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Weekend reading: A crashing bore

Weekend reading: A crashing bore post image

What caught my eye this week.

You know you have a decent market sell-off on your hands when brokers start to experience outages due to trading volumes.

So it proved in the US this week, when the multi-billion dollar startup Robinhood periodically prevented its users from accessing the market after its systems froze in the face of coronavirus panic trading.

James Koncar, a Robinhood user from Tampa, told Business Insider that he’s upset at missing out on the action:

Koncar said he reported Robinhood to the Securities and Exchange Commission and is considering filing a complaint with FINRA1 — and added that he won’t be using Robinhood in the future.

“Sure, I lost money, but there’s no guarantee that I would’ve sold at open Monday. The point was I was completely unable to until it was too late,” he said. “They opened the door for other brokers to offer commission free trading and I will be taking advantage of that with another broker.”

Perhaps in the post-correction future, Robinhood customers will sue the firm for actually being open for business later on in the week and therefore enabling them to panic-dump their shares?

My cynicism aside, as far as I know all the major retail brokers in the US now offer commission-free trading, after Robinhood kicked down that particular door.

With its USP gone, I wonder if Robinhood will become one of the first major market victims of the coronavirus – or at least a takeover target?


In the UK most non-fund investors are still paying to trade – though Freetrade has begun to challenge that after it scrapped even its modest £1 fee for instant orders. (Sign up via my link and we both get a free share).

And in the absence of (tax) free trading, churning our portfolios – rarely a great idea, anyway – can be a definite drag on returns.

It’s also probably pointless, as adviser Blair duQuesnay writes:

When we get scared, our brains produce the hormone cortisol, fueling our fight-or-flight instinct. This served us well for thousands of years when we were running from predators on the savannah.

The prevalence of news and information (and misinformation) is fueling those fears at an instantaneous reaction speed.

What is an investor to do?

‘Nothing much’, is her sensible conclusion.


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.

And as I stated last week, from the perspective of assessing Covid-19’s long-term hit on the economy, it’s not heartless to note that the vast majority of those who die will be elderly or infirm, and that quite a few would have died fairly soon anyway. Rather, it’s essential.

This doesn’t mean their deaths matter less in human terms. Every death is a tragedy for someone. But it’s a far lighter economic blow than if the virus was stalking 30-somethings.

As Jeremy Faust writes in Slate:

Yes, this disease is real. And, yes, there truly do appear to be vulnerable patients among us, those far more likely to develop critical illness from it. And that relatively small subset, if infected in high numbers, could add up to a tragically high number of fatalities if we fail to adequately protect them.

The good news is that we have huge advantages to leverage: We already know all of this and have learned it remarkably quickly. We know how this virus spreads. We know how long people are contagious. We know who the most vulnerable patients are likely to be, and where they are.

Healthy people who are hoarding food, masks, and hand sanitizer may feel like they are doing the right thing. But, all good intentions aside, these actions probably represent misdirected anxieties.

When such efforts are not directly in service of protecting the right people, not only do they miss the point of everything we have learned so far, they may actually unwittingly be squandering what have suddenly become precious and limited resources.

The stock market doesn’t care about the miserable sight of bodies piling up in the morgue. It isn’t irrational. The crash that is going on right now represents humanity’s greatest prediction machine trying to figure out the scale of the hit to corporate earnings. That’s its job.

Our goal as investors is typically to try to be richer in the future than we are today. We make our decisions accordingly.

The only way to ensure you’re not poorer tomorrow – literally – is to sell everything right now. But most people who do that will struggle to get back into the market at a better time. They will likely end up poorer for their actions in the long run.

So we raise our eyes to a further horizon. If you’re retiring in ten years and you have a plan based around a sensible asset allocation and realistic return expectations, what’s changed?

Absolutely nothing. Diddly-squat. Nada. Zilch.

Keep on keeping on.

This is true even if we do see long-term societal changes in the aftermath of the virus. Some are predicting a change in working patterns, for example, or a mass re-shoring of manufacturing previously sent to China.

