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Old 04-23-2020, 06:58 PM   #381
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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.
I always say, cash is a position, and it gives you options to rapidly put to work when the opportunity presents itself. Not all money need have a return for many on this site. Better to lose out on 2% in CDís, it a 10% or 20% drop in equities presents a better opportunity 3 to 6 months from now
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Old 04-23-2020, 07:00 PM   #382
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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.
Heck, right now 25% of the nation's pork processing capacity is shut down and farmers are starting to euthanize hogs because they have nowhere to sell them and can't afford to feed them. Two weeks to meat shortages.

No way that sort of thing is in the algorithms.
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Old 04-23-2020, 07:05 PM   #383
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Heck, right now 25% of the nation's pork processing capacity is shut down and farmers are starting to euthanize hogs because they have nowhere to sell them and can't afford to feed them. Two weeks to meat shortages.

No way that sort of thing is in the algorithms.
I have a smoker, but only need one hog! But this is almost like oil two days ago going below zero, kill the hog and pay me to come get it to take it off their hands since they canít afford to feed them. Pork Belly Futures anyone?
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Old 04-23-2020, 07:21 PM   #384
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I have a smoker, but only need one hog! But this is almost like oil two days ago going below zero, kill the hog and pay me to come get it to take it off their hands since they canít afford to feed them. Pork Belly Futures anyone?
Pork bellies are the processed stuff that comes out of the processing facility. If you get a whole hog, you better know how to turn a 250# animal into meat.
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Old 04-23-2020, 08:26 PM   #385
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You donít need to be a fortune teller to have an informed opinion and ask questions. Not one person has said ďXĒ WILL happen, but ask or opine what seems logical or likely. Most posters with any kind of longevity (20+ years) know enough and have experienced enough to know this is not any kind of typical market turmoil. I have no answers either, just opinions.
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Old 04-24-2020, 04:56 AM   #386
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And now for a dash of optimistic prognostication.

After the senate leader publicly said no bailouts to the states this week, governors will be under pressure to open their economies sooner. Hopefully, most will do better than Georgia to protect citizens. Still, the workers and consumers will have a choice how much to participate in the economy once the lockdowns ends. That is the start of the recovery, and unfortunately second wave. But the mindset of many vulnerable has changed - and habits have changed potentially for the better.

For decades, western corporations have chased the 'China Price'. For the USA, that means we have exported our inflation of labor costs with electronic dollar supply expanded and selling federal debt to communist China. Now, with a coming/ongoing collapse in demand, all the supply chains will be interrupted. Thankfully, a lot of that unemployment will be exported - to China for which I shed not a tear. However, Western coastal ports gathering up the shipping will suffer from the slack.

After services based businesses clear bankruptcy - those physical assets will still be there for later use. Demand will be much less, but some of those assets can be rebooted, particularly with low borrowing costs to restart a business after bankruptcy.

Longer term.

Supply chains will shift closer to home and away from China. That capital reinvestment should prove better futures for central and south America (and more hopefully Mexico to move them away from socialism). Some of those manufacturing jobs will come back to the USA, especially in light of labor surplus and low capital borrowing costs. However, this means consumers will have some inflation in goods that have been absent for awhile. This restructuring should prove to be a boon to manufacturers of robotics and 3D printers. And resumption of rare earth mining closer to USA.

Infrastructure - Washington DC will get around to doing the right thing and pass an infrastructure bill in the next year. Surplus labor, low borrowing costs will fuel the boom. Good news for construction companies and manufacturers like Cat and steel suppliers.

More white collar jobs will have increased flexibility for work from home, resulting in a reduction in pollution to help slow global emissions.

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Old 04-25-2020, 01:58 PM   #387
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Don't have a subscription to the Financial Times but just the heading tells a story:

Equity valuation
Investors baffled by soaring stocks in ‘monster’ depression
Gap between financial markets and global economy yawns wider
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Old 04-25-2020, 02:43 PM   #388
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Part of the reason you get so many different opinions is that there is quite a wide range of financial situations among the group.

...

His advise [advice] is that if someone tells you they have a strong feeling about a financial event about to occur, the safe this [thing] to do is not to believe them.

Here is a link to the talk.

https://annual.cfainstitute.org/2018...ment-industry/
+4960
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Old 04-25-2020, 05:04 PM   #389
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Old 04-25-2020, 10:30 PM   #390
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Old 04-26-2020, 10:03 AM   #391
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Heck, right now 25% of the nation's pork processing capacity is shut down and farmers are starting to euthanize hogs because they have nowhere to sell them and can't afford to feed them. Two weeks to meat shortages.

