Is a "V" shape recovery a pipe dream post COVID?

[Cuddles]

I keep reading opinions here and elsewhere of the imminent bottom that will rebound violently after COVID passes and/or a vaccine is found.

I'm not sure I buy the premise, given the amount of debt we've now incurred in addition to what's already there. We've got industries about to be decimated and unemployment creeping in, so a recession is almost a guarantee at this point. We've got an election that will certainly spook investors and have them wait on the sidelines.

How realistic are people being about this miracle recovery, and are people buying into dead cat bounces that'll eventually fade through the upcoming months/year?

 

[nooby_mcnoob]

Companies that survive the downturn without bailouts or reducing dividends will come out strong. I'm sure QQQ will zoom since those companies only have exposure to general economic conditions.

 

[Pekelo]

There will be rallies, no doubt about that. You can ride them for good gains. How long will they last though? Well look at the chart, one of the biggest rally ever (1800 Dow points I think) lasted an hour.

Anybody expecting a quick solution to this virus is kidding himself. Sure, there will be reopening of businesses. Sure eventually there will be a vaccine. And sure there will be reinfections and probably re-quarantine.

What is also sure, there will be inflation and tens of thousands of bankruptcies. This virus is going to hang around for years until most everybody got it or got vaccinated against it.

If signifficant number of people die, real estate prices will drop. etc.

And there could be another, even stronger mutation coming, with a much bigger and younger killrate.

 

[NY_HOOD]

There will be a significant impact. Stocks are ultimately valued based on earnings and projected earnings. With all the ensuing layoffs, people will not purchase a lot of discretionary items. Thats just a fact.
I will tell you semi conductors will be hit more and i think Apple will be under 200.
How will google and facebook not get hit? They depend on advertising. Small and medium sized business will definitely spend less on advertising.

 

[tsfx]

I keep reading opinions here and elsewhere of the imminent bottom that will rebound violently after COVID passes and/or a vaccine is found.

I'm not sure I buy the premise, given the amount of debt we've now incurred in addition to what's already there. We've got industries about to be decimated and unemployment creeping in, so a recession is almost a guarantee at this point. We've got an election that will certainly spook investors and have them wait on the sidelines.

How realistic are people being about this miracle recovery, and are people buying into dead cat bounces that'll eventually fade through the upcoming months/year?

The idea that the general masses now see huge buying opportunities will make it "rally" much harder than previously. Something else will rally instead. But that'll hold true only if the masses actually put money behind their convictions rather than just speculate over it behind a glass of Sunday beer.

A crowded room holds the strongest resistance.

 

[RubberBand]

The idea that the general masses now see huge buying opportunities will make it "rally" much harder than previously.

I think we need to once and for all figure out who is moving the market. You constantly hear that its the funds that make up the bulk of the trading and that retail investors are a small piece of the pie. If this is the case, then a huge rally cannot happen, and it cannot be sustainable.

I have no answer to this question, but I think its important to the discussion.

 

[tsfx]

I think we need to once and for all figure out who is moving the market. You constantly hear that its the funds that make up the bulk of the trading and that retail investors are a small piece of the pie. If this is the case, then a huge rally cannot happen, and it cannot be sustainable.

I have no answer to this question, but I think its important to the discussion.

When in the past have the masses made fortune collectively ? At the expense of who then? Where does wealth come from ?

Let's leave out wars and any other physical and violent encounters. In that case, you can make a fortune collectively

 

[zghorner]

I think it will recover fast once we are at least on the back side of this virus. Infection numbers need to be decreasing, travel restrictions need to be removed etc...currently i dont see how we could possible be near bottom yet when things are getting worse every day...we havnt felt the pain that 20%+ unemployment will bring, negative earnings, etc...

 

[orbit23]

We do not recover after this for a long time... Things haven't even progressed yet.. we are going into a recession likes someone like me has not lived thru yet.

 

[Specterx]

A V-shaped recovery is certainly possible. Three key points:

1. The government and Fed have been extremely quick to fire-hose stimulus into the economy, which should stabilize markets, prevent further black swan hammer blows (bank or large corporate failures, etc.) and help offset any temporary loss of consumer income.

2. The psychology here is crucially different from 2008 and even 2000 - this isn't a bursting credit or asset bubble scarring behavior for years to come. People are already chomping at the bit to resume normal life. The instant there's a perception that "the crisis has passed", all the laid-off workers will be rehired overnight to deal with a huge flood of business.

3. If a drug-combo cure has in fact been discovered, that means it's just a question of manufacturing and distribution time until the whole thing goes away entirely.

Rather than an extended bear market, I think it's much more likely that the massive stimulus and zero rates combined with a sudden abrupt halt to the epidemic thanks to effective drug treatment, will lead to a white-hot economy and stock market blowoff over the next few years. We were already headed there until Covid crashed the party.

It's actually quite interesting to see how the psychology of the GFC still exerts such a powerful effect, even more than a decade down the line.