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The coronavirus crash: as told by the Monevator community

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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{ 91 comments… add one }
  • 1 Mousecatcher007 March 23, 2020, 11:19 am

    If my figures are correct the FTSE 100 2009 bottom would be 4,741 in today’s money. The FTSE is at 4,970 as I type.

  • 2 Al Cam March 23, 2020, 11:32 am

    And guess what, ………. I was wrong, very, very wrong !!

  • 3 Rob March 23, 2020, 12:17 pm

    Ha! That was meant to be a tongue in cheek reference to the famous shoe-shine boy stock market indicator.

  • 4 Neverland March 23, 2020, 12:18 pm

    We live right beside a very big park in London and I must say I was quite surprised by quite how many people were in said park at the weekend all things considered

    I guess we will find out how wise that was of them in about two weeks time at about 6pm when the latest virus statistics come out

    #fingers_crossed

  • 5 The Accumulator March 23, 2020, 12:41 pm

    @ Rob – yes, it did make me laugh. Great timing and you weren’t wrong. Hope you acted on your insider information 😉

  • 6 Can't see the wood for the trees March 23, 2020, 1:11 pm

    Has this outbreak changed the views of any readers about investing for the longer term?

    It’s made me rethink my focus, to prioritise living in the now more. Doesn’t mean I’m going to take my eye off the longer term but I’m definitely going to dial it down somewhat and live more for the moment.

  • 7 Rob March 23, 2020, 1:28 pm

    @TA – I don’t think Ray Dalio will be asking for advice, nor will Victoria Coren Mitchell be pleased with my English skills.

    Being serious, I do hope that young man hasn’t blown himself up with excessive leverage, this experience will scar him for life.

  • 8 FI Warrior March 23, 2020, 2:04 pm

    So, it looks like the Fed have just bailed out anyone who got too-big-to-fail knowing it helps get free money. Some very risky assets included this time, not just the banks, looks like the concept of moral hazard is passe. This has to devalue confidence in fiat currencies as well as the bonds of govts with their money printers on auto settings at the maximum.

    Oh well, should be good for a dead cat bounce at least, depending what you wish for. Panic or textbook, smart disaster capitalism? Time will tell.

  • 9 Factor March 23, 2020, 3:08 pm
  • 10 madflier March 23, 2020, 3:09 pm

    I’d hang on for two weeks, personally. This hasn’t even started yet.

  • 11 Gentlemans Family Finances March 23, 2020, 3:19 pm

    Funnily enough – I had a plan to retire early later this year.
    I was due to finish up a 6m contract in April and spend more time with the Lady and kids.
    Fire budget was based on less travel, less commute and less eating out / easy spending.

    Looks like I got what I wanted since I’m working from home (new 3m contract but in the oil business and that’s fooked right now).

    Savings rate looking good. We have emergency cash but nasty paper losses.

    Have I looked at my accounts since the end of Feb? Not a chance – I will.avert my eyes and top up some accounts as the tax year ends / begins.

    This is not lean FI but rather Self-Isolation FI – great practice for the real thing.

  • 12 Gentlemans Family Finances March 23, 2020, 3:20 pm

    SI-FI would be the better way to describe this situation.

  • 13 The Accumulator March 23, 2020, 3:42 pm

    @ Factor – thank you. That brings it home.

  • 14 The Accumulator March 23, 2020, 4:03 pm

    @ Can’t see the wood – that’s exactly what I’m thinking about. How can I make this work but not based on previous assumptions? There’s a lot going out the window right now

  • 15 The Investor March 23, 2020, 4:08 pm

    I am seeing ‘experts’ on TV literally asking if the airlines will be viable in the future because apparently “Will people still want to travel in the future?” is a serious question.

    Meanwhile China is back to traffic jams.

    As I keep saying — it’s bad but it’s not the end of the world.

  • 16 The Investor March 23, 2020, 4:54 pm

    Meanwhile China is back to traffic jams.

    Although, to “actually” myself, I see that Hong Kong has seen the infection rate pick-up again. 🙁

    Look, it’s all uncharted. But people *are* going to fly again. Admittedly maybe not on the same airlines owned by the same shareholders…

    It’s fine to be bearish but realize prices include the views of at least some prominent people who think that when the virus is gone one way or another in 18 months, people aren’t going to fly or go on holiday.

    That seems really panicky and short-termist to me.

  • 17 Marco March 23, 2020, 5:31 pm

    Don’t forget 10 years of dividends paid (and hopefully reinvested in VWRL)

  • 18 tom_grlla March 23, 2020, 5:47 pm

    Yes, it does feel like a lot should be baked into prices now.

