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Re: Contextualization of Recent Market Action


@yogibearbull wrote:

@youth wrote:

Dow 24,000, if we are lucky!  

Gabe


Will you take DJIA 26,000? That was touched today.   https://stockcharts.com/h-sc/ui?s=%24INDU&p=D&yr=0&mn=6&dy=0&id=p22075858343


R/O a 1000 point drop today.  24,000 Dow a very good possibility depending upon the progress of this Virus.  Save your pennies......hold on to your suspenders.  

Gabe

Gabe

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Re: Contextualization of Recent Market Action

Based on the capitulation at today's Close and today's movement of the Ten Year and Thirty Year Treasuries and Gold price, today's Close may not be a bad equity buy price looking back from October 31, 2020. 

Edit: In the after market, the rout continues. 

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Re: Contextualization of Recent Market Action


@Anitya wrote:

Based on the capitulation at today's Close and today's movement of the Ten Year and Thirty Year Treasuries and Gold price, today's Close may not be a bad equity buy price looking back from October 31, 2020. 

Edit: In the after market, the rout continues. 


Much more to come......if there is no good news about the virus.  So........alternative investments is the way to go!  

Gabe

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Re: Contextualization of Recent Market Action

@NuEnglanderThe difference here is really between traders and investors. You are probably an investor like most boomers, who have mostly done well to 'buy and hold'. Traders try to profit from small movements in prices. Some will say this is not possible, or at least not easy, given that markets are supposedly efficient ie prices quickly adjust. Other say it isn't possible consistently to beat the market. Whatever the truth, buy and hold (or passive index) investing is the way to go unless you have the time, dedication, and knowledge. Having said that there's nothing to stop you having a little flutter as long as its with no more than say 10% of your holdings.

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Re: Contextualization of Recent Market Action

The market will remain in turmoil Friday.......early futures suggest  a positive tone, however, it is very, very early.  From what I have read, there is no change on the virus front; so the market will be very volatile and quickly move negative.  Perhaps, something positive on the virus front will change the market's course.....we'll see.  So.....hold onto your suspenders.

Gabe

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Re: Contextualization of Recent Market Action


@youth wrote:

The market will remain in turmoil Friday.......early futures suggest  a positive tone, however, it is very, very early.  From what I have read, there is no change on the virus front; so the market will be very volatile and quickly move negative.  Perhaps, something positive on the virus front will change the market's course.....we'll see.  So.....hold onto your suspenders.

Gabe


Gabe or @youth, Why do you post the same dribble on several threads? This is including ones you have been requested to not post on? Really, man, we get it! Things are bad and probably getting worse before better. You have posted nothing that can't be obtained from two seconds on an iPhone. Since we can't put you on ignore your posts clutter up useful info from other posters. Thanks for your consideration. 

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Re: Contextualization of Recent Market Action


@Bentley wrote:

 Keeping things in perspective; we have enjoyed ten years of record-setting gains, we have given the last four months of those gains back. I'd take that scenario any day. Will we give back more?............it will depend on the news which will get incorporated into prices immediately, as new news breaks.


Agreed!

To which I would add there is no way to know if we are already oversold. What concerns me is that this virus has not even begun it's potential pattern of damage directly to Europe or the US. So, are the markets yet to react to more bad news, or is this already baked in?  Here is to hoping the worst news is already baked in and we have overshot on the downside. Though the pre-markets at 4:00 EST are looking pretty dismal.

I think it is also very interesting that growth funds are seriously outperforming index funds during this rout. They outperformed on the way up and are now outperforming on the way down. And my portfolio of dividend stocks did not fare much better than index funds, either. This goes to your main point, maybe chasing performance is the best defense against the inevitable downturns.

 

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Re: Contextualization of Recent Market Action

Corona is not deadly like Ebola, which caused the rapid death of most victims before there was time to spread the virus.  However, it's far more dangerous than most flu, with a 20x mortality rate of roughly 2%; it's easily spread, has a long incubation period, and often produces only mild symptoms.   So, maybe no cause for panic, but impossible to simply ignore and challenging to contain.

It could be useful to itemize those things that could help set a stock market bottom; versus things which could extend the stock market declines. 

I'll get started with these (not prioritized in terms of likelihood or importance):

Optimistic

  • Rapid identification and distribution of an effective treatment for Corona virus victims, removing fear of the virus and making the spread much less dangerous
  • Declining growth rate of new cases
  • Growing conviction that Corona is just another flu, that will diminish with coming of Spring and the end of "flu season"
  • Confirmation that Chinese cases have definitely peaked, with business and factories coming back online
  • Bond market rates stabilize and rise
  • Increased sector differentiation of daily returns (declines are presently broadly based).

Pessimistic

  • Rapid spreading leads to a near-complete shutdown of air and train travel in Europe
  • Multiple European and US cities are quarantined to contain spreading
  • Tourism falls to near zero
  • Credit markets are clobbered as company defaults soar
  • 10-year T-Bond rates fall rapidly below 1%
  • African new cases soar out of control

Disastrous

  • Death rate soars because of virus mutation.

