I’ve been nervous about the financial markets for a while - everything seems overvalued and with money almost free people make stupid decisions chasing return. Many companies have been taking advantage of cheap money often to re-purchase shares, loading up on debt to hand money back to shareholders. It was only a matter of time before something triggered a meltdown.
When what’s now COVID-19 took off in China, and supply chains started shutting down, I figured it wouldn’t be good. Indeed, the data from St. Louis FED shows a debt spike underway, though still about a third of GFC conditions.
At the end of Feb I moved my Super out of shares and into fixed interest. I wasn’t as smart as I thought I was though - the rules are that investment changes received by 4pm will be executed the next day, so when I submitted my change at 3:45pm I was pretty confident… only to realise that of course the cutoff is 4pm Sydney time, which is 3pm in Brisbane. Doh! Anyway, instead of a 4% hit I ended up taking a 7.5% hit - still a long way off where we currently are, with the funds I was in down about 20% at this stage.
I managed to get our relatively unscathed as well during the GFC, but made the classic mistake of taking way too long to get back in and missing a good chunk of the upside. The plan for the near future is to sit down and work out when would be a good time to switch back into shares.
The market has no idea what’s going on at the moment and is running around like a headless chicken, so I assume the wild swings will continue for a while yet. Significant COVID deaths are yet to occur in the US and their general response to the epidemic seems misguided at best, so the worst is yet to come. Another question to consider is whether China is back now? Are they on top of things and ready to get back to some semblance of normality, or will COVID flare back up once the relax their restrictions?
Anyway, interesting times as the Chinese curse goes 😁