No way that sort of thing is in the algorithms.
Sure, the longer the shut down means more shortages in food supplies we will see. Even harsher conditions may come with a second wave of COVID spread if we reopen prematurely.
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Old 04-26-2020, 06:34 PM   #392
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PE ratio is still well above long-term market average. Very realistically the market drops to below market average for awhile. So yes, DOW still might drop to 18,000
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Old 04-26-2020, 08:34 PM   #393
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Markets already looked forward to 4th quarter and already factored in big negative 2nd & 3rd quarter earnings and GDP. Support level with all the pension funds are too strong and the FED injected so much $$$ into the economy so no, we will not see DOW 18k again. I see a DOW 29k by the end December.
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Old 05-11-2020, 11:34 AM   #394
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We can say good bye to DOW 18K now and looking forward to DOW 30K by December 2020. !!!!!!
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Old 05-11-2020, 11:56 AM   #395
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Old 05-11-2020, 12:49 PM   #396
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I'd been waiting for todays jobs report. I now think 18k was the low.

Unless we have a bad infection rebound.
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Old 05-11-2020, 02:19 PM   #397
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PE ratio is still well above long-term market average. Very realistically the market drops to below market average for awhile. So yes, DOW still might drop to 18,000

I agree with the PE ratio being up too high so the market is over valued.

Why is there a market rally in a pandemic? That does not make sense. But wait. I have a saying: If it does not make sense, then it's politics.

We all know who is in power now. We all know that the Fed is semi-independent. We all know that the Treasury Department is not. I like to speculate on whether there is a connection between the market rally and the people currently in power.

Too many people are focused on the opening up of the economy in June and July. Not enough attention is being focused on the election in October and November. If my speculation is true, then the stock market may potentially crash again when we get near or after the actual election.
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Old 05-11-2020, 02:42 PM   #398
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I agree with the PE ratio being up too high so the market is over valued.

Why is there a market rally in a pandemic? That does not make sense. But wait. I have a saying: If it does not make sense, then it's politics.

We all know who is in power now. We all know that the Fed is semi-independent. We all know that the Treasury Department is not. I like to speculate on whether there is a connection between the market rally and the people currently in power.

Too many people are focused on the opening up of the economy in June and July. Not enough attention is being focused on the election in October and November. If my speculation is true, then the stock market may potentially crash again when we get near or after the actual election.
100% agree, but you are (probably) also assuming that the Admin changes hands. If it doesn't, then I believe the propping up of the market could very well continue.
As stated before, there also could be a chance for a downswing in the 3rd quarter if the economy outlook at that time becomes more negative.
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Old 05-11-2020, 04:05 PM   #399
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Why is there a market rally in a pandemic?
It does not make sense. I think that what Government may do is invest / support the Market prices with newly created money, buying at low price, wait till economy will reopen, Market will regain lost values and sell with good profit at that time.
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Old 05-11-2020, 07:02 PM   #400
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100% agree, but you are (probably) also assuming that the Admin changes hands. If it doesn't, then I believe the propping up of the market could very well continue.
As stated before, there also could be a chance for a downswing in the 3rd quarter if the economy outlook at that time becomes more negative.
I like to list the short term risks to understand the overall risk to the stock market:

1. Election risk that was already covered.
2. Virus risk in the event opening the economy too soon causing another shutdown.
3. Unemployment risk in the event opening the economy does not result in 100% re-hiring.
4. Bankruptcy risk in the event opening the economy does not result in sufficient revenues causing companies to fold and causing even more unemployment.
5. Printing too much money resulting in foreign investors fleeing the USA due to possible inflation. You do not see many foreign investors in venezuela as an example.
6. No vaccine risk in the event no vaccine is developed in 2020 or 2021. This means businesses that cannot avoid social distancing such as sports, large restuarants, etc will be hurt.
7. The virus mutates causing the virus to be like the seasonal flu and will never go away.
8. Economic recession even after the economy is opened because of permanent damage to the economy.
9. A limit on the number of bailouts. The government cannot save everyone.

IMO, there are more downside risks than upside. This also means the chances of the dow reaching 29,555 again is low unless all nine risks are eliminated or are not significant. The dow is more likely to decline once reality sets in. The economy needs time to heal. Only a miracle will allow a "V" shaped recovery.
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