 

At this point there are several independent variable at play.  We can't predict any particular outcome with certainty.  However, investors and traders might want to estimate the odds of these outcomes, so as to help decide on new purchases, sales, and/or re-balancing.

Further stock market declines as well a recovery bounce could be very dramatic and sudden.   "V", "U", and "L" shaped chart continuations are all possible.

Concerning the risk that a certain presidential candidate might win in November, we can look at bettors' odds and study the polls.  With Corona, that's not possible.

N.

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Re: Contextualization of Recent Market Action

Yogi,

I had 32% equities. Yesterday I have sold some stocks and ETFs and was able to bring down my equity to 25%. High Yield Municipal bond funds are doing well. I am depending on the fund managers of PRWCX and VLAIX.

This too shall pass!

Thanga

 
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Re: Contextualization of Recent Market Action

Hi Mortmain.

I do not know how to reply directly or cut and paste etc. I am not a boomer, I was born in the 1930's. Your description and advice is sound. I am not a trader as I do not have the time (maybe now that I am retired), nor the interest, nor the knowledge. Getting into that game as an idiot is not wise. In a way, I am trapped. What would the capital gains be on some Microsoft purchased in 1991 be? At this age, I will let my kids deal with it, but it goes to them with a "step up". You put forth some good comments, thank you.

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Re: Contextualization of Recent Market Action


@DrVenture wrote:

@Bentley wrote:

 Keeping things in perspective; we have enjoyed ten years of record-setting gains, we have given the last four months of those gains back. I'd take that scenario any day. Will we give back more?............it will depend on the news which will get incorporated into prices immediately, as new news breaks.


Agreed!

To which I would add there is no way to know if we are already oversold. Correct. What concerns me is that this virus has not even begun it's potential pattern of damage directly to Europe or the US. So, are the markets yet to react to more bad news, or is this already baked in? 


Yes! They will react to any new news.

 Markets do not price what is "unknown". Markets do price in all that is known and forecasted. Now for the foot-stomper! Markets react to new news. Markets may also overreact or under-react but they will react by incorporating all the new news into stock prices. Trying to guess where the market will be tomorrow, next week, next month or year becomes much more difficult when markets are in extreme stress.

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Re: Contextualization of Recent Market Action

Everyone needs to CALM DOWN! The S&P 500 is down about 12% from it's recent high, and this is a "correction" (so far) tied to UNKNOWN severity of the Coronavirus (COVID 19) and how fast/ whether it will spread and ultimately affect the economy. Couple of KNOWN facts about Covid 19:

1) Most cases are mild- therefore it will most likely spread. 

2) It is primarily an upper respiratory infection- sniffles/ cough, sneezing, +/- fever, etc. similar to Influenza. Incubation can be several days to possibly 14+ days- probably explaining why we have had "new" cases pop up in northern California- they came in contact with someone with a mild case and were infected.

3) Some cases become SEVERE- with fulminant Acute Respiratory Distress Syndrome (ARDS)- fulminant edema (swelling) in the lungs, requiring mechanical ventilation, aggressive treatment and support.

4) Corona Viruses are VERY COMMON- many cases are mild colds- this one just appears to be a more severe strain of the Corna virus. 

5) Death rates "appear" to be several percent so far- usually those who are elderly/ immunocompromised/ multiple medical problems. Occasionally can be fulminant, severe in younger healthy people- hence the deaths of some otherwise healthy people. 

6) Typically these outbreaks will last several months- and gradually improve as we head into summer/ warmer season (similar to Influenza). May eventually worsen in the southern hemisphere as they head into their "winter".

7) Developing a vaccine will take MANY months- into 2021. However, there are a couple of antivirals that MIGHT limit the severity of the illness (Remdisavir, Danoprevir, Ritonavir, etc.) They are being tested right now in infected individuals. none are "cures", but they may limit the severity for someone with a severe case. 

As far as the effects on the Market- the stock market HATES UNCERTAINTY, and that's what we have right now! This could go on for several weeks to many months. It could vary all the way from a mild "correction" (what we have right now), all the way to triggering a recession IF it really gets bad, supply chains are "impaired", business and consumer confidence declines, travel is cut off, etc., etc. Bottom line is NO ONE KNOWS right now, hence the indiscriminate selling. 

I am STICKING with my plan/ my asset allocation, and I have a "shopping list" in case the market continues to go lower. This is a NORMAL reaction to a situation that is UNKNOWN as to its effects on the economy/ businesses, etc. I strongly suggest avoiding any responses to statements like "hold on to your suspenders", "look out below", etc., etc. I learned LONG AGO to check my emotions at the door when "shopping" at the Stock Market. 

Win
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Re: Contextualization of Recent Market Action

I'd wager good money (in fact, I am) that a year from now, everyone who is cash or bond "fat" will deeply regret not taking advantage of this unfortunate global-market opportunity, either buying depressed (otherwise healthy stocks), and/or Roth Converting depressed assets you already own (paying less tax on the conversion that you otherwise would have). This is the very definition of tactical investing. I'm not saying make large scale AA changes in some form of step-change; rather begin to wade into the cesspool of devaluation.

