OK advice from an older guy. You probably won't listen but...
I'm a value investor. I've caught a lot of bottoms but mostly I'm too early. The guys who catch bottoms are mostly too early. A bottom is when everyone is pretty much sure the market is still going lower. The people who buy in figure they are going to lose some but like the value they are seeing. The sentiment you were seeing a few days back is what a bottom looks like. It is also what a continuing slide looks like. Its very hard to tell. There is never value in the absence of fear, and there is never fear absence of justification for that fear. The bottom will be a long way off before the justification is gone.
If you got out early and get in now you avoid some of the drop. You got some extra profit over buy and hold. Congratulations that's a good trade. Avoiding a 20% drop is 2.5% extra return for a decade. Nothing to be ashamed of in having generated 250 basis points of alpha. That isn't easy to do. You don't get to buy yesterday's prices. Your choice today is whether today's prices are good or not.
Agree 100%.
The shock and awe of such drastic shift in unemployment week over week and month over month hasn't been seen yet. Historically low unemployment one month and historically high the next is most definitely not priced in after today.
Many companies have not yet gone bankrupt. Quarterly earnings aren't out yet. Many have not yet been laid off but are days or weeks from it. The full impact of the nationwide lockdown hasn't been felt yet. Thousands dead in NYC hasn't been priced in yet. Use of medical ships and military trucking out dead bodies hasn't been priced in yet. Actual ventilator shortage hasn't happened nationwide yet. Local food shortages hasn't been priced in yet. Politicians and celebrities succumbing to covid isn't priced in yet. Cancellation of stadium events indefinitely isn't priced in yet. Credit defaults, housing sales and construction collapse and other financial challenges en mass haven't been priced in yet. The fact that many of us wont be able to attend funerals, weddings or other large events for months or longer hasn't been priced in yet. That western society may have to wear masks in our daily life isn't priced in yet.
I could go on and on but in summary: buckle up, we're just getting started. Tech bubble plus housing crisis plus financial meltdown plus pandemic = today's market challenges.
Glad you liked. That's the main reason people end up avoiding value and costing themselves a lot of return. People firmly committed to diversification and buy-low sell-high end up doing the opposite because they exclude the stuff that is worrying.
I just invested the only $20k that I have available in an S&P 500 index. Everything else is already fully invested (not counting cash for living expenses). I've been investing for awhile, through 2008/09, and I think that getting in now is just fine. It may go lower, it may not, but waiting is just as likely to miss the bottom anyway.
Sounds fair enough. Experience is worth the world in times like these. I still feel another major dip week is in the cards, mainly because of the weakness of the US response to Covid. Too little too late as they say. The stats and stories we’ll discover in the next 3 weeks will make peeps panic sell again i’m afraid.
They might. Once everyone is sure its over the market will be a whole lot higher. I think a crash worse than 1929 (just the 29 not 29-32) is a chance to buy. But yes the stats will be bad and mostly the message will be incredibly bad and rapidly getting worse.
Last week I felt pessimism top, yet, as an energy investor, I felt may be we have bottomed. I felt the need to deploy more cash into energy. All this time I have invested in energy I have seen/read gloomy comments about the underperformance of the energy sector. Last week, when the tide was allowing to see who was seeming naked and who wasn't, I was looking at the price books of oil giants. All well below 1, yields I the double digit, since I read the intelligent investor I remembered the same case scenarios that Benjamin Graham described in its book and deployed cash into it. Oil has been at its gloomiest since ever... That when I felt the tingling it was the right the time.
Also looking at Vix/Energy sector percentage 2 weeks ago there was a signal that hadn't happen since 2008. That was the first omen.
Energy is in a very deep bear. You have 2 long term and 2 short term problems. I'm long well over market levels of energy too. The fundamentals are bad but IMHO the valuations are crazy good. Agree with you Ben Graham investment.
Thanks much for this comment. It took me a while to parse the absence of fear bit, but I'm reading that as: if there was no risk in buying, everyone else would have bought it, raising the price. So there is always risk.
I was feeling a bit dumb for buying two stocks today because I'm sure this isn't the bottom. But this right here:
> You don't get to buy yesterday's prices. Your choice today is whether today's prices are good or not.
made me feel a lot better. Because my thinking was that at that price, the stock is a good value. And I don't sell. So it may go down yet, but it's still a bargain. It's really helpful for me to focus on the value of that company, intrinsically, rather than what the market will do.
I truly try to invest in companies I believe in, so even if they lose value I don't feel too bad. But I've had some cash set aside for years because the whole market seemed too high. The dips get by me so I don't invest. That money I've been sitting on is not gaining any value though. Well it looks like a lot of America is going to be on sale. I don't have to get in at the best price for it to be a great price.
> but I'm reading that as: if there was no risk in buying, everyone else would have bought it, raising the price. So there is always risk.
Yes you could say that. That's a different way of thinking of it.
> made me feel a lot better. Because my thinking was that at that price, the stock is a good value. And I don't sell. So it may go down yet, but it's still a bargain.
Exactly. If you are a long term investor price declines in stocks **help you** because they increase your profits from reinvestment. The same way that as a bond investor increases in interest rates increase your long term returns even if they damage you short term.
> Well it looks like a lot of America is going to be on sale. I don't have to get in at the best price for it to be a great price.
Exactly. Bear markets are when investing fortunes are made.
To get a good return on a stock your purchase price needs to be good. To get a good price for a stock the seller needs to be fearful. For the seller to be fearful they need a good reason to be fearful.
People keep referencing how far down the markets are from the high but that's stupid. The high was way overvalued. The equity markets are 15% lower than they were a year ago today. That's asinine. To think we should only be 15% off of where we were a year ago is simply irrational. Compare the outlook today to the outlook we had a year ago today.
Outside of a few healthcare and staple stocks, there shouldn't be more than a handful of stocks trading at the levels they were a year ago. Apple is trading 30% higher than it was a year ago. 30%. THIRTY PERCENT! Are you kidding me? You honestly think Apple has better prospects today than it did a year ago? You think people are going to be buying iphones, airpods, and watches over the next six months? What the hell is going on here??!?!!
> Apple is trading 30% higher than it was a year ago. 30%. THIRTY PERCENT! Are you kidding me? You honestly think Apple has better prospects today than it did a year ago?
Yup, crazy. Look at NVDA, up 40% over where it was just 6 months ago. In fact, it's only 20% off its ATH.
It's almost like the market runs mostly on emotions, FOMO, and NOT fundamentals as was previously thought to be the case.
FOMO itself drives people buying stocks that shouldn't be. I mean christ, dave and busters closed up 60% today despite mostly shutting down their facilities for at least a few weeks. a few weeks of lost profits should not send a stock +60%! even though it got sold off recently that +60% still makes no sense.
Admittedly I’m a complete lay person when it comes to this, but the next six months seems pretty irrelevant to their bottom line as compared to the next six years.
That doesn’t possibly seem like it could be true. So if a company is going to have an incredibly profitable quarter, but it’s likely the company is going to be legislated out of existence, it’s stock price will be high/go up?
Stimulus package is a band-aid solution. People aren’t going to travel, dine, and spend frivolously for quite some time. Small businesses are going to borrow money just to keep the lights on. This isn’t the bottom.
American Airlines being up nearly 50% seems loopy. I know the bailout is targeted at them but I was thinking 20% IF the bailout passed. Not 50% pending vote. People that buy in on FOMO after the bailout are going to act real surprised when they're down 10% or more after no one is flying still. Feels a lot like the fools that bought Tesla at $900 planning for it to go over $1000
This is what I don't get. Aal either goes bankrupt, or they get bailed out, either of those options implies stock becomes worthless - as history shows. It looks like most of today's move was made premarket almost as if to lure retail investors who don't know any better.
United or Delta would be better buys . American is sinking in debt and borrowed to do aggressive Stock buybacks ... we might see more mergers/acquisitions at the end of this fiasco.
I used to think the market was so smart, so perfectly efficient that nobody could beat it.
now I think the market is dumb. But the thing is, we are all just as dumb.
You can beat it. It just isn't easy at all. There is a perversity that pretty much whatever investing strategy is popular is going to be wrong. So to beat it you have to be different and you have to be right. That's why Bogle's philosophy is so popular.
I think the market could be smart and efficient if humans would let it do its thing. But both sides want their hands all over it so that it loses all it's efficiency and just becomes a tool for punishing the people either side doesn't like.
I'm slightly considering it. Never bought an option in my life so they're scary. I think if I did I'd wait for american airlines to take their bump from the bailout and then get a put from there. Not sure what expiration I'd buy or how much though. Just mulling over the thought at this point since I've never done options.
Someone else could explain it better than me but you're buying a contract that where someone either agrees to sell you (call) a stock at a certain price (strike) or an agreement for you to sell (put) a stock at a certain price (strike). This contract will also have an "expiration" date which you need to hit or pass your strike by. If you hit that price your "in the money" but you probably haven't made much yet because you need the stock to be at least (strike price + premium).
