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COVID-19 and the portfolio

edited March 2020 in Fund Discussions
Howdy, Not to write as being dispassionate towards the circumstance of COVID-19 and those dealing with this; but also that I am not in a position to offer any direct assistance for a remedy.

I wrote on Jan. 21:
As to a "black swan" or what could also be named as an excuse to take some profits by the big market players; IS IF.......and likely a much to do about nothing, is the monitoring of the corona virus in China and other countries in the area.
If this virus were to become very wide spread and deadly; well, who knows, eh?
Market reports (of course) are already headlining that this virus could trigger a markets sell-off.
I can not disagree that if a global problem with any virus became serious enough; markets would be affected.
Of concern to the CDC, WHO and other health organizations at this time, is the beginning of the lunar new year period; which always involves escalated travel volumes by millions of Chinese, both domestic and foreign travel.
So now we (our house) have to decide whether this (COVID-19) will become a global economic event that will shape our portfolio in a dramatic fashion. It is not as much about how we feel; but how those who control the advances and declines in our portfolio choose their path.
A few considerations for those who alter the path of our portfolio are: sovereign wealth funds, hedge funds, pension funds, insurance company investments, central banks ,wealthy individual investors, and of course; the algo machines. As to the humans involved with money flows in these organizations, that aside from what the "numbers" may show them; is that, they too, have their shaped behavioral human nature and how they think.

We do not tend to move money in or out of a position with averaging; but rather in large chunks. Now to decide whether to take some profits from investments in the growth side, with fingers crossed, OR unload 50% OR hold tight.

Lastly, I had several links I considered. But, good timely data is readily available. The virus numbers continue to grow and into more countries. China we know about, South Korea has had a rapid cases increase since Thursday, Japan has more scattered cases, northern Italy has closed off several communities, etc, etc, etc.
A large concern, especially from the industrial nations, is growing supply chain shortages. It is one thing to have a facility closed and alter production for electronics, vehicles and such; and a whole different circumstance revolving around medicinal compounds, products and devices.
The consumer and other workers is another aspect when they can't or don't want to venture outside. An older model in the U.S. suggested that the "old" Michigan auto industry in it's glory days supported another 5 or so workers in the community.

I'm rambling now........time to stop pecking the keyboard.

Please share your thoughts. Perhaps I need a good kick in the arse.

Take care,
Catch


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Comments

  • @catch22 FWIW: If you roll the dice you have a 1 in 3 chance of being right, 2 in 3 of being wrong. You can take it from here.

    Enjoy your Sunday, Derf
  • Hi Catch22,

    So far, you're a lot more likely to die of influenza. Orders of magnitude more likely.

    If this health event triggers something more catastrophic in the markets it means the snow was already on the mountain. We were just waiting for the sound in the valley to trigger the avalanche.


  • @Derf
    We don't do dice for investments and the Magic 8 Ball is in the shop for repairs.
    I will check Khan Academy for die rolling data outcomes relative to investments.

    @WABAC
    2019-2020 flu season data was noted here recently; but this is the current data for week ending Feb. 15
    --- CDC estimates that so far this season there have been at least 29 million flu illnesses, 280,000 hospitalizations and 16,000 deaths from flu

    However, traditional flu season illness or deaths have not affected our investment portfolio in the past. Obviously, my death from influenza related conditions would have an impact on portfolio decisions.
  • edited February 2020
    Hi sir..thx for Commentary
    We are staying the course..no changes made
    Will buy more equities if continued downtrend
    Maybe Beginning small limted crash that everyone talks about since 2012 __ !? 20+% downturn before election
  • edited February 2020
    First post. Hello all. I think this disease will effect mkts a lot. I have most everything at TRowe inc. my Roth and 403b. Have been in PRHSX and PRGTX along with PRNEX when prices drop for energy or the fund fall into the low 30s at least. Few weeks ago I move most everything to PREMX and PRULX just keeping some shares of the others to keep them open. I got bit a few times when funds closed....
    I have been stalking you all here for a few weeks and know many of you just sit tight and rebalance but I do feel that moving things to bond funds like I have when I have made good gains and the market seems to be about to burst works for me. Of course if GTX drops down to the $14-$15 range I will shift again perhaps. I know I have missed some gains the last 10 years but am still above 8% and some years more still. I am in my mid 40s and need to build not just maintain. Wife's things are with Janus because it sounds like her mom's name (you should see her pick the final 4 LOL) Thanks for adding me, I have been looking for a place like this. Split my board time here and on WUS.
  • @parsig9; Welcome aboard. Forgive me , could you tell me what GTX stands for ?
    Derf
  • Thanks Derf. I was just abbreviating PRGTX that I mentioned earlier in my post.
  • edited February 2020
    A lot of it depends on your time horizon. My wife and I will remain fully invested in US growth funds and don't anticipate making any changes due to COVID-19. We don't have any emerging market or overseas funds because the US is the premier global economy and we expect it to remain so for years to come.

    However, if the virus starts to seriously disrupt the global supply chain then some of our tech and large-cap funds could definitely be impacted in the short term. But over a 15-20 year time frame I'm not concerned.

    Another factor to consider is that the Chinese communist state has almost certainly deliberately misrepresented the number of infections and deaths. The real number may be 10, 100, or even 1000 times higher than they claim. China's chronic dishonesty may well prove to be the real virus.

    Still, I would strongly advise against making any knee-jerk changes to a portfolio which, like us, you might have taken years to craft.
  • Welcome @parsig9.

