Fed continues to pump. $75B in securities today.
Futures up 600.
Who knows what will happen, but I already have a feeling Monday will be a DOW 2000+ rout.
Can someone please explain to me how we as a global economy WILL NOT suffer from this massive Global QE?
The Trump Bump (in stock prices) is now the Trump Pump.
In uncertain times people will want liquidity and Cash. If the demand for money and cash goes up while the supply of cash money remains constant, the Price of Money goes up.
And places with whack money try to buy good money. Like all the foreigners all over the world buying up US dollars, further driving the price of dollars up.
This is Deflation.
When there is Deflation the value of goods and services goes down, and lower prices on stuff leads to less production and further hurts the economy.
During the great Depression shit was all to hell, and some banks failed and a bunch of money straight disappeared, making things even worse. Econ bros studies this and decided that it was bar to let the money supply contract.
Since then Monetarists have believed in using the supply of money to “guide” the economy. To keep prices stable they get more money out there.
Just buy a little bit here and there. The 2 medicine for covid 19 have been declared by china as effective : avigan and chloroquine.
Chloroquine is cheap and that’s bad news for pharma. Abbvie s ritonavir combo wasn’t effective. I heard gild remdesivir is effective. Bloomberg made a stupid headline saying that chloroquine is dangerous and can cause deaths if you overdose on it (2grams), and i was like duh… Any medicine is deadly if you overdose. Chloroquine has been fda approved and clinically tested, if you decide to overdose on a drug, don’t blame the drug.
Anyways, the valuations of some stocks are ridiculously low. For people saying that this isn’t the low, well if you can predict it then go ahead. I think the risk reward is very huge here.
Cruise lines will take a one year loss, but their stocks went down 75-80 pct already. If we are looking at a long horizon a one year loss, is maybe 10 pct of discounted cash flow. Plus the discount rate is being supressed.
Stocks like epr, spg, eat, wynn, mgm, dri have also been supressed by 75 pct ish. But seriously the prices now, it’s like they are priced for bankruptcy.
Oil is one area , i wouldn’t touch until 4 months.
This is precisely what the fed should be doing. They are basically printing money making assets more dear and money less dear. You saw gold prices crash, because of the strengthening of usd. Usd will strengthen in times of crisis, and that’s good, it means people have faith in the us economy. So the usd becomes strong and the fed has to intervene, one is by cutting rates, second is by expanding the balance sheet. Obviously this will stimulate an inflation to counter the recession deflation by covid.
I think the point is we have no idea what valuations are right now. Just because something is cheaper than it was doesn’t mean it’s going to be a good investment… or even be around in a year. Companies do go bankrupt in times like these.
@lucasmon - Not a terrible read, but I think the premise is unrealistic for regular people. It assumes we’re all sitting on a mountain of cash, just waiting for the right time to stick it back in the market. Most of us were close to fully invested in our target allocations when it all went to shit and don’t have a stack of cash to deploy.
Well it’s impossible to time the market, but you can do dollar averaging.
I am not going all in now, i do it slowly. Each time a stock drops 20 pct i will buy. I am not saying this is the bottom, but some of the stocks are already priced for bankruptcy. Look at epr , fell from $76 to $13. Sure it might drop to $5 range, but I am saying even @$16 i will take a chance.
If things go back to normal in maybe 3 years, i have an opportunity to make 4x my capital. 300 -400 pct in 3 years is crazy opportunity, or it might go to 0. The cash position is decent, pretty sure the banks will keep lending.
Mo at $35 , 8.5 pct yield was it is definitely a safer bet, but it’s a stalwart at most make 20-30 pct profit after a year. I still smoke my Marlboros.
Tesla i am waiting to short, with oil prices at $20, no point buying an electric car. I think it might drop to $300, i am waiting for it to go back to 600 before shorting.
Autos , i am not too interested, the recession signals the down cycle.
MU, i am pretty confident, asps have been going up and we get a nice discount.
CCL will get a bailout, i am not too sure regarding the terms maybe a loan. Already priced for a semi bankruptcy, will rebound after virus issue settled if it doesn’t go bust.
T is a decent pick for a future dividend play if you like hbomax, they really need to price it at netflix range to penetrate market. Very dumb management.
Dis , didn’t fall enough to make me lust for it. I want at least 50 pct discount because all their parks, movies are affected.
FB , pretty decent - more people will be online using their services but businesses are disrupted so ad revenue might drop.
Google , again same as fb.
Amzn - was surprised it actually dropped, but i would sell amzn to buy other discounted stuff.