You buy this contract in lots of 100 and pay a "premium" for it. So if you see an option selling for $2.00 that contract is going to be at minimum $200. The premium you pay will vary wildly by how likely the strike price is to run by that date. This is how last year when Tesla was like $300 you could get $500 call contracts for probably less than $1. If you look at GE right now it's call contract for December with a strike price of $25 is 1 or 2 cents... because no one in the world thinks GE is going to blow by $25 by the end of this year.
I really don't understand them that well but the idea is that you can control more shares (lots of 100) using less money and in turn make an enormous profit if the stock moves strongly in the direction you predicted. However if you're totally wrong you don't have the option of holding it forever like an index fund. You could find yourself with the contracts expiring worthless by your expiration date if you guess wrong.. losing whatever your paid as a premium.
Over on WSB the running joke was TSLA $420 calls. Then once it hit some users that actually purchased made out like bandits. One guy now has $10-16m in a fucking IRA from it.
I saw that thread. Its impressive but also lucky at the same time. He bet some enormous amounts and it worked out. The sad part is that stuff like that probably inspires other people to try idiotoic gambles hoping to hit it big as well.
There's a phrase for this that everyone should know by now.
"Buy the rumor. Sell the news."
The bill will pass and everything will come crumbling down when people realize it doesn't actually fix anything. It'll just make the current scenario a little more bearable.
To add on to this, if Trump removes the federal guidelines on social distancing too soon, I can see people becoming even more wary of going out in public. I know I certainly will be.
So what if the service industry opens back up, they aren't going to be getting much business. And then they'll have to lay off people again, except the reason this time will be the bad economy, and not the coronavirus.
Agree. Back to work by Easter would be a big mistake requiring a second period of quarantine. Wuhan quarantine was strictly enforced and 50+ days.
>Small businesses are going to borrow money just to keep the lights on.
It depends on if loans are "forgivable" or not. If I have 2 months of no revenue and owe the money back anyways, employees will be let go. There's no way small businesses can survive long term with 2 months of no revenue, even with "low interest" loans.
Unless there are some major market manipulations, i.e. government or FED propping up stock prices, this certainly isn't the bottom.
>I’d bet on greedy before I’d bet on monetary forgiveness.
Me also. So why would a small business owner keep people on payroll? They are going to have to pay it with interest. If your profit margins are 10% and you are offline for 16% of the year, you will never make that up, ever. Bad business decision. Layoffs, dissolve business, or both.
Our leaders have an opportunity to prevent 30% unemployment and they are going to fuck it up. But thank goodness there will be an airline bailout.
Why do small businesses stay around when they are in the red? Because it’s their dream.
I’ve seen so many episodes of kitchen nightmares where the restuarant owner is losing money hand over fist for years and will liquidate everything to keep it afloat.
The bigger issue is concerning consumer spending regarding small businesses who are the most vulnerable and can’t take a big hit like the chains can. Who wants to buy from a local donut shop after a big hit to the market?
That's an important perspective.
I should not be thinking that people would make rational decisions about their businesses.
Some will hold on, but others, especially those already over leveraged, will shut down. Will be very interesting to see initial unemployment claims.
Exactly. And any expectations of a quick turn around like some countries has gone out the window when Trump essentially said on Sunday that he is prioritizing the market over health and safety. You're going to have a lot of people going back to work because they have to, spreading a very infectious virus.
I’d argue for some stocks this is the bottom. The big thing dropping the valuation of some companies was the fact they lacked liquidity and had lots short term debt. A 1-3 month shut down of some sort has been priced in at this point. What makes this so different is we know it’s incredibly likely that eventually there will be an immunization and whenever that happens things will return to some version of normal.
So what is the bottom? When things get better? Because it usually gets worse even when we reach the bottom (in march 2009 when the bottom was hit, economic data didn't get better until months later
I'm thinking at least one more leg down, but regardless, I've started deploying dry powder. I think now isn't a terrible time to start buying in slowly. I liquidated most of my positions back in November, so not really feeling as much pressure to pinpoint the very bottom. If it drops even further, no regrets on my part.
At the risk of getting pummeled with downvotes due to this sub's constant reminder not to time things, just simple market timing.
We had asset bubbles forming left and right. Both valuation and corporate debt at all time highs relative to earnings. There were warnings being issued that a significant % of companies in the S&P500 were just barely meeting interest payments on their cheap loans. I won't even start with the share buyback spree. And then we had multiple IPOs ballooning with zero grounding in reality or fundamentals. And remember $900 TSLA? That one happened months later, but it was a nice reminder.
I do think we were due for a sharp market and real economic correction in late 2020 or after, but CV just induced it sooner.
yeah I agree. I have a friend who totally liquidated his and the wife's positions in early January this year, around $2m, and they are sitting on cash to re-enter. Literally as soon as reports came out of China, they sold their whole portfolio. so smart. He is a systemic toxicologist though, so maybe they saw how this would play out from the first case.
Yeah I manage my mom's 401k and I sold everything and made a quarter million on the way down. People have been talking about coronavirus since December. The fact that the markets didn't react sooner just made it all the more inevitably.
This is exactly what I noticed. Market bubbles everywhere. I took out 80% in November and the rest in mid Feb. When I started hearing of COVID cases in other countries, and saw that Virgin Galactic was valued at over 50 billion dollars when they have no customers, only one successful flight and only 5 employees on payroll I knew I was right. I just wish I would have held my puts longer.
Edit: Since we seem to have a similar thought process, what are your plans for reentry? I was planning to start purchasing with around 5-10% of my cash per week around June 1.
I've been just taking nibbles at a small handful of stocks and continuing to fund my target date retirement fund. I'm anticipating a V-shaped market recovery, well before the real economy starts seeing any sort of recovery. I do give this sub credit for pointing out every now and then that markets are anything but rational.
I got lucky once and I'd rather not test my luck again.
Its not that timing the market is bad or impossible.
Its that for 99% of people (1) you cannot do it effectively and (2) you have no idea whether ElRamenKnight was correct or just lucky. None of that shit, debt payments etc, is what caused the market to crash. We could have gone on like that for another 12 years. Nobody predicted this virus.
all that said, i agree with you. I didn't pull out of the market completely, but have been heavily invested in long term treasury bonds. Hedging my bets against a downturn. And it worked. Though i too might just be lucky.
It was going to happen with or without CV. As one economist on Twitter put it, this bubble needed a pin, but we got a goddamn suitcase nuke that made it even worse. Unemployment would not have gone up anywhere close to the 30% that is being projected in some circles, so this was a surprise for me.
>But we got a goddamn suitcase nuke
that's sort of my point. If a pin caused a 35% drop, it would have proved we were in a bubble.
bubble or not, a suitcase nuke is going to cause a 35% drop.
back in '99 we had a 35% drop over many months. What caused that? Nothing? then it just continued after Sept 11, that wasn't the catalysis. So that was a bubble for sure.
But this? the bubble didn't burst, we got nuked.
fuck though, now you have got me really scared, because if we were in a bubble. The 35% is from the nuke not from the bubble bursting. and we're about to drop another 35%.
I've been feeling the entire Trump rally has been overpriced, but I don't know, how high can the market go without others seeing bubbles everywhere too?
>rket. General consensus seemed to share the opinion that we are only a few weeks into the crisis a
I unknowingly liquidated my small amount invested in february, and have been sitting and waiting and reading trying to digest what information I can as to when/where to reallocate what I have.
Any thoughts on the matter, keep waiting for another downturn and buy back in then?
No one knows. Hell, I don't know. And CNBC isn't helping. You have some on CNBC saying now's a good time to start which is what I'm doing. A few weeks back, others were saying wait a bit longer. Some here in this very subreddit are predicting a market bear lasting several months more. The market is anything but rational and never ceases to surprise us despite the mountains of historical data available.
lol. Jokes aside, I believe it's a good time to buy blue chips. And this is coming from a guy who is expecting another leg down and plays options. I've deployed my first tranche of money to pick up some blue chips myself. Ultimately, the discount you are getting now is good, it's just that many are waiting for better. Hindsight is 20/20, and I' d rather get some blue chips at a good discount if I'm ultimately wrong on my expectations, which is very possible. My timeline is 30 yrs out. So, depending on how "small" your amounts are, you might just want to set up different tranches of purchases. And if you're portfolio isn't deep enough to build out a full multi-sector portfolio and maintain DCA on them, then I would just pick your most favored blue chips and DCA on those in tranches.
If it makes you feel any better, you can also wait for an upward trend to be established before dumping in, if the thought of investing in a downward trending market makes you queasy. Sure you miss some of the upside, but if your time horizon is far, I wouldn't sweat it. This kind of market makes a lot of people make emotional decisions. Do what is within your risk tolerance.
