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0 pointskirse6y ago0 comments

Having been roughly in your position back during the 2008 dump... https://news.ycombinator.com/item?id=318595

Don't forget, the market can drop 20% a day for awhile. Plenty of smart folks are sitting on the sidelines with cash, but time will tell if this is the trigger for a much larger longer-term 2020 deleveraging.

Markets aren't even where they were pre-Trump election yet, so this 30% haircut from the top isn't even a "correction" from some viewpoints.

I personally wish I was ballsier back in 2008/2009 (Ford for $1, BoA for similar prices, etc), but it'd also be premature to jump into this market if you truly think it's the tip of a recessionary iceberg. Recessions take 3-6 months minimum to spill over into WallSt. If you're not jaw-agape at the prices of some of your favorite companies, it's probably not the bottom just yet.

Further, if you take the pessimistic view (ala Japan Nikkei), you might get stuck holding stock that never recovers. Be patient.

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4 comments · 2 top-level

rabidrat6y ago· 1 in thread

FWIW, I was ballsier back in 2008 and bought WAMU on the way down. It's exciting to watch your investment go all the way down to 0 :/

wj6y ago

I did as well. I was certain they were going to be rescued!

rnd336y ago· 1 in thread

The problem is separating the great recessions from less dramatic recessions. Was 2008/2009 a once in a decade recession or once in a century recession? In a normal recession you'll never get Ford for $1, and most stocks will never feel that cheap.

kirseOP6y ago

Right now the bulk (>95%) of this short-term correction is tied directly to COVID-19 total infections + infection-rate data. The parasitic drag on second and third-order (and beyond) economic factors have barely kicked in (i.e. lost productivity from WFH, people without jobs, businesses unable to stay afloat because of credit / liquidity / debt servicing issues, etc). The fundamental value-producing capabilities of most companies are exactly the same as they were two weeks ago. Chick-fil-a can still make the same great sandwich, and AMD can still make the same great chips.

Theoretically if someone released a miracle cure today that could be distributed in 2 weeks, you'd witness the greatest bull rally in the history of the US over this remaining week.

All that to say you don't really need to guess on this one right now. So long as we don't see a flattening/slowing of the US infections curve, markets will continue trending downward as compounding negative impacts/expectations on those 2nd/3rd-order economic effects begin to pile up. For now, the right answer is to stay out of the market.

Over the next 4 weeks you'll have all the data you need to decide if this will return as a monster bull rally or a long-term 2020+ drag on the economy. Keep an eye on your COVID-19 dashboard. As soon as the data starts to flatten out, consider an entry point. (with the caveat it doesn't return in full force based on season - look into the 1918 flu). If infections continue to accelerate though (which they currently are), stay out.

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