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Old 04-16-2020, 06:09 PM   #261
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This market is a “perfect orgy of speculation”. It looks like the perfect time for a "day trader". Reminds me of the Y2K era. The stock market is not the economy and the FED knows we have serious problems (unless you view them as political) so I'm sitting back and waiting until things settle down. Too old to take a lot of risk and it looks risky to me.
What I see in the real economy is very much at odds with what the market is doing. It perplexes me.
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Old 04-16-2020, 07:42 PM   #262
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Originally Posted by brewer12345 View Post
What I see in the real economy is very much at odds with what the market is doing. It perplexes me.
And you ain't the only one. I was perplexed the market went so high in January.
And now with all the bad news, I don't understand what investors see that I don't.
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Old 04-16-2020, 08:09 PM   #263
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And you ain't the only one. I was perplexed the market went so high in January.
And now with all the bad news, I don't understand what investors see that I don't.
Count me in with you all in the same thoughts.
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Old 04-16-2020, 08:53 PM   #264
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+1 It looks to me like the economy is in the ***tter and corporate profits will be absymal but the market doesn't seem to give a care. The artificiality of a combination of Fed intervention propping up the market with easy money and traders doing their trading thing seeming to ignore long-term fundamentals make me concerned we are seeing a bubble grow right before our eyes. When will it go "pop"?
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Old 04-16-2020, 09:19 PM   #265
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+1 It looks to me like the economy is in the ***tter and corporate profits will be absymal but the market doesn't seem to give a care. The artificiality of a combination of Fed intervention propping up the market with easy money and traders doing their trading thing seeming to ignore long-term fundamentals make me concerned we are seeing a bubble grow right before our eyes. When will it go "pop"?

Well I guess I would understand your view if you think the economy and profits were permanently in the ***tter. Otherwise, if this is temporary, not much has changed. A few quarters of zeros in the IRR calculation doesn’t change the valuation much. I’m kinda surprised how quickly you jumped ship, I thought of you as our fearless captain.
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Old 04-16-2020, 09:22 PM   #266
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Market can look past bad news but what is going on now is a bubble in about 6 stocks that carry a significant weight of the overall market. The stocks are Apple, Microsoft, Amazon, Google, and Facebook. The market cap of these stocks are significantly higher than entire industry sectors. What doesn't make sense is that with so many businesses fighting for survival, the last thing they will be spending money on is advertising on Google and Facebook. I really don't think people are looking to upgrade to the latest iPhone given that many of their customers are people who live paycheck to paycheck and their iPhone is their sole status symbol. I'm selling a lot of my bonds into this rally to raise cash for the next sell-off.

I'm not too impressed with the three step plan to re-open the economy. Many people will continue to stay at home until the virus is contained and dinner out with your wife doesn't involve drinking your liquid dinner with a straw through your mask. My brother is a doctor (Radiology and Nuclear Medicine) Most of his work these days involve COVID-19 patients that are admitted to the hospital. He told me that MRIs and CT scans of many COVID-19 patients that survive show damage to the lungs, heart, and lesions in the brain. So we prefer to avoid getting infected.
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Old 04-16-2020, 09:59 PM   #267
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The Gilead drug appears to be the reason for the surge in futures.

https://www.cnbc.com/2020/04/16/sp-5...ronavirus.html
The hilarious thing is that this is a pump and dump scam. CNBC picked up a highly dubious BS source reporting this and it was misleading enough that Gilead felt compelled to disavow it.
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Old 04-16-2020, 10:08 PM   #268
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And you ain't the only one. I was perplexed the market went so high in January.
And now with all the bad news, I don't understand what investors see that I don't.
Same here.
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Old 04-16-2020, 10:15 PM   #269
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Nobody knows nuthin'. Rembering this will allow you to become completely relaxed.
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Old 04-16-2020, 10:39 PM   #270
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I don't get it either but over at bogleheads I recall they have a saying that the market is forward looking. It's looking at things 6 mos out and acting accordingly, not based on the current day situation. So I guess, in this case in 6 mos the market sees we'll be back to normal-ish. I dunno, maybe.
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Old 04-17-2020, 01:11 AM   #271
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If the market price movement on any day is based on price discovery.....Who is buying at these prices? A few people closing short positions perhaps, but other than that who?
Even if people think this is overblown, I can’t imagine any sane person thinks at this weeks levels US stocks are cheap (the whole market not specific issues)?