Ba - It’s one of the stocks that weren’t punished enough for the max 8 debacle, i am surprised they punished it so bad for this situation. But i wouldn’t touch it except for an opportunistic short.
Spg fell from $130 to $47 , if you believe it’s going to be world war z , don’t touch this. I believe otherwise. This is not a run of the mill reit like wpg .
Unilever - it’s a staple and people are selling this stock. They will most likely get a boost from their sales.
Yea, nothing wrong with dollar cost averaging in over time. I agree no one can pinpoint the bottom, but volatility generally drops significantly when we bottom. You may be a few days after the bottom if you wait for that signal, but better being a little later than a lot early. Also, I think technical analysis is BS for the most part, however there are enough people who do believe in technical analysis that it can become a self-fulfilling prophecy. And, I do think you can look at an asset’s past performance to see where resistance levels are to get an idea of where people will buy and sell. For example, SPX 2400.
I’m not interested in individual stocks for the most part. It seems risky to open yourself up to individual stock risk in this environment. A stock’s price can go to $0. And, keep in mind bond holders get paid before stock holders. These companies are going to need financing to get through the lean times. Credit and bond markets are going to be tough despite all the quantitative easing because the demand for corporate credit is gong to be so damn high and companies are going to default. And, trying to guess which companies are going to get sweetheart government assistance is crap shoot. I think the cruise industry is especially risky. The virus is going after their key demographic after all.
All that said, I think the companies that have enduring competitive advantages and are well capitalized will do well long term. Growth, tech, energy and financials do well in recoveries/expansions, so weighting your portfolio towards those can’t hurt.
Big week coming up!!!
I think we see a false bottom this week around DOW 18K, get some good news (Stimulus) and rally mid-late week back to 20K. Then jobs report hits and we plummet to 17K, then more bad info on US infection and we bottom around DOW 15K mid-late week next week.
I’m hoping 18K is bottom though. I just don’t see it with what we still have to go through though.
I’ve got cash and I’m chomping at the bit to buy more.
Friday I bought more DIS at $88, MLM at $155 and CAT at $97.
Will continue to buy these 3 as they retreat.
Also want AAPL at $200-$210, GOOG under $1,000, and reinforce my TSLA position under $350.
Got my airline holdings to a position I’m comfortable with after they popped 15% Friday, of which they fell back to flat for the day in the afternoon sell off. Now I can sleep at night haha.
Times like this are why it’s fun to work at a long/short fund, it’s been a great year so far. While I’m not permitted to comment on specific companies or strategies, the one overarching comment I’d make is that investing in individual names that you have no distinct industry advantage in, have not modeled out extensively, and don’t have intricate knowledge of is insane. Always remember, pretty much every time you are doing something (buying, selling, shorting) there is someone in the professional investor community on the other side of that who knows 100x as much as you. Nobody will take this advice, but I had to say it.
Thank you!
Futures already hit limit down. Unless stimulus bill is passed tomorrow morning, which it won’t, tomorrow will be absolute carnage. Capitulation day incoming.
@plinnyc88 The common argument I hear against this line of thought is that retail investors aren’t subject to regulatory restrictions, neutralizing/managing risk, and timelines of professional analysts and asset managers, etc., which could in theory give them a leg up. I take it you don’t buy that?
You don’t think the stimulus is already baked into stock prices? It’s pretty much a foregone conclusion at this point, right?
I think we are hypersensitive to all information right now. Since rep and dem are still playing politics, and can’t come to an agreement on big business bailouts, the fire gets stoked. Infection rates are about to explode. We lost 4K on DOW last week. We’ll probably do that again this week.
All I know is there is going to be one hell of a quick recovery. Get your money in before that! This week is critical.
Retail investors are generally lemmings, I think that the argument you’ve repeated holds no water. If you sat in the work environment of a top HF or long only asset manager for a week, you’d walk out of there and realize how true this is. Many of us look at things like Seeking Alpha as a contrarian indicator: “Retail is all giddy about this, it’ll implode. Retail hates this, doesn’t understand the accounting, great entry point.”
I can’t say you’re wrong bc I’ve never been a pro, but I’ve done well staying in my lane within the market. I don’t invest in what I’m not confident in. I don’t get on bandwagons unless it’s vetted. I use tried and true methods along with my gut, and that’s put me in a really good position.
People that left a big 401K heavy in stock funds flat out were not managing their portfolio. I don’t care how old you are.
