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Old 06-11-2020, 11:46 AM   #601
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A big part of today's drop today was the result of Delta Airlines announcements made yesterday regarding their 90% drop in revenue forecast and steps they are taking to cover the millions of dollars per day of cash bleeding.

Precisely why Warren Buffet sold his airline holdings. This is also why Warren Buffet have a large cash position because there is too much risk buying equities for now. I also have a large cash position of 30% equities and 70% treasuries. When there are more sellers than buyers, the stock market decline.
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Old 06-11-2020, 12:05 PM   #602
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Brutal day, and I'm afraid the drop of the past few days (including today) could be the start of the next big leg down.

We're just north of 20.5% equities at this point, but with bond funds that have higher risk than perhaps I initially understood went through a very painful drop on the "total $$" chart in March. (Lesson learned - some bond funds like Bank Loan, Corporates and Emerging Markets can act darn near like equity funds during a downturn like we had in March).

All in all, our March downturn was beyond my SWAN levels at ~31% of what we have in equities or FI..so, even though I'd be locking in things under the 27K+ DOW we had just a short while ago, I'm seriously thinking of selling 12% of our equities holdings (mostly Internationals like OAKIX that have gone pretty much nowhere the past 5 years, some Small Cap and some Value funds) and a chunk of the higher risk (EM, Bank Loan) FI funds today.

Bottom line is that with COVID cases increasing in a bunch of states that opened too early and all the other chaos going on at the moment with protests and upcoming elections that the risk is just too great at these levels..and with a potential new house build coming up and all the $$ that will require, it's time at least for us to dial back the risk even further to ~18% equities..no desire to ride the roller-coaster back down if we don't "need" to take the risk.
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Old 06-11-2020, 12:45 PM   #603
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Mr Powell clearly indicated that economy has no chance to recover till 2022 and that is Market reaction on it.
Well, I guess it depends what you mean by "recover". I think you are overstating Powell's message, which was one of being supportive of the economy, as long as that takes.
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Old 06-11-2020, 12:54 PM   #604
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Without additional $1 trillion QE to bail some bonds ETF and stocks, Market will visit below 20,000 again. The question is if the almighty US$ will keep up with all this extra created QE while GDP continue to decline.


I think 1 trillion is the amount they plan to ask for in July.
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Old 06-11-2020, 01:06 PM   #605
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Mr Powell clearly indicated that economy has no chance to recover till 2022 and that is Market reaction on it.
The market supposed to be forward looking, so no one knew this concept before Powell stated as such.
Perhaps with a few more drops, Powell might be "encouraged" to soften his message.
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Old 06-11-2020, 01:47 PM   #606
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This was long overdue. We have a huge bubble in mega technology stocks and even bankrupt companies who's stocks are headed to zero but were spiking up as much as 1500% based on twitter messages from Wall Street traders who were playing the old pump and dump game. Airlines were almost trading levels as if the weren't even impacted by this pandemic. Air travel will come back, but not to the levels of 2019 for many years.
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Old 06-11-2020, 01:59 PM   #607
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The market supposed to be forward looking, so no one knew this concept before Powell stated as such.
Perhaps with a few more drops, Powell might be "encouraged" to soften his message.
So you think he is a 'yes man' :-)
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Old 06-11-2020, 01:59 PM   #608
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I think 1 trillion is the amount they plan to ask for in July.
The Fed has only purchased a small portion of their allocation of Corporate bond ETFs. Just stating that they will purchase corporate bond ETFs caused traders that were shorting bond ETFs to cover their shorts. This stabilized the bond market and then the equity market. While equities continued to rise, the bonds troubled companies continued to fall.

https://www.ft.com/content/c8a4e1cd-...7-be5190c77409

We will likely see the 10 year note head to zero over the next 12 months. However, the bond market will be a minefield with energy, retail, commercial real estate, industrial, and some financial companies headed for default.
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Old 06-11-2020, 02:08 PM   #609
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I was wondering today how long it would take for all of the "really smart" investors to come out and remind everyone how they knew this was the end game, and that it will now be years before recovery. Just a few days ago, I and many others were not only back to even, but up from 1 year ago, and even for the YTD.

No ones knows didly for certain. It may be the beginning of another big, prolonged downturn. Or it could be an overeaction to some news yet again. Only time will tell.
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Old 06-11-2020, 02:09 PM   #610
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So you think he is a 'yes man' :-)
Not completely, but any policies which cause the stock market to fall will be questioned.
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Old 06-11-2020, 02:13 PM   #611
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I was wondering today how long it would take for all of the "really smart" investors to come out and remind everyone how they knew this was the end game, and that it will now be years before recovery. Just a few days ago, I and many others were not only back to even, but up from 1 year ago, and even for the YTD.

No ones knows didly for certain. It may be the beginning of another big, prolonged downturn. Or it could be an overeaction to some news yet again. Only time will tell.
I suppose you're talking about me based on what you said.

If so, I sure don't claim to be among the "really smart" investors.

I do have a pretty good "gut", however, and we did rise way too far way too fast. I also follow politics and current events more closely than many have time to, as I'm ER'd and have always been a bit of a news junky to begin with.

With recent events, it does seem reasonable if not likely that this indeed COULD (emphasis: COULD) be the start of the next big leg down.

Guess we shall see. But it sure feels like it - TO ME. YMMV.
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Old 06-11-2020, 02:16 PM   #612
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I was wondering today how long it would take for all of the "really smart" investors to come out and remind everyone how they knew this was the end game, and that it will now be years before recovery. Just a few days ago, I and many others were not only back to even, but up from 1 year ago, and even for the YTD.

