Rarely has a week felt so short. Everything seemed to happen on fast-forward and the past was consigned to another era.

The best thing I did during the crash was just to stop.

Standstill happened on Saturday. I sat on my couch and WhatsApped friends. Some I haven’t spoken to for years because, well, when do you get the time?

God, I felt better for hearing those friendly voices.

The next best thing I did was catch up on the Monevator comment threads. In line with best passive investor practice, I’ve steered clear of following the markets in real-time. (It’s quite enough to get the gist, cheers!)

Those threads are a wonderful community support group all by themselves. While certain media outlets trade in a stream of ‘Old lady mugged for her toilet roll’ sensationalism, in Monevator readers I found a bastion of sanity.

There are many different voices: the calm, the nervous, the novice, the veteran, the informed and naive. The confident, the catastrophising, the far-sighted and near-term. There’s good humour and flapping, wisdom, stoicism, wild speculation, and emotions pitching like a dinghy in the Atlantic.

Piece it all together and you can chart the crisis in a graph of human voices.

So I did!

Imagine what follows in the style of the TV reports and radio chatter that accompany the heroes of your favourite disaster movie…

February 22

We were still arguing about SWR rates but something was brewing 

Al Cam
Feb 22, 2:59pm
Re the future: I know that my own crystal ball does not work terribly well, and thus the best I can do is to take a view of how things might just pan out in the full knowledge that I will almost certainly be wrong.

Rob
Feb 23, 11:11am
Sorry I just had to share this.
Run for the hills!

February 29

Vanguard FTSE All-World: -9.91%
Vanguard FTSE 100: -10.78%
Vanguard UK Gilt: 0.94%
iShares Physical Gold: -0.28%

Coronavirus hits the markets

Indeed this has been the fastest decline from a high for the US stock market of all-time. UK shares are down 11% for the week, too, and the average UK pension fund has lost a whopping 5% to 6% of its value since Monday.

Joe
Feb 29, 7:30am
It has been a tough week, even for someone in the accumulation phase with 15+ years of buying left, like me.

Ali
Feb 29, 8:12am
Typical. Last night me and the Mrs did our end of month financial spreadsheet. I hadn’t logged in all week for obvious reasons and I told her not to.

Let’s just say it ended with her going upstairs saying “I hope you know what you’re doing.”

JimJim
Feb 29, 8:57am
Interesting at work to see the reactions of various people towards the COVID-19 virus. The vast majority are just “business as usual, somebody else’s problem, I’m sure it will be OK, these things happen.”

Rob B
Feb 29, 9:12am
Bumped into a friend last night who had sold out in the morning. It was his holiday spending money! I chose some appropriate words that were the opposite of what I was really thinking.

Vanguardfan
Feb 29, 11:28am
I haven’t looked at my accounts. It will be painful, losses could easily represent several years’ spending.

Foxy
Feb 29, 11:32am
Watched ‘Contagion’ last night, great timing!

Jim brown
Feb 29, 12:30pm
I am 100% in equities with 20-years time horizon. I am tech-heavy circa 20% of my portfolio. I have taken a massive beating this week. By Thursday I stopped logging in.

AAJ
Feb 29, 12:33pm
I know it’s bad. But the more the markets fall the happier I am. As long as I can make sure I have a job for the next 12 months, I am trying to get every penny I have into the market.

xxd09
Feb 29, 12:36 pm
So far so good as Wiley Coyote famously said!

ZXSpectrum48k
Feb 29, 1:27pm
Returns in the last year on all assets were just bonkers, so I find it hard to be surprised when a fraction of that disappears. I think it’s good for markets to feel a dose of genuine volatility again. Albeit I’d prefer the driver of that volatility not to be something that can kill my family or I.

BeardyBillionaireBloke
Feb 29, 5:31pm
All a bit awkward with my retirement in 1 month.

Steve
Feb 29, 5:39 pm
I have an authentic Venetian plague doctor mask, which might yet be useful.

Jim McG
Mar 1, 10:20 am
Well, I wish I had some cash lying around to buy in now.

old_eyes
Mar 1, 1:36 pm
So far calm. We will see what happens next. This could be the long-awaited test of my passive credentials.

ZXSpectrum48k
Mar 2, 1:33pm
Bonds doing well again this morning as market prices global coordinated central bank policy easing.

The Investor
Mar 4, 12:25pm
All sorts of friends of mine have contacted me in the past few days saying “what should I do?!” And my answer is stick to your plan… or if you didn’t have a plan then at least realise now you need one!

I’ve traded a lot over the past two weeks, but I’m always trading. I will live or die by that sword.

