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Weekend reading: Do not sell

Weekend reading logo

A message from my co-blogger The Accumulator, followed by the rest of the week’s good reads.

Hi old friend,

This is it. The one we’ve been talking about for years. Our biggest test yet. You and I were there in 2008 of course, but we didn’t have so much skin in the game.

This time is different. It’s different because it’s now.

No history book ever inflicted pain but now we hold an oblong portal onto the world’s misery and we can’t tear our eyes away.

We might as well clip a giant billboard to our nose that relentlessly flashes: CATASTROPHE.

So I guess you know what I’m going to say, but we both need to hear it anyway.

We only have to do one thing.

Do not sell.



That’s how serious this is. We do not swear. Or use capitals.

Let’s forget the well-meaning charts and stats for once. We’ve seen this movie before. Only we weren’t in it that time.

This can still be a movie, just a bad dream in a few years from now. The losses aren’t real. They aren’t real until you sell. Until you lock them in. Then the damage is done. Then you’ll wear that scar for life.

Keep your hand away from the nuclear button and in a few years all this will be one of those savage bites out of a short-term chart. Then a fairground dip on a medium chart. Then a wonder-what-that-was squiggle on a long-term chart.

Looking back, those didn’t hurt us because we weren’t there. Looking forward they only hurt us if we sell.

I tell you this… I’m not going to be yet another cautionary tale. Another ‘weak hand’ that folded under pressure. A bear market victim that couldn’t take it.

The best have already told us what to do.

What are the catchy quotes?

“Buy low, sell high.”

“Be greedy when others are fearful.”

It’s hard to hear great advice when your heart is pounding in your ears.

So until my head is back in charge of my gut, I’ll settle for this:

Do not sell.

The Accumulator

From Monevator

Hang on in there if you’re a long-term investor – The Investor via Twitter

Investing in the face of disaster – Monevator

From the archive-ator: Who isn’t buying the market right now? – 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!1

Pandemic policies: Rishi Sunak’s first Budget and a cut in the base rate [Search result]FT

Oh yes, the was a Budget this week. The key points… – BBC

…and what it means for you – ThisIsMoney

British Airways is in a battle for ‘survival’ due to impact of coronavirus – ThisIsMoney

Second patient cured of HIV, say doctors – BBC

Shell-shocked? This is the fastest bear market in history – The Irrelevant Investor

Coronavirus corner

I was slow to appreciate why ‘flattening the curve’ of virus cases is so important, but this simple dotted line makes it clear – New York Times

Coronavirus: Why you must act now – Tomas Pueyo via Medium

Cancel everything – The Atlantic

UK government’s coronavirus advice and why it gave it – Guardian

Seven science-based strategies to cope with coronavirus anxiety – The Conversation

Saga suspends all cruises, due to the threat to over-70s – ThisIsMoney

Super-rich jet off to their disaster bunkers – Guardian

Products and services

Top savings accounts go up in smoke after rate cut – ThisIsMoney

Could you get money back in minutes from your student loan overpayments? – ThisIsMoney

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

Is the higher Junior ISA allowance just a perk for the wealthy? – Guardian

NS&I Savings rates could fall to a new low – Money Observer

Wooden homes for sale [Gallery]Guardian

Comment and opinion

Hello darkness my old friend – Josh Brown

The worst day of our investment lives – Of Dollars and Data

Warren Buffett’s thoughts on the crash [Video] – via YouTube

Victory is inevitable – The Escape Artist

COVID-19 and bonds: No time to die – Finimus

Asset allocation re-visited – DIY Investor

Animal Spirits Emergency Podcast [Podcast, heart on sleeve…]AWOCS

How will the coronavirus affect your finances? – Get Rich Slowly

So, now it’s a bear market – Bason Asset Management

Prison of my own making – Indeedably

The Stay Rich portfolio – Meb Faber

Naughty corner: Active antics

Market meltdowns – Fred Wilson

Assessing the oil shock – Klement on Investing

Hunting for dividends in the Goldilocks zone [PDF]UK Value Investor

Switching out of shares in a battered market [Search result]FT

An extreme level of equity market fear… – Horan Capital Advisors

Kindle book bargains

How to Get Rich by Felix Dennis [Like no other book in the genre] – £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

The 1990s tech boss who lost more than a billion: What happened next? – BBC

And finally…

“As skilled members of a disease-fighting team, you and the other players work together to keep the world safe from outbreaks and epidemics. Only through teamwork will you have a chance to find a cure.”
Pandemic: The Board Game [Great fun, recommended]

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  1. Note some articles can only be accessed through the search results if you’re using PC/desktop view (from mobile/tablet view they bring up the firewall/subscription page). To circumvent, switch your mobile browser to use the desktop view. On Chrome for Android: press the menu button followed by “Request Desktop Site”. []
{ 124 comments… add one }
  • 1 CisforV March 13, 2020, 7:23 pm

    Alternatively, for investments outside a tax shelter, sell and switch to a very similar investment straight afterwards. Grab those capital losses now to offset future gains.

    I actually find it almost frustrating this happened at the end of the tax year. I’m desperately waiting for the new tax year to deploy idle cash into my ISA and/or pension.

  • 2 MrOptimistic March 13, 2020, 7:28 pm

    If TA’s trying to make a point I wish he would be clearer…….
    I am looking at GBP v USD and wondering what else is going on.
    No intention of selling, or of buying ( unless FTSE falls below 4000 after which I make no promises). Minimisation of regret, I can live with missing out on 20% upside but throwing good money after bad really hurts as the word idiot dances in front of my eyes.

  • 3 NewInvestor March 13, 2020, 7:33 pm


    Ditto. I feel your pain. So frustrating: only £125 left of my ISA allowance, and then it’s sit-and-watch until 6 April.

  • 4 Ali March 13, 2020, 7:59 pm

    Too late…..

  • 5 Alistair Marshall March 13, 2020, 8:02 pm

    The YouTube/Warren buffet link send to be pointed at the old monevator post

  • 6 ZXSpectrum48k March 13, 2020, 8:05 pm

    MrO: GBP/USD has moved slightly over 6% this week. About 3.5% of that is broad based strengthening of the US Dollar (chart DXY to get an idea of this). This week we’ve moved into crisis mode. In that environment one rule pretty much always holds: US Dollar cash is king.

    With regard to Sterling itself, yes it is underperforming other Dollar crosses. To be fair, it closed last week a little be toppy on expectations for a bit more of a bazooka from Rishi Sunak’s first budget. Instead, the budget was a bit of shoulder shrug and Sterling weakened.

    In addition, in preparation for cashflow disruptions, corporates are aggressively drawing down on their revolving credit lines at banks. This is putting strain on some bank’s liquidity positions. They are finding hard to sell down assets and obtain term repos. The Libor-OIS basis started to widen showing funding stress. Hence the massive balance sheet expansion via 1m/3m repos by the Fed on Thursday afternoon. This is all been done to sure up the funding position for banks, most particularly, in US dollars. Nonetheless, when people worry about the financial sector, the currency which has the most exposure to the financial sector, Sterling, does tend to get sold.

  • 7 The Investor March 13, 2020, 8:09 pm

    @Alistair — Thank you! Fixed now.

  • 8 W March 13, 2020, 8:24 pm

    I had 20% in cash. The plan now being to buy equities at each 5% drop from 20% through 50%.

    This accepts that not all the cash may be deployed as the market may never get below some levels. But who knows where the bottom will be, so I will buy at intervals. Placed the first buy order on Thursday.

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

  • 9 No such thing as a free lunch March 13, 2020, 8:39 pm

    @the accumulator, thanks so much for sharing the conversation article on anxiety, very useful. For me, unexpectedly something else to deal with whilst facing markets in free fall.

    Always appreciate the links and the site. Thanks for all your efforts.

  • 10 Steve March 13, 2020, 9:14 pm

    Just double your tracker payments and go back to sleep.

  • 11 The Borderer March 13, 2020, 10:26 pm

    @Steve (10)

    Unless, of course, your in de-accumulation, in which case it’s hard to get to get to sleep.

  • 12 Hague March 13, 2020, 10:47 pm

    So SWR. It’s 3%, isn’t it?

  • 13 Balanced View March 13, 2020, 11:08 pm

    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 an 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.

    I also feel horrible about the deaths that are going to be inflicted by some very poor decisions by politicians. This could’ve been stopped but is now going to ravage the economy and our elderly like nothing ever before. It’s horrifying.

  • 14 W March 13, 2020, 11:33 pm

    @Balanced View Don’t sell, if this is what you take issue with, is not bad advice.

    If you follow this website you’d know the context is accumulation, and not holding anything you are not prepared to hold for 10 or 20 years.

    For those approaching retirement, it is assumed they have already started derisking.

    It’s about having a plan in keeping with your situation and risk tolerance, and sticking to it.

  • 15 Vanguardfan March 13, 2020, 11:45 pm

    Thanks for this. Interesting times.

  • 16 Naeclue March 14, 2020, 12:59 am

    I checked our portfolio this evening after the US market closed. I rebalanced back to 60/40 equity/bonds at the start of the year. It has now moved to 49/43. In other words down 8%. Cannot say I have the slightest intention to do anything about this, neither buy nor sell. Current plan is to wait until next January and rebalance as normal.

    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. When John Pierpont Morgan was asked what was going to happen to the stockmarket, he said “It will fluctuate”. It is probably reasonable to extend this to “Fluctuate wildly” for a while yet.

    Our worst performing positions are in UK FTSE 100/250 ETFs and all share trackers, all down about 30% year to date, so I can appreciate the sense of pain for anyone heavily allocated to UK shares. Our least worst equity performance has been with US REITs ETFs, down 15%, closely followed by US equity ETFs, down 17%. So that’s the highest priced market, based on CAPE, p/b, etc. falling the least. Surprisingly our emerging markets ETFs are only down 19%. I was expecting a lot more than that.