I wouldn’t ask a man running about in a house on fire where he see his career being in five years. But I suppose there could be consequences.

Never mind, assuming you’re a passive investor. Some companies may profit if more of us work from home in the future , as the blogger Indeedably predicts. Others will suffer if this scare teaches people they don’t need to fly so much or have so many face-to-face meetings.

But companies are always rising and falling, just like the overall market. You own them all in your index funds. Fluctuations were baked into your return expectations.

This too shall pass.

Viral marketing

Mr Money Mustache notes:

In my lifetime alone, we have seen the rise and decline of quite a list of worldwide health scares, each of which was covered in the news with similar intensity to what we see today. AIDS, Ebola, SARS, Bird Flu, and the 2009 Swine Flu pandemic, also known as H1N1. That one was particularly serious in retrospect, having infected between 11-21% of the world’s population and taking the lives of about 500,000.

Yet here we are, with that fearful event gone from the rearview mirror and a global economy that is far richer than it has ever been.

Which is exactly what we will eventually be saying about the present moment in time, from our vantage point in the even more prosperous future.

I suggested last week that most of us could get Covid-19 over the next few months. The official UK thinking seems to be moving in that direction.

Meanwhile the chief medical officer now reckons that 50% of cases will probably happen within a three-week period and 95% within a nine-week period. The capacity for strain is clear

Still, do you think this virus will seem quite so scary, when we all know people who’ve had it and we’ve possibly had it ourselves?


Unless you plan to dedicate yourself to this crisis full-time, I’d suggest you’re best off ignoring it from an investing point of view. The media is certainly full of nonsense. To give just one example, I heard apparently sensible people on the financial television today saying it was time to buy China because “the rest of the world had to deal with the virus” whereas China is “moving on and returning to normal.”

Is it credible that the world will suffer a coronavirus pandemic while its most populous country is granted some sort of nationwide immunity, due to one city getting there first? I’d suggest not. Yet that was presented as a sensible scenario by someone with billions of assets under management. These people are out of their depth.

The science is fascinating, and I’ll continue to track it. By all means try not to catch the virus. Definitely look out for those most vulnerable in your life – and perhaps help them part-isolate before they get the virus, rather than afterwards. Follow the story for intellectual reasons, and wonder if Google’s AI has already guessed at its underlying structure.

Be prepared to mourn someone.

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. Be prepared for such a slowdown.

Keep saving, keep investing, keep washing your hands.

And have a great weekend.

From Monevator

Our updated guide to help you find the best online broker – Monevator

From the archive-ator: Crisis investing as swine flu panic spreads – Monevator


Note: Some links are Google search results – in PC/desktop view you can click to read the piece without being a paid subscriber. Try privacy/incognito mode to avoid cookies. Consider subscribing if you read them a lot!2

Chancellor urged to cut taxes to save stricken airlines [But what about the carbon, eh?]ThisIsMoney

Coronavirus: Are people panic buying? – BBC

Bank of England and Treasury draw up plans for small firms threatened by the virus – ThisIsMoney

Struggling John Lewis (/Waitrose) cuts staff bonus to the lowest level since 1953 – Guardian

Despite income gains, higher economic growth, and technological innovation, there was no meaningful change in UK life expectancy between the 1540s and the 1850s. Then hand-washing became understood and after that penicillin was discovered – A Wealth of Common Sense

Products and services

Using ISAs to fund your retirement [Search result]FT

Signs of life in the cash ISA market as rates finally perk up – ThisIsMoney

RateSetter will pay you £20 [and me a cash bonus] within 30 days of you putting in your first £10 – RateSetter

As the ETF turns 30, it is time for active managers to embrace it [Search result]FT

