Let's get rich and watch the world burn

[Skeletor]

As the economist JR Hicks opined, "Really catastrophic depression is most unlikely to occur as a result of the simple operation of real accelerator mechanism; it is likely to occur when there is profound monetary instability – when the rot in the monetary system goes very deep."
Coronavirus will just be the spark for the coming great depression.
Stocks might keep soaring for some days or weeks but then they'll drop even further.
Usually you get 40% drops followed by some rebound, and then other legs down.
I expect the S&P500 bottom to be in the 500 area so still long way to go. The markets will be drugged with stimulus packages of all sorts in the meanwhile, which will give temporary boosts and hope; instead of playing to pick falling knives, a way to invest into this now would be in adirectional trades through the use of options, i.e. investing in volatility with strategies such as the strangle or straddle.

Thoughts?

> inb4 Krice worrying someone hijacked my account

[Skeletor]

Just to clarify, I don't think the virus will be the reason, but only the trigger for this incoming recession.
Covid-19 is being used by world governments as an excuse to increase monetary supply and central banks balance sheets.. boundless government spending and whatnot, keeping up drugging the economy. This is why I believe that once the virus won't be an issue anymore, the world would not return to pre-crisis conditions.

Anyway stock prices are still kinda oversold; I'd expect S&P500 to keep bouncing up a bit more, say 2700-2800ish range but then start dropping again. 11 years of highly drugged and hyperleveraged bull market won't be corrected with a quick 1 month bear market.

From my calculations, April could possibly still be good for stocks (some seasonal strenght as well - but commercials still heavily short which isn't a good sign) but after that I can see things only dropping until an absolute bottom around 2022. Meanwhile, more and more companies will be downgraded by moodys and emerging markets will be wrecked by default fuck-circles.

Something to take into account is Trump and the 4th Nov 2020 elections. He will do all he can to get there with markets in good conditions. Thus another round of QE is a given, probably somewhere in July. And likely free monthly allowance to all US citizens, which needless to say won't be good for the USD.
You can argue that other countries and central banks might also follow Trump's lead in populism and print their asses out? Oh yeah that might be the case. What would then happen is that currencies would keep devaluing against one another, and mid term all will devalue against gold - which I like but as mentioned in the first post is not the only way one could make money out of this.

[Krice]

Stocks are there just for rich people to make money from nothing. Maybe we should think about not having stocks at all. Just real life economy based on actual reality. Some people are already in panic about economy, but why? Most people still have jobs, or if they lose their jobs they can get new ones. Jobs don't just disappear, they will be there. Some people will also have more money, not less, because they don't spend it to vacations and other stuff like that. And, even this is terrible thing to say, in theory there will be more open jobs, because people will die.

[mouser]

Just to clarify, I don't think the virus will be the reason, but only the trigger for this incoming recession.

If you close the corn fields because you are afraid your citizens will get infected, people will starve and die. Massive shortages are not a trigger for a crisis, they are the crisis.

Stocks and economicists' numbers are just a representation of that grim reality.

[mouser]

Stocks are there just for rich people to make money from nothing. Maybe we should think about not having stocks at all. Just real life economy based on actual reality. Some people are already in panic about economy, but why? Most people still have jobs, or if they lose their jobs they can get new ones. Jobs don't just disappear, they will be there. Some people will also have more money, not less, because they don't spend it to vacations and other stuff like that. And, even this is terrible thing to say, in theory there will be more open jobs, because people will die.

The stock market is an artifact that is used in order to gather funds for big, big projects and operations, without having to ask for big loans to a bank. Thus, you can capitalize the firm by offering participations/shares of it to investors rather than having to sell your soul to some banking cartel. It is done all the time in "real life" when Joe needs to open a shoe workshop and does not have the money, so he joins up with Jack and they set workshop together.

Also, people are in panic because in many places, lockdown orders are preventing people from working. That is, they are prevented from producing necessary goods. Most important, they are prevented from making a living. As I said on other thread: try to live 5 months without a job in some places.

You answered that a socialist State will take care of you if you have it. Fine. But your socialist State can only last for so long if activity is frozen. If factories are closed and necessary goods are no distributed, you starve, no matter the color of your government.

Jobs will be there after the crisis, yes. But you first have to survive the onslaught.

Good luck with that.

[Krice]

But your socialist State can only last for so long if activity is frozen.

It's not. And we'll have to wait and see what actually happens. I really hope this makes us think about local production rather than trying to make everything in China or far east. It would bring back more jobs and create better economy.

[Skeletor]

The problem is covid-19 is simply a spark, a catalyst, a scapegoat to endorse the administration of a higher dose of the same drugs which are already determining the grounds for a major recession.

[mouser]

The problem is covid-19 is simply a spark, a catalyst, a scapegoat to endorse the administration of a higher dose of the same drugs which are already determining the grounds for a major recession.

I agree that many governments are riding the wave in order to be more governing and govern harder. Which is a bad thing. Laws being passed so governments cannot be criticized for their management of the crisis, massive socialization of industries...  some ministers have given the order to shoot at people who is troublesome during confinement period.

But I still sustain that the virus is its own crisis. Will it aggravate a different, impending crisis? Maybe, maybe not. But the virus is a very destructive agent and deserves to be considered as such.

[Skeletor]

The problem is covid-19 is simply a spark, a catalyst, a scapegoat to endorse the administration of a higher dose of the same drugs which are already determining the grounds for a major recession.

I agree that many governments are riding the wave in order to be more governing and govern harder. Which is a bad thing. Laws being passed so governments cannot be criticized for their management of the crisis, massive socialization of industries...  some ministers have given the order to shoot at people who is troublesome during confinement period.

But I still sustain that the virus is its own crisis. Will it aggravate a different, impending crisis? Maybe, maybe not. But the virus is a very destructive agent and deserves to be considered as such.

My point takes into account all of the bad neokeynesian interventionist policies we have had since the last 11 years, not just the recent, current and future measures to tackle covid-19.

Yes world governments have the duty to protect their citizens from this destructive agent but personally I'd tackle something with low mortality rate and high transmission rate (which R0 in the 2.5ish range means) just by selective isolation of the more at risk, i.e. immunocompromised individuals as opposed to the entire population of planet earth.