    On the upside, by far the best are long duration US Treasuries ETFs, up 27%. Gilts have been disappointing, up only 4% on average (duration much lower than with our US Treasuries though) and GBP cash of course has not moved at all.

    GBP/USD is down about 6% year to date, so once again the drop in share prices has been cushioned by the drop in sterling.

  • 17 Investor Geek March 14, 2020, 2:15 am

    Well said, @TA.

    I thought TI’s table (on twitter, earlier this week, from Investor Chronicle), comparing peak/troughs of last few crisis, was notable. At that point FTSE All-Share was at 3400, the dip was 2 months long, and down 19%. Next shortest/mildest crash was 4 months, 31% down.

    As of today we hit about 29% down, in 2 months. Then, after UK hours, S&P rallied 9% up.

    My hunch is it could get worse. But long term it will clearly be better.

    So saying ‘do not sell’ is quite different from ‘buy in now’.

  • 18 Hospitaller March 14, 2020, 9:04 am

    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”.

    And in this way, I am buying, not selling.

    It does seem odd to be doing that in the face of the news flow. And, because of the risk of sudden bounces (as happened in New York yesterday) it can be tricky to invest in funds to catch the dip. Buy limit orders on investment trusts are easier to do. But so far so good.

    I have not got everything in that I wanted to but that’s life.

  • 19 Clueless March 14, 2020, 9:29 am

    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.

  • 20 JimJim March 14, 2020, 9:46 am

    Indeedably’s Piece was very well written, and reflective. We all have prisons of our own making. I am looking at re-balancing some dry powder cash into shares soon but having the same problems as always in committing. I fear the worst is not yet over, and I can afford to be late to any party. Ideally this would be 12 months from now when my long term cash ISA runs out, or earlier if we manage to sell a rental property we are marketing. But the markets will not be working to my beat, they will do what they do with me in or out.
    I am NOT SELLING, my life is no different this week than last, or the week before as we are not about to use the money anytime soon. If this had happened nearer retirement I would probably feel a whole lot more anxious about it but, just like the gains, it seems removed from reality.
    From Kipling, “If you can meet with Triumph and Disaster And treat those two impostors just the same” is the phrase going through my head the most at the moment.
    …Carry on

  • 21 SemPassive March 14, 2020, 10:04 am

    The weak pound is going to add to the headwind of buying global equities right now (for a big lump sums anyway – my work pension will be drip feeding a % of contributions into a global tracker).
    The more GBP goes down, the more likely my next buy of risk assets from cash on the sidelines will be either a FTSE250 tracker or a GBP hedged fund.
    I think the FTSE250 could be yielding over 4% soon, so even if it crawls back up over years its going to give you a decent income in the meantime.
    Assuming the UK economy doesn’t collapse as we attempt to gain this mythical herd immunity 🙂

  • 22 PC March 14, 2020, 10:49 am

    I can relax about my SIPP hitting the life time allowance for a while ..

  • 23 Matthew March 14, 2020, 11:02 am

    It might save us from climate change! Also it might prepare us for the next pandemic, perhaps even give us partial immunity

  • 24 Vanguardfan March 14, 2020, 12:04 pm

    @matthew, no.
    Pandemics happen precisely because a new virus enters the population. Because there is no population immunity, it spreads rapidly. That’s what makes it a pandemic. This one won’t make us immune to the next one, it’s not how it works.
    And this IS the one we’ve been fearing, and should have been preparing for (and were, before austerity). It has never been if but when. Now is the time.

  • 25 Matthew March 14, 2020, 12:35 pm

    @vanguardfan – I can imagine worse, say if you had a higher death rate but delayed, like hiv but more contagious – so it would pass on just as easily as this, or one that mutated like the cold, which this one seems to do less

    There can be common genetics between them that can give some partial protection in some cases – for example one strain of covid 19 protects you against the other, and yes the next one would not become a pandemic if it didnt spread, which is a good thing!

  • 26 Steve March 14, 2020, 12:40 pm

    I don’t understand the notion from our “government” that herd immunity is a good thing; getting this virus is highly unlikely to create immunity against the next one. The lack of prior planning is cringeworthy. They tell you to self-isolate and get your food on online. They don’t think that there is inadequate capacity to actually deliver the food. A plague was predictable and there is a high chance that another one will come in the next decade. It is in one of nature’s ways of controlling the population when we overindulge in procreation.

    What is happening in the equities markets as such is not bothering me. I see it as an investment opportunity and in fact have been waiting for such an equities crash for a while.

    I am a little more concerned about the corporate bond market. I do not mean the high yield stuff which is obviously vulnerable. But my trust of rating agencies is very low after the last fiasco and I have concerns over liquidity in the bond market if there were a rush for the door in the supposedly “investment-grade” market.

  • 27 Gooey Blob March 14, 2020, 12:41 pm

    This is a long game. Buy, buy and buy again. If share prices keep falling, keep buying. The more shares you own in the dip, the more you stand to gain when the recovery comes.

  • 28 Philip Clarke March 14, 2020, 1:03 pm

    Woe is me. Retired and living off a combination of DC and DP pensions, I have to repay a modest (£77k) interest-only mortgage in a few months. Plus we’re helping Junior buy his first place. I had already taken some cash out, taking advantage of the time assets were full-priced (about a month ago, remember then?), but I *had* to sell some more this week rather than risk further falls.

    If I didn’t need the cash I would certainly be hanging on in there and topping up.

    Not posting for sympathy, the money ‘lost’ was anyway earmarked for some travel which we would not now doing, we’re in a good place (both financially and geographically) to self-isolate and our woes are relatively minor compared to some other groups facing the loss of loved ones or the fallout from a recession.

    Stay safe!

  • 29 FIRE'd before I was fired March 14, 2020, 1:25 pm

    Looks like the WHO are now actually questioning the UK’s approach (perhaps politely suggesting it might be a mistake).
    Nassim Taleb has been a little less polite about it on Twitter.

  • 30 Nebilon March 14, 2020, 1:56 pm

    I’m very frustrated by the timing of all this as I had initiated the process of putting my largest SIPP pot into drawdown, just taking the tax free cash, and then went on a ski trip before actually implementing. I was going to reinvest most of the tax free cash in much the same stuff , in ISAs. as far as possible, but also take some of it for some home improvements and to replace my car. Not going to do it now, as the cash I would have taken and not reinvested is a bigger proportion of the whole PCLS, and the various steps would have me out of the market for a day or so, which I’d rather avoid in current climate. On the bright side I now have a bit more time, since the point was to crystallise to reduce the risk of Incurring a lifetime allowance charge later: I am quite a bit further away from the lifetime allowance than I was!

  • 31 Dawn March 14, 2020, 2:27 pm

    Monevator back to themselves again!
    Yes here it is. Almost a relief.
    We knew a crash would come eventually after such a never ending bull run!
    I’m surprising calm. I havnt sold. I’d been gearing up mentally for this moment and I’m ok. I’m ready to start living off my stash too!. It’s a good test for us all. Until this happens you just dont know how you’ll feel.
    I comfortable my asset allocation was correct. When I’m ready I’ll live of rental income and cash/ bonds. I did eventually buy some!. I’m happy to have 45% of my money in equities ,that’s my growth engine that’s just temporary down atm . I’m prepared for 5 even 10 years for a break even. It will likely be sooner . Ill be buying a little once isa opens as I’m working part time and still carnt resist urge to save at least something!
    This all will pass and the world will keep on turning once again.
    A big thankyou to experienced investors who have made mistakes in the past ,sold then regretted. we can learn from them in times like these so not to do the same.

  • 32 Peter March 14, 2020, 2:41 pm

    What happened to govermnment bond funds, are they not suppose to go up in crisis? Especialy when bond yelds are going down? – inverse corelation.

  • 33 CollReg March 14, 2020, 3:10 pm


    I was quite sceptical of the government’s approach at first but have come round to it on reflection (and I’m going to be at the sharp end of the outcome as a hospital doctor).

    The argument is that now the virus is circulating around the global population everyone is going to encounter it at some point. So if you go with super-aggressive isolation measures you may stop infections now (creating a flattering graph as there are many floating around social media) but inevitably you will have to relax those restrictions at some point, whereupon your population are still naive to the virus encounter it, transmission takes up where it left off and you get the spike of infections which overwhelms your healthcare capacity.

    The latter is the key thing which makes the difference to outcomes (primarily mortality): as per the graph in Coronavirus Corner above, if you can stay within your healthcare capacity then mortality is 0.5-0.95%, exceed it and you jump to 4-5+%.

    The UK government strategy of less aggressive public health measures should slow but not halt the spread of the virus, with the aim of gradually exposing much of the population to it, meaning the total number of cases requiring hospitalisation, and most importantly critical care (ie ITU and ventilation), within the capacity of the NHS to cope (albeit with a re-configuration of services to a crisis footing for several months in all likelihood).

    Will this work? I don’t know. Is the strategy rational? In my personal and professional opinion, yes. Is it better than the more aggressive strategy? On the balance of probabilities, I’d say yes, but only time will tell, hindsight is 20/20 as they say.

  • 34 Jim McG March 14, 2020, 3:18 pm

    Definitely time to read that Felix Dennis book again, thanks for the pointer to the Kindle edition. Probably the best buy anyone will make this year. After all, it’s only money.

  • 35 Faustus March 14, 2020, 4:01 pm


    It has been a puzzle this week why US & UK Gvmt bonds and gold have not been a great hedge against falling equities (in contrast to the first couple of weeks of the crash). Something similar happened I think during the most volatile periods of the GFC.

