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Old 05-09-2020, 10:44 AM   #21
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Agree - shift the pattern so the initial down movement for 2007 aligns with 2020.
Here is the chart I posted at https://www.early-retirement.org/for...-a-103378.html


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Old 05-09-2020, 11:38 AM   #22
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Originally Posted by COcheesehead View Post
The chart isn’t mine, it’s from Fidelity and it’s a hypothetical on what if the bottom is in. The common matching point across all the previous downturns in the chart is the low and the bounce off the low. So if the bottom is in, the bounce we just had is not unprecedented. We just had a similar one 11 years ago.

Remembering 2009, folks were sure a second shock would hit and another leg down was coming. I am not saying a new low couldn’t happen today, but sometimes when history doesn’t repeat, it at least rhymes.
Thanks for the interesting analysis. I think Lbscal's chart captures my suggestion perfectly.

(It sure would be cool to be able to view these charts in comparison to the policy decisions made at the moment.)
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Old 05-09-2020, 12:01 PM   #23
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Agree - shift the pattern so the initial down movement for 2007 aligns with 2020.
What you are all missing is the point of the chart was to align all the downturns at the low and show a case as to why we had the incredible bounce back. We’ve had them before. Hence the title of the chart, “what if this was the bottom.”

It’s just another side. Take it for what it was meant to be. Something to ponder.

With all the opposition to the chart in this thread, which is an alternative point of view, it makes me wonder why. Which actually makes me think the chart could be right.
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Old 05-09-2020, 04:21 PM   #24
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It's just pure madness to look at all these past charts and try to glean any useful information about what lies ahead. Of course there will be lows in the charts, recessions, crisis, flash crash, you name it. One thing is for sure, something is going to happen again that will cause a sell off...unfortunately none of us have any idea when or by how much. When you look at all these charts/plots over a couple of years time they look ominous. Zoom out and look at the proper time horizon to have any business being invested in stocks, and it's just loud noise.
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Old 05-09-2020, 04:34 PM   #25
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It's just pure madness to look at all these past charts and try to glean any useful information about what lies ahead. ...
+1

Any good technical analyst also considers the orbital positions of both Saturn and Venus before making any predictions. It is not a simple matter of drawing lines and perceiving patterns in random data. There must be science involved too.
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Old 05-09-2020, 04:45 PM   #26
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Remembering 2009, folks were sure a second shock would hit and another leg down was coming. I am not saying a new low couldn’t happen today, but sometimes when history doesn’t repeat, it at least rhymes.
Second wave in 2009?

The lows of 2009 were only reached after busting through the lows of 2008.

The question was whether the Oct 08 lows were "the bottom".

But yes, we always wonder if the current low is "the bottom" regardless of the number of legs down.

But right now we are at 1 leg down. Usually there is more than one but there is sound logic to suggest we may have put in the bottom. There is also sound logic that says we have not.
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Old 05-09-2020, 04:51 PM   #27
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Putting the charts aside, it's pretty obvious that the Fed has been "juicing" the markets. Everyone knows this and this is where we are today.

When the second quarter earnings (or lack thereof) are posted this summer, the Fed better have another round or two to put into their "big gun" or that chart will look much, much different.
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Old 05-09-2020, 04:57 PM   #28
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The hurdle we must pass for market lows to return is (almost) everyone believing it won't (can't) happen. That's when the market will be prime for one. Looks like the media is starting to turn that way.
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Old 05-09-2020, 05:05 PM   #29
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Putting the charts aside, it's pretty obvious that the Fed has been "juicing" the markets. Everyone knows this and this is where we are today.

When the second quarter earnings (or lack thereof) are posted this summer, the Fed better have another round or two to put into their "big gun" or that chart will look much, much different.

I guess we might want to call the next Fed action a "known unknown". I would agree that they do wield a "big gun".... I guess it's safe to say the "biggest gun".
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Old 05-09-2020, 07:03 PM   #30
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Second wave in 2009?

The lows of 2009 were only reached after busting through the lows of 2008.

The question was whether the Oct 08 lows were "the bottom".

But yes, we always wonder if the current low is "the bottom" regardless of the number of legs down.

But right now we are at 1 leg down. Usually there is more than one but there is sound logic to suggest we may have put in the bottom. There is also sound logic that says we have not.
I am not sure what you are saying.
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Old 05-09-2020, 07:07 PM   #31
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Putting the charts aside, it's pretty obvious that the Fed has been "juicing" the markets. Everyone knows this and this is where we are today.

When the second quarter earnings (or lack thereof) are posted this summer, the Fed better have another round or two to put into their "big gun" or that chart will look much, much different.
The 2nd quarter comes up time and time again on this board as the line in the sand. Shhh. Don’t tell anyone.

Contrarian in me says ....
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Old 05-09-2020, 10:21 PM   #32
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Putting the charts aside, it's pretty obvious that the Fed has been "juicing" the markets. Everyone knows this and this is where we are today.
Yes, that is in essence Fed policy given the shock to the economy, and rightly so.

