Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Old 04-23-2020, 02:49 PM   #361
Full time employment: Posting here.
atmsmshr's Avatar
 
Join Date: Mar 2016
Location: An island off the coast of Florida. (Ok - if you really need to know it's Vero Beach)
Posts: 627
SecondCor521 - IMHO a lot of the disconnect is perspective and lack of forecasing.

On one hand, I tell my 20ish children to DCA and buy low cost USA index with a small dash of international and stay 100% stocks for the next 25 years. Don't peak at the balance. Ignore what is happening today and don't time the market.

(On the other hand, DW and I are retired and not going back to work. So our risk tolerance is less and timeline shorter. My current actions would not apply to the next generation at their age. Previously, I was uber risky and 100% equity during my working career until 2 years ago.)

So a lot of 'automatic' stock market buying is going on with the younger set each paycheck. After all, it was not the laid off hourly workers who were stuffing money into 401ks. And for all age groups, more automatic buying from pension fund managers and from lifecycle funds that have target bands rebalanced. That's a lot of moolah coming in, particularly when those funds have a retriggering of bands to balance. The automatic buying is a steadying effect.

Credit crunch effects have a downdraft. Corporations raising cash will not do stock buybacks if they think dividends are going to be cut. And corporations will definitely not buyback if they are on the hook for a Treasury or Fed loan. But this is the big unknown. The Fed supporting paper for the 'fallen angels' was a very good thing - otherwise there may have been a sharp decline for equity of those companies not able to raise enough cash. Additionally, corporations starved for cash will start to cut matching 401k contributions - typically a company stock match.

Forecasting blindspots. Major corporations have withdrawn earnings forecast leaving analysts (and computer programs) stuck with the 4rth quarter forecast until earnings are announced or projected. And new projections will likely be less than a year out. 2nd quarter earnings will be worse than what is coming out now.

Bankruptcies. Remember in 2008 how long the financial market spinout took? Loan defaults, bankruptcies, foreclosures, liquidity issues, sorting out the mess of collateralized loan obligations pulsing through the legal, corporate and accounting systems? No one can accurately predict how that is going to turn out. For example - Oil war. 10% of the worlds oil tanker fleet sitting aside as storage tanks? Wells shutting in, loan and bond defaults, steel demand down expected 5%, housing foreclosures in the oil patches, bad loans on the books of credit unions and regional banks. That alone will take a year to understand the effects. What computer program can untie that knot today with any accuracy in forecast?

So IMHO a lot of what we see today is just automatic buying propped up by some who 'bought on the dip' and will soon have no reserves left for additional buying. Prompt backstop by the Fed to prevent a meltdown. Lack of earnings forecast leaves us (and the trading programs) flying in the dark without instruments in mountainous terrain. The broader indices more probably reflect what is going on since smaller companies may have less access to credit and smaller war chests than the big boys. When the PE numbers reflect what is happening, and more bankruptcies start rolling, look out below.

But what the hell do I know.
__________________
DW and I are 59/59. FIRE'd August 2019. Non-cola pension available but will remain untouched until mid sixties to grow, max SS for DH at FRA or 70. Mega retiree health available. IRA rollover from 401k Jan 2020 for NUA treatment. LTCG next few years. AA 40% stocks, 7% cash and 53% Intermediate Treasury fund. Rising equity glidepath.
atmsmshr is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 04-23-2020, 02:55 PM   #362
Recycles dryer sheets
 
Join Date: Sep 2018
Location: High Plains Non-Drifter
Posts: 314
Quote:
Originally Posted by brewer12345 View Post
Because uncertainty is such a great buying signal. Interesting.
Statistics.
WyomingLife is offline   Reply With Quote
Old 04-23-2020, 02:58 PM   #363
Thinks s/he gets paid by the post
GravitySucks's Avatar
 
Join Date: Feb 2014
Location: Syracuse
Posts: 3,252
Quote:
Originally Posted by WyomingLife View Post
You are certainly right. Or not. I am comfortable in my uncertainty.

In the meantime people like me are buying as people like you sell.

Please continue.
And some of us are standing pat.
If I was a betting man I'd sell now thinking I'll be able to buy in later much lower.
But I'm not gambling. I'm investing with infrequent rebalancing.
I am waiting for another dip to convert to Roth some this year. Got to imagine we're going to see higher taxes soon.
__________________
ďNo, not rich. I am a poor man with money, which is not the same thing"
GravitySucks is online now   Reply With Quote
Old 04-23-2020, 03:06 PM   #364
Recycles dryer sheets
 
Join Date: Sep 2018
Location: High Plains Non-Drifter
Posts: 314
I respect and admire Brewer12345. I'm a newbie in comparison, and not very smart.