    However:
    a) it’s impossible to know what the timescale for life going back to ‘normal’ is.
    b) it’s impossible to know what will be disrupted (e.g. will there be less business travel, more zoom conferences?).
    c) the US still feels like it’s complacent in a number of places. Combined with who knows how much effect the stimulus packages will have?
    d) if we are firmly into ‘money-printing forever’ territory, inflation expectations will be rising, which makes future cash-flow complications more fiddly.

    Director buying has been encouraging, but still feels it’s a bit half-hearted in the amounts so far.

    Today, it doesn’t feel Simple OR Easy!

  • 19 Seeking Fire March 23, 2020, 6:19 pm

    tom_grlla. In answer your questions, I’ll have a guess:

    (a) – 18m – 2.5 years based on the imperial college analysis and expectation that once quarantine measures are lifted infection rates rise. Summer / Winter issues. From an investment perspective thats a dot on the horizon but psychologically I think it’s going to be real challenge for the population. Particularly winter Q4 20/Q1 21:

    (b) I’m guessing it will be a slow / cautious recovery from a business capex perspective interspersed by a relief for consumers who want to have some fun, travel etc. Assuming they’ve got any spending money to do so. There will be a concern for a few years that it may come back with each winter the concern getting less over time – if no vaccine is found.

    (c) Yup, agreed, they’ll get their act together though my betting is ultimately I’m not that convinced beyond saving lives (obviously critical) that in terms of investing it makes much difference. either we get the virus (another of my clients got it over the weekend and is already much better) or we get a vaccine to sort this out

    (d) I think deflation is the real problem here due to collapse in demand that will be offset by money printing. Yields continue to fall. So inflation is there in asset prices but not in the shops. You already see this in annuity rates. It feels a bit like the value of money continues to decrease in terms of the risk free assets that can be purchased.

    All bets off if (i) mutation (ii) geo-political major fall out. Also more economically positive if (i) vaccine quicker (ii) many more people get the virus and don’t fall majorly ill (iii) governments decide the economic fall-out is too large and order populations back to work and seek to manage the vulnerable population as best as possible – my betting is the working population might increasingly be keen on this. Please note on (iii) I am referring solely to economics /markets not the impact on humanity.

    So q is it a v, L or tick shape recovery – I’m in the tick shape for now, having been v shape previously. I don’t think I can get to L shaped but not impossible.

  • 20 ZXSpectrum48k March 23, 2020, 6:39 pm

    The Fed definately went all in today. QE infinity has arrived with unlimited buying of govt and agency bonds. Primary market and secondary market corporate lending facilities (PMCCF and SMCFF) to provide liquidity to the corp bond market. Term Asset Backed Lending Facility (TALF) to provide liquidity in the ABS market. Expanded Money Market Mutual Fund Liquidity Facility (MMFLF) and Commercial Paper Funding Facility (CPFF), with reduced funding cost and wider eligiblility for debt.

    I knew they could print money but I never expected them to print that many acronyms. Also soon to launch a Main Street Business Lending Program (I assume MSBLP?) to support SMEs.

    Equally important it seems German politicians are finally getting the joke. The bazooka finally brought to bear where previously there was only a pea-shooter. Proper fiscal stimulus. Even an ESM credit line to Italy without punitive conditions. I never thought I see the day. Perhaps the’ve finally worked out that being paid 0.05%/annum for issuing 30-year debt actually isn’t bad value!

  • 21 Brod March 23, 2020, 7:19 pm

    Well, whatever this US stimulus/QE programme is, doesn’t seem to be having much effect as SP500 down another 3% as I type..

    Ho-hum.

  • 22 Vanguardfan March 23, 2020, 8:42 pm

    TA I loved that summary!

    And @factor – that clip was circulated via a medic year group I’m part of. It made me cry.
    I can’t imagine how the frontline medics are feeling now. Well, most of them are too busy to do anything but get through what is in front of them.

    I’m now at home with two kids who have gone from gearing up for GCSE and A levels to suddenly….what? I’m wondering if school/uni will be able to start in September even.

    As for end games, there are only three (well probably only two). The epidemic burns itself out (the much maligned ‘herd immunity’ – not a great strategy, but just a description of the natural history of an epidemic; we extinguish it by proper public health action testing, quarantining and snuffing our individual chains of infection (this is what China did, but we still don’t know if it can work long term, and we basically gave up on this); or we find an effective vaccine. That’s it.

    Economy wise, I think there will be long term effects. Especially in the balance of power between China/SE Asia and Europe and the US. On the micro level, it will change us, too soon to tell how, but I wouldn’t be surprised if we find the limits of remote working and connections, and the new luxury/status symbol will be the ability to spend lots of time interacting in person.

