OMG Omicron

[Jolly Blue Giant]

I thought it was strange that stocks were hit so hard yesterday because of the US case. Did anyone actually think this strain wasn't going to turn up in this country?

It is not hugely surprising the market is recovering today, as that seemed like an overreaction.

Big overreaction indeed. Buyers are the most skittish people on earth. Lots of bargains right now if you have money on the sidelines. Great time to buy low!

[MightyGiants]

I thought it was strange that stocks were hit so hard yesterday because of the US case. Did anyone actually think this strain wasn't going to turn up in this country?

It is not hugely surprising the market is recovering today, as that seemed like an overreaction.

It got here a bit quicker than expected, but I have to think everyone expected it

[MightyGiants]

I have to say, we don't know much about Omicron, but it's spread has been pretty impressive.  In the span of a week it went from being not even a topic of conversation at Thanksgiving, to "it's all over the US"

[DaveBrown74]

I have to say, we don't know much about Omicron, but it's pretty has been pretty impressive.  In the span of a week it went from being not even a topic of conversation at Thanksgiving, to "it's all over the US"

Very true. And I certainly don't know that much about it either. My only takeaway so far is that it does not appear to make most people any sicker than they're getting with regular covid, and possibly not even that sick. Granted that's largely anecdotal at this point and not based on a huge sample size. So in no way am I trying to make some declarative statement to that effect.

Even if it's a bit more transmissible, how big of a problem is it if it generally doesn't get people that sick?

[MightyGiants]

Very true. And I certainly don't know that much about it either. My only takeaway so far is that it does not appear to make most people any sicker than they're getting with regular covid, and possibly not even that sick. Granted that's largely anecdotal at this point and not based on a huge sample size. So in no way am I trying to make some declarative statement to that effect.

Even if it's a bit more transmissible, how big of a problem is it if it generally doesn't get people that sick?

I have taken the "it doesn't make one that sick" claims with a grain of salt.  First, many of those claims are coming from South Africa which is trying to save its savaged tourist season.  Second, the reality is pretty much all of the Covid variants the majority of people don't get all that sick.  It's always been a numbers game.  In other words, when you are dealing with millions or billions of people even a small percentage getting severely ill or dying can be devastating (as we have already witnessed).

One thing I keep hearing is that the new variant has an easier time reinfecting people.   That is troubling on two fronts.  First, it takes natural immunity off the table (in terms of slowing the spread) and second, it likely means the vaccines are less effective.

[DaveBrown74]

On Omicron's infectiousness:


https://twitter.com/farrmacro/status/1466834183939137538

[MightyGiants]

The market is not having a good day

[DaveBrown74]

The market is not having a good day

Nope.

I wonder how much if that is driven by the fact that it's Friday, and that everyone now faces weekend risk with an ongoing concerning story surrounded with a lot of uncertainty. If that is the case, and things are not terribly alarming this weekend with omicron (eg some new finding suggesting it is more virulent than regular covid or an utterly massive spike in cases), you would think things could bounce again on Monday. This has been the pattern at least. That happened last weekend and Monday, for those reasons.

[DaveBrown74]

I know this thread was originally about omicron specifically, but it seems to have morphed into kind of a dual-pronged thread that is both about omicron and also the market in general (as well as how it specifically pertains to omicron). I think it's a great, topical thread, I appreciate the contributions, and hopefully it keeps going for a bit.

On the subject of the markets, one interesting further development is that crypto, which had already been struggling in the past week or so, took a beating last night. Bitcoin is down to about 47,000 as I type, which is about a 17% decline just from yesterday (and it was down decently yesterday as well). Some of the other cryptocurrencies are in even worse shape today.

Why might this be relevant? It could suggest a deterioration in risk appetite and speculative sentiment in general, which would obviously be a negative for stocks. Needless to say this is hardly some perfect correlation, and it might not mean much outside of the crypto world, but generally speaking crypto has surged in the past year alongside a lot of other trendy assets, including meme stocks, NFTs, sports trading cards, etc. Flooding the world with liquidity has boosted these types of assets. And speaking of meme stocks, like GME and AMC, those have been hit hard recently too. That has been going on for a few days now.

If omicron turns out to not be a game changing threat, then I would expect stocks to bounce, but that remains unclear at this point, and it seems like investors/traders in general are increasingly on the defensive. Next week will certainly be an interesting one for markets.

