Stock Markets, I coulda had a great set of speakers!

[Irvrobinson]

There are a lot of people thinking they're going to catch a falling knife with Boeing. I'm not one of these people.

 

[Old Onkyo]

I have been gradually phasing back into the market. I missed Tuesday’s record run. Oh well....I thought the Dow would go lower than 18,000.
I still think there is another big dip coming.

 

[TankTop5]

I have been gradually phasing back into the market. I missed Tuesday’s record run. Oh well....I thought the Dow would go lower than 18,000.
I still think there is another big dip coming.

I think so too. Luckily I bought on Monday, up about 70% on those and I’m buying again tomorrow. Picked 10 stocks that are down over 70% that have a good 5 and 10 year track record, a mix of oil, entertainment, real estate (retirement home investing ) and business support companies.

With the Fed assistance and the stimulus I’m betting the next two weeks are going to be fun, 2nd quarter is a crap shoot and 3rd quarter this year scares the crap out of me.


Sent from my iPhone using Tapatalk

 

[davidscott]

Will probably retest the lows after the end of the month. Then it could go way lower or stabilize. At this point it depends on containment. If for some reason it is contained then a V shape recovery is possible but personally I don't see it. Oh well the markets were WAY overvalued anyway IMHO. Big Bear markets do happen (2000 and 2008 recently) but some of us tend to forget. Its different this time is the Bull mantra.

 

[Mr._Clark]

Stock are up about 2-3% right now (DJ total market is up 2.5% as I write this).

Mini survey: Is this just a dead cat bounce, or is it an actual rally of sorts? This is more for sh*ts and giggles than anything else.

I'm terrible at predicting the market so I'm planning to leave everything in stocks the same as I did in 1987 and 2008 (queue REO "Ridin' The Storm Out")(I just realized I was actually in the mountains with my lady beside me watching the snow this weekend)

I finally got around to checking my investments today, and I'm actually up about 5% this year.

This storm has not passed yet, but the end does seem to be on the horizon.

Of course, I could lose 30% tomorrow (I'm still terrible at predicting the market).

 

[panteragstk]

I really need to get into investing, but there is so much info out there it's hard to know what's a safe bet for a beginner to start getting into things.

 

[VMPS-TIII]

I really need to get into investing, but there is so much info out there it's hard to know what's a safe bet for a beginner to start getting into things.

I bought S&P 500 March 25th and I am now selling off 50%. By any metric this market is more overvalued than 1999. The Fed is at zero, that's not going to last forever. Any rally is a good time for me to trim more. That's why it's time to buy some new speakers. lol

 

[Irvrobinson]

I bought S&P 500 March 25th and I am now selling off 50%.

Good luck with that. If one of the COVID19 vaccines gets FDA approval and is proven more than 60% effective there's going to be a wave of euphoria for pent up demand that you'll miss 50% of. Getting out is easy, but getting back in is a challenge these days, because electronic trading increases volatility.

By any metric this market is more overvalued than 1999.

Not really correct. The current S&P500 PE ratio is about 29, and the PE ratio in 1999 was about 32:

S&P 500 PE Ratio by Year - Multpl

S&P 500 PE Ratio table by year, historic, and current data. Current S&P 500 PE Ratio is 30.47, a change of +0.19 from previous market close.

www.multpl.com

The Fed is at zero, that's not going to last forever.

Certainly, but projected to be stable through 2022:

Fed sees interest rates staying near zero through 2022, GDP bouncing to 5% next year

The Fed also said it will continue to increase its bond holdings, targeting Treasury purchases at $80 billion a month and mortgage-backed securities at $40 billion.

www.cnbc.com

Any rally is a good time for me to trim more. That's why it's time to buy some new speakers. lol

Good luck with that too.

 

[Irvrobinson]

I am jealous of Jeff Bezos though. By luck, he sold over $4B of Amazon stock right at the price peak before the virus correction started. He still has lost many billions on what's left, but it still looks awfully lucky.

So much for Bezos' timing being right. He sold at what, $2300 a share or thereabouts? AMZN is in the $3200 range now. Not so lucky.

 

[Old Onkyo]

So much for Bezos' timing being right. He sold at what, $2300 a share or thereabouts? AMZN is in the $3200 range now. Not so lucky.

Trust me...his divorce had a lot to do with that...

 

[VMPS-TIII]

Not really correct. The current S&P500 PE ratio is about 29, and the PE ratio in 1999 was about 32:

I'm totally happy with trimming back now. As soon as the virus has a vaccine the Fed will start to move back to 2-3% and we should see a 20-30% pullback. Even if that doesn't occur I am so much happier having some cash on hand now. Taking profit never feels bad.

 

[Kvn_Walker]

I really need to get into investing, but there is so much info out there it's hard to know what's a safe bet for a beginner to start getting into things.

I went in kind of heavy on AAPL and SPY a little while ago. Those are fairly safe and I wish I had bought in 10 years ago.