  • 23 W March 23, 2020, 10:25 pm

    My guess is a vaccine will be available sooner than anticipated. Russia for one is working on it and they don’t tend to mess around, they’re building new hospitals to increase capacity now. Boris promised us 40 new hospitals by 2030. Different way of doing things I guess.

  • 24 MJCROSS March 23, 2020, 10:25 pm

    My P45 arrived in the email today… as planned, having six months ago given formal notice to FIRE at the end of the FY.
    Scared? You bet. Still the right thing to do? You bet. Time, especially time in good health while relatively young, beats money hands down – so long as your survival needs are covered.
    It strikes me that in very many ways money is just a proxy for time; and it is in fact *time* that is in fact our most (but not only) valuable commodity. Does money of itself have much intrinsic value?

  • 25 Factor March 23, 2020, 11:35 pm

    @Vanguardfan

    Made me cry too; superheroes the medics.

    I have “skin in the game” – my son-in-law is a GP, and I too have a year 11 GCSE student.

  • 26 Sparschwein March 24, 2020, 12:00 am

    Interesting discussion again.
    Adding to @tom’s list:
    e) investors (re-)discovering how fat those tails really are, adjusting the risk premium

    I think the key question is (d) – what are the knock-on effects from central banks’ & fiscal actions. The Fed’s ginormous QE (125 bn of debt *per day*) is official, and there’s draft legislation for two trillion in helicopter money.

    Is it just me who thinks that USD, GBP, EUR… all look increasingly iffy?

  • 27 AVB March 24, 2020, 8:41 am

    I might look into taking out a variable rate mortgage, and using it to overpay my fixed (for another 4 years) rate mortgage. As I can only overpay 10% p.a. I could put the future overpayments in various short-term time deposits, assuming I can find some that are equal or greater than the variable mortgage rate (I am also assuming the variable mortgage rate will stay depressed for a while). This will also give me an option of shifting the money held on deposit into the market instead should things start looking up in the future. Just an idea, not sure if i’ll actually do it or whether it’s actually viable.

  • 28 BBlimp March 24, 2020, 9:03 am

    @cantseewood – this is why I thought that article about putting own home on interest only was foolish for all but the absolute hardest core… it assumes you’ll keep paying your mortgage payments into the market now and catch the recovery… when the textbook meets real life who wins ?

    I’ve come up with a little list of priorities for the present & future… same kind of thing you do when a friend passes… have to try and stick to it this time 😉

  • 29 The Accumulator March 24, 2020, 9:22 am

    @ MJCross – good luck! I’m thinking along similar lines. I haven’t got time to waste. The financial impact is significant, and who knows where that ends, but can I scale back to cope with that and refocus on what really matters?

    @ Bblimp +1 on priorities

  • 30 xxd09 March 24, 2020, 11:36 am

    Caught my wife going online for a champagne purchase
    We are not spending “any “ money-no holidays etc-self isolating therefore……
    Deserve a bottle of champagne every week on Sunday as compensation!
    Hard to argue -don’t want to argue-12 weeks to go
    Better than my scratch marks on the wall marking off the days
    Just count the bottles!
    Aged 73-17 years retd
    30/65/5 -equities/bonds/cash
    2 years living expenses in cash
    Global Equity Index Tracker Fund and Global Bond Index Tracker Fund hedged to the Pound -2 Funds only
    Portfolio down 8%
    Sitting tight
    xxd09

  • 31 The Weasel March 24, 2020, 11:53 am

    Heh… it’s humbling to see my comment in hindsight. Went from thinking this was an overreaction to be seriously worried health and money-wise a few days ago.
    Now I’m lucky I still have a job (which actually *looks* safe for now) and my emergency fund should give me about 9 months to 1 year of safety, yet I can’t bring myself to buy more of my ETFs now as I think this still has a good way to go… Not sticking to the plan, I know!

    On a separate note, Donny Trump across the pond seems very eager to the approach of ‘eff it!, I want my economy back’. The USA is right behind Italy now in the number of COVID cases and managed to get there so quickly! It’ll be interesting how it pans out

  • 32 MrOptimistic March 24, 2020, 12:21 pm

    I have to keep reminding myself that my priority is capital preservation and the fact that there is a significant jump in share prices is NOT a reason for disappointment in a lost opportunity ( your existing holdings also went up you plonker).
    However in the absence of doing any trading it seems a good time to revisit asset allocation. I was aiming for about 40% equities or below ( and was there before I bought into the ‘ melt up’ theory in January ( genius – not)).
    The doubt I have is not about equities but about bonds. Previously I had stuck to my decade old theory that short duration was the obvious play given interest rise risk but there seems to be a new reality of low rates, low inflation and the historical fear of ‘stagflation’ is a low probability.
    However probably not wise to go all in with my new logic given the last decade’s lesson so perhaps the 60% non- equity bit could be 20% in each of cash, short duration hedged IL, market duration hedged global sovereign bonds.
    Presumably asset allocation gets a chapter in the pending Monevator book so perhaps that will clarify thinking .