Will you be refunded if the virus causes your flight to be cancelled? – Guardian

Do peer-to-peer loans deserve a place in your ISA? [Search result]FT

Homes for sale in isolated places [Gallery]Guardian

Comment and opinion

John Lee: You too could become an ISA millionaire [Search result]FT

Your portfolio was built for this – The Retirement Field Guide

The Get Rich portfolio – Meb Faber

10 top tips to minimize your tax bill for this year and the next – Money Observer

The US stock market tends to under-perform after the Fed cuts rates – Of Dollars and Data

No sweat – Humble Dollar

Shiny shiny starts to gleam as fear rises – Simple Living in Somerset

Think about what you have, not what you lack – The Simple Dollar

Stock market crashes are permanently impermanent – A Teachable Moment

Perspective – Retirement Investing Today

The hidden fixed income benchmark risk [Nerdy, US, only relevant if you go beyond gilts]Mark Rzepczynski

Naughty corner: Active antics

The real reason the Fed had to cut rates by 0.5% [Keep reading down for updates] – Calafia Beach Pundit

Bluefield Solar Income: Making hay while the sun shines – IT Investor

Moats, risk, and ESG investing [Research]Morningstar

Politics and Brexit

The Immigration Bill: A tragic end to British rights and freedoms – Jessica Simor QC via Twitter

Kindle book bargains

How to Get Rich by Felix Dennis [I love this book]£1.99 on Kindle

One Up On Wall Street by Peter Lynch – £0.99 on Kindle

RESET: How to Restart Your Life and Get F.U. Money by Dave Sawyer – £0.99 on Kindle

How Women Rise: Break the 12 Habits Holding You Back by Sally Helgesen – £0.99 on Kindle

Off our beat

Secular monks – First Things

Shared objective reality – Seth’s blog

The US has fallen behind its democratic peers as freedom declines worldwide [Research]Freedom House

And finally…

“Historian Alfred Crosby, who told the story of the flu in America, argued that democracy was unhelpful in a pandemic.”
– Laura Spinney, Pale Rider: The Spanish Flu of 1918 and How it Changed the World

Like these links? Subscribe to get them every Friday!

  1. A US regular: https://www.finra.org/ []
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{ 88 comments… add one }
  • 51 Neverland March 9, 2020, 11:43 am

    This is what you get your equity risk premium for

    Its not all 20% mad gainz year-in year-out for doing nothing but holding a tracker fund

  • 52 The Investor March 9, 2020, 12:11 pm

    @Edward — Thanks for sharing that anecdote. That is exactly the sort of thing I am worried about and it will get worse if we trigger a deep recession and a fall in tax receipts/spending. (Although with that said, at these tiny bond yields the market should be pretty relaxed about governments increasing borrowing and spending to offset some of that pain. So lots of moving parts.)

    @Neverland — Indeed.

  • 53 Indecisive March 9, 2020, 12:23 pm

    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). Don’t want to miss out this time but don’t want to buy too early either. So far I’m dripping in another bit every time the markets fall again.

    And I’ve learned (which I should have known but didn’t) about funds being priced once a day. I still don’t understand entirely but think the system works like: if you place an order before 8am, you get the spot price valuation at 12pm(ish) for your order? And if you order after 8am, you get whatever price the following day brings? Which in current markets is unpredictable.

  • 54 tom_grlla March 9, 2020, 12:25 pm

    Yes, we’re finally seeing some serious volatility on the 2008 scale. It will be fascinating to see the psychological impact – on passive FIRE people, on finance professionals aged 31 and under who can barely remember 2008 etc. etc.

    My current attitude – Don’t panic and wash your hands more than usual. Support your local cafe/business. That’s as much as I feel confident about.

    For reasons unknown, I was flicking through Charley Ellis’s ‘Winning the Loser’s Game’ recently, and I think the key takeaway for me was ‘rebalance’ (as per ‘slow & steady’). This seems a calmer approach than overthinking what to sell/buy.