I'm just trying to bring science and math into this.

Quantum mechanics, cosmology, physics: all based on statistical probabilities of where the photon is. Nobody knows where the photon is. The best that physics can do is a wave function of probability. And in that sentence is the current understanding of life.

Same for markets. And the machines influencing market trading are running statistical equations.

So for all of you that think the market "hasn't taken into account X", read some statistics. That's all I'm saying.

And if anybody knows where the photon is, you will win the Nobel Prize in Physics in some future year.
WyomingLife is offline   Reply With Quote
Old 04-23-2020, 03:17 PM   #365
Thinks s/he gets paid by the post
RAE's Avatar
 
Join Date: Jan 2005
Location: northern Michigan
Posts: 2,190
Quote:
Originally Posted by atmsmshr View Post
When the PE numbers reflect what is happening, and more bankruptcies start rolling, look out below.
+1. We are still in the early stages of this economic disaster. Unless the stock market is completely detached from reality, I see no chance for a sustained upswing anytime soon.
RAE is offline   Reply With Quote
Old 04-23-2020, 03:22 PM   #366
Full time employment: Posting here.
atmsmshr's Avatar
 
Join Date: Mar 2016
Location: An island off the coast of Florida. (Ok - if you really need to know it's Vero Beach)
Posts: 627
Quote:
Originally Posted by RAE View Post
+1. We are still in the early stages of this economic disaster. Unless the stock market is completely detached from reality, I see no chance for a sustained upswing anytime soon.
I think we are in the third inning of this particular ball game that probably started earlier than last November.
__________________
DW and I are 59/59. FIRE'd August 2019. Non-cola pension available but will remain untouched until mid sixties to grow, max SS for DH at FRA or 70. Mega retiree health available. IRA rollover from 401k Jan 2020 for NUA treatment. LTCG next few years. AA 40% stocks, 7% cash and 53% Intermediate Treasury fund. Rising equity glidepath.
atmsmshr is offline   Reply With Quote
Old 04-23-2020, 03:22 PM   #367
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
SecondCor521's Avatar
 
Join Date: Jun 2006
Location: Boise
Posts: 6,778
Quote:
Originally Posted by atmsmshr View Post
SecondCor521 - IMHO a lot of the disconnect is perspective and lack of forecasing.
Thanks for the thoughtful answer, atmsmshr. I appreciate it. Anyone else have other explanations for why the market is not properly setting price levels for all the upcoming bad stuff?

Another couple of categories for possible explanations as to why the market is "too high" that I thought of: the market is broken, the market is being rigged by someone(s) for some reason, or the people here are smarter than the rest of the market (I think this last one my son refers to as the exceptionalism hypothesis, but he may be referring to the reverse/inverse/converse).
__________________
"At times the world can seem an unfriendly and sinister place, but believe us when we say there is much more good in it than bad. All you have to do is look hard enough, and what might seem to be a series of unfortunate events, may in fact be the first steps of a journey." Violet Baudelaire.
SecondCor521 is online now   Reply With Quote
Old 04-23-2020, 03:27 PM   #368
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 32,251
I think it is a bunch of things that disconnect the stock market from the economy in the short-term. I seem to recall hearing that over 70% of daily trading activity is just traders and computers doing their trader thing... trying to catch a small profit here and there from stock movements. Easy money and low interest rates have been a large factor too as by pushing interest rates so low fixed income is relatively less attractive. And the concentration of the large caps as Freedom56 describes above.

I don't think it is retail investors thinking that they really want to be in stocks right now other than perhaps just following their AA.

To me the 15% or so that the market is down YTD does not adequately reflect the impact to the economy of the loss of 26 million jobs in the last month, business closures, etc. I think the economy is in a world of hurt and we just aren't seeing it yet... IMO worse than the Great Recession circa 2008 but hopefully not as bad as the Great Recession.

BTW, I hope that I am wrong and when the smoke clears we bounce back with a V recovery, but my reading of the tea leaves isn't that so I've gone defensive for now until the path out of this public health and economic mess is clearer.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.

