Do you think Dow 18,000 was the bottom?

Folks are debating whether the certain recovery will be U or V shaped. What if it goes WWWWWWWWWWWWWW for a long time?
 
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?
 
vipertom1970 said:
nothing wrong with capital preservation but sell and try to get back in is always a losing game.
Click to expand...

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.
 
vipertom1970 said:
nothing wrong with capital preservation but sell and try to get back in is always a losing game.
Click to expand...

Two words to avoid: "always" and "never". When using them one usually ends up being wrong at some point!

k-man said:
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.
Click to expand...

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.
 
BeachOrCity said:
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.
Click to expand...

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.
 
Last edited:
BeachOrCity said:
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.
Click to expand...
The printing press is On again. The question is for how long before the US$ will lose the confidence in it.
 
The printing press is On again. The question is for how long before the US$ will lose the confidence in it.
Click to expand...

And do what? Start using the Yuan or the Euro or bitcoins as the defacto currency?
 
+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.
 
Toocold said:
And do what? ...
Click to expand...
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.
 
vipertom1970 said:
"...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..."
Click to expand...
There is a fly in your ointment and it is the irrational behavior of most people.


Cheers!
 
vchan2177 said:
I am also concerned about inflation. Here is a link on the causes of inflation during the 1970's which I found interesting:

https://www.investopedia.com/articles/economics/09/1970s-great-inflation.asp

In a nutshell, High oil prices and loose money caused the 1970's inflation.

We now have low oil prices which is anti-inflationary. We have loose money and high national debt which is inflationary.

...
Click to expand...

Cheap oil is not anti-inflationary when few people are driving/flying to make use of the cheap prices.
Mean while food prices have skyrocketed. Black market price (Venezuelans would call it the real price) of pancake mix is $28/box. A month ago it was $6. What is available is rationed (milk, eggs, bread, soap) meanwhile farmers are dumping milk and plowing produce because they can't find a way to get it to market. Sounds like scripts of the PBS documentaries of the Great Depression.

Opportunists are demanding their companies shutdown for 3 weeks (paid leave of course) for cleaning and a 30% raise (depending on local starting points) for them to come back to work + employer provided PPE.

So yeah. inflation is going to be a ____.
 
k-man said:
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.
Click to expand...

Amen to this....CA is not looking to see large gatherings until 2021:

https://www.latimes.com/california/...avirus-concerts-sporting-events-2021-garcetti
 
brewer12345 said:
Because a small sample study on a drug with nasty potential side effects that aren't uncommon showed some promising results. So what?
Click to expand...

don't know where you got your news but Remdesivir looks very promising after the trial so yes, you can say good buy to DOW 18K and welcome DOW 30K by year end.
 
Last edited:
vipertom1970 said:
It means you can say good buy to DOW 18K and welcome DOW 30K by year end.
Click to expand...

You find that valuation reasonable given that we may still be in an ugly recession with high unemployment by then?
 
brewer12345 said:
Because a small sample study on a drug with nasty potential side effects that aren't uncommon showed some promising results. So what?
Click to expand...


I can think of something. The stock market is whatever the people who operate it think it should be. All the supposedly ugly numbers concerning huge unemployment and collapse of revenues are starting to hit and have been foreseeable for weeks now. But up she goes! And the futures are up too. Yes, I know: "Stay tuned". "Sucker's rally" etc etc. But it supposedly forecasts things in the future. So we must be getting better, right? And btw, killing people is not a factor in calculating PE ratios or anything else. That happens all the time.
 
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