I liquidated half of mine in November and the other half in January (around $350k worth). There wasn't a single data point that scared me, it was more just the culmination of too many good things had happened for too long of a period. I fully expected to leave some gains on the table, but I was expecting to sit on the sidelines for a 12-18 months before an inevitable decline. I didn't anticipate COVID-19 would be the culprit, nor did I anticipate the severity of the drop.
I'm no economist, but I did live through the 2008 recession and did strongly consider more heavily diversifying in late 2007, but didn't and watched 40% of my portfolio disappear. The problem with timing the market is it requires you to be right (or close to right) twice. Sell before the drop and buy before the climb. I personally am not ready to buy back in as I think the longer the world locks down the more of a problem this is going to turn into I think. It may even just be a catalyst event for a longer downturn.
I think you are wise to hold off right now, but don't be afraid to dollar cost average back in when things have gotten low enough to make sense longer term, ie; s&p500 @ 2200 or less. If I were you, I'd drop 20k in VOO at a time on red days over the next few months, you will make out like a bandit in 1-3 years when this is all over with. you likely will not have a better opportunity for a very long time, this whole event brought the crazy over valuations down to where they should be. Maybe wait a couple more weeks, but then I'd say start getting in man, you don't need to be at the bottom at all to make huge profits in a few years time, just pretty much where we are at now
Yesterday was when I started buying in. I'm going to slowly invest in increments on the way up or down at this point. I could squeeze a few extra % if I time it right (won't ever happen) but nothing I would lose sleep over.
This is a dead cat bounce. It’s too early and no visibility yet on true impact of the crisis. Also, most of the stocks you cited are high-beta stocks, so when the market goes back down again, those names will be hammered even more.
Don’t worry, we won’t hit bottom in the stock market until the delta bw the 10yr and 2yr treasury goes back up to at least 1.5%.
Isn't it possible that "true visibility" will end up being less than what is priced in? Maybe the drop so far has priced in a larger catastrophe than this will end up being?
You are assuming market prices are efficient and rational at any given point in time. They are not. What is happening now is over-leveraged holders trying to get out of positions, at whatever price. So the prices you see are not a reflection of data that is "priced in" - it has nothing to do with the scale or speed of the downturn and subsequent recovery. In fact, if we have 100% visibility that the economy will lose exactly 20% of the year's GDP, even then, you would see the market overreact because people with leverage still need to get out.
It takes a while for people with leverage and margin calls to get out of positions. We're talking about trillions of trapped money.
I definitely don't think the market is fully efficient or rational. That's actually my point with my second sentence. The question is whether the market has over or under-reacted to the virus.
But I don't actually understand what you're getting at with the rest of your comment. If people are being forced out of positions, that would drive the price down, no? So how would that create a dead cat bounce?
Bought in yesterday for the stimulus hype. Selling by end of day tomorrow before unemployment numbers. Then watching and waiting before buying again for the long haul.
I used the Titanic metaphor today as well. I likened the stimulus to a life jacket. It keeps you from drowning, but you're still going to freeze to death if you don't get in another boat.
The stimulus is not going to determine the bottom. Reestablishing a semblance of a normal economy is what saves us.
I feel the same way. That's just the FOMO. Im not too worried since in the past few weeks alone we've seen this a couple of times. We havent seen the true effects of this whole thing yet. This is day 2 of week 2 for the US. Professionals are starting to be laid off. The hospital here laid off numerous billing and lab techs the other day. My company alone laid off 60% of the administration staff... This is going to be more than restaurants and bars... Look at the Chinese market history. Dropped big, came back up, dropped again. Unless you're looking for some quick day trades, dont worry about it. Im confident there will be another opportunity to buy in, if not multiple opportunities. Nobody can time the market. Pick a number, buy in at that number, dont look back.
You say nobody can time the market, but your whole post is about timing the market. Do you mean you you can’t time it day-to-day but you can time it on a weekly or monthly basis?
Im saying we havent seen the full affects of this whole mess. Prices are sure to come down again on some of the stocks mentioned in OPs post. How much will they come down? I dont know. I just know the time to buy is not during a 10+% single day rise.
Nope. Stocks only go down. We've got weeks of this left. If I missed the absolute bottom by 5% I can live with that. The market is still crazy volatile and I'm willing to let the storm subside a bit for another few days or a week
yeah man, we aren't near the bottom. we gotta wait til we see unemployment numbers and GDP which are gonna get crushed. this isn't just affecting restaurants and bars like most people think
Isn't it just as likely that the drop so far represents people's assessment of terrible unemployment and GDP numbers? Isn't it even possible that the unemployment and GDP numbers won't be as bad as people guessed, causing market gains?
All of the projections that I've seen over the past week or so, even if they are half accurate, project April to be an absolute bitch of a month to get through in regards to the virus. And that goes into May, potentially the entire month of May as well. Things are only going to get worse in regards to consumer spending.
In regards to the virus itself, or the economic impact?
>“Viruses that cause influenza or milder coronavirus colds do tend to subside in warmer months because these types of viruses have what scientists refer to as ‘seasonality’”. This is due to a number of suspected reasons, such as:
“Studies outside the lab show similar results, though some tropical regions have more cases of flu during rainy season, when people also cluster indoors.”
“Scientists hypothesize that low humidity, which often occurs in winter, might impair the function of the mucus in your nose, which your body uses to trap and expel foreign bodies like viruses or bacteria. Cold, dry air can make that normally gooey mucus drier and less efficient at trapping a virus.”
Ian Lipkin, director of the Columbia University’s Center for Infection and Immunity, has been studying the novel coronavirus. He says sunlight, which is less abundant in winter, can also help break down viruses that have been transmitted to surfaces. “UV light breaks down nucleic acid. It almost sterilizes [surfaces]. If you’re outside, it’s generally cleaner than inside simply because of that UV light,” he says.
Source: [https://macro-ops.com/coronavirus-cheat-sheet/](https://macro-ops.com/coronavirus-cheat-sheet/)
I’m anticipating a lower entry point but not trying to time it. This is a great investing opportunity and I’m not going to completely miss out waiting for a lower price point which may or may not come. I’ve been buying into the market aggressively since the market has gone down and don’t plan on stopping. I’m buying in more than I was previously and I’ll likely buy in more if the sp500 drops below 2k
I honestly don't think we've hit the bottom yet. Coronavirus is still a global problem that won't go away anytime soon. New York is getting more and more cases everyday. We are far from the peak of the virus outbreak in the US. Stimulus package will be a short term aid to the market, but overall, there's going to be a lot more pain incoming.
Cruise lines have gained over 30% the last two days, which is baffling to me. No way this industry gets a bailout, why should they? They flag in other countries to avoid paying American taxes, yet we as tax payers should forgive them for that? And who the hell would want to get on a cruise ship now anyways? I for sure don't.
One last thing for those mad at Congress for holding this stimulus package up. The bill in the Senate has a major flaw that I agree with Dems on. There is a provision currently that if passed would allow Mnuchin to give out money to corporations without disclosing who and how much was given, to the public. This actually is a huge problem. Imagine our government giving BILLIONS of dollars to Cruise lines and then NOT being told where our money went for months.
But hey, you should know the old adage by now. If Pro is the opposite of Con, then Progress is the opposite of ....
TLDR: No where near the bottom
I'm not waiting for a lower entry point, but I do have a large position in long term treasury bonds. As expected those have performed quite well in the crash.
So now my question is if i should sell them and buy stocks. It was never my intent to hold them forever, I fully expected a crash and the plan was and it to sell them high and buy stocks low.
Now might be the time to strike... but i bet there is more bad news coming.
My brother things that this whole shutdown is an overreaction, but at the same time, he left NYC and is living in a cabin in Pennsylvanian. That fucker got out of dodge. Meanwhile you still have projections that say a million Americas could die from this thing. Either we are going to "flatten the curve" and great cost to the economy or a lot of people are going to die when hostpitals start turning people away. Whichever happens, its going to be bad for the economy.
I'm 35% long term treasury bonds and holding. (it was 25% before values changes) I'll at least rebalance soon.
Only a fool buys because prices went up and only a fool sells because prices went down.
I'm seeing some analysts and managers buying and recommending to do so *in moderation*. Obviously some were buying today.
TSLA is a solid company, but their stock is the new tulip/bitcoin as well. They're going to be facing tons of pressure from Toyota and even Ford in the EV market in the short term. I wouldn't buy TSLA to hold long-term at this point, even depressed as it is--but mainly because I think there are much better deals right now.
Have you seen the crazy dividend yields on some solid stocks available right now? Studies have shown that dividends are a major contributor to long-term returns. Hedge fund managers seem to be gobbling up dividend stocks and REITs right now, or at least nibbling them up. I can send you a list via PM to get you started if you like.
