[gautam109]

Originally Posted by saket77

No official word on it as yet, but I do think that it is forced buying by LIC/ EPFO and other DIIs. I don't think this buying would be coming from FIIs.

There is definitely a component of that. But many quality (genuine, non "operator" driven) small / midcap stocks that are not on radar of LIC/EPFO are also showing sharp recoveries after falls. Points to genuine domestic investor buying as well. Smart funds & folks seeing bargains and snapping up select stocks.

Honestly, so many companies are falling to unreasonable lows as if the world is ending tomorrow. Every business will be impacted by Cov-19 - some more, some less. But this too shall pass and we will return to business as usual.

Take Hero Motocorp - debt free company, Rs. 3,000 cr+ cash/equivalents (if I recall right), which is close to 10% of it's marketcap. Has over 50% 2-wheeler market-share. Owns 30%+ in Ather Energy. Stock has fallen about 22% in one month. On an already depressed stock price thanks to auto slowdown. At sub Rs. 1,800 it looks a "too good to be true deal" to me.
Trading at less than 10 times profits, vs long-term median P:E ratio of 17-18. (per ratestar)

Many other examples abound - prices of government owned power transmission utilities have crashed 50%. We are not going to stop consuming power due to Covid!

Or take Alphabet Inc (Google) or Facebook (also owns WhatsApp & Instagram). They've both fallen 26%+ in the last month, despite being pretty "Covid-proof" businesses, I'd think.


PS: This is not an investing recommendation. My stock views are subject to bias, conflict of interest & plain error . Please take proper guidance & do your own homework before making any decisions. Especially, please stay away from investing unless you can take double-digit falls in stock prices with equanimity and without reacting (panic-selling). And if you find a good, solid company to invest in, only invest as much as cash as you can leave aside for at least 3-4 years without needing it.

[pganapathy]

Originally Posted by Thermodynamics

For the time being, I think it is an opportunity to reorganize portfolios. I have been stalking some healthy but overpriced stocks. This is the opportunity to grab them.

Just make sure of one thing. The companies in question don't collapse during the pandemic. There was an article today about how some airlines would go bankrupt by May if the "social distancing" continued as people wouldn't travel.

[akhil_007]

Originally Posted by Samurai

Other than building robust healthcare to cover all the poor, I don't see why all countries have to turn to classic definition of socialism. However, if the job losses stays high, governments everywhere may have to seriously look at UBI.

Temporarily, yes. This is a major shock to the current system, so most private businesses will suffer, until they learn to work the new reality. That also can mean that they need a work force that works differently, trained differently. People who are quick to adopt will have an easy time. Lots of jobs will be lost, lots of new ones will be created. If enough jobs are not created and filled, it will be a bad scenario.

Thank you for throwing more light on this. Would like to hear more please

Talking about jobs, would it result in more of gig jobs than full-time salaried jobs?

Even without corona, state of economy is bad(not bringing politics here). Govt is not putting money in people's hands. And with whatever they have, people are not spending it.

Now, enter Corona. The moment masses realize that hell has broken loose, I see them emptying their bank accounts and hoard hard cash.

If we extrapolate this to global scale, hesitancy to invest might prevail, atleast for an year or so across all non-basic facility(any purchase that need not be done immediately) Industries. Wouldn't this be normal from behavioral economics point of view?

[Samurai]

Originally Posted by akhil_007

Thank you for throwing more light on this. Would like to hear more please

Talking about jobs, would it result in more of gig jobs than full-time salaried jobs?

It is impossible to give detailed answers. We can talk only in abstract level at this point. As I said before, we don't really have any understanding of how people behave in an highly interconnected global economy brought to its knees by social distancing.

Originally Posted by akhil_007

If we extrapolate this to global scale, hesitancy to invest might prevail, atleast for an year or so across all non-basic facility(any purchase that need not be done immediately) Industries. Wouldn't this be normal from behavioral economics point of view?

If you are only looking at investment environment, traders like smartcat will have better idea.

I am more worried about how it will change business environment. For example, consider how 2008 affected business. It changed the spending pattern among large businesses for good. Prior to 2008, even small vendors could easily win high value contract as long as value was shown. After 2008, businesses became very risk averse. They increasingly started to rely on ratings like Gartner's magic quadrant to pick their vendors. That resulted in all the high value contracts going to large companies with heavy marketing budget. Small vendors had to settle for sub $100K contracts most of the time. I am talking from first hand experience. This forced the small vendors to operate differently than before, or become stagnant.

[dearchichi]

How does the effects of the virus on the economy affect the prospective car buyer, assuming he/she can afford it? Would prices be lowered, offers rolled out or accessories added to lure customers? Must we wait and watch?