    Various theories are circulating (others will no doubt be able to provide better explanations):
    1. The huge volatility spike this week has caused a liquidity crisis and is forcing financial institutions, wealth funds (and leveraged investors) to start liquidating all assets to reduce risk.
    2. Some of the bond bears suggest that the huge fiscal stimulus required to restart the global economy will lead to inflation and therefore higher interest rates down the road, and this is now starting to be priced in.
    3. China and other large holders of US Treasuries are starting to divest into a wider range of low risk assets (though this should be beneficial for gold). As someone else noted UK Gilts are not as attractive for safe haven seekers as they once were given the peculiar vulnerabilities of the UK economy.

    Others take a different view that the world now faces a prolonged deflationary era which could keep bond yields at rock bottom for a generation (as in Japan).

  • 36 The Investor March 14, 2020, 4:11 pm

    Re: Gold, I’d add a fourth possibility, which is potentially one or more big funds in liquidation. It’s pretty easy to imagine anyone silly enough to be massively short treasuries could also have been very long gold.

    Just an extra theory but there was an air of disorder and panic in the sell-off this week, whereas first couple of weeks felt pretty rational.

  • 37 Faustus March 14, 2020, 4:24 pm


    There seems to be a very serious risk problem with the UK Gvmt’s strategy due to it involving a wide range of (as yet unprovable) assumptions about the virus, immunity, reinfection, seasonality, mutations and the long-term health consequences of contracting the disease. Get any of these wrong and the strategy could be catastrophic costing vastly more deaths than necessary. Nassim Taleb has been vocal in pointing out this risk problem.

    Neither is it clear how, given that 40 million+ in the UK would need to contract the virus in order to stand a reasonable chance of herd immunity by the autumn, the NHS will have the capacity to cope with the vast number of serious cases even if these are spread over 6 months.

    The counter-argument in favour of buying as much time as possible (which seems to be the scientific consensus in the rest of the world) is that it increases the probability of finding better treatments for those worst affected.

    Either way, maximum respect to you and your colleagues for what you are about to face.

  • 38 xxd09 March 14, 2020, 5:04 pm

    Every expert to his field
    Investing-people are told that good times always end but will come back again-invest accordingly -do people heed this advice?
    Medicine-diseases appear suddenly out of a clear blue sky-no health system can predict this anymore than one can predict stockmarket drops
    BSE,HIV,SARS etc all had the usual initial apocalyptic stories but our health service dealt with them
    They no doubt will probably deal successfully with the current problem

  • 39 MrOptimistic March 14, 2020, 5:05 pm

    @ZX. Interesting thanks.
    @Faustus. The world needs optimists but viral pneumonia has eluded efforts to date so creating a virtual finishing line for us to get over any time soon isn’t really a basis for planning. They are facing an unprecedented problem so I’m inclined to give them some slack even if hindsight shows they were wrong.

  • 40 ZXSpectrum48k March 14, 2020, 5:08 pm

    @Faustus. I’d say that US govt bonds have been a great hedge against equity falls. My major passive govt bond fund, for example, VGLT (long-duration UST tracker), is up 22.7% YTD. Easily offsetting the YTD loss on the S&P at -16%.

    Problem is that you just can’t see govt bonds as a homogeneous block. In the 10-year sector, year-to-date, UST yields are down by about 100bp, Gilts 45bp, Bunds 35bp, while Italian BTPs are up by 40bp. Similarly, if you hold shorter duration bonds, they simply won’t hedge equity falls. The’re just cash really. Equities are the same though: the Nasdaq is down 8% YTD but the FTSE100 is down 29%.

    As I’ve mentioned in the last few weeks, I’ve been offsetting gains on bond funds I own against losses on equity funds, to move to cash and lock in a net profit. The front-end of most yield curves had already fully priced cutting cycles by the end of last week. For example, the US curve prices an 86bp cut from the Fed meeting on Weds. The back end of the yield curve was also incredibly flat. Something like the 2y vs 10y spread, 1y forward, was down at 5bp at the end of last week. That makes little sense for an event that is still more likely to be a technical recession, albeit with downside risks. Plus fiscal expansion is now very much on the radar. Valuations were just very stretched.

    In addition, other factors why govts bonds performed poorly this week
    1. 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.
    2. Related to that Risk-parity strategies failed horribly this week. With equities down and bond yields up, these guys were just puking their guts up. Dalio’s macro fund probably had a very bad week.
    3. This week corporates started to draw down revolving credit facilities at banks, so the bank Treasury operation needs to sell or repo bonds (typically govt bonds and IG corp bonds) to raise liquidity.
    4. Some smaller funds are struggling to make margin calls, so they are selling down liquid collateral like govt bonds.

  • 41 Snowman March 14, 2020, 6:00 pm

    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.

    The Government action is complacent and essentially ignoring the actions the WHO are recommending here, and in this case at least I think the WHO are close to getting it right.

    The action required needs to be comprehensive and multi- stranded. Flattening the curve is important (we can’t stop this spreading in the long run) but the current Government policy doesn’t achieve this aim. I think we are at serious risk of
    ending up in an Italy situation. Some of the things that we need to happen:

    1. It is a good idea for those with symptoms to self-isolate. But we need those living with people self-isolating to go into quarantine also now.

    2. We need more testing, we should learn from South Korea here. It is not sensible to switch to just testing those hospitalised. We also need to do some testing (within the constraints of a balance against available resources) of some of those self-isolating. Through this we can identify hotspots of the virus as well as the overall position.

    3. We need to reintroduce contact tracing to enable targeted measures.

    4. There is at least one (sad) case of someone tested following death but not before, who tested positive but isn’t included in the total UK deaths. And consequently relatives of the deceased, one of whom is apparently ill hasn’t been tested. We need proper recording e.g. of deaths and make this information available

    4. Social Distancing: we need targeted measures such as school closures in hotspot areas or where there are multiple cases within the school (just assuming it creates too many knock on problems is nonsense, sometimes it will sometimes it won’t)

    5. We need to set up on-line recording system for those self-isolating to enter that information and encourage people to use this. This will give indications of regions where more people are self-isolating and may show trends in increasing self-isolation.
    Possibly have a stratified sample of people in the country who don’t have symptoms currently where they can complete an online form on a weekly basis to indicate if they are now self-isolating. Test a small proportion of those who then indicate they are self-isolating to be able to enable a rough estimate of how many have the virus in different areas and how many have cold or other flu conditions.

    6. We need to think about the possibility of doing some sort of antibody testing for those who think they’ve had the virus and are health workers or need to care for vulnerable relatives but are afraid to do so. Obviously if there is evidence of the possibility of reinfection (there are some potential reinfection cases which may have alternative explanations hopefully) this may not be sensible.

    There are too many unknowns to model the spread but I fear the NHS will be overwhelmed without more comprehensive measures to flatten the growth, and that could make the difference between the death rate being say 0.6% or 4%.

  • 42 Vanguardfan March 14, 2020, 6:17 pm

    Absolutely spot on Snowman. The complacent arrogance of our approach is breathtaking.

    It’s much easier to cope with secondary outbreaks and flare ups if you’ve actually got a system to contain/delay it. We will be out of control in less than 2 weeks at this rate. If

  • 43 Learner March 14, 2020, 6:33 pm

    The February peak was arguably the tippy top of valuations, over-inflated by low rate demand and extremely generous corporate tax cuts. I won’t be surprised if this -20% retreat is still well above mean or fair value and folks buying in now (myself included, guilty) won’t be taking profit any time soon. Sitting tight for a while now, back to regular schedule. I’d be happy to see the markets slide another 20 or 30% – a real inversion – but not if that comes with a genuine recession which will brutalize society yet again.

  • 44 beeka March 14, 2020, 6:51 pm

    The 25% drop in the paper value of my equities is certainly testing my commitment to the cause… particularly the speed of the drop (BTW: why does it look like only three of the “DOW drawdowns” drop 20%). I’m not selling even though I might regret not doing so the market falls another 20%. It will take equal nerve to start buying again. Here is hoping for some clarity by the time the new ISA year opens.

  • 45 MrOptimistic March 14, 2020, 7:59 pm

    Trying not to get drawn into ‘ they should do this…’ mode, I wonder if this financial event isn’t unique in that it is not financial in terms of the ultimate mover. So we can watch the headlines and statistics and we know that it is going to get much, much worse and further controls on freedoms will be imposed, and further government commitments to support financial institutions will be needed. Is it unreasonable to now liquidate all equity positions with a view to buying back in say two months time when prices are lower?
    I know this is the definition of market timing, but in such a situation, which can be monitored, is the problem that you can’t be trusted to buy back in before – too late – the mood is obviously more optimistic and prices are higher than your sell position?
    To be clear, I am not going to do this but I suspect the deterent isn’t that I am smart enough to know I am a fool who can’t be trusted, even by himself, but in fact I am just a coward who can’t take decisive action and hit the sell button ( repeatedly) ?
    Can’t only be me who wonders about that strategy.

  • 46 Neverland March 14, 2020, 8:42 pm

    Boris Johnson’s government reckless and going off in a completely different direction from the rest of Europe, whatever next?

    You sow what you reap.

  • 47 Seeking Fire March 14, 2020, 8:54 pm

    Firstly I wish good health to all Monevator readers and their families over the coming weeks and months.

    On the financials…..

    I made the comment ‘do not sell’ last week and I have no intention to do so and hope others don’t. Do not sell. But I will say, I feel much less inclined to buy at the moment than I did a couple of weeks ago. I am surprised S&P500 isn’t even in a technical bear market. Global equity markets have not fallen significantly yet imo. I feel confident I won’t sell if they fall 60-75% from here and have mentally taken that cut to my equity portfolio to prepare. Do not sell people unless you believe you can market time. The UK FTSE 100 does feel cheap though at a CAPE of 11 ish/ FTSE 250 a bit less cheap at a CAPE of 16ish but not bad. If I do buy it will be a bit more gold / a bit more US TIPS and then the FTSE 100/250. Not attracted to the S&P500 at all.