Retired Jan 2012 at age 56
pb4uski is offline   Reply With Quote
Old 04-23-2020, 03:34 PM   #369
Recycles dryer sheets
 
Join Date: Oct 2004
Posts: 294
I do understand why the market fell so fast, I don't understand reason for the bounce, but I did appreciate the opportunity to bail. In the tech bubble (00) I was caught flat footed, dumbfounded, failed to act and lost something like 65%. My current ira is only down 3% ytd, and is all cash.
Shredder is offline   Reply With Quote
Old 04-23-2020, 03:42 PM   #370
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
SecondCor521's Avatar
 
Join Date: Jun 2006
Location: Boise
Posts: 6,778
^ Thanks, pb4uski.

I guess it didn't click until reading your reply that everyone has an opinion of the market, and we all get to decide if it's "too high" or "too low" from our own point of view. And it's that variation of opinion that results in trades and the ebb and flow of opinion that raises and lowers markets.

I guess I think that there's a lot of smart people here, and if the smart people here collectively think the market isn't pricing in all the upcoming bad stuff enough, then why is the market currently stupid. Because if we're the smart ones and we think it is too high, then who are all the dumb ones who are buying stock right now and keeping the market from dropping more than it has (i.e., down to what we smart folks would deem a fairly valued market)? And how did they get so much money if they're dumb? It would take a lot of money to buy up all the supply of stock from the smart people who are selling now, I think? Maybe everyone who wants to sell has already had a decent enough chance to do so over the past month or so.

(And to atmsmshr, I'm not calling our young investor kids who are just starting out and putting money in their 401(k)s and such "dumb". What they're doing makes sense; I'm just not sure that there are that many young people who are brave enough and secure enough not to stop their 401(k) contributions in the current level of uncertainty. I'm also not sure there's enough inflows there to prop up the supply of stock from those who think bad stuff is coming, but then again I have no way of measuring or even estimating those numbers in any reasonable way, so it's plausible.)

P.S. - I didn't get much sleep last night due to stress over a family member, so if I'm not my usual sharp-brained self, I claim fatigue. Also battling a sinus infection, so there's that.

P.P.S. - The other thing I forgot until just now is that I'm sort of an EMH LTBH low-cost broad-based index fund person, so I generally don't have to form an opinion on the current price level of the market. I just rebalance to my AA when my IPS says to, sell when I need to, and monitor my WR%. So I don't really need to know or think about if it's "too high" or "too low". Not bragging or being superior, I just am explaining why I was briefly perplexed - it's because I'm a valuation newbie or ignoramus, take your pick of terminology.
__________________
"At times the world can seem an unfriendly and sinister place, but believe us when we say there is much more good in it than bad. All you have to do is look hard enough, and what might seem to be a series of unfortunate events, may in fact be the first steps of a journey." Violet Baudelaire.
SecondCor521 is online now   Reply With Quote
Old 04-23-2020, 03:42 PM   #371
Full time employment: Posting here.
 
Join Date: Aug 2015
Posts: 509
As I posted earlier, very reputable London's Imperial College gave reports to GB and US Governments on their study of current pandemic with prediction that workable vaccine could be developed in 12 to 18 month. You can bet on Market recovery at hand or diving back to 18,000 but until the vaccine is here there is no recovery. Meanwhile most Governments do everything possible to pump fiat money into financial systems of their countries to prevent collapse while economic shut down or huge slow down what makes people feel less confidence in those currencies and force investors to look for various assets in order to preserve their savings and one of most popular assets are equities.
VFK57 is offline   Reply With Quote
Old 04-23-2020, 03:59 PM   #372
Recycles dryer sheets
Beststash's Avatar
 
Join Date: Nov 2003
Posts: 468
I don't think the market reflects the extent of the damage that is happening to the global economy. Restarting the economy in the US (much less the global economy) is going to be difficult because different states will be doing different things. Totally out of sync.

As the pressure to re-open the economy builds there are several factors that are important. Even if a business opens that doesn't mean that customers will respond accordingly - if fact until more is known I would bet that caution will be the norm.

Can we count on the FED continuing to rescue the market even as we see them delve into junk bonds? Can Congress continue to subsidize workers and even more so businesses until things stabilize? Bankruptcies, cuts in capital spending, earnings that aren't reflective of current events....everyone suspending guidance, and so far not even a mention of the oil situation. I think for the foreseeable future.........CASH IS KING
Beststash is offline   Reply With Quote
Old 04-23-2020, 03:59 PM   #373
Recycles dryer sheets
 
Join Date: Sep 2018
Location: High Plains Non-Drifter
Posts: 314
Lots of fortune tellers here.

