The inevitable8 Mar 2020 11:01
Hi gents,
I know there is a tonne of experience here but I thought I would share from my previous experinces during a crash. First the obvious, cash is key and as hard as it can be to let that investment go (albeit briefly in some situations) you can always buy back in and from my experience in times like these when you do venture back in the same investment it can come at an extensive discount (think 50% plus!). I would not be surprised if we saw the Ftse 100 back below the 4000s, I remember the Greece crisis and fears of contagion during 2011 and day after day after bloody day many stocks were blood red or flat with hardly any liquidity. Remember one thing, the professionals in this game will always protect themselves (the MMs) and seek profit. Some forget this but each market maker can short a stock by up to 10% legally before they are obliged to declare their hand to the market. So if a stock has 5 MMs that could be 50% of the stock unless it really is tightly held being shorted with out the knowledge to the wider market participants. Also to be aware of redemptions within some of the funds, this can force them to sell and they will often hedge (Open a fat juicy short) before offloading as they already know there is not enough interest in the position they hold (Longs)and so will drop a stock with their forced selling by as much as 90% (think Woodford with ITX/others, City Financial with SHG/others). There are a few funds that have been in this precarious position since August last year with Miton being one of them, others are closing positions to de-risk or meet margin calls. Without buyers the price can obviously only go one way.
I know someone could develop a new vaccine for Coronavirus at any time but to a greater extent significant damage has already been done to many areas of the global economy and it may take longer than most expect to bounce back, whatever you decide don't sit there and watch your losses continue to mount just cut and run.
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