Elliott Management is raising money again - as much as US$ 5 billion for a new fund - as it is waiting for âa market downturnâ, says the FT.
Elliott who?
Elliott Management are a US$ 38 billion distressed debt specialists and activist investors. Thatâs some long-term investing and involves patience and doing legal homework. These funds donât wear rose-tinted glasses - they see the upside and the downside.
That view of the markets is shared by many of the 360 global single- and multi-family offices surveyed for the 2019 UBS Global Family Office Report, which was done in conjunction with Campden Research and released Monday. A majority expect the global economy to enter a recession by 2020, with the highest percentage of gloomy respondents in emerging markets. About 42% of family offices around the world are raising cash reserves.
âŠ
Family offices have become a greater force in global financial markets. Campden estimates that such firms manage around $5.9 trillion. The offices in the UBS survey had an average of $917 million under management.
Someone needs to tell my portfolio if were not in a recession! 3 bad enough days on the trot. I simply donât get the negativity. Is this purely down to algo trading. Any opinions?
On average, thereâs been a market correction every year since 1900. When I first heard this, I was floored. Just think about it: if youâre 50 years old today and have a life expectancy of 85, you can expect to live through another 35 corrections. To put it another way, youâll experience the same number of corrections as birthdays. (Note: a correction is defined as a drop of at least 10% but not more than 20%. A bear market is a drop of more than 20%).
Why does this matter? Because it shows you that corrections are just a routine part of owning stocks. Instead of living in fear of corrections, accept them as regular occurrences. Historically, the average correction has sent the market down 13.5% and lasted 54 days â less than two months.
Still, in the midst of a correction you might find yourself becoming emotional and wanting to sell because youâre anxious to avert the possibility of more pain. Youâre certainly not alone. These widespread emotions create a crisis mentality. But the vast majority of the time, the sky is not falling. It is a simply a âseasonal storm.â
How bad does it get when the market really crashes? Historically, the S&P 500 SPX, +0.11% has dropped by an average of 33% during bear markets. In more than a third of bear markets, the U.S. benchmark index plunged by more than 40%. Iâm not going to sugarcoat this. If youâre someone who panics, sells everything in the midst of this mayhem, and locks in a loss of more than 40%, youâre going to feel like a grizzly bear mauled you for real. Even if you have the knowledge and fortitude not to sell, youâll likely find that bear markets are a gut-wrenching experience.
Even Vanguard Group founder Jack Bogle admits that bear markets are no walk in the park. âHow do I feel when the market goes down 50%?â he asks rhetorically. âHonestly, I feel miserable. I get knots in my stomach. So what do I do? I get out a couple of my books on âstaying the courseâ and reread them!â
Sadly, many investment advisers fall victim to the same fear and hide under their desks during tumultuous times. Peter Mallouk (my co-author) told me that ongoing communication during these storms is key. Hereâs what you need to know: bear markets donât last. The 14 bear markets in the U.S. over the past 70 years have varied widely in duration, from a month-and-a-half (45 days) to nearly two years (694 days). On average, they lasted about a year.
Books on order, appreciate the time spent to write the comments. Thank you. Personally I buy more in the noise, but I get itâs concerning to the novice.
Thanks guys I was sort of joking at the start of my original comment but the second half is true. The negativity in the news I donât think helps the way it used to 20+ years ago when there wasnât 24hr news cycles. Negativity sells. Could algos crash the market if they are just running on negative news? I read somewhere that they around 48% of the average daily trade volume, could be wrong. Any further reading on this and market downturn would be much appreciated, thanks guys. @engineer I know youâve got something on algos!
Edit: Algos werenât as big a portion in the previous recession or downturns before that etc.
Sure they could crash the market. And there have already been cases of flash-crashed where that happened. But since this was not driven by real news but by cascading stop losses, it rebounced quickly/instantly. I wouldnt worry too much about it as investor.
Havenât tried Tonyâs app but the lessons and the wisdom are all in the book. Iâd recommend Google Play/Audible audio versions of Money or any other book for more active learning.
Do reread certain chapters over and over thoughâknowledge retention falls over time unless you revise and apply it.
In the end, everyone you may have heard ofâDalio, Buffett, Burry, etcâdevelop own methods based on, say, Graham and Dodd. As each of us here is unique, our preferences will vary.
For example, take a look at this Strategy screenshot posted in another thread from the stock picker M.D. guy Mike Burry who created the first subprime CDS and taught Wall St how to protect against AAA housing mortgage bonds, because he did his due diligence, whole based in Palo Altoâfay away from Wall St. I believe it was written before or after the dot com, so it was pre-Big Short.
Growth is slowing worldwide, investment is slowing, large IPOs have almost all fallen flat with investors losing huge amounts, but most importantly solid companies are shedding workers worldwide and lowering forecasts. This is compounded by events like Brexit, the revolt in HK, the war in Syria, the invasion of Kashmir, which all add to the instability.
Massive interventions like QE or large cuts in corporation tax in the US can cause the market to levitate for longer than expected, but arguably theyâll just make the fall greater when it comes. Contrast stock market prices (near all time highs) with all this news and it is hard to believe they will climb much further.
I suspect weâll see a bear market globally if not a strong crash soon - things are not looking hopeful for the next few years, certainly for UK domestic stocks IMO.
Landsdowne in the FT predicting that bond prices will fall as governments start to spend/issue more debt, but that tech stocks will fall and UK valuations will improve. Michael Burry is concentrating in US big caps. Everyone seems to think there will be a âwinnerâ, but will there in a bear market? Iâm not sure - certainly Iâd rather hold gilts in that situationâŠ
here:
:
) is that (another one 
