Financial Markets Meltdown

[elkhunter11]

Originally Posted by bdub

No kidding. Explain to me exactly how that is going to jive with the liberals goal to crush Alberta and the oilpatch forever and drive the country to economic collapse. Use your head man.

Exactly, it would do just the opposite, it would revive the oil industry, increase employment, increase tax revenue,and keep our money in Canada. Even worse, it would offend the Saudis, and Trudeau would lose his kickbacks from the Saudis.

[bdub]

Originally Posted by elkhunter11

Exactly, it would do just the opposite, it would revive the oil industry, increase employment, increase tax revenue,and keep our money in Canada. Even worse, it would offend the Saudis, and Trudeau would lose his kickbacks from the Saudis.

Yeah you bet. It's terrible what we have allowed to happen here. Canada's a joke run by a bunch of clowns.

[thenaturalwoodsman]

Something eventually is gonna have to give here, unemployment numbers are due Thursday in Canada and are sure to not be good. Trudeau is hucking cash around to everyone wether they need it or not. The 3 dictators cant come up with anything for oil. Saudi's and Russia are just starting to rumble with the Virus. Boris is in hospital. Stocks are flying high.....

[bsmitty27]

^ there is money to be made. But it's by gamblers.

[Dean2]

Originally Posted by bsmitty27

^ there is money to be made. But it's by gamblers.

Yep, or if you are pretty good at day trading. Anyone thinking of jumping back in for long term holds be VERY careful what you buy into. There are some good deals but not all discounted shares are a deal.

Air Canada has been bankrupt once, very good chance they could do it again, along with all the Cruise lines. Despite this, their share prices are being bid up like they are on fire sale. These are short covers and short term traders at work. Airlines and the like are terribly run, financially levered operations. They have been one of the worst for piling all their spare cash into share buybacks and artificially bumping their share values but now have no resources to ride out this drop. These are high risk at the best of times, right now, they are Russian Roulette with five loaded chambers.

There is going to be a recession world wide, how bad no one knows. A second round of lock downs is far from unlikely until we have a vaccine and effective treatment. We may well be a long ways from bottom yet. Need to look closely att what you are holding and if they are in the wrong sectors, this recent run up may be a good chance to rebalance your portfolio. If you have not heard in person from your Financial advisor, to discuss this stuff it is also time to go shopping for a new one cause the one you have is useless. Best of luck all.

[Jim Blake]

Bang on Dean. About as accurate information as you can get.

Our play around money I handle and haven't traded anything on this weird, volatile market.

Funny you should mention about Advisers updating clients. I had a chat with my neighbor a few miles away and he said his had not contacted them since their yearly update months ago. Ours updates at least once a week either by email or phone. He's good and it has showed especially so in this crisis.

[ward]

Originally Posted by Jim Blake

Bang on Dean. About as accurate information as you can get.

Our play around money I handle and haven't traded anything on this weird, volatile market.

Funny you should mention about Advisers updating clients. I had a chat with my neighbor a few miles away and he said his had not contacted them since their yearly update months ago. Ours updates at least once a week either by email or phone. He's good and it has showed especially so in this crisis.

If your advisor has not contacted you during this crisis, you don’t actually have one.

[KGB]

Kenny said that he expect the unemployment to be above 25% in a province...

[CMichaud]

Originally Posted by ward

If your advisor has not contacted you during this crisis, you don’t actually have one.

You mean beyond the form emails they send out saying don't panic with a bunch of links to articles discussing how it is best to wait it out?

That's all my guy sends me

[Map Maker]

I finally figured out the markets.
These last four weeks, I have been calculating and recalculating and can finally summarize the market as:
If I buy, the market will go down.
If I sell, the market will go up.

[Dean2]

Originally Posted by CMichaud

You mean beyond the form emails they send out saying don't panic with a bunch of links to articles discussing how it is best to wait it out?

That's all my guy sends me

If that is your guys shtick phone up his boss and rip him a new one, then go interview for a real advisor with a bunch different companies. Portfolio composition is going to be critically important over the next two years. You want to be in the market for sure, but you damn well better be in the right stuff or you are going to be flat to down a lot over the next 24 months. Even in ETFs you want the right ones, not just a general basket and for sure not emerging markets, European Financials, travel stocks etc.

[fishtank]

Originally Posted by Map Maker

I finally figured out the markets.
These last four weeks, I have been calculating and recalculating and can finally summarize the market as:
If I buy, the market will go down.
If I sell, the market will go up.

