Fled to the safe haven of cash and took the profit on my larger ISA equity fund outside Freetrade! Plan to go back in around April/May at possibly a discounted price. Kept my Freetrade fund, itās not looking healthy!
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Nothing like an article to cheer us all up. Thanks for that one 
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Average down all the way then
If hes right and its a big if, it just means the buying window stays open for longer. Average down
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A few data points to wait for.
The institute for supply management (ISM) will report their figures on Monday, I believe. Anything above 50 is deemed good news, but currently we are at 50.7 and the forecast is 48.5. If that comes to pass, it will jolt the markets further.
Then on Tuesday is Super Tuesday in the democratic primaries and Bernie Sanders is expected to solidify his front runner status and get twice as many votes as the runner up, Joe Biden according to polls. That will jolt the markets further, given his spending pledges.
Next week may be messy again.
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In the sell off in Q4 2018 the S&P500 bounced off of the 200 week moving average, as did the previous two big drops in 2016 and 2011. If we do the same again, we would get around a 20% decline, roughly the same as the 2018 drop. We are about half way there following last week.
The numbers on the charts are suspiciously neat and tidy. I think Iāll check my Tarot cards and tea leaves just to be sureā¦
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I was thinking I really should have put more in on Friday but held back, now itās looking like that could have been a wise decision.
More cases in England again today should see the FTSE fail to rebound.
Even people that donāt even have a clue about the stock market were commenting saying how it ācrashedā while discussing the virus.
I think Iāll keep my current strategy and just continue to average down on each red day, psychologically I feel thatās what suits me best.
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Same here. I had planned on jumping in on Friday but held out. Really hope I made the correct decision otherwise Iād kick myself for missing an opportunity to average down.
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This sums up the week in the markets:
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Virus is spreading in the U.K. and Germany, first few cases in the USA. I doubt Monday we will see a big rally.
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Weāve got a some way to go, itās quite early days and weāve not seen similar infection rates to the Chinese experienceā¦yet.
Once we get a sense of the true scale of economic disruption beyond Initial profit warnings and notices of missed earnings targets weāll have a little more to go on.
I think the threat of recession is particularly real in economies where the fundamentals already point to slow or decelerating growth without the crisis of an emerging pandemic. Calling out China, ongoing disruption there could lead to profound supply side impacts across the world and will only compound the problem.
The population of china is 1.435 billion and in America its 329 million. We may not see the same impact in different countries around the world.
Healthcare system is also better in the USA and they are forewarned. However, supply chains are global so even if the virus remains contained in the USA, it still may have a major detrimental impact on the US economy.
From Barronās:
The coronavirus has severely disrupted nearly every link in the global supply chain, from raw materials to components to finished goods, which could lead to curtailed production, product shortages, and financial stress across a range of industries. How manufacturing delays ripple through the economy isnāt so straightforward, however.
Tech companies, apparel makers, and industrial-equipment manufacturers are likely to be hurt most, given that they are most reliant on inputs from China and Southeast Asia. A prolonged delay in parts procurement not only would threaten corporate earnings, but could imperil companiesā ability to make debt payments.
The healthcare system is worse in America and despite the warnings major government departments have been defunded. The average US citizen can not afford to get tested and go off sick from work due to a lack of healthcare, poor/no sick pay and no savings. If the disease is in the US it will spread faster than anywhere else.
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Emphasis my own.
If supply chains remain disrupted for a prolonged period it could potentially turn into a systemic risk given the very high levels of corporate debt; ~US$9 trillion in the US alone.
That being said I donāt think weāre anywhere near that yet.
I think the difference compared to past pandemics is the level of interconnectedness and reliance on highly complex supply chains upon which the global economy now relies. Iām confident that supply chains are however able to adapt.
From a political risk perspective it just feels like this could be used to further the decoupling agenda that is taking root around the globe.
Good discussion about the importance of company fundamentals.
The value of doing research. We gotta invest time to do your bottom-up and top-down research.
Highly recommend to learn to calculate a companyās debt versus its readily available funds. Donāt invest in companies with lots of debt (think capital intensive industries like mining, oil and gas) unless you know what youāre doing. Donāt invest in companies that financed acquisitions with lots of debt unless you know what youāre doing.
Hereās an example of a company with large debt:
Also:
If youāre day trading and donāt care about fundamentals, good luck - you might get run over (I have - it was fun):
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For those who are wondering why there was a Gold sell-off on Friday and what the future will likely bring, excellent summary:
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Soā¦ if those margin calls are not coveredā¦ we may go deeper, right!?..
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A good detailed article for the next coming week for the stock market.
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