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As someone living in Hong Kong, it kind of blows my mind how little attention Americans have given this situation. All but a few Americans have their head in th

As someone living in Hong Kong, it kind of blows my mind how little attention Americans have given this situation. All but a few Americans have their head in the sand on this, and the markets have not at all priced in the all but certain long term impact of this. I've personally broken my long-time rule of no trading public markets and opened a Robinhood account to hedge against this. So far this week I'm up 5x on those hedges. Markets are starting to realize, but I don't think we're even close to having fully priced in the impact of this. Everybody remembers the 2008 recession. A subset of people during that recession made a killing. The Big Short was a great book (and movie) about this. This is probably the first new opportunity to be a "big shorter."

bcrosby95 7y ago
> A subset of people during that recession made a killing. And a lot of people lost a lot of money trying to time that. It wasn't if, but when. People were talking about the mortgage driven bubble for years by the time 2008 rolled around.
SubiculumCode 7y ago
Everyone I know is worried about it.
wyxuan 7y ago
Good time to load up on gold and us dollars. I think coronavirus will be the catalyst to end the business cycle and blow the top off some of the major fiscal problems that have popped up.
- marton78 7y ago
  ... and then you want to buy dollars? FYI gold and dollars are usually inversely correlated.
  - sfj 7y ago
    So are gold and stocks, yet they both went down on Tuesday. The market is very strange nowadays.
01100011 7y ago
I'd love to agree with you, but I keep being reminded that 'the market can remain irrational longer than you can remain solvent.' Sure, I'm nearly certain this is going to give us 2-4 quarters of negative growth, worldwide, but I don't know when the market is actually going to price that in.
- i_am_nomad 7y ago
  Morgan Stanley already is betting on a return to positive growth sometime in late Q2. I won’t bet against them.
  - yodsanklai 7y ago
    Finance illiterate question: how do you know what Morgan Stanley is betting on? I'd assume they don't divulge their trading bets.
    - throwaway3157 7y ago
      Generally each bank has many fund managers and analysts that do a lot of public speaking about their bets, thoughts, and speculations. You'll see them on public news stations as guest commentators
      - joshschreuder 7y ago
        Given what they say has an effect on how others trade, do you think that they may not be completely forthright unless it was in the best interest of their bet?
  - kenneth 7y ago
    Morgan Stanley was betting that subprime mortgage CDOs were sound in 2006. How'd that work out for them?
chao- 7y ago
Either we know different Americans, or have different expectations of what their response is likely to be. I have heard from several friends and from family about their acquisition of significant quantities of non-perishable food, boxes of face masks, and ammo. Definitely don't have their heads in the sand. I'm somewhat closer to "head in the sand" myself. I am watching the news closely, but don't feel anything I can do in my immediate daily life is consequential to the situation.
- nl 7y ago
  and ammo Yeah those type of people always think civilisation is about to collapse. And lots of them are looking forward to it.
  - remarkEon 7y ago
    Well, a lot of the folks I know who stockpile ammo are cops or veterans (or both) and as such would very much not be looking forward to any collapse, since they've very likely experienced a taste of what that would actually be like.
  - prepend 7y ago
    The measure of interest isn’t that those people exist, it’s whether there are more and how much ammo is bought. That change is of interest to me.
    - SlowRobotAhead 7y ago
      I just bought 5k of 9mm... virus unrelated. Season is coming up and I’m out of practice. After these, I’ll have fresh brass and reload. Last year I ran about 15k, this year I bet 8k tops. Just too busy.
      - prepend 7y ago
        What season require 9mm?
burlesona 7y ago
Sample size of one, but, everyone at the office today was talking about this, my parents and my wife's parents both called to ask what we thought about it... seems like it's very top of mind for most people I know.
lettergram 7y ago