Isn’t that the truth ...

[Jim Blake]

Looks like the shine came off a bit today. Oil is going down by a few bucks.

WCS 7.15
Canadian Light 7.50

Maybe someone already knows what the outcome of the Thursday meeting is going to be. I can't believe even with large cuts it would make up for the impact Covid-19 has done.

[MooseRiverTrapper]

That was a wild ride today. I see some low prices coming in the next few weeks. “W” shaped rebound out of this hole.

[Fisherdan]

I really don’t understand what is going on with these markets. This week has seen an amazing rally, despite all the deaths, job losses, oil price, etc.

There is this idea that this recession is “man-made” which somehow makes it different then other recessions.

How were other recessions, bubbles, etc not man-made? The economy is man-made. Man-made or not, the impact on businesses, industries, and consumers are going to be real.

The CEOs of Royal Bank and CIBC, this week are saying that it will take a lot longer to recover from, and that there are a lot of future unknowns.... consumer spending habits, businesses shuttered, industry shifts, etc.

Maybe I’m too negative about the outlook... right now there are definitely a lot braver/more optimistic investors than me.

[thenaturalwoodsman]

Originally Posted by Fisherdan

I really don’t understand what is going on with these markets. This week has seen an amazing rally, despite all the deaths, job losses, oil price, etc.

There is this idea that this recession is “man-made” which somehow makes it different then other recessions.

How were other recessions, bubbles, etc not man-made? The economy is man-made. Man-made or not, the impact on businesses, industries, and consumers are going to be real.

The CEOs of Royal Bank and CIBC, this week are saying that it will take a lot longer to recover from, and that there are a lot of future unknowns.... consumer spending habits, businesses shuttered, industry shifts, etc.

Maybe I’m too negative about the outlook... right now there are definitely a lot braver/more optimistic investors than me.

Agreed! The markets this week were a complete joke really, nothing but bad news oil is/was never gauranteed with OPEC with zero demand on the back side of a price fix anyways. People dying and deaths havent peaked in North America, nothing but bad news all over the world and specifically North America. But the stocks went up and still continue....... Trump wont cut his production, WCS is worth nothing, jobless rates are high and climbing.

Market gains at this week's current rate the Dow will be back at its highs of 29,000 points by April 24th. That is not normal in these environments and something will give here It has too....

[bdub]

Originally Posted by thenaturalwoodsman

Agreed! The markets this week were a complete joke really, nothing but bad news oil is/was never gauranteed with OPEC with zero demand on the back side of a price fix anyways. People dying and deaths havent peaked in North America, nothing but bad news all over the world and specifically North America. But the stocks went up and still continue....... Trump wont cut his production, WCS is worth nothing, jobless rates are high and climbing.

Market gains at this week's current rate the Dow will be back at its highs of 29,000 points by April 24th. That is not normal in these environments and something will give here It has too....

Look back on past bear markets. Not unusual to see big retracements off of the drops that can see the market claw back 40% to 60% of the losses before heading lower. Look back to the 2008-09 period and you will see the market chop up and down like this over 16 months before hitting the bottom. I think there is very limited upside here, and a lot of downside risk.

Between 2800 and 2950 on the SP500 is where I will probably be putting on some short exposure to hedge my equity longs or outright selling some more stock. I added a bunch more gold during that dip in March but I doubt we will get another chance like that for a while. Lots of FOMO right now, probably going to suck a lot of folks in just in time to crush them on the next leg down imo.

Today the FED announced they are pretty much going to buy up any and all piles of junk debt out there including that held in ETF's. Next up the FED will be buying stocks like the Japanese. Plus they are spending trillions elsewhere trying to prop up this house of cards. We are into Modern Monetary Theory mode. Unlimited printing of cash by governments. I don't think it can end well. I get the feeling this is worse than 2008 but may also end quicker. But who knows. Nobody really does, just got to try and manage the risk and opportunity as we go through this I guess. Good luck all.

[Buckhead]

Originally Posted by bdub

Look back on past bear markets. Not unusual to see big retracements off of the drops that can see the market claw back 40% to 60% of the losses before heading lower. Look back to the 2008-09 period and you will see the market chop up and down like this over 16 months before hitting the bottom. I think there is very limited upside here, and a lot of downside risk.