The rest of my 401k is split evenly amongst low-risk funds and company stock.

I don't blame you for being hesitant. There's a saying that the stock market isn't the economy; it's Vega's for the rich. If a poor man makes money, it's by accident, not by design.

 

[Irvrobinson]

There's a saying that the stock market isn't the economy; it's Vega's for the rich people who do their homework. If an poor ignorant man makes money, it's by accident, not by design.

Fixed that for ya. And the stock market isn't the economy, the prices of stocks are a forward indicator of corporate earnings or enterprise value.

 

[Irvrobinson]

As soon as the virus has a vaccine the Fed will start to move back to 2-3% and we should see a 20-30% pullback.

Do what you want, but that scenario is very unlikely. First of all, as Swerd likes to remind us, vaccines don't prevent infections, vaccinations do. The best case scenario for a substantial portion of the US population to be vaccinated appears to be 3Q21. Since interest rates right now are essentially zero, and the Fed is unlikely to risk squashing a recovery by raising rates more than 25 basis points per quarter, it would take two years to get to a little over 2% that way. And your assumption of a 20-30% pullback due to an interest rate rise is unfounded.

 

[Mr._Clark]

Not really correct. The current S&P500 PE ratio is about 29, and the PE ratio in 1999 was about 32:

S&P 500 PE Ratio by Year - Multpl

S&P 500 PE Ratio table by year, historic, and current data. Current S&P 500 PE Ratio is 30.47, a change of +0.19 from previous market close.

www.multpl.com

I don't disagree with you, but I will add (yes, I'm having a Captain obvious moment) that focusing solely on PE ratios can be misleading because earnings vary so much. The PE for the S&P 500 was 70.91 on 1/1/09, and the S&P was 865.58. Yesterday the S&P was 3,374.85. After adjusting for inflation the gains are not quite as impressive, but still good.

Inflation Adjusted S&P 500 - Multpl

Inflation Adjusted S&P 500 chart, historic, and current data. Current Inflation Adjusted S&P 500 is 5,970.85, a change of +36.65 from previous market close.

www.multpl.com

I have yet to figure out a way to accurately predict earnings. Here's one prediction:

https://seekingalpha.com/article/4369466-summer-2020-snapshot-of-expected-future-s-and-p-500-earnings

I have no idea if this is accurate.

Index funds have done well for me over the years, but this might be a bit of a historical anomaly. For example, with reference to the inflation adjusted S&P 500, a person who steadily bought stocks between around 1955-1975 would not have broken even until roughly 1990. A person who bought a basket of S&P stocks in 1910 would not have broken even until around 1955. Conceivably, A person could have bought stocks in 1910 and sold in the early 1980s and just broke even.

One can of course pick different starting and ending points that will give very different results. My only point is that it is entirely possible to buy and hold over a relatively long period of time and end up basically breaking even.

The possibility that there will be a long (relatively) flat stretch of 20-30 years bothers me more than the possible sharp drops. Sharp drops tend to be followed by sharp rises, but a long flat market will cook me and my index fund investments like the proverbial frog in a slowly heated pot of water.

 

[panteragstk]

Fixed that for ya. And the stock market isn't the economy, the prices of stocks are a forward indicator of corporate earnings or enterprise value.

What are some resources that someone like me can use to do their homework? No problem with research, it's half my job, but there are so many sites that seem to just be marketing you to their offerings it's difficult to see what is good research, and what is marketing.

 

[Irvrobinson]

I don't disagree with you, but I will add (yes, I'm having a Captain obvious moment) that focusing solely on PE ratios can be misleading because earnings vary so much. The PE for the S&P 500 was 70.91 on 1/1/09, and the S&P was 865.58. Yesterday the S&P was 3,374.85. After adjusting for inflation the gains are not quite as impressive, but still good.

PE ratios are often not a good indicator for an individual stock, but they are for broad markets. Some stocks are priced by enterprise value and not current earnings. Tesla, to take the most outrageous example, is barely profitable, but has a market value greater than Toyota. Toyota has earnings just under $24B per year, while Tesla has earned perhaps $100M in its lifetime. So, obviously, a PE ratio is not a good way to value Tesla stock. The same for companies like Zoom Video, MongoDB, and (IMO) Amazon and Shopify. It doesn't take a genius to figure out that the stock markets value growth more than profit.

I have yet to figure out a way to accurately predict earnings. Here's one prediction:

https://seekingalpha.com/article/4369466-summer-2020-snapshot-of-expected-future-s-and-p-500-earnings

I have no idea if this is accurate.

