Poll: Market bottom and recovery time?

[24601NoMore]

If you have a good argument, you should just make it. Most people on this board are smart enough to recognize a good argument when they see it. The fact that others may agree or disagree with you will not matter if your argument is sound.

That's precisely what I did to start the thread if you go back and read my original comment, as well as other comments made since..

I haven't seen any viewpoints to the contrary with a comparable level of supporting data in this thread, however..

And if you'll notice, my comments have absolutely nothing to do with what Lance, Hunter, Pomboy or anyone else has said. These are all facts everyone should be well aware of unless you've been living in a cave the past 6 months. There are plenty of "headwinds" this market is facing in 2022. I've outlined many of them in detail.

 

[24601NoMore]

How can you be 100% positive? That's powerful information!

This is difficult for me to understand. If you are 100% positive the market will be down by as much as 50% within the next 10 months, why would you wait for a recovery back to the level of 12/31/21? We're only down ~9% so far. It seems that you are stuck with your position.....didn't the experts you mentioned advise getting out before the downdraft?

It's a viewpoint based on data that's readily available to all of us. It may be right or it may be wrong. But my gut - based on 40+ years in the markets - is that's it's likely going to prove right.

I am actually considering lightening up my already small (25%) exposure to equities, even with us down ~9% YTD. However - things keep sliding, and there to this point has been no good exit position. I'd like to get back to 20% or less before things go totally splat. However, I do think I (and all of us) have missed that opportunity at this point, and there is likely nothing but lower market valuations ahead the rest of this year.

As I said, I'd love to be proven wrong, as I'm a heavy seller north of 4,700. And if we hit 4,700 I'm dropping to 20% or less exposure in equities pronto.

 

[FLSUnFIRE]

I voted "S&P500 down 50+%; 0-2 years recovery" after careful research. My methodology was to look at the results and pick one with no votes that I felt most sorry for being neglected. I feel this is the most accurate I can get in predicting the future... since most people are horrible at predicting the market the best odds were to not select anything someone else had picked as their prediction....

 

[MRG]

It's a viewpoint based on data that's readily available to all of us. It may be right or it may be wrong. But my gut - based on 40+ years in the markets - is that's it's likely going to prove right.

I am actually considering lightening up my already small (25%) exposure to equities, even with us down ~9% YTD. However - things keep sliding, and there to this point has been no good exit position. I'd like to get back to 20% or less before things go totally splat. However, I do think I (and all of us) have missed that opportunity at this point, and there is likely nothing but lower market valuations ahead the rest of this year.

As I said, I'd love to be proven wrong, as I'm a heavy seller north of 4,700. And if we hit 4,700 I'm dropping to 20% or less exposure in equities pronto.

How many puts are you buying?

 

[Montecfo]

Hyperbole ever?

CAPE 10 is not a market timing indicator. Neither is market cap to GDP.

So they can't scream "sell".

If you think the market is overvalued by 50 percent or more you should be out of the market or be short the market.

Period.

The rise in rates is no surprise. It started about 18 months ago.

From elsewhere in the thread, is a quarter point raise in March then "minimum"? Answer: Several Fed governor's came out last week poo pooing the idea of a half point rise.

The larger concern is an over-reaction by the Fed in my view. This version of inflation is caused by COVID, supply chain, government restrictions and largess.

Most of these ills are not anything Fed can cure. But if they pretend they can, they will trigger recession, but I doubt it would be deep.

The yield curve has inverted more than once in the last 10, with no recession. This is a valuable data point, not assurance of recession.

I personally am not worried about recession or market selloff. These are normal features of the capitalist system. They are to be understood and used to advantage, not feared.

 

[nash031]

I remember back in the woebegone days of 2013 on this very forum that one poster declared the S&P would never hit 2000 again. I'm always amazed at declarative statements about the unknowable.

But here's what I do know: a 50% drop is extremely unlikely; a 5 year rebound is almost equally unlikely.

 

[Out-to-Lunch]

Are you sure that you have the temperament to invest in stocks?