    I have always kept a years savings in physical gold coins, a year in gdp cash and three – four years in tips, plus some other assets that are less correlated to equities including investment property. So I feel I have a decent fire break – it’s helped psychologically (I highly recommend it) and if I was 100% in equities that would be testing my fortitude further. I know ZX looks at bonds as a measure of returns and it seems very sensible given structurally decline rates but with a time length of 60 years for me, I’m going with Warren that the majority of my portfolio should be in equities and bonds are more insurance for me.

    I am v nervous about the economic impact though. UK GDP is >£2 trillion. Say this lasts 12 months min. The impact here would be enormous – now magnify that globally. The budget announcements will have minimal impact. I feel this has the potentially to be entirely different to anything we have witnessed in our life times economically. This is not necessarily my central scenario but neither is it a tail case for me any more. I can see the govt saying (a) you don’t have to pay your rent or mortgage – I am preparing myself to tell my tenants you don’t have to pay rent if you can’t for a few months and don’t worry just stay healthy (b) govts guaranteeing all loans (c) banks overwhelmed with funding requests – companies globally are drawing down on all their credit lines (I work in FS and am seeing this first hand) (d) govts giving out foodstamps (or some equivalent) to people who aren’t getting paid (e) people having to take unpaid leave as companies shed labour.

    On the govt strategy. I don’t feel it’s going to last. It appears cases are going to go up substantially and the public will demand a lockdown as we are seeing in different countries in Europe. Even if it’s medically the best approach – which I don’t know. I feel a real risk is general panic amongst the public over the coming months. Personally feel we must all try to avoid this and start to look out for our neighbours again as best we can.

    This feels to me at the moment that this issue is going to be around for at least 12 months. Either (a) circa 45m obtain the virus and between 450k – 1.6m (based on current mortality rates) die (b) we mass quarantine for months and hope it doesn’t come back next winter but I am sceptical it will die out globally and not re-emerge when travel picks up. Spanish Flu seemed to be around for a couple of years. But I am not a doctor and I don’t know. I am really intrigued about China – have the cases there really died out? Are they going to quarantine the country until they find a vaccine?

    My point is economically I don’t see how the impact can be less than 12 – 24 months minimum. Historically it’s been best to buy equities when things are darkest – 1932/ 1942 / 2008. Feels things can get a lot worse from here if we are waiting for a minimum of 450k people to die and 20 have so far in the UK. If that’s really the strategy then the govt should be aiming for around 6m to catch it every month between now and then next winter flu season? Or have I got that wrong.

    I made a comment a few weeks ago on the SWR that our blog posts and the articles had all been massively influenced by the returns over the last ten years. For anyone thinking of retiring on the 4% SWR this will or should be a sobering lesson. If you have retired on that model, I would be cutting back on my discretionary spending if I was an earlyish retiree.

    Stay positive everyone and let us continue to use this blog as a source of valuable investing guidance to each other. Capitalism will win out so do not sell!

  • 48 Richard March 14, 2020, 9:14 pm

    Perhaps the strategy now reflects a pragmatic view that it is past the point where it can be contained. Many people will get this and the aim is now two fold, minimise the impact to the health service (and thus minimise deaths) and minimise the impact economy. Lock down too early and you help the first but hurt the latter, indeed potentially seriously hurt the latter. As others have said, it can then flare up again in a few months when the cold weather returns – locking down every few months is going to lead to more deaths as services are hurt by the economic impact. I think this is where the herd immunity concept comes from. Better to let it burn slowly and cope with it than to stamp it out only to flare up again again. So I see the strategy designed to bring the cases up to the health care capacity and as it approaches more stringent restrictions come into force, but the aim is no longer to stop it fully.

  • 49 Jon March 14, 2020, 9:18 pm

    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.

  • 50 Marco March 14, 2020, 9:56 pm

    The U.K. governments plan makes a lot of sense to me, although it won’t work if the worried well socially isolate excessively.

    Closing schools for an extended period of time is a panic response and will cause more harm than good.

    Regarding shares, I’m all in after deploying my 50k premium bonds emergency fund. I don’t really care about the price or PE ratios but there is extreme fear out there and I’m attracted to that like a fly to a turd 🙂

    Stay healthy out there. Definitely don’t smoke unless you are kamakaze, minimum alcohol, good diet and stay fit. We are all likely to get infected and the vast majority will survive.

    As a guess, I think in 10 years time now will be seen as an excellent time to buy equities

  • 51 Nicholas Stone March 15, 2020, 4:25 am

    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.

    If markets drop further I will continue to sell bonds and may even reduce my bond exposure (I’m 25% bonds) now in order to buy more equities, with the plan of buying back bonds later.

  • 52 britinkiwi March 15, 2020, 6:03 am

    @CollReg – looking at the UK plans from across the world I could say it’s one arm of a international and very large real-time clinical trial, testing interventions, with no placebo arm. As an health care professional in an NZ hospital I’m taking a very active professional interest in the situation! I’m not sure who designed the trial but it’s clear the US is the laissez-faire arm. Lets hope we don’t see the triple spikes like the 1918-20 flu……

    It is picking holes in preparedness internationally so the UK is not alone at being criticized for inaction/lack of real time information/crap planning. Our PM, Jacinda, has basically said “The Way is Shut”* for NZ with isolation and no-travel in place. A few events being cancelled or delayed. 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 ..

    Financially – looking to dribble cash in to the markets over the next 4-6 weeks, not a massive amount, just the spare cash we had earmarked for a new 2nd hand car. Looks like we won’t need it for a while. Losses were offset early on due to drop in NZ$ vs other currencies (total was increasing 2 weeks ago!) now we’re about 10% down on a classic 60/40 diversified portfolio.

    Stay safe and wash those hands!


  • 53 Vanguardfan March 15, 2020, 8:48 am

    To those who think the government is making the right call, please have a look at the medium article TI linked to, and consider this. It’s not hard to understand the theoretical rationale behind the government’s strategy. It’s also clear that we don’t know how successful the Asian countries will continue to be when they relax some of their control measures. Clearly, a novel infectious disease will continue to be a threat to individuals who have not developed immunity (either by infection or vaccination). However:
    1. The only countries who have apparently successfully ‘flattened the curve’ are those who have implemented very rigorous controls, including social distancing (‘lockdown’) as well as testing and isolation.
    2. There is approx two week lag before effective measures can be seen to slow transmission. Before that we can’t tell if a measure is working. It’s unclear yet whether the earlier localised lockdowns in Italy have been effective in slowing spread.
    3. Our measures seem designed to be less effective than other countries, hence we can expect faster spread and a steeper curve.
    4. Even the measures we have put in place, such that they are, risk being totally ineffective because we are being given the message that it’s ok for healthy people to get the disease, and therefore, control measures don’t need to be taken seriously. Expect this view to change once we see the disease spreading more widely, when we have already lost valuable time.
    5. It is much easier to control future spread if you have already got on top of the outbreak. That’s why more countries with low numbers are reacting sooner and more robustly.
    6. The implicit numbers behind the so called herd immunity strategy (which is not a strategy so much as a laissez faire ‘let the outbreak burn itself out’ approach) are, as others have pointed out above, truly appalling.
    7. The idea that our health service can cope with these numbers, when we have less infrastructure and personnel than the vast majority of similarly wealthy countries, is soon going to be shown to be extremely wishful thinking. Expect some really brutal rationing decisions (in Italy, some hospitals are restricting respiratory support to the under 60s. They have maybe twice as many ICU beds as us). Expect some people to die at home because there are no hospital beds.

    I can only hope for a speedy change of direction. In the meantime, I wish everyone well, and especially those in the frontline of the health service.

  • 54 Richard March 15, 2020, 9:15 am

    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. So I think I will hold off for now, even if prices are tempting. That interest only mortgage sized payment starts to look more appealing….

  • 55 MrOptimistic March 15, 2020, 9:48 am

    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.

  • 56 The Investor March 15, 2020, 10:04 am

    @MrOptimistic: You write…

    Is it unreasonable to now liquidate all equity positions with a view to buying back in say two months time when prices are lower?

    I know this is the definition of market timing, but in such a situation, which can be monitored, is the problem that you can’t be trusted to buy back in before – too late – the mood is obviously more optimistic and prices are higher than your sell position?

    Trading in and out of markets like this is perhaps the best definition I can think of in investing of something that looks like an obvious no-brainer decision but is actually very hard to do profitably in practice. (Perhaps the hordes of DIY investors who try to profit from buying a share just before it goes ex-dividend come close. Wow, the efficient markets have never thought of that! 🙂 )

    To be clear, my active and naughty strategy for the past few years (when I transitioned from being a traditional stock picker to being very active, and trying to only hold my best portfolio each day, albeit severely compromised due to cost concerns) involves a lot of this kind of thing.

    When I met with @TA on the first day of February, I told him I was really worried by the CV and that I didn’t think Western markets were taking it seriously — nor readers of this website! 🙂 I have a close friend who works with Chinese factories and I was staggered with how business had come to a halt. It seemed obvious to me that if this thing jumped to the West we’d see huge disruption. And I couldn’t see how it wouldn’t jump.

    As a result I dropped from approaching 90% equities to well under 60%, and approaching 20% in cash. That’s an enormous cash allocation for me. I did this over about a week.

    Yet towards the end of February I’d added c.20% of equities back! Why would I do something so dumb, as the news got worse? Because the markets were going up and the US was hitting an all-time high.