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Old 04-17-2020, 02:11 AM   #272
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If the market price movement on any day is based on price discovery.....Who is buying at these prices? A few people closing short positions perhaps, but other than that who?
Even if people think this is overblown, I can’t imagine any sane person thinks at this weeks levels US stocks are cheap (the whole market not specific issues)?


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Over the last couple of weeks we have moved cash into some US and non-US ETFs. We will likely continue. And we are sane.

You suggest above that the relevant consideration is whether “US stocks are cheap.” That is one consideration, for sure, but isn’t the sole one, at least for us. Here are some of the factors we consider when investing:

1. Is one a day trader/market timer, or long-term investor?
2. What is one’s AA?
3. What is one’s age?
4. What is one’s investment horizon?
5. Under any reasonable scenario would one envision cashing out of equities over certain future benchmarks (5, 10 years, e.g.)?
6. Does one take a negative or positive view of what society/life will be like in 2025, 2030, 2040, 2050?
7. Does the equity holding pay dividends?
8. Does one actually care if the market drops another, say 20% today (see above)?
9. Does one have any debt?
10. Does one LBYM?
11. Does one want to leave behind an inheritance to children or charity?
12. Are stocks off their recent highs?
13. Does one believe the market will be higher or lower in 2030 than it is today?
14. Does one watch Mad Money daily or instead not really care what some talking head on TV says?
15. Does one not really watch that much TV at all?

And on and on.

So there are lots of reasons why sane people could justify investing today. But YMMV. And I could actually be crazy, I suppose. But I don’t think I am.
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Old 04-17-2020, 05:00 AM   #273
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What I see in the real economy is very much at odds with what the market is doing. It perplexes me.
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Now with all the bad news, I don't understand what investors see that I don't.
I get it, but the market is not responding to what is happening now, or even for the first half of the year. It is responding to trillions from the Fed, which is real money, and what they see for the second half, which currently looks like the slow recovery will have started. That is better than the worst fears from March, so the market is up from there.
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Old 04-17-2020, 05:15 AM   #274
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Hindsight being 20-20, was the stock market justified for tanking 35% about 1 1/2 months ago when the virus was starting to spread and people were beginning to understand the economic ramifications from it? I think it did.

Using the same logic, we'll see in a couple of months whether the stock market is justified that there will be some economic recovery due to all the measures taken. It is what it is. If you think that there won't be economic recovery, you should short the market. If you think there will be even greater economic recovery, you should go long. Or you can not play the game.

Trying to tie today's situation with a forward looking financial instrument is foolhardy.
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Old 04-17-2020, 06:32 AM   #275
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Hindsight being 20-20, was the stock market justified for tanking 35% about 1 1/2 months ago when the virus was starting to spread and people were beginning to understand the economic ramifications from it? I think it did.

Using the same logic, we'll see in a couple of months whether the stock market is justified that there will be some economic recovery due to all the measures taken. It is what it is. If you think that there won't be economic recovery, you should short the market. If you think there will be even greater economic recovery, you should go long. Or you can not play the game.

Trying to tie today's situation with a forward looking financial instrument is foolhardy.
This is really the whole deal. Down 35% in a very short period of time. Now back up....what 25%....in a very short period of time. If you think the economy won't take a huge hit over a long period time and we bounce out of this, that makes sense. If, like me, you believe that the market is overly optimistic about the amount of damage that has occurred and will continue to unfold in the coming months, it makes no sense at all.

Today we're up on what seems to me to be nothing short of plan that should be called "A 3 phase step to herd immunity". Because without adequate testing and governors/mayors truly adhering to the new "guidelines" (many won't), it's possible that we're going to have another surge this summer. Likely in states where the leaders and residents think this virus only affects old people and wusses.

Also up on a "leaked" t-con between doctors about Remdisivir, which overnight is a miracle cure. We've been hearing about this drug since February when it was used in China for compassionate purposes. Same in Europe. The Chicago hospital said their study is 125 patients, 113 critically ill, and lost only two patients.

But on April 10th the New England Journal of medicine reported on the compassionate use of Remdesivir in Europe, Canada and the US. And their synopsis was this: "CONCLUSIONS
In this cohort of patients hospitalized for severe Covid-19 who were treated with compassionate-use remdesivir, clinical improvement was observed in 36 of 53 patients (68%). Measurement of efficacy will require ongoing randomized, placebo-controlled trials of remdesivir therapy. (Funded by Gilead Sciences.)"

