It took after the second week of the initial sell off to realize this isn't a technical pullback. I held back from any opportunity and some are suggesting a current bear rally. I subscribe to this view and even though markets front run crisis worse case, I don't see how the economy can just take off from where it hibernated.
Smart cookies in the hedge funds world are all developing forecasting models to find the flatt line point in the furure but then what? I have been think deeply and came to the conclusion of the flase positives:
testing is based on symptoms, we don't know asymptomatic population numbers
infection numbers are therefore inaccurate as those unwittingly infecting will show infection rates in 14 days time hence expo infection growth
Lockndown works to stop the spread but eliminate because China, SK, Singapore are showing signs of reinfection and in some cases zero immunity for recovered patients.
The current state of policy decision is based on data driven unfolding events, not the authorities fault because we are dealing with the unknown. It is fair to say that for each week of lock down, the recovery in the economy will go backwards in an expo destructive rate. The moral dilemma is to let the weak die out as to not destroy the economy as a very shot term solution or mitigate the infection rate until a cure/vaccine is found. As usual hindsight will measure the course of action they take now.
Some are suggesting a view that it is the end of financial markets blah blah. Possible. I take the view that cash is king because it allows options to stay sidelined or slowly get in. Quality companies will recover first and the less debt encumbered the less value destruction from massive capital raising. As usual us small time holders gets screwed by dilution while the funds take the discounted raising with glee. Look at COH and Veritas fund!
Banking is currently secure from a Bank run compared to GFC. As I refereed to never bet against the Feds, money printing, primary dealer status and now buying HY junk debt to control the value destruction will provide some stability. If these props don't work then they can follow Japan comics and buy indirectly stocks! Deutche will not be allowed to fail which is different from zombie status.
Just starting imo, months to play out if I refer GFC. If a V shape then I have just missed the generational buy the dip opportunity!
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