[MightyGiants]

For a long period of time, we have been dealing with non-existent interest rates.   That has put high yield savings, money market, and bonds off the table in terms of practical investment vehicles or places to keep one's money.   That has left stocks and various speculative type investments.

So investors are left with 3 options

1)  with inflation, ensure your money is losing nearly 5%

2)  keep it in the market and ride the risk

3)  invest in alternatives like crypto


I didn't list bonds because they are simply not that attractive with feds making it clear they will be raising interest rates next year so not only are yields from bonds less than inflation, but you are sure to lose some money when the rate hikes occur

[Jolly Blue Giant]

I know this thread was originally about omicron specifically, but it seems to have morphed into kind of a dual-pronged thread that is both about omicron and also the market in general (as well as how it specifically pertains to omicron). I think it's a great, topical thread, I appreciate the contributions, and hopefully it keeps going for a bit.

On the subject of the markets, one interesting further development is that crypto, which had already been struggling in the past week or so, took a beating last night. Bitcoin is down to about 47,000 as I type, which is about a 17% decline just from yesterday (and it was down decently yesterday as well). Some of the other cryptocurrencies are in even worse shape today.

Why might this be relevant? It could suggest a deterioration in risk appetite and speculative sentiment in general, which would obviously be a negative for stocks. Needless to say this is hardly some perfect correlation, and it might not mean much outside of the crypto world, but generally speaking crypto has surged in the past year alongside a lot of other trendy assets, including meme stocks, NFTs, sports trading cards, etc. Flooding the world with liquidity has boosted these types of assets. And speaking of meme stocks, like GME and AMC, those have been hit hard recently too. That has been going on for a few days now.

If omicron turns out to not be a game changing threat, then I would expect stocks to bounce, but that remains unclear at this point, and it seems like investors/traders in general are increasingly on the defensive. Next week will certainly be an interesting one for markets.

As for crypto - it's one of the commodities that I stay away from. Ever since China decided to reel it in and the constant chatter about Congress wanting to regulate it - it's just too risky for my blood. I also stay away from biotech companies and retail companies. I know a lot of money can be made in biotech, but a lot more can be lost. Like playing roulette.

Last week was a dumpster fire and I got my butt kicked pretty good. Thankfully, I'm not one who uses a lot of margin so I didn't get any margin calls, but I know a lot of people did - especially the young stocktwits who tend to use all their margin. That's how one loses the whole nest egg.

Personally, I think it will all climb back simply because (as Rich pointed out) there are no real options so you pick your poison and hope you lose the least amount of your savings. Perhaps buying real estate is a better option. Gold and silver tend to do a little better than bonds, but not by much.

As for me, I have to stick with the stock market while staying well diversified with "value" companies and not get sucked into the meme stocks driven by the twits to unreasonable expectations. I still marvel at GameStop being valued at about a thousands times more valuable than WalMart 

I expect a big comeback in the semiconductor business as well as the infrastructure companies riding the EV rage with all that new money being shoveled in from Biden's infrastructure bill. Fisker (FSR), Lucid (LCID), EVgo (EVGO), Beam Global (BEEM), Wallbox (WBX), and the hydrogen energy companies like Plug Power (PLUG), Ballard Power (BLDP), FCEL, etc., are priced at below Black Friday bargains right now and anyone sitting with a lot of free cash on the sidelines can clean up. Not advice, just thinking out loud (note: NEVER take advice from me or anyone else and always do your own research if you are a retail investor)

Regardless, the stock market really is the only game left in town with a chance for making money rather than losing it over the long haul.

Out of curiosity, what platform do you guys use? I use TD Ameritrade exclusively

[MightyGiants]

I use Vanguard


One thing about gold VS crypto.  In the end, crypto has zero value if people no longer accept it as a storage of value.  Gold, on the other hand, will always have some use in jewelry and the like.   

One thing I like is dividends.  I know they are not the most tax-efficient but I like the idea of making money regardless of the market going up or down and without me having to sell any stocks.

[LennG]

Seems the market has bounced back, big time.

Can't keep a good man down for long.

I HOPE 

[MightyGiants]

Seems the market has bounced back, big time.

Can't keep a good man down for long.

I HOPE 

It's a very impressive day today for the markets

[DaveBrown74]

It's a very impressive day today for the markets

Sure is. Yesterday too. The markets seem to be moving on from omicron. Nobody thinks it's a big deal anymore.