    Take care everybody.

    p.s. A confession – I’ve been ‘thinking’ about the Wisdomtree 3x leveraged index shorts to hedge against things I don’t want to sell. (I mean, if you’re going to fall from the tree, why do it half-heartedly?). If anyone has any knowledge/experience, it would be much appreciated. Of course, at times like this, liquidity etc. is not going to be normal. I hope this is not going to get me excommunicated from here!

  • 55 The Investor March 9, 2020, 12:39 pm

    @tom_grlla — I cannot and will not comment/give individual advice here, so make your own decisions. What I would warn you though is that in general 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.

    Sure, one might buy that ETF, the index fall 10% over the next week, and someone will feel like a genius. But equally this might be the low — or we may just get a big bull market rally (trap) in an ongoing bear market — and at 3x leverage you’re going to get your face ripped off, presuming such a person had actually taken sufficient size to hedge their portfolio. This is without even going into the longer-term unfavourable maths (link below).

    (Generously) these sorts of ETFs are tools for short-term / day traders, not passive investors turned dabblers.


    But as I say not advice specific to you, which I can’t give. Just general thoughts for all readers, prompted by your comment.

  • 56 Matthew March 9, 2020, 12:44 pm

    @tom – i wouldnt short the market because you dont know when people will suddenly decide to buy again, at any point, lets just say that if hedge funds (who can do this and have more knowledge) still cant beat an index reliably, what chance do we have. As well as it seeming generally inefficient to have 2 opposing bets, as opposed to one lesser one

    P.s. was accused of stockpiling coffee in the supermarket! I would have anyway, since Asda is out of my way but I prefer their coffee over tescos, morrisons, etc, and I dont like going to the supermarket often. But I am a safer driver when I have coffee, and I would struggle to do my job without it (not a morning person!). I just laughed!

  • 57 Mathmo March 9, 2020, 1:13 pm

    They don’t ring a bell at the bottom.

    Stay well everyone.

  • 58 The Weasel March 9, 2020, 1:21 pm

    This is it. This is the Big Discount we’ve all been waiting for. As I write my S&S ISA is down to cost value, but this is just starting.
    If only I had some spare cash lying around..

  • 59 tom_grlla March 9, 2020, 1:26 pm

    Many thanks for the words. This is great, as it’s much harder when you’re deliberating on your own about these things i.e. you need to hear the issues pointed out.

    To clarify, I’m active and have passed CFA Level 1, so am not completely green. It was an idea to just reduce my net equity exposure, particularly when owning active closed-end funds whose discounts are widening, which I don’t want to sell (but buy more of if they keep going down).

    And yes, if playing with 3x leverage, you would want to go small amounts and for the short-term.

    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.

    Again, thanks again to all for the helpful words.

  • 60 Naeclue March 9, 2020, 1:53 pm

    It would appear that S&P 500 futures trading has been suspended: https://www.thestreet.com/investing/us-stock-futures-suspended-limit-down-global-markets-plunge

    The monstrously big S&P 500 ETF SPY is trading though, down about 7%, so looks like carnage will continue on Wall Street.

    @tom_grlla, 3 times leveraged ETFs, seriously? Trading because of fear of missing out is in my opinion almost as bad as selling due to fear of further losses. My cash will stay safely scattered around FSCS protected accounts and in NS&I income bonds. I am sure my gilts and US treasuries are doing well right now and it might be a good time to sell, but equally it could be a very bad time, so I am holding on to those as well. I will trade next January if I need to rebalance back to 60/40 at the time, according to my long term plan.

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

  • 61 ZXSpectrum48k March 9, 2020, 2:16 pm

    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.

    S&P future is limit down. So we wait for the US cash open. It’s bonds though that consistently amaze me. The 30-year USTs is down 38bp on the day at the moment… that’s an 8% positive return in just one day. I sold VGLT (UST long-duration bond tracker) and IUSA (S&P 500 tracker) on Friday to reduce my portoflio VAR. Yet, today the gain on VGLT is again greater than the loss on IUSA. Long-duration govt bonds have been the saviour here for any passive portfolio.
    (posted this on another thread by accident sorry)

  • 62 Naeclue March 9, 2020, 2:18 pm

    @Matthew, I would thoroughly recommend the book “Why We Sleep: The New Science of Sleep and Dreams”, by Matthew Walker. It will open your eyes to what caffeine is likely doing to you by disrupting your sleep patterns. I only drink decaf now, but have learned that even decaf is not caffeine free, so am trying to cut down on that in the evenings as well.