Between 2800 and 2950 on the SP500 is where I will probably be putting on some short exposure to hedge my equity longs or outright selling some more stock. I added a bunch more gold during that dip in March but I doubt we will get another chance like that for a while. Lots of FOMO right now, probably going to suck a lot of folks in just in time to crush them on the next leg down imo.

Today the FED announced they are pretty much going to buy up any and all piles of junk debt out there including that held in ETF's. Next up the FED will be buying stocks like the Japanese. Plus they are spending trillions elsewhere trying to prop up this house of cards. We are into Modern Monetary Theory mode. Unlimited printing of cash by governments. I don't think it can end well. I get the feeling this is worse than 2008 but may also end quicker. But who knows. Nobody really does, just got to try and manage the risk and opportunity as we go through this I guess. Good luck all.

My thoughts exactly.
I am thinking the markets are going to retest the lows before we move forward on a genuine uptrend.
Be careful out there, folks.

[Dean2]

Rolling 12 months the overall portfolio is down 11.2%, but I did move a chunk to cash over the six month period prior to March so that moderated the drop a lot. Sitting on 35% cash and 20% long bonds that are at their normal % component. Thus the long bonds going up in value as rates dropped have also helped offset the drop in equities as well.

Have been doing some short term trading and have put a little back to work long term but have no plans to put the rest of the cash to work long term for quite a while yet. Partial position Limit orders in place, for example Royal Bank at $77 now at $88 first partial filled at $74, Canadian Utilities at 30 now at $35 first partial filled at $27, Telus at $20, now at $22 first partial at $19, Fortis at $45 now at $55 and expect the market will easily come off enough to fill these.

We shall see if that is correct but as long as a guy is sitting in cash, all you are giving up is the gain if the market doesn't come back enough to fill your limit orders. Best of luck to all of you.

[Jim Blake]

Looks like the 10 million bbl/day cut in today's agreement didn't cut it. Not surprising since so far the estimated demand drop has been indicated at 30 million bbl/day.

WCS now just over 5 bucks.

TSX and dollar both up???

[Dean2]

A couple of guys have PMed me about stocks so here is the short form

Concentrate on stocks that are the very best in their industry, strong balance sheets and the very best management teams, will be around for the long term and pay a reasonable dividend that is secure. So a concrete example of best managed and best long term returns RBC and TD bank. Worst managed over many years and risk exposed Laurentian, CWB or CIBC. If you bought an ETF like ZWB you get all of these banks, best and worst. It is why I am not a fan of ETFs, but if you don't know how to separate the wheat from the chaff, it is better than picking the wrong ones.

These are strictly how I have prioritized things, this is not advice for others as it may be completely wrong for your situation and risk tolerances. Consult a qualified financial advisor, if you can actually find one.

Industries
Banks in Canada - see above. NOT U.S. or European Banks
Utilities - wide service areas with a large percentage of clients on regulated rates
Telecom - Pick those that have the large networks and multi pronged business like network, internet, T.V. Cloud etc
Payments - Visa and MasterCard
Tech - Amazon, Microsoft
Retail - Grocery Stores and the Mega Retailers with strong online presence
Energy Infrastructure - Pipelines - these have very good dividends but they are also exposed to oil price risk so not nearly as risk free as Utilities.
REITs - apartment and single family only and preferably no more than 20% in Alberta and Sask. Those holding office space, retail space and many commercial properties are going to have a real rough ride the next few years.
Health Care - Suppliers of materials and pharma.

Hope some of you find this interesting and thought provoking.

[BlackHeart]

Originally Posted by Dean2

A couple of guys have PMed me about stocks so here is the short form

Concentrate on stocks that are the very best in their industry, strong balance sheets and the very best management teams, will be around for the long term and pay a reasonable dividend that is secure. So a concrete example of best managed and best long term returns RBC and TD bank. Worst managed over many years and risk exposed Laurentian, CWB or CIBC. If you bought an ETF like ZWB you get all of these banks, best and worst. It is why I am not a fan of ETFs, but if you don't know how to separate the wheat from the chaff, it is better than picking the wrong ones.

These are strictly how I have prioritized things, this is not advice for others as it may be completely wrong for your situation and risk tolerances. Consult a qualified financial advisor, if you can actually find one.

