the markets as a whole in the comings days and weeks.
The current overall debt burdened of countries, corps & individuals is dangerous in an environment with major reductions in economic output.
At this time I’m slightly pivoting away from the balanced and diversified model in order to cherry pick some over sold LG Cap equities in underperforming sectors.
Best luck to all during these extraordinary times.
@SailAway, #117 and #120
Lol. Stuck a nerve the other day did I?
@SailAway
Hit send accidentally before finishing my comment.
“Struck” not “stuck”.
And, how is your head today? After loving yourself so much yesterday (and last night by the sounds of it), it must hurt.
@#121 Ponzie brother of Fonzie
“How old are you?
I’m talking about 70+.”
++++
Not to worry Ponzie.
The taxman has taken care of anyone foolish enough wanting to sell everything and go “all cash”.
Its not like Boomers will, en mass, sell as a cohort and crash the market.
People born from 1946 to 1964 is a wide margin of sales…assuming even 10% are invested in the market…which I highly doubt.
But when they die and their Gen x and Millenial kids get their indebted hands on the estate funds…..that’s another parable…. Grasshoppers vs ants.
@#123 Calgary rips one
“Probiotic yogurt. Sauerkraut. Honey on foods. Magnesium in oats and spinach. MSM 1 gm a day, metylsulfonyl methane. Glutamine in whey protein. Coconut oil with breakfast. Black tea for interferon source.”
++++
Have you even considered quitting your job in the hospital dietary dept. and riding elevators for a living?
#124 Returns on 03.01.20 at 12:27 am
Yes, throughout the history of the markets, US markets have always beaten TSX.
That’s just fact. A waste of time to debate.
Then look at last year- sure, the TSX was up 15% or so. Dandy. But then US markets were up nearly twice that.
If a 2% MER is concerning, then a one-year, 90% difference in return should also register. People often say something like, ‘oh, I’m happy with 15% (or 5 or 7); that’s all I need’
I’m personally never happy if my investments are less than optimal because of a choice I made. 26% is far better than 15%.
Logic and math, but most importantly… willingness to take action.
#132 Blackdog on 03.01.20 at 9:21 am
@SailAway, #117 and #120
Lol. Stuck a nerve the other day did I?
———————-
It’s getting old, Sandra. Let it go.
124 returns – I used the 21 year comparison as you had based the tsx return on it in your post 72. I really didn’t know how it would work out. Over that time period the returns are much more comparable. So yes, all about the timeframe.
We’ve been warned about home bias for years. It was a real concern when RRSPs had foreign content limits. I do enjoy my Canadian dividends in my non-reg.
@#119 Penny Henny on 02.29.20 at 10:39 pm
#95 oh bouy on 02.29.20 at 6:55 pm
@#91 Penny Henny on 02.29.20 at 6:36 pm
#59 oh bouy on 02.29.20 at 4:01 pm
@#30 KNOW IT ALL on 02.29.20 at 12:53 pm
China is shutdown. That’s why the virus is spreading slower.
The rest of the globe is business as usual. The virus will spread indefinitely if the global population doesn’t hit a big pause button.
Cases are popping up globally and those patients have never travelled or haven’t been around anyone who has…… so they think.
Thank goodness I live in a small town far from Toronto
https://www.toronto.ca/community-people/health-wellness-care/diseases-medications-vaccines/coronavirus/
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i live in Toronto but visit various small town every weekend :)
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Nothing to see here in Welland.
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thats for sure
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thanks for not visiting.
Please don’t come again
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no problem.
definitely won’t be back to that place.
@Delicious Dog 131,132
“Lol. Struck a nerve the other day did I?”
+++++
Hardly.
The juvenile, insipid attempts at humor were painfully transparent due to the fact that while you were posting as “Sail Away” your own “Delicious Dog” moniker was noticeably absent ….
Whats next?
Let me guess.
Yuk yuk “Crowdedelevatorfartz” comments with a vocabulary that would make a 9 year old squirm in uncomfortable, silent, embarrassment?
JWD “ Ryan, thanks for the wise words. Do you like the CDN banks at these levels? The green one has been stuck for a number of years now, but still pays a nice divy ( just increased again ) Would you buy more at these levels?
Thanks”
Yes we like the banks and we get our exposure through a dividend ETF. Their yields are more attractive after this correction and they are attractively valued. – Ryan L
#121 Ponzi
How old are you?
I’m talking about 70+.
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A couple years older than Garth but not as wise.
#129 Franco
I have always disagreed with Garth’s doom of the housing market
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Then you have always been disagreeing with a straw man and not understood the concept of the greater fool.
Anyone here have a chart to show the financial leverage of companies in 2008 all the way to today?
Probably something worth looking at.
Your welcome.
Buying opportunity?
Your first chart is a falling knife chart if I ever saw one.
Comments on media… we shouldn’t rely much on media to educate us with science. Always ask the motive behind what you are watching. CNBC and BNN promote market trading and most often have hosts and guests with an agenda to influence viewers to buy in. Just look at how shows are produced. A host interviews someone, the conversation moves to a sector and real time stock symbols flash on a screen in co-ordination with the flow of conversation, its script. Rehearsed after hour script from the day before, for effect. As such, these channels are not the place for unvarnished truth.
However… we can’t ignore their messaging. The media message will move the herd. If one say, flips to CNBC and 3 out of 4 stories are on COVID-19, it won’t be a good news day because there is simply no good news out on this virus right now. Point is, pay some attention to the messaging, it moves the herd, just don’t put much trust in it.
You are smarter than you think. Have a plan and be willing to learn – hard knocks speed the process of common sense. Common sense is a valuable asset and earned. You can’t make enough of it if it is free – the productive will of people are the true wealth of a nation.