  • 63 Matthew March 9, 2020, 2:39 pm

    @naclue – i probably should cut down, we have cardiac problems in our family, i wouldnt touch decaffe either, because without so much antifungal in the form of caffiene it has more mould, I think i need to find a good day to cut down, im not a natural morning person, although I think before driving probably is not worth it. Have low sugar consumption however! And dont smoke! Probably should excersise though
    Get about 6 hours sleep a night, the amount of daylight makes more difference than the number of hours slept

    Once i couldnt sleep at all and then went to work! But since I survived the workday I dont worry about it so much now and dont get insomnia, apart from waking up multiple times, but as long as I do sleep at some point the day will be ok!

    Fun times with this market dip, one of the reasons I invest is for a little excitement

  • 64 Factor March 9, 2020, 2:47 pm

    For the record I have a close family member who is a GP here in the UK, and on the better to know than not know basis I asked him whether if I contract but survive C19, “Will I then be immune to C19 re-infection?” He said, “Probably but the danger with Corona viruses is that they readily mutate, and you probably wouldn’t be immune to the mutation”.

  • 65 Factor March 9, 2020, 2:59 pm
  • 66 MrOptimistic March 9, 2020, 3:16 pm

    @Factor. Same as flu then. Research paper I read reckoned efficacy of flu virus was about 100 days. This virus is dangerous but then there’s avian flu H5N1 waiting to mutate to allow human to human transmission ( fatality rate about 60% but hopefully the mutation would peg that back and anyway if the incubation period isn’t too long it signs it’s own death warrant). Makes a change from watching the hypnotic market today ( I know economists talk of the velocity of money: I can see where it’s speeding off to today well enough).

  • 67 Fremantle March 9, 2020, 4:43 pm

    Started the process of transferring a work pension to my SIPP at the beginning of January, got delayed by a closure of the work pension office over January and now have no idea when my transfer will be initiated. I’m not too worried, it was only about 5% of our portfolio, but it was invested in the cheapest UK and ex-UK trackers available, so will be getting a battering.

  • 68 Jonathan March 9, 2020, 4:54 pm

    Thanks for the Lancet link, interesting. My suspicion is these particular experts favour strong population measures not because they think the disease especially bad, but because they know how little capacity the NHS has to cope with extra demand.

    It still seems to me from the reported fact there have been few symptomatic cases in younger people that it is pretty likely the total number infected has been much higher than reported because mild cases have not been diagnosed. It is something we won’t know for sure until it is possible to test a random sample for previous infection (through presence of antibodies; such a test has not yet been released). My personal guess is that the proportion becoming seriously ill and possibly dying is around the same as normal seasonal flu.

    From a logical point of view reactions to Covid-19 are excessive – more people die from seasonal flu each day in a UK winter than will die from Covid-19 in a month. We are scared because we don’t know.

    But even if it is the same as normal flu, there is an important need to take measures to restrict spread. Simply because none of us have pre-existing immunity the disease has the capacity to spread extremely widely. If numbers become too high for the contact-tracing approach to work reasonably well in containing local outbreaks, a decision will have to be made to limit public gatherings which increase the risk of spread.

    As far as the stock market drop goes, logically there ought to be a bounce back once calmer judgement prevails. But there is still the risk of the self-fulfilling prophecy, the drop in share prices itself causing an economic slowdown by changing behaviour.