  • 33 Factor March 24, 2020, 2:15 pm

    Had an online message from my platform IWeb, saying their services were being seriously impacted by the extent to which funds were being transferred into the platform.

  • 34 Grand March 24, 2020, 2:23 pm

    I’ve not taken a look at my portfolio since the end of February – therefore I’m not sure of the paper losses I’ve suffered.

    One thing for sure, is come next pay check, i’m going to be happy to DCA into my portfolio given that i’m still in the accumuation stage.

    Like your post stated… do not sell, we all knew this day was coming. The Riches man in babylon states get used to living of 9/10 of your income, thanks to the encouragement of this website, and the pesimistic views of Neverland, i’ve gotten used to living of a lot less.

    I suppose, i’d be feeling very different if I was in my sixties, but given thats a couple decades off, i’ve time to prepare for the next big one….

  • 35 The Wobbler March 24, 2020, 3:09 pm

    This situation is crazy. I had a moment of [madness/panic/clarity/inspiration (Delete as applicable)] in Feb and sold everything apart from a chunk of LS20. I am now sweating away trying to commit to an investing strategy for the bulk of my cash. I was pleased to have avoided the big falls (even though it is NOT the passive way) because I was also way under my age in bonds due to greed and other revenue streams (commercial lettings).

    So far I have put around 25% back in to FTSE 100 and 250 trackers at an average of 5500 and 13000 respectively. I am desperately trying to stick my fingers in my financial ears and concentrate on more important matters which are in my neighbourhood. Time will tell, as ever, where we stand right now.

    Stay safe and help others.

  • 36 Learner March 24, 2020, 4:27 pm

    Hah! Immortalized in blog. I’ve been unemployed for a year, I’ve felt the financial impact first hand. Keeping job, keeping 2 years cash, keep trickling into portfolio.. that’s the plan.

  • 37 Grumpy Old Paul March 24, 2020, 4:34 pm

    @xxd09,
    Pleased to report that my bottle of the Balvenie Caribbean Cask arrived this afternoon within 24 hours of my order. Some coffee beans and wine on the way but the latter is delayed until mid-April because of an out-of-stock obscure Italian white at the Wine Society.
    I’m a little younger than you but have the same frustration at not being to take longed-for holidays. Also not seeing my partner who is at her house. Learning to live life more in the moment, calling around friends scattered around the country but limiting myself to one or two calls a day maximum. But I recognise that I need to count my blessings and think of all those folk putting their health on the line to keep our basic services operating, those dependent on food banks and the homeless.
    On the investment front, I decided in 2019 to use 2 years ISA allowances either side of April and to make a strategic change to a more defensive posture. Given I’m unlikely to spend much of my ISA pot, its disposal following my demise will occur at an unknown time in the next 35 years. Therefore it makes sense to try to keep volatility relatively low. I’m about 10% off the peak and around 1% down over the year. My only regret is that my bond holdings were all hedged (following nudges on this website – no hard feelings!) and a look on Trustnet at the performance of unhedged global bond funds over the last 12 months and 5 years gave cause to a certain level of irritation. I need to rebalance back towards equities but am sitting on my hands! I do wonder whether all the new debt will be inflated away; the eventual recovery will surely be long and slow as countries rebuild their economies and place more emphasis on self-sufficiency and resilience to external shocks.
    On the virus, I agree that the timing and scale of impact and recovery is unknowable. I do notice a welcome slight moderation in the increase in new cases and deaths in Italy – h/t to worldometers – but the elephant in the room is the USA which is still the world’s largest economy.
    Back to the gardening…

  • 38 Matthew March 24, 2020, 5:34 pm

    The delay to my wedding has worked out quite financially favourable, im now able to buy the dip, and I’m no longer expected to take my partner out for meals or holidays

  • 39 Edward March 24, 2020, 6:02 pm

    Huge rally today, most likely the bear rally we’ve been expecting if aligned to Bob Farrell’s in/famous ’10-Investment Rules to follow’.

    Rule #8 states:

    Bear markets have three stages – sharp down, reflexive rebound and a drawn-out fundamental downtrend

    1.Bear markets often START with a sharp and swift decline.
    2.After this decline, there is an oversold bounce that retraces a portion of that decline.
    3. The longer-term decline then continues, at a slower and more grinding pace, as the fundamentals deteriorate.

    But it’s all happening at hyperspeed. In 2008 it was nearly half the year before the rally, but this one is a mere month after the market started to slide.