    Just my opinion, the virus could be a catalyst for a major pull back, but something had to initiate that happening anyway. I do think by late this year the corona virus will be a blip on the radar, at least I hope that is the case for humanity and the stock market. The response from governments might be to throw even more money into a slowing economy-stock market. But who knows. I am upping my gold play a bit more in response, but otherwise I don't plan to change much. Just my humble opinion... or crystal ball guess.
  • @MikeM. I've been thinking the same thing on gold. I'm curious Which fund do you use to invest in it?
  • @MikeW, I use an ETF, IAU. I don't think there are mutual funds that invest in gold per-say, just the companies that mine it.
  • Have you considered GLD ?
  • Scroll down 1/2 of the page for the graphic.

    Market reactions during virus emergencies
  • IAU expense ratio is less than GLD.
  • edited February 2020
    @MikeM and @MikeW

    Note: GLD and IAU are twins relative to performance.
    The below chart is pre-2008 market melt (May, 2006) to date.

    Comparative chart for GLD, IAU, GDX (gold miners) and SPY (for equity reference)
  • Thanks @catch22.... very helpful to see it laid out on a chart. Definitely some risk there.
  • Thanks @catch22.... very helpful to see it laid out on a chart. Definitely some risk there.
  • The one idea I can't get out of my head is the following:

    If COVID 19 is so benign and causes far fewer deaths than the flu, why is China quarantining 300 million people?

    The only reason they would do that, is that they had data that the mortality rate is far far higher when they started the quarantine, ie in late January.
  • It could be something like that but it could also be just their governments general reluctance to admit there's trouble in River City. It get's in the way of the perpetual mind control smoke.
  • But why would they start a province wide quarantine of 11 million people if there was not the danger that hundreds of thousands would die? 80000 people died of the flu in the US in 2018 and we didnt blink.
    Where there is smoke there is fire
  • I honestly hope this virus runs its course shortly and dies away on it's own.

    Well, now we're at this point; where the general public, who hasn't been paying attention are going to have reports shown more frequently on their tv's. The below two, are the pronouncements that go past the algo trading or whatever else one chooses to determine "profit taking".
    I continue to watch data reports regarding COVID-19, and this in itself is troublesome. And as has been discussed previous, supply chain issues in many market areas; and also to the point of further restrictions in travel, via whatever means. Visa/MC have reduced profit estimates from just 1 month ago, as usage will be down. And what about the Walmarts and $ stores; among all of their product lines. A simple example is that 85% of all toys/games related are imported from China.
    Sanofi and Gilead have noted, among other researchers; that any type of successful vaccine is generally anticipated to have about a 12 month time frame

    I'm not going to drag this further.

    WHO press conference, 'Now is the time to prepare', Feb. 24

    CDC warns of 'severe disruptions', Feb. 25

    There is no mercy in the equity market place at this time, as; even our healthcare and med. tech. is getting the big head slap, which are our only equity exposure at this time.

    Lastly, if you have an alternative view of this post; please comment. I'm only writing about what I interpret to be the current circumstance. Other viewpoints are needed.

    Seriously.....take care of you and yours,
    Catch
  • The following article provides context regarding how markets have responded to prior epidemics.
    Of course, there is no guarantee that market behavior will be similar this time around...

    The Impact of Coronavirus for Investors
  • edited February 2020
  • Other nations in Eur. will be having cases soon, shutting down tourism. Oil is going to move much lower as are the broader indexes as demand drops. I think moving to bond funds is safer ground until at least late May. I say this partly b\c of the disease but mainly government and the nation in general will over react to it in an effort to be responsible in an election year. I think another twenty-five percent drop is within the realm of possibility based on the numbers and emotions in play.
  • REITs, utilities and other dividend focused US equities held up fairly well early on, but it looks like indiscriminate selling is leaking into those categories as well. Panic selling may be close at hand.
  • edited February 2020
    Tweety Amin just announced a COVID-19 news conference at 6PM. 6PM? Really? I question the timing b/c they're likely trying to mitigate the likely continued market drop when nobody believes what he says. The Asian open should be interesting this evening.

    ... just have this running in the background as you watch/listen to him....


  • As mentioned above the regular annual flu incidence in this country so far is millions and the death rate about 16000. Yet there is no panic.
    My opinion ....the death rate is so much higher in China is because the emergency hospital set ups that they use. Influenza be it COVID-19 , or our usual flu ordinarily is a disease of variable severity. Some people carry the virus with no symptoms or a mild cough. But when it becomes severe which is the minority it kills by progressing into a viral pneumonia and may be complicated by a bacterial pneumonia. The latter is the killer if not properly treated with antibiotics intravenously. When you look at the massive quickly set up China hospital situation some patients may not have the IV antibiotics given to them in a timely fashion. In the US and probably Europe most hospital admissions with flu or COVID-19 are started on IV's immediately and given antibiotics as soon as there is a threat of bacterial infection. Hope this explanation helps to understand that most likely this will not have he same mortality as in China.
  • edited February 2020
    Prob 20k-50sk die in NAmericar < much less than flu incidents > by late spring
  • johnN said:

    Prob 20k-50sk die in NAmericar < much less than flu incidents > by late spring

    As the current mortality statistic of this virus is 20X that of the routine flu, your numbers purely depend on the numbers of those infected. I'm not sure how the American public would respond with the quarantines we're now seeing around the world.

  • We do not know yet that COVID-19 is 20x mortality of usual flu. This is a new virus
    to the medical community. Wait and we will find out. The mortality is dependent on adequate medical care. We have the capacity to treat the secondary bacterial pneumonia.( that is the killer). I have the confidence in our medical community. It is not a time for panic.
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