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When the second quarter earnings (or lack thereof) are posted this summer, the Fed better have another round or two to put into their "big gun" or that chart will look much, much different.
You could be right but I doubt it. The market is rationally expecting terrible earnings in Q2. With 15-20% unemployment, no other expectation is reasonable. The markets are looking to 2021 and even 2022 in my opinion.

At this point what would cause major further selling is bad Covid news. Bad economic news is baked into the cake, for now.
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Old 05-10-2020, 05:01 AM   #33
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Yes, that is in essence Fed policy given the shock to the economy, and rightly so.



You could be right but I doubt it. The market is rationally expecting terrible earnings in Q2. With 15-20% unemployment, no other expectation is reasonable. The markets are looking to 2021 and even 2022 in my opinion.

At this point what would cause major further selling is bad Covid news. Bad economic news is baked into the cake, for now.
The assumption is also that everything gets much rosier economically for quarter 3 and 4. If it does not turn out to be so, the drop could happen in the July/Aug time frame.
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Old 05-10-2020, 08:09 AM   #34
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So the cause and cure are different, but maybe investors always act in a similar way to a crisis?
Bingo!
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Old 05-10-2020, 08:31 AM   #35
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To get a sense of where the market is right now, you need to remove these stocks from the indices to see how much damage has been really been done: Microsoft, Facebook, Google, Apple, and Amazon. The bottom 400 stocks in the S&P 500 are now meaningless.
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Old 05-10-2020, 10:11 AM   #36
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To get a sense of where the market is right now, you need to remove these stocks from the indices to see how much damage has been really been done: Microsoft, Facebook, Google, Apple, and Amazon. The bottom 400 stocks in the S&P 500 are now meaningless.
I'm not sure what you would conclude from this. Maybe that S&P 500 is not a good sector to concentrate in? Agreed. We own the world, VT/VTWAX, and as a result the S&P in total is 35-40% of our portfolio IIRC.

Also, like most things in the market this is deja vue all over again. We had the "Nifty 50" concentration, we had the tech bubble, and I'm sure there have been many others. To the extent this time is different, the companies you list are demonstrated market successes with growth potential and real profits. Whether history will judge them to have been overpriced at this point remains to be seen.

Some nice things about passive investing are (1) it is a demonstrated winning strategy, and (2) there's no reason to get spun up about periodic (and usually temporary) market infatuations.

You have shorted the companies on your villains list or have bought a bunch of puts, right?
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Old 05-11-2020, 12:53 AM   #37
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To get a sense of where the market is right now, you need to remove these stocks from the indices to see how much damage has been really been done: Microsoft, Facebook, Google, Apple, and Amazon. The bottom 400 stocks in the S&P 500 are now meaningless.
I use RSP, an equal weight ETF of SP500, to get a sense of what you mention. It's down 16% ytd versus down 9% for SPY. Not even a bear market.
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Why fight it.....
Old 05-11-2020, 09:18 PM   #38
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Why fight it.....

I was in the “there’s no way $18k was the bottom” club, but seeing all the pessimism now and everyone saying long recession yada yada yada, I think the bottom happened 23 March and will NOT be retested. It could be a bumpy ride back to the top, but why fight it. And be fearful when others are greedy and greedy when others are fearful. Just now everyone is fearful, unemployment numbers are out, markets went up, earnings are out, markets went up. Everyone was still super pessimistic for the 12-36 months following the bottom in 2009, and the markets kept going up. Worst unemployment numbers came out after the bottom in March 2009.

Don’t fight the fed. Bottom happened already.
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Old 05-12-2020, 09:59 AM   #39
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In the OP Siegel discusses his following of Scott Gottlieb, MD. From today's twitter post:

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Scott Gottlieb, MD @ScottGottliebMD
Morgan Stanley's updated COVID model today puts the U.S. national Ro equal to around 1.11 and the epidemic doubling time at about 43 days; reflecting a slowing epidemic, but one where spread is still expanding.
This does not sound encouraging for opening up an economy in general. Of course, there are big regional differences. If the US market continues to rise it is ignoring fundamental data.
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Old 05-12-2020, 10:34 AM   #40
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I think the Fed is juicing the market for a couple of reasons:
1) To give the big investors, banks and institutions time to unwind bad positions cleanly and sell their [re-purchased] stock back to the market before the Q2 negative earnings reports start to bury them.
2) To convince all the regular people who are now hoarding their money that the water is safe; and to put it into the market and bail the big guys out.
The musical chairs will stop when the Fed decides to pull their support. The only question left to answer is, 'how bad will it be?' Nobody knows what the business losses and unemployment rate will be when this is all over.

As evidence, savers are being vilified in the media and the Fed is squeezing savings accounts to get people to invest their money [in the market] to address the currently anemic money velocity with new trillions sloshing around. Take your pick

Here is the relevant chart from the Fed:

and another that speaks to the [negative] correlation between unemployment and economic growth. This one is equally, if not more, scary:


I think it's time for great caution in the market since there is certain to be major disruptions throughout the economy when this is over.
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