People getting COVID on its own won’t affect large companies much. But the economy tanking because of lockdowns / people being afraid to go out most certainly will affect big companies. And the likelihood of this affecting the real economy is quite large in my opinion: (smaller) companies have been burning through their reserves, banks getting all their loans back is becoming less likely. Add another shock to the system and I wouldn’t be surprised if panic hits. And given that the economy is already shell-shocked I also wouldn’t be surprised if we see a larger crash than the last time around.
Add to this that stock prices don’t reflect NPV perfectly, especially in the short term: “The market can stay irrational longer than you can stay solvent”.
I’m still considering my possibilities but I’m thinking about liquidating a large part of my investment portfolio and taking -some- of that money to buy puts.
Of course this means having to have some idea of -when- a downturn might set in. OP mentions June, but my feeling is that this will happen much earlier and so earlier options might be in order. My thoughts are going towards buying February and / or March puts.
I have a pretty clear story line how this leads to a crash. What would need to happen for this -not- to lead to a crash?
What would need to happen for this -not- to lead to a crash?
Many investors remembering that selling in mid-March was a bad idea, and that the economy recovers from pandemics faster than most commentators expected.
People getting COVID on its own won’t affect large companies much. But the economy tanking because of lockdowns / people being afraid to go out most certainly will affect big companies. And the likelihood of this affecting the real economy is quite large in my opinion: (smaller) companies have been burning through their reserves, banks getting all their loans back is becoming less likely. Add another shock to the system and I wouldn’t be surprised if panic hits. And given that the economy is already shell-shocked I also wouldn’t be surprised if we see a larger crash than the last time around.
Add to this that stock prices don’t reflect NPV perfectly, especially in the short term: “The market can stay irrational longer than you can stay solvent”.
I’m still considering my possibilities but I’m thinking about liquidating a large part of my investment portfolio and taking -some- of that money to buy puts.
Of course this means having to have some idea of -when- a downturn might set in. OP mentions June, but my feeling is that this will happen much earlier and so earlier options might be in order. My thoughts are going towards buying February and / or March puts.
I have a pretty clear story line how this leads to a crash. What would need to happen for this -not- to lead to a crash?
Many investors remembering that selling in mid-March was a bad idea, and that the economy recovers from pandemics faster than most commentators expected.