Author Topic: Delusional markets stalling my start to aggressive investing  (Read 5053 times)

Body Surfer

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Re: Delusional markets stalling my start to aggressive investing
« Reply #100 on: May 01, 2020, 04:19:58 PM »
OP- Q2 business earnings will be horrible. Yes the market could very well start another nosedive. Our market might be sideways for the next 10-15 which will end FIRE for those in the lower percentages of the retirement goals. But nobody here wants to even think of that dreadful scenario. But this scenario is a very likely outcome. The market does not go up decade after decade like the last 10 years. Probably won't again for awhile.

Market could be sideways for the next 10-15 years

SEdude

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Re: Delusional markets stalling my start to aggressive investing
« Reply #101 on: May 01, 2020, 04:30:49 PM »
Quote
so what is the compelling reason for the markets to continue to go up in the next couple of years? that is the answer i am looking for that outweighs the elephant in the room

@Jamese20 - In an attempt to answer your question directly: Action by the fed and by congress. The fed is going to do everything in its power to prevent widespread economic damage. Here is a read on some of the existing steps they've taken https://www.brookings.edu/research/fed-response-to-covid19/
I'm less sure about congress, as I haven't been reading up on where they stand in regard to further stimulus beyond the CARES act.
But it is entirely possible that a combination of monetary policy and direct stimulus could prop up the economy for a long while. It would probably require drastic, unprecedented measures, but it doesn't seem outside of the realm of possibility. And it may just kick the bucket down the road 5-10 years for an even bigger crash, but that's outside the scope of the next couple years.

Buffaloski Boris

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Re: Delusional markets stalling my start to aggressive investing
« Reply #102 on: May 01, 2020, 04:54:26 PM »

i am trying to see the case for why the market will stabilise and go up even ... sorry but folks havent really put up anything with any weight. you can say i have made my mind up... fine think what you like but i am telling my mind isnt made up otherwise i wouldnt pose the question... just because i am struggling to see a convincing argument from anyone including you doesnt mean i have made my mind up.. i am merely saying... your points dont seem convincing to me for reasons i just outlined

Please be gentle.  This is a fun topic and we don't want it to get shut down prematurely.  Let it have time to ripen, like a really stinky cheese. 

I'm game. I'll give it a go.  Looks like you're UK based?  My rationale is more US based because I'm an American Russian bot. It's actually pretty simple as to why the markets are up so high.  There are a few reasons.  Most importantly is central banks.  They've essentially backstopped the markets.  No, that's an understatement. They've given the markets a liquidity enema. They're printing money like there's no tomorrow. They're printing money till their fingers have worn to nubs from hitting "P" on the keyboard. Throw a few trillion dollars at it and I have no doubt you could raise the dead, let alone equities markets. So based on that I think the question to be asked is not why the markets are where they are, but why aren't they higher? The upshot is the central banks know who they work for, and it isn't the unfortunate sods who just got laid off. New central bank slogan: No part of the 1% left behind!     

Another reason is that after the recovery comes inflation. Maybe. We don't really know but it's a pretty fair guess.  Most of the folks posting here are too young to remember living under significant inflation.  Amongst financial assets other than commodities, equities are almost always better than bonds when it comes to inflation.  So, investors are piling into equities rather than taking the whole .5% (if you're lucky) that you'll get on government bonds. Supply and demand. 

Finally, the reason that you've already alluded to. There are a lot of folks who believe in the Efficient Markets Hypothesis.  I'm not one of them. At least in the short term.  I believe that markets are a reflection of human behavior.  Which is to say that the the reason why the markets are bat**** crazy is because PEOPLE are bat**** crazy!  If you're trying to put a veneer of logic on this, you're frankly kidding yourself.  You might as well use horoscopes or a voodoo priest to predict short term market moves.  It'll probably work out better.

All that said, in the very long run, markets do seem to go up and offer returns above inflation.