March 6

Vanguard FTSE All-World: -10.49%
Vanguard FTSE 100: -12.17%
Vanguard UK Gilt: 4.84%
iShares Physical Gold: 1.49%

The uncertainty mounts

The latest estimate from scientists at Imperial College is the virus has a death rate of around 1%. While lower than early estimates, it’s still much worse than normal flu. However it’s far far less deadly than SARS and the other exotic killers.

Know that your portfolio could potentially go down another 10-30% or more. I don’t expect the worst, but it happens often enough and it’s clearly possible given that we’re probably headed for recession.

tom_grlla
Mar 6, 5:24pm
Many thanks for this. It’s all very well knowing all the behavioural psychology, but as the old Mike Tyson quote goes, “Everybody has a plan until they get punched in the mouth.”

Matthew
Mar 6, 5:29pm
I’m hoping the virus won’t mess up my wedding in June so I’m not overly against catching it now, it feels inevitable anyway.

W
Mar 6, 11:13pm
Seeing the numbers increasing daily and how, within a few weeks, people across the globe are now all confronting this virus, I can’t help but think, if only empathy and understanding between people and nations would spread as easily.

Andrew
Mar 7, 8:13am
I am scared. I am 50 and have a lung problem and am on immuno-suppressants for it…

…It is in my nature to plan and I am in the process of writing a ‘What to do in case I die document for my wife’.

AncientI
Mar 7, 11:40am
I see Elon Musk has tweeted that the panic around the coronavirus is dumb, must say I agree.

Vanguardfan
Mar 7, 12:20pm
Panic is never helpful, but informed action could be. Ill-informed complacency is not only unhelpful but could cost lives…

…The real problem to my mind is the US, their current strategy seems to be, don’t test, don’t record, pretend it’s not happening, blame the foreigners, turn away a ship full of people who need care.

Naeclue
Mar 7, 1:43pm
I am far more concerned about vulnerable and/or elderly family and friends than I am about the stock market.

Mathmo
Mar 7, 6:07pm
While the DON’T PANIC message is fine, the fragility of the economy to supply disruption and anxiety is real…

…And I’m so glad I’m on record both trash-talking bonds on these pages some years ago (they can’t go higher!) and also relenting and buying the things anyway. They really can go higher.

The Investor
Mar 7, 6:42pm
I fully expect a big economic hit from coronavirus. It’s coming.

SemiPassive
Mar 7, 8:30pm
I gave it a week of consideration before adjusting my asset allocation on Tuesday from 55% equity to 40%, selling into the early week rally, as I agree this has the potential to drop at least another 10% if not 20-30%.

The Investor
Mar 8, 9:56am
Italy has put 16 million in quarantine, so the country is trying the China lockdown route.

ZXSpectrum48k
Mar 8, 4:58pm
With elderly relatives who are clearly vulnerable to this virus, and also as someone who, in their mid-40s, is both asthmatic and unfit, my focus has shifted very much from wealth to health over the last few weeks. If I’m thinking about finance at all, it’s more about wills, life insurance and how my better half would handle the complexity of the portfolio if I don’t make it.

Edward
Mar 8, 5:16pm
No one really has a clue whether the market will drop 10% or 90%!

The Investor
Mar 9, 8:36am
@all — As I write the UK and German markets are priced by futures to fall 10%, after the oil price slumped 30% on a renewed Saudi-inspired price war. The US is priced to fall another 5% too.

If we open like this, it’s historic Black Monday (1987) type stuff.

We can’t give personal advice, but I’d urge all readers to keep your heads and don’t do anything silly.

Seeking Fire
Mar 9, 10:02am
Firstly hope everyone remains healthy, fingers crossed the eye of the storm passes swiftly. It is not hyperbolic to suggest people should have their affairs in order…

Matthew
Mar 9, 10:04am
Notice how one new crisis makes you forget the last:

Oil price war – forget COVID.
COVID – forget the threat of ‘no deal’.

So if you’re ever depressed about one thing in life, then introduce a new problem to distract yourself.

Edward
Mar 9, 11:42am
Just got off the phone with a friend who is a consultant and her biggest worry is not COVID, but that the NHS will break under the strain.

Neverland
Mar 9, 11:43am
This is what you get your equity risk premium for. It’s not all 20% mad gainz year-in, year-out for doing nothing but holding a tracker fund.

Indecisive
Mar 9, 12:23pm
I’m struggling to hold back from buying, “just in case” the markets don’t drop much further. I missed out in 2018 (slept through it) and 2008 (we’re doomed, they’ll keep dropping forever).

tom_grlla
Mar 9, 12:25pm
A confession – I’ve been ‘thinking’ about the Wisdomtree 3x leveraged index shorts to hedge against things I don’t want to sell.

