Stock Futures Were Halted Sunday Night After 5% Drop

3. Heroic effort that puts a stop to this without major disruption, following by insufferable people telling us "see it was never a big deal in the first place."

I'm not sure which is the worst option.

But who is dying matters when looking at economic impact.

Median age of death in China is 75. Median age is 81 in Italy. This is around the expected life span of these countries.

Obviously a human life cut short is always worth mourning, but from an economic perspective, dying pensioners could actually be a stimulus.

  expert epidemiologists are predicting billions infected and millions if not tens of millions of deaths 

Name two.

The fear in the markets is due to the long systemic propping up of asset values. COVID19 is the pin pricking the balloon. Fundamentally, COVID isn't the problem, it's the Fed. My favorite analogy is forest fires: they're healthy for the environment on occasion. When you stop them from happening indefinitely, bad things happen. In terms of markets, that means people taking on debts when they should not do so. People getting funded for fundamentally unprofitable business ventures. It is healthy for an economy to clean house on economically inefficient ventures from time to time.

There are some scientists that have models like this, but keep in mind that a lot of the people that come up with these are not peer reviewed estimates, and some of them just want the publicity. The media obviously goes for it, because if it bleeds it leads.

Yes, there's a lot of 10-year bull run market dynamics that found a perfect catalyst with a global pandemic.

Unfortunately the current rates are based on people (mostly) having access to forced respiration devices. 1/5 people who get Covid require external oxygen...

This is absolutely false and yet another reason why journalists shouldn’t play epidemiology.

Mitigating the rate of spread leads to less deaths overall. If everyone got it at the same time, there wouldn’t be enough healthcare system capacity to handle it. This isn’t a new concept, it’s well-known within epidemiology. Cities with early interventions in the 1918 flu epidemic had 50% lower peak death rates. If everyone got it at once, many more people would die than if the same number of people got it over a longer period of time.

The following is my speculation, but if we woke up tomorrow and everyone suddenly had the coronavirus, then the economy would be in much bigger trouble than it would be with a slower rate of infection.

High rates of corporate debt are misleading. We've had a decade of essentially zero or near-zero interest rates. We've also had companies that generate profits on an almost unprecedented scale be able to (legally) transfer IP offshore and essentially engage in IP licensing as a form of transfer pricing (which is otherwise illegal).

So you have a bunch of people who would rather borrow money at near-zero rates than repatriate profits that they'd then have to pay taxes on. This is just deferring tax debt indefinitely. Worst case scenario for the tech companies at least is that they need to repatriate some of their mountains of cash (and possibly downsize to reduce costs).

I don't know what fraction of corporate debt this covers but given the size of the tech companies now, I'd be surprised if it wasn't a significant chunk.

> $280 SPY puts

ayeee 2500 SPX puts here, brethren

But that logic is flawed, see Japanese market. NIKKEI 225 Index, Was 34k in 1990, still 20+k and hasn't recovered after 30 years. There's nothing preventing that from happening to the US market.

If you're not sure if you can, probably you can't. At this point nothing indicates that we've learned how to reliably avoid recessions. Quantitative easing and negative rates don't look like the Holy Grail, quite the opposite.

Absolutely disagree with this sentiment. Avoiding recessions pushes for a change in the rules of the game allowing unhealthy practices to go on unpunished in the market. This is incredibly unhealthy in the long run.

Well then you do some quantitative easing and all is well again ;).

Only 2% of the US workforce has a minimum wage job.

I misphrased that - I meant to say in the long term. I agree that we will see a quarter or two of eps impact due to virus. But for a true crash the market needs to price in a longer term impact due to the virus - which seems unlikely on its own. However we certainly can see a crash due to sentiment and valuation changes prompted by this as a catalyst.

It's a smart move. What's price of the put BTW? Did you feel that people were concerned about an immediate fall that Put was expensive at that moment?

I bought S&P puts at the wrong time so many times that I just gave up, didn't trust my gut in early Feb, assumed the market would find some strange way to keep going up. Oops.

What’s the point? Instead of spending money on stocks and puts against the same stocks (which costs money), why not just allocate less to stocks in the first place?

The reasons I could imagine is if the stock is illiquid (401k, lockup, etc)

Congrats on winning the lottery.

Long term yours is a losing strategy.