I think it's because the death rate is hard to track and while "high" does not seem nearly as bad as the spanish flu. In part, the damage appears to be China's methods of trying to contain the virus that are making it worse... For instance, the death rates appear to have a distribution mostly impacting the elderly (incidentally those who are also most likely to have a weaker immune system, but also believe in less conventional medicine: 80+ years old 14.8% 70-79 years old 8.0% 60-69 years old 3.6% 50-59 years old 1.3% 40-49 years old 0.4% 30-39 years old 0.2% 20-29 years old 0.2% 10-19 years old 0.2% 0-9 years old no fatalities https://www.worldometers.info/coronavirus/coronavirus-age-sex-demographics/ https://www.worldometers.info/coronavirus/coronavirus-age-se... Not saying this isn't bad, the current stats are showing something around a 0.7% mortality rate[2][3]. The real scare here, is like the spanish flu, there's a chance it can evolve into a more deadly strain (such as SARS) the more people who contract it. If that's the case, we could be seeing 10% fatality rates across the board. If you're interested in the history of the spanish flu, there's a great series here: https://www.youtube.com/watch?v=XQ9WX4qVxEo&list=PLhyKYa0YJ_5BZ3gQleTk-PJqIejFf4Rh2 https://www.youtube.com/watch?v=XQ9WX4qVxEo&list=PLhyKYa0YJ_... In any case, general point, people American's aren't super worried about it because we have a great healthcare system, and it's spread is limited thus far. I do think a panic will set in as every major city likely now has infected individuals. So it's a good time to pull out of the market. [2] https://www.statnews.com/2020/02/25/new-data-from-china-buttress-fears-about-high-coronavirus-fatality-rate-who-expert-says/ https://www.statnews.com/2020/02/25/new-data-from-china-butt... [3] https://www.marketwatch.com/story/coronavirus-update-79339-cases-2169-deaths-clusters-emerge-in-iran-and-italy-2020-02-24 https://www.marketwatch.com/story/coronavirus-update-79339-c...
- legionof7 7y ago
  The reason that the Spanish Flu evolved into a more deadly strain was because WWI was going on. The mild cases stayed at the front lines while the severe ones went home and spread the severe strain around. This won't happen here because the severe strain will die out. Viruses generally become less lethal as they spread.
  - kyboren 7y ago
usaar333 7y ago
Your timing was good since you bought when the market may have been mispricing volatility. Assuming these are puts, a lot if your gain is from the volatility shoot up. At this point, the market has corrected volatility pricing dramatically (vix is doubled). Odds are over 50% we'll see sp500 drop below 2900 in next month (Black Scholes). But that doesn't mean a short is profitable - I recall 2008 but also the false recession of late 2018 - few people could have accurately predicted both results.
tudorw 7y ago
And when the retail investors get excited, smart money goes elsewhere, the parties already over...
abootstrapper 7y ago
How exactly are you investing in Robinhood? I dollar cost average, but I plan to pick up extra stock in corona bear market if I can scratch any extra cash together.
- kenneth 7y ago
  Buying puts against overvalued vulnerable companies + the market in general.
closeparen 7y ago
What impact do you think there's going to be five years from now?
totalZero 7y ago
The American president is railing against news organizations that are paying attention to the outbreak.
- cpr 7y ago
  He's rightly railing against news organizations that are trying to stoke FUD and panic.
Intermernet 7y ago
If you come out on top with your hedging, will you donate the profits to relief / training / prevention / education causes? Otherwise, you're literally profiting from the misfortune of others.
- downerending 7y ago
  If things are mispriced, the trade is going to happen. There is absolutely no way it could not. If it makes you feel better, many of the wealthiest traders do in fact donate a lot of money to such causes.
  - Intermernet 7y ago
    "If things are mispriced, the trade is going to happen. There is absolutely no way it could not." That's fatalistic. The only way the trade happens is if someone places the trade. If you see the trade as immoral, don't place the trade. If someone else profits from it, so be it, but at least you didn't. Please extrapolate the consequences of your trades. If it feels even slightly dodgy, it probably is, and no matter how you justify it, it was a bad thing to do.
    - downerending 7y ago
      As far as that goes, I don't see trades as immoral, as long as traders are following our laws and the rules of the market. I'd go so far as to say it's virtuous. Trades communicate price information, and that's good for everyone. If you're concerned about the immorality of economic choices, then you should consider the idea that you yourself are already acting in grossly immoral ways with your money. Read this to see why: https://www.nytimes.com/1999/09/05/magazine/the-singer-solution-to-world-poverty.html https://www.nytimes.com/1999/09/05/magazine/the-singer-solut...
- kenneth 7y ago
  Efficient markets are good for society, they give us accurate prices for things, and inform us of the impact of events. They're not perfect, but they're better than everything else. Sometimes they are wrong, the price is wrong. If my intuition is correct, my trades help push the price towards the correct direction and make the markets more efficient. If I'm wrong, I lose money. Hopefully I will profit from spotting an inefficiency in the market that many other did not. Not everything must be altruistic. The misfortune (some inevitable, some preventable due to bad leadership) will happen anyways. I don't see anything wrong with profiting off of it.

bcrosby95 7y ago

> A subset of people during that recession made a killing. And a lot of people lost a lot of money trying to time that. It wasn't if, but when. People were talking about the mortgage driven bubble for years by the time 2008 rolled around.