    Over years of doing this you develop a very healthy respect for the market being cleverer than you, most of the time. (Or luckier than you!) There’s always a bad reason somewhere to sell/sit in cash. So I followed the lead of price and re-upped equities. Well we all know that was a terrible decision in retrospect. 🙂

    This kind of thing happens *all the time* when you try to time markets. E.g. Over Friday I dithered about rotating some stocks, and even pulled poor @TA in (we were discussing something else) as I was contemplating rotating into a trust that had been left behind by the rally. I dithered, went for a walk, talked to @TA on the phone. By the time I came back I decided to leave it. The trust rose 20% PERCENT in an hour in the afternoon! 😐

    Yet as the UK markets closed I didn’t mind because the rally had totally faded. Fine, going into the weekend not super-gung-ho. Went for dinner with my girlfriend. Checked the US market close in the loo.

    Up 9% at the close WTF!?

    If you think you will be able to anticipate rallies like this (and I note you say you don’t, which is good!) you’re probably kidding yourself. People have no idea how capricious this stuff is until you have money on the line. I’ve been doing it for years and I get it right maybe 55% of the time versus 45% wrong, which is perhaps just enough to make it worth the cost for returns but is not enough to make it worth the hassle in my life (would be different if I was running money professionally and making a sliver on billions, but equally I am pretty sure my 55% hit rate (guesstimate) would fall!)

    The idea that a passive investor in the middle of a crash will discover themselves in the middle of a fearful bear market to be legendarily excellent market timers is fantasy. Of course many who try will get it right through luck. But most will fail, and keep quiet about it, or fail and not even realize they failed (due to terrible record keeping).

    The vast majority won’t and shouldn’t try, which I heartily endorse! Keep to your plan. 🙂

    If you want to see how difficult timing is, I suggest you try it as a paper portfolio over a year. You’ll almost certainly discover you’d have done better to just hold throughout.

  • 57 The Weasel March 15, 2020, 10:04 am

    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 focus should be on the vulnerable not the whole population.

  • 58 AncientI March 15, 2020, 10:06 am

    Thanks to the digital age and the speed with which information travels I dont expect we will ever see a bear market exist over many months anymore. Instead I expect bear markets to last only weeks now,

    if you look at all the sp500 declines since 2009 the bottom has always been in within 2 months.

    If March 2020 continues to be a down month then I think theres a good chance the bottom will be in April sometime, we could be another 20% lower then, who knows.

  • 59 David March 15, 2020, 10:06 am

    As well as the Medium article and all the sensible points from other posters, the maths that worries me is something I read on Rory Stewart’s Twitter:

    To achieve “herd immunity” of 60% by Oct the UK would need a running average of around 2.8mil cases (if active cases last ~2 weeks, 6 mo). That’s a running average of 140,000-280,000 critical ICU cases (if ICU cases last ~2 weeks)

    The UK has 4,000 ICU beds.

  • 60 Ben March 15, 2020, 10:11 am

    This is an unusual opportunity for investors as epidemics are highly predictable and well understood mathematically. Without China’s Draconian social distancing, the rest of the world will follow a typical epidemic curve, with exponential growth followed rapid decline. The disease will then become endemic but uncommon, probably before the end of the year. A recession looks very likely, but recovery is inevitable and might be quicker than people expect. If a vaccine is developed faster than expected (which would make the UK’s herd immunity strategy look like a catastrophic blunder), things will turn around even faster.

    As always, it’s impossible to time the bottom, so spreading out investments over summer seems the best approach to be. It’s a buyer’s market.

    As for Corona, obviously makes sense not to be in the herd when hospitals are overwhelmed. Aggressive social distancing essential, especially if you are over 50, male, a smoker etc. And stop visiting any elderly relatives immediately – remember you’re a vector as much as a victim.

  • 61 The Investor March 15, 2020, 10:20 am

    Regarding the Covid-19 strategy, I’m stepping back at the moment and trying to listen a little more.

    Readers may recall that early on my own thoughts were not a million miles from the Government’s. (Minimize disruption, focus on vulnerable, understand many/most of us will get it so follow the lesson of King Midas with the tide). However as noted in my article above (I did the links, not @TA, as usual 🙂 ) like many I really misunderstood how quickly it could overwhelm health services.

    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.

    Where are our huge new temporary hospitals being build right now? I can’t see anything being done? Yet we clearly have unexpected demand coming down the pike. Why are we not turning one of these emptied buildings into an arena? I’m sympathetic to the view that says it’s because we haven’t faced this before, whereas China and many Asian countries have.

    Because I think I didn’t appreciate that case for ‘flattening’, I’m trying to shut up and learn a bit more. 🙂

    However I stand by my initial assertion that crashing the economy and disrupting everything will be a VERY high price to pay. That saw me branded heartless by some readers, despite strong statements that I understand the horrible real-world realities, and I say again my own mother would be in the firing line — we’re trying to self-isolate her now. So yet again, yes every death is tragic. Nobody wants extra deaths for the sake of it.

    However crashing the economy will massively reduce economic growth and tax receipts etc. In five years there’ll be some unknowable number of fewer hospital refurbishments, money for rare drugs, vegetables for children at the lower-end of the income spectrum. There’s a cost to losing trillions in global growth. (Albeit maybe also some hidden upside — e.g. there are calculations suggesting China’s shutdown will long-term have saved a few lives due to reducing air pollution even temporarily!)

    Then there’s the health disruption. 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? How many kids will have a rash that the parents struggle to describe on the phone but a doctor would recognize in an instant?

    I don’t know but the answer is more than none I’m sure.

    Finally, on top of all this, we can’t really stop the virus. With less than 100,000 cases worldwide, almost all in China in lockdown, it got here and infected many people and has spread widely.

    Does anyone really think we can keep this thing out now? How?

    Set against all that, agreed — strong case for flattening the curve, curbing demand, striving for a vaccine/cure, hoping the sun will help as I wrote a few weeks ago.

    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.

  • 62 xxd09 March 15, 2020, 10:46 am

    Lack of skilled ITCU staff even if you could put the infrastructure in place
    Going to have to ride it out whatever happens
    Keep listening to the head medics as advice is constantly changing as they get more info from the frontline
    Use of common sense required
    BSE,SARS etc was to wipe us out but were mastered
    As for investing-this is a good test of your Asset Allocation-was it right?
    As for market timing-good luck!

  • 63 Vanguardfan March 15, 2020, 10:47 am

    Some word from the coal face:
    This is why we have to do all we can to delay.

    Frankly I don’t think the economic damage is avoidable, even with the ‘laissez faire’ scenario.

  • 64 Jonathan March 15, 2020, 10:53 am

    I think the UK approach to the virus is rational, but that is harder to maintain when everyone else is being irrational. And so much is based on informed guesses, with wide confidence limits. If things turn out bad, who knows whether one extra precaution would have made the difference; conversely if things are controlled who knows if excessive restrictions have led to unnecessary damage to the economy.

    The problem is that leaders want to be seen to be doing something, anything, a kind of machismo. In the case of Trump the machismo started with saying that Americans’ constitutions would easily stand up to the pesky Chinese virus, and then switched to trying to out-do the Chinese and Italian restrictions.

    As hard information emerges, including the Lancet and Medium articles I was pointed to from this website, it seems to be more and more likely that Covid-19 has about the same severity as normal flu, it is just that the lack of prior immunity (even partial) makes it spread quicker and hit the vulnerable harder. The unknown to me – but presumably known to public health officials from previous contact tracing – is whether children act as significant spreaders of the virus. If not, then given how mildly they are affected it makes sense to keep schools open. They can surely estimate how big a hit to NHS capacity would be caused by forcing working parents to stay at home with kids.

    The surprise to me is that there hasn’t been stronger advice on protecting those vulnerable through pre-existing problems. Creating a significant barrier to them getting infected would have a big impact at both a personal and a health service level. Some signals this morning that officials are finally thinking that way.

    Investment-wise, the quandary is coming soon for me. Money from my late mother’s estate is likely to appear soon, assuming the buyers of her house don’t get cold feet right at the point of exchange of contracts. Do I just hold money as cash? Do I at least follow my strategy of the last few years of investing half our ISA allowances in balanced funds at the beginning of the financial year, adding more later? Should I be investing outside ISAs?

  • 65 Vanguardfan March 15, 2020, 11:03 am

    Please stop spreading the misinformation that this is no worse than flu.

    I am in touch with a lot of docs (I used to be one). 20% need hospital, maybe 5-10% some kind of intensive care (obviously this is to some extent context specific depending on testing policies and availability of beds, but the US docs are confirming the kind of stats the Chinese and Italians have experienced).
    At the severe end the complications are pretty horrific (not just lungs but heart and brain stem can be affected). It is not just older sicker people that can be severely affected.

    For balance, yes of course, the majority, the 80%, will be ok. And even in older age groups most people are surviving. But just like flu? No.

  • 66 Vanguardfan March 15, 2020, 11:10 am

    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 (this is already 5 days too late for infection spread). If you have autonomy to do so, limit your own face to face contacts. Help your elderly relatives to limit their contacts – phone or video call them frequently.
    That’s about all I can think of. Keep in touch with friends, reach out and offer support, remotely.

  • 67 Vanguardfan March 15, 2020, 11:14 am

    And your portfolio – follow your plan.
    (I’ve been caught out by the US surge, having decided to do my usual CGT sales…should have really deferred given the volatility and the lack of control of timing of fund trades. But hey, it’s only a bit of a tax bill).

