General Investing and Economics Discussion - No Politics

[bobongo]

We’re now printing money and using it to buy ETFs. We are completely bastardizing trading markets now. I’m going to guess we spend about $10 Trillion from the Fed before we’re done. This is incredible.

https://www.marketwatch.com/story/t...s-it-mean-2020-03-23?siteid=yhoof2&yptr=yahoo

https://finance.yahoo.com/news/bare...t-of-its-bazooka-morning-brief-101830881.html

There hasn't been such artificial pumping of the market since 1929. To wit: a trillion dollar deficit (soon to be three), interest rates reduced to zero, and tax cuts used for stock buybacks (and I'm not making a comment here on whether there should have been tax cuts, just that they were in fact largely used for stock buybacks, thus pumping the market).

The market is still very overvalued, even though we're looking into a deep recession. For the market to get to a normal valuation compared to GDP (the middle of Buffet's "fair valued" range), it would have to fall 20% from what it is right now. And that's normal valuation, not even considering the coming recession or the fact that GDP will be going down.

https://www.gurufocus.com/stock-market-valuations.php

 

[LibertyTurns]

Wow, a lot of froth in the market today while we teeter on the edge! We back to stock market roulette?

 

[Techster]

Good time to make a quick buck on TVIX. My algorithm got me out in the mid 800's (it went as high as 1,000). Started the day at 220's, and has climbed back to the 300's.

I have zero doubt TVIX has a few rockets left on the spaceship.

**Remember to use a stop loss people (trailing stop loss if you can)...I can't be responsible for your greed.**

 

[Techster]

 

[Deleted member 2897]

Unfortunately, Fortune's ruse is what most people forget at the front of a recession. That PE is based upon trailing profits. Companies will be making a fraction of what they are now in the next quarterly reports. Many won't show a profit at all.

 

[CuseJacket]

The driver of the market correction thus far has <1% to do with incorrect prior valuations. We are at the mercy of Covid-19 and our response to it. Would take a herculean effort to convince me otherwise.

 

[Techster]

The driver of the market correction thus far has <1% to do with incorrect prior valuations. We are at the mercy of Covid-19 and our response to it. Would take a herculean effort to convince me otherwise.

Agree 100%.

Markets have not moved with "valuation reality" for a while now. Covid 19 virus just gave jittery investors a reason to bail. Also, something that few have touched upon...algorithm controlled trades at large funds that have built in "black swan" events such as the virus. Make no mistake, once certain algorithmic "wires" were tripped with respect to the virus, it executed multiple huge trades across markets causing values to tumble. Then you had everyone else piling on. Sentiment is a very powerful part of trading.

Stocks are like any other commodity. They're only worth what someone else is willing to pay for them. Look at Tesla. If you looked strictly at Tesla's books versus any other car maker, you'd laugh so hard if they told you what someone paid for one share. Of course, if you invested in the Tesla in the last 2 years, it would be a laughter of joy. Tesla is the ultimate sentiment trade.

It will be interesting to see how the US markets react when the country's Covid 19 curve starts to "flatten" and even more interesting once it the line starts going down. Personally, I believe the market will recoup a LOT of its value. Maybe not pre-Coronvirus levels, but a 50%+ recovery would not surprise me at all.

 

[stech81]

Invest in Bud Light an aluminum cans , when you finish you can sell the cans for aluminum they bring $0.017 per can. You will lose money but if you buy enough you won't give a Sh*t.

 

[LibertyTurns]

Volume today was underwhelming ending at somewhere between 2/3 & 3/4 of what it has been.

 

[bobongo]

Volume today was underwhelming ending at somewhere between 2/3 & 3/4 of what it has been.

Another interesting stat is that today's gain was the biggest percentage rise in the stock market since 1934.

 

[Deleted member 2897]

Another interesting stat is that today's gain was the biggest percentage rise in the stock market since 1934.

The stock market dropped more than 30% on 8 different occasions in the 1930s. I'm glad I didn't live back then LOL.

 

[LibertyTurns]

Another interesting stat is that today's gain was the biggest percentage rise in the stock market since 1934.

The price change was nice, but volume speaks commitment.

2386 is resistance and the S&P cleared that & held today. A follow thru in the next 10 days would be a nicer sign.

That all being said, significant downside risk still exists. In my opinion, the odds of 30% more downside is greater than the chance of 30% upside. Time will tell.

 

[bobongo]

The price change was nice, but volume speaks commitment.

2386 is resistance and the S&P cleared that & held today. A follow thru in the next 10 days would be a nicer sign.

That all being said, significant downside risk still exists. In my opinion, the odds of 30% more downside is greater than the chance of 30% upside. Time will tell.

Indeed. Hard for me to believe this was more than a dead cat bounce. We had just Monday an announcement from the FED that they're basically going to bring out every weapon they've got, including "unlimited" qualitative easing, help for state and local governments, and the purchase of corporate bonds. Now we're on the eve of a two trillion dollar stimulus package, probably mostly baked into today's gains. The reason I highlighted the year 1934 as the last time the market gained more was to accentuate that it was in the middle of the depression and that that gain was in the midst of much bigger losses.

Now the FED has shot its last wad and the stimulus will be passed soon. After that, the market is on its own, staring at >2 million unemployment claims and a plummeting GDP.

 

[LibertyTurns]

@bobongo In 2008 there was an 18% bounce, retraced that bounce & went down another 30%.

 

[bobongo]

The stock market dropped more than 30% on 8 different occasions in the 1930s. I'm glad I didn't live back then LOL.

Depends on where your money was, if you had any. Seems to me if you had the good sense and foresight to have stuffed it into your mattress, you would have made out swell.

 

[Deleted member 2897]

Depends on where your money was, if you had any. Seems to me if you had the good sense and foresight to have stuffed it into your mattress, you would have made out swell.

My grandfather was so poor he had to wear girls shoes. Thankful to not have been around then.

 

[bobongo]

My grandfather was so poor he had to wear girls shoes. Thankful to not have been around then.

My Mom grew up in Appalachia. She had seven brothers and two sisters and their parents were sharecroppers. She said at dinnertime she had to eat fast or there wouldn't be anything left.

 

[MountainBuzzMan]

My Mom grew up in Appalachia. She had seven brothers and two sisters and their parents were sharecroppers. She said at dinnertime she had to eat fast or there wouldn't be anything left.

I grew up in Appalachia as well. We were all so poor that we did not even know it. We never wore shoes in the summer time. We sharecropped as well. Not much is worse than suckering tobacco by hand and we used to shovel out chicken houses. I am not even that old.

 

[LibertyTurns]

Mom would pour 1 can of soup in a big pot and add a lot of water. She beefed it up with stale bread or stale crackers she bought from the store that sold food with expired dates. Thank God for our huge vegetable garden. Imagine buying expired food today.

 

[bobongo]

I grew up in Appalachia as well. We were all so poor that we did not even know it. We never wore shoes in the summer time. We sharecropped as well. Not much is worse than suckering tobacco by hand and we used to shovel out chicken houses. I am not even that old.

In some parts of Appalachia, I guess you could say the Depression never really went away.