Can I meet you all in Vegas this weekend? I need your insights.
WyomingLife is offline   Reply With Quote
Old 04-23-2020, 04:07 PM   #374
Full time employment: Posting here.
 
Join Date: Jul 2013
Posts: 953
Have we seen this level of low interest rates before? One of the questions that struggle with is this- Where do you put your money that is not invested in equities? Most of my invest-able amount is tied up in a 401k or roth, so I don't know if I can put it into a CD somewhere. And those interest rates are very low. I have not been a fan of bonds, because I never saw the rationale in putting your money into a lower performing vehicle. Especially here in recent times when bonds also decreased in value. So if you think equities are going to drop, where do you stash the cash? Perhaps that is what is holding up the market, for the time being. Every payday we see new funds coming in that are allocated to a certain buying pattern, but I find it hard to believe that those inflows can be propping up the market in perpetuity.

Rewind the clock 50 years and I saw my father sell a business, at the absolute peak. Put the money into CDs and S&Ls because they were paying too much interest. Got uncomfortable with that, and pulled out just before that went pop, and put it into the market. I don't know where he hid the crystal ball, but the timing was good. Moved a bunch into Florida real estate and built houses for awhile, Mom got out of those the year before a whole bunch of hurricanes tore up the Florida market.

Right now- where do you stash the cash? This ZIRP stuff has me buffaloed.
__________________
Well it's all right, we're heading to the end of the line...
Clone is offline   Reply With Quote
Old 04-23-2020, 04:09 PM   #375
Recycles dryer sheets
Beststash's Avatar
 
Join Date: Nov 2003
Posts: 468
Quote:
Originally Posted by WyomingLife View Post
Lots of fortune tellers here.

Can I meet you all in Vegas this weekend? I need your insights.
My crystal ball tells be to stay away from Vegas! But you are correct. If we knew the future we might totally freak out!
Beststash is offline   Reply With Quote
Old 04-23-2020, 04:38 PM   #376
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jan 2018
Location: Tampa
Posts: 9,843
Quote:
Originally Posted by WyomingLife View Post
Lots of fortune tellers here.

Can I meet you all in Vegas this weekend? I need your insights.
Vegas is closed right now.
Wyoming has lots of open space.
__________________
TGIM
Dtail is offline   Reply With Quote
Old 04-23-2020, 05:02 PM   #377
Recycles dryer sheets
 
Join Date: Dec 2018
Posts: 121
When the market dropped in March many investors bought at sale prices which of course helped increase share prices. Many investors are optimistic that the market is the place to be. They believe in USA's future.

The virus has been a huge shock. Perhaps reality has not set in. Perhaps people cannot conceive that the world has suddenly become so awful and scary when just very recently life was so good to investors.

The reality is most of main street is suffering badly. Seems historically the USA markets have had a few pessimistic reality checks and dropped more than just once. We have only had one bad drop since the virus nightmare began. Many investors, including the optimistic folks believe a second significant drop will occur. Of course, if the second significant drop occurs the optimistic investor will buy up a bunch more on-sale share prices.
Mountain skier is offline   Reply With Quote
Old 04-23-2020, 05:06 PM   #378
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Mar 2003
Posts: 18,085
Quote:
Originally Posted by Clone View Post
Have we seen this level of low interest rates before? One of the questions that struggle with is this- Where do you put your money that is not invested in equities? Most of my invest-able amount is tied up in a 401k or roth, so I don't know if I can put it into a CD somewhere. And those interest rates are very low. I have not been a fan of bonds, because I never saw the rationale in putting your money into a lower performing vehicle. Especially here in recent times when bonds also decreased in value. So if you think equities are going to drop, where do you stash the cash? Perhaps that is what is holding up the market, for the time being. Every payday we see new funds coming in that are allocated to a certain buying pattern, but I find it hard to believe that those inflows can be propping up the market in perpetuity.

Rewind the clock 50 years and I saw my father sell a business, at the absolute peak. Put the money into CDs and S&Ls because they were paying too much interest. Got uncomfortable with that, and pulled out just before that went pop, and put it into the market. I don't know where he hid the crystal ball, but the timing was good. Moved a bunch into Florida real estate and built houses for awhile, Mom got out of those the year before a whole bunch of hurricanes tore up the Florida market.