No ones knows didly for certain. It may be the beginning of another big, prolonged downturn. Or it could be an overeaction to some news yet again. Only time will tell.
This is true, but some of the comments are about the bond market, which appears to be in worse shape currently than the stock market.
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Old 06-11-2020, 02:21 PM   #613
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I suppose you're talking about me based on what you said.
No, not talking about any one person. It is just interesting observation and I think everyone (me included) likes to validate their own thinking or actions taken.

In any event, I sure hope the naysayers are all wet!
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Old 06-11-2020, 02:30 PM   #614
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No, not talking about any one person. It is just interesting observation and I think everyone (me included) likes to validate their own thinking or actions taken.

In any event, I sure hope the naysayers are all wet!
K - it's all good..and I hope for my and everyone else's sake to be totally and completely wrong .
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Old 06-11-2020, 02:33 PM   #615
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No, not talking about any one person. It is just interesting observation and I think everyone (me included) likes to validate their own thinking or actions taken.

In any event, I sure hope the naysayers are all wet!
Yeah, I'm not thinking of anyone in particular either, but we gained well over 20% since this thread opened (and there already was some recovery started then), and now with a 7% drop I wonder how many are jumping back in and declaring victory with their astute timing of the market. Probably still more falling to come...maybe. Maybe not. It would take another 25%+ drop to get to 18,000.
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Old 06-11-2020, 02:55 PM   #616
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Probably still more falling to come...maybe. Maybe not. It would take another 25%+ drop to get to 18,000.
Well, we did unfortunately close below the 200 DMA on the S&P today, so the algorithms could / will probably go crazy and keep selling.

It's almost too predictable at times. Guess we'll see tomorrow..

Hoping my bond funds hold up better than they did in March. My EM FI was down ~19% Jan 1 to trough. Bank loan down 21%. Corp Bond 11% down. Even my all-time favorite PIMCO Income down 12+%. HY Corp 18.8% (but I expected that one). Even Wellesley at ~65% bond was down 15%. UGH!!! Guess I learned an important lesson about FI risk once you venture out beyond Treasuries. Shoulda just stuck to VBTLX and called it a day, but oh, no..I just had to reach for yield.. I finally learned dividends don't mean SQUAT if your principal is dropping like a stone in deep water..
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Old 06-11-2020, 05:33 PM   #617
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Like Sergeant Schultz, I don't know nothing, but wanted to capture gains and shave back to 45% stocks, so I sold 3% stocks Sunday, then left for Nevada's Arc Dome Wilderness and Berlin-Ichthsaurus Park Monday morning.

This was a bit of a shock after driving back to civilization this afternoon after a morning hike in the Monte Christos peaks--maybe I should have stayed at Arc Dome!
The COVID numbers in Arizona and Texas are very concerning, but I haven't been back long enough to absorb anything, really.
I think we're going out again in the Nevada outback next week, so this time I'll let you all know in advance.


If this keeps up, I may have to buy back stocks in a week or two.
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Old 06-11-2020, 07:44 PM   #618
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This is true, but some of the comments are about the bond market, which appears to be in worse shape currently than the stock market.

How do you figure that? The Vanguard total bond index is having a strong year, up 6.6% already, while stocks are negative. The Fed just said they will keep interest rates at near zero for some time to come.
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Old 06-11-2020, 07:57 PM   #619
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Brutal day, and I'm afraid the drop of the past few days (including today) could be the start of the next big leg down.

We're just north of 20.5% equities at this point, but with bond funds that have higher risk than perhaps I initially understood went through a very painful drop on the "total $$" chart in March. (Lesson learned - some bond funds like Bank Loan, Corporates and Emerging Markets can act darn near like equity funds during a downturn like we had in March).

Bottom line is that with COVID cases increasing in a bunch of states that opened too early and all the other chaos going on at the moment with protests and upcoming elections that the risk is just too great at these levels...
I agree with the opinion that we are at a start of the next leg down since the overall PE ratio is above the historical average. With the 2nd quarter earnings to be published around July, the PE ratio should increase even further since I expect the corporate earnings to take a hit. When the PE ratio is too high, this will mean buyers will hesitate on buying equities.

I believe bonds are very risky during this time because the Fed are buying some corporate bonds to prevent some companies from going under. Recessions are really good for the economy in the long term because inefficient companies should go under and zombie companies should not be propped up by the Fed. Here is a link on bond's performance during the last recession:

https://obliviousinvestor.com/what-h...-market-crash/

This is why I prefer government bonds over corporate bonds during a bear market. I am 30% equities / 70% treasury bonds and my portfolio has gone up since the crash mainly due to the performance of VUSUX which is +21.47% 2020 YTD.

https://investor.vanguard.com/mutual...formance/vusux

The stock market will decline after the number of COVID19 cases increase. The stock market was high because there was an expectation of the virus's impact on the economy to be minimized. The market will be spooked once again when the number of COVID19 cases increases due to the protests (tear gas causes coughing in a crowd) and the memorial day holiday (no social distancing at the beach and parks).
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Old 06-11-2020, 08:15 PM   #620
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Don't worry, the Fed is loading up their guns with more $trillions. Everything will be bailed out as needed (hedge funds, Reits, banks, bond funds, etc.). Remember, JP said they have more "tools". All will be good and the flowers will bloom again.
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