How low can we go?

[Lordosis]

Almost unanimously we voted that we have not hit bottom yet. I know that this is a WAG but if you had to commit to a number what would you say?

Currently on 4/2/20 the S&P is at 2480 down from a high of almost 3400

[Zzyzx]

S&p was at 2237 on 3/22...

[Lordosis]

S&p was at 2237 on 3/22...

yes it is now back up to 2490.

[Perry Ict]

I'm very unsure....I think it CAN go as low as about 1200, in more of a worst case scenario. On the other hand, it's also possible that we already hit the low at about 2200. For purposes of the poll, I will go with 2000.

[Anne]

I have no idea. But I’m surprised nobody has called you a whippersnapper yet on this post Lordosis

[Lordosis]

I have no idea. But I’m surprised nobody has called you a whippersnapper yet on this post Lordosis

With current events I am happy to be a young whippersnapper.

[Dont_know_mind]

My guess is 999.
But on more optimistic days I think 1700.

[nephron]

I've been thinking about this lately. Everyone is under the assumption that once the pandemic is behind us, everyone will go back to work and things will go back to the way they were. I don't think that's a fair assumption. We have never seen mass unemployment like this and this large of a disruption to our economy. I think that it will take much longer for things to go back to where they were then everyone is anticipating. If you think about it from a micro-scale, the flower shop on the street opens up, well the people who normally buy flowers just got off unemployment are not going spend their money on flowers, so the shop cannot hire back their 5 workers who remain unemployed and cannot afford to go to the restaurant down the street, and etc. It's easy to see why this contraction will be prolonged. I used to think that the stock market maybe "discounted", but the more that I think about it, all of these companies have had their earnings drastically cut. Their earnings have not been reported yet so they look like they are priced at a "discount", but in actuality, their earnings are severely diminished and maybe diminished for a prolonged period of time. I don't think that you can use evidence from prior bear markets to predict what the market will do in this instance because I don't think that there has ever been a disruption to the economy this large. I am still dollar cost averaging into my taxable account, but I am not anticipating that we are at the bottom or that there will be a rapid recovery.

[Lordosis]

I've been thinking about this lately. Everyone is under the assumption that once the pandemic is behind us, everyone will go back to work and things will go back to the way they were. I don't think that's a fair assumption. We have never seen mass unemployment like this and this large of a disruption to our economy. I think that it will take much longer for things to go back to where they were then everyone is anticipating. If you think about it from a micro-scale, the flower shop on the street opens up, well the people who normally buy flowers just got off unemployment are not going spend their money on flowers, so the shop cannot hire back their 5 workers who remain unemployed and cannot afford to go to the restaurant down the street, and etc. It's easy to see why this contraction will be prolonged. I used to think that the stock market maybe "discounted", but the more that I think about it, all of these companies have had their earnings drastically cut. Their earnings have not been reported yet so they look like they are priced at a "discount", but in actuality, their earnings are severely diminished and maybe diminished for a prolonged period of time. I don't think that you can use evidence from prior bear markets to predict what the market will do in this instance because I don't think that there has ever been a disruption to the economy this large. I am still dollar cost averaging into my taxable account, but I am not anticipating that we are at the bottom or that there will be a rapid recovery.

I agree. I think the market's going to go lower if only just because this disruption to the economy seems like it should be bigger and more drastic then the last couple of major pullbacks. But I'm not quite sure when that message is really going to be common knowledge. I think we as physicians have a slight advantage in knowing that this virus is not just going to go poof and everything is back to normal. I feel like a lot of people I talk to think that is going to be the case. And I also question how many influential people in the economy really understand the gravity of the situation.

I am sure when things do start moving again there will be some catching up to do in some industries where people have delayed things but if somebody missed a cruise I don't think they're going to go on an extra Cruise later this year or next year. Especially if that person's finances were impacted. Then again I like to think of myself as a financially responsible person and maybe most people would go on an extra Cruise if it could be done cheap enough for on credit.

like most things with the stock market and economy I think there are just way too many variables to account for them all.