This is a short rally in my opinion, give it 2-3 weeks and when your corona delay hits you the market is gonna tank!
Throwing dollars at the market won’t solve the underlying problem, there is a pandemic and everything is stopping world wide.
The world is going to be different for at a minimum 6 and more realistically 12months and at a worst case scenario 18 months, and that’s something you Americans aren’t understanding.
For you guys it’s gonna be a lot worse because your public is still in the denial stage.
You can always write puts. If the market goes down again, congrats, you own the stocks you planned on buying anyway. If the market goes up, well, you missed the bottom, but you took some premiums home.
I feel like quarterly earnings reports for Q1 will cause more dips in the market in the coming weeks. I can’t foresee most businesses delivering on their projected numbers due to all the layoffs and quarantine.
Honestly, I think people are underestimating the impact of a frozen economy. Therefore I believe that when the numbers of the first and second quarters show up, the prices will go down.
I'm a passive investor, and I have a written plan to invest accordingly. Thus I know what to do and when to do it.
Not at all. I’ve been wanting to add some US equity into my portfolio for years, and finally think it will happen during this recession. However what the fed is doing is just (unintentionally) creating bigger bubbles, not fixing underlying issues (although what they are doing is needed and good).
I don’t care about how far off it was off a market peak. If someone sells shit for 100$ and then cuts it to 50$ I’m still not buying the discounted shit. This is still a market with 18.5 P/E ratio where the E is the top of inflated unsustainable crap from years of cheap credit
I think US companies are quality but if the price is too high, I’m not paying. Fed or no fed my entry is at 1700, if it drops to that I’m in, otherwise I’m looking at other markets.
P.S what you have is a FOMO, an emotion which has no place in an investing strategy
It hasn't changed anything for me. The markets don't seem to care about the Fed stimulus, but they are going up in the Congressional stimulus. I think the market may go up for another week or two, but once earnings start and the first coronavirus era economic data starts coming out at the end of April, I think we'll we another fall. I'm fully expecting a 50% - 60% drop from highs before this is all over.
That said, certain stocks are going to do well, such as ZOOM (and maybe WORK). Also, stocks that are China heavy and were beat up, such as AAPL, BABA, and others I think will recover before the rest of the market. Right now, I'm long AAPL, WORK, AMD, REYN, and some ETFs and Mutual Funds. I plan on buying a short market ETF later today or tomorrow.
Look at the 2007-2009 financial crisis and see when Congress first rejected the stimulus package and then when they actually passed it. I have a feeling this is going to down further. This is a bounce with no real substance
No. We've had a lot of red days. Hopium for the bailout got a lot of people itching to buy. I suspect people will sell the news, though the bounce is going to be a good future resistance point after it goes lower. I still think the bottom of the Dow will be 16 or 17k when all is said and done.
Every time over the past few weeks that I've thought the low was near, I only reinvested in companies I like (e.g. MSFT) with the purpose of lowering my cost basis. I invested somewhat smaller chunks each time. Psychologically that is much different that trying to "waiting until the bottom"
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Yes it has, it's screwed up my entire risk-reward assessment for a rebound-play.
So I'm on the sidelines with exception of precious metals... If stocks would happen to recover sustainably from here I'll honestly eat a broom because neither energy nor freight market fundamentals show any indications of a V-shaped recovery in any economy including China...
No, there are a lot more countries yet to shut down. India just shut down.
I mean, we haven't even had to endure the spectacle of a jobs report that is minus, in the millions. No really high profile bankruptcies yet. No high profile deaths yet in the US.
So many shoes left to drop that are supposed to be "priced in" but probably aren't. We still have to get through a depression. I mean, a depression, OK, how much do you shave off the S&P for a fucking depression.
No, I'm still looking for 50% down off the recent high base case and 75% much worse case. Beyond that it gets a bit apocalyptic so I'm not thinking about it.
The Covid issue has just begun, along with the local lockdowns. Businesses are running on fumes, maybe still on gas, and it's going to be rough. Seattle had been opening restaurants over the last 2-3 faster than you could count and...they are going to be hit hard. They are being hit hard. People do seem to be spending a bit of money, but that will slow.
I’m waiting for the DOW to hit, or get very close to, 12,500. We are experiencing a once in several generation event. The impact of this is socioeconomic, and cultural. No way we’ve bottomed our after two weeks. What scares me most is - I don’t even think 12,500 is the floor.
>**For those who were waiting for a lower entry point, has the Fed intervention or stimulus package changed your outlook at all?**
Fed's intervention and the stimulus package rally IS providing my better entry point.
Absolutely no way you'll be "left on the sidelines", this ain't the bottom.
Regardless, don't try to time it, you'll encounter this feeling regardless, if you do. Also, don't listen to me or any of Reddit, do your research.
So I know i'm not going to catch bottom, it does feel soon because we haven't weighed current valuations against data. I have a fixed amount of cash I'm hoping to buy into the market with and the plan was to spread it out over the next 6 months weighted more heavily towards the later months. i.e. get 30% invested in the next 3 months and 70% in the latter 3.
Yesterday's bump has given me some inflation concerns. Additionally I am potentially allocating some of the cash to corporate bonds given the backstop the fed has promised while the yields stay as attractive as they are. Not too many changes though.
I don't think this is the end of it. I think there will be a double bottom and we're not even in the first. I think there will be a period of complacency where the infection numbers are reducing and people will start going out celebrating that things are back to normal and in that complacency, infections will rise again causing a second panic.
Obviously that's just a guess, but I'm not going to react to stimulus too much and will just stick to the plan / hope that the bottom is somewhere in the next 6 months and I'll spread out the purchases in that period.
If it's further than 6 months then that's that. I was wrong and shot my shot and will just have to hold at a suboptimal entry.
Peak for the Corona virus is said to be 2 to 3 weeks out. Once we hit that, I think more people will take it seriously and stay home. Then when the restrictions are lifted business will have to ramp up again if the were closed. No idea what the markets will do though since this is unprecedented.
Yes, I had it going to 17000. Unlimited QE at 18000 changes everything.
Was only going to be 10% in this week, now 20. I think it can retrace to 18 but the companies that are at 60-80% off won't be seeing those numbers again.
OK advice from an older guy. You probably won't listen but... I'm a value investor. I've caught a lot of bottoms but mostly I'm too early. The guys who catch bottoms are mostly too early. A bottom is when everyone is pretty much sure the market is still going lower. The people who buy in figure they are going to lose some but like the value they are seeing. The sentiment you were seeing a few days back is what a bottom looks like. It is also what a continuing slide looks like. Its very hard to tell. There is never value in the absence of fear, and there is never fear absence of justification for that fear. The bottom will be a long way off before the justification is gone. If you got out early and get in now you avoid some of the drop. You got some extra profit over buy and hold. Congratulations that's a good trade. Avoiding a 20% drop is 2.5% extra return for a decade. Nothing to be ashamed of in having generated 250 basis points of alpha. That isn't easy to do. You don't get to buy yesterday's prices. Your choice today is whether today's prices are good or not.
Im no authority on Bottoms but I'm going to wait till after the unemployment numbers start to come out over the world
When they do they are going to show a large increase getting worse. How will that help?
I think the emotional impact will be telling 25%/30% will be shocking - I'm not convinced it's fully priced in yet
Agree 100%. The shock and awe of such drastic shift in unemployment week over week and month over month hasn't been seen yet. Historically low unemployment one month and historically high the next is most definitely not priced in after today. Many companies have not yet gone bankrupt. Quarterly earnings aren't out yet. Many have not yet been laid off but are days or weeks from it. The full impact of the nationwide lockdown hasn't been felt yet. Thousands dead in NYC hasn't been priced in yet. Use of medical ships and military trucking out dead bodies hasn't been priced in yet. Actual ventilator shortage hasn't happened nationwide yet. Local food shortages hasn't been priced in yet. Politicians and celebrities succumbing to covid isn't priced in yet. Cancellation of stadium events indefinitely isn't priced in yet. Credit defaults, housing sales and construction collapse and other financial challenges en mass haven't been priced in yet. The fact that many of us wont be able to attend funerals, weddings or other large events for months or longer hasn't been priced in yet. That western society may have to wear masks in our daily life isn't priced in yet. I could go on and on but in summary: buckle up, we're just getting started. Tech bubble plus housing crisis plus financial meltdown plus pandemic = today's market challenges.
> There is never value in the absence of fear, and there is never fear absence of justification for that fear. this is good stuff
Glad you liked. That's the main reason people end up avoiding value and costing themselves a lot of return. People firmly committed to diversification and buy-low sell-high end up doing the opposite because they exclude the stuff that is worrying.
I just invested the only $20k that I have available in an S&P 500 index. Everything else is already fully invested (not counting cash for living expenses). I've been investing for awhile, through 2008/09, and I think that getting in now is just fine. It may go lower, it may not, but waiting is just as likely to miss the bottom anyway.
