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Old 04-14-2020, 03:28 PM   #221
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nothing wrong with capital preservation but sell and try to get back in is always a losing game.
This far I am way ahead of buy and hold this year.
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Old 04-14-2020, 03:48 PM   #222
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Big and medium business survival mode has been something like:

- Pull the earnings forecast for next quarter and next year
- Draw down all available credit to raise cash
- Stop stock buybacks
- Employees 'work' from home
- Employee PPE for those working at location
- Furloughs and Layoffs
- Exec Pay cuts
- Mothball factories, airplanes, ships, oil rigs, hotels, amusement parks.
- Suspension of dividends
- Apply for government grants and loans
- Renegotiation of debt with banks
- Fight downgrades from ratings agencies
- Renegotiation of planned purchases with suppliers
- Renegotiation of leases / mortgages
- Plead with state governors to reopen asap
- Layoff everyone except skeleton crew
- Develop Public Safety plans to show how clean the business really is

Small businesses don't have as many levers to pull.

The stock market is shrugging all of this off. Irrational Exuberance?
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Old 04-14-2020, 04:05 PM   #223
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The stock market is shrugging all of this off. Irrational Exuberance?
I think so... but from recent history tells me ....."Don't fight the FED". Since they included "the market" in their mandate it goes against conventional wisdom.
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Old 04-14-2020, 06:14 PM   #224
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I sold some equities today. I normally maintain 55% equities but I decided to trim it back a little to get closer to 50%. I don’t really understand what these market rallies are all about. Nobody has any idea what the recovery is going to look like. But it seems like it going to go very slowly so I don’t share in the market optimism right now.
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Old 04-14-2020, 06:46 PM   #225
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I've been playing the bounce: went from 57% stocks Jan 1; decided to scrape off at least half of 2019 gains, so reduced to 53% in Jan, then the market went up; scraped off some more; reduced from 49% stock to 45% stock 3rd week of January, then saw the market take me down to 40% in March. Bought enough a day after the low (by accident) to raise to 43%, then saw the market take me up to 48% last Friday, so brought myself back down to 44%.
I'll ride this out for a while but will put more cash to work if I get down close to the 40% level.
Never thought I'd sit on 30% cash, but that's OK. I'm essentially even with where I was a year ago, which I would take anyday, but I'm not sure the V shaped recovery is the most likely outcome. I'll let the Fed take me up further before I scrape off some more. The volatility is probably going to snap our heads off; I think I was up 65K one day last week or the week before, which is reminiscent of 2008/9.

Online gig runs out next month, so I'm just trying to coast into full SS age in 4 years without losing an arm and a leg.
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Old 04-14-2020, 07:05 PM   #226
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Folks are debating whether the certain recovery will be U or V shaped. What if it goes WWWWWWWWWWWWWW for a long time?
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Old 04-14-2020, 07:20 PM   #227
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Folks are debating whether the certain recovery will be U or V shaped. What if it goes WWWWWWWWWWWWWW for a long time?
That's a volatile, but flat market - not a bad long-term result of this mess.
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Old 04-14-2020, 07:21 PM   #228
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Another point of note.
Each of the last 2 bear markets had 3 drops and 2 partial recoveries before the final move upward.
So far, only one move down and one partial recovery.
Is it really possible "this time is different" due to Fed manipulation?
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Old 04-15-2020, 07:29 AM   #229
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nothing wrong with capital preservation but sell and try to get back in is always a losing game.
Not necessarily. In 2007 we got out of the market in early November when the Dow was at 13,600, and sat on the sidelines until January of 2009 when we got back in at 7850. When we moved to a Treasury fund in November of 2007, never did we imagine that we'd be sitting on the sidelines for 14 months. And while we didn't get at the very top, we were pretty close, and the Dow bottomed around 6,600 in early March and then bounced back to the high 7,000 later that month. That was the whoosh to the bottom and the snap back. We missed a 42% drop in the market in our portfolio which was invested very aggressively at that time.

As I've said earlier, we were very aggressive through the end of 2019, but moved into VBIAX in January because we felt like the market was overvalued. We didn't want to be greedy. We saw an almost 30% return in 2019 alone, like many of you here likely did as well.

We followed the virus news very closely and grew increasingly concerned. Missed the top, but got out at 27,080 and moved into VMFXX. And we will stay on the sidelines again, for I fear, quite some time. But this is completely about capital preservation now for us.

My wife is in contact with many other service businesses and ICs trying to apply for PPP and expanded benefits for ICs through State unemployment. It's a joke...they're lightyears behind where those of us in the 21st century operate. This money is not getting to the people and businesses who need it fast enough. Not even close.

Our "bet" is that this is going to be a deep and long recession. Turn off CNBC....it's a game show right now, other than the big thinkers they typically have on before the market opens. This is a moment to read The Economist and The Financial Times. And everything I'm seeing there is that we are *in* for it. And the way that our markets are behaving here are completely devoid of any reality. Trading on a hope and a prayer at this point.

If we're wrong, and this whole pandemic event has been overblown, there has still been an incredible amount of destruction to the economy. And we have no idea just how much destruction has been done just yet. But if we're right, this market will not only re-test the lows, but go below those levels.

