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Participant ○○○

Is Market Always Right?

Obviously the recent market rally is akin to the SpaceX launch of NASA astronauts to the space station -:)

I am clearly enjoying the ride as the loss caused by Feb/March swoon appears to be ephemeral.

Truth be told, I have locked in some gains in my tax deferred accounts mainly because I am just not trusting the V recovery of the market.

What are you doing?

19 Replies
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Frequent Contributor

Re: Is Market Always Right?

Staying the course with no further actions.

Whether the market is right or not is irrelevant to my strategy; terms like don't fight the Fed has little significance, either.

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Re: Is Market Always Right?

Same here.  No changes.

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Re: Is Market Always Right?


@SteadyEddy wrote:

Obviously the recent market rally is akin to the SpaceX launch of NASA astronauts to the space station -:)

I am clearly enjoying the ride as the loss caused by Feb/March swoon appears to be ephemeral.

Truth be told, I have locked in some gains in my tax deferred accounts mainly because I am just not trusting the V recovery of the market.

What are you doing?


         I just keep buying income, CEF. DCA down and up. So I have little cash to add at this point. I do think any recovery will be like a NIKE swoosh, angle unknown, but not to an overvalued point like in 2019 for awhile.

          Anyway the smart money, the primary market movers, just may take some profits off the table as you have at this point also to see what factual economic damage has been done as the smoke clears. Maybe back to a trading range after rotating from growth into some value and bonds in my opinion.

          So what you did may be a wise move at this point by not being greedy or making a decision based on panic. Your ahead and if the market swoons again you can reinvest profits. Either way you win.

           *answering your question the market is never right in the short term when it’s ruled by fear and greed but always right long term when it’s based on earnings but seldom priced in tandem.

          

 

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Re: Is Market Always Right?

My mind has been telling me that there's no good reason for optimism in the current circumstance, but consider the possibility that we had a jolt which wasn't foreseen and, therefore, couldn't be priced in in advance.  So we got a crash that MAYBE undershot what it COULD have been.  NOW, maybe we're looking ahead to what we THINK will occur: a cure and uptick in business - cause for optimism.  All of THAT might account for what we're seeing. 

I think we DESERVE to be lower than we ARE, but I also think our prospects from here are better than they were.  The latter just seems to be winning over the former.  If "right" means "this is happening"; then the market is, indeed, always right.  If "right" means being where logic TELLS us it should be; then, no, the market has never had to agree with logic!

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Re: Is Market Always Right?

I’m basically “sitting on my hands” now, the market has recovered nearly all of it’s sell off now, and equities no longer look “cheap”. I did some buying during the sell off, but not as much as I could have (hindsight being 20:20). Now just sitting “pat”, watching things. I still feel there are downside risks here- due to “reopening” of economy and Covid-19 virus, as well as the current political situation, etc. 

Win
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Re: Is Market Always Right?

Staying the course with our NEW 50/50 allocation.

Last 3 years at 40/60. Bear took us to 35/65. On Mar 31 we over-rebalanced to 45/55. Today we sit at 49/51. Our port is UP 2% YTD.

It's turned out great....so far.

My main worry is episode 15 of the Thucydides’s Trap.

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Re: Is Market Always Right?


@SteadyEddy wrote:

Obviously the recent market rally is akin to the SpaceX launch of NASA astronauts to the space station -:)

I am clearly enjoying the ride as the loss caused by Feb/March swoon appears to be ephemeral.

Truth be told, I have locked in some gains in my tax deferred accounts mainly because I am just not trusting the V recovery of the market.

What are you doing?


Right about what?  The market is what it is!  8-)

ElLobo, de la casa de la toro caca grande
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Re: Is Market Always Right?

Last i checked, the market is correct.  I tried to buy a stock for 88 dollars, but the market was 100.  I never got the stock, so i decided the market must be right.

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Re: Is Market Always Right?

The Market will do what the Market will do.  Think alternative investments.  

Gabe.

 

 

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Re: Is Market Always Right?

The question may need to be qualified. I think that over the long term the market is seldom wrong. The information necessary to make adequate decisions is not always evident in the short term. 

Clearly, the market overshot the mark (on the downside) in March. Now it appears to be overshooting the mark on the upside. With unemployment being what it is now, the forecast of 10% unemployment at end of 2020, P/E's double what they were last time we were at these levels, and a major public and private debt build underway, I must ask myself if these levels are justified. I'm not an equity buyer at these levels, except my bi-weekly 401K purchases.

The best argument is that "the market" is looking out 12-18 months. My observation is that people are not that patient. Which could also explain how we went up so far and so fast. 

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Re: Is Market Always Right?


@Win1177 wrote:

I’m basically “sitting on my hands” now, the market has recovered nearly all of it’s sell off now, and equities no longer look “cheap”. I did some buying during the sell off, but not as much as I could have (hindsight being 20:20). Now just sitting “pat”, watching things. I still feel there are downside risks here- due to “reopening” of economy and Covid-19 virus, as well as the current political situation, etc. 