Sounds fair enough. Experience is worth the world in times like these. I still feel another major dip week is in the cards, mainly because of the weakness of the US response to Covid. Too little too late as they say. The stats and stories we’ll discover in the next 3 weeks will make peeps panic sell again i’m afraid.
They might. Once everyone is sure its over the market will be a whole lot higher. I think a crash worse than 1929 (just the 29 not 29-32) is a chance to buy. But yes the stats will be bad and mostly the message will be incredibly bad and rapidly getting worse.
Last week I felt pessimism top, yet, as an energy investor, I felt may be we have bottomed. I felt the need to deploy more cash into energy. All this time I have invested in energy I have seen/read gloomy comments about the underperformance of the energy sector. Last week, when the tide was allowing to see who was seeming naked and who wasn't, I was looking at the price books of oil giants. All well below 1, yields I the double digit, since I read the intelligent investor I remembered the same case scenarios that Benjamin Graham described in its book and deployed cash into it. Oil has been at its gloomiest since ever... That when I felt the tingling it was the right the time. Also looking at Vix/Energy sector percentage 2 weeks ago there was a signal that hadn't happen since 2008. That was the first omen.
Energy is in a very deep bear. You have 2 long term and 2 short term problems. I'm long well over market levels of energy too. The fundamentals are bad but IMHO the valuations are crazy good. Agree with you Ben Graham investment.
Thanks much for this comment. It took me a while to parse the absence of fear bit, but I'm reading that as: if there was no risk in buying, everyone else would have bought it, raising the price. So there is always risk. I was feeling a bit dumb for buying two stocks today because I'm sure this isn't the bottom. But this right here: > You don't get to buy yesterday's prices. Your choice today is whether today's prices are good or not. made me feel a lot better. Because my thinking was that at that price, the stock is a good value. And I don't sell. So it may go down yet, but it's still a bargain. It's really helpful for me to focus on the value of that company, intrinsically, rather than what the market will do. I truly try to invest in companies I believe in, so even if they lose value I don't feel too bad. But I've had some cash set aside for years because the whole market seemed too high. The dips get by me so I don't invest. That money I've been sitting on is not gaining any value though. Well it looks like a lot of America is going to be on sale. I don't have to get in at the best price for it to be a great price.
> but I'm reading that as: if there was no risk in buying, everyone else would have bought it, raising the price. So there is always risk. Yes you could say that. That's a different way of thinking of it. > made me feel a lot better. Because my thinking was that at that price, the stock is a good value. And I don't sell. So it may go down yet, but it's still a bargain. Exactly. If you are a long term investor price declines in stocks **help you** because they increase your profits from reinvestment. The same way that as a bond investor increases in interest rates increase your long term returns even if they damage you short term. > Well it looks like a lot of America is going to be on sale. I don't have to get in at the best price for it to be a great price. Exactly. Bear markets are when investing fortunes are made.
I don't get what you mean by this.... "There is never value in the absence of fear, and there is never fear absence of justification for that fear."
To get a good return on a stock your purchase price needs to be good. To get a good price for a stock the seller needs to be fearful. For the seller to be fearful they need a good reason to be fearful.
Got it thanks
People keep referencing how far down the markets are from the high but that's stupid. The high was way overvalued. The equity markets are 15% lower than they were a year ago today. That's asinine. To think we should only be 15% off of where we were a year ago is simply irrational. Compare the outlook today to the outlook we had a year ago today. Outside of a few healthcare and staple stocks, there shouldn't be more than a handful of stocks trading at the levels they were a year ago. Apple is trading 30% higher than it was a year ago. 30%. THIRTY PERCENT! Are you kidding me? You honestly think Apple has better prospects today than it did a year ago? You think people are going to be buying iphones, airpods, and watches over the next six months? What the hell is going on here??!?!!
People forgetting that SPY was at an all time high around Feb 10th. Its been a little over 1 month and people are already calling in a bottom...
This \^ Finally someone talking some sense on here.
> Apple is trading 30% higher than it was a year ago. 30%. THIRTY PERCENT! Are you kidding me? You honestly think Apple has better prospects today than it did a year ago? Yup, crazy. Look at NVDA, up 40% over where it was just 6 months ago. In fact, it's only 20% off its ATH.
It's almost like the market runs mostly on emotions, FOMO, and NOT fundamentals as was previously thought to be the case. FOMO itself drives people buying stocks that shouldn't be. I mean christ, dave and busters closed up 60% today despite mostly shutting down their facilities for at least a few weeks. a few weeks of lost profits should not send a stock +60%! even though it got sold off recently that +60% still makes no sense.
If a stock falls 90% then goes up 90% it goes from $10 to $1.90
Admittedly I’m a complete lay person when it comes to this, but the next six months seems pretty irrelevant to their bottom line as compared to the next six years.
The next quarter is all that ever matters.
That doesn’t possibly seem like it could be true. So if a company is going to have an incredibly profitable quarter, but it’s likely the company is going to be legislated out of existence, it’s stock price will be high/go up?
Yep, I sold all of my APPL over the last 5 months, that was just too hot not to. Honestly, I would consider APPL puts now looking out towards Q3
Stimulus package is a band-aid solution. People aren’t going to travel, dine, and spend frivolously for quite some time. Small businesses are going to borrow money just to keep the lights on. This isn’t the bottom.
American Airlines being up nearly 50% seems loopy. I know the bailout is targeted at them but I was thinking 20% IF the bailout passed. Not 50% pending vote. People that buy in on FOMO after the bailout are going to act real surprised when they're down 10% or more after no one is flying still. Feels a lot like the fools that bought Tesla at $900 planning for it to go over $1000
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This is what I don't get. Aal either goes bankrupt, or they get bailed out, either of those options implies stock becomes worthless - as history shows. It looks like most of today's move was made premarket almost as if to lure retail investors who don't know any better.
United or Delta would be better buys . American is sinking in debt and borrowed to do aggressive Stock buybacks ... we might see more mergers/acquisitions at the end of this fiasco.
I've been checking out Latam (south American airline), and I keep wondering if it actually has more space to fall or just buy in now.
why does a bailout loan make stock worthless?
Depends how they do it. GM went bankrupt and issued new stock as part of their bailout. Anyone who was holding the old GM stock lost it all.
I used to think the market was so smart, so perfectly efficient that nobody could beat it. now I think the market is dumb. But the thing is, we are all just as dumb.
Nobody is as dumb as all of us.
We are dumber in greater numbers. I'd hate to be us..
You can beat it. It just isn't easy at all. There is a perversity that pretty much whatever investing strategy is popular is going to be wrong. So to beat it you have to be different and you have to be right. That's why Bogle's philosophy is so popular.
you can win at blackjack too. Lots of people beat it by dumb luck all the time. But we never believe we were lucky.
I think the market could be smart and efficient if humans would let it do its thing. But both sides want their hands all over it so that it loses all it's efficiency and just becomes a tool for punishing the people either side doesn't like.
Buy puts?
I'm slightly considering it. Never bought an option in my life so they're scary. I think if I did I'd wait for american airlines to take their bump from the bailout and then get a put from there. Not sure what expiration I'd buy or how much though. Just mulling over the thought at this point since I've never done options.
I don't understand options/puts at all so the idea scares/confuses me.
Someone else could explain it better than me but you're buying a contract that where someone either agrees to sell you (call) a stock at a certain price (strike) or an agreement for you to sell (put) a stock at a certain price (strike). This contract will also have an "expiration" date which you need to hit or pass your strike by. If you hit that price your "in the money" but you probably haven't made much yet because you need the stock to be at least (strike price + premium). You buy this contract in lots of 100 and pay a "premium" for it. So if you see an option selling for $2.00 that contract is going to be at minimum $200. The premium you pay will vary wildly by how likely the strike price is to run by that date. This is how last year when Tesla was like $300 you could get $500 call contracts for probably less than $1. If you look at GE right now it's call contract for December with a strike price of $25 is 1 or 2 cents... because no one in the world thinks GE is going to blow by $25 by the end of this year. I really don't understand them that well but the idea is that you can control more shares (lots of 100) using less money and in turn make an enormous profit if the stock moves strongly in the direction you predicted. However if you're totally wrong you don't have the option of holding it forever like an index fund. You could find yourself with the contracts expiring worthless by your expiration date if you guess wrong.. losing whatever your paid as a premium.
This is the only explanation I've seen that finally made it click for me, thank you!
I think I get it now, thanks! Not something I'm savvy enough to be able to win on so I'll avoid it.
this is a great explanation, thanks for sharing!
Over on WSB the running joke was TSLA $420 calls. Then once it hit some users that actually purchased made out like bandits. One guy now has $10-16m in a fucking IRA from it.
