Evening all.
Wow today felt like a really panicky day, probably the worst so far in terms of listening to people on Bloomberg/CNBC, reading articles and watching various assets do some crazy moves.
Oil sinking to an 18 year low would normally be headline news you couldn’t escape, but today it barely got a mention and likewise with the GBP hitting a 30 year low! These are major market events but they are just par for the course at the moment.
The stock markets were a mess and extremely volatile with a limit-down on futures before the markets opened and a circuit breaker activation when the SP500 fell 7%.
The SP500 finally completed the test of the 2018 low with its own spike down and the Nasdaq100 surrendered its recent out-performance and hit the 30% correction level, and the Dow not wanting to be left out, made an incredible move of test 19,000 after hitting what I thought might act as psychological support at 20,000 yesterday. This move from the Dow means all gains from Trump’s Presidency were erased, although it did not close on that basis, with a late day rally rescuing some of the losses.
So all three set some kind of milestone and upped the ante on my comments from yesterday. And some of the moves in stocks were eye-watering. I noticed Hertz was down 40% and thought that was just an incredible example of how a fairly inert business can be decimated in this current environment. The list of big moves is long and distinguished and it’s hard to reconcile how willing investors are to sell some of these assets so deeply.
And all of this is taking place in a situation where governments across the world are cutting interest rates to the bone, promising unlimited support, some already buying assets, some close to sending out helicopter money.
I really thought that after the last couple of days when a lot of these initiatives were announced, that we’d start to see some kind of bottoming process start to play out as short-sellers started to cover positions knowing that these markets were getting a government back-stop and that panicking investors would start to calm down and stop hitting the sell button!
But today really had none of this and it felt really ugly. As with a few other days, the distress was visible in that bonds were selling off while stocks were cratering and also gold was getting pushed lower. Another of those rare ‘Triple Whammy’ days that I wrote about recently which just don’t feel right and shouldn’t happen!
I had a pile of market orders pending and it was quite nerve racking to watch them get filled in such rapid fire fashion when the markets suddenly accelerated downwards. Final positions were taken on DRGO, SOXX and VWO. That is Dividends, Semiconductors and Emerging Markets respectively.
A couple of bond orders also triggered but I was only expecting those to be hit if stocks were rallying so this squeezed the organisation of capital a bit.
I’ve sort of staked my claim now as I had tried to plan things with a test of the 2018 lows in mind as the kind of correction we would see. This is also just over 30% from the top.
The economic concerns arising are definitely way beyond what I thought we’d see so I’m not all the comfortable but with no leverage I still think the risk is controlled given the position world governments have taken.
I also take encouragement from the fact the human trials are already underway for a Coronavirus vaccine. I wouldn’t like to be short on the day they announce that a vaccine candidate has been tested successfully and I hope that day comes soon for the sake of everyone’s health.
My preference with the portfolio is not to add more capital right now but I am prepared to do so, as per plans I mentioned earlier this year, as I’d like to take my eToro membership up a level and so need some more deposits to do this.
We’ll see how markets perform and it should be appreciated that buying while markets are 30-40% down is preferable to buying once they’ve already recovered by 20%, which could have happened if the above happens with a vaccine test being successful.
Well I think I’ve rambled on enough for now, if you have views on the market situation feel free to share them.
Thanks for your time.
$SPX500 $DJ30 $NSDQ100