    As soon as the corporate earnings and joblessness figures are public surely global stocks will tank another 15-20%? Where is the bottom?!

  • 40 Edward March 24, 2020, 6:05 pm

    @Matthew – Take this chance to delay indefinitely!

    From Bill Maher’s stand up…
    “I always hear women say, “Y’know, married men live longer.” Uh, yes, and an indoor cat…also…lives longer. It’s a fur-ball with a broken spirit that can only look out on a world it will never enjoy, but it does, technically, live longer.”

    :O)

  • 41 Matthew March 24, 2020, 6:11 pm

    @edward – i call her hyacynth and she calls me victor 😉

  • 42 xxd09 March 24, 2020, 6:16 pm

    Hi Grumpy Old Paul
    With social life curtailed and spring cleaning started early I am glad to relate that she found 4 bottles of bubbly that she did not know we had!
    Could this be a lesson for us all?
    Anyway we are set up for the next month and who knows what will have happened by then!
    xxd09

  • 43 Brod March 24, 2020, 6:48 pm

    @Grumpy Old Paul – I’m afraid The Wine Society have now suspended deliveries. Grumpier Old Paul, maybe? They don’t consider themselves an essential service. I beg to differ, but what can you do?

    Still, I got three cases in last week which should see me through to July. Mix in the odd better bottle from my wine fridge and I’ll be OK to August I reckon. Then it’s 2007 Rhone and 2009/10 Bordeaux for a couple of months…

  • 44 Don March 24, 2020, 7:26 pm

    I absolutely agree. Donald “MAGA, America First” Trump is never going to let Boeing go. That would mean US airlines would have to buy Airbus. Or worse, perhaps Chinese planes!

  • 45 Don March 24, 2020, 7:36 pm

    Agree. I also think it’s a pretty safe bet that oil will not stay at 25 dollars indefinitely. Sure, it could get even cheaper but it’s got to go higher eventually. Crazy times…

  • 46 Fatbritabroad March 24, 2020, 10:59 pm

    Yes buffets been buying delta. Didn’t he say he’d never buy airlines

  • 47 Al Cam March 25, 2020, 12:15 am

    For anyone who wants to examine how the COVID-19 outbreak compares across countries, take a look at:
    https://www.databrew.cc/posts/covid.html
    The tool is very good IMO, but accessing it can be a bit hit & miss.

  • 48 Al Cam March 25, 2020, 8:02 am

    re iWeb:
    does anybody know how to get a valuation of your holdings at an earlier date, (e.g. 1/4/19), or do you have to pay for an ad-hoc statement?

  • 49 Neverland March 25, 2020, 8:14 am

    @Al Cam

    You can pickup your historic quarterly statements from the vertical box on the left hand side:
    -> Valuation ->Statements

    I don’t believe you can generate a historic value at any other dates from the web interface

  • 50 Simon T March 25, 2020, 9:39 am

    How big does you house have to be in order to lose and then rediscover 4 bottles of Champagne?
    Work are now enforcing us to take holiday in H1 and Q3 and all leave it for Q4 when we will all be back earning. I am still wfh for the client but other projects are stalling (and those were big revenue earners)
    As I retire in November it doesn’t bother me as I will not be eligible for next years bonus anyway, just a bit annoyed I won’t get paid holiday money when I leave.
    On a good note – those near Oundle/Peterborough way, Amps fine wines is doing free door to door deliveries. Picked up a cheap case for £60 or so and they personally delivered in on Sunday in their van (I am 20 miles from Oundle)

  • 51 John March 25, 2020, 9:47 am

    FTSE, get back down until 6 April!!

  • 52 The Accumulator March 25, 2020, 9:54 am

    NHS coronavirus volunteer campaign:

    https://www.goodsamapp.org/NHS

  • 53 Al Cam March 25, 2020, 10:01 am

    @Neverland:
    Thanks for prompt reply.
    This is also my understanding of the iWEB user interface.
    This is a bit of a shame, especially given that this type on enquiry is fairly easy to perform at other brokers

  • 54 Vanguardfan March 25, 2020, 10:08 am

    @alcam. Which other brokers? I could do it at Alliance Trust Savings, and I found it a really useful feature.
    I’m now with II and Youinvest and haven’t seen a way to do it with them.
    Anyone know any different?

  • 55 old_eyes March 25, 2020, 10:14 am

    Absurdly proud to have been quoted in the roundup of reader comments. I said it would be a test of my passive credentials, but so far, so good. I have not even looked at my holdings since the beginning of March and won’t until my monthly check at the beginning of April. There will be blood all over the carpet, but I never had any confidence in my ability to time the market so I will leave things as they are.

