Weekend reading: Do not sell

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.

@CisforV

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

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

@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.

@Steve (10)

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

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.

Thanks for this. Interesting times.

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’.

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.

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 🙂

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

@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!

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.

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.

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.

@Steve

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.

@Peter.

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).

@CollReg

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.

@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.

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%.

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.

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.

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!

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.

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.

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.

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.

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.

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.

Some word from the coal face:
https://www.theguardian.com/world/2020/mar/15/coronavirus-senior-nhs-consultant-speaks-out
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.

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.

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).

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!

@ 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.

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.

https://www.washingtonpost.com/graphics/2020/world/corona-simulator/?utm_campaign=wp_main&utm_medium=social&utm_source=facebook

https://www.washingtonpost.com/graphics/2020/world/corona-simulator/?utm_campaign=wp_main&utm_medium=social&utm_source=facebook

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

+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.

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.

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.

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?

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 …

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

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

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.

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.

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.

@matthew

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

@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.

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.

@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?

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?

@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.

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?

@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?

>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.

@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).

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.

@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…

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