Thread by @MarceloPLima

I'm fascinated by huge market drawdowns and how the bottom is never obvious.

As they say, "Nobody rings a bell at the bottom."

In the Great Recession, the market bottomed on March 9th, 2009; it never looked back, and it was the start of one of the best bull markets ever.

Here are some choice quotes from the NYT, TWO DAYS before the bottom:

Byron Wien: he advises small investors to buy gold and corporate bonds, not equities, which, he said, may be too risky right now.

Barton Biggs: advises well-to-do investors to arm themselves with shotguns if need be against the possibility of a deepening downturn and accompanying “social unrest.”

Peter Lynch, of course, nailed it:

“People say they’re afraid of a stock market crash,” said Mr. Lynch, the former manager of Fidelity’s Magellan fund.

“Well, we’ve already had a crash. Look at the numbers.”

Henry Kaufman, the Wall Street economist who has often been bearish in the face of market optimism, says that while the stock market will surely recover, many investors will need to lower their expectations.

It’s not clear that the market today presents a “buying opportunity,” he said, pointing to continuing structural problems in the economy. “There is no golden rule that says how much a market should go down,” he said.

The rest of the article is more of this. Source:
nytimes.com/2009/03/08/you…

I wish the @WSJ had functionality to search by date range like the NYT!

WSJ, March 7, 2009 (two days before the bottom):

Unemployment rate grew to 8.1%, up from 7.6% in January, said the Labor Department.

"We'll be at 10% unemployment by year end," said Joseph LaVorgna, chief U.S. economist at Deutsche Bank. "What's going to stop it?"

Source:
wsj.com/articles/SB123…

One day before the bottom, 3/7/2009:

The outlook for the world's developed economies darkened in January, as the Organization for Economic Cooperation and Development's leading indicator edged closer to lows recorded during the oil shock of the early 1970s.

The OECD said there is "little clear indication of stabilization soon."
wsj.com/articles/SB123…

Hopes that the bad news is priced in have dwindled as bad turns to worse in the economy and in the banking sector. Burned by so many recoveries gone awry, traders and retail investors have become gun shy, and rallies are fleeting affairs.

Source: wsj.com/articles/SB123…

The day of the bottom: "Markets seem unable to shake the perception that the global economy is rapidly deteriorating."

This guy is also upset he owns Google at 15x earnings in 2009, which he claims is not cheap 🤣
wsj.com/articles/SB123…

Also on March 9, 2009: "This time around, the economy is slipping deeper into a recession" and "After what seemed like the beginning of a thawing of debt markets early in the year, sentiment has deteriorated, analysts say."

wsj.com/articles/SB123…

Months before the bottom in March 9, 2009, Buffett wrote:

"What is likely, however, is that the market will move higher, perhaps substantially so, well before either sentiment or the economy turns up. So if you wait for the robins, spring will be over."

He was right.

Source:
nytimes.com/2008/10/17/opi…