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Re: Contextualization of Recent Market Action


@Win1177 wrote:

Everyone needs to CALM DOWN! .......

I am STICKING with my plan/ my asset allocation, ...... This is a NORMAL reaction to a situation that is UNKNOWN as to its effects on the economy/ businesses, etc. I strongly suggest avoiding any responses to statements like "hold on to your suspenders", "look out below", etc., etc. I learned LONG AGO to check my emotions at the door when "shopping" at the Stock Market. 


+1

I nominate this post for "Post of the week"

 

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Re: Contextualization of Recent Market Action

Win and others,

I understand the severity of this current strain of Corona, but not to be naive, Influenza infects hundreds of thousands and kills tens of thousands of people annually (that we know of; many more are not reported) and yes we have vaccines for it, but not yet for this "Corona" strain.

So why are "supply chains" impacted for this virus but not for Influenza.  As is stated above, MANY more people are impacted AND die from Influenza; are they not part of some "supply chain"?

Of course,we have had other virus breakouts over the years, but I don't remember such a high level of doom and gloom being spewed.  I could be wrong; i;m just going by memory.

I know this may be a simplistic view, but I'm not sure the "panic" being spewed by MSM and others is truly called-for.  Is there more to this rhetoric than is overt?  

 

Any thoughts?

Matt

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Re: Contextualization of Recent Market Action

I have hired Wellington to manage my investments- in my opinion they are the Finest money managers in the business. I am sure they will come out strong on the recovery!

I learned this from Cape Cod years ago!

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Re: Contextualization of Recent Market Action

To me "panic" is in the eye of the beholder. Was El-Erian telling folks that this "is different" and "avoid buying the dip" two weeks ago fear mongering or useful info? One fellow reads that "this virus could get ugly" and runs screaming like his hair is on fire and another simply thinks "I shall remain alert". I'd rather be informed and make up my own mind than have information withheld. No one needs to read or watch the news. Yet, folks are drawn to drama like moths to a flame. Chicken or egg?

As to supply chains, my belief is that when you halt travel and invoke quarantines, you are putting pressure on shipping, receiving and manufacturing.

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Re: Contextualization of Recent Market Action

VA --

     What makes you think those of us who have moved largely to cash and protective positions must remain there a year from now?     Some of us were able to minimize losses when technical patterns clearly flashed "Sell!"    And we intend(?) hope(?) to return to the market when those technicals improve.

     I have read a hundred nay-sayers claim "You can't time the market!" ..... nevertheless some of us are doing it.   The DJIA is down 11% from its highs.  As of today's open my losses are 2.8% from my portfolio high using the simple expedient of disregarding chatter but heeding market signals promptly.   My only regret is that when the technicals flashed last week I moved incrementally -- not with real conviction.    Still, better to be approximately correct than precisely wrong.

     Yes I know, "If it is so easy why isn't everyone doing it?"    Answer: because most of us permit our egos, biases and opinions to interfere.   But there's good news:  if you're really determined, you get better with practice and experience.   I'm reading a lot of posts like yours, telling us how sorry we'll be some sunny day when the market is skyrocketing again but I'll be stuck in cash.  Well, if that's the consolation you're giving yourself while watching your net worth crumble, you and all the buy-and-holders are welcome to it.

     I have no idea where or where the bottom is -- but I intend to be watchful and nimble.

    

     

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Re: Contextualization of Recent Market Action


@mattm wrote:

Win and others,

I understand the severity of this current strain of Corona, but not to be naive, Influenza infects hundreds of thousands and kills tens of thousands of people annually (that we know of; many more are not reported) and yes we have vaccines for it, but not yet for this "Corona" strain.

So why are "supply chains" impacted for this virus but not for Influenza.  As is stated above, MANY more people are impacted AND die from Influenza; are they not part of some "supply chain"?

Of course,we have had other virus breakouts over the years, but I don't remember such a high level of doom and gloom being spewed.  I could be wrong; i;m just going by memory.

I know this may be a simplistic view, but I'm not sure the "panic" being spewed by MSM and others is truly called-for.  Is there more to this rhetoric than is overt?  

 

Any thoughts?

Matt


My understanding is that this strain of Corona virus has a mortality rate 20x that of an ordinary flu.  So, efforts are being made to avoid contagion while scientists race to find a cure and to develop a vaccine for the future.  Plants have been shut down in China, affecting overseas customers that rely on these products.  Energy use is down and energy producers may have credit troubles, so there are ripple effects. 

I agree that there's no reason to panic; this is not an easily-spread version of Ebola.  But, it is highly contagious.  With a 2% mortality rate, it can't be ignored.  (If everyone in France were exposed, there could be over a million deaths.)   Furthermore, there's a non-zero risk of mutation.

Hope that helps.

N.

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Re: Contextualization of Recent Market Action

I think the DJIA is currently down about 15% from it's high. I moved to bond funds not cash, They are still up and the market is down. Now I am moving some back to equities. Maybe too soon, I don't know. Just a few percent so far. I was only underweight equities about 5% based on my current risk tolerance. It doesn't require lightning fast timing to get off the tracks of a slow moving freight train like this virus.

 

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