The stupidity of this coronavirus bear market is extremely intense. I don’t see a day go by without people screaming buy. Only a minority of people are following the actual facts. Heads are firmly in the sand. While I initially moved drastically to cash in February, since then I have maintained around 50% long. At this point I’m really going to whittle down my long positions to only my very favourite stocks (high quality growers) or companies that are short term and potential long term beneficiaries of the pandemic.
A few points to keep in mind:
- Markets are extremely volatile, big ups and big downs. This indicates a huge level of uncertainty. Markets do not like uncertainty. You have to be optimistic to the point of delusion to think that this is a bottom.
- People who called a bottom almost 2 weeks ago thinks thinks waiting to buy is mad, a week later.
- Retail investors are buyers.
- The ASX is only just beginning to see desperation capital raises.
- I think there is over 90% chance of a severe recession, with an unknown duration. Markets rarely rally into the start of a recession.
- I think there is a not-insignificant chance that the USA decides the cure is worse than the disease and allows the coronavirus to rip through the country, with people dying on the streets (from any ailment) since hospitals will be overwhelmed.
- Over 3000 hospitalised in NYC with over 20% of them requiring ICU
- The pandemic to cause lock-downs everywhere that has not taken Singapore-style measures early.
Ergo, I am selling a lot more stocks today, to increase cash, to take advantage of better opportunities.