  • 69 MonsAltusLad March 9, 2020, 6:09 pm

    Hi Jonathan. If you found the editorial in the Lancet interesting then this comment piece is also well worth a read: https://www.thelancet.com/action/showPdf?pii=S0140-6736%2820%2930567-5

  • 70 never give up March 9, 2020, 6:31 pm

    I just wanted to take this opportunity to thank TI and TA for their work on this site. When I need a hug I come here and read a post or two and some of the comments. Until I found Monevator and MMM I was too scared to invest. 2008 scared me to quite an extent, and so I spent a lot of years heavily overpaying a mortgage.

    I was glad to have found this place in 2017 though and commenced my passive investing journey. It’s great not to have to confront days like today on my own. Memories have returned of some of those crazy days in 2008/2009. I haven’t wavered at all these last couple of weeks though and will not be selling. I’ve even been ‘brave’ enough to invest a bit of cash I had lying around. Thanks again for turning this timid investing mouse into a, well, I was going to say a roaring lion but that’s going a bit too far. Perhaps a semi-confident mole or something would be a better description. This doesn’t sound very impressive but is far better than the timid mouse. I have learned a lot here.

    These falls have definitely convinced me that the liability matching approach is right for my pre-pension retirement years, so I look forward to that next post in the series.

  • 71 MrOptimistic March 9, 2020, 6:37 pm

    @MonsAltusLad. Thanks for the link. Interesting. If 6% of cases are critical then it is an order of magnitude ( if not several) worse than run of the mill flu. Today’s statement from China that 70% of those infected have now recovered begs the obvious question. Best to be cautious with both your health and investments!
    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!

  • 72 Jonathan March 9, 2020, 6:54 pm

    @MonsAltusLad that is brilliant, an expert commentary of the sort my academic mind (well, ex-academic mind) had been hoping for.

  • 73 L March 9, 2020, 6:55 pm

    At first my SIPP transfer to Vanguard seemed ill timed. Close Brothers sold to cash just after the first real falls, leaving me nursing a loss of c. 6.5%. Then came the ridiculous mini bounce and I felt like a total idiot! I’m feeling a lot better today with a pile of cash, I just hope they get it over to Vanguard pronto so that I don’t miss the bottom…

  • 74 Vanguardfan March 9, 2020, 8:48 pm

    To me, the most sobering statistic is the realisation that as yet, fewer than 0.5% of the population of Lombardy (popn 11m) or Hubei (popn 58m) has been recorded as cases, and the health services are under severe strain in both places. How on earth will they cope with 10% of the population affected, let alone 60% as suggested in the Lancet commentary?
    Delay has to be a very high priority, and I see little sign that the UK govnt is taking this sufficiently seriously (ie, with actual practical and logistical back up, feet on the ground to carry out policy as opposed to just stand at a podium talking about it).

  • 75 MonsAltusLad March 9, 2020, 9:50 pm

    Indeed, if containment fails (as looks likely) and the end game of this is therefore herd immunity at some point down the road, then we get the herd there via enough people having survived the virus, a vaccine being developed, or a combination of the two. Whatever allows the herd immunity effects to take hold will do it. As you so rightly identify Vanguardfan not overloading health services has to become our national priority as there is no vaccine yet. To limit the economic damage and maximise the effectiveness of their actions the government are clearly delaying bringing in mandated controls until they see infection numbers climb significantly. Across the population this makes some sense – as The Investor has commented on crashing the economy has significant health and social implications – and if they mandate controls for too long people are less likely to stick to them. My hope is the Government are following exactly what the experts are saying as they must not risk a Lombardy situation arising here, where health services are overwhelmed, by delaying actions for too long.

    Whatever the government do we can, and must, all do our bit to try to help; hand hygiene, voluntary work-from-home if possible, limiting unnecessary social interaction etc. This can help us avoid Italy-like actions at a later time. As China gets back on its feet it will be interesting to see their infection numbers evolve and how comprehensively they can manage any flare ups – i.e. can we hope to get to a similar position where numbers can be controlled through rapid isolation, contact tracing and testing – buying us time to get to a vaccine. The alternative, of reaching a point of herd immunity solely due to sufficient individuals having caught and survived infection, is a grim thought.