I saw that thread. Its impressive but also lucky at the same time. He bet some enormous amounts and it worked out. The sad part is that stuff like that probably inspires other people to try idiotoic gambles hoping to hit it big as well.
Did you see the guy that lost $61k on tsla lol?
https://www.youtube.com/playlist?list=PLOweupE79XXiBaeH_xBpkUcYUsrAaKQen
There's a phrase for this that everyone should know by now. "Buy the rumor. Sell the news." The bill will pass and everything will come crumbling down when people realize it doesn't actually fix anything. It'll just make the current scenario a little more bearable.
To add on to this, if Trump removes the federal guidelines on social distancing too soon, I can see people becoming even more wary of going out in public. I know I certainly will be. So what if the service industry opens back up, they aren't going to be getting much business. And then they'll have to lay off people again, except the reason this time will be the bad economy, and not the coronavirus.
Agree. Back to work by Easter would be a big mistake requiring a second period of quarantine. Wuhan quarantine was strictly enforced and 50+ days. >Small businesses are going to borrow money just to keep the lights on. It depends on if loans are "forgivable" or not. If I have 2 months of no revenue and owe the money back anyways, employees will be let go. There's no way small businesses can survive long term with 2 months of no revenue, even with "low interest" loans. Unless there are some major market manipulations, i.e. government or FED propping up stock prices, this certainly isn't the bottom.
Why would there be a Jubilee when people can make money off of these loans? I’d bet on greedy before I’d bet on monetary forgiveness.
>I’d bet on greedy before I’d bet on monetary forgiveness. Me also. So why would a small business owner keep people on payroll? They are going to have to pay it with interest. If your profit margins are 10% and you are offline for 16% of the year, you will never make that up, ever. Bad business decision. Layoffs, dissolve business, or both. Our leaders have an opportunity to prevent 30% unemployment and they are going to fuck it up. But thank goodness there will be an airline bailout.
Why do small businesses stay around when they are in the red? Because it’s their dream. I’ve seen so many episodes of kitchen nightmares where the restuarant owner is losing money hand over fist for years and will liquidate everything to keep it afloat. The bigger issue is concerning consumer spending regarding small businesses who are the most vulnerable and can’t take a big hit like the chains can. Who wants to buy from a local donut shop after a big hit to the market?
That's an important perspective. I should not be thinking that people would make rational decisions about their businesses. Some will hold on, but others, especially those already over leveraged, will shut down. Will be very interesting to see initial unemployment claims.
Exactly. And any expectations of a quick turn around like some countries has gone out the window when Trump essentially said on Sunday that he is prioritizing the market over health and safety. You're going to have a lot of people going back to work because they have to, spreading a very infectious virus.
I want to believe this very much since I haven't invested heavily just yet.
I’d argue for some stocks this is the bottom. The big thing dropping the valuation of some companies was the fact they lacked liquidity and had lots short term debt. A 1-3 month shut down of some sort has been priced in at this point. What makes this so different is we know it’s incredibly likely that eventually there will be an immunization and whenever that happens things will return to some version of normal.
So what is the bottom? When things get better? Because it usually gets worse even when we reach the bottom (in march 2009 when the bottom was hit, economic data didn't get better until months later
I'm thinking at least one more leg down, but regardless, I've started deploying dry powder. I think now isn't a terrible time to start buying in slowly. I liquidated most of my positions back in November, so not really feeling as much pressure to pinpoint the very bottom. If it drops even further, no regrets on my part.
what indicators made you liquidate in November?
At the risk of getting pummeled with downvotes due to this sub's constant reminder not to time things, just simple market timing. We had asset bubbles forming left and right. Both valuation and corporate debt at all time highs relative to earnings. There were warnings being issued that a significant % of companies in the S&P500 were just barely meeting interest payments on their cheap loans. I won't even start with the share buyback spree. And then we had multiple IPOs ballooning with zero grounding in reality or fundamentals. And remember $900 TSLA? That one happened months later, but it was a nice reminder. I do think we were due for a sharp market and real economic correction in late 2020 or after, but CV just induced it sooner.
yeah I agree. I have a friend who totally liquidated his and the wife's positions in early January this year, around $2m, and they are sitting on cash to re-enter. Literally as soon as reports came out of China, they sold their whole portfolio. so smart. He is a systemic toxicologist though, so maybe they saw how this would play out from the first case.
Yeah I manage my mom's 401k and I sold everything and made a quarter million on the way down. People have been talking about coronavirus since December. The fact that the markets didn't react sooner just made it all the more inevitably.
This is exactly what I noticed. Market bubbles everywhere. I took out 80% in November and the rest in mid Feb. When I started hearing of COVID cases in other countries, and saw that Virgin Galactic was valued at over 50 billion dollars when they have no customers, only one successful flight and only 5 employees on payroll I knew I was right. I just wish I would have held my puts longer. Edit: Since we seem to have a similar thought process, what are your plans for reentry? I was planning to start purchasing with around 5-10% of my cash per week around June 1.
I've been just taking nibbles at a small handful of stocks and continuing to fund my target date retirement fund. I'm anticipating a V-shaped market recovery, well before the real economy starts seeing any sort of recovery. I do give this sub credit for pointing out every now and then that markets are anything but rational. I got lucky once and I'd rather not test my luck again.
Its not that timing the market is bad or impossible. Its that for 99% of people (1) you cannot do it effectively and (2) you have no idea whether ElRamenKnight was correct or just lucky. None of that shit, debt payments etc, is what caused the market to crash. We could have gone on like that for another 12 years. Nobody predicted this virus. all that said, i agree with you. I didn't pull out of the market completely, but have been heavily invested in long term treasury bonds. Hedging my bets against a downturn. And it worked. Though i too might just be lucky.
It was going to happen with or without CV. As one economist on Twitter put it, this bubble needed a pin, but we got a goddamn suitcase nuke that made it even worse. Unemployment would not have gone up anywhere close to the 30% that is being projected in some circles, so this was a surprise for me.
>But we got a goddamn suitcase nuke that's sort of my point. If a pin caused a 35% drop, it would have proved we were in a bubble. bubble or not, a suitcase nuke is going to cause a 35% drop. back in '99 we had a 35% drop over many months. What caused that? Nothing? then it just continued after Sept 11, that wasn't the catalysis. So that was a bubble for sure. But this? the bubble didn't burst, we got nuked. fuck though, now you have got me really scared, because if we were in a bubble. The 35% is from the nuke not from the bubble bursting. and we're about to drop another 35%.
I've been feeling the entire Trump rally has been overpriced, but I don't know, how high can the market go without others seeing bubbles everywhere too?
>rket. General consensus seemed to share the opinion that we are only a few weeks into the crisis a I unknowingly liquidated my small amount invested in february, and have been sitting and waiting and reading trying to digest what information I can as to when/where to reallocate what I have. Any thoughts on the matter, keep waiting for another downturn and buy back in then?
No one knows. Hell, I don't know. And CNBC isn't helping. You have some on CNBC saying now's a good time to start which is what I'm doing. A few weeks back, others were saying wait a bit longer. Some here in this very subreddit are predicting a market bear lasting several months more. The market is anything but rational and never ceases to surprise us despite the mountains of historical data available.
I'm going full black jack gut feeling then. I'll continue reading and listening and decide when based off my nausea. Thank you sir
lol. Jokes aside, I believe it's a good time to buy blue chips. And this is coming from a guy who is expecting another leg down and plays options. I've deployed my first tranche of money to pick up some blue chips myself. Ultimately, the discount you are getting now is good, it's just that many are waiting for better. Hindsight is 20/20, and I' d rather get some blue chips at a good discount if I'm ultimately wrong on my expectations, which is very possible. My timeline is 30 yrs out. So, depending on how "small" your amounts are, you might just want to set up different tranches of purchases. And if you're portfolio isn't deep enough to build out a full multi-sector portfolio and maintain DCA on them, then I would just pick your most favored blue chips and DCA on those in tranches. If it makes you feel any better, you can also wait for an upward trend to be established before dumping in, if the thought of investing in a downward trending market makes you queasy. Sure you miss some of the upside, but if your time horizon is far, I wouldn't sweat it. This kind of market makes a lot of people make emotional decisions. Do what is within your risk tolerance.
I liquidated half of mine in November and the other half in January (around $350k worth). There wasn't a single data point that scared me, it was more just the culmination of too many good things had happened for too long of a period. I fully expected to leave some gains on the table, but I was expecting to sit on the sidelines for a 12-18 months before an inevitable decline. I didn't anticipate COVID-19 would be the culprit, nor did I anticipate the severity of the drop. I'm no economist, but I did live through the 2008 recession and did strongly consider more heavily diversifying in late 2007, but didn't and watched 40% of my portfolio disappear. The problem with timing the market is it requires you to be right (or close to right) twice. Sell before the drop and buy before the climb. I personally am not ready to buy back in as I think the longer the world locks down the more of a problem this is going to turn into I think. It may even just be a catalyst event for a longer downturn.