[Antares]

I would love to be wrong, but I suspect the damage here won’t be fixed in a matter of months, maybe not even in 2-3 years. Job losses and business failures will take a long time to sort out, and I’m concerned about how long it will take for consumer spending, that essential ballast to the US economy, to do its magic. But I won’t kid myself that I can predict these things, or that I’m right. This just seems true to me.

[Tim]

I think it all depends on developing an effective treatment. Without it, Stay at Home will linger into the summer. Containment would be the only effective strategy and that alone would greatly restrict any activity both personally and business wise. If this rolls into the summer, it will be a very long recovery. Our behavior patterns will be ingrained. Weekend getaway? No thanks for a large segment of society. Trip to Vegas? No thanks. Ripple effects through out the economy will take years to subside.

[Lordosis]

There are always people willing to spend money if the price is right. I know more then one person with a cruise booked in June. I know even more people booking cheap cruises this fall.

Idiotic if you ask me but I am sure they are not alone.

[Nysoz]

I think we can have another pretty decent drop ahead of us but I don't think there will be more circuit breaking days unless really bad news pops up somewhere. Probably more of a slow downturn. We'll probably retest the previous lows and maybe slightly lower as long as things are 'status quo'.

As for recovery, the market hates uncertainty. So once our infection/death rates flatten out, we get a good treatment guidelines, or vaccine, it'll provide a bump to the market. Those will be the days where there will be a short v shaped recovery type of picture. But after that, the market has to deal with the financial aspect of record unemployment and the fed printing money. That'll provide uncertainty on the way back up.

I think once we're back outside and trying to get back to our previous lives, the average American is going to want to spend money once they get back to work. Even the weeks going into this as it was developing, people were still going on flights and going on cruises. People will want to reward themselves, spend for their kids for keeping them cooped up. It'll take a little to build wide spread confidence back up but not 1-2 years long. We tend to have a short term memory for things like this.

[Antares]

I think it all depends on developing an effective treatment. Without it, Stay at Home will linger into the summer. Containment would be the only effective strategy and that alone would greatly restrict any activity both personally and business wise. If this rolls into the summer, it will be a very long recovery. Our behavior patterns will be ingrained. Weekend getaway? No thanks for a large segment of society. Trip to Vegas? No thanks. Ripple effects through out the economy will take years to subside.

What you describe is what I think is most likely. Once the surge is over, we do not go back to ordinary life except carefully, with a broad testing regimen akin to the testing, quarantine and tracing contacts S Korea did. We may need to reinstitute restrictions multiple times. Life is not safe and ordinary. It only ends with a vaccine.
Not to unduly plug my own stuff, but the topic of my latest video is How Does This End:

https://youtu.be/2i9ZmB9pBvM

[Antares]

I think we can have another pretty decent drop ahead of us but I don't think there will be more circuit breaking days unless really bad news pops up somewhere. Probably more of a slow downturn. We'll probably retest the previous lows and maybe slightly lower as long as things are 'status quo'.

As for recovery, the market hates uncertainty. So once our infection/death rates flatten out, we get a good treatment guidelines, or vaccine, it'll provide a bump to the market. Those will be the days where there will be a short v shaped recovery type of picture. But after that, the market has to deal with the financial aspect of record unemployment and the fed printing money. That'll provide uncertainty on the way back up.

I think once we're back outside and trying to get back to our previous lives, the average American is going to want to spend money once they get back to work. Even the weeks going into this as it was developing, people were still going on flights and going on cruises. People will want to reward themselves, spend for their kids for keeping them cooped up. It'll take a little to build wide spread confidence back up but not 1-2 years long. We tend to have a short term memory for things like this.

I agree with you that spending will increase when restrictions end, but putting aside the issue of how long it will take to get to a safe national situation and to ease restrictions, the numbers that are able to spend freely will be far lower than before the pandemic.