We just continue to ask ourselves, if the market was down 20% in late 2018 due to tariff concerns, Brexit concerns and Fed interest rate policy concerns....should it be trading *just* 20% down now? With everything that has happened and with a sea of uncertainty ahead? With unemployment clearly over 25 million people already when you factor in the backlog of "pending" UI and PPP applications. Does everyone think those jobs are all going to be waiting for those people when we "open up" the USA again? Are you kidding me?

Anyway, in no set of circumstances does that make any sense to us. Even with the stimulus that is being thrown at the problem, it's not enough to offset the capital destruction that has already happened. And oh....the whole rest of the world is worse off than we are. And we kind of do business with them too.

Again, if we're wrong, and we're all back to work soon, that would be great. And unemployment numbers drop like a rock as everyone goes back to those re-opened businesses that hired them, jobs at the ready....unemployment back down to 3.5%. If the ballparks and theme parks are full and the restaurants are packed due to pent-up demand, then I'm wrong. If planes are flying as full as they used to be and cruise ships are heading out packed to the gills like before...then I was wrong, and the economy will soar back to life and we'll have that "V" recovery that this market is clearly betting on.

We'll know in 2-3 months and see how we're doing with our testing efforts. And we'll see how the consumer behaves. If things start looking really good, then we'll happily jump back into the market into VBIAX, when it feels like it's trading on reality and not on what appears to me right now to be a fantasy.
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Old 04-15-2020, 07:55 AM   #230
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nothing wrong with capital preservation but sell and try to get back in is always a losing game.
Two words to avoid: "always" and "never". When using them one usually ends up being wrong at some point!

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We just continue to ask ourselves, if the market was down 20% in late 2018 due to tariff concerns, Brexit concerns and Fed interest rate policy concerns....should it be trading *just* 20% down now? With everything that has happened and with a sea of uncertainty ahead? With unemployment clearly over 25 million people already when you factor in the backlog of "pending" UI and PPP applications. Does everyone think those jobs are all going to be waiting for those people when we "open up" the USA again? Are you kidding me?

Anyway, in no set of circumstances does that make any sense to us. Even with the stimulus that is being thrown at the problem, it's not enough to offset the capital destruction that has already happened. And oh....the whole rest of the world is worse off than we are. And we kind of do business with them too.
This matches my sentiment. My only caution is the old truism "Don't fight the fed". But I just don't see how the fed can replace the bulk of the entire economy for the likely >1 year duration of this whole thing.
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Old 04-15-2020, 07:56 AM   #231
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Two words to avoid: "always" and "never". When using them one usually ends up being wrong at some point!
I’m always very careful to never use those words.
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Old 04-15-2020, 08:27 AM   #232
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Two words to avoid: "always" and "never". When using them one usually ends up being wrong at some point!



This matches my sentiment. My only caution is the old truism "Don't fight the fed". But I just don't see how the fed can replace the bulk of the entire economy for the likely >1 year duration of this whole thing.
I got 3.2M in the market and have not loss one $1 dollar yet since 1995 and still up over 350% so I NEVER worry about the markets looking at 10-15 years out and ALWAYS have faith in the US Economy, our technology, our science and our ingenuity. Study already shown there are more money is lost waiting for corrections or bottom than in them.
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Old 04-15-2020, 08:32 AM   #233
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But I just don't see how the fed can replace the bulk of the entire economy for the likely >1 year duration of this whole thing.
The printing press is On again. The question is for how long before the US$ will lose the confidence in it.
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Old 04-15-2020, 08:45 AM   #234
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The printing press is On again. The question is for how long before the US$ will lose the confidence in it.
And do what? Start using the Yuan or the Euro or bitcoins as the defacto currency?
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Old 04-15-2020, 08:56 AM   #235
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And do what? Start using the Yuan or the Euro or bitcoins as the defacto currency?
Surely Zimbabwe could not print out their way from economic chaos.
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Old 04-15-2020, 09:02 AM   #236
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The printing press is On again. The question is for how long before the US$ will lose the confidence in it.
This is a concern of mine. There's an opinion piece on Bloomberg about this today. Title: "Money is Losing its Meaning."

https://www.bloomberg.com/opinion/ar...e?srnd=premium
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Old 04-15-2020, 09:07 AM   #237
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+1 The Fed seems to me to be pushing its mandate to the edge of the envelope. I'm not totally certain that they have the authority to do some of the things that they are doing.
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Old 04-15-2020, 09:18 AM   #238
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I’m always very careful to never use those words.
I just spit my coffee out. [emoji23]
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Old 04-15-2020, 09:20 AM   #239
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And do what? ...
In TIPS we trust, supplemented by 50% of our equity in non-US stocks. In a significant devaluation of the dollar all equities will have a wild ride, but when the dust settles non-US equities will be the winners.
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Old 04-15-2020, 10:08 AM   #240
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"...I NEVER worry about the markets looking at 10-15 years out and ALWAYS have faith in the US Economy, our technology, our science and our ingenuity..."
There is a fly in your ointment and it is the irrational behavior of most people.


Cheers!
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