    The key lesson from the comments as the crisis unfolded, and the comments on the comments, is that – as The Accumulator says – “nobody has a Scooby”. With everyone pointing with confidence to different outcomes and strategies, I can think of no better idea than to keep buggering on. I know that I am just as likely to swerve over the cliff as to swerve away from it. The only concession to panic I might make is that I have some unsheltered equity funds I should bed and ISA over the tax year-end, and I might hold in cash for a while to boost the emergency fund. Probably unnecessary, but I see a bigger risk in running short of the readies during prolonged turmoil than missing out on a new bull-run over the coming months.

    Is that naughty deviating from the plan (no passive brownie points for you!), or just a sensible response to an “oh shit!” environment?

    Anyway – keep safe all.

  • 56 Edward March 25, 2020, 10:50 am

    @SimonT

    Remember, it’s only Quarantine if it comes from the Quarante region of France. Otherwise it’s just sparkling isolation.

  • 57 Matthew March 25, 2020, 11:32 am

    Theyre asking for volunteers, surely itd be better to pay people, so as not to attract the elderly into doing it, and in place of welfare, or just use existing couriers/mail. Also even if not everyone gets tested I think everyone should at least be temperatured on a regular basis

  • 58 xxd09 March 25, 2020, 11:54 am

    We elderly (73) cannot volunteer-against the rules
    Sad as most volunteers come from the fit elderly
    xxd09

  • 59 IanT March 25, 2020, 12:00 pm

    Already well over 250,000 volunteers in the first 24hrs.

    That’s pretty impressive.

  • 60 weenie March 25, 2020, 5:16 pm

    Off-licences now added to the government’s list of ‘essential businesses’.

    It was a step too far to ask the British to stay at home without a ready supply of alcohol!

  • 61 Brod March 25, 2020, 6:52 pm

    @Weenie – would/could you? Assuming you’re not tee-total, of course.

  • 62 Al Cam March 25, 2020, 7:51 pm

    @vanguardfan:
    I’d rather not say which, but I have used several and iWEB is the only one that did not have, at least some form, of this function.
    Interestingly, the first platform I used, which was relatively clunky compared to the new shiny ones, not only had this function but allowed you to download the full (or between two chosen dates) day-by-day history (inc start price, close price, transactions (buy/sell, etc)) to a CSV file.
    It is not unknown for s/w vendors & providers to remove features that are rarely used – as this saves on maintenance costs, etc. This may explain what has happened here, but in any case, I find being able to query the history a very useful facility. Even if it only confirms that I have done something dumb!!

  • 63 Grislybear March 25, 2020, 7:52 pm

    Equities have pulled up a bit, still on sale but not as cheap as they were.

  • 64 Naeclue March 25, 2020, 8:29 pm

    2 kids and their partners moved in on Sunday for the lock down. Have more space here than where they were renting/sharing so kind of makes sense. We all get on well, but not sure we will if this drags on for several months.

    Markets bouncing around still, as expected, which I shall continue to largely ignore. Bed and ISA time at the start of the new year, so would prefer markets to be low at that point.

  • 65 Grumpy Old Paul March 25, 2020, 8:32 pm

    Brod,
    I hope the Wine Society will take heed! Fortunately I still have some bottles left from a case purchased before Christmas which includes a couple of rather fine Burgundy!

  • 66 The Accumulator March 26, 2020, 9:27 am

    @ Matthew – existing delivery networks look overwhelmed. Pay people? If people don’t want to volunteer now, in this time, to alleviate a crisis unprecedented outside of wartime, then god help us. Thankfully half a million signed up so far.

  • 67 Vanguardfan March 26, 2020, 9:49 am

    Supermarket deliveries can’t be had for love or money, which makes it very hard to provision distant vulnerable relatives. Not to mention the increased risks of everyone having to physically visit a supermarket.
    So far other deliveries are working ok, here.
    I do think in principle it would be helpful to put the people who can’t do their current work to productive use. The most urgent task seems to be sourcing PPE. Medics on the frontline describing it as facing the battle of the Somme with no weapons and no trenches to hide in.
    However, I have no faith that anyone in government has the remotest scoobie about how to do real practical detailed planning and implementation. So we bumble on trying to do our best.

  • 68 Hospitaller March 26, 2020, 11:41 am

    You have made my day. I have never been quoted anywhere, ever, before. I usually spend calm sunny days going up and down between the locks on a stretch of the Thames. I am often on my own, sometimes with Mrs Hospitaller (we are a notoriously permissive order – don’t do poverty either). For reasons I am still completely unable to grasp. the Environment Agency has banned any leisure use of the river at all; maybe the lockkeepers (whom I would not bother anyway) desire extended gardening time. Maybe the government intends to abolish leisure completely. And so, it is back to sorting out the back garden (again and again and again).

