OT: Market Advice

[Jeffreauxdawg]

There are a few sharps on this board in regards to the markets so I am going to to gather opinions... Spare me the you need an advisor rap... I have one, but he doesn't know more than anybody else when it comes to short term markets. The handful of people who do have an edge, won't deal with the likes of me... They play with billionaires only.

Mrs Socks works for a public company and has some options I would like to cash. They have been in a blackout for a few months and opened up today (of course the day the **** hits the fan.) They are well into the black and part of me says take what you can, but I also watched thousands of dollars disappear before the market even opened today. Because of her position, she has to get permission to sell any stock from legal, so we have to make our mind up and stick with it. The blackout kicks back in at the end of the month.

So what do we think about this dip...

Will it turn around in a week or two and I just stick in a holding pattern? Even if that means waiting until the next quarter?

Is it the beginning of the end and today is the best it will be for a long time?

 

[dorndawg]

 

[TheStateUofMS]

Stick to long term plan. If you're an older individual pre retirement, your risk should have been dialed back, so you're not perfectly correlated with the market. Long term bonds would be holding up the portfolio quite well actually.

If you're young, you buy the market today. I bought the VOO (S&P500 ETF) today as it crossed the 200 day exponential moving average. I always do this. Only time I buy it actually. I own other individual stocks as well. (I'm young so I'm 100% equities).

Have a plan. Stick to it. Be diversified across MANY asset classes. This is easier with an adviser, but if you're not with an adviser because you're young or don't have the type of money it takes to work with an adviser (outside of Edward Jones), just invest in a target date fund.

Bottom line: If you're older and your portfolio follows the market averages, you're taking on too much risk. If you're younger, you should be buying this drop and increasing 401k/retirement plan contributions while the market is low. If you're in between (35-50) and don't follow the market enough to manage your portfolio, just stay in the target date fund.

There is no systemic risk to the system like in 2008 going on right now. Global growth has slowed. The tariffs/trade war make things slower for a time period. Once companies are moved outside of China into other countries like Vietnam, I guess China tariffs will remain in tact while we do more business with other countries. China is the real long term loser here.

 

[DogStuckAtUM.sixpack]

If you're smart, you could end up with $25 worth of beer.**

 

[TheStateUofMS]

There are a few sharps on this board in regards to the markets so I am going to to gather opinions... Spare me the you need an advisor rap... I have one, but he doesn't know more than anybody else when it comes to short term markets. The handful of people who do have an edge, won't deal with the likes of me... They play with billionaires only.

Mrs Socks works for a public company and has some options I would like to cash. They have been in a blackout for a few months and opened up today (of course the day the **** hits the fan.) They are well into the black and part of me says take what you can, but I also watched thousands of dollars disappear before the market even opened today. Because of her position, she has to get permission to sell any stock from legal, so we have to make our mind up and stick with it. The blackout kicks back in at the end of the month.

So what do we think about this dip...

Will it turn around in a week or two and I just stick in a holding pattern? Even if that means waiting until the next quarter?

Is it the beginning of the end and today is the best it will be for a long time?

My apologies as my post was for the general masses and I didn't answer your question.

Not sure how long correction will last, but things are very oversold on the indicators and without anything systemic out there threatening the system like 2008, I'd wait for a rebound on those options. Day's like today are NEVER the right day to sell unless we're in a 2008 environment, which I don't believe we are.

You're likely going to owe some taxes on those options too. With the market dropping as much as it did (the company may have gone down much more over past week), I'd wait for a better exit.

The timing of when something will end is a tough one. Looking at the charts, each sell off since Jan 2018 (when S&P was first approaching 3,000) was very similar in that it was a quick drop and there wasn't really enough time to analyze things, but when things came back, they came back in a "V," so that'll likely happen at some point.

We're literally a tweet away from a sharp rebound.

 

[UpTheMiddlex3Punt]

I think this latest dip is transient (not related to a fundamental weakness), but it could last a good 3 months. Given that you have a blackout period and a delay, I would wait until a much more stable market before selling.

I am getting tired of this trade war BS. There does not seem to be a coherent strategy to it and China will probably try to run out the clock against Trump. If an economic moderate (i.e. someone whose policy is close to the pro-free-trade doctrine that has dominated US policy for the last four decades) wins the Democratic nomination, they will probably hold off until after the 2020 election because they know they can get a favorable deal if the Democrat wins. If it's someone more radical (relative to historic norms) economically then they might strike a deal with Trump before the election because they have no idea what they would get if the Democrat wins and might see a Trump reelection as more likely, thus strike before he gets reelected.

 

[patdog]

The general advice I've always heard is don't be too invested in your employer's stock. If you sell today and then reinvest in an index fund, it won't matter what the market is doing on the day you sell. You're not leaving the market, just diversifying.

 

[TheStateUofMS]

You're 100% right on China waiting out the clock. The problem is China's long term goals. Go do some research on China 2025 Initiative and One Belt One Road.

I honestly couldn't believe at the time China was laying out their world domination plan through theft and bullying other nations, but they did it. I assume this is one reason why DT is so hard on China.

It does suck no other nations will jump on board and go after China. I can only assume their economies are so weak and fragile (EU, Japan, Canada, etc) they don't have the stomach to fight back against China.