 

[Dtail]

It's a viewpoint based on data that's readily available to all of us. It may be right or it may be wrong. But my gut - based on 40+ years in the markets - is that's it's likely going to prove right.

I am actually considering lightening up my already small (25%) exposure to equities, even with us down ~9% YTD. However - things keep sliding, and there to this point has been no good exit position. I'd like to get back to 20% or less before things go totally splat. However, I do think I (and all of us) have missed that opportunity at this point, and there is likely nothing but lower market valuations ahead the rest of this year.

As I said, I'd love to be proven wrong, as I'm a heavy seller north of 4,700. And if we hit 4,700 I'm dropping to 20% or less exposure in equities pronto.

If the market is dropping by 50% and is on its way already, how does the market get to 4700 for you to sell?
As far as getting to 20% equity exposure, if the market does drop 50%, you have no worries and don't have to do anything at all.

 

[marko]

We all sadly got caught in a downdraft that shows no signs of abating. Go check tonight's futures if you have a strong stomach.

Surprisingly, futures are flat as of 5:30 am today. This will certainly change again but an improvement from negative 500 last night. Dax and Ftse flat but Nikei down 400

 

[target2019]

The market is down 11% from its high (VTI). That is a correction.

What is a downdraft? A headline to attract utube clicks.

 

[marko]

I've mentioned this before. The debacle and recovery of 2008/09 has made me (dangerously?) sanguine about market 'downdrafts'.

It was the last day market day of February 2009 when my "I'm-smarter-than-you" neighbor walked in and smugly announced that she "sold everything!". The following week of course......

Some people should just stick to CDs IMO

 

[aja8888]

It was the last day market day of February 2009 when my "I'm-smarter-than-you" neighbor walked in and smugly announced that she "sold everything!". The following week of course......

Some people should just stick to CDs IMO

One of my golfing buddies announced back then that his Ameriprise "guy" told him he was going to sell all the equities, and did so, locking him into a $500 K loss (but he can carry it forward and deduct $3 K each year!).

I told him he should be buying, not selling.....he went with his "guy".

Oh, his "guy" still gives him dozen nice golf balls each Xmas!

I can't make this stuff up.

 

[intent]

I voted "S&P500 down 50+%; 0-2 years recovery" after careful research. My methodology was to look at the results and pick one with no votes that I felt most sorry for being neglected. I feel this is the most accurate I can get in predicting the future... since most people are horrible at predicting the market the best odds were to not select anything someone else had picked as their prediction....

That, sir, is impeccable reasoning. I LOVE it!

 

[njhowie]

BTW..Futures:

- Dow: -451
- NAS: -309
- S&P: -67

Tomorrow gonna be UGLY..continuing an ugly YTD.

2022 will likely end red. Probably bigly (30-50+% down). Only question is how long it will take to recover back to 12/31/21 levels.

BTW...Futures:

- Dow: +31
- NAS: -44
- S&P: +5

Give it a break.

 

[24601NoMore]

Hyperbole ever?

CAPE 10 is not a market timing indicator. Neither is market cap to GDP.

...

From elsewhere in the thread, is a quarter point raise in March then "minimum"? Answer: Several Fed governor's came out last week poo pooing the idea of a half point rise.

The larger concern is an over-reaction by the Fed in my view. This version of inflation is caused by COVID, supply chain, government restrictions and largess.

CAPE10 and Market Cap to GDP may not be "timing" indicators, but they are absolutely indicators of valuation. And both clearly show this market has been over-valued by at least 50% for quite some time now. Will that continue? Possibly. Possibly not. But at some point, perhaps soon, valuations will revert to more historical averages. If anyone just wants to "ride that out", more power to ya. But I personally would prefer to pay attention to the clear signs that help one avoid the huge downdrafts and long climbs back up. And there are plenty of very smart people (Stephanie Pomboy is one - very highly respected macro analyst) who agree. Last I saw, Steph is roughly "zero" in US stocks aside from a few miners and energy companies. She'll move back in when valuations are more reasonable. Good strategy, IMHO, and I wish I had not gotten greedy in late 21 and took more profits than I did.