    Personally, I have been limiting social interactions for the last week, will continue to do so, and have strongly advised vulnerable family members to take similar steps. The thought of needing significant medical care at the point of peak infection in the UK population is enough for me to decide some social distancing is a sacrifice worth making right now. It also gives me plenty of time to tot up the losses and shade my investment tracking spreadsheet red!

  • 76 Matthew March 10, 2020, 9:13 am

    I was thinking, even if future growth projections will be lower, money has to return to the market because it has nowhere better to go, fund managers cant justify sitting on cash forever, or negative yields, sooner or later they will always have to return, like a child who refuses their dinner will eventually get hungry

  • 77 Neverland March 10, 2020, 9:48 am


    ” fewer than 0.5% of the population of Lombardy (popn 11m) or Hubei (popn 58m) has been recorded as cases, and the health services are under severe strain in both places. How on earth will they cope with 10% of the population affected”

    Answer: they won’t and people will die as a result.

    It’s just a question of how many.

    I don’t know if you remember the London riots in 2011 but there simply weren’t enough police to show up at all the disturbances. Same with hospital beds.

    The spanish flu epidemic in 1918 infected one third of the world’s population.

    I’m kind of wondering why we are not doing the same measures as France and Ireland right now also.

    But I’m really sure Boris Johnston knows what he is doing.

    Personally I would rather catch it early before it might mutate.

    It was the second iteration of spanish flu that did the killing in 1918.

  • 78 Edward March 10, 2020, 10:07 am

    Watched Margin Call again yesterday, and one has to assume there are people operating with far more information than me who are buying the dip this morning.

    Traders love the vol.

    But it would scare me shirtless!

  • 79 Matthew March 10, 2020, 10:59 am

    @edward – yea, information like “im fired if I dont beat the index on this dip” – remember fund managers are playing with other peoples money, not their own, if;

    1) they ride it out, not beating the index = sacked (what are we paying you for?)
    2) they bet and lose = still sacked, but hey, its not my fault
    3) they bet and win = keep job, what a genius!

    They have nothing to lose by speculating with other peoples money, theyre not going to be personally bankrupted or jailed, and even if they were their ego and job needs them to take a shot at trying

    Indexes are safer without the human element to mess it up

  • 80 Dan March 10, 2020, 11:29 am

    Interesting to note that the investors only real concern is that it seems more virulent amongst the elderly and therefore less likely to impact on global economics and hence his portfolio.

  • 81 tom_grlla March 10, 2020, 12:30 pm

    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 – many thanks for your brilliant article on Short ETFs, exactly what I was after – it was a huge help, especially in understanding the dangers of compounding in a mixed volatile market.

    Naeclue – you’re right, it’s great to have a plan. I’m just still working on mine, and sometimes I find the best way to learn & understand is by trying it out. The Equity side isn’t so tricky, but the diversity side has been trickier in an increasingly negative rate environment. I still tend to look to Peter Spiller of CGT.

  • 82 tom_grlla March 10, 2020, 12:38 pm

    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’m done now.

    TI – many thanks for your brilliant article on Short ETFs, exactly what I was after – it was a huge help, especially in understanding the dangers of compounding in a mixed volatile market. You really are a wonder, I just wish more people could write about finance with your clarity.

    Naeclue – you’re right, it’s great to have a plan. I’m just still working on mine, and sometimes I find the best way to learn & understand is by trying it out.

    The Equity side isn’t so tricky, but the diversity side has been harder in an increasingly negative rate environment. I still tend to look to Peter Spiller of CGT.

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


  • 83 The Investor March 10, 2020, 12:58 pm


    Interesting to note that the investors only real concern is that it seems more virulent amongst the elderly and therefore less likely to impact on global economics and hence his portfolio.

    Oh yes, that’s why I wrote in the article:

    “This doesn’t mean their deaths matter less in human terms. Every death is a tragedy for someone.”