  • 68 JimJim March 15, 2020, 11:31 am

    @ Johnathan Re ” then given how mildly they are affected it makes sense to keep schools open. They can surely estimate how big a hit to NHS capacity would be caused by forcing working parents to stay at home with kids”
    What about the aging profile of the teachers in this country, schools employ those too. Would you risk the lives of all the educational professionals in the U.K just to limit economic disruption? In my educational organisation we have three members of staff over the age of seventy, precious little is being done to protect them in what are public facing roles with lots of close contacts throughout the day.
    As it stands, with public health England’s advice to educational establishments 12th March, If One contact is had with an infected person, the whole group must self isolate for 14 days de-facto closing the place.

  • 69 Bloodonthestreets March 15, 2020, 11:32 am

    I’m sticking my neck out here a bit but I think stocks could fall 70% or even more. There’s just no fundamentals there any more. Even when some companies were turning a profit the markets and more importantly companies were propped up by cheap debt.

    Whole industries are going to collapse. This is almost certainly going to be the worst shock to the capitalist system since WW2 and probably worse because companies in those days at least made a profit

    Uber will go under I reckon and WeWork for sure. Start up industry destroyed now as there won’t be any more VC money. Essentially the house of cards built up since the financial crisis and arguably since deregulation of the sector in 1980s is going to collapse

    Happy Days!

  • 70 MrOptimistic March 15, 2020, 11:36 am

    @TI. Cheers for that. I am about 40% in equities in the ISAs and 20% in the sipp. I sold Witan Pacific just at the outset and wish I had sold more. Yesterday I checked on something I meant to sell but didn’t (AVI) and it showed a monthly loss of 25% so no point selling that! Scrap my ( hypothetical) idea.
    Think IT discount calculations are trailing reality at the moment which doesn’t help.
    The virus is going to cause worry and personal tragedies for a while to come, but government actions could turn this into a deflationary slump we struggle to get free of for a time to come. Don’t think it’s the time to sell or buy if you can avoid it.
    Good luck.

  • 71 MR BEN MORGAN March 15, 2020, 11:41 am

    @ Jonathan
    ” it seems to be more and more likely that Covid-19 has about the same severity as normal flu”

    To put this in context, season flu killed 240 people in Italy between October and January, but coronavirus is killing around 200 a day and that number is expected to keep doubling every 5 days or so until the peak of the epidemic.

  • 72 ZXSpectrum48k March 15, 2020, 11:44 am

    @vanguardfan. Are you implying that 20% of all those who are infected require medical intervention? Or 20% who are seeking medical help, require medical intervention? The latter would fit the sort of data I’m seeing but not the former. I’ve been on 20+ conference calls on COVID-19 in the last few weeks and one of the biggest frustrations from the experts on the calls is the absence of good statistical data on the ratio symptomatic to asymptomatic carriers, and how many in the population have actually already had the virus. Limited data I’ve seen from the Seattle cluster using random testing, carried out by a major pharma based in that area but botr published, is showing infection rates 5-10x the official numbers. That would make SARS-CoV-2 still far worse that H1N1 or typical flu but not as bad as the numbers you suggest.

  • 73 Ben March 15, 2020, 11:54 am

    Some basic but interesting mathematical models of the epidemic with quarantine and varying degrees of social distancing at the link below. There are different routes to herd immunity, e.g. a very rapid epidemic in which nearly everyone is infected (maximum number of deaths) and a slower curve which achieves herd immunity but leaves a significant proportion of the population uninfected. This seems the best approach, but I think the UK government wants a short sharp shock with elderly people insulated from it.



  • 74 Jonathan March 15, 2020, 12:02 pm

    @Vanguardfan, I didn’t mean to imply that we should currently be no more concerned about Covid-19 than flu. It is a genuine health crisis. Though it will be a long time before the number of deaths matches those attributed to flu every winter. But in 5 years time my own guess is that it will be just another part of the regular seasonal wave of infections.

    In terms of numbers, since no one knows what the denominator is no one can accurately estimate the incidence. South Korea which has tested far more people than anywhere else has ended up with severe cases at lower incidence than elsewhere. I understand there are now serological tests being carried out on population samples in Hubei that will give a better guide to how much testing of acute cases underestimates the actual incidence.

    @JimJim, your school is unusual in having such elderly teachers, and I do think strong measures should be taken to protect at-risk groups. From my own local knowledge (as a school governor) a fair proportion of the profession retire earlier than 65 and the median age is probably close to 40. (Universities on the other hand will often have a proportion of older staff, I had a number of elderly colleagues throughout my career; however at that point they usually don’t have the level of potential infective exposure as mid-career staff, and also those still active may be fitter than the average 70-year-old).

  • 75 Matthew March 15, 2020, 12:17 pm

    We could be about to see massive QE injections to stimulate growth and to pay for all this treatnent and quarrantine, perhaps equities will be the best way to ride that

  • 76 The Rhino March 15, 2020, 12:18 pm

    You can rely on Vanguard to be a soothing balm on the hot-rash of COVID-19:


  • 77 FlyByNight March 15, 2020, 12:34 pm

    +1 on don’t sell and everything @TI said about timing.

    Passive works so it’s just a case of stick to the plan and hope monthly payments are buying the market at the cheap end.

    On CV – as with other topics debated here in recent years there are going to be differences of opinion on the rights and wrongs.

    For my view – it’s best to work with others unless you can publish clear evidence that they have got it wrong.

    But I do struggle with the government’s central thinking that they want the majority of the population to get it knowing hundreds of thousands are going to die. Especially when countries with far more experience of dealing with this are doing the opposite.

  • 78 Vanguardfan March 15, 2020, 12:49 pm

    @zx – the latter (hence the caveat about testing policies).
    Agree totally re lack of good data yet, especially population based antibody studies. Seattle study sounds interesting and the one hope could be that if there have indeed been more silent infections than we are aware of, and that confer immunity, then we could reach virus burn out quicker.
    Do you know of any antibody studies in children?

  • 79 WhiteSheep March 15, 2020, 1:10 pm

    I am not sure why the medium article was so widely shared on various social media. The author has no qualifications in the area, and there are some fairly apparent arbitrary assumptions and mistakes (like the relationship between understimated true cases and fatality rates), some of which are actually peer reviewed in the comments. That is not to say that the impact of COVID-19 may not be understimated, but there seem to be no shortage of better sources on the internet (e.g. https://www.who.int/docs/default-source/coronaviruse/who-china-joint-mission-on-covid-19-final-report.pdf ). My employer is already enforcing homeworking for any non-business critical activities.

    I am also surprised that even some Monevator readers seem to discover that they have overstimated their risk tolerance…

    Best wishes to everyone and stay healthy.

  • 80 Jonathan March 15, 2020, 1:15 pm

    @Vanguardfan those are exactly the questions I have. Overall prevalance and thus real percentage needing hospitalisation, and whether children are in fact getting infected without symptoms and whether they spread it. In the unusual case of a new infective agent it will unfortunately take time to collect good data. Once the currently huge confidence limits start to reduce strategies will become clearer.

  • 81 Ste March 15, 2020, 1:28 pm

    Regarding Covid-19, listen a little more is certainly the right advice, and do listen to the experts. Unfortunately that should have included the author of that medium article. No doubt, he makes a compelling point and writes a solid data story, and I understand why it’s being shared so widely. I am troubled by the idea that decisions that impact the lives of millions should be based on that sort of evidence. It looks like he made a very valiant effort to compile relevant information and write it up in an understandable way, which is great. However, from all I have seen he does not seem to have a relevant background in epidemiology, virology, statistics or any other field that might be useful for that sort of work. This doesn’t mean he shouldn’t be allowed to do it of course – I am sure he was driven by the best of intentions and tried the best he could. It just means we should be extra careful about the very strong and prescriptive conclusions the article makes, and we should wait until some people with actual expertise have peer-reviewed his maths and claims (some people seem to be on it right now but I haven’t seen a conclusive response yet, and people pointed out that some of his graphs look like he might have misunderstood statistical and epidemiological concepts). Epidemiology is really, really hard to get right and we should be a little humble and acknowledge that people who’ve been doing it for years might be better placed to give us recommendations here. It’s true, in an emerging situation like this one we sometimes have to act based on incomplete evidence and before everything is peer-reviewed and published – I’d just prefer if that sort of advice was left to people who have accumulated years of experience and know how to contextualise the vast amount of incomplete data we are getting in at the moment.

    Having said all this, destroying my carefully built argument immediately: He does seem to make a good point overall and Anthony Costello (https://twitter.com/globalhlthtwit) and others (see open letter by UK based scientists http://maths.qmul.ac.uk/~vnicosia/UK_scientists_statement_on_coronavirus_measures.pdf) have endorsed the gist of his write-up. I think citizen data science like Tomas Pueyo’s piece can really help the scientific community in collecting and compiling data, make academia more open and hold policy-makers to account, I would just urge some caution when it comes to taking it as gospel as happened with the medium article.

  • 82 Vanguardfan March 15, 2020, 1:55 pm

    I do agree with those pointing out the non expert provenance of the medium article, although that said, the ‘flattening the curve’ principle is widely quoted and what our expert advice is aimed at. The problem is we don’t really have good enough data yet, so all is speculation. I guess I am more at the precautionary end, in the absence of good evidence try to anticipate the worst.

    It would help if the govnt were more open about the evidence they are using – they have said now that they will publish it, which will be interesting.

  • 83 The Investor March 15, 2020, 2:13 pm

    Re: Scientific evidence/experts, I shared my 5,000 to 10,000 already-infected estimate that I made in comments on Lars’ article on Thursday on my social media. Several friends got in touch, at least a couple who are wicked smart(er than me), generally estimating higher.

    One of my nerdy virus-enthusiast friends though said “there’s no evidence to say it’s more than 1,000 currently” and linked to some official data. He also says it’s reckless to state the virus might be slowed by warmer/sunnier weather, despite plenty of circumstantial pointers. Also there’s no evidence death rate is lower than X%. Etc.