Re: the Fed - most major US banks (Morgan Stanley, JPMC, etc) are forecasting at least 4 and as many as 7 hikes this year. I suspect the first hike (in March) will be .25, not .5 regardless of recent public statements by Bullard. That said, I do think it's entirely possible we will end the year at least at 1% and possibly 2%. What do you think will happen to stocks in that scenario? If you're not taking action in a Fed hike cycle like that, the odds are high you're going to be on a rollercoaster headed down quickly. If you're good with that, that's fine - but at this point in my life in ER, I'm not good with that and will take action to avoid the clear freight trains headed straight for us whenever it's possible to do so and the signs are all flashing warnings bright neon red. And based on the recent sell-off, a lot of other people are doing precisely the same thing for the same reasons.

I remember back in the woebegone days of 2013 on this very forum that one poster declared the S&P would never hit 2000 again. I'm always amazed at declarative statements about the unknowable.

But here's what I do know: a 50% drop is extremely unlikely; a 5 year rebound is almost equally unlikely.

Yes, the market is largely unknowable. But as I've said, there are very clear signs on valuation and Fed action that many experienced investors recognize. A good number of them are acting on those clear signs. If anyone wants to ride the rollercoaster down and (hopefully..see Japan) back up over what could be many years, that's an individual decision. However, the signs have clearly been there for some time now. Could the bull continue to run for a bit? Sure. But at some point likely soon, things are going to revert to mean. In that light, risk management and not just blind buy and hold is prudent, IMHO.

 

[Dtail]

CAPE10 and Market Cap to GDP may not be "timing" indicators, but they are absolutely indicators of valuation. And both clearly show this market has been over-valued by at least 50% for quite some time now. Will that continue? Possibly. Possibly not. But at some point, perhaps soon, valuations will revert to more historical averages. If anyone just wants to "ride that out", more power to ya. But I personally would prefer to pay attention to the clear signs that help one avoid the huge downdrafts and long climbs back up. And there are plenty of very smart people (Stephanie Pomboy is one - very highly respected macro analyst) who agree. Last I saw, Steph is roughly "zero" in US stocks aside from a few miners and energy companies. She'll move back in when valuations are more reasonable. Good strategy, IMHO, and I wish I had not gotten greedy in late 21 and took more profits than I did.

Re: the Fed - most major US banks (Morgan Stanley, JPMC, etc) are forecasting at least 4 and as many as 7 hikes this year. I suspect the first hike (in March) will be .25, not .5 regardless of recent public statements by Bullard. That said, I do think it's entirely possible we will end the year at least at 1% and possibly 2%. What do you think will happen to stocks in that scenario? If you're not taking action in a Fed hike cycle like that, the odds are high you're going to be on a rollercoaster headed down quickly. If you're good with that, that's fine - but at this point in my life in ER, I'm not good with that and will take action to avoid the clear freight trains headed straight for us whenever it's possible to do so and the signs are all flashing warnings bright neon red. And based on the recent sell-off, a lot of other people are doing precisely the same thing for the same reasons.



Yes, the market is largely unknowable. But as I've said, there are very clear signs on valuation and Fed action that many experienced investors recognize. A good number of them are acting on those clear signs. If anyone wants to ride the rollercoaster down and (hopefully..see Japan) back up over what could be many years, that's an individual decision. However, the signs have clearly been there for some time now. Could the bull continue to run for a bit? Sure. But at some point likely soon, things are going to revert to mean. In that light, risk management and not just blind buy and hold is prudent, IMHO.

So for simplicity sake, let's use the S&P as a reference point.
At what SP valuation, will you take action to avoid even more losses? You had mentioned perhaps at 4,700. What if it doesn't go back up to 4,700 and you just keep waiting and then it rides down 50%?

 

[24601NoMore]

So for simplicity sake, let's use the S&P as a reference point.
At what SP valuation, will you take action to avoid even more losses? You had mentioned perhaps at 4,700. What if it doesn't go back up to 4,700 and you just keep waiting and then it rides down 50%?