SubiculumCode 7y ago

Everyone I know is worried about it.

wyxuan 7y ago

Good time to load up on gold and us dollars. I think coronavirus will be the catalyst to end the business cycle and blow the top off some of the major fiscal problems that have popped up.

marton78 7y ago
... and then you want to buy dollars? FYI gold and dollars are usually inversely correlated.
- sfj 7y ago
  So are gold and stocks, yet they both went down on Tuesday. The market is very strange nowadays.

01100011 7y ago

I'd love to agree with you, but I keep being reminded that 'the market can remain irrational longer than you can remain solvent.' Sure, I'm nearly certain this is going to give us 2-4 quarters of negative growth, worldwide, but I don't know when the market is actually going to price that in.

i_am_nomad 7y ago
Morgan Stanley already is betting on a return to positive growth sometime in late Q2. I won’t bet against them.
- yodsanklai 7y ago
  Finance illiterate question: how do you know what Morgan Stanley is betting on? I'd assume they don't divulge their trading bets.
  - throwaway3157 7y ago
    Generally each bank has many fund managers and analysts that do a lot of public speaking about their bets, thoughts, and speculations. You'll see them on public news stations as guest commentators
    - joshschreuder 7y ago
      Given what they say has an effect on how others trade, do you think that they may not be completely forthright unless it was in the best interest of their bet?
- kenneth 7y ago
  Morgan Stanley was betting that subprime mortgage CDOs were sound in 2006. How'd that work out for them?

chao- 7y ago

Either we know different Americans, or have different expectations of what their response is likely to be. I have heard from several friends and from family about their acquisition of significant quantities of non-perishable food, boxes of face masks, and ammo. Definitely don't have their heads in the sand. I'm somewhat closer to "head in the sand" myself. I am watching the news closely, but don't feel anything I can do in my immediate daily life is consequential to the situation.

nl 7y ago
and ammo Yeah those type of people always think civilisation is about to collapse. And lots of them are looking forward to it.
- remarkEon 7y ago
  Well, a lot of the folks I know who stockpile ammo are cops or veterans (or both) and as such would very much not be looking forward to any collapse, since they've very likely experienced a taste of what that would actually be like.
- prepend 7y ago
  The measure of interest isn’t that those people exist, it’s whether there are more and how much ammo is bought. That change is of interest to me.
  - SlowRobotAhead 7y ago
    I just bought 5k of 9mm... virus unrelated. Season is coming up and I’m out of practice. After these, I’ll have fresh brass and reload. Last year I ran about 15k, this year I bet 8k tops. Just too busy.
    - prepend 7y ago
      What season require 9mm?

burlesona 7y ago

Sample size of one, but, everyone at the office today was talking about this, my parents and my wife's parents both called to ask what we thought about it... seems like it's very top of mind for most people I know.

