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Old 04-17-2020, 07:12 AM   #281
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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.
But that is almost always the case. The market is never economy. The market is more about gambling on specific corporate future profits. True, they are often more in sync, but perhaps that's always more correlation than causation.

I don't pretend to know where any of this is headed, but it's usually true that the market recovers well before the real economy.
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Old 04-17-2020, 07:13 AM   #282
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People should not be surprised by market manipulation. Pump and dump schemes have been going on for years. Two weeks ago we had that "huge" oil production cut by OPEC and oil spiked along with energy stocks. Now that the market has realized that the cut wasn't that huge, oil is trading at $17.80 a barrel and headed lower. The market is also starting to realize that Russia and the Saudi Arabia really aren't fighting with each other but coordinating to crush the shale oil producers. Worst of all, the major oil producers in the US also want the independent oil producers to go away.

Just remember, a clinical trial without a control group (receiving a placebo) is no clinical trial.
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Old 04-17-2020, 07:36 AM   #283
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But that is almost always the case. The market is never economy. The market is more about gambling on specific corporate future profits. True, they are often more in sync, but perhaps that's always more correlation than causation.

I don't pretend to know where any of this is headed, but it's usually true that the market recovers well before the real economy.
It's pretty clear there will be a long term hit to corporate profits.

But I guess every bear market includes these senseless rallies. This feels a lot like January and we know how that played out, so I will just be patient.
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Old 04-17-2020, 08:09 AM   #284
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It's pretty clear there will be a long term hit to corporate profits.

But I guess every bear market includes these senseless rallies. This feels a lot like January and we know how that played out, so I will just be patient.
What if the Fed starts buying equities? More to the point, what if the Fed has already begun buying equities? Iím not advocating this, but if the Fed put has crossed some threshold and now deep pocket investors feel Fed backstopping will expand to new asset classes, the skyís the limit for many asset classes, including equities.
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Old 04-17-2020, 08:24 AM   #285
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What if the Fed starts buying equities? More to the point, what if the Fed has already begun buying equities? Iím not advocating this, but if the Fed put has crossed some threshold and now deep pocket investors feel Fed backstopping will expand to new asset classes, the skyís the limit for many asset classes, including equities.
If the Fed does start buying equities, this time could be different.
Wonder how Main St. with only ~50% participation in the markets would feel about this implied supporting the rich?
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Old 04-17-2020, 08:35 AM   #286
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The Bank of Japan has been buying equities for years now. Has it helped? I can see the Fed buying equities as a backstop, but that would signal a start of a long bear market.
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Old 04-17-2020, 08:42 AM   #287
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Interesting article on the subject. Technically, they can't invest in stocks but they've crafted a clever workaround via Treasury.

https://www.thestreet.com/opinion/fe...rve-buy-stocks

Quote:
... Can the Fed do this? No, the Fed would need congressional approval to begin directly intervening in equity markets. But as demonstrated by the inventiveness it's already displayed to buy assets it shouldn't be buying, there isn’t any reason to doubt it can’t move forward with the Treasury and an SPV to make it happen without formal approval. ...
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Old 04-17-2020, 08:52 AM   #288
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As a retiree, I share your perspective.
+1.
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Old 04-17-2020, 09:10 AM   #289
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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 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.
I have come to respect and trust your judgement. Although I agree this shock is nothing we have ever seen before, I trust the fed's quick and decisive actions will shorten the recession period to less than 18 months. We are cautiously optimistic and believe the financial markets will not implode but there will be a lot of pain while we go thru the recession.

As a fellow retiree (60 Yr old) my principal goal is to conserve our portfolio and grow it over time at a reasonable rate without taking unnecessary risks. So I have increased our cash/Bonds to 20 years of living expenses, while the rest stays invested in equities.
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Old 04-17-2020, 09:17 AM   #290
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I have come to respect and trust your judgement. Although I agree this shock is nothing we have ever seen before, I trust the fed's quick and decisive actions will shorten the recession period to less than 18 months. We are cautiously optimistic and believe the financial markets will not implode but there will be a lot of pain while we go thru the recession.

