General Investing and Economics Discussion - No Politics

[cyclejacket]

A reasonable number of Democrats won’t do what he wants. Republicans will filibuster. He won’t be able to get anything he wants done.

I think it is reasonable conjecture to think that Bernie's recent primary successes have at least played some role in the market meltdown this week. It appears investors may have some of the same fears of a Sanders Presidency.

 

[Deleted member 2897]

I think it is reasonable conjecture to think that Bernie's recent primary successes have at least played some role in the market meltdown this week. It appears investors may have some of the same fears of a Sanders Presidency.

I'm sure he will pursue executive orders to do whatever he can, but he can't raise taxes, expand Medicare, waive college tuition, institute a wealth tax, take over utilities, and all those other things via executive order. He's to me the best option for President if you lean conservative. It gives Trump the best chance to win, and if Trump loses he has the least chance to actually get anything done. The more moderate folks like Biden, Buttagieg, and Klobuchar will take more incremental changes that will carry probably 100% of Democrats and maybe even some Republicans. Liberal incrementalism is the scourge on our country (in my biased conservative opinion), because any government program is hard to undo. Incrementalism brings with it an inertia to where you can keep stacking more and more blocks on each other to march in a certain direction. Any attempt later to undo things is dismembering grandma and eating her limbs for dinner and stuff like that.

 

[LibertyTurns]

@CuseJacket The indicators that were relevant were on 1/27. S&P down 1.57% on slightly above average volume. Next indicator was a follow thru on 1/31 where it was down 1.77% on higher volume than it was down on 1/27. These are IBD principles straight out of their methodology. Yeah it was tough watching the market go up for 2-1/2 weeks as I was selling off hoping I wasn’t wrong. However, the price tag for bad analysis at that point was what 2-3% of gains missed?

Someone asked if anyone was a short seller. Not me. You can make good money doing that but I’m not an active trader and that discipline requires a lot of study and talent in my opinion. Not my style.

@cyclejacket Not concerned about a Sanders Presidency. He has a fair chance of being elected, but somehow Americans are inadvertently smart occasionally when voting. They’re not apt to give him a mandate to get any of his crap rammed thru.

What is likely to be the case is this is just what the Maniac needs to look Presidential. He’ll get a favorability boost, big one if this turns out the way he predicted.

 

[CuseJacket]

@CuseJacket The indicators that were relevant were on 1/27. S&P down 1.57% on slightly above average volume. Next indicator was a follow thru on 1/31 where it was down 1.77% on higher volume than it was down on 1/27. These are IBD principles straight out of their methodology. Yeah it was tough watching the market go up for 2-1/2 weeks as I was selling off hoping I wasn’t wrong. However, the price tag for bad analysis at that point was what 2-3% of gains missed?

Someone asked if anyone was a short seller. Not me. You can make good money doing that but I’m not an active trader and that discipline requires a lot of study and talent in my opinion. Not my style.

@cyclejacket Not concerned about a Sanders Presidency. He has a fair chance of being elected, but somehow Americans are inadvertently smart occasionally when voting. They’re not apt to give him a mandate to get any of his crap rammed thru.

What is likely to be the case is this is just what the Maniac needs to look Presidential. He’ll get a favorability boost, big one if this turns out the way he predicted.

Thanks for the insights. I'm not familiar with IBD's principles as I've hardly ventured over there. Are you a subscriber or are you doing your research another way?

How much of this week's drop do you attribute to coronavirus news?

 

[LibertyTurns]

Thanks for the insights. I'm not familiar with IBD's principles as I've hardly ventured over there. Are you a subscriber or are you doing your research another way?

How much of this week's drop do you attribute to coronavirus news?

I subscribe to IBD mostly for the stock screeners and analytics. $30/month.

I’d buy a copy of William O’Neill’s How to Make Money in Stocks. Best ROI on any book you can ever purchase IF you are disciplined and dedicated to following the rules. Lots of things to learn regarding market dynamics, chart formations, how to spot break out opportunities, etc.