Then I missed my exit point and have to ride the rollercoaster down. "Hopefully" it doesn't take as long as I suspect it will to come back up to where we were on the last trading day of 2021. I do think given valuations it may be quite a while until the market "re-inflates" back to the halcyon days of 2021.

I will say I'm feeling pretty dumb for not pulling more profits off the table last year. 2020 and 2021 were abnormal market years and I probably am not as good at harvesting profits as I should be. Last time I'll make that mistake for sure.

 

[Dash man]

I like bacon too! But it wasn’t an option in the poll.

 

[Gumby]

It is not clear to me that the price on the last trading day of 2021 is relevant to your decision now. Stocks don't care what you paid for them. At this point, the decision is whether you think it will drop further or not. If you are really convinced we'll see a 50% drop, then sell now and buy back when we do.

 

[FLSUnFIRE]

I will likely sell what I need to fund 2023 at the end of this year regardless of the state of the market. If the market is down I might be able to sell more than I need to fund 2023 while not exceeding my desired MAGI (my cost basis is very low so proceeds are gains at this point); if I can do so, I will sell even more and step up the basis to max out MAGI.


If the market seriously CRASHES right before I plan to sell, I might use my HELOC to float my expenses month to month in 2023 until it came back some (would still harvest the "losses" which would actually be a step up in basis with a capital gain shown so no wash-sale concerns and immediately reinvest so I have no time out of the market until recovery).


Or I'd go back to work.... HA just kidding!

 

[street]

It is not clear to me that the price on the last trading day of 2021 is relevant to your decision now. Stocks don't care what you paid for them. At this point, the decision is whether you think it will drop further or not. If you are really convinced we'll see a 50% drop, then sell now and buy back when we do.

Well said, and the way I see it also. Doing nothing or selling and buying back at the end of the day, it may not pay any better. The main objective IMO is the person has enough to live on for the down time. Like some have said if a person has expenses covered for the year or a few years there really isn't anything to be concerned about or have to adjust for.

 

[Winemaker]

Well, I was a little upset when DW moved her 403b to Fido from Investco and they liquidated her shares and gave her cash. Well, now it's a blessing. It upset the AA, and it's time to redeploy to familiar funds at a discount. Funny how my anger changed into mild euphoria in just a few weeks.

 

[Aerides]

I'm not going to debate OP's points, because most of them are not new, and have not resulted in the catastrophe that is the OP's assumption. To me the idea that we're about to see anything near a 50% collapse is unrealistic. This is not 2008. At most, this is 1990.

If this is a blip, which is what I think it will recover. This is why I keep a few years in cash. I can ignore blips. I can ignore short, normal downturns.

I do not know, or care, who Lance, Steph, David, Jim, Tom, Dick or Harry are. Pundits are paid to create sound bites and bring eyeballs to the TV. They are not paid for accuracy.

But the OP has made it clear what he thinks of me and others with my viewpoint, I'm just blindly holding and living in a cave it seems. So because I don't want to argue the details ad nauseam (that sounds like work to me), I won't.

 

[HarryHawk]

I don't know if any of you go grocery shopping. I just got back from a shopping trip. I would say about a third of the shelves/freezer space was empty. No frozen french fries, no coffee creamer, no frozen chicken, etc, etc. Heard on the radio that the price of fertilizer is up 300%.

It is hard for me to convince myself that our economy is healthy. I have never seen anything like this in my 70 years on earth. It seems to me that there is some probability that stuff is going to get real. Hope I'm wrong, I am old and crotchety after all.

 

[aja8888]

I don't know if any of you go grocery shopping. I just got back from a shopping trip. I would say about a third of the shelves/freezer space was empty. No frozen french fries, no coffee creamer, no frozen chicken, etc, etc. Heard on the radio that the price of fertilizer is up 300%.

It is hard for me to convince myself that our economy is healthy. I have never seen anything like this in my 70 years on earth. It seems to me that there is some probability that stuff is going to get real. Hope I'm wrong, I am old and crotchety after all.

I've been trying to buy Walmart brand yogurt in the small 6 ounce containers for two months now and the shelves have been empty. Lots of other brands that a twice the price though.