Me too. I bought 10 contracts on SPY puts 5 days before the drop, expiring January. My first target is the Dec 2018 lows but I expect a 50% drop before the end of the year.

I love how people are self righteous about the timing but I have been wildly profitable over the last 20 years picking my spots like this.

I agree with that but do you know you’re going to take a 20% hair cut? What if you get out of the market after it drops 6% at the bell tomorrow and then it goes up 1% the day after and 3% the day after that? Do you panic buy back in? What happens if someone finds out that a cheap readily available drug cures it and this whole thing is over in three weeks?

I’m extremely pessimistic about the market right now, but I’m more pessimistic that if I traded that I wouldn’t lose more money.

I’ve had a big chunk of my 401k sitting on the sidelines for months now. I’m going to wait to see how this virus thing shakes out then use it to buy back in after it looks like the worst is over.

Until then, there’s way too much uncertainty to try and trade this. I’m not retiring for twenty years. Whatever happens it should bounce back in 2-3 years or so.

>The idea that you should just sit back and be ok with a 20% haircut isn’t something that I will just “take” if I can help it.

You don't have to be an active trader to preserve your capital. I've been invested for years but around the 2nd week of Feb, I went 100% cash. This time I saw train and got off the tracks. My plan is to average in slowly over time as the market stabilizes and the news gets better.

You are waving around a winning lottery ticket as evidence of your strategy being better. What is your strategy? First of all, was this put even good? How much of your portfolio did you cover and how much as a fraction did it cost? But much more importantly, how many times have you hedged your portfolio in the last eleven years?

Hedges cost money. Market goes up long term. You will lose money long-term by hedging. That's the steady state of your strategy. That's the obvious reason why people don't hedge. I'm puzzled as to why you didn't acknowledge this. Instead, you offer an outlier where hedging performed better. Seems deeply disingenuous.

SARS was a close relative of Covid-19. No vaccine was developed:

https://en.m.wikipedia.org/wiki/Severe_acute_respiratory_syn...

Buying at a low point is lucrative, sure, but how will you know when we're at a low point?

Should you have bought or sold Friday? Should you buy or sell this coming Monday? Answering these questions accurately is in fact hard.

> Some basic timing is not all that hard and can easily double your gains.

If it was that easy everyone would do it, or at least the "simple basic timing"-fund with twice the gain would be more popular than any etf.

But probably more realistic you are just deluding yourself.

Value investors don't time the market, though it can seem like timing. To the extent to which one can assess a personal 'intrinsic value' to a company, one can buy when it is substantially undervalued and sell when it is substantially overvalued.

One can see this in Berkshire's cash hoard. Expect to see it deployed in the year to come, when valuations may become more in-line with historical norms.

Well, out of kindness here's why I downvoted it --

1. Rambly/poetic 2. Doesn't really cite any sources or provide new information

Source on vaccine timing? My understanding is anyone who claims a viable vaccine is trying to pump their favorite pharma.

“Anthony Fauci, the longtime director of the National Institute of Allergy and Infectious Diseases (N.I.A.I.D.), spoke up. “A vaccine that you make and start testing in a year is not a vaccine that’s deployable,” he said. The earliest it would be deployable, Fauci added, is “in a year to a year and a half, no matter how fast you go.”

https://www.newyorker.com/news/news-desk/how-long-will-it-ta...

I freely admit I'm no virologist, but I don't quite get the focus on vaccines over cures.

People are panicking because there's no cure and they think there's a small but negligible chance they might die if they get it.

The virus is structurally quite simple. There are antibodies known from the previous SARS epidemic that are predicted via simulation to bind to the spike proteins very well indeed. I did some research over the past few days into how quickly you can make antibody serums and, well, it's a lot faster than you can make vaccines, especially if you aren't trying to manufacture huge quantities. At least one biotech firm claims to be right on the cusp of manufacturing antigens, which are a key ingredient in the (mass) production of antibodies.

Very few people get COVID-19 so badly they'd need to be given an external cure. With the containment efforts, it's possible you don't need huge factories producing antibodies to be able to cure the worst affected cases, and it's possible that the news of availability of a cure would itself be sufficient to largely end the panic. If COVID-19 becomes just "a bad flu that can be cured at your local hospital in the unlikely case it gets worse" then we might see a reset to normalcy very fast.