When to buyback?

[UnrealizedPotential]

Quote:

Originally Posted by audreyh1 They are completely different metrics and not interchangeable. One uses a 1 year view of past earnings, and the other a 10 year inflation-adjusted view of past earnings.

Thank you for that Audrey. I learned something today.

[audreyh1]

Quote:

Originally Posted by UnrealizedPotential Thank you for that Audrey. I learned something today.

I encourage you to explore the https://www.multpl.com/shiller-pe site and click on the FAQ for various metrics. They explain a lot.

[NoiseBoy]

Quote:

Originally Posted by audreyh1 I encourage you to explore the https://www.multpl.com/shiller-pe site and click on the FAQ for various metrics. They explain a lot.

I was curious to see if the mean had shifted upward at all from the long bull market, but it looks to still be in the 15 - 16 range that I recall from his original study. It only briefly touched that level during the housing crisis, but could this time be different? For today, I think I will stay on the fence and keep an eye on this chart. I'm not trying to time the very bottom, so I may move my 401k to a more aggressive fund if the CAPE gets below ~20.

[OldShooter]

Quote:

Originally Posted by UnrealizedPotential ... where we are in this bear market. I don't think anyone really knows.

Correct. And playing with charts and numbers will not result in any change to this situation.

If there were actually some reliable way to predict, do you think that the possessor of that information would be announcing it to the world?

[audreyh1]

Quote:

Originally Posted by NoiseBoy I was curious to see if the mean had shifted upward at all from the long bull market, but it looks to still be in the 15 - 16 range that I recall from his original study. It only briefly touched that level during the housing crisis, but could this time be different? For today, I think I will stay on the fence and keep an eye on this chart. I'm not trying to time the very bottom, so I may move my 401k to a more aggressive fund if the CAPE gets below ~20.

I think there are two different “means” - one prior to the late 90s and one after. I pay no attention to the overall mean.

From Nov of 2008 through May 2009, CAPE10 stayed below 16, but not by much, so it more or less bottomed near the long term mean. It didn’t get up to 21 until March of 2010.

Earnings data tends to run several months behind so very recent CAPE10 calcs may be off as they are projections based on stale earnings data. It’s not a particularly real-time metric. But historical numbers are good.

[DWright]

Quote:

Originally Posted by rayinpenn I had a buy back number in mind 40% loss in the Dow from it’s high. I understand if you don’t like the sound of that but let’s keep feeling out of it for this.

Some quick math for you. If we are headed for a 65% drop and you buy in after it is down 40% you will lose another 40% by the bottom. Who knows if it will go that low, but it isn’t impossible.

[ERD50]

Quote:

Originally Posted by rayinpenn .... Thoughts? Please be kind. ....

Here are my thoughts, and they are kind (at least IMO).

While I don't believe in market timing, what's done is done. You did the first step. It wasn't exactly clear when you got out, but if you sidestepped ~ 35% of the loss, well in my view, you hit the jackpot already.

Why be greedy? Get back in, take the 35% 'gain' (relative gain), and don't look back. The old "bird in the hand" approach.

No one knows if it is going lower, it's where it is based on expectations. So things may get terribly bad, but if "terribly bad" is built into the current price, it may not drop at all from here. I don't know, you don't know. You may never find a better re-entry point.

Take your winnings while you can, and be happy. That is my kind advice.

-ERD50

[timbervest]

Quote:

Originally Posted by COcheesehead At yesterday’s close the market was at 100% of expected GDP. It’s not cheap yet.

I suspect that GDP will be considerably lower next quarter so the market probably has a way to go.

[Fermion]

Some individual stocks sure seem cheap.

Take BMY for example. Closed Friday at $48.40, down from Feb highs in the $60s.

Fwd PE is 9.64. Broad, diverse pipeline and consumers are dying for their products, even in a recession.

Now Exxon doesn't look cheap.


I think now is the time for stock picking. Index fund investing is dead.