Trust builds a great civilization so own the consequences of decisions (accountability). Fraud and hit&runs should be punished mightily. Reminds of the Spiderman movie of a message that great power brings responsibility/accountability – the reason I diss many “leaders”. Until rubber meets the road, talk is cheap – action is louder than words. I am thinking T2 is more like his mother, Maggie. So in my mind I am tagging him with MT2 – the phonic appeals to me. On an off note, does Kim Campbell still aspire to be PM? Hers is quite a story.
Covid 19 is not the Black Death or smallpox but it is far worse than the common flu. Whether it came from a lab or bats doesn’t matter now. NA Aboriginals missed out Black Death but not small pox.
https://nationalpost.com/news/canada/everyone-was-dead-when-europeans-first-came-to-b-c-they-confronted-the-aftermath-of-a-holocaust
As far I believe, the Government owns all Canada lands except by agreement – FN own all rights over their “reservation” plus select surface rights over outside “reservations” (hunting for example) and Government promises. I believe in one law for all so I want to negotiate but at the end of the day FN may want to be like Quebec within Confederation.
Late last Friday, I stepped up and bought small amounts of Canadian equities using my dry powder (Helco). I am going after quality cash flow. Fortunately I can use the points from my Visa card to pay commission so I am okay to buy small. I wait to see how that works out for me.
#135 crowdedelevatorfartz on 03.01.20 at 9:37 am
@#123 Calgary rips one
“Probiotic yogurt. Sauerkraut. Honey on foods. Magnesium in oats and spinach. MSM 1 gm a day, metylsulfonyl methane. Glutamine in whey protein. Coconut oil with breakfast. Black tea for interferon source.”
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Have you even considered quitting your job in the hospital dietary dept. and riding elevators for a living?
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Hahaha. The only thing missing are beans. Pure methane generation.
My general view on food is that if you’re carrying any reserves (hey, chubby), extra food or supplements are an absolute waste of time and effort. A healthy body’s immune system is exponentially more powerful than snake oil.
It’s like adding extra water to a full cup.
People Panic on 02.29.20 at 9:24 pm
#106 Sold Out on 02.29.20 at 7:54 pm
“Its prudent to check in with yourself periodically and ask this question, “Am I as smart as I think I am?” If you only ever answer affirmatively, you need to ask a smarter person.”
….
I’ll check in with the Flat Earth society here.
These people are quite sure they know things that NASA doesn’t, the moon landings were a hoax, the space station is a hoax, and airplanes don’t go 500 mph because look at how fast they are going when they land (which is admittedly a lot slower).
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Don’t discount the Flat Earth Society too soon.
I’ve got a pamphlet from them lying around here somewhere. I seem to recall they were bragging about their numbers expanding globally.
Cheers, R
#136 Sail Away on 03.01.20 at 10:13 am
#124 Returns on 03.01.20 at 12:27 am
Yes, throughout the history of the markets, US markets have always beaten TSX.
That’s just fact. A waste of time to debate.
Then look at last year- sure, the TSX was up 15% or so. Dandy. But then US markets were up nearly twice that.
If a 2% MER is concerning, then a one-year, 90% difference in return should also register. People often say something like, ‘oh, I’m happy with 15% (or 5 or 7); that’s all I need’
I’m personally never happy if my investments are less than optimal because of a choice I made. 26% is far better than 15%.
Logic and math, but most importantly… willingness to take action.
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I will never understand how avoiding “home bias” is constantly preached by high dollar managers but never practiced. The TSX represents 1.8% of the world’s total market value, but they pile between 20%-60%of your money into this underperforming and stagnant dog of an index. I seriously doubt there is a single portfolio outside of Canada that has any exposure at all to the TSX.
US markets always spearhead growth and represent over 40% of the world’s market value. That’s where the lion’s share of your equity exposure should be. The numbers never lie.
#128 Toronto_CA on 03.01.20 at 6:55 am
I can’t help but wonder what the world would be like today if instead of SCARY CHINA WUHAN VIRUS FROM EATING BATS the narrative was just “this is a bad flu season, everyone please wash their hands, get the vaccine, and stay home if you feel unwell”.
Would the end death toll be any different? I doubt it somehow. Would the amount of paranoia, xenophobia, and anxiety (financial and mental) be reduced significantly? Absolutely.
———– ummm, Absolutely Not ———-
The strength of the fact that Garth & Ryam are posting rationally on GreaterFool about this event is significant.
Markets have been ransacked by it, and may still be.
Another important fact to your points that,
Many countries have brought in complete bans on large gatherings,
Have cancelled events of huge market significance,
Stopped commercial flights 100% between countries that would have been considered an idea of complete falsehood just weeks ago….
And now we have containment ( according to China etc reports, Korea still growing!)
With ought concerted efforts the Pandemic part of the narrative would be significantly greater than now.
Big thanks to Ryan & Garth for tossing real numbers to this event.
For example, I noted earlier that Gas/fuel prices will decrease….and watched as it went up a few pennies; then it followed the decline.
Interest rates are coming next, and who wants to, speculate on that market effect? Anyone. More affordable mortgages, mixed with tanking economic predictors? Hmmm…anyone’s wisdom at work is welcome .
It probably is different this time in that you should expect a U shaped decline and recovery not a V shape.
High corporate and personal debt levels could come into play if revenues/incomes suffer as a result of the virus spreading. Insolvencies could be the black swan that causes a longer than anticipated recession and Canada will be hit much harder than the USA.
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St. Bernard a great dog.
I like the St Jerome dog better.