Industries
Banks in Canada - see above. NOT U.S. or European Banks
Utilities - wide service areas with a large percentage of clients on regulated rates
Telecom - Pick those that have the large networks and multi pronged business like network, internet, T.V. Cloud etc
Payments - Visa and MasterCard
Tech - Amazon, Microsoft
Retail - Grocery Stores and the Mega Retailers with strong online presence
Energy Infrastructure - Pipelines - these have very good dividends but they are also exposed to oil price risk so not nearly as risk free as Utilities.
REITs - apartment and single family only and preferably no more than 20% in Alberta and Sask. Those holding office space, retail space and many commercial properties are going to have a real rough ride the next few years.
Health Care - Suppliers of materials and pharma.

Hope some of you find this interesting and thought provoking.

Thanks for this post, its good advice in uncertain times. But a few questions...

Why Visa & MC??.....with the level of unemployment we are seeing, I would imagine two things; 1)higher levels of defaults/losses 2) Much lower revenues from the retail side of the equation.

REITs in apartments and single family homes? Would think that this is also heavily impacted....we see the promotion of not paying April rent and this is just the start...wait till May when the cash from their vacation pay payouts runs out and the size of the govt cheque is a lot smaller than they thought....unemployed moving back home if possible. On single family homes....who is buying right now.....can't even show the home......and mortgage deferrals through the roof.....lots of people will be underwater equity wise if they can't get back to work soon........I would expect the value of single family homes to drop a fair bit.

Just asking......I have been 100% in cash for the last 6 months......looking for where/when to get back in......could be some really great bargins by summer.

Or maybe not...... WASHINGTON (Reuters) - The pandemic sweeping the world will turn global economic growth "sharply negative" in 2020, triggering the worst fallout since the 1930s Great Depression, with only a partial recovery seen in 2021, the head of the International Monetary Fund said.

[Dean2]

Visa and MasterCard are only involved at the transaction level. They do not hold any credit card balances, all losses belong to the Banks and other card issuers, not MasterCard or Visa. Right now, credit cards are only about 60% of in person purchases, rest is cash, debit card and still some cheques. They are 100% of online purchasing and both through the lock down and well out the other side Online is going to really take off so Credit Card transaction fees will grow rapidly.

REITS - There is a shortage of residential rental space, whether it is apartments, condos or single family houses, in all major markets, especially Toronto, Vancouver, New York, LA etc. There will be a short term dip due to rent issues but there is a lineup of people looking for rentals so eventually people will go back to paying or get evicted and quickly replaced. Apartment REITS have come off as much as the other REITS but are far less exposed to longer term downsides. It also has the advantage that if some of your tenants aren't paying, they are a small percentage of your total rents, if Sears goes broke or a large oil company moves to the states, or switch to work form home for 90% of their staff you lose a BIG chunk of rental income.

[tranq78]

Originally Posted by Dean2

A couple of guys have PMed me about stocks so here is the short form

Concentrate on stocks that are the very best in their industry, strong balance sheets and the very best management teams, will be around for the long term and pay a reasonable dividend that is secure. So a concrete example of best managed and best long term returns RBC and TD bank. Worst managed over many years and risk exposed Laurentian, CWB or CIBC. If you bought an ETF like ZWB you get all of these banks, best and worst. It is why I am not a fan of ETFs, but if you don't know how to separate the wheat from the chaff, it is better than picking the wrong ones.

These are strictly how I have prioritized things, this is not advice for others as it may be completely wrong for your situation and risk tolerances. Consult a qualified financial advisor, if you can actually find one.

Industries
Banks in Canada - see above. NOT U.S. or European Banks
Utilities - wide service areas with a large percentage of clients on regulated rates
Telecom - Pick those that have the large networks and multi pronged business like network, internet, T.V. Cloud etc
Payments - Visa and MasterCard
Tech - Amazon, Microsoft
Retail - Grocery Stores and the Mega Retailers with strong online presence
Energy Infrastructure - Pipelines - these have very good dividends but they are also exposed to oil price risk so not nearly as risk free as Utilities.
REITs - apartment and single family only and preferably no more than 20% in Alberta and Sask. Those holding office space, retail space and many commercial properties are going to have a real rough ride the next few years.
Health Care - Suppliers of materials and pharma.

Hope some of you find this interesting and thought provoking.

Excellent comments, thanks Dean.

[badbrass]

Just got payed out at 8.0 % this year!!!!!!
I was not sure if I was going to see my return, or my investment!
Got my Check on investment and return on Thursday! YES YES !!!!!!!!

[Dean2]

For the guys that have asked, here are the specific companines I favour in each category.