You're in the UK so I'm a little mystified at the concern.  The PE ratios and CAPE ratios for the UK market are actually rather attractive as compared to other markets. The US market is very pricey.  YMMV.         
« Last Edit: May 01, 2020, 07:32:15 PM by Buffaloski Boris »


nereo

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Re: Delusional markets stalling my start to aggressive investing
« Reply #104 on: May 01, 2020, 07:43:52 PM »
If you think the stocks are currently overvalued, what did you think back in January, when the PE ratios were higher?  Weren't you putting your money in via your pension then?

Covered this already.. Still waiting for a reason for why this market won't go down that adds up... Instead it's just overbearing patronising high horse type responses.. Mainly because they don't have a response that adds up other than finance blog owners clichés

Sounds like you are waiting for us to affirm what you already believe, and are rejecting out of hand any suggestions that runs counter to that.  Which is, in a neat little package, confirmation bias.

The irony here is most of the posters involved in this thread (at least the ones that I know) share similar feelings that the market will be rocky for the next several quarters, myself included.  Yet few of us are running from our ISP and AAs.  Those are not contradictory actions.

Buffaloski Boris

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hodedofome

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Re: Delusional markets stalling my start to aggressive investing
« Reply #106 on: May 01, 2020, 08:41:01 PM »
OP: You sound like a pessimistic and fearful person. Might I suggest not investing on the long side where the optimists triumph the most but being a short seller or long volatility trader instead.

ChpBstrd

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Re: Delusional markets stalling my start to aggressive investing
« Reply #107 on: May 01, 2020, 09:57:03 PM »
@Jamese20 I agree with you that little has been offered here except cliches and the story of how going 100% long has worked great for over a decade so far and proves that past performance predicts future results. No doubt there is a lot of wishful thinking digging people into their opinions, both on the side of people who are 100% long and people who sold everything to wait for the next shoe to drop. You are wise to ask experienced investors for counterarguments.

Your critics make a good point when they ask at what level you would be willing to buy back in. You DO need a buy-in criteria and you HAVE NOT talked value yet. There are some traps in doing so:

Trap #1 is that if the market falls further, that fall might be accompanied by more bad news, which might cause a cautious person to lower their buy-in price even further. E.g. One might say "I'll buy in at 15% lower than today's price". If millions are infected in India and Latin America, stock prices might fall another 15%. Is that the buy point, or is the buy point now 15% lower because of the damage in India and Latin America? If one keeps lowering their buy-in price with every drip of bad news and every drop in the market, eventually they never get in.

Trap #2 is setting your buy-in criteria as a metric based on current numbers. Trailing twelve month PE ratio is a good example. In May 2009, the S&P 500's TTM PE ratio hit an astronomical 123 because so many companies had shrunken earnings or were reporting huge losses. I remember people in 2009 shaking their heads at stocks and saying they needed to fall further to have reasonable PE ratios before they would buy in. Ooopsie. I'm anchoring my earnings assumptions at 2019 levels because they will probably return to those levels in about 2-3 years. 2020 and probably 2021 earnings will be anomalies just like 2009.

Trap #3 is stubbornness from being right. If 3 months from now stocks have fallen 40%, I will perfectly understand your decision to review this thread and contemplate your steadfastness with great satisfaction. However, it will be very, very hard at that moment to reverse your position. Humans like to continue doing what was rewarding. If choosing the bearish path is making you feel smart, it will be nearly impossible to reverse that decision, especially while in the grip of traps #1 and #2.

What do I know? My pedigree is having been an investor through 2000-2003 and 2007-2009. I know what bad economic conditions look like, and these are the worst yet. I remember all the above exact same internet forum arguments from back then, except for @nereo 's astounding idea that the bankruptcy of millions of small businesses and the loss of all those jobs will be good for large businesses - prize winner for wildest bull argument! I fell into each and every one of the traps listed above. I've seen bull traps at the beginning of severe recessions and I've been faked out by bad news and crystal-ball narratives I told myself a few times. I now know never to bet everything on a particular narrative coming to fruition, no matter how convinced I am. Hedge thyself!