If there's one thing to worry about your children's future job prospects, China's "One Belt One Road" and "China 2025" should make you even more worried. I'm glad we're trying to counter China. Will it work? I don't know, but at least we're trying.

 

[TheStateUofMS]

Sounds like he's not really invested in the company at this point, but will be upon exercise.

I put a little in my company's stock bc I get it quarterly and at a 15% discount. I'm not putting a ton into it though. You're point is valid though. The worst thing that can happen is your retirement being heavily invested in your company's stock and right before you retire, the company (or the economy) goes through a real rough patch and you lose your income and a lot of your retirement nest egg.

 

[coach66]

I agree, well said.

I would wait for things to settle down unless you have confidence issues with the company.

 

[Jeffreauxdawg]

The general advice I've always heard is don't be too invested in your employer's stock. If you sell today and then reinvest in an index fund, it won't matter what the market is doing on the day you sell. You're not leaving the market, just diversifying.

It's a good point and I agree. I am a little fearful of 2 things though...

A. The options are techy and generally over react one way or another so if the s&p drops 2-3% the company stock drops 5-6%. It's not a 1-1 on a day like today, but the diversification alone is worth a little hit.

B. The delay of getting permission, selling stock, and funding my brokerage account is about 7-10 business days. So if this is going to bounce back in a day or two I would rather catch it on a flat spot than a spike down.

Anywho, good advice.

 

[Jeffreauxdawg]

My apologies as my post was for the general masses and I didn't answer your question.

Not sure how long correction will last, but things are very oversold on the indicators and without anything systemic out there threatening the system like 2008, I'd wait for a rebound on those options. Day's like today are NEVER the right day to sell unless we're in a 2008 environment, which I don't believe we are.

You're likely going to owe some taxes on those options too. With the market dropping as much as it did (the company may have gone down much more over past week), I'd wait for a better exit.

The timing of when something will end is a tough one. Looking at the charts, each sell off since Jan 2018 (when S&P was first approaching 3,000) was very similar in that it was a quick drop and there wasn't really enough time to analyze things, but when things came back, they came back in a "V," so that'll likely happen at some point.

We're literally a tweet away from a sharp rebound.

Good info. Thanks.

 

[Jeffreauxdawg]

Sounds like he's not really invested in the company at this point, but will be upon exercise.

I put a little in my company's stock bc I get it quarterly and at a 15% discount. I'm not putting a ton into it though. You're point is valid though. The worst thing that can happen is your retirement being heavily invested in your company's stock and right before you retire, the company (or the economy) goes through a real rough patch and you lose your income and a lot of your retirement nest egg.

I concur. I didn't point out that these options are our bonus money. Retirement is well on track with 401Ks and SEP IRA's. This is taxable income unless I buy and hold for 12 months. The new tax laws make it a lot easier to swallow the difference in capital gains and the ordinary income, but it still adds up. The buy and hold would be a no brainier, but I am stuck in the same blackouts even if we own it outright. While I am currently wooly about the company, a lot can change in a year and my long-term plan has been to take out x every quarter unless something stupid happens. A short seller wrote a hit piece last fall and we held on until the last week before blackout and it paid off. I sure like that money sitting in my Vanguard Total Market Fund... Getting it there is the challenge.

Ultimately, I need to pull out X amount out this year, so it's this period or November. I am just having you guys blow on the dice before I decide when to roll.

 

[Jeffreauxdawg]

I think this latest dip is transient (not related to a fundamental weakness), but it could last a good 3 months. Given that you have a blackout period and a delay, I would wait until a much more stable market before selling.

I am getting tired of this trade war BS. There does not seem to be a coherent strategy to it and China will probably try to run out the clock against Trump. If an economic moderate (i.e. someone whose policy is close to the pro-free-trade doctrine that has dominated US policy for the last four decades) wins the Democratic nomination, they will probably hold off until after the 2020 election because they know they can get a favorable deal if the Democrat wins. If it's someone more radical (relative to historic norms) economically then they might strike a deal with Trump before the election because they have no idea what they would get if the Democrat wins and might see a Trump reelection as more likely, thus strike before he gets reelected.

I have a gut feeling that the President is playing his own manipulation game.. not with currency, but with votes. (Not being negative, it's just high stakes politics if this is what he's doing.)

If he times it right on working out a trade deal with China, dropping tariffs on steel, truly opening up free trade again (In the Spring or Summer of 2020 let's say) the market is going to explode for at least a few months. This will be a big boost going into an election. He can make any deal and the market will consider it a big win at this point because we are all exhausted.

A booming economy is the best bet to win a second term. Ending this *** beating of a trade war is the best bet to put the economy into hyperdrive for a while.

 

[TheStateUofMS]

I think you're likely dealing with a non qualified employee stock option plan (NSO) and you should talk to someone about the tax implications because you likely will pay income tax on the difference between the exercise price and the grant price. Sometimes you can actually forfeit some options when you exercise to pay the tax. It may always be like that.

It's free money, but it's worth having a quick discussion. For instance, it might make sense to exercise some this year and some next year. Just depends.

 

[coach66]

I had a similar thing happen to me in 2001 but I was locked up and couldn't get

out when the bubble busted and all those wonderful options ended up being worthless, very frustrating but 2001 and 2008 were different events than what we are seeing today
I think. With that said the diversify comments are spot on.