    This is why people turn to someone like the Medium article. It’s a very smart person who has made as @Ste says the best fist he can of all the data out there, at a time when Western governments have been shown to fail (early Italy), be blusteringly incompetent and nationalist (US) or apparently riffing on a hypothesis (the UK government, though at the time of the Medium article the UK government wasn’t really even doing that.)

    I am as big a fan of experts as anyone, but much of this is more politics. And anyway in the absence of information people can believe, something will fill the vacuum. This is why as others have said we should be careful what we say for sure.

    The chief scientific officer by Thursday night had made the same 5-10K prediction of UK infections as me. Lucky stab on my part, but no movement from my chiding friend except to then claim it was “old news”.

    It’s natural at times of crisis, fear, uncertainty, and distrust that people are going to have to make decisions ahead of the evidence. I got my vulnerable mother into isolation mode on Thursday (this was why I was posting on social media suggesting friends/family do the same) and I would not wait for the UK government to order the same in a couple of weeks, personally.


    It would help if the govnt were more open about the evidence they are using – they have said now that they will publish it, which will be interesting.

    Exactly. Fully agreed.

  • 84 Sparschwein March 15, 2020, 2:52 pm

    @ZX – South Korea is the most comprehensive dataset. Outside SK, no one has done broad testing. Trust those who say “we don’t know”, that’s a sign of real experts. There’s frantic research activity and new studies published almost daily.
    For real-time information and expert commentary, “Science Twitter” is your friend.

  • 85 Keith March 15, 2020, 3:08 pm

    The concept of ‘herd immunity’ makes sense when we’re talking about vaccination campaigns using a much attenuated form of the virus to stimulate the body’s own responses to generate an effective response. How many of us would accept a vaccine that killed around three out of every hundred people who had it?

  • 86 Matthew March 15, 2020, 3:35 pm

    Could we have a house price drop & subsequent 2008 style crisis due to a flood of 3 and 4 bedroom elderly homes flooding the market?

  • 87 Jonathan March 15, 2020, 3:45 pm

    Pueyo of The Medium may not be a professional epidemiologist, but he has done many a useful service by pulling together some of the more useful data out there.

    Unfortunately, as he pointed out, by the time we have data to discuss it is already old in terms of the progress of the pandemic. And hardly any of it has been collected as a proper epidemiological study so there are potentially huge sampling errors. But as more information emerges the confidence limits should hopefully contract.

    In a sense Pueyo simplified the situation, because his aim was to create a clear account of what he personally thought the risks were. A professional would most likely been more careful (hence unclear) about pointing out confidence limits.

    In the end though, any reporter or government official will be making a choice. Are they going to write/plan on the basis of the statistically most probable case, or somewhere on the worst case side of the probability distribution curve?

    All rather like our old friend the SWR calculation …

  • 88 Sparschwein March 15, 2020, 5:34 pm

    @TI (#56) – a timely (and sobering) perspective, thanks.

    I have kept a large chunk of my stock allocation in cash recently and avoided most of the drop. The reasoning being that we are headed for either of two scenarios,
    a shutdown of the big Western economies or an Italy-style overwhelm of the medical systems and ensuing panic. The latter being more likely in the UK and US due to poor government policy.
    Hence my thought that there is more potential downside than upside. I just can’t see the markets rally to old heights when there are Contagion-style scenes from the largest world economy all over the media… but maybe I am very wrong.

    Any thoughts which scenarios are priced in or not?

    I think there is a place on this site for reports from the active investing front, if only as cautionary tales.

  • 89 Matthew March 15, 2020, 6:11 pm

    New uk cases has decellerated, boris’s plan must be working!

  • 90 Vanguardfan March 15, 2020, 6:24 pm

    Testing policy changed last week . Now you have to be severe enough to be hospitalised to get a test.

  • 91 Matthew March 15, 2020, 6:38 pm

    So… if we eventually cannot hospitalise people because of no space, we wont record an increase in cases, and can lift the lockdown!

  • 92 xxd09 March 15, 2020, 8:13 pm

    Keep the faith!
    The Chief Medical officers of England and Scotland are putting in impressive performances on TV and Radio
    Reminds me of that MOD official Ian McDonald(those Scots again) in the Falklands campaign
    We are in the hands of these experts whether we like or not-what do we or our politicians know about Viral Pandemics-a very specialised area!
    The politicians have the executive power but our permanent officials have the expert knowledge
    Tighten seatbelts and hold on-going to be rough ride
    I think we will make it to the other side with these guys and gals(Scot is Catherine Calderwood)
    xxd09( 73!)

  • 93 Lethalturnip March 15, 2020, 8:29 pm

    I’m 31 and I have ~9 years of saving 1/3 of my life’s earnings in approx 80% equities across SIPP & ISAs. I feel fine about this. I’m not worried, or panicking. From the point of view of my investments I couldn’t give a shit. I have read about this – I have planned for this by informing myself. I have spent hundreds of hours reading Monevator and other websites cover-to-cover, and I have confidence in the decades(!) of evidence that I remain in a great position. I’ll just continue to stick my money in every month buying cheaper and cheaper shares, just as every scrap of historical evidence recommends once it was blessed with the benefit of hindsight.

    Stay the course. Easy peasy for us (relatively) young-uns.

  • 94 FlyByNight March 15, 2020, 8:46 pm

    Watching the news just now and hearing news from a relative in Switzerland that schools are shut for 7 weeks and offices are closed and people working from home: I wonder what our experts know that no one else does?

    As @Vanguardfan says: It would help if the govnt were more open about the evidence they are using.

    Not sure that these things work – but there’s a petition going which 229k people have signed and it’s going up fast. The government need to make their case or change the plan.

  • 95 Richard March 15, 2020, 11:10 pm

    I thought many over 70s would naturally self isolate out of fear without being asked, but having been to my local garden centre I don’t think I have seen it more full of elderly and frail looking customers.

  • 96 ZXSpectrum48k March 15, 2020, 11:16 pm

    Boom. Fed has done 100bp emergency rate cut and $700bn in QE ($500bn of govt bonds, $200bn of agencies). Fed funds is now at 0-0.25%. So we are back at the zero bound last seen in 2015. They had a meeting on Weds but clearly couldn’t wait that long. Fed also lowered cost of dollar swap lines with ECB, BoJ, BoE, BoC and SNB by 25bp. RBNZ also cut 75bp. So continuing co-ordinated liquidity injections from central banks. Their ammo is being spent.

    S&P future is limit down, about 4.8%, on open.

  • 97 Martin March 15, 2020, 11:48 pm

    I feel like the UK’s plan of action might be fuelled by the idea that going into a full lock-down will lead to more deaths eventually due to economic reasons than the virus.

    No matter how much politicians can be outright stupid and vile, at times like these, I don’t envy them one bit. No matter what they do, they will be blamed hard.

  • 98 Matthew March 16, 2020, 12:10 am

    @zx – does QE ammo ever run out? Arguably there must come some point with negative rates too that would push people to spend/ increase risk, people’s risk adversion can only go so far when annuities become out of reach and cash becomes too risky

  • 99 Neverland March 16, 2020, 8:40 am


    No, in extremis, the government can just sent people on the national insurance register cheques

    You could argue that’s what the whole PPI mis-selling scandal actually was

  • 100 Jura March 16, 2020, 8:45 am

    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 S Korea only holds true until you run out of ICU beds. The UK does not nearly enough beds to cope with the peak that is being predicted. We are miles behind the rest of Europe in containment and when it hits we will struggle to keep up. Yes, containment will have an enormous economic and psychological impact. 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 (IMO) the mother of all recessions. What price life?

  • 101 Vanguardfan March 16, 2020, 8:57 am

    @jura. Thank you.
    @martin, yes the economic effects will be severe, but some of the impacts on individuals are political choices – as Neverland says, the government could choose to put money in people’s pockets, to spread the pain more fairly.
    To be honest all this worry about portfolios is a bit of a luxury at the moment (and I appreciate this is an investment site) – what people need to be doing now is making sure they have a liquid cash emergency fund. Do not spend your cash on cheap stocks.

  • 102 The Weasel March 16, 2020, 11:50 am

    It does not matter if the Fed or the BoE give free money to banks or even individuals.

    What use is money if the demand won’t be there? Are we all suddenly going to start booking flights to some quarantined nation just because borrowing is cheap?
    I suspect monetary stimulus is not the right tool for the job this time. Or am I missing something?

  • 103 Vanguardfan March 16, 2020, 12:03 pm

    Free money will help people who suddenly have a black hole in their income to keep paying essential bills and put food on the table. Obviously it won’t mend the economy, that will have to wait.

  • 104 The Investor March 16, 2020, 12:04 pm

    I suspect monetary stimulus is not the right tool for the job this time. Or am I missing something?

    Yes. 🙂 It’s not that cutting rates is a tool for a job. It’s that it’s required, because when say one-year yields on US Treasuries are flirting with going negative, US rates shouldn’t/needn’t be far higher. And conditions shouldn’t be tighter than they need to be going into a recession.

    There’s also a necessary but not sufficient aspect to this. Cushioning the blow will require monetary easing. But it is not going to do the job alone.

    Frankly, I don’t think much can be done to offset it. Sometimes we face economic shocks. This is one of them. We have to get through that reality.

  • 105 AAJ March 16, 2020, 12:11 pm

    @The Weasel “It does not matter if the Fed or the BoE give free money to banks or ”

    On the face of it, this does indeed sound like it’s of little use. However, the reality is that printing money and handing it out in certain areas will save businesses from going under. I am sure the Fed just printed one $trillion for short term loans in the last week alone (I am sure there people here better placed to comment on the details). Without this many businesses and banks would be on a sticky wicket. It’s more a case of getting the money where it’s needed. What happens to BA, EasyJet etc. if they can’t refinance loans? Maybe some BoE funny money could help? What happens to the new funny money after covid-19 has passed? That is what people should be asking. What happens to interest rates after covid-19? What happens to the price of gold following an increase in liquidity and a calming down of oil price tensions?