I too think the market is overpriced compared to the reduction in economic growth potential. The S&P should have a PE ratio of about 14-15 instead of 20. Why reach for an earnings yield of (1/20 =) 5% when the downside potential of the current crisis is probably another 60-70%? Why buy junk bonds (HYG) for yields under 6%, when the majority of these companies are likely to default in the next 24 months? Those are shitty odds, even using 2019 numbers. I am unmoved by the claims I should overpay for stocks because treasury rates are near zero.

I've been happily hedging SPY and QQQ with put options since 2018, but that strategy is too expensive at this moment. Instead I've been looking for volatile and hard-hit value stocks like SBRA and GEO which can be relied upon to deliver >10% ROE from mostly government revenue streams and which can be bought for fat discounts by selling overpriced put options. When assigned, I might sell calls and keep repeating this process while volatility remains high and options premiums remain fat. I'll go 100% long in the S&P again when the price over 2019 earnings is 15. If that never happens, I will have sold so much options premium that I might FIRE on bonds in a couple of years. If it does happen, there's a case to be made for retiring on a 5% WR because so much SORR risk will be over with, as it was for other cohorts where >5% was a safe withdrawal rate.

Jamese20

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Re: Delusional markets stalling my start to aggressive investing
« Reply #108 on: May 02, 2020, 03:12:02 AM »
OP: You sound like a pessimistic and fearful person. Might I suggest not investing on the long side where the optimists triumph the most but being a short seller or long volatility trader instead.

i dont think so, i sound logical in my own view... and the weight of reasoning for market declines seems to drastically and heavily outweigh the reasons for why markets have stabilised and will continue to march upwards in the current climate. for examples the stimulus package hasnt saved the unemployment figures .. it may have prevented a total disaster scenario but thats about it.. as the numbers are showing (other than the stock market metric)

this is not about optimism or pessimism, it is about logic and reason and 99% of the time its really extremely difficult to see how a market overall is cheap or expensive.....ive said this before but each economic downtuirn has had one underlying thing....people out there trying to create and generate business and overcome the downturn... most economic activity is in a coma and the ones running are seeing massive declines because most people are not doing their usual thing, this will hurt earnings hard and take time to recover and should be reflected in the markets... 

So, on that basis... i will think i will wait for Q2 earnings and take a view..if it is still at these strange levels i will just start to invest slowly into markets that appear better value like my own country... and if after that the market still looks nuts i will just bite the bullet and go on my main plan of investing aggresssively each month and accept what comes my way assuming life is back to a more normal mode.

i dont think 3-6 months of building up more cash wealth is going to hurt me or my plans, after all - anything could happen at this stage with any of our jobs.


RogerOS

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Re: Delusional markets stalling my start to aggressive investing
« Reply #109 on: May 02, 2020, 06:10:38 AM »
When I read your this topic's title I thought: finally, someone who understands me! Every private individual I know thinks the recent stock rally is absolutely crazy. It seems to me that you are looking for confirmation that you are making the right decision by delaying investing.

I can confirm that many people agree with you that the recent rally is absolutely delusional and that such high PE ratios make little sense in the current situation (see the Top is in! thread). I'm still wondering who is pushing the prices up. However, no one can confirm that you are on the right track, only time will tell.

Even though you might not gain much long term by following this strategy, I don't think you will loose much either by delaying your investments a few months.