  • 69 xxd09 March 26, 2020, 3:17 pm

    One wonders how long the government can close the country down before people start to die from closedown as opposed to Coronavirus
    I gave them a month at most from the start of closedown
    I also note the packed commuters (like sardines) in underground tubes and trains in London-been like that continually since the disease started
    If they don’t all have Coronavirus I would be surprised-they all must be recovered cases and carriers-they are mostly young people admittedly
    Just some thoughts
    xxd09

  • 70 Sean March 26, 2020, 3:42 pm

    @68Hospitaller

    Much the same on the canals, CRT have told us all that only essential movement for liveaboards now e.g. move to/from services for water, toilet tank emptying etc. Even if they hadn’t I wouldn’t be going to the narrow boat anyway as the marina have told us to stay away. Not surprisingly the sun then comes out for 5 days, and counting, giving us the best boating weather for many months.

    I could have done with going to the boat for a week or two if only to take my mind off my plunging SIPPs and ISAs. Thankfully my DB pension covers all my expenses including boat licence and mooring fees etc otherwise I might have lost my nerve and partially cashed in although, to be fair, I didn’t during the financial crash.

    I’m still trying to decide whether or not to do my usual £20k into the ISA and £3.6k * 2 into SIPPs on 6 April. I probably won’t be brave enough and will then miss the bottom by a mile after the recovery gets going, whenever that is. My fear is that when the worst appears to be over, and the market starts to recover, the 2nd wave (out of many waves?) will hit and we’re back to square one.

  • 71 Sean March 26, 2020, 3:44 pm

    Dunno where that 68 came from!

  • 72 Learner March 26, 2020, 3:55 pm

    Wow, unemployment claims in the US last week: 3.2 million. 7x (!) higher than the worst week of the GFC, highest spike on record, and.. markets are up. That either reflects the sheer speed of decline in demand, or this kind of news was already priced in (per TI’s recent posts). Everyone betting hard on that V shaped recovery.

  • 73 weenie March 26, 2020, 4:37 pm

    @Brod

    No, I wouldn’t and I couldn’t. I’ve been stockpiling beer since early Feb so happy with my stash!

  • 74 Naeclue March 26, 2020, 5:06 pm

    @Hospitaller, Sean. Same story all over for boats. We keep a yacht in a marina on the south coast. Have not been able to take it out because of dredging outside the lock gates. Now cannot take it out, or even go and sort it out for the new season due to C-19. I doubt the marina will be reducing their fees anytime soon either.

    We have been planning to sell and buy a smaller boat, impossible now of course and marinas charge by the meter.

  • 75 Matthew March 26, 2020, 6:42 pm

    @naclue – does your pirate ship have value? If you cant sell it and value is destroyed because of restrictions but you face ongoing charges, can you forfeit it like a static caravan or leasehold/ timeshare?

  • 76 Stephen Taylor March 26, 2020, 6:54 pm

    Being 100% equities (on the basis I am all in pensions with no ISA provision yet and cannot access them for over 20 years), I have taken quite a hit over the past couple of weeks.

    I have found myself being strangely calm, however, again perhaps because the money is locked up for so long before I can access it, and I am also at the stage where my monthly contributions are higher than they have been previously (and so it feels like i am better placed to benefit from buying at the lower end).

    On the flip side, I now recognise that I will need to build up the emergency fund as that immediate buffer feels more important than it did before.

    As someone who started working (and therefore contributing, at that point a pittance, to a pension) in late 2008, I had not really experienced a significant downturn so my risk approach was largely theoretical. My hunch that I can stomach an aggressive approach at this still pretty early stage of my investing life seems vindicated, but I had underestimated my nervousness about the here and now. Not sure if that’s counter intuitive but I see my long term approach remaining aggressive in terms of allocation to equities, but conservative in terms of emergency fund.

  • 77 The Accumulator March 26, 2020, 7:12 pm

    I absolutely loved getting the chance to quote so many readers in this piece. Without you we really wouldn’t bother.

  • 78 The Accumulator March 26, 2020, 7:20 pm

    @ Stephen – it makes complete sense. The risk for most of us is extremely high in the near term. Cash is king in this scenario.

    It’s amazing how so many of the truisms of personal finance have come to pass in the last couple of weeks: emergency fund, the need for high-quality government bonds, equities can fall with frightening speed, dividends can be cut drastically, don’t mess with leverage, don’t hold too much of your wealth in the company you also work for, you’ll most likely find out your real risk tolerance in a bear market, invest conservatively until you’ve taken that test, risk tolerance can change dramatically when you get holder, equities are risky for a reason…

  • 79 Fatbritabroad March 26, 2020, 10:36 pm

    Exactly how I feel (and also absurdly pleased to have been quoted) as I said I’m not worried about my largely passive investments but I now feel at 5 months emergency bills I am woefully unprepared. The question is with a ‘secure’ producer job with a mega corp do I double down and invest as much as I can or build the emergency fund. Do you feel lucky punk?

