If you follow this blog, you might know that I've been expecting a major market crash in the past few years. It's why I named this blog "Expect The Unexpected".
I've been resisting to make such calls in compliance with my principle of least action. The argument is, if I have to act more than 2 or 3 times for the rest of my life, I wouldn't be acting on true once-in-a-decade or once-in-a-lifetime events.
After I learned what's happening in Wuhan and its impact on economic activity in China. I made the call that a crash is imminent. I tried to warn some of my co-workers on the incoming impact. I got the usual Boglehead's responses. Here is an interesting exchange with an experienced investor*:
On Wednesday, February 19, 2020 at 11:36:11 AM UTC-8 XXXX XXXX (Me) wrote:
On Wednesday, February 19, 2020 at 7:56:22 AM UTC-8 XXXX XX (An Experienced Investor) wrote:
"investing isn’t about beating others at their game. It’s about controlling yourself at your own game.”
+1
Retirement planning isn't a race. Too many people think it is one, and thus compare/worry about numbers that ultimately makes very little sense.
It is a personal journey, and the most important thing is to reach the finish line. Whether you reach there in a rocket ship or a leisurely stroll, it doesn't really matter.
You're probably right. In general, wars and pandemics come and go, and life always goes on. For those survive, this event will have little impact on their retirement plan 20~30 yrs down the road.
But, for those with family members or friends currently locked in Wuhan, the psychological impact cannot be ignored when you see corpses are trucked out of you neighborhood because you'll start wondering whether you're going to have a retirement or not. When such videos are quickly removed from social media and WeChat accounts spreading such "rumors" are swiftly banned, you cannot help asking, do I have the necessary information to make the right decision?
I have been watching this event unfolding for the past 3~4 weeks, mostly via private communication with friends. I find it takes about 1~2 weeks for the reality on the ground to be propagated into the mainstream media in the US. Few people grown up in the Western can imagine the draconian measures currently being taken in Wuhan/Hubei and contemplate how everyday life and economic activities are affected. They probably won't feel the real economy impact till Q1/Q2 corporate earning season.
I don't want to sound like alarmist here. I agree that most people in the US shouldn't overreact. But, if you have shorter time horizon and/or your investment is tightly coupled with China, you surely have to prepare for embracing the impact.
Generally speaking, I don't time the market, but I do indulge myself once in a decade. If you can clearly see a rocket ship passing by, why not jump on board?
* This post is back dated and made public only after I left the company.