Buffaloski Boris

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Re: Delusional markets stalling my start to aggressive investing
« Reply #110 on: May 02, 2020, 07:47:07 AM »
OP: You sound like a pessimistic and fearful person. Might I suggest not investing on the long side where the optimists triumph the most but being a short seller or long volatility trader instead.

i dont think so, i sound logical in my own view... and the weight of reasoning for market declines seems to drastically and heavily outweigh the reasons for why markets have stabilised and will continue to march upwards in the current climate. for examples the stimulus package hasnt saved the unemployment figures .. it may have prevented a total disaster scenario but thats about it.. as the numbers are showing (other than the stock market metric)

this is not about optimism or pessimism, it is about logic and reason and 99% of the time its really extremely difficult to see how a market overall is cheap or expensive.....ive said this before but each economic downtuirn has had one underlying thing....people out there trying to create and generate business and overcome the downturn... most economic activity is in a coma and the ones running are seeing massive declines because most people are not doing their usual thing, this will hurt earnings hard and take time to recover and should be reflected in the markets... 

So, on that basis... i will think i will wait for Q2 earnings and take a view..if it is still at these strange levels i will just start to invest slowly into markets that appear better value like my own country... and if after that the market still looks nuts i will just bite the bullet and go on my main plan of investing aggresssively each month and accept what comes my way assuming life is back to a more normal mode.

i dont think 3-6 months of building up more cash wealth is going to hurt me or my plans, after all - anything could happen at this stage with any of our jobs.

This has been a great topic as your question has drawn out some really passionate posters who have tried to explain why they think the way they do.  And I've gotten a better insight to some folks way of thinking.  We have some really, really smart and wealthy people who post here, and the back and forth has put them on the top of their game.  So I'm thankful for that.  And I appreciate your posts that drew it out of them.  Now I'd be more thankful if this topic really went into the ditch like they sometimes do, but that's just my preference. 

This is investing and very, very few people have figured out the "secret sauce" of the markets. I'm aware of only one group out there that seems to have consistently beaten the markets*. And they aren't letting us in on it!  The rest of us are applying our best guesses.

I don't like to give specific investing advice but I do think your position of staying in cash in the short term is logical and defensible. Cash is still king. It's also where I (mostly) happen to be.  I can't wrap my head around the idea of paying sky-high PE ratios for US equities. So I gave up trying.  I buy international equities indexes with significantly lower PE and CAPE ratios and will continue to do so slowly in accordance with my IPS.  At the point where I think US equities are fairly priced, I'll happily dive in. I've also defined that point in my IPS.  In doing so I'll hopefully avoid some of the traps that @ChpBstrd identified above.

Having an IPS to guide my decisions is important as it has forced me to calmly think through my strategy and what is important to me and to put those thoughts down in one place.  Revisiting it when the markets are being more crazy than usual does help. 

*(Renaissance Technologies)

bradleylsmith

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Re: Delusional markets stalling my start to aggressive investing
« Reply #111 on: May 02, 2020, 09:41:36 AM »
I'll take a crack at this. A lot of unsettling emotion is going around here and in my friend circles that is weighing me down as well. So I'm mainly writing this to myself to keep me sane.

I work for a company that is not in the SP500, but is 30 billion+ market cap. Our main product is data. Our business has increased 950% since the virus started. We live in the data age. Data is the new oil and this virus has sprung a massive new leak of the stuff.

Looking at all the top companies in the SP500, I can see how a lot of them would greatly benefit from this.

the top 5 companies are Facebook, Alphabet, Amazon, Apple and Microsoft.  They account for 17.5% of the SP500 (https://www.cnbc.com/2020/01/28/sp-500-dominated-by-apple-microsoft-alphabet-amazon-facebook.html) Can you see how this virus is a huge boon to every single one of those? Not just in a "doubling" factor, but in a 950% increase in business way? I can see looking back on this how every tech company benefits, and a lot of B2B consumers of tech as well. Costco getting more online shopping, more personal data from that? Check. People becoming more willing to buy things online instead of physical forms thus increasing margins? Check.

This virus has the potential to leap us forward 20 years into where we would otherwise be in terms of society. Yes, just like every other transition it will be painful, and we are getting a nice 10% discount right now for that pain. This is offset by the potential opportunity being far greater than it was a mere few months ago.