    With that said this is an investing website. And you’re either a troll or you’re stupid.

  • 84 Guido Maluccio March 10, 2020, 1:17 pm

    Thanks for the Mark Rzepczynski “The hidden fixed income benchmark risk” article, talking about the Aggregate Bond Index. That referenced a good GMO article (The passive aggressive Agg revisited) and both were very relevant to me because I hold a sizeable amount of the AGBP ishares Global Aggregate Bond ETF. I always felt the passive advice of holding mainly/only government bonds in your own currency (or hedged) was a bit too conservative but I’m seeing the wisdom of that more and more. Also more food for thought on the indexing versus active managed choice for my bond allocation.

  • 85 Sparschwein March 10, 2020, 8:57 pm

    Initially I thought this is overblown, just another flu… I changed my mind. This is much more infectious and creates a higher fraction of severe cases. Now it looks inevitable that the rest of Europe and the US are heading the way of Italy. When this happens, I believe we will see more panicked selling before the markets recover.

    Has anyone looked into possible knock-on effects? E.g. if shale producers go bust en masse, what would that do to credit markets, systemic stability…

    As always, DYOR. I am not an expert but I read scientific papers and otherwise rely on commentary from MDs and epidemiologists.

  • 86 marked March 10, 2020, 10:06 pm

    Was looking more at pensions today, lifetime allowances and Benefit Crystallization Events (BCE’s). There are 13 potentials of these, and there is always one that will hit you – namely on your death!

    So I’m struggling a bit here with it to be honest for DC type pensions. One of the attractions of those is the money left over can be shared with your dependants but of course HMRC will take anything over an LTA (for those where an LTA existed before pensionable age) and charge the 55% Lifetime Allowance Charge on it. I didn’t realise how complicated this was as when you take money you are taking X% (to two decimals with the hundredth rounded down) of your LTA at that particular LTA limit for the year (e.g the LTA changes with CPI to make it more complicated).

    I guess the bit I struggle with is consider you had a Crystal ball and put your money into a fabulous ETF (call it the Investor-V-AccumulatorETF) that doubled every 4 years (look at QQQ today -literally including the roller coaster of the past few weeks is 100% up on 4 years ago) and as this wonderful thing occurred you were taking out money here and there to consume your LTA are you EVER in a position when you die that the BCE determines you’ve consumed more than your LTA (e.g you may be 90 and the previous BCE was 75) and there’s not enough left to pay the tax left in the DC pot. What happens then? Please don’t tell me your wife or other dependent has to pay!

    Or am I overcomplicating it (although Pensions are a complicated area).

  • 87 Merlotman March 10, 2020, 10:56 pm

    The LTA is indeed a complex issue and one on which I have probably pondered for too long. I recall some as usual excellent commentary by (I think) TI. What I have had to do is create a spreadsheet to work out the optimal drawdown pattern taking into account year on year income tax and any higher rate tax on BCEs. This is in an effort to shoot the proverbial investment arrow through the HMRC eye of the needle. The conclusion I came to is that at 57 I needed to start drawing UFPLSs as soon as possible and take more income tax pain now rather than wait until 75 but each persons circumstances will of course vary.
    To your point and to the best of my understanding when you get to 75 there is a compulsory BCE and at that point your remaining pension pot gets measured against your remaining LTA. If it is more you get hammered the 55%. However once you are past this point there is no further LTA related income tax to pay and of course when you die as the investments are in a trust (the SIPP) these can all be passed on free of IHT to your beneficiaries. However if they want money out of the SIPP they have to pay income tax on any withdrawals depending on their tax position. If you die before 75 then your beneficiaries get the SIPP free of IHT but are subject to all the income tax hits via future BCEs that you would have been.
    Hope this helps

  • 88 Carl March 17, 2020, 2:14 pm


    Found your site today when I came across https://monevator.com/low-cost-index-trackers/

    Do you have a recommendation of which trackers are among the best to invest in QQQ?



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