No one knows how to accurately predict earnings. poop happens, so accurate predictions are impossible. Some companies can have great results for a quarter, but they may issue "soft guidance" when earnings are announced, and the stock could tank on the day of the announcement. That just happened to Intel. They announced a great quarter recently, but in the same statement announced their so-called 7nm fab process was slipping by 6 months, and that their revenue outlook was softening. The stock tanked by 16%, though their earnings were awesome. On the other hand, it is possible for a non-expert to make reasonable predictions of success. For example, anyone can watch all of their friends and neighbors getting deliveries from Amazon Prime on a daily basis. Anyone can see that Amazon is a wild success, even if they don't know anything about cloud computing and Amazon's position in that market. In the 1990s, anyone could have seen lines of people outside little Starbucks stores waiting for the privilege of paying $3/cup for coffee. Anyone can see a huge number of people addicted to expensive Apple products. Anyone can see the lines of people at Costco. Some indicators do not take careful study of financials, markets, or technologies.

Index funds have done well for me over the years, but this might be a bit of a historical anomaly. For example, with reference to the inflation adjusted S&P 500, a person who steadily bought stocks between around 1955-1975 would not have broken even until roughly 1990. A person who bought a basket of S&P stocks in 1910 would not have broken even until around 1955. Conceivably, A person could have bought stocks in 1910 and sold in the early 1980s and just broke even.

One can of course pick different starting and ending points that will give very different results. My only point is that it is entirely possible to buy and hold over a relatively long period of time and end up basically breaking even.

I'm not a fan of index funds. IMO, they are for people who don't care to learn about or think about investing. I used to be like that. I was completely consumed by my career and raising a family, and I was a terrible investor. For a short time I actually listened to financial advisors - a huge mistake. The worst is annuities. I have to sit and smile while some of my most brilliant friends in highly technical fields tell me about the great annuity they just purchased, and recommend that I do the same. (Some people buy annuities so they can sleep better at night, but that's very expensive sleep.) I didn't wise up until about 2009 or so. I try not think about how much richer I would be if I wised up 20 years earlier. I bug my children about this all the time.

The possibility that there will be a long (relatively) flat stretch of 20-30 years bothers me more than the possible sharp drops. Sharp drops tend to be followed by sharp rises, but a long flat market will cook me and my index fund investments like the proverbial frog in a slowly heated pot of water.

Flat stretches affect markets, not individual stocks.

 

[Ponzio]

I don't disagree with you, but I will add (yes, I'm having a Captain obvious moment) that focusing solely on PE ratios can be misleading because earnings vary so much. The PE for the S&P 500 was 70.91 on 1/1/09, and the S&P was 865.58. Yesterday the S&P was 3,374.85. After adjusting for inflation the gains are not quite as impressive, but still good.

Inflation Adjusted S&P 500 - Multpl

Inflation Adjusted S&P 500 chart, historic, and current data. Current Inflation Adjusted S&P 500 is 5,970.85, a change of +36.65 from previous market close.

www.multpl.com

I have yet to figure out a way to accurately predict earnings. Here's one prediction:

https://seekingalpha.com/article/4369466-summer-2020-snapshot-of-expected-future-s-and-p-500-earnings

I have no idea if this is accurate.

Index funds have done well for me over the years, but this might be a bit of a historical anomaly. For example, with reference to the inflation adjusted S&P 500, a person who steadily bought stocks between around 1955-1975 would not have broken even until roughly 1990. A person who bought a basket of S&P stocks in 1910 would not have broken even until around 1955. Conceivably, A person could have bought stocks in 1910 and sold in the early 1980s and just broke even.

One can of course pick different starting and ending points that will give very different results. My only point is that it is entirely possible to buy and hold over a relatively long period of time and end up basically breaking even.

The possibility that there will be a long (relatively) flat stretch of 20-30 years bothers me more than the possible sharp drops. Sharp drops tend to be followed by sharp rises, but a long flat market will cook me and my index fund investments like the proverbial frog in a slowly heated pot of water.

You might wanna keep in mind that more people are at the crap tables (playing the market), so there's more of a likelihood of fluctuating highs & lows.

The trick is to get out while the getting's good and your kids don't spend your inheritance on a yacht.

 

[Ponzio]

The worst is annuities.

Aye

My stupid a$$ x-brother-in-law accountant, a self-styled economic genius (read: moron), convinced my immigrant parents to sink $30K into one while I was away on vacation. It could of been worse but my father luckily insisted he wait to invest more till he could talk to me when I got back. I was my parents informal accountant/lawyer since we arrived in the country in '62, since they couldn't read/write in English and only made it to 3rd grade in Sicily. I was not amused. I watched him like a hawk from that point on and advised/begged my parents to run things by me before they made any more investments with him.

Later on, before he left my sister, he tried to convince my parents to distribute all their funds (thru gifting) before dying to avoid state inheritance taxes. Oh how my father and I laughed.

My dad had the greatest line I ever heard about his money. Does he know my blood is on that money? How long it took me to earn it?

Shyster's abound.

 

[Ponzio]

What are some resources that someone like me can use to do their homework? No problem with research, it's half my job, but there are so many sites that seem to just be marketing you to their offerings it's difficult to see what is good research, and what is marketing.

Invest in what you know in the stock market and not what your crazy uncle/cousin or any of us here recommends.

Best advise I took from the Oracle of Omaha, Warren Buffett.