lettergram 7y ago

I think it's because the death rate is hard to track and while "high" does not seem nearly as bad as the spanish flu. In part, the damage appears to be China's methods of trying to contain the virus that are making it worse... For instance, the death rates appear to have a distribution mostly impacting the elderly (incidentally those who are also most likely to have a weaker immune system, but also believe in less conventional medicine: 80+ years old 14.8% 70-79 years old 8.0% 60-69 years old 3.6% 50-59 years old 1.3% 40-49 years old 0.4% 30-39 years old 0.2% 20-29 years old 0.2% 10-19 years old 0.2% 0-9 years old no fatalities https://www.worldometers.info/coronavirus/coronavirus-age-sex-demographics/ https://www.worldometers.info/coronavirus/coronavirus-age-se... Not saying this isn't bad, the current stats are showing something around a 0.7% mortality rate[2][3]. The real scare here, is like the spanish flu, there's a chance it can evolve into a more deadly strain (such as SARS) the more people who contract it. If that's the case, we could be seeing 10% fatality rates across the board. If you're interested in the history of the spanish flu, there's a great series here: https://www.youtube.com/watch?v=XQ9WX4qVxEo&list=PLhyKYa0YJ_5BZ3gQleTk-PJqIejFf4Rh2 https://www.youtube.com/watch?v=XQ9WX4qVxEo&list=PLhyKYa0YJ_... In any case, general point, people American's aren't super worried about it because we have a great healthcare system, and it's spread is limited thus far. I do think a panic will set in as every major city likely now has infected individuals. So it's a good time to pull out of the market. [2] https://www.statnews.com/2020/02/25/new-data-from-china-buttress-fears-about-high-coronavirus-fatality-rate-who-expert-says/ https://www.statnews.com/2020/02/25/new-data-from-china-butt... [3] https://www.marketwatch.com/story/coronavirus-update-79339-cases-2169-deaths-clusters-emerge-in-iran-and-italy-2020-02-24 https://www.marketwatch.com/story/coronavirus-update-79339-c...

legionof7 7y ago
The reason that the Spanish Flu evolved into a more deadly strain was because WWI was going on. The mild cases stayed at the front lines while the severe ones went home and spread the severe strain around. This won't happen here because the severe strain will die out. Viruses generally become less lethal as they spread.
- kyboren 7y ago

usaar333 7y ago

Your timing was good since you bought when the market may have been mispricing volatility. Assuming these are puts, a lot if your gain is from the volatility shoot up. At this point, the market has corrected volatility pricing dramatically (vix is doubled). Odds are over 50% we'll see sp500 drop below 2900 in next month (Black Scholes). But that doesn't mean a short is profitable - I recall 2008 but also the false recession of late 2018 - few people could have accurately predicted both results.

tudorw 7y ago

And when the retail investors get excited, smart money goes elsewhere, the parties already over...

abootstrapper 7y ago

How exactly are you investing in Robinhood? I dollar cost average, but I plan to pick up extra stock in corona bear market if I can scratch any extra cash together.

kenneth 7y ago
Buying puts against overvalued vulnerable companies + the market in general.

closeparen 7y ago

What impact do you think there's going to be five years from now?

totalZero 7y ago

The American president is railing against news organizations that are paying attention to the outbreak.

cpr 7y ago
He's rightly railing against news organizations that are trying to stoke FUD and panic.

Intermernet 7y ago

If you come out on top with your hedging, will you donate the profits to relief / training / prevention / education causes? Otherwise, you're literally profiting from the misfortune of others.

downerending 7y ago
If things are mispriced, the trade is going to happen. There is absolutely no way it could not. If it makes you feel better, many of the wealthiest traders do in fact donate a lot of money to such causes.
- Intermernet 7y ago
  "If things are mispriced, the trade is going to happen. There is absolutely no way it could not." That's fatalistic. The only way the trade happens is if someone places the trade. If you see the trade as immoral, don't place the trade. If someone else profits from it, so be it, but at least you didn't. Please extrapolate the consequences of your trades. If it feels even slightly dodgy, it probably is, and no matter how you justify it, it was a bad thing to do.
  - downerending 7y ago
    As far as that goes, I don't see trades as immoral, as long as traders are following our laws and the rules of the market. I'd go so far as to say it's virtuous. Trades communicate price information, and that's good for everyone. If you're concerned about the immorality of economic choices, then you should consider the idea that you yourself are already acting in grossly immoral ways with your money. Read this to see why: https://www.nytimes.com/1999/09/05/magazine/the-singer-solution-to-world-poverty.html https://www.nytimes.com/1999/09/05/magazine/the-singer-solut...
kenneth 7y ago
Efficient markets are good for society, they give us accurate prices for things, and inform us of the impact of events. They're not perfect, but they're better than everything else. Sometimes they are wrong, the price is wrong. If my intuition is correct, my trades help push the price towards the correct direction and make the markets more efficient. If I'm wrong, I lose money. Hopefully I will profit from spotting an inefficiency in the market that many other did not. Not everything must be altruistic. The misfortune (some inevitable, some preventable due to bad leadership) will happen anyways. I don't see anything wrong with profiting off of it.