[OldShooter]

Quote:

Originally Posted by ERD50 Here are my thoughts, and they are kind (at least IMO). While I don't believe in market timing, what's done is done. You did the first step. It wasn't exactly clear when you got out, but if you sidestepped ~ 35% of the loss, well in my view, you hit the jackpot already. Why be greedy? Get back in, take the 35% 'gain' (relative gain), and don't look back. The old "bird in the hand" approach. No one knows if it is going lower, it's where it is based on expectations. So things may get terribly bad, but if "terribly bad" is built into the current price, it may not drop at all from here. I don't know, you don't know. You may never find a better re-entry point. Take your winnings while you can, and be happy. That is my kind advice. -ERD50

+1

[OldShooter]

Quote:

Originally Posted by DWright Some quick math for you. If we are headed for a 65% drop and you buy in after it is down 40% you will lose another 40% by the bottom.

Quite funny actually. And if we are headed for a 40% drop and you buy in after it is down 40% you will not have missed the bottom.

Somewhere in the middle is probably how this will turn out. We'll know in a few years. These things are always clear in the rear-view mirror but never clear through the windshield.

[rayinpenn]

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Originally Posted by target2019 If you buy back at - 40% what will you do when the market drops another 10%...

Nothing. I won’t cry in my beer

[ripper1]

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Originally Posted by pb4uski Once/if the smoke clears, I'll probably look at some length of moving average to signal the bottom and then value average in over a period of time.... still need to think about it, but it will be a gradual and methodical getting back in and not all at once.

+1

[Markola]

Quote:

Originally Posted by OldShooter Quite funny actually. And if we are headed for a 40% drop and you buy in after it is down 40% you will not have missed the bottom. Somewhere in the middle is probably how this will turn out. We'll know in a few years. These things are always clear in the rear-view mirror but never clear through the windshield.

I’ve been doing some modeling on Portfolio Visualizer, trying to see the effect of getting more aggressive during the troughs of the last two recessions.

In those two cases, it took 3-5 YEARS or more to begin to see any benefit of going 90% stock at the bottom vs. hanging with my current slow-as-she-goes 50/50 allocation.

Once the 90% AA finally caught up with and exceeded the 50/50 one, you had to stick with that 90% aa for years more during the stock bull, only to suffer the next recession.

So, even if I could somehow find and time the bottom of this one and go all in, what is the point if it takes several years more to benefit? This one doesn’t feel like a flash crash to ride back up quickly.

[brewer12345]

Quote:

Originally Posted by Markola I’ve been doing some modeling on Portfolio Visualizer, trying to see the effect of getting more aggressive during the troughs of the last two recessions. In those two cases, it took 3-5 YEARS or more to begin to see any benefit of going 90% stock at the bottom vs. hanging with my current slow-as-she-goes 50/50 allocation. I don’t see the point in trying to find the bottom now.

Those of us sitting in cash do, for sure. For a 50/50 thick and thin allocation, I would just rebalance as necessary.

[calmloki]

Quote:

Originally Posted by rayinpenn Nothing. I won’t cry in my beer

Don't worry, be happy. I didn't take money off the table (as you did, at a brilliant time). Looks to me like you are way ahead of the game right now. I bought at 5,10, and 20% down. After making those purchases we are still down over a $100k from the time before we bought! We do have more shares though.. I am instructed that we are not buying more at the present time

[OldShooter]

No interest in finding the bottom. Actually, we now look at our fixed income tranche more as a bucket than as an AA. We have about five years of generous spending sitting there right now. Our plan is to spend it down as we watch this excitement evolve. If the bounce is fairly fast we may start to replenish the bucket in 2-4 years. If slower, we'll move more slowly too. Our only issue this year is a small Roth that is 100% equities, so we'll wait to pull the RMD there.

In contrast, we are on the investment committee of a nonprofit/DW is the chair. There we're expecting to move around $2M DCA into equities. The original plan, pre-virus, was to finish by late June. Not sure we will move that aggressively now. Our 1Q20 meeting with the FA will determine.

[Running_Man]

From an earlier thread on Feb 29th:

I took the orderly speed of the decline to indicate there is not a large amount of funds available on the bid curve of most stocks to take the small amount of sales, as you indicated that was not panic selling. As a point the TRIN never got above 1 on any day despite the fastest decline from a stock market top in the history of investing. World record low interest rates and world record declines without any panic is not the type of market I like.

