The coming Great Depression

[Jiggs]

For the last two years I have been reading articles on many financial pages predicting a repeat of the 1929 Depression. Twenty months ago the WFR listed every possible trigger except a pandemic, and this month TIME is warning of global economic misery.

So far the stock market has already repeated the collapse of 1929’s overpriced peak and dead cat bounce. Are we now due for a repeat of its 2-year rollercoaster descent to one-sixth of today’s share prices? What is a good defensive strategy for a small newbie investor?

“Nations across the globe have incurred so much more debt from the World Bank and other global lending institutions... Over-inflated stocks and property with loans lacking many basic protections for the lender... Triggers for economic recession (are) trade wars, geopolitical tensions, imploding consumer or corporate debt....”
https://worldfinancialreview.com/the-predicted-2020-global-recession/

“We’re headed into a global depression; a period of economic misery that few living people have experienced."
https://time.com/5876606/economic-depression-coronavirus/

[macduffy]

Yes, it's all been said many times before. Still we struggle on...……….

:mellow:

[Bjauck]

Yes, it's all been said many times before. Still we struggle on...……….

:mellow:
The Black Death in Europe resulted in scarcity of labour and the rise of the Guilds (unions) and an increase in living standards for surviving workers. In England this may well have seen the beginning of the end of feudalism.

However today with the effect of this virus and the medical ability and democratic urge to save lives, there will not be a post-epidemic labour shortage. The effect of the epidemic response will likely fall heavily on the surviving workers. The challenge will be to compensate and mitigate the loss of workers' income and employment without over-taxing and stifling business and investment.

[Jiggs]

...the effect of this virus and the medical ability and democratic urge to save lives, there will not be a post-epidemic labour shortage....
Isn't the virus just the straw on the camel's back for the predicted Great Depression II? Many financial journals and websites have been pointing to the oceans of debt and collapsing globalism as the real forces for the coming collapse. I have been studying the 1929 collapse and we now seem to be where they were in early 1930, just after their dead cat bounce.

I bought TRU when it was cheap because I figure countries will still want a cheap test for cervical cancer, even in a depression, and I figure that other shareholders who expect a coming crash will sell retail, agricultural and tourism shares and buy utilities, so have CEN and GNE for now, waiting for the crowd to pump up their prices. But most of the other utilities look overpriced to me, so I'm keeping my pennies in my broker's account at 1% until prices drop. Should I be doing something else? I read of how sales of lipstick skyrocketed in the 1930s depression but I don't know of any NZ companies manufacturing lipstick.

[SBQ]

You can not simply compare the 1929 great depression to today. For the simple reason, and i'm certain these critics that spew their angle of the issue, is that the world is far more connected today than in the early 30s. Because of this close connection and wide use of economic data (with a MUCH higher degree of accuracy than 100 years ago), gov'ts around the world and the central banks are able to have a tighter control of the global economy. Issues like Quantitative Easing & MMT never existed back then, the "tools" that central banks had at their disposal again, never existed back then. You simply just can't forecast or base assumptions on a graph showing how much the market crashed in the Great Depression and assume that the same could happen again. That's the biggest problem with looking at charts ; much like a photo snapshot at the time but certainly should be not indication history will repeat in the SAME manner.

Yes crashes do come and go but to the smart investor, all of that is noise and what is more important is the long term plan. "It's not how many times you go in or out of the stock market but rather... how long you stay in that counts"

[arekaywhy]

Isn't the virus just the straw on the camel's back for the predicted Great Depression II?

you mean...the government's response to the virus

[peat]

if you wait for the crash you'll either die waiting ,
or fail to find the kahunas on the very day you should go all in.

invest sensibly according to your situation w/r to age , asset base, income, security, etc , if you feel markets are insanely overvalued then reduce your ratio of equities to fixed interest.

[Jiggs]

invest sensibly according to your situation w/r to age , asset base, income, security, etc , if you feel markets are insanely overvalued then reduce your ratio of equities to fixed interest.
Thanks Peat. 90% of our savings are in a conservative Kiwisaver account at present. We started buying shares when the govt started selling off the power companies dirt cheap, and a friend who had been bitten in the 1980s crash advised me to sell any shares after they went up 50% because they usually go down again. Trouble is when I sell them then, they continue to go up, like our $2 A2 Milk shares did, and if I do hang onto them, they collapse in price, like our Truscreen ones. Nowadays I just look at ShareClarity graphs: buying when the blue line is below the green one, and selling when the blue goes way above - all that price ratio ROE ETBIT jargon is beyond me.

[Jerry]

Nowadays I just look at ShareClarity graphs: buying when the blue line is below the green one, and selling when the blue goes way above - all that price ratio ROE ETBIT jargon is beyond me.

Being of a logical turn of mind, I too started out by the above method. I have since been amazed (and singed) by the fact that Blue lines can remain below Green ones for years! I am beginning to think Index Linked may be the way to go. I find the real information one needs in order to invest wisely is unknown to the ordinary punter. How often does a share price rise or fall just before a good/bad event? Some people do have good information, but God forbid that insider trading may take place. :sleep: Wash my mouth out!

[fungus pudding]

Thanks Peat. 90% of our savings are in a conservative Kiwisaver account at present. We started buying shares when the govt started selling off the power companies dirt cheap, and a friend who had been bitten in the 1980s crash advised me to sell any shares after they went up 50% because they usually go down again. Trouble is when I sell them then, they continue to go up, like our $2 A2 Milk shares did, and if I do hang onto them, they collapse in price, like our Truscreen ones. Nowadays I just look at ShareClarity graphs: buying when the blue line is below the green one, and selling when the blue goes way above - all that price ratio ROE ETBIT jargon is beyond me.

Just remember - Murphy is always lurking.

[peat]

shareclarity have quite a rigid perspective using discounted cash flows to determine value.
As noted in this thread buying value based on this view doesnt always work out. Sometimes it is just a C-rap company

Shareclarity take no notice of momentum which is kind of a big deal really. so there approach is very one sided - still vaguely interesting but not an immutable law for winning. (There isnt one afaik)