  • 106 The Investor March 16, 2020, 12:14 pm

    What we really need to be thinking about is pubs, restaurants, small hotels, events etc.

    They are mostly probably going to go bust under the lockdown plan everyone is urging, presuming the virus doesn’t abate quickly or with warmer weather. This is a huge slug of the economy, with massive knock-ons.

    I’m also hearing tourist numbers are falling and Chinese students are going home on account of the UK government’s early strategy. Won’t help either.

  • 107 Snowman March 16, 2020, 12:16 pm

    14 CV deaths in UK yesterday

    Chinese data shows deaths occur on average about 20 days after infection (5 days to symptoms and 15 days after symptoms)

    So if we assume that those 14 deaths all contracted corona virus exactly 20 days ago.

    And we assume the number of infections is currently doubling every 3 days (or 26% per day). Then we expect the number of deaths per day also to increase by the same percentage

    Then we will expect 14 x 1.26^20 = 1,426 per day UK CV deaths in 20 days time assuming the same mortality rate per infected case

    And we can’t do anything now about that because all the deaths in 20 days are from people already infected today

    368 deaths in Italy per day at the moment
    1,426 estimated deaths for UK in 20 days

    There must be an error in my numbers? Can anyone point it out?

  • 108 Snowman March 16, 2020, 12:29 pm

    Doubling of new cases every 5 days may is hopefully more accurate

    This gives 224 deaths in 20 days

    So less than Italy currently but pretty scary all the same

    The sensitivity to the growth rate shows how important it is to take action now

  • 109 MrOptimistic March 16, 2020, 12:39 pm

    @Snowman. With that logic what is the daily toll in 100 days time ?
    Based on Chinese data, plus the more plausible data out there, 80 % of cases are unremarkable, 20% require support, without effective support (ITU) the fatality rate is of the order of 5% ( thanks @Jura) with this unevenly spread across the population in accordance with risk factors.
    From an individual perspective we can assess the odds. For the government dealing with the whole population it’s an awful algebra. They have my sympathy.
    I live in a rural location, but even here it is very quiet today and there are almost no contrails in the sky. Unless everyone is packed into Tesco’s this shows the message is getting home and hopefully it will slow things down if only a bit.

  • 110 Algernond March 16, 2020, 12:45 pm

    ETFs seem a lot more fun than their equivelent finds right now (e.g. Vanguard VWRL vs . All-word tracker fund).
    Can make a quick decision to buy when there’s a sudden dip and immediatly see the rewards, rather than the pain of waiting 3-days with a fund not knowing what the the price will be.

  • 111 Jonny March 16, 2020, 1:35 pm

    It seems a bit strange to talk about investments given all the chaos and anxieties surrounding CV, but I’ve hit an interesting (to me at least) dilemma.

    I’d made the decision 2-3 weeks ago to increase the total amount I have invested (primarily in VG LS80) by about 12.5%, with some cash that was earning next to nothing in savings.

    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!

    Last week was really interesting following the market updates as they happened. Normally I don’t pay any attention, and just make automated regular monthly payments (which I’ll continue to do), making lump sums as and when I found any extra money. Interestingly I’ve not looked at the damage to my portfolio, as it’s in there for the long term so nothing I can or should do with that.

    My quandary is whether to proceed with this 12.5% purchase (which given the markets now, will leave an even larger proportion invested than before). I was totally happy making such a large lump sum when the market was higher, so should be even more happy about buying the same stuff at these ‘sale’ prices. My worry is whether there are to be further significant drops (or ‘better sales’ ahead if looking optimistically) soon after I commit. I realise I’m back in the market timing territory (both being greedy and wanting to get more for less, and fearful, wanting to avoid ‘paper’ losses) – but it turns out despite knowing better – in the thick of it I’m only human 🙁

    I guess I should probably drip feed/dollar cost average the investment over weeks, fortnights, months – perhaps re-evaluating how I feel about the prospect of putting more money into the market each time I do. But even then I still need to pull the trigger on that first buy!

    I’m not expecting anyone to solve this for me (though any opinions are always appreciated) – I guess this is as good a way as ever to try to document/articulate my thoughts. I wonder what I’ll think if I come back to re-read it in 12 months time?

  • 112 Snowman March 16, 2020, 1:35 pm

    @ Mr Optimistic

    In 100 days time a substantial proportion of the population will have had the virus, so herd immunity will be materially relevant and so the exponential growth rate assumption will have long broken down even if we took no further measures to stop the spread

    But in the relatively early stages (i.e deaths in 20 days from everyone with the virus now) the herd immunity consists of less than 1% of the population and so is a trivial error given the other assumptions, allowing the exponential growth assumption to work.

  • 113 MrOptimistic March 16, 2020, 1:42 pm

    @Snowman. With these sparse statistics and short characteristic time, delays in feeding the numbers through probably are distorting things. When they say ‘x events today’ do they really mean X reported today, having previously been inching up the reporting chain and then being aggregated?

  • 114 Matthew March 16, 2020, 2:42 pm

    Perhaps far more people already have it without knowing/reporting and the death rate is lower, the peak sooner
    I dont think we should logically fare worse than other countries that do the same as us

  • 115 Learner March 16, 2020, 2:42 pm

    >Based on Chinese data, plus the more plausible data out there, 80 % of cases are unremarkable, 20% require support

    Just a note on this stat (if we’re talking about the same data) – the 80% “mild” category is everything up to and including non-hospitalised pneumonia, the other 20% “severe” and “critical” are hospitalisation (eg ventilation) and organ failure respectively.

    Wouldn’t want anyone to confuse unremarkable with a sniffle.

  • 116 Snowman March 16, 2020, 3:13 pm

    @Mr Optimistic

    Good point about deaths not being deaths on the day but those making it into the statistics on that day. Don’t know the answer about what the average delay is between deaths happening and then appearing in the daily death statistics, or whether deaths won’t be distributed evenly in the figures each day, because the information is not being made available. But if there is a significant delay that worsens the numbers.

    Whatever the delay if we see around 14 deaths per day reported and as a trend doubling every 3 or 5 days on a daily basis, then it is not looking good on these calculations.

    Don’t have any particular insight on this so looking for genuine feedback on how the back of the envelope calculation I’ve made is wrong.

    Incidentally you can extend the method perhaps using a 0.6% case fatality rate to work out how many people are affected with this virus at any one time (or at least infected 20 days ago). Strikes me as a more accurate calculation than taking test results and multiplying by 10 or something.

  • 117 Jonathan March 16, 2020, 3:26 pm

    @Snowman, there was a rule of thumb given in the Medium article talked about above. The writer reckoned the number of deaths (likely to be fairly definitive) should be multiplied by 800 to estimate the total number of cases.

    If I remember right, that was on the basis of a 1% death probability at the point of infection and a 20 day lag between someone getting infected and dying. It still may exclude a proportion getting extremely mild symptoms and thus not included in the denominator for death rate (might be the case for children).

  • 118 xxd09 March 16, 2020, 5:09 pm

    I would be loath to give very much credence to any Chinese figures

  • 119 Chris March 17, 2020, 5:26 pm

    Dumb luck on my part last Friday to want to change from ETFs to a unit index tracker, sold on the Friday and by the time the purchases had gone through Monday the market had dropped 10% – am I pleased to have got more units for my money, yes, but it’s also a reminder to me to stop looking obsessively. And that plowing in some surplus cash was a decision that may or may not work out, but likely will in the long run.

    Too much looking at the markets maketh the man stressed.

  • 120 Edward March 26, 2020, 7:22 pm

    Your ‘do not sell’ mantra is being severely tested here. I’ve seen a number of sites suggesting there is a very high probability that stocks will drop 80% from their 2020 highs.

    That would be disastrous for all but the most defensive portfolio.

    Maybe take advantage of this bear rally and get out before it gets really ugly?

  • 121 AAJ April 1, 2020, 10:08 am

    @Edward “I’ve seen a number of sites suggesting there is a very high probability that stocks will drop 80% from their 2020 highs”

    There is a reasonable chance of further falls. 80% drop form all time highs is unlikely and is a guess. This is especially true in the US were the fed will simply buy equities to keep prices up. However, the truth is, no one knows. And no one knows when to get back in. The probability is that when people (retail) sell they miss getting back in at the correct time and hence miss out on gains they would otherwise have retained.

    Yes, it’s tempting to become a trader…

  • 122 David April 28, 2021, 6:07 pm

    Its now over a year since this post, but I still like to look at it every now and again. It is a remarkable piece of blogging. Not because the advice was quickly validated by the bounce back in the markets. Not even because the advice was so wise (which it manifestly was). Rather, its because the writing is superlative – practically iconic for the personal finance sphere. “Hi old friend. This is it. … DO NOT SELL”. A wonderful, forceful call to arms / sense. The author and this blog deserve an award for journalism, let alone for investment wisdom. God bless you, Monevator.

  • 123 The Accumulator April 29, 2021, 7:34 am

    Well, that’s got my day off to a bright start. David, thank you… where’s the blush emoji?

  • 124 Time like infinity October 17, 2023, 10:49 pm

    I’ll second that @David #122. Yes. Perfect advice, perfectly timed @TA. Glad to have held on. While unsurprised by the market recovery, it was pleasantly surprising we only saw falls of a third or so from the Feb peak to the March trough (and less still in £ terms, due to $ strengthening), as well as such a speedy, extended and strong rally, with a doubling of the SP500 in just a single year. @Matthew’s #75 intuition was right.

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