Methodology called CanSlim emphasizes:
C- Current Quarterly Earnings- look for accelerating earnings growth
A- Annual Earnings- same principle
N- new, innovative product or service- drives demand for stock
S- Supply & demand- look for volume increases particularly during price increases
L- Leader- pick from top sectors & leaders within that sector- weak sectors perform poorly, weak stocks in hot sectors don’t perform as well as top stocks in hot sectors
I- Big volume means institutional support building- institutional funds need to buy lot to create a position. Drives lighter traded stocks up rapidly when they’re adding (also occurs over a sustained period)- time to make money
M- Market direction- buy when market in uptrend, avoid downtrends. Distribution days with follow thru like we saw on 1/27 & 1/31 are bad omens. Sustained uptrends make it hard to lose- think advance/decline stats

I think there’s some nervousness in the market & many were looking for a reason to sell. Overall, we’re in a long term uptrend, still. We have not rolled over the 200 day MA yet.

Coronavirus will give top cover to poor performing CEOs to scapegoat their bad record onto China & events outside their control. Most should have been investing in capital improvements, hiring to meet demand, etc and were missing the boat. Many over-relied on China, a poor business partner & needed to diversify their supply chains. Yeah, some concerns over a Socialist or worse yet a ruling elite, anti-business Democrat getting elected on top of that. Fed also wrongly started restricting the money supply a year & a half ago with the economy not yet firing on all cylinders. The not actually a tax cut bill was somewhat stimulative because business taxes were cut, but bottom line is we reduced the rate of tax increasing but actually still raised taxes (no bueno for good economic growth).

Small investors like us are supposed to be nimble. We can take a position or sell a position more rapidly than institutions. You can take advantage of market hysteria at a moment’s notice. It takes a long time for a fund to dump a couple million shares. I can dump 1k shares in 2 mins. You can invest like the S&P, but avoid the bottom half. Indexes have to mimic the market. All type of opportunities to out-perform. You just need a system and understand how the game is played.

 

[LibertyTurns]

@CuseJacket I also read a lot. Not the BS headlines on CNN, MSNBC, fox, but real analysis anytime I can get my hands on it. What the media says is often way too time late, not supported by actual real data, etc. There’s actually some useful economic government reports.

For straight analytics, Schwab gives me everything I needs. IBD has quick screeners to select stocks, sectors, etc. Ciovacco is great for learning how the market operates and assorted principles. Every week listening to Ciovacco’s weekly presentation is 30 mins well spent.

 

[Techster]

Speaking of Berkshire...

 

[Deleted member 2897]

Speaking of Berkshire...

I always chuckle when people criticize “Big Oil” when companies like Exxon are only making a 10% profit margin. Companies like Buffet, Apple, Google, etc - they wouldn’t even get out of bed for such an unprofitable endeavor.

 

[LibertyTurns]

Different than investing but I do enjoy reading about macroeconomic theories/ policies and do listen to what Buffet has to say even though he’s way too Liberal for my liking. Some good ones are Milton Friedman, Thomas Sowell, George Schultz, Art Laffer, George Stigler.

Liberals and RINOs would do well to read Stigler’s works on Regulatory Capture. It explain what our system of government has grown into- basically regulation for the enrichment of the regulators. Here’s a good piece.

https://tspppa.gwu.edu/sites/g/files/zaxdzs2001/f/Carrigan Coglianese 2015 George J. Stigler.pdf

Below is from 1947, the Mount Perelin Society’s Statement of Aims. Sound familiar to what’s playing out today?

https://www.montpelerin.org/statement-of-aims/

I think if people more fully understood what they really believed in then the United States would be a much greater nation and better place for all to live. Too many have been corrupted by what so-called leaders want them to believe.

 

[LibertyTurns]

China is screwed. Will be interesting Monday morning.

https://tradingeconomics.com/china/business-confidence

 

[Deleted member 2897]

China is screwed. Will be interesting Monday morning.

https://tradingeconomics.com/china/business-confidence

Japan posted a -6% GDP a month ago. All that is coming our way. Maybe not to that extent, but travel, supply chains, and so on will all be affected. But if we’re going to have a recession, one caused by people sitting on their hands and companies unable to ship products temporarily is about the best recession you can get.

 

[LibertyTurns]

What’s everybody thinking about tomorrow?

I’m going to be watching carefully, but if there’s no appreciable signs of a trengthening (stall of blood letting), the 37% of my portfolio left in securities is going to cash.

I’ll just wait in the sidelines until the coast is clear and let others try to make lemonade out of these lemons.