These are strictly how I have prioritized things, this is not advice for others as it may be completely wrong for your situation and risk tolerances. Consult a qualified financial advisor, if you can actually find one.

Industries - Industries and Stocks are in order of preference by me.

Banks in Canada - see above. NOT U.S. or European Banks
RBC, TD with a small position in National Bank

Utilities - wide service areas with a large percentage of clients on regulated rates
Fortis, Canadian Ultilities, Capital Power, Alta Gas

Telecom - Pick those that have the large networks and multi pronged business like network, internet, T.V. Cloud etc
Telus, Rogers, BCE (Bell Media)

Payments - Visa and MasterCard

Tech - Amazon, Microsoft

Retail - Grocery Stores
Loblaws, Kroger,

Mega Retailers with strong online presence
Walmart, Costco, Canadian Tire

Energy Infrastructure - Pipelines - these have very good dividends but they are also exposed to oil price risk so not nearly as risk free as Utilities.
TransCanada Pipe, Enbridge, Pembina Pipelines

REITs - apartment and single family only and preferably no more than 20% in Alberta and Sask. Those holding office space, retail space and many commercial properties are going to have a real rough ride the next few years.
Canadian Apartment Reit, Northview Apartment Reit, Interrent Reit - definitely NOT Boardwalk Reit which is 74% Alberta and Sask.

Like I said above, these are the ones I like, please do your own research to see if you like them too.

[MountainTi]

See what that does. Yay The Donald

https://www.bloomberg.com/news/artic...AigDehlqix97OQ

[bdub]

Originally Posted by MountainTi

See what that does. Yay The Donald

https://www.bloomberg.com/news/artic...AigDehlqix97OQ

That cut isn't going to mean much when demand is down triple what the cut is. The market is forcing them to cut anyway, this is just OPEC window dressing for the time being. Until cars, ships, planes and industries start burning another 20-30 million bbls I don't think it's going to move the needle very much or for very long.

[Jim Blake]

Originally Posted by bdub

That cut isn't going to mean much when demand is down triple what the cut is. The market is forcing them to cut anyway, this is just OPEC window dressing for the time being. Until cars, ships, planes and industries start burning another 20-30 million bbls I don't think it's going to move the needle very much or for very long.

Well said. I understand inventories, tank farms are nearly at capacity. This is going to be long term pain.

[bdub]

A few tidbits of information I picked up by reading and listening to some smart folks over the long weekend. There are some pretty grim statistics and economic data already and we are only into this thing for a month or so. From my notes.

Some 30% of renters didn’t pay their last months rent is the US. The majority of employees have had their income cut by 25% plus. Unemployment projections of 25% in the States. Stimulus is going to hit most hands when people have been already been out of cashflow for 6 weeks. Think Breadlines and food shortages coming. The US economy is consumer driven, to the tune of 70-90% depending where we are in the cycle. Debt is at extreme levels. Most are living paycheck to paycheck and have no buffer. Most have been living/buying on credit. Auto loans, HELOC’s and credit card debt. Low rates have created a cycle of borrow and spend. Even retirees are in debt bigtime, the majority of them still owe on mortgages, funding their lifestyle out of their home equity.

And the corporate sector it isn’t much better. We are getting earnings revisions drastically lower. Credit downgrades. Debt going from Investment grade to junk. Stock buybacks are going to become a dirty word. Dividends are getting cut or eliminated. Some public companies are going to go under. Thousands of private companies and small businesses are going to go under. Many have no buffer to survive for long and credit is tight.

Closer to home an article was saying 25% of Vancouver homeowners are only going to pay half their tax bill and 6% are going to pay none of it. 46% of residents have lost their jobs or had hours reduced. Rent and mortgage payments are similar to US stats with almost 30 percent not making rent or unable to pay their full mortgage.

Its going to take a long time to repair the psychological damage of this slowdown. Even if we restart the economy tomorrow, peoples behaviours are going to be altered for a long tome. Who is going to travel on a plane, go to events, restaurants, theatres. Who’s going to continue to spend like we have in the past.

And prior to the covid we already had headwinds building. Trade wars, trouble in N Korea, Venezuela, Iran and the Middle East. Oil price war. The US stock market was at a very high valuation just a short time ago.

On the positive side we have rates at next to zero and the FED printing trillions lol. The POTUS is the ultimate market pumper and now has the FED under his thumb. The VIX is still elevated but coming down. Scary times to navigate markets for sure. Good luck all.