  • 80 Fatbritabroad March 26, 2020, 10:42 pm

    @hospitaller yes there is only so many times one can trim ones bush

  • 81 The Wobbler March 27, 2020, 1:03 am

    Here’s a peach of a commentary: https://www.advisorperspectives.com/podcasts/2020/03/19/woody-brock-the-economic-impact-of-the-coronavirus

    The website on which it features has a wealth of opinion and numbers. All from a US perspective but you can’t have too much detail on that side of the Atlantic at the moment, can you? WTF is going on?? I particularly liked how the Orange One took credit for becoming the Worlds Most Infected Nation tonight, due to having the best testing! Spin-tastic,

  • 82 Hospitaller March 27, 2020, 1:23 am

    @ Sean @ Naclue

    As the Welsh private says mournfully about the sick calf in Zulu, “it is a great pity”. I, as I have no doubt you also do, get a huge sense of tranquillity from quietly trogging around in my boat. But for now, man in bowler hat, he says “no”.

  • 83 Simon T March 27, 2020, 11:34 am

    On a different note – my firms pension people (XPS) must be feeling the strain. Normally money gets deducted from my salary near the end of the the month. And this then takes around 20 days for people to do manual reconciliation etc then the money appears in my pension dashboard but with buy dates around the first few days of the month. Last months is still showing as uninvested – thats never happened before

  • 84 Al Cam March 27, 2020, 12:08 pm

    @TA
    re truisms of personal finance, etc:
    Do you have a tentative date for part VI of your “series on how to maximise your ISAs and SIPPs to achieve financial independence”, as I reckon we could all do with a constructive diversion, and, in that sense, I am 100% with Whettam’s comment of March 13

  • 85 Matthew March 27, 2020, 2:44 pm

    @TA – although the volunteers give freely I think the government,out of honour, should pay them to make up a bit for lost jobs and again to skew towards a younger group doing it.

    But I suppose giving them nothing is the least we can do

  • 86 The Accumulator March 27, 2020, 6:44 pm

    I think there comes a time when we all need to do our bit and not worry about the financial incentive on offer. Now feels like that time.

    @ Al Cam – happy to oblige. I thought the appetite for SWR related topics may have plummeted for now but I’d welcome the diversion too.

    Off Monevator duty this weekend though, the day job is taking over…

  • 87 combat_wombat March 28, 2020, 5:47 pm

    @TA could you tell me why passive investing is better than momentum investing please? I’ve been passive investing for 9 years now and have come across this theory (link below). Please help me to stay strong and not lose my nerves/change my investment strategy. Thanks

    https://www.moneyobserver.com/saltydog-trend-investing-funds-wins

  • 88 xxd09 March 28, 2020, 7:50 pm

    Momentum investing is a form of Active Investing
    It is therefore totally opposite in its principles of investing to passive investing
    Presumably you have chosen the passive investing style for good reasons and hopefully with good results over the last 9 years
    In these volatile times you should not be making radical changes to your investing style especially if it has been successful -things could go very wrong!
    In the ŵords of John Bogle -the greatest advocate of passive investing-“Stay the Course”.
    It is rather wonderful to know that the best thing to do-investing wise-in these worrying times with a passive portfolio is nothing
    This lets you sleep at night
    The stock market will recover in time -as will your portfolio
    xxd09

  • 89 combat_wombat March 29, 2020, 1:14 am

    Thanks for the reply – makes sense! Sit tight people and don’t listen to the voices… Stay safe

  • 90 The Accumulator April 4, 2020, 12:15 pm

    @ Combat – the big problem with momentum investing is holding your nerve when it gives you false signals for months or years. With any plan you have to be capable of sticking to it when it appears not to work. And you then again, how will you know if it really has stopped working? Never change your strategy on the basis of a few hopeful sounding articles. And if you are tempted to go active – never go all in. Here’s a good piece on momentum:
    https://earlyretirementnow.com/2018/04/25/market-timing-and-risk-management-part-2-momentum/

  • 91 Learner May 1, 2020, 2:53 pm

    A short notice all-hands Zoom meeting, a brief attempt at justification, some hand wringing and there it is: laid off, along with 50% of my department. (And this being America, heath insurance ended at midnight same day too, so personal extreme lock-down begins today to minimize risk – no long car journeys or bike rides, extra care around the home, etc. I’m solvent, I can make rent as per the quote, but one trip to the ER could be ruinous.)

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