The Investor
Mar 9, 12:39pm
@tom_grlla — I cannot and will not give individual advice here, so make your own decisions. What I would warn you though is that I think novice/passive/non-trading investors wandering into exotic plays at times of market distress is a recipe for at best gambling and at worst disaster.

tom_grlla
Mar 9, 1:26pm
I can’t promise I won’t dabble with a tiny amount, as it’s the only way to really learn about these things, but I definitely won’t be doing anything serious.

Naeclue
Mar 9, 1:53pm
It would appear that S&P 500 futures trading has been suspended…

…It is at times like this, with heightened emotions, that investors should get out their plan, read it and act rationally instead of emotionally.

ZXSpectrum48k
Mar 9, 2:16pm
This is making Lehman look mild! Oil futures were down 30% at one point today. HY credit is getting destroyed given the impact that will have on shale producers. Yes, COVID-19 is the underlying driver, but no one saw the Saudis and Russians not being able to come to some agreement on oil production. The OPEC+ agreement is in tatters.

…Long-duration govt bonds have been the saviour here for any passive portfolio.

Matthew
Mar 9, 2:39pm
Fun times with this market dip, one of the reasons I invest is for a little excitement…

never give up
Mar 9, 6:31pm
It’s great not to have to confront days like today on my own.

MrOptimistic
Mar 9, 6:37pm
I have been waiting for a bond market correction and higher interest rates with sublime confidence since about 2012. What do I know. Hope I am still around when I am proved right!

tom_grlla
Mar 10, 12:30pm
Got in and out of the Short yesterday. I guess sometimes you have to put your own hand near the flame, even when mother’s told you not to! I don’t think I’ll be doing it again…

TI – I don’t suppose you’ve done a feature on long, out-of-the-money Puts, ho ho?

Sparschwein
Mar 10, 8:57pm
Initially I thought this is overblown, just another flu… I changed my mind.

March 10

Vanguard FTSE All-World: -14.76%
Vanguard FTSE 100: -19%
Vanguard UK Gilt: 6.36%
iShares Physical Gold: -0.48%

Investing in the face of disaster

The virus is already having a real impact all over the world, as millions curtail travel and social interactions, and suffer financial or – worst of all – great personal loss.

Stock markets plummeted again on Monday before rebounding on Tuesday – and of course nobody can know where they will go next. The expected future risk of the markets have spiked recently, too.

AVB
Mar 11, 1:31am
Can’t believe there was no mention of loo rolls as a tradeable asset!

Steveark
Mar 11, 4:34am
4000 deaths is small change as disasters go. Normal flu deaths dwarf that. This might trigger an overdue bear market. But it is hardly a big story.

The Rhino
Mar 11, 11:23am
Positive action could be watching Mad-Max a few times, assuming someone hasn’t looted your TV?

ZXSpectrum48k
Mar 11, 12:17pm
Monetary policy is not built to handle a problem like this. At best, it should be a short-term relief, to create breathing space while other measures are brought in. Unfortunately, governments have been asleep at the wheel for over a decade; no structural change, no fiscal expansion. So we end up with monetary dominance and central banks forced to use all their ammo up with little real impact.

What the markets need here is governments to act decisively. Most especially the US whose reaction thus far has been pathetic. That means fiscal expansion on a major scale. Targeted support to supply chains. Actual government intervention. Governments acting like a genuine back stop for the private sector. Not just fiddling while Rome burns, doing a few billion here or there, like normal.

Government bonds are giving a huge signal with negative real rates out to 50 years. The market is crying out for more public debt, more duration. Governments seem unable to get the joke since they are full of old people, with old dogmas. Fighting a long dead war from the 1970s against inflation. Against big government. Against state intervention. Just the wrong people, wrong time, wrong place.

Dawn
Mar 11, 2:53pm
Feel like jumping off a cliff.

ZXSpectrum48k
Mar 11, 4:48pm
Rishi brought a handgun to the party when he needed a bazooka. To give him credit at least he brought something. Merkel and Trump can’t even find a pea shooter.

ZXSpectrum48k
Mar 11, 7:42pm
If we go into a recession then the typical post-war correction is of the order of 25-30%. So at 30% correction, that would [be] SPXT (S&P total return index) at around 4800. Or about where it was at the bottom of the correction in Dec-18! That really shows how much we rallied in 2019. If that happened instantly, that would reduce the total return since 2009 to, a still very good, 13.5%/annum. Even at a 50% drop, the return since 2009 would still be above 10%/annum.

Those who have a well-diversified portfolio should be finding that that their bonds are seriously offsetting the damage they are taking on risky assets like equities. If you were sensible enough to own long-duration bonds, you might be still up on the year.

