Stock Market
- Thread starter bulldogcountry1
- Start date
The market is being driven by the response to COVID. It has nothing to do with the economy or the fed. If people think there is good news on responding to the actual virus, it will go up. If not, down. That's been clear for two weeks.
I think people are thinking this is a transient event and are bargain shopping. Nobody is really wanting to sit down and understand the long term effects.
The truth is somewhere in between. There will be a good recovery, but it might be two to three years before the s&p 500 gets back to its peak.
I also think people are still nervous about this disease. It was a load of BS when everyone said the whole damn market went down because of cheap oil from the Saudis. That was rationalization for being scared about coronavirus.
The truth is somewhere in between. There will be a good recovery, but it might be two to three years before the s&p 500 gets back to its peak.
I also think people are still nervous about this disease. It was a load of BS when everyone said the whole damn market went down because of cheap oil from the Saudis. That was rationalization for being scared about coronavirus.
I’m no financial guy (although I’m smarter than mine), but aren’t the COVID response and the economy intertwined?
im guessing the OP question was related to the fact that the market went up today despite the unemployment number(mind boggling).
i dunno, experts chime in...maybe the unemployment was priced in, and the positive gain was due to the bill getting passed?
my 401k is still in 2 bond funds, and hasn’t lost much(relatively) ...I talked to my stupid financial advisor the other day and told him not to even tell me the damage. It’s too late. He didn’t, which is more indication that I’ve taken a ******* bath. He was calling to “check on us”, and when I told him that I’d been furloughed 50%, I swear I thought he was gonna cry.
I know, the ****** line is, “just stay in the market, don’t try and play the dips..etc etc..” but when you see a tsunami coming like this, **** that. How much does it hurt to get into cash for a month and see what happens...
i emailed my FA, on Feb 25th. I asked him if he was rebalancing my portfolio due to CV19 and Sanders looking strong. They said they had been and were rebalancing.
i thought I’d learned in 2008. I guess I kinda did, because I at least saved my current 401k from absolute devastation. Unfortunately, I’m probably going to have to start tapping into my retirement now.
In my opinion, people are realizing it’s been an overreaction and there is a light at the end of the tunnel. It’s not the bubonic plague and despite the jobs numbers being down, we are feeling a cumulative effect of the Fed cutting interest rates, the stimulus bill getting passed, and pandemic exposure models being significantly downgraded.
i think it's a total disconnect at the moment. If the market sees bipartisan responses to actually doing something about that virus, it likes it. I'm not a financial guy either but that's just my observation from the last three weeks.
No one can tell you with any certainty what's behind short term market moves. They often are opposite of what you'd think the news would dictate.
That said, I like one of Buffet's favorite quotes...
"In the short run, the markets are a voting machine, but in the long run they're a weighing machine."
They will eventually work back to true values.
BTW, our Federal Reserve (a government agency, no matter the technical definition) is basically acting like a private investor buying up various bonds and whatever the hell else it wants to with it's magic printing press. They've got your back.
That said, I like one of Buffet's favorite quotes...
"In the short run, the markets are a voting machine, but in the long run they're a weighing machine."
They will eventually work back to true values.
BTW, our Federal Reserve (a government agency, no matter the technical definition) is basically acting like a private investor buying up various bonds and whatever the hell else it wants to with it's magic printing press. They've got your back.
I think there's still another big downturn ahead of us. Unemployment claims hit a record high today, at about twice the number expected, and yet the market went up. It's great that Congress has agreed on a relief package, but that's still a LOT of people out of work.
I think it’s a panic of hedge fund managers FOMO. They’re tickling in to grab some bottom positions. When Q1 Numbers start coming in there’s going to be another twenty percent drop. Its not time to buy yet. When we fly past 2009 unemployed numbers start picking up blue chips
People are starting to creep out of their house with their normalcy bias kicking in. "Just the flu bro 2.0" is about to happen, and that's going to cause another spike in a few weeks. I've already seen it everywhere, "Durr it's just blue states shutting down to hurt Trump"
Its not completely disconnected; the hardest hit sectors are those you'd expect, such as tourism and hospitality. A lot of people are out of work and aren't spending money at stores that aren't open. A lot of small businesses could disappear forever.
I had a broker tell me this and I never forgot it. The stock market is nothing more than a popularity contest of competing news. It usually has nothing to do with reality. That's why when good news comes out, it tanks at times because someone sees inflation 3 months down the road. Sadly, this is the only game in town and its rigged.