Right now- where do you stash the cash? This ZIRP stuff has me buffaloed.
You either stick your cash in the highest yielding safe option (bank account) and accept that as the cost of staying safe, or you choose to accept some risk. I am mostly in cash. To offset the drag I am pursuing some deposit options, but I am also trying to shift to a barbell strategy of almost all cash with little bits of other stuff to juice my yield enough to earn at least a nominal return. It is proving to be challenging.
__________________
"All animals are equal, but some animals are more equal than others."

- George Orwell

Ezekiel 23:20
brewer12345 is offline   Reply With Quote
Old 04-23-2020, 06:45 PM   #379
Recycles dryer sheets
 
Join Date: Mar 2012
Posts: 386
Part of the reason you get so many different opinions is that there is quite a wide range of financial situations among the group.

For the individual that has an extremely low withdrawal rate i.e. ~1-2% (large cushion), he or she is fortunate to have the option to be either real aggressive or real conservative with little risk of failure over a 30 year horizon or even longer....largely becomes personal choice....so you would expect some folks to get near extremes here.....possibly all cash or all stock and everything in between without worry of failure. I think it was Schwab who put up some data recently that had very high net worth folks getting more conservative in this crisis.

Which ever way someone goes, they are likely in large part, trusting their intuition. People tend to hold these intuitions with a high degree of certainty even when they are wrong. Physiologists have studied this in detail... they find that expert intuition is learned through multiple experiences with rapid feedback. In these cases most of the time you can trust your intuition to be right. But in markets, where the world in which they reside is highly irregular, it's very hard to imagine someone developing expertise. You cannot because the world is not regular enough to learn rules. Daniel Kahneman did a good talk at the CFA institute a few years back explaining this. His advise is that if someone tells you they have a strong feeling about a financial event about to occur, the safe this to do is not to believe them.

Here is a link to the talk.

https://annual.cfainstitute.org/2018...ment-industry/
__________________
FIRE'd---4/27/2018 @ 54. DW--RE date 03/01/19.
tdv2 is offline   Reply With Quote
Old 04-23-2020, 06:53 PM   #380
Recycles dryer sheets
 
Join Date: Nov 2015
Posts: 55
Quote:
Originally Posted by Beststash View Post
I don't think the market reflects the extent of the damage that is happening to the global economy. Restarting the economy in the US (much less the global economy) is going to be difficult because different states will be doing different things. Totally out of sync.

As the pressure to re-open the economy builds there are several factors that are important. Even if a business opens that doesn't mean that customers will respond accordingly - if fact until more is known I would bet that caution will be the norm.

Can we count on the FED continuing to rescue the market even as we see them delve into junk bonds? Can Congress continue to subsidize workers and even more so businesses until things stabilize? Bankruptcies, cuts in capital spending, earnings that aren't reflective of current events....everyone suspending guidance, and so far not even a mention of the oil situation. I think for the foreseeable future.........CASH IS KING

I will jump in again, and donít think all the connections are made in all the algorithms to truly understand the potential recession. As a person with many years in Supply Chain, the disruptions are truly unprecedented and will take months to get back to normal, which infir one donít think can be priced in.

Airlines are down 90%, this affects rental car companyís, Uber and Lyft, Rental cars replace a portion of their fleet monthly with new cars from car manufacturers, car manufacturers buy raw materials to produce them, rental car companies, sell their used cars in the market. Tire manufacturers depend on new cars for Manufacturing, all of these companies use oil and employees. This is a chain reaction across every industry, and I only covered a couple, where layoffs, trucking companies, ports, manufacturers, rental car companies, used car market, new car market will cost jobs for at least 12 to 18 months to sort itself out.

These are the reasons I believe the market bottom is well below 18,000 over the next 12 months. My money is in short bearish mutual funds and very few long mutual funds that I am willing to hold. So I will make some money on the downward slide I expect.
Rowej is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
$764,000,000,000...Will you get your cut this year? mickeyd FIRE and Money 16 02-12-2020 04:55 PM
Is Dow 13,000 - 15,000 on the horizon at the rate of this plunge? cyber888 FIRE and Money 74 12-28-2018 10:17 AM
$423,000,000,000.00 Howard Other topics 25 02-08-2006 03:59 PM
$2,000,000,000,000- Happy 55th mickeyd Other topics 12 12-28-2004 09:19 AM

» Quick Links

 
All times are GMT -6. The time now is 06:42 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2022, vBulletin Solutions, Inc.