Pinkney
Mar 11, 8:45pm
I made my own calculation based on doubling every 3 days and for Italy this would mean 10 million this time next month. The power of compounding is a wonderful thing sometimes, but in this case it’s not quite so positive.

The Investor
Mar 12, 9:20am
Market crashing again today, so perhaps some may be growing less sanguine. My view is this is a decent-sized crash but we’ve been here before.

Neverland
Mar 12, 11:32am
Look on the bright side, you can’t have an old fashioned bank run a la Northern Rock if the banks are all closed and you are banned from gathering in a queue because of the virus.

MrOptimistic
Mar 12, 12:04pm
If the US is forced into nationwide emergency measures, petrol might be thrown on the fire. It shows no great insight on my part, but seems clear we are only in the early stages, and it may indeed be an ‘opportunity’ but in the falling knife sense.

Vanguardfan
Mar 12, 12:13pm
I’ve just stopped looking at my portfolio, fingers crossed I got the asset allocation right…

SemiPassive
Mar 12, 2:29pm
On COVID-19 that article The Investor just posted is superb if scary. If you look at who the NHS is actually testing, it’s clear the real numbers of infected in the UK are likely to be in the thousands, possibly tens of thousands by now. Certainly they will be within a week.

Simon T
Mar 12, 3:00pm
I am sat at home in self-imposed isolation working, with a heavy chest, and feeling like death warmed up.

Nick
Mar 12, 3:12pm
I simply won’t want to invest by the time we’re close to the bottom because I’ll feel like I’ve been punched in the gut.

The Investor
Mar 12, 2020, 4:02pm
…commenting on a phone without glasses, while fighting for toilet roll in Tesco, haha!

The Rhino
Mar 12, 5:50pm
Not just Italian, but local medic chatter is pretty horrifying as well, some brutal age-based triaging already occurring in my nearest hospital.

David
Mar 12, 8:40pm
While partially out, things began to move in the wrong direction. I know I need to get back in but when?

Whettam
Mar 13, 12:17am
I preferred it when we argued about passive vs. active, SWRs and asset allocations.

MrOptimistic
Mar 13, 8:28am
I don’t think there is any wisdom in trying to catch the bottom of this, it could last a couple of years.

An Admirer
Mar 13, 11:27am
Best buying opportunity for a generation over the rest of this year, and especially the next few months. Bear ahead. Fill your pockets.

Simon
Mar 13, 12:19pm
One of my clients, a luxury brand, is going into internal meeting meltdown at the moment (check out some of the luxury goods manufacturers – some have 40% wiped off market capitalisation).

Don
Mar 13, 2:41pm
But I mean, seriously, how bad can it get? I can’t see the market going down as far as 08/09…

March 13

Vanguard FTSE All-World: -18.22%
Vanguard FTSE 100: -27.03%
Vanguard UK Gilt: 1.88%
iShares Physical Gold: -4.47%

Do not sell

Do not sell.
DO NOT SELL.
DO NOT FUCKING SELL.

MrOptimistic
Mar 13, 7:28pm
If TA’s trying to make a point I wish he would be clearer…

Ali
Mar 13, 7:59pm
Too late…

ZXSpectrum48k
Mar 13, 8:05pm
This week we’ve moved into crisis mode. In that environment one rule pretty much always holds: US Dollar cash is king.

…When people worry about the financial sector, the currency which has the most exposure to the financial sector, Sterling, does tend to get sold.

W
Mar 13, 8:24pm
I had 20% in cash. The plan now being to buy equities at each 5% drop from 20% through 50%…

…I can’t say if it’s a good plan. But at least it is a plan.

Balanced View
Mar 13, 11:08pm
I sold two weeks ago, and even now I think the advice above is terrible. Equities remain above long term average valuation (despite falling 30%) – the virus is still expanding at an exponential rate and hasn’t hit the US with inevitable shutdowns yet. This is definitely going to get worse before it gets better. My pension is loaded with government bonds, my portfolio has bear ETFs. This is going to be really bad.

Naeclue
Mar 14, 12:59am
I will leave others to their impending doom or wonderful buying opportunities. Heard it all before. No one has a clue where market prices are going, but one of those opinions will be right by pure luck.

Hospitaller
Mar 14, 9:04am
As the minister said, who was sowing mailbags in prison for misappropriation of public money but refusing to say where he was keeping it, “I am not sowing, I am reaping.”

Clueless
Mar 14, 9:29am
I’ve just sold some bonds but do I buy equities now or wait in the hope that they will go lower? I’m thinking once the virus takes a grip of the US, the markets will fall further, but maybe this expectation has already been priced in.

PC
Mar 14, 10:49am
I can relax about my SIPP hitting the Lifetime Allowance for a while.