[theflyingguy]

I think the Dynamics are changing again for all vendors. At least in many companies that I know, a different procurement model is emerging which is to co-invest in the base product to prove that this works and scale it up after showing initial value.

Now this is where I have seen that the small vendors are quick to grab contracts up to about a million since their decision making process is quick, there are rarely any levels and they are more keen to get business and are less risk averse.

So post Corona, this might become a level playing field again for all businesses irrespective of size since the trend has anyways shifted towards buy rather than build. Product implementation life-cycles are very short compared to building something completely from scratch. So there is a lot of acceptance in top brass to work with product SME startups or small companies rather than big behemoths.

[fache89]

Generalisation in matters of economy invites argument, not agreement as no two economies are alike. Given the current situation I see that central banks world over are struggling to keep their economies out of recession. In 2008 crisis, it was a demand shock which brought the economy to a standstill. In this case, it is a supply and demand shock combined. It will be deflationary initially, but will be followed by hyperinflation courtesy the QE and massive stimulus. The govt. and corporation are both debt laden. The debt levels are unsustainable and people's faith in Banks is eroding

I can only hope that humanity regains it's consciousness. In difficult times, humanity flourishes by cooperation, not competition.

[volkman10]

Ford, JLR asked to make ventilators to fight coronavirus!

Britain has asked manufacturers including Ford Motor, Jaguar Land Rover and Honda to help make health equipment including ventilators to cope with the coronavirus outbreak.

Jaguar Land Rover confirmed it had been approached for help with the production of ventilators as part of ongoing discussions with government.


Link

[v1p3r]

Originally Posted by dearchichi

How does the effects of the virus on the economy affect the prospective car buyer, assuming he/she can afford it? Would prices be lowered, offers rolled out or accessories added to lure customers? Must we wait and watch?

I would lay off any capital intensive purchases like this for a while. Having said that, I would assume slightly lowered interest rates for loans, and low demand leading to prices dropping.

An interesting article by someone who knows what he's talking about - https://www.nytimes.com/2020/03/16/o...nomy-debt.html

[sgiitk]

Agree @v1p3r; Sometimes I wonder whether the 'Herd Approach' of the NHS of UK makes sense. Allow it the spread until it hits 60% plus of the population. Then the 'Herd' develops immunity. The term is from the Times of India.

[Samurai]

Originally Posted by akhil_007

With private business taking the hit(based on cash flow etc) first and no new businesses taking off, would countries world over move closer to socialist based economy. Something on the lines of Help during distress, tax during prosperity?

Rich and powerful are already lobbying the governments all over the world to change rules to benefit them.

https://www.youtube.com/watch?v=niwNTI9Nqd8

[SmartCat]

Originally Posted by Samurai

Rich and powerful are already lobbying the governments all over the world to change rules to benefit them.

Well this time, its different.

- President compares Covid-19 with Seasonal Flu? Dow Jones falls 1000 points
- Fed lowers interest rates by 0.5%? Dow Jones falls 1000 points
- Bailout for cruise industry, airline industry and oil companies? Dow Jones crashes 1000 points
- Fed lowers interest rates to zero? $700 billion Quantitative Easing? Dow Jones falls 3000 points

Now the current US President links stock market performance with his chances at re-election. So now there is a positive and negative feedback loop at play here:

- Acknowledgement of seriousness of Covid-19 and outlines the steps taken. Dow Jones up 2000 points
- Just now, the President hinted that payroll tax cut is off the table. What's likely is direct cash in the hands of Americans in 7 to 15 days flat. Lot more than $1,000 per person is being indicated. Dow Jones up 6%.

Mnuchin says Trump administration is looking to get cash to Americans ‘immediately’
https://www.cnbc.com/2020/03/17/mnuc...mediately.html

Not sure about others, but atleast the stock market understands that superficial steps (that helps the rich & powerful) will not save the economy. After all, the stock market looks at US consumer health and future earnings of American companies. Trump does not listen to health experts. Trump does not listen to economists. But he watches S&P 500 & Dow Jones like a Hawk.

Now hopefully, the President/US Govt gets the message sent by the stock market and takes the right steps.

[SmartCat]

Mnuchin warns senators lack of action could result in 20% unemployment rate
https://edition.cnn.com/2020/03/17/p...rus/index.html

During the Great Depression of 1929, unemployment rate in USA was 25%

[padmrajravi]

I think all of us who work in the IT service industry should be worried. There will not be any new projects for a while and even the existing clients who lose business because of the lockdowns will decrease their IT spend considerably. Service companies will have limited options other than firing people.

[saket77]

^^Why do you think other sectors would be any better?