As a fellow retiree (60 Yr old) my principal goal is to conserve our portfolio and grow it over time at a reasonable rate without taking unnecessary risks. So I have increased our cash/Bonds to 20 years of living expenses, while the rest stays invested in equities.
I hope that I am wrong and you are right that the recession only lasts 18 months... and who knows, once the smoke clears that may be more apparent and I'll feel more comfortable putting the ship back into gear.

I am concerned that the Fed's interventions have artificailly boosted markets and that boost will subside as the Fed withdraws.

I should premise this with the fact that I was concerned about the Fed propping up the market and the velocity of trading influencing prices and the potential for a bubble even before COVID... so the recent crash just brought those concerns more to the surface.
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Old 04-17-2020, 09:29 AM   #291
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If the Fed does start buying equities, this time could be different.
Wonder how Main St. with only ~50% participation in the markets would feel about this implied supporting the rich?

They'll say what they always say: "If you don't prop up the 'job creators' we'll have to lay people off. You wanna lose your job? Den Gimme da money"
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Old 04-17-2020, 09:47 AM   #292
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Love this quote “In a bear market, money returns to its rightful owners.”

here is a good read: "Here We Go Again"
http://www.oncoursefp.com/files/Vect...20%20final.pdf
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Old 04-17-2020, 04:25 PM   #293
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I nearly panicked when the dow got below 19,000, but I changed my allocation by selling most of my bonds, and buying all stocks. I'm gonna let it ride baby...right to the top.
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Old 04-17-2020, 04:30 PM   #294
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I nearly panicked when the dow got below 19,000, but I changed my allocation by selling most of my bonds, and buying all stocks. I'm gonna let it ride baby...right to the top.
You may be fine but hold on tight if we drop to 14000. You donít want to buy on drop one only to sell on drop two.
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Old 04-17-2020, 04:30 PM   #295
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I nearly panicked when the dow got below 19,000, but I changed my allocation by selling most of my bonds, and buying all stocks. I'm gonna let it ride baby...right to the top.
+1, over re-balanced like a mad man before DOW 18k and now back to Jan 1st, 2020 level.
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Old 04-17-2020, 05:34 PM   #296
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You may be fine but hold on tight if we drop to 14000. You donít want to buy on drop one only to sell on drop two.
I hear ya.
It just seems whenever people trying to time the market, they regret it. I know I have a few more years in the market, so Iím going to continue putting money in, and Iím going to be aggressive. If I buy on the way up, so be it; if I buy on the way down, so be it. Either way, I believe the dow will be back at 29,000 near election time... in my opinion, that makes every share on sale.
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Old 04-18-2020, 04:15 AM   #297
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Seriously?? I am 100% in pb4uski’s last post camp. The trouble was abrewing even before this insane untested obstacle. IMHO, if the DOW is even 27000 by election time, it will have been through short term manipulation directly for the election. But what do I know? Nuthin, just like everyone else.
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Old 04-18-2020, 04:21 AM   #298
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Seriously?? I am 100% in pb4uskiís last post. The trouble was abrewing even before this insane untested obstacle. IMHO, if the DOW is even 27000 by election time, it will have been through short term manipulation directly for the election. But what do I know? Nuthin, just like everyone else.
Yup.
I know nuthin too, but believe there could be 2 dates where there could be a down test of the market.
1 - in July during 2nd quarter results, plus depending how the reopening is doing.
2 - if there is a switch in Presidents, there could be a down test in Nov.
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Old 04-18-2020, 04:34 AM   #299
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Love this quote ďIn a bear market, money returns to its rightful owners.Ē

here is a good read: "Here We Go Again"
http://www.oncoursefp.com/files/Vect...20%20final.pdf
While I like the quote, that news letter was worthless. Just regurgitation of ďchoose an AA and always stick to it regardlessĒ, stating well worn borrowed factoids. Nothing wrong with that, but what does anyone need that kind of newsletter for? Reassurance?
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Old 04-18-2020, 04:43 AM   #300
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I don't know anything either. What I think I do know is stocks do not appear cheap to me right now. I found some bargains in March that seems to have dried up. Earnings don't look good going forward. We have not retested the lows yet either. But the big thing that stands out to me is the market seems to be going up faster than what would seem reasonable to me.
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