ZXSpectrum48k
Mar 14, 5:08pm
Other factors why govts bonds performed poorly this week…

…Macro hedges are coming off as underlying risky assets are being sold. In the initial move, rather than sell risky assets like equities, people macro hedge by buying govt bonds, buying gold, selling USD/JPY. At some point, the underlying asset has to be sold, so the hedge comes off. So this week we see govt bond yields higher, gold lower, USD/JPY higher. This is a positive sign since the market can’t find a clearing level until the underlying risk is sold out.

Snowman
Mar 14, 6:00pm
Can’t help but start to feel a bit uneasy about this.

Not the fall in the value of my investments, which is within my risk capacity and tolerance (albeit with hindsight my 80% equity allocation was too high). But I’m very uncomfortable with the lack of comprehensive action by the UK Government.

beeka
Mar 14, 6:51pm
The 25% drop in the paper value of my equities is certainly testing my commitment to the cause… particularly the speed of the drop.

Neverland
Mar 14, 8:42pm
Boris Johnson’s Government reckless and going off in a completely different direction from the rest of Europe, whatever next?

Jon
Mar 14, 9:18pm
I am undecided whether to sell.

Therefore I may sell half my equities, guaranteeing that I’ll be half right and half wrong. I think I can live with that quite easily.

Marco
Mar 14, 9:56pm
As a guess, I think in 10 years time, now will be seen as an excellent time to buy equities.

Nicholas Stone
March 15, 4:25am
My bonds are close to hitting 20% out of kilter with my equities. So if/when they do, I’m planning to sell them in order to rebalance somewhat.

britinkiwi
Mar 15, 6:03am
Beer festival yesterday noticeably quieter, despite the sunny weather.

@TI – I’ve played Pandemic – good co-op game! Local store had Pandemic at 25% off last week – so had to buy it.

Richard
Mar 15, 9:15am
I have some dry powder I could invest, but I am increasingly concerned about the employment situation. This will feed through for some time after the emergency is over. Could be out of work for a year or more, esp if companies lay off lots of employees and saturate the job market.

MrOptimistic
Mar 15, 9:48am
At the moment I wonder if TA’s message should start by saying DONT BUY!

I have read a lot of braggadocio from keyboard warriors on other forums thinking they can see through this. Nothing wrong with cash just at the moment in my view.

The Investor
Mar 15, 10:04am
The idea that a passive investor in the middle of a crash will discover themselves to be [a] legendarily excellent market timer is fantasy. Of course many who try will get it right through luck. But most will fail, and keep quiet about it…

The Weasel
Mar 15, 10:04am
Can’t help but think now that this whole thing is a massive, massive overreaction stoked by the media. The UK is taking the right approach in no closing school, events etc.

The Investor
Mar 15, 10:20am
Italy has shown us the danger, horribly. Remember when China building those speedy hospitals seemed amusing sci-fi stuff? The crazy top-down driven Chinese! Doesn’t seem so crazy anymore…

…My GP surgery send a text on Friday saying it doesn’t want people coming in. I presume all the others are doing the same. How many funny lumps will be missed because of this? How many would-be suicidal people won’t reached?

…Does anyone really think we can keep this thing out now? How? Clearly all nations are groping in the dark, seemingly with various levels of competence, but I don’t think there are any even half-easy answers to be honest.

Vanguardfan
Mar 15, 11:10am
Practical actions. If your organisation hasn’t yet limited face to face contacts, lobby the management to do so. If you are the management, limit all but essential face to face contacts. Make sure that everyone is clear that they should not come to work from the moment they experience symptoms.

The Investor
Mar 15, 2:13pm
I got my vulnerable mother into isolation mode on Thursday.

Jura
Mar 16, 8:45am
I am not an epidemiologist or infectious diseases expert and I’ve certainly no financial expertise, but I am an intensive care specialist. This is not the flu. This is going to be very bad. The sub 1% mortality as seen in South Korea only holds true until you run out of ICU beds. The UK does not [have] nearly enough beds to cope with the peak that is being predicted…

…At 1% mortality (and it will go higher when we run out of beds) we are talking 400,000 over maybe 6 months. UK deaths in WW2 were 450,000 (Wikipedia) occurring over 6 years. On that occasion we mobilised the country and took on vast amounts of debt to rise to the challenge. This is the kind of response that’s needed. Yes, there is going to be the mother of all recessions. What price life?

Jonny
Mar 16, 1:35pm
I was about to pull the trigger, and noticed the markets were falling, and decided to take the weekend to think about it. Then last Monday happened! I felt very clever, and felt cleverer and cleverer still as the markets fell throughout the week. Then they started to rise again on Friday. Had I missed my chance? Was it going to get worse? I realised that I of all people am unlikely to be able to time the bottom of this!