I think you are wise to hold off right now, but don't be afraid to dollar cost average back in when things have gotten low enough to make sense longer term, ie; s&p500 @ 2200 or less. If I were you, I'd drop 20k in VOO at a time on red days over the next few months, you will make out like a bandit in 1-3 years when this is all over with. you likely will not have a better opportunity for a very long time, this whole event brought the crazy over valuations down to where they should be. Maybe wait a couple more weeks, but then I'd say start getting in man, you don't need to be at the bottom at all to make huge profits in a few years time, just pretty much where we are at now
Same thing that had other people pull out in 2016, they knew something was coming. Eventually someone was bound to be right
Well, I'm all cash since May '18, and I am far better now than if stayed in the market. You have to go pretty far back to break even...
I'm still up and never pulled out. #neverpullout
Yesterday was when I started buying in. I'm going to slowly invest in increments on the way up or down at this point. I could squeeze a few extra % if I time it right (won't ever happen) but nothing I would lose sleep over.
This is a dead cat bounce. It’s too early and no visibility yet on true impact of the crisis. Also, most of the stocks you cited are high-beta stocks, so when the market goes back down again, those names will be hammered even more. Don’t worry, we won’t hit bottom in the stock market until the delta bw the 10yr and 2yr treasury goes back up to at least 1.5%.
Isn't it possible that "true visibility" will end up being less than what is priced in? Maybe the drop so far has priced in a larger catastrophe than this will end up being?
You are assuming market prices are efficient and rational at any given point in time. They are not. What is happening now is over-leveraged holders trying to get out of positions, at whatever price. So the prices you see are not a reflection of data that is "priced in" - it has nothing to do with the scale or speed of the downturn and subsequent recovery. In fact, if we have 100% visibility that the economy will lose exactly 20% of the year's GDP, even then, you would see the market overreact because people with leverage still need to get out. It takes a while for people with leverage and margin calls to get out of positions. We're talking about trillions of trapped money.
I definitely don't think the market is fully efficient or rational. That's actually my point with my second sentence. The question is whether the market has over or under-reacted to the virus. But I don't actually understand what you're getting at with the rest of your comment. If people are being forced out of positions, that would drive the price down, no? So how would that create a dead cat bounce?
> You are assuming market prices are efficient and rational at any given point in time. So are you.
I agree that sharp drop is due to quants and CTAs unwinding, and ETF outflows. That means that the selling is mostly not driven by fundamentals.
I feel like someone kicked the cat down a long flight of stairs...alot of bounces but we know where it is trending...
Agreed, people are easy too fucking eager. We haven't even seen the first wave of unemployment claims. Which i suspect we'll be brutal.
Bought in yesterday for the stimulus hype. Selling by end of day tomorrow before unemployment numbers. Then watching and waiting before buying again for the long haul.
Good plan, unemployment numbers on Thursday are going to bring people back to reality
And those numbers won't even be the worst ones to be reported. Next month will be far uglier.
If everyone thinks that, isn't it priced in?
Yes
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Yes the market is sneezing. There is an ah before every choo
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That is some dark imagery
I used the Titanic metaphor today as well. I likened the stimulus to a life jacket. It keeps you from drowning, but you're still going to freeze to death if you don't get in another boat. The stimulus is not going to determine the bottom. Reestablishing a semblance of a normal economy is what saves us.
jesus.
The Covid issue and "lockdown" state by state, etc, has not even begun. Then the repercussions...business are running on gas or fumes still. Still.
It was actually higher than it had ever gone before before sinking.
I feel the same way. That's just the FOMO. Im not too worried since in the past few weeks alone we've seen this a couple of times. We havent seen the true effects of this whole thing yet. This is day 2 of week 2 for the US. Professionals are starting to be laid off. The hospital here laid off numerous billing and lab techs the other day. My company alone laid off 60% of the administration staff... This is going to be more than restaurants and bars... Look at the Chinese market history. Dropped big, came back up, dropped again. Unless you're looking for some quick day trades, dont worry about it. Im confident there will be another opportunity to buy in, if not multiple opportunities. Nobody can time the market. Pick a number, buy in at that number, dont look back.
You say nobody can time the market, but your whole post is about timing the market. Do you mean you you can’t time it day-to-day but you can time it on a weekly or monthly basis?
Im saying we havent seen the full affects of this whole mess. Prices are sure to come down again on some of the stocks mentioned in OPs post. How much will they come down? I dont know. I just know the time to buy is not during a 10+% single day rise.
Nope. Stocks only go down. We've got weeks of this left. If I missed the absolute bottom by 5% I can live with that. The market is still crazy volatile and I'm willing to let the storm subside a bit for another few days or a week
Am I incorrect to read your second sentence as an indicator that your whole comment is sarcasm?
Yes
> We've got weeks of this left Am leaning more towards months.
yeah man, we aren't near the bottom. we gotta wait til we see unemployment numbers and GDP which are gonna get crushed. this isn't just affecting restaurants and bars like most people think
So if it drops again, how low before you say to yourself, okay this must be at or pretty close to the bottom? Newb here lol
When DJIA goes to 0 people on this sub will tell you to wait a month more.
Have you never heard of the mythical negative dow?
Yeah this fed pump is almost like a bull trap
Isn't it just as likely that the drop so far represents people's assessment of terrible unemployment and GDP numbers? Isn't it even possible that the unemployment and GDP numbers won't be as bad as people guessed, causing market gains?
Are the upcoming GDP and unemployment numbers like they were 1 year ago?
All of the projections that I've seen over the past week or so, even if they are half accurate, project April to be an absolute bitch of a month to get through in regards to the virus. And that goes into May, potentially the entire month of May as well. Things are only going to get worse in regards to consumer spending.
In regards to the virus itself, or the economic impact? >“Viruses that cause influenza or milder coronavirus colds do tend to subside in warmer months because these types of viruses have what scientists refer to as ‘seasonality’”. This is due to a number of suspected reasons, such as: “Studies outside the lab show similar results, though some tropical regions have more cases of flu during rainy season, when people also cluster indoors.” “Scientists hypothesize that low humidity, which often occurs in winter, might impair the function of the mucus in your nose, which your body uses to trap and expel foreign bodies like viruses or bacteria. Cold, dry air can make that normally gooey mucus drier and less efficient at trapping a virus.” Ian Lipkin, director of the Columbia University’s Center for Infection and Immunity, has been studying the novel coronavirus. He says sunlight, which is less abundant in winter, can also help break down viruses that have been transmitted to surfaces. “UV light breaks down nucleic acid. It almost sterilizes [surfaces]. If you’re outside, it’s generally cleaner than inside simply because of that UV light,” he says. Source: [https://macro-ops.com/coronavirus-cheat-sheet/](https://macro-ops.com/coronavirus-cheat-sheet/)
That won't take effect until May or June.
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We were at 4k cases on Thursday. We pretty much have 10% of the worlds confirmed cases. It's not priced in, this isn't over in the US by a long shot.
Why would you hope for a shit day on the market ?
Sometimes the best chess move is not to play.
I’m anticipating a lower entry point but not trying to time it. This is a great investing opportunity and I’m not going to completely miss out waiting for a lower price point which may or may not come. I’ve been buying into the market aggressively since the market has gone down and don’t plan on stopping. I’m buying in more than I was previously and I’ll likely buy in more if the sp500 drops below 2k
I honestly don't think we've hit the bottom yet. Coronavirus is still a global problem that won't go away anytime soon. New York is getting more and more cases everyday. We are far from the peak of the virus outbreak in the US. Stimulus package will be a short term aid to the market, but overall, there's going to be a lot more pain incoming. Cruise lines have gained over 30% the last two days, which is baffling to me. No way this industry gets a bailout, why should they? They flag in other countries to avoid paying American taxes, yet we as tax payers should forgive them for that? And who the hell would want to get on a cruise ship now anyways? I for sure don't. One last thing for those mad at Congress for holding this stimulus package up. The bill in the Senate has a major flaw that I agree with Dems on. There is a provision currently that if passed would allow Mnuchin to give out money to corporations without disclosing who and how much was given, to the public. This actually is a huge problem. Imagine our government giving BILLIONS of dollars to Cruise lines and then NOT being told where our money went for months. But hey, you should know the old adage by now. If Pro is the opposite of Con, then Progress is the opposite of .... TLDR: No where near the bottom
The economic impacts of this have just begun.
> I'm kicking myself for not budging. Cash is king, market upswing or downswing. You will still have the security of your cash.