Interesting read, and it makes sense. We can all say that no one really ever knows where the bottom is, but when the Dow crept down to nearly 18,000 earlier this week, there seemed to be a unanimous belief that it was time to buy. Even if we did see a little more downturn, there was just too much value there to continue sitting on the sidelines
All that said, I do agree with others that another dip is coming. In my mind, not because of Q1 earnings as we all already know those reports are gonna stink, but because of specific longer term forecasts. In my business, we’re still projecting minimal long term impact, but I think there are going to be some surprises from other sectors
All that said, I do agree with others that another dip is coming. In my mind, not because of Q1 earnings as we all already know those reports are gonna stink, but because of specific longer term forecasts. In my business, we’re still projecting minimal long term impact, but I think there are going to be some surprises from other sectors
2 things generally:
1) The biggest rallies come in bear markets. We're coming off the deepest sell off in stock market history in terms of speed. That leads to a VERY over sold market, so you're primed for a big bounce.
2) The pause in US economic activity should be 1 or 2 Quarters max. Some industries will take much much longer to recover, though, which is why some stocks will undoubtedly get ahead of themselves and fall back to Earth when more numbers and information comes out in the future. Prime example is certain Casinos ceased operations through end of March. That'll be extended no doubt. Cruise lines suspended operations for 60 days. I'd be surprised if that's not extended.
1) The biggest rallies come in bear markets. We're coming off the deepest sell off in stock market history in terms of speed. That leads to a VERY over sold market, so you're primed for a big bounce.
2) The pause in US economic activity should be 1 or 2 Quarters max. Some industries will take much much longer to recover, though, which is why some stocks will undoubtedly get ahead of themselves and fall back to Earth when more numbers and information comes out in the future. Prime example is certain Casinos ceased operations through end of March. That'll be extended no doubt. Cruise lines suspended operations for 60 days. I'd be surprised if that's not extended.
It was priced in to a degree, but we'd be much much lower right now without the stimulus and the Fed stepping into the credit markets and buying up unprecedented amounts of corp bonds and mortgage backed securities. They've really been buying everything in sight in the credit markets to keep liquidity in tact. The stimulus bill is paying 4mos unemployment insurance plus I think stimulus checks. Also basically interest free loans to companies in trouble.
The market dropped over 38% from high to low (last Friday as of now) in 3 weeks. The market priced in a recession no doubt.
The market dropped over 38% from high to low (last Friday as of now) in 3 weeks. The market priced in a recession no doubt.
^^^Agree with a lot of this too. The models are being downgraded bc of the drastic steps taken by isolating, shutting down sporting events, conferences, business travel and leisure travel. Just like no one saw the virus coming, no models saw the effects of isolating coming.
In theory, when you by the stock market, you are buying the projected future earnings of the company you buy (whether you get those earnings in the form of a higher stock price from reinvestment and eventual sale, or dividends) and the amount you pay should should be the NPV of all it's projected future earnings. When you have a large shock like this, that hammers projected earnings in the near term (which count the most in the NPV calculation) but the long term stream of income is not as impacted (ignoring the fact that some stockholders will lose rights to future earnings through a reorg or liquidation). So the market priced in a massive hit to earnings and no we are probalby going to bounce up and down based on whether people decide that they were too pessimistic or optimistic and based on new informaiton changing their expectations. Apparently, at least in the short term, people thought the stimulus was much more important than the unemployment claims.
Potentially a lot. The stock market price swings are very lumpy. If you can miss the bad days, it makes a huge positive difference in your portfolio. Conversely, if you miss the good days, it makes a huge negative difference in your portfolio. If you believe that the stock market will go up over the long term and you believe that it is reasonably efficient, then trying to market time will be a losing proposition for the vast majority of people. You have to not only be better than the market but better than the market by enough to offset the upward trend in stock market prices. For every person that smartly or luckily got out before the big drop, there will be several (or more?) that lose their nerve near the bottom, sell at near the worst possible time, and miss stretches like we've had this week and then a lot fo those will stay out b/c of fear until the market has recovered and they've been left out of it.
Much easier and generally much better to manage that through your portfolio design. I have no clue if we are at the bottom right now, but I think if you have five or more years before you need the money, you will be fine and probably do well if you go in right now and keep contributing regularly for the next 5 years.
ETA: Jumping in and out largely explains why the average investor makes such worse returns than the stock market as a whole. For the twenty year period ending 12/31/15, the average investor made 5.19% a year while the market as a whole returned 9.85%. https://www.thebalance.com/why-average-investors-earn-below-average-market-returns-2388519 (not sure of this source exactly but I think that has been pretty consistently shown to be true across multiple studies).
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I don't completely agree with your conclusion. It just means that fundamentals should have a very prominent place in building your investment plan. Anyone who thinks of the stock market as a way to get rich quick based off just trying to time stocks should just head on over to the casina. A lot of people just gamble in the stock market because it scratches whatever itch that is, but it comes without the same perception issues as losing your money at the boat. I know some of these guys and they always refer to that one time they made money and they always almost have this thing figured out...
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