I realise I’m back in the market timing territory – but it turns out despite knowing better – in the thick of it I’m only human.

March 16

Vanguard FTSE All-World: -24.42%
Vanguard FTSE 100: -29.94%
Vanguard UK Gilt: 0.65%
iShares Physical Gold: -4.35%

How to prepare for a recession

“The coronavirus is upon the West. Stock markets are in free-fall.
Almost all measures that can slow the virus down and save lives will hit economic activity.”

The Investor
Mar 16, 12:06pm
I’ve re-published our ‘Prepare for a Recession’ article in light of the COVID-19 pandemic.

If you think this is a contrary indicator and the bottom may be in market-wise, I wouldn’t blame you!

DaveTheHedgehog
Mar 16, 1:24pm
Stay safe everyone. I’m just forgetting about money at the moment and bunkering down till we get through to the other side and pick up the pieces.

xxd09
Mar 16, 1:44pm
How long does anyone think that these closed down nation states/economies can last economically? When will they have to open up economic activity again regardless of coronavirus just to survive?

Could be a 10-year recession in worst-case scenario with all the damage being done to businesses. Buying on the dip seems rather irrelevant.

Is your fridge full?

MrOptimistic
Mar 16, 2:17pm
Wow, gold 6% down. Someone really does need cash! If I was tempted to buy anything, this might be it.

Jones
March 17, 8:18am
I am switching out of bonds into equities which are now a screaming ‘Buy’ at these prices.

Boltt
Mar 17, 9:45am
Just tended to my wounds.

ermine
Mar 17, 10:00am
And I have spread some savings into three different institutions so if one bank seizes up I have diversity.

MrOptimistic
Mar 17, 10:04am
Without a crystal ball any decisions I make at the moment are in fact guesses. Red numbers or black as the wheel spins. Not to be confused with strategy!

The Rhino
Mar 17, 11:04am
This has to be the ultimate poster-boy for the emergency-fund, and an emergency-fund is not the same as a dry-powder fund. Rebalancing and normal monthly investments are probably the way forward, much as I wish I had a massive dry-powder fund due to some sort of unique prescience on my part.

Richard
Mar 17, 2:49pm
Personally I would hold at least a year’s expenses in cash, maybe two. Perhaps this is extreme but I don’t like where we are heading.

March 17

Vanguard FTSE All-World: -20.68%
Vanguard FTSE 100: -27.98%
Vanguard UK Gilt: -0.25%
iShares Physical Gold: -1.73%

This is an investment site

“This is a testing time for everyone. As we begin to isolate ourselves and the economy is put into a coma to try to save the patient, it may seem like an existential threat.”

DevonshireDozer
Mar 17, 11:17am
As my late Dad once said; “Never argue with an idiot, because people watching soon lose track of which is which.”

marked
Mar 17, 11:43am
I am angry that we didn’t use the month that China bought us more effectively. I see the PM as a gambler, and his health minister as a ‘Yes’ man.

Penelope
Mar 17, 12:47pm
I for one would like to know why Mr Boris Johnson and his useless cabinet haven’t been personally hand-building ventilators for at least the last 6 months.

weenie
Mar 17, 12:58pm
Two weeks of self-isolation for me now as member of my family has a temperature/fever. Could be a bad cold, could be more.

Investments-wise, I’m holding and buying when I get the cash.

Tony
Mar 17, 1:05pm
It’s self-evident this is both a health and economic crisis, and an utterly significant and serious one. People have died and people will lose their jobs. Companies will fail.

I used to gamble on shares. Got lucky until more often I got unlucky, including this time around. I didn’t realise I was gambling. Made every mistake in the book.

Jen
Mar 17, 2:56pm
I personally knew someone who made the wrong, panic-based, financial decisions during 2008/09 and wound up committing suicide because couldn’t provide for his family. His kids were 6 and 9 years old at the time. With the prospect of job losses and another uncertain financial period on the horizon I would think that Monevator is more important then ever to help people avoid more situations like that.

madflier
Mar 17, 3:47pm
As one of the many medical staff going to work today to deal with the rising panic and chaos that is being generated, I couldn’t agree more.

The Borderer
Mar 17, 7:38pm
Don’t you dare lose heart because of some muppet comments.

Vanguardfan
Mar 18, 8:35am
People are obviously going to feel distressed at this time, and this will come out in all sorts of stress reactions. We need to cut each other some slack, all of us.

mjcross
Mar 18, 6:29pm
We read you. We need you. Keep going… please

March 18

Vanguard FTSE All-World: -23.67%
Vanguard FTSE 100: -30.95%
Vanguard UK Gilt: -3.94%
iShares Physical Gold: -3.1%

Stick to the plan

“You may not be feeling like much of a hero right now. The stock market has been smashed, and the global pandemic is unfolding like the first act of a horror movie.”