Those are very different snapshots of the efficacy of the drug.

This isn't a "top down" event like the Great Recession. This is going to be a "bottom up" Great Recession. I'm watching things on the news that I've never seen before. Lines of cars that go as far as the eye can see, not just for testing, but for food banks. Crowds of desperate people grasping for paper forms to apply for unemployment because the state's website keeps crashing. And NYC, a complete ghost town, for at least one more month. Many of those businesses will not make it. And everyone I am talking with has no plans to travel, attend concerts or any events with large numbers of people, or eat in restaurants for the foreseeable future. The Feds can put out "guidelines" til the cows come home. I don't trust their guidelines.

Until we get more earnings and data, we aren't even remotely out of the woods.
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Old 04-17-2020, 06:35 AM   #276
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I remember when we came off the March 2009 lows the market skyrocketed off those lows. Then of course in 2011 we had a big correction. We went down almost 20% in 2011. The same thing could happen this time .
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Old 04-17-2020, 06:42 AM   #277
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Markets already looked to 4th quarter and unemployment is now old news.
Until reliable vaccine is mass produced and all population will get vaccinated, economy reopening most likely will bring the pandemic second wave.
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Old 04-17-2020, 06:45 AM   #278
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Well I guess I would understand your view if you think the economy and profits were permanently in the ***tter. Otherwise, if this is temporary, not much has changed. A few quarters of zeros in the IRR calculation doesn’t change the valuation much. I’m kinda surprised how quickly you jumped ship, I thought of you as our fearless captain.
I don't think the economy and corporate profits are permanently in the ***tter but at the same time the recovery back to "normal" will be slow. Many people who had no or negligible savings will have their finances decimated and the same with many small businesses. I happen to think it will be a long time, likely years, before the 20 million lost jobs are recovered and that will impact consumer spending, which was 70% of the economy before COVID.

I don't feel like I've jumped ship, more like I see the worst storm that I have ever seen ahead and have put the gear shifter into neutral until I can assess how bad the storm really is and what direction it is heading before putting the ship back into gear. Meanwhile, I'm watching other ships (like the USS Wall Street) drive right into the storm at full speed ahead.
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Old 04-17-2020, 07:05 AM   #279
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If, like me, you believe that the market is overly optimistic about the amount of damage that has occurred and will continue to unfold in the coming months, it makes no sense at all.
I agree with you in general that the market seems overly optimistic, but I know enough to know that I don't know many things that could justify these levels. Upcoming treatments, true impact of summer on the spreading, J&J's target to produce a billion vaccine by Q1 of 2021, even more stimulus... Of course there are a bunch of unknowns that could negatively impact the stock market...

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I'm watching things on the news that I've never seen before. Lines of cars that go as far as the eye can see, not just for testing, but for food banks. Crowds of desperate people grasping for paper forms to apply for unemployment because the state's website keeps crashing.
I think the vast majority of people's lives are better than what's displayed on the news, so I discount everything on the news especially right now during this political year.

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I don't feel like I've jumped ship, more like I see the wort storm that I have ever seen ahead and have put the gear shifter into neutral until I can assess how bad the storm really is and what direction it is heading before putting the ship back into gear.
My investment strategy -- through all this chaos -- remains constant. I'm dollar cost investing every month until the end of this year and avoid trying to market time based on the latest sensational headlines. I know that the market moves faster than my ability to assess it.
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Old 04-17-2020, 07:10 AM   #280
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I don't think the economy and corporate profits are permanently in the ***tter but at the same time the recovery back to "normal" will be slow. Many people who had no or negligible savings will have their finances decimated and the same with many small businesses. I happen to think it will be a long time, likely years, before the 20 million lost jobs are recovered and that will impact consumer spending, which was 70% of the economy before COVID.

I don't feel like I've jumped ship, more like I see the wort storm that I have ever seen ahead and have put the gear shifter into neutral until I can assess how bad the storm really is and what direction it is heading before putting the ship back into gear. Meanwhile, I'm watching other ships (like the USS Wall Street) drive right into the storm at full speed ahead.
As a retiree, I share your perspective.
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