Treasury go brrrrrrrrrrrrrrrrrrrr.
The Feds gonna make it rain.
Yes, the only thing that made me uncertain of the trouble ahead in the markets was the amount of experts predicting trouble ahead. This a sign that that people have overbought the rebound.
This situation is really testing my personal beliefs. I don’t think we are anywhere close to anything near normalcy. Even if the decision is made that body bags are worth it for the sake of the economy, we are in deep shit. There is zero ability to magically restart the economy, even with Helicopter Ben on steroids.
I’m still buying and holding, but I would not be at all surprised by a 30%+ drop at some point in the next 6 months.
Yeah, I’m now 1/3 Berkshire and 2/3 a Stable Value Fund that seems to pay 1.8% though who the hell knows. It’s invested in corporate bonds w/ a “wrapper” so I have no idea how exactly it works other than it seems to go up a tiny amount each day.
I was all in on stocks couple of weeks ago (posted here) but expected a 13% return over a year or two. So quickly is bonkers, and I just don’t understand it so I’m out. Expecting a lot of bad guidance in earnings this week dissuading the notion that stocks are largely immune from 16 freaking million people suddenly being unemployed.
Even Keed is selling off.
Let’s all become timers and jump back in the market in Dec 2020.
I’m hanging on. What the hell is the point of spending years of research to arrive at a buy and hold strategy if I can’t hang in there at a time like this.
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Oil and gas, sit down restaurants and bars, airlines, in person sports, concerts and other events, the conference industry, resorts, etc. all have a lost year of profitability ahead of them. And then any knock on effects from those businesses. Vast majority of state and local budgets will have to be slashed, and then any knock on effects from that.
And in 2008 we had a major recession simply from housing prices getting to high…
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I’m not going to wait market gets to where I think it should be before buying back in. I’m buying back when we get back to 22,000 or when fallout from Corona is fully known/~beginning of 2021 if 22,000 never comes. Key to market timing, if you are going to gamble, is not to get greedy and to throw in towel if your thesis is proven wrong.
Here is a thought experiment for you:
- Assume that you have a perpetual bond that pays $100 a year and that the applicable discount rate is 10%. This bond trades at $1000.
- Now assume that a deadly pandemic freezes the economy and the bond pays $0 interest this year. Now the bond trades at $900.
- But then assume that because everyone is staying home watching $12/month Netflix rather than spending $200/weekend going out that more money is being saved and discount rates fall to 9%.
- Your bond is worth $1011!
The actual stock market is down 20% because of the pandemic…
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US futures already thinking we get back all of last night’s pesky losses and more. Heaven forbid we have a down week! Shorts continue to take an absolute bath.
The reason buy and hold works is because most people convince themselves that each market crash is a special, this time is different, once every 500 year event that invalidates buy and hold. They have always been wrong, but I dont know maybe this time is different.
We are now only like 17% off the ATH for the S&P 500. Does this make any sense to anyone else?
It’s also further from a free market price discovery tool than it has ever been before. It’s a jopke.
It seems like to me that the markets can decouple from reality but not permanently. Basically all of the crashes we have seen were after reality didn’t match the stock prices for one reason or another. Maybe I am being naive and this time is different for some reasons I don’t understand yet. Although I have a hard time thinking a shock of this magnitude that makes most businesses unprofitable and realistically has at best a very murky end in sight doesn’t completely wreck the underlying businesses that these stock prices are supposed to represent.
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The only explanation that makes any sense to me is the bobman point that it reflects lower expected returns, which seems reasonable in a world of zero interest rates.
An alternative is that people just remain in complete denial regarding the economic carnage that’s in progress.
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Weren’t we already in a zero/negative interest rate situation in most of the world prior to this with USA #1 at barely above zero? Everyone was rushing to refinance mortgages back in February. I do think it has some effect because you have to park your money somewhere but this was already true to some extent.
To ask this question a different way do you guys think we can really set new ATHs in this environment? Because I would be absolutely shocked and we aren’t really all that far away from them.
The 10 year treasury is down 200 basis points in the last year. That’s significant and return expectations for everything are based off treasury rates.
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Tesla is up over 100% in the last month
We’re currently like 17-20% off all-time highs, but that would be worse it not for unprecedented stimulus and the expectation of more massive amounts of stimulus. So with that in mind, the market thinks fair value right now without the stimulus is probably more like DOW 17-20K.
But here’s the thing. Like 40% of the country and probably more than half the market thinks we’re going to reopen in a couple weeks and everything will be fine from there. That’s ~impossible, and if/when people figure that out, who knows what the floor is?
The question is will people figure that out or will there be enough obfuscation of numbers to hide it and keep the economy open?
Warren Buffett hasn’t started buying yet. The collapse part of this hasn’t even started yet IMO. Nobody knows what the real world impacts are going to be yet… Except those of us who are on the front lines in the real world where the data gets generated.
Out here in the real world it’s pretty fucking bleak lol. I’m not going to be firing my first bullet until the S&P is trading under 2000. I’ll be putting in extra bullets as it falls from that point. If the S&P never hits 2000 that’s fine I’ll be opportunistically buying cheap real world stuff instead.
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