Edward
Mar 18, 6:53pm
Goldman yesterday published a paper saying, “Our global GDP growth forecast for 2020 has fallen to just 1¼%. This would be less bad than the deep recessions of 1981-82 and 2008-09 but worse than the mild recessions of 1991 and 2001.”

What utter rot. There will be millions of job losses and thousands of companies going to the wall. The recession will be long and deep. They are just trying to get mugginses like me to invest back in the market knowing full well the bottom is a long, long way off.

Grislybear
Mar 18, 7:24 pm
Any plungers out there? Anyone maxing out credit cards etc to buy equities on the cheap?

Sparschwein
Mar 18, 9:05pm
We may be headed for a rapid recovery or the world may turn “Japanese” and stocks won’t reach their old heights for the next 40 years. No one knows.

Buying stocks on credit is a recipe for disaster, and on credit card at 20+% interest, really?

W
Mar 18, 9:13pm
Deploying that cash that was ready for such an equities rout requires some nerve when all the signs suggest things could get much worse.

But all bad bear markets feel like the end of times, yet morph into an obvious buying opportunity once they’re in the rear view mirror.

Fatbritabroad
Mar 18, 9:39pm
I’m 100% equities and not worried at all about my actual investments despite being about 30% down.

Berkshire Pat
Mar 18, 11:08pm
I started buying cautiously today – which is probably a sign we’re a long way off the bottom, based on my normal luck! Probably drip drip drip every month or two, depends on how things develop.

The Borderer
Mar 19, 12:33am
Don’t sell, but don’t buy either. Keep your powder dry.

Jonny
Mar 19, 12:41am
Hopefully I won’t procrastinate too long and miss out on all the upside!

Seeking Fire
Mar 19, 12:17pm
Some people think things are going south, others north, just remember though many people in Asia are a little more optimistic than they were a month ago – a friend in Hong Kong yesterday commented to me, “Ah, I see the UK are in panic stations mode – i.e. where we were a couple of months ago.”

The Investor
Mar 19, 1:17pm
“Any plungers out there? Anyone maxing out credit cards etc to buy equities on the cheap?” I just saw this comment. This is an extraordinarily bad idea.

I’d strongly suggest not chasing the market down on leverage. Many people who do this will bail if the bear market continues.

Passive investors should stick to the plan, good times and bad, x100.

hyperhypo
Mar 19, 1:26pm
If I’m honest, my inaction (no selling or buying lately) is through paralysis rather than strategic.

never give up
Mar 19, 3:15pm
I was scarred by 2008 and put off investing for a while. I was up for redundancy twice but kept my job. I was determined, when the next recession came, I would be ready and the sick-to-the-pit-of-my-stomach feeling would be minimised. I therefore have no debt and two years worth of lean expenses in cash.

Beyond that I will pound-cost average for as long as I stay employed. I wasn’t able to market time on the way up and I certainly won’t be able to on the way down either. I may only get what the market gives me but that is enough.

David
Mar 19, 5:28pm
Must remind myself. LONG TERM plan.

March 20

Vanguard FTSE All-World: -20.31%
Vanguard FTSE 100: -29.21%
Vanguard UK Gilt: 1.77%
iShares Physical Gold: 1.97%

Lockdown

“Deliberately freezing our economy by ordering workers to down tools and companies not to charge for their services is an extreme move that will cause a recession.”

Hospitaller
Mar 21, 12:49pm
I have to talk to myself a lot to remind myself to do what I always said I would do when the crash happened. I had created a redeployable pot and a spreadsheet saying how much has to go into equities at -20% -25% -30% -35% -40% -45% drops. I have stuck to that religiously. I do believe that markets will recover one day.

Politically, I am furious with the government for leaving the NHS so badly equipped. Someone has to take responsibility for not having even vaguely the same number of ventilators as our European peers. That someone will be B. Johnson at the next election. I would like someone administratively competent and someone whose response to the situation is not like a C-list actor in a wartime movie.

Socially, I am okay for now. I cannot see my lovely granddaughter in person but she waves at me through a screen.

ZXSpectrum48k
Mar 21, 1:43pm
…Unlike 2008 this isn’t a financial crisis caused by shadow banks; nonetheless shadow banks are suffering here from liquidity issues and credit risk, and GBP gets hit on that risk given its exposure to financial services. More important is that the UK has a current account deficit, and relies heavily on portfolio inflows and FDI. Those have just come to a standstill. Furthermore, the UK has somewhat EM-like economic features and all EM currencies are getting splattered right now.