In the mean time, I’ll be renegotiating contracts to take advantage of the hysteria.

 

[Deleted member 2897]

What’s everybody thinking about tomorrow?

I’m going to be watching carefully, but if there’s no appreciable signs of a trengthening (stall of blood letting), the 37% of my portfolio left in securities is going to cash.

I’ll just wait in the sidelines until the coast is clear and let others try to make lemonade out of these lemons.

In the mean time, I’ll be renegotiating contracts to take advantage of the hysteria.

I’m not a frequent trader. Got my wife to move everything to cash. Maybe in several months we’ll move back out. Depends on how long the recession lasts and where the market goes. I’d like to go all-in if the Dow goes under 18-15,000 or less.

In the mean time, looks like 30 year fixed mortgages are 3.375%-ish. Folks should see if refinancing could save a lot.

 

[CuseJacket]

In my ignorance I think you choose one of the following.

Last week was either:

1. Start of a recession
2. A cyclical low in a bull market
3. Coronovirus induced
4. Have no clue

If #1, as bwelbo believes, stay out
If #2, you buy
If #3, form your opinion on the likelihood of a material pandemic
If #4, up to your risk tolerance and timeline

 

[CuseJacket]

Also market futures have been volatile over the weekend and currently point toward the positive (+.3%). If you try to pair mainstream retail news over the weekend with futures activity, my interpretation is that Biden winning in South Carolina (rather than Sanders) was seen as a positive. The latest coronovirus news has been mostly negative.

If you have the opportunity to take short-term capital losses, it seems like a great time to do so given the overall uncertainty, even if you want to stay in market with an equivalent security. That's an easy 30-40% tax savings depending on your tax bracket and living location. We won't see that level of improvement for a long while, and even if you miss part of the upswing, you're making money.

 

[Techster]

IF you have the nerves to capitalize on the downward market, buy TVIX and set a trailing stop loss. It was up over 100% last week until the last positive minute run on Friday that pared it's appreciation to just over 65% end of trading day. Trailing stop loss is key here...you need capitalize on profits and as this is not a long term investment...because once the market heads up, TVIX goes the opposite way.

I've always played it against TQQQ...which is opposite to TVIX. TQQQ is an extraordinary play if the market is going up, which it has been until the past two weeks. Like TVIX, set a trailing stop loss for when the market heads down.

If your trading platform allows you to set up trailing stop losses, or you know how to make use of API's, this is a really good "side" play to capture profit on the way down and the way up.

*BTW, I am not a professional (I just play one on messageboards), so take this suggestion as information only...I can't have anyone's wife (or husband) coming after me because one of you put your kids college fund on the line.

 

[Techster]

Interesting article on cashing out on the market to minimize downside risk, then trying to time the market to get back in to capture the upside.

https://www.cnbc.com/2020/02/28/her...k-market-for-cash.html?recirc=taboolainternal

Even if you think you’ll just wait it out for a few weeks to see what happens, be aware that six of the S&P’s 10 best-performing days during the 20-year period occurred within two weeks of the 10 worst days, according to J.P. Morgan....

...
Of course, there’s always the chance that you could get the timing right — i.e., you sell at the top of the market and buy at its bottom.

For illustration purposes only: Say you had sold 10 shares of an S&P 500 fund when the index peaked in October 2007 at 1,565, and then repurchased shares when it bottomed in March 2009 at 666. In that case, your money would buy 23 shares — more than double the amount you sold.

Basically, you better time it right. Of course, that can be said of all investments.

 

[Techster]

 

[Deleted member 2897]

Wall Street making money hand over fist. 650 million shares traded hands today - nearly 3.5x normal volume.

 

[LibertyTurns]

@Techster There’s a difference between trying to “play the market” ie the market timing approach and taking an analytical approach to risk reduction.

Today’s action is going to take me several hours of teeth gnashing tonight. Not sold this is not a dead cat bounce and the actual coronavirus impact to the overall economic situation is significant on some level. There’s going to be CEO’s across the land linking this to their poor performance.

Now if the government finally reduces taxes as a stimulative measure, well I’ll be thrilled. Secondarily, if China is recognized for what it is: trade adversary, economic power adversary, military adversary, etc and we get serious about competing with them that would be beneficial as well. China is not our friend, not a partner, etc.