What I despise most are advisors who say stay the course to young investors. It’s wrong, and it’s bad advice. It keeps them stupid, so I get it. As an advisor, you want your clients stupid, otherwise what are you paying them for?
Time in the market beats timing the market. Puke. Use your brain and educate yourself.
I’m no genius and I knew to go to a cash position a few months ago. Right after we killed Soleimani, I went cash. Markets were at an all time high, war was knocking on the door, impeachment crap, partisan everything and it is an election year. Is that not enough to get defensive?
I’ve clearly read to many articles and comments blaming this person, or that person for their losses. People need to step up and manage their damn positions. It’s that simple.
End rant.
For the most part I’ve been lucky in this market meltdown. I changed companies last summer and transferred the old company 401K to an IRA and remained all cash. A little over 400K.
To buy the house in my new town I sold oil stocks; CVX, BP and COP. That turned out to be fortuitous timing, then my new company paid what was essentially a signing bonus which replaced most of the $ I used to buy the house.
In early January I decided the market had gotten too high and was due for a pullback so I sold big positions in holdings such as TSLA, SOXX, HACK and a few others that aren’t springing to mind right now. All in all, at the start of this pandemic I was sitting on a large pile of cash.
The bad part is I sold TSLA in the mid 400s. Way too soon and I had a very large holding in Tesla. Long timers know what a fanboy I am of Tesla. (look up my Tesla thread)
Another bad part is the stocks I decided to keep have been absolutely hammered. Those were long term holdings in dividend players such as T, WY, NHI, OHI and VTR. I don’t like selling long term dividend stocks because between the dividend reinvestment and the dividend growth over the years you tend to get attached (Though I didn’t have that problem with the aforementioned oil stocks). These stocks I kept got absolutely hammered and I have fairly large sized holdings of them.
So, this is what I’m doing now. Last week I bought back into TSLA with some pretty large buys. It may take a while and be a rough ride but in my opinion, the market has tipped its hand about where the value of Tesla is going. This pullback is like a mulligan for people who want in Tesla. I plan to buy more.
Today I bought small positions in the following consumer staples: PEP, K, ADM and XLP. XLP is a Consumer Staples index fund. I also bought GSK, PFE, ABBV and MDT for healthcare. Consumer Staples should be early recoverers and medical stuff seems logical. All of these pay a great dividend and I love dividends. I will probably buy more of these because they are small positions and I don’t think we have seen the bottom.
Later in this cycle I will probably buy build back positions such as XLB. I think our infrastructure is already kind of old in its life cycle. To me SOXX and HACK are no brainers for the long term. HACK is cyber security. I started investing when I noticed colleges were starting to offer cyber security as a major. Admittedly, I jumped back in on these index funds too soon. I didn’t realize just how bad this Corona Pandemic was going to be.
Here are my dark horses I thought of today but haven’t purchased; TAP and BUD. Coors and Budweiser. My thought is if we have a prolonged recession, people may go back to drinking cheap beer. Let’s face it, no matter how bad things get people are still going to drink beer. The question is at what point will they stop drinking craft beer?
Finally, and for the record, I wouldn’t touch airlines, cruise ships or oil with a ten foot stick. There is too much easy to see Social Change ahead so I have no interest in gambling on those things. I’d gamble on pot or solar before any of those. Maybe pot in a year when we have an idea of whose going to survive.
To all: Stay healthy, keep your jobs and good luck investing in the stock market.
Yes i agree we will see a semi bottom at 18,000. Then go up to 22,000 then the rest depends on virus, earnings don’t really matter, it has been priced in for most stocks. Virus will matter more.
Still no US stimulus bill!
Futures up based off it being close. If it fails again, market will react in protest, I bet.
Our government is a clown house.
And I hate listening to Trump speak. He may be the worst public speaker on the planet. It’s CRINGE!
I was 50/50 S&P 500 index/Bond index when this all started. I’ve been waiting for a pullback like this for quite a while. I’m down a lot more than 1% but that’s the game.
I’ve been gradually rebalancing to a more stock-heavy portfolio as the S&P drops. 2.5% every 100 pts, to be exact. I’ll be 100% stock when/if the S&P hits 1500.
I’m performing the exact same operation with my personal investment account (TD Ameritrade), but also adding chunks of saved cash that I’ve held back for a few years, thinking the market was overpriced.
I refuse to invest in individual companies because I only read the first few chapters of Graham LOL. I ESPECIALLY avoid the energy industry because I work in it, so I’m already pretty long on that sector.
Good luck to all.
When they pry it from my cold, dead fingers.