I bought a little more than I intended during the sell off. Having more than half on my long-term IRA holdings in equity, I sold off for a small gain the extra equity I bought on the dip. Now, i have about 3% new equity to concern myself with and plan to keep it long term. I worry the market will face another downturn, but think more likely it will stagnate at this point with daily ups and downs going into the late year months when depending on the coronavirus, its potential resurgence and possible treatment will determine how the market end the year.

I most likely will sell more stocks for RMDs at that time, unless there is a big downturn, as I am trying to balance my IRA to a lesser percent of equity. My taxable accounts are lower on equity, which is where my sell off market purchases were made.

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Re: Is Market Always Right?


@SteadyEddy wrote:

Obviously the recent market rally is akin to the SpaceX launch of NASA astronauts to the space station -:)

I am clearly enjoying the ride as the loss caused by Feb/March swoon appears to be ephemeral.

Truth be told, I have locked in some gains in my tax deferred accounts mainly because I am just not trusting the V recovery of the market.

What are you doing?


I've been on the same course, Eddy. I bought and sold BA twice in the past couple of weeks. My recent sell was this morning, as I have no problem taking a nice profit. My stock positions have given me an opportunity to buy and sell, where the funds don't allow for quick profits. 

I was always willing to take profits when playing single deck Blackjack at Tahoe in the old days. Find the right table(new dealer), played third base and watch the cards of everyone at the table while counting cards. No different with investments...………..understand your investment, and be willing to take profits.

 

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Re: Is Market Always Right?

This is an amazing Wall Street Journal headline:  "The Nearly Nihilistic Market Rally."   https://www.wsj.com/articles/the-nearly-nihilistic-market-rally-11591177302

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Re: Is Market Always Right?

Like to read that one, but I'm no longer a subscriber. This market quick rise seems  strange to me?

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Re: Is Market Always Right?

The lede: "The world is in a state of nearly unparalleled turmoil—except for financial markets, which seem blithely unaware. The S&P 500 was up a further 0.8% Tuesday, following a 0.4% gain Monday. That makes for a 10-day gain of nearly 5%.

That might seem illogical, but it isn’t. Markets care about one set of policy developments to the exclusion of everything else: namely, the fact that government rescue measures seem to be working, at least to the extent of avoiding worst case scenarios...."

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Re: Is Market Always Right?


@Juris2 wrote:

The lede: "The world is in a state of nearly unparalleled turmoil—except for financial markets, which seem blithely unaware. The S&P 500 was up a further 0.8% Tuesday, following a 0.4% gain Monday. That makes for a 10-day gain of nearly 5%.

That might seem illogical, but it isn’t. Markets care about one set of policy developments to the exclusion of everything else: namely, the fact that government rescue measures seem to be working, at least to the extent of avoiding worst case scenarios...."


Hence the reason that "Don't fight The FED" may be of utmost relevance here. And the corollary, "Don't fight politicians willing to further indebt the world to get re-elected". You can quote me on that one - LOL. Still, how organic or sustainable is fueling the markets with debt? 

Anyhow, that level of spending by the government is the only reason I am not taking this opportunity to trim equities much further. I recently cut equities 5%. I will cut another 5% if we go higher. I will buy 5% if we go much lower. Time will tell. And, I believe, that stimulus/FED support in 2009/2010 is a good guideline. So, maybe all this spending has staved of the end of the bull market for the foreseeable future?  We are in uncharted waters. 

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Re: Is Market Always Right?


@FatKat wrote:

Like to read that one, but I'm no longer a subscriber. This market quick rise seems  strange to me?


Agree, FatKat. If the markets were perceived by some to have been over-priced late last year and a recession on the horizon, I find it hard to believe that the economy won't be effected by our current situation.

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Re: Is Market Always Right?


@Juris2 wrote:

The lede: "The world is in a state of nearly unparalleled turmoil—except for financial markets, which seem blithely unaware. The S&P 500 was up a further 0.8% Tuesday, following a 0.4% gain Monday. That makes for a 10-day gain of nearly 5%.

That might seem illogical, but it isn’t. Markets care about one set of policy developments to the exclusion of everything else: namely, the fact that government rescue measures seem to be working, at least to the extent of avoiding worst case scenarios...."


Completely consistent with the driver for the market tank back in March, which was the cut of the Fed Funds rate to, essentially, zero and the all time low in Treasury yields.  The 30 year bond has been below 2% since mid-February.

That is, the liquidity crisis seems to be over and now the 'market' is efficiently determining the winners and losers in the solvency crisis!

ElLobo, de la casa de la toro caca grande
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Re: Is Market Always Right?


@youth wrote:

The Market will do what the Market will do.  Think alternative investments.  

Gabe.

 

 


anything but the above.  Anybody can be a great investor if they start early and invest monthly thru 401K.  All they have to do is select one target fund and keep doing it for 30 years.

Anything else is more complicated and/or needs a lot more time.

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