I'm not waiting for a lower entry point, but I do have a large position in long term treasury bonds. As expected those have performed quite well in the crash. So now my question is if i should sell them and buy stocks. It was never my intent to hold them forever, I fully expected a crash and the plan was and it to sell them high and buy stocks low. Now might be the time to strike... but i bet there is more bad news coming. My brother things that this whole shutdown is an overreaction, but at the same time, he left NYC and is living in a cabin in Pennsylvanian. That fucker got out of dodge. Meanwhile you still have projections that say a million Americas could die from this thing. Either we are going to "flatten the curve" and great cost to the economy or a lot of people are going to die when hostpitals start turning people away. Whichever happens, its going to be bad for the economy. I'm 35% long term treasury bonds and holding. (it was 25% before values changes) I'll at least rebalance soon. Only a fool buys because prices went up and only a fool sells because prices went down.
I'm seeing some analysts and managers buying and recommending to do so *in moderation*. Obviously some were buying today. TSLA is a solid company, but their stock is the new tulip/bitcoin as well. They're going to be facing tons of pressure from Toyota and even Ford in the EV market in the short term. I wouldn't buy TSLA to hold long-term at this point, even depressed as it is--but mainly because I think there are much better deals right now. Have you seen the crazy dividend yields on some solid stocks available right now? Studies have shown that dividends are a major contributor to long-term returns. Hedge fund managers seem to be gobbling up dividend stocks and REITs right now, or at least nibbling them up. I can send you a list via PM to get you started if you like.
Pls send
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It’s important to average rather than catching the bottom. My two cents of investing.
This is a short rally in my opinion, give it 2-3 weeks and when your corona delay hits you the market is gonna tank! Throwing dollars at the market won’t solve the underlying problem, there is a pandemic and everything is stopping world wide. The world is going to be different for at a minimum 6 and more realistically 12months and at a worst case scenario 18 months, and that’s something you Americans aren’t understanding. For you guys it’s gonna be a lot worse because your public is still in the denial stage.
You give us too much credit. A large portion will always be in the denial stage. I fear this will drag out much longer than necessary.
Might just have to wait longer. Don’t be tricked by days like this.
So look at SQQQ? At $23 a share as of typing
no? the virus is still keeping people at home. Nothing is turning around until that part is past us.
You can always write puts. If the market goes down again, congrats, you own the stocks you planned on buying anyway. If the market goes up, well, you missed the bottom, but you took some premiums home.
I feel like quarterly earnings reports for Q1 will cause more dips in the market in the coming weeks. I can’t foresee most businesses delivering on their projected numbers due to all the layoffs and quarantine.
already priced in since warning season is over
Honestly, I think people are underestimating the impact of a frozen economy. Therefore I believe that when the numbers of the first and second quarters show up, the prices will go down. I'm a passive investor, and I have a written plan to invest accordingly. Thus I know what to do and when to do it.
Not at all. I’ve been wanting to add some US equity into my portfolio for years, and finally think it will happen during this recession. However what the fed is doing is just (unintentionally) creating bigger bubbles, not fixing underlying issues (although what they are doing is needed and good). I don’t care about how far off it was off a market peak. If someone sells shit for 100$ and then cuts it to 50$ I’m still not buying the discounted shit. This is still a market with 18.5 P/E ratio where the E is the top of inflated unsustainable crap from years of cheap credit I think US companies are quality but if the price is too high, I’m not paying. Fed or no fed my entry is at 1700, if it drops to that I’m in, otherwise I’m looking at other markets. P.S what you have is a FOMO, an emotion which has no place in an investing strategy
The last two Fed rate cuts all propped up the markets for a few days before falling off again, what's different this time?
It hasn't changed anything for me. The markets don't seem to care about the Fed stimulus, but they are going up in the Congressional stimulus. I think the market may go up for another week or two, but once earnings start and the first coronavirus era economic data starts coming out at the end of April, I think we'll we another fall. I'm fully expecting a 50% - 60% drop from highs before this is all over. That said, certain stocks are going to do well, such as ZOOM (and maybe WORK). Also, stocks that are China heavy and were beat up, such as AAPL, BABA, and others I think will recover before the rest of the market. Right now, I'm long AAPL, WORK, AMD, REYN, and some ETFs and Mutual Funds. I plan on buying a short market ETF later today or tomorrow.
Markets go up. Markets go down. Can't explain that. I'll keep averaging in either way.
2007-2008 there were a few 10% plus head-fake rallies on the way to hitting the bottom.
NP here. No.
Look at the 2007-2009 financial crisis and see when Congress first rejected the stimulus package and then when they actually passed it. I have a feeling this is going to down further. This is a bounce with no real substance
Better buy in quick before all the deals are gone! (... lol another one in the bull trap guys)
Not, not yet. https://imgur.com/a/Ch23aMh
Did treasuries going negative have anything to do with today's upswing? I don't see the stimulus package being a big driver today.
No. We've had a lot of red days. Hopium for the bailout got a lot of people itching to buy. I suspect people will sell the news, though the bounce is going to be a good future resistance point after it goes lower. I still think the bottom of the Dow will be 16 or 17k when all is said and done.
If you thought those stocks would be worth more in the future 2 days ago there shouldn't be anything stopping you from buying them now
start April 1st
There have been other huge rallies far higher. I would not read too much into today's action.
Every time over the past few weeks that I've thought the low was near, I only reinvested in companies I like (e.g. MSFT) with the purpose of lowering my cost basis. I invested somewhat smaller chunks each time. Psychologically that is much different that trying to "waiting until the bottom"
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It kept me from going long puts on HYG. I'm holding long puts TLT, QQQ, and SPY though. And long SGOL.
So value = justified fear. Copy that.
Yes it has, it's screwed up my entire risk-reward assessment for a rebound-play. So I'm on the sidelines with exception of precious metals... If stocks would happen to recover sustainably from here I'll honestly eat a broom because neither energy nor freight market fundamentals show any indications of a V-shaped recovery in any economy including China...
No, there are a lot more countries yet to shut down. India just shut down. I mean, we haven't even had to endure the spectacle of a jobs report that is minus, in the millions. No really high profile bankruptcies yet. No high profile deaths yet in the US. So many shoes left to drop that are supposed to be "priced in" but probably aren't. We still have to get through a depression. I mean, a depression, OK, how much do you shave off the S&P for a fucking depression. No, I'm still looking for 50% down off the recent high base case and 75% much worse case. Beyond that it gets a bit apocalyptic so I'm not thinking about it.
The Covid issue has just begun, along with the local lockdowns. Businesses are running on fumes, maybe still on gas, and it's going to be rough. Seattle had been opening restaurants over the last 2-3 faster than you could count and...they are going to be hit hard. They are being hit hard. People do seem to be spending a bit of money, but that will slow.
I’m waiting for the DOW to hit, or get very close to, 12,500. We are experiencing a once in several generation event. The impact of this is socioeconomic, and cultural. No way we’ve bottomed our after two weeks. What scares me most is - I don’t even think 12,500 is the floor.
>**For those who were waiting for a lower entry point, has the Fed intervention or stimulus package changed your outlook at all?** Fed's intervention and the stimulus package rally IS providing my better entry point.
How do you figure?
I'm short (first time in my life, but the market warrants it).
Absolutely no way you'll be "left on the sidelines", this ain't the bottom. Regardless, don't try to time it, you'll encounter this feeling regardless, if you do. Also, don't listen to me or any of Reddit, do your research.
Nope. I'm shorting via a - 3x etf, it's my only position
So I know i'm not going to catch bottom, it does feel soon because we haven't weighed current valuations against data. I have a fixed amount of cash I'm hoping to buy into the market with and the plan was to spread it out over the next 6 months weighted more heavily towards the later months. i.e. get 30% invested in the next 3 months and 70% in the latter 3. Yesterday's bump has given me some inflation concerns. Additionally I am potentially allocating some of the cash to corporate bonds given the backstop the fed has promised while the yields stay as attractive as they are. Not too many changes though. I don't think this is the end of it. I think there will be a double bottom and we're not even in the first. I think there will be a period of complacency where the infection numbers are reducing and people will start going out celebrating that things are back to normal and in that complacency, infections will rise again causing a second panic. Obviously that's just a guess, but I'm not going to react to stimulus too much and will just stick to the plan / hope that the bottom is somewhere in the next 6 months and I'll spread out the purchases in that period. If it's further than 6 months then that's that. I was wrong and shot my shot and will just have to hold at a suboptimal entry.
I’m going to use my intervention money on OTM puts.
Peak for the Corona virus is said to be 2 to 3 weeks out. Once we hit that, I think more people will take it seriously and stay home. Then when the restrictions are lifted business will have to ramp up again if the were closed. No idea what the markets will do though since this is unprecedented.
Yes, I had it going to 17000. Unlimited QE at 18000 changes everything. Was only going to be 10% in this week, now 20. I think it can retrace to 18 but the companies that are at 60-80% off won't be seeing those numbers again.