Bond Yield Inversion again .. Buying opportunity?

[cyber888]

So the 2yr-10yr bond yields inverted again today .. an indicator of recession .. but everyone says recession will be in early 2020 and the White House as posponed the latest China tariffs to Dec.2019.

Are you buying the dip today for another equity run to Nov/Dec and then taking it out

 

[Winemaker]

I believe US interest rates are falling due to flood of foreign money pouring into the US. Many foreign countries have negative rates, so the US is only place for a return.

 

[Cessna152]

I’ll wait a few months to verify a market downtrend. If I “miss out” on bargains by waiting that long, no loss to me (literally.)

 

[kgtest]

Buying the dip tomorrow. DCA every week baby. Riding the elevator...up, down, sideways...wherever it takes us! Got some buddies and talking heads who have already rotated out of equities. I'm not a sissy though. Imma give it another month or two.

 

[Spock]

I’ll wait a few months to verify a market downtrend. If I “miss out” on bargains by waiting that long, no loss to me (literally.)

Thats the modern malfunction: today's markets seem to "flash crash" rather than establish a 'downtrend', and I always move slower than the PPT or algos.

 

[dirtbiker]

I know there's a downturn coming. There has to be. There always is. The question is when. This is always the question. The one very few have the answer to.

I sold some of my growth stocks and my Nasdaq ETF (QQQ) yesterday when everyone was frothing at the mouth to buy. I also haven't been buying much lately; I've been letting my cash contributions sit. I've got more in cash in my accounts than I ever have. I'm staying put in my high dividend blue chips, and will be keeping a lot in cash and invest a bit more in short term bonds. I don't want to get out of the market entirely, so I'm not cashing out completely (though today made yesterday seem like a great day to do it. lol). I'm just keeping my positions in my ETFs and blue chips and keeping cash on hand to invest when the time is right. Most everything seems overvalued to me right now.

 

[LOL!]

I think only short-term plays are appropriate here. That is, buy and then sell within a few days. Higher volatility that we have seen in the past week has historically just been a prelude to a lower market in the intermediate term I think.

Be careful. I see no reason not to do one's normal rebalancing though.

 

[Dtail]

No one pure buy and hold anymore? lol

 

[timbervest]

I know there's a downturn coming. There has to be. There always is. The question is when. This is always the question. The one very few have the answer to.

Many said the market was overvalued in 2013, 2015, 2016, and 2018

 

[24601NoMore]

Bought some more Fidelity S&P 500 today..not a huge amount, but still a buy..

Buy low, sell high...could we go lower? Of course. But the algos are running the show nowadays and turning on a dime (or a tweet).

 

[SecondCor521]

No one pure buy and hold anymore? lol

I am still LTBH low-cost broad-based index funds. Still at 93/7.

Today's explanation for today's market downturn make little to no sense to me. I have heard the following three things from people who seem to know what they're talking about:

1. Inverted yield curves are not always followed by recessions.
2. When they are, the recessions happen many (many = 9 to 18?) months later.
3. Between the inversion and the recession, the market usually goes up another X% (20%?).

Maybe some or all of the above are not true. Maybe the explanation given to the talking heads from the floor traders and other financial types is inaccurate or deceptive. Maybe I'm missing some logical position which allows both to be correct.

In any case, I still have lazy intent to move my stock allocation higher. If the downtrend grinds on and people start to worry (including me), then I'll reallocate.

 

[dirtbiker]

Many said the market was overvalued in 2013, 2015, 2016, and 2018

Agreed. I may be leaving some money on the table staying in a higher percentage of cash and bonds than I normally do, but I'm hedging against a bear market. If the stock market follows the bulls, I've still got money in stocks, so I'm still making money. If it crashes, I'll suffer some paper losses, but also have some money to invest at a bargain.

I think there's a reason why Warren Buffet is sitting on such a large pile of cash. He can't find any companies to buy at a value right now either.

 

[dirtbiker]

I am still LTBH low-cost broad-based index funds. Still at 93/7.

Today's explanation for today's market downturn make little to no sense to me. I have heard the following three things from people who seem to know what they're talking about:

1. Inverted yield curves are not always followed by recessions.
2. When they are, the recessions happen many (many = 9 to 18?) months later.
3. Between the inversion and the recession, the market usually goes up another X% (20%?).

Maybe some or all of the above are not true. Maybe the explanation given to the talking heads from the floor traders and other financial types is inaccurate or deceptive. Maybe I'm missing some logical position which allows both to be correct.

In any case, I still have lazy intent to move my stock allocation higher. If the downtrend grinds on and people start to worry (including me), then I'll reallocate.

So it sounds like you have plans to buy high and sell low?

 

[target2019]

Buying the dip tomorrow. DCA every week baby. Riding the elevator...up, down, sideways...wherever it takes us! Got some buddies and talking heads who have already rotated out of equities. I'm not a sissy though. Imma give it another month or two.

When will it end (when will it end)
Hey! Hey! Hey! Hey!

 

[SecondCor521]

So it sounds like you have plans to buy high and sell low?

Of course. You got me. My WR is so low I have to find a way to blow all my dough.

 

[MichaelB]

My WR is so low I have to find a way to blow all my dough.

Hey, happy to help ...

 

[NYEXPAT]

BTFD

 

[joeea]

everyone says recession will be in early 2020

Who says that?

and the White House as posponed the latest China tariffs to Dec.2019.

Which has nothing to do with inversion or anything else.

Are you buying the dip today for another equity run to Nov/Dec and then taking it out

No thanks.

 

[joeea]

That is, buy and then sell within a few days.

Why wait a few days?

 

[ESRwannabe]

There's nothing for me to do right now. If we get a big drop, I will do some tax loss harvesting though.

 

[dirtbiker]

Of course. You got me. My WR is so low I have to find a way to blow all my dough.

 

[fireorbust]

ETFs?

I kinda think the inversion is a result of ETF's. Our last recession and major inversion was in 2008/2009. Etf's were just getting popular.

Now, when equities are tanking, everyone goes looking for "safety" in bonds (namely bond etfs). As money pours into bond etfs, they have no choice but to invest those funds. As the funds buy more bonds, the yield drops and the etf share price goes up..... Then the retail "screeners" see the great 4 week price performance and pile more money into a "safe" bond fund. Eventually, everything reverts to the mean and yields will normalize. The exceptionally low starting point of yields makes it much easier to invert unlike the good old days of 5% on 10s.

IMO, Etfs are driving everything.

But, I could be wrong too....