Central banks have spent the last 10 years driving the finances low in order to stimulate demand, but this is a shock that is suppressing demand and is going to put pressure on many marginal companies, which could have a cascading effect. TESLA going parabolic is I think the definitive marker of the top of this market. The FED was already having trouble keeping the party going with last years liquidity squeeze in September. This inflection will hurt far worse than that so I think it will be at least an equal 18 months to 2 years in order for the pain to be cleared out, now that the pain has begun.

But if you feel there will be a V recovery I would like to understand why that would be, in a environment of reduction of physical demand of goods. Oil has already been presaging this move.

Small example, there are literally thousand more, the airlines are all going to take a big financial hit on air travel, resulting in deferred capital and cancelled aircraft orders. Boeing is already borrowing to pay it's dividend, an incredibly stupid decision, airplane cancellations will drastically reduce it's orders and result in a multitude of smaller supplier companies, which have debt financed themselves in the Boeing boom also cutting back. I do not see this issue as a V bounce back but a 18 months to 3 years wait to return to previous production levels.

I am also expect precious metals to decline as Central banks, which have been buying record amounts of gold, will probably need to sell in order to shore up their financial deficits, especially China which has been the largest purchaser of gold over the last 10 years, in anticipation of a world move to SDR's.

Nothing has changed to make me want to change a thing (since this post Boeing has dropped 67%, United Airlines 60% and Gold has dropped 7%), though there are those that would claim a monkey could have easily typed that, in Connecticut last week nearly 2 percent of the state’s workers declared that they were newly jobless on a single day. While there is a risk that the US Government will announce a program so massive that inflation fears will drive up all the prices, I would still wait for the 1300 or so or else 3100 as a timing exercise that failed or one year on the S&P500. 1300-1400 will bring the dividend yield of the S&P500 to a 4% yield which would provide the income necessary to adequately fund a retirement and provide a historical level of value that endured for many years before these past few.

In 2009 the S&P500 fell to a 4.45% dividend yield and everything indicates at this point this is a worse crisis than that, at 4.45% dividend yield the S&P500 will be around 1235. At 3100 you admit you missed your chance and this whole episode was overblown and you can continue on with your retirement, you son's college and your new roof and knees.

[SeattleRocks]

I am going to 100% cash (my last trade out of the market is this Monday) to wait this out and am taking the proceeds and spreading it around to several banks to make sure I am FDIC ensured in all directions. I am keeping my powder dry and very liquid.

I will start dollar cost averaging when the Dow hits 15,000 which I personally believe we will hit (ie. approx. 50% decline). If I see momentum selling beyond 15,000 I will just slow down my dollar cost averaging and would LOVE to get in as 13,000 or 14,000 even less if I can.

I have 5 years living expenses set aside beyond what I will dollar cost average into the market when that time comes. And once back in the market, if it stalls out for years, I can just live with the dividends. While it could keep going down which is entirely possible, I think buying in at 15,000 or lower gives me a nice base to bounce back up over time. In 5 years, I think I will be very happy.

But I do also believe that this virus condition is short lived. It will do ALOT of damage but I think once we see a treatment or God willing, a cure the market is going to turn around fast and since I was very conservative (30/70) before this downturn, going back in at levels I feel good about, I will probably flip that to 70/30 and make up my losses pretty quickly.

I know, I know. I have seen all of the data on market timing. I get it. But I think everyone can see the carnage coming down and I just don't want to take even more hits. I see absolutely nothing in the economy right now that is going to lift stocks in the near term and I am not a great individual stock picker. Some of you are great at that and will do very well with some beaten down stocks, but that is not my strength...

[brewer12345]

Quote:

Originally Posted by SeattleRocks I am going to 100% cash (my last trade out of the market is this Monday) to wait this out and am taking the proceeds and spreading it around to several banks to make sure I am FDIC ensured in all directions. I am keeping my powder dry and very liquid.

Rather than deal with several banks, why not just buy T bills or a treasury only MMF? Much less hassle and the same credit quality for what will be a temporary position.