Jamese20

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Re: Delusional markets stalling my start to aggressive investing
« Reply #112 on: May 02, 2020, 09:56:43 AM »
I'll take a crack at this. A lot of unsettling emotion is going around here and in my friend circles that is weighing me down as well. So I'm mainly writing this to myself to keep me sane.

I work for a company that is not in the SP500, but is 30 billion+ market cap. Our main product is data. Our business has increased 950% since the virus started. We live in the data age. Data is the new oil and this virus has sprung a massive new leak of the stuff.

Looking at all the top companies in the SP500, I can see how a lot of them would greatly benefit from this.

the top 5 companies are Facebook, Alphabet, Amazon, Apple and Microsoft.  They account for 17.5% of the SP500 (https://www.cnbc.com/2020/01/28/sp-500-dominated-by-apple-microsoft-alphabet-amazon-facebook.html) Can you see how this virus is a huge boon to every single one of those? Not just in a "doubling" factor, but in a 950% increase in business way? I can see looking back on this how every tech company benefits, and a lot of B2B consumers of tech as well. Costco getting more online shopping, more personal data from that? Check. People becoming more willing to buy things online instead of physical forms thus increasing margins? Check.

This virus has the potential to leap us forward 20 years into where we would otherwise be in terms of society. Yes, just like every other transition it will be painful, and we are getting a nice 10% discount right now for that pain. This is offset by the potential opportunity being far greater than it was a mere few months ago.

i see the exact opposite for those... especially facebook and apple in particular and amazon didnt make any money q1 this year already - creative thinking none the less

maizefolk

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Re: Delusional markets stalling my start to aggressive investing
« Reply #113 on: May 02, 2020, 10:14:30 AM »
i see the exact opposite for those... especially facebook and apple in particular and amazon didnt make any money q1 this year already - creative thinking none the less

Apple made money in Q1.

Quote
Apple today announced financial results for its fiscal 2020 second quarter ended March 28, 2020. The Company posted quarterly revenue of $58.3 billion, an increase of 1 percent from the year-ago quarter, and quarterly earnings per diluted share of $2.55, up 4 percent.

Facebook made money in Q1 too.

Even amazon, notorious for trying to never report a net profit, made money in Q1.

Jamese20

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Re: Delusional markets stalling my start to aggressive investing
« Reply #114 on: May 02, 2020, 10:20:15 AM »
i see the exact opposite for those... especially facebook and apple in particular and amazon didnt make any money q1 this year already - creative thinking none the less

Apple made money in Q1.

Quote
Apple today announced financial results for its fiscal 2020 second quarter ended March 28, 2020. The Company posted quarterly revenue of $58.3 billion, an increase of 1 percent from the year-ago quarter, and quarterly earnings per diluted share of $2.55, up 4 percent.

Facebook made money in Q1 too.

Even amazon, notorious for trying to never report a net profit, made money in Q1.

amazon is having to spend 4bn on corona related things... so although the q1 states operating profit... its going to be wiped out essentially

Jamese20

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Re: Delusional markets stalling my start to aggressive investing
« Reply #115 on: May 02, 2020, 10:23:07 AM »
You’re not crazy, the markets are being very weird. This global pandemic is unlike anything we’ve seen in our lifetimes, it is not in any way under control yet, it has already had sweeping effects that will continue to ripple over the next few years, so it doesn’t warrant the V recovery we’ve seen to date.

While the other commenters are not wrong that continuing to consistently buy regardless of the price is all you need to get to retirement, you’re likely not wrong that you will be able to buy more shares for your dollars in the near future. I’m betting on that as well. But I’ll be fine if my bet doesn’t pay off, and my re-entry into the market is not based off share price but instead based on when the number of US covid recoveries are consistently outpacing the number of new US covid cases enough that I can be reasonably confident that the pandemic portion of this crisis is under control. We’re currently sitting on more than 880,000 active *confirmed* cases in the US (and likely an order of magnitude more of undetected active cases, based off preliminary community testing in LA and others). We are not ready to be reopening and getting back to business