I understand the stock market could and probably will crash again in the coming months.
I’ve made investments in what I perceive to be value stocks, those with a proven track record at a cut price and solid fundamentals/moat.
Am I right or being naive in that these stocks which are already bottomed or super low won’t be affected so much. When the market crashes again it’s going to be the bubbles (tech/pharma) that see th biggest hit and account for most of the lost points. I.e. Tesla, Amazon etc
Everybody may have different theories but no one really knows…
I have a few “value” stocks such as Telecommunications (BT, Telefonica, etc) that I bought quite low, but if there is another crash they will probably also go lower.
No one knows if there will be a crash and which stocks it will affect more. It could affect less the “value” stocks that are quite low and “burst” the current “Tech Bubble”, however, it may also plummet value stocks even lower whilst having minor influence on the strong, “social distance friendly” tech stocks such as Microsoft and Amazon.
Another “dip” or “crash” is not even guaranteed, we will have to wait and see what happens. I personally think stocks market indices will go down, at least another 10% this year but it’s impossible to know.
When a stock hits below 30, in my head I see huge signals going off on traders screens anywhere, so in a crash the first ones to bounce back are the ones who were hovering above that figure anyway.
As long as those value stocks are low volatile then in the long term you will come out better off. Unfortunately, no stock is immune from a recession, but those with low volatility tend to fall much less. Again no one knows the future, but you’d have to have been hiding under a rock not to know what is happening around the world. All the signs are pointing to a recession, it’s only a matter of when.
The markets are seeing fewer and fewer positive signals as the days go on, it’s almost at the stage where there will be nothing to look forward to soon.
The election is coming, which is only going to fuel the fire right now dividing people and beliefs. You could see serious resistance between people as tensions rise and finances becomes harder hit. I’m awaiting retaliation on the BLM movement, not because people don’t agree with the cause, but simply because it’s an easy target to vent fustrations.
Coronavirus is going to peak again, the nations have not got the option of shutting down further out of fear of financial ruin. Things will start to slip, as precautionary measures become almost taken for granted and an air of complacency will set in. People will have to make a daily choice between self isolation or financial troubles. Death rates are increasing and the amount of new infections outweigh the amount of new testing going on. The gov is bullshitting by saying it’s higher because we are testing more, it’s higher because it’s spreading like crazy.
YELP business directory has reported half of restaurants have permanently closed. I would argue that many small to medium businesses are in the same boat also. I’m certain that many businesses are only staying open right now to claim the government bailout money, which is siphoned into wages for the company bosses.
I have heard the UK gov is giving out ÂŁ50k non backed loans to companies - so tons of businesses are taking out this loan with no intention of paying it back, only to go bump after the payouts stop. Again, siphoning it into wages for the directors. The amount of defaults on company loans will kill most of the banks, in turn hurting the gov.
The markets are being held up by tech companies which are FAR over valued for the products and services they provide. Money has flowed that way just because these tech businesses operate more flexible and can scale up and down quicker than the likes of Airlines etc. Nothing more, in my opinion. There is only so many Zoom-like applications we need on a computer, with only a certain amount of use cases. Soon they might “zoom” out of popularity. BadumTss.
Again, just a few thoughts. Not saying it’s for certain but food for the brain.
No doubt, we really shouldn’t be this high. Still some good stocks that are at fair prices though, so no reason to stop putting money in. There will always be opportunities
Very well written. The only thing you’ve missed for UK is that the furlough scheme ends in October and then in January we will most likely have hard Brexit and all that will be a recipe for a giagantic s*it storm in the UK.
No, no short positions at all, a good portion in cash though.
Nothing against Telsa, I like Elon and I think he has the charisma of a Steve Jobs - also a following too. I hope he does well.
To be perfectly honest, i’m struggling right now where to put my money. The market has been trapped in a range for about a month and right now the best play I can think of is just sit tight on cash and wait for some waves.
I’m learning as I go and offer my take on the situation. I may be wrong but I think it’s good to sound out some opinions just to see others sentiment and if it agrees or disagrees with mine.
Also I don’t think there is a need to panic either, we just need to be smart about how we trade. There is always money to be made whether the market is going up or down. I won’t lie though, if you are faint hearted now might be the best time to consider putting your cash into more secure instruments. Otherwise your health will suffer dearly
I’m going long on BT, RR, Shell, Lloyds, if you look at previous crashes and their current levels there’s good support there. I think AZ, Tesla, GSK, AMZ are all going to get slammed.
Oil isn’t going anywhere soon.
BT are leading the 5G infrastructure in UK and can fall on Openreach sale if needed.
RR have good risk/reward and they are government supported while also being well diversified, also talk of rolling out mini nuke stations which they lead in.
Lloyds are well prepared for this, they are in a better position than other European banks (stress tests). I know they are still paying bonuses to all staff and have just increased their pension.
I also think national express could be a good punt, first group are dead and NEX will lap it up.
Shell earnings next Thursday I believe along with all the other big oil firms, should be interesting. Hoping that the market has already factored in the bad news for shell, but if it’s down I will add to the position I have already. Agree that long term it will come good.
National Express have at least embraced the eco movement as I saw they are going EV on some of their coaches, which is nice to see them embrace. Got a small punt on them, hopefully they will come good in time. May have more to fall though as confined spaces on a coach are deffo not a place I think anyone wants to be anytime with covid floating around. In time though, hopefully they come good.
RR will not be allowed to fail, it’s in our national interest to keep a company that is extremely niche and leads in its field, especially as countries becomes more insular. They are well diversified and are leading micro nuclear plants as well going electric on their engines. Warren east was turning RR around and they were due to make their first profit this year, prior to Covid. With East at the helm and the streamlining of their business I think they will do well in a couple years.
Shell will pick up again. Oil is not going away. Industry will not change over night and Shell will adapt and buy it’s way into renewables as it already is. A return of dividends to their previous levels will again increase price. We are creatures of habit, covid isn’t changing anything over night.
BT can not fail, they are too engrained into our national infrastructure. They have recently done deals with sky to make it easier to obtain their TV packages. When dividends come back so will the price. Furthermore, big insider trading suggests the board are confident and believe in the future at BT.
Lloyds ok, low interest rates and bad debt but this is a burden for all banks. But as I said British ones have faired better than their European counterparts on stress tests.
I get your point but I think brexit will change the dynamic, I really think it will be short term pain long term gain. I think the UK or England, whichever it is…will do well. I think as a nation we are very critical of ourselves but constantly admire others. Truth is we have some big companies, not all of them public and some of the best engineers and innovators in the world. I think there will be more spending domestically as supply chains shift, which btw is happening now and I can vouch for that. I also think the EU is going to fail, Italy will end up leaving and that will be that.
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BadumTss.
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