For me this underlines two facts I always have to bear in mind. One, I must carry decent foreign currency exposure. Yes, GBP is massively undervalued on long-term metrics and one day will mean revert but right now it’s going to struggle. Second, I look at my net wealth and returns in USD dollar terms, not just GBP terms. If I just look at GBP returns, I understate the damage I’m taking right now (and for the past decade+). I’d just be lying to myself.

RIT
Mar 21, 1:52 pm
On the investment side of things down 18% in GBP and have just hit a re-balancing band which will require selling gold and buying equities…

…Let’s see what the future holds but so far my FIRE strategy seems to be holding up albeit with some good learning on what’s important along the way.

IanT
Mar 21, 4:25pm
Having spent the last few years diligently reading the wise words of Monevator and positioning myself, in terms or risk, in what I thought was a comfortable position should there be a dramatic drop in values, I find that I’ve completely misjudged how I’d react to such a fall.

I really am surprised at my reaction.

I wasn’t taking ENOUGH risk!

Neverland
Mar 21, 5:07 pm
“No one knows anything… Every time out it’s a guess, and if you’re lucky, an educated one.” William Goldman’s famous quote about Hollywood is just as apt when applied to infectious disease predictions.

tom_grlla
Mar 21, 5:19pm
How’s everybody feeling? I think that even if you’ve resisted doing anything and stuck to your plan, it must be incredibly stressful (only a robot wouldn’t be wondering if they were doing the right thing).

Mathmo
Mar 21, 7:33pm
I’m poorer but sanguine. If you can keep your head while all about are losing theirs…

Now it’s about hunkering down, working, and doing DIY in the sunlight and trying to read or complete Netflix when it’s dark. Never seen so many people walking in the local woods.

Learner
Mar 21, 10:36pm
I have 12 months [bare bones] expenses in cash, plus another 4 years worth intended for a mortgage downpayment, and little else. Mentally prepared to spend half of that keeping a roof over my head if laid off in the near future.

FI Warrior
Mar 22, 9:35am
I also feel the economy is a lot more fragile than people think and there is more to drop, the fundamentals are still so imbalanced and not under state control. When faceless hedge funds, random global investors and other states own so much of your critical infrastructure because decades of governments have stealthily sold off most of the national assets, you’ve put yourselves at their mercy when their purpose is to chase the slightest profit. It’s the difference between pawning your valuables in hard times vs taking a loan from the local loanshark Jimmy-the-legbreaker.

Penelope
Mar 22, 9:46am
Our thanks go to FI Warrior for illustrating the benefits of not panicking.

The Investor
Mar 22, 2:37pm
I am personally much more optimistic than 5-6 weeks ago, when I was writing/talking about coronavirus to general disinterest and governments seemed oblivious.

Now the response is beyond what might have reasonably been expected even two weeks ago. Rishi Sunak (future prime minister?) really seems to get it. Yes, the economic hit is going to be absolutely massive, but these countermeasures are not in the history books.

We also know what has to be done and can be done to curb the virus. It’s worked (in a more extreme version) in China. Worst-case scenario (ex-mutation) we have been too slow and thousands die unnecessarily but it should not be hundreds of thousands and it shouldn’t mean a six-month delay to getting past it.

I feel there is going to be loads of adaption. Lots of restaurant lays offs, say, but lots of delivery van hiring. Over time (hopefully) a steadily growing immune population is going to build up, which will help…

…Of course all companies face the issue of getting to the other side of the crisis without blowing up. Debt is a worry. It looks like governments realise the best way to keep everything intact is to try to standstill it with massive cash infusions, before we pick up where we left off. This is the best-case scenario, leaving an uncertain future bill. (One inference might be even more temptation to inflate away debt in years to come. Beware sitting in cash/bonds forever).

Finally, equity markets have already been smashed for six. Even the US markets are down c.30%. The UK markets are down even more.

The falls are rational, to some unknown extent. A year of earnings wiped out? Definitely. 5% of market cap goes bankrupt? Possibly. But a 40% permanent destruction of earnings capacity? I don’t think so…

…This is bad. It’s worse than 2008 for sure. But it’s not a time for panic or despair. That’s not the magnitude of what we face here.

The Investor
Mar 22, 3:55pm
@all — I won’t be able to respond to individual comments, super-busy prepping the bunker for my girlfriend to come and lockdown with me!

TO BE CONTINUED…

ETF market data courtesy of JustETF. February 22nd baseline. Dividends included.

Comments edited for length.

Comments do not constitute advice. They do constitute the impression that nobody has a Scooby what will happen next. Except maybe @ZXSpectrum48k. Though his memory isn’t great.

Take it steady,

The Accumulator (and friends)

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