> if you've got some cash to invest in the markets and a long time horizon to draw on it, this may be the money making opportunity of a generation.
If you think prices are dropping strictly because of covid-19 you're wildly misunderstanding the situation. If you buy now thinking it's low I am quite certain you will lose quite a lot of money.
~20% of the work force is unemployed or at reduced time right now. Goldman Sachs estimates we might see ~2 million people file for unemployment Monday. These are the most vulnerable parts of the population. They're going to lose health insurance, struggle to pay rent, struggle to eat... and we haven't even seen the pandemic warm up in the US yet.
Next will be people at companies whose stock just completely crashed losing their jobs. It will take a month, but when shares drop companies must act by increasing share holder value, which will mean letting people go.
All of this will have severe consequences for the national and global economy, consequences that will just start to be felt once people stop being sick. If this thing magically disappeared tonight you would probably still see a few of your favorite local restaurants disappear forever. And again, this is literally just the beginning.
This isn't happening just because of an unfortunate natural disaster but because the US (and many other countries) have systematic vulnerabilities that make them unable to deal with a situation like this. The world after covid-19 dies down will be wildly different than today. This could very well be the end of US hegemony as we see countries like China, that can deal with these problems, start to rise to become the new global super power.
The best case is looking bad and the worst case is unimaginable. The idea that you can simply "buy at the bottom" and make it rich very wrong.
Depends, as always, on how much your worst case is priced in. Over the last month or two, Lyft is down 70%. The company is not intrinsically worth 70% less than it was the Friday before last. Does that mean it's a good company? Who knows, maybe not. Can it fall more? Sure. Does it have a big cash position to weather this storm? Yeah I mean it's got $3.3B-ish on hand and doesn't have to pay drivers when nobody's taking rides because they're contractors. Just like Uber [1] and their $6B bank account [2]. And Square with their $2B bank account [3]. At this point Square is trading at 7X cash on hand. UBER at 6X cash on hand. That makes them better capitalized than your Wells Fargo savings account with a fractional reserve rate of 10:1.
Plenty of very solid companies are now trading at 30% of what they were a month ago with massive warchests. To say that hasn't priced in a few quarters of negative growth is a bit of a stretch isn't it?
As for indices, well, not all companies stand to get burnt by this downturn. Have you seen the lines at Target and Walmart? As some S&P components go down others go up. That's the raison d'etre of ETFs. Plenty of companies do well as others do poorly.
> The idea that you can simply "buy at the bottom" and make it rich very wrong.
Of course picking the bottom is the hard part but even if you're off by a bit on either side, with a sufficient time horizon, these prices are mouth-watering.
Or should I just wait and buy at the next top? ;) I'd argue the idea that you can wait for it to recover before investing in hopes you become rich to be very wrong.
If you think prices are dropping strictly because of covid-19 you're wildly misunderstanding the situation. If you buy now thinking it's low I am quite certain you will lose quite a lot of money.
~20% of the work force is unemployed or at reduced time right now. Goldman Sachs estimates we might see ~2 million people file for unemployment Monday. These are the most vulnerable parts of the population. They're going to lose health insurance, struggle to pay rent, struggle to eat... and we haven't even seen the pandemic warm up in the US yet.
Next will be people at companies whose stock just completely crashed losing their jobs. It will take a month, but when shares drop companies must act by increasing share holder value, which will mean letting people go.
All of this will have severe consequences for the national and global economy, consequences that will just start to be felt once people stop being sick. If this thing magically disappeared tonight you would probably still see a few of your favorite local restaurants disappear forever. And again, this is literally just the beginning.
This isn't happening just because of an unfortunate natural disaster but because the US (and many other countries) have systematic vulnerabilities that make them unable to deal with a situation like this. The world after covid-19 dies down will be wildly different than today. This could very well be the end of US hegemony as we see countries like China, that can deal with these problems, start to rise to become the new global super power.
The best case is looking bad and the worst case is unimaginable. The idea that you can simply "buy at the bottom" and make it rich very wrong.