I did it last month with a small amount of $ when the conditions were pretty much the same and unless there’s divine intervention I’m gonna lose ~100% of my investment. There’s no telling how long this bubble is gonna last so I’d say avoid it.
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Funny Australian stonks note: last Friday our reserve bank made immensely grim economic proclamations and our market dropped 0’6%. USA jobs data Friday leading into our Monday session and market rises 1.8%. We live and die by the U.S. markets sadly.
I’m assuming you hold long positions in 401k etc? Maybe just re allocate if you think we’re on the precipice then buy back in lower?
For some reason every source I look at is quoting XOM different today, and it’s bouncing around between -1.8% and +.6% across all the sources.
I just checked my IRA, the one that actually matters, ofc that has it at -2.13%. Sweet.
Yeah I agree re being long in tech. I more was piggy backing on an earlier comment about vaccine news. I just would have thought cyclical would explode if Russia vaccine meant anything which in my opinion it doesn’t in reality but market sentiment is anything but!
Those were some good times.
Yes I am long in retirement accounts and always have been. I kind of subscribe to the Riverman school of thought on that and never mess with it. This would purely be for STONKS gambling purposes only.
I absolutely nailed the first crash with spy, cruise, casino puts. But I’ve since given a bunch of it back trying to hit this next ‘inevitable’ crash. I’m mostly out now, and just going to wait until the crash actually starts. I will probably miss the first leg down, but there should still be plenty to capture.
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Kind of a bloggy post, but I think it’s relevant.
Right now I, like many here, feel it in my gut that the markets must be too high. I’ve shifted stocks from VTI to Berkshire and pulled out a decent chunk of cash, but that cashing out was mostly taking into account the possibility of us replacing a bunch of windows and replacing an aging minivan. So now I am sitting here resisting the temptation to lighten up on stocks even more (or buying puts or whatever). Here’s what I force myself to recall:
Back in grad school, I was constantly trying to come up with an idea for a dissertation or other publishable idea related to stock market inefficiency. For some context, the stakes for this are extremely high: if you are able to enter the job market as a rookie with a published paper, you are extremely likely to land a high-paying 6-year contract in a tenure-track position at a research university. And if you’re able to put together 4-5 of those published papers within that 6-year contract period, you’re very likely to get tenure, locking in that high-paying salary in perpetuity. It’s a really good gig, similar to a federal judge’s position.
So the point is, there is a HUGE incentive to identify and publish one of these journal articles. And I had access to all the best data - stock market data, financial statement data, analyst data, management forecast data, portfolio holdings for institutional investors, insider trading, and even some weird datasets like Fortune’s most admired companies.
So I would look for evidence of market inefficiencies where I thought it would be OBVIOUS that they would exist:
- Evidence that managers issue overly optimistic forecasts, leading to temporarily high prices that subsequently reverse.
- Evidence that firms with low analyst following or low institutional ownership were “undiscovered” and more likely to outperform
- Evidence that firms with artificially high earnings (via some type of earnings management) fooled investors and subsequently underperformed
- Evidence that high growth or high P/E firms underperformed
But it always turned out that when I performed a statistical analysis over the entire sample of firms, rather than cherry-picking a few obvious (to me) examples, I could never find robust evidence for these mispricings that I thought would obviously be there. I never found that magical publication. (And I still have never published a paper that shows any evidence of obvious mispricing.)
I say all this not because I think that markets are perfectly efficient and that pockets of mispricing never exist. I’m just forcing myself to remember that markets are incredibly competitive and there have been innumerable times that I have been convinced about obvious mispricings and been completely wrong.
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I think you are pretty much right on with this. A rank amateur like me is probably normally incapable of identifying inefficiency in the stock market so why try. Maybe it is nearly impossible for anyone. The hard thing in making the case for the market being overpriced is that I can’t think of a catalyst for STONKS plunging that hasn’t already happened over the past few months and did not result in a plunge.
-Coronavirus surge
-Mass civil unrest
-33% GDP contraction
-10%+ unemployment 3.5 months after OPEN FOR BUSINESS
-No future stimulus in sight
-College Football at least partially canceled
-20-30 million facing eviction
-Trump looking like he will lose the election
Those have already happened and the market just collectively yawned and kept rocketing up. If those things don’t cause the market to at least take a pause what will? I am starting to think nothing even though my brain thinks that is nonsensical.
Normally I would say that the economic reality should matter to the stock market even though the stock market is not the economy. So far in the last 4 months that does not appear to be happening. As Bored said maybe it never happens again?
What impact would a Biden win in November have? Based on my guess with zero education on this topic would the markets possibly drop at that point, given the possibility that he will undo the tax cuts Trump instituted? I guess supposedly the ramifications of his win have already been “priced in” to the current markets based on the % likelihood of that win…
The real answer is that nobody knows.
A lot of the reason behind the first crash was just the uncertainty about a virus that nobody had ever seen before. Remember back in late Feb a 3-4% IFR was still in play. And also nobody knew the Fed could just inject $5T with the snap of a finger.
I don’t think betting on another huge crash is the smart play. The next 8-9% dip will get bought up pretty fast because people know the Fed will bail them out if it gets any worse.
Maybe look at VIX options if you want to gamble on it? Up or down we don’t know but volatility seems likely.
I’d still do neither.
TSLA now up roughly $40,000,000,000 in market cap in one day on the news of the stock split. For reference the entire market cap of Honda is barely more than TSLA’s one day gain at $46B.
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I think the catalyst is bankruptcies, people can’t pay their rent, their bills, evictions, foreclosures.
But yet to be determined if the government can (or will) stop these things from happening, or how long they can delay what seems inevitable.
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This doesn’t make any sense. Retail orders don’t move the market, so there’s nothing to run in front of.
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Regarding hedging against calamity, I feel pretty good about where I’m positioned right now - 1/4 in Exxon, 1/2 in FXE (Euros vs dollar 1x) and the rest in some international funds and a couple stonks I can’t sell w/o incurring short-term cap gains tax.
I’m up 20% since my previous peak in Feb and 45% from my low point in March/April. If we crash I’ve still got most of my gains locked in. And if the dollar crashes I’ve got Euros. But if we recover I should get some gains out of Exxon and the others.
I don’t feel comfortable being more stonk-exposed at least until we see how back to school plays out. Then the election is going to be a total shitshow.
I feel like it can’t be a bad long term strategy to at least just pick individual stonks or sectors (energy) that haven’t gotten into the recovery party yet. If your index fund has a ton of AMZN/MSFT/AAPL and now TSLA - that seems like a recipe for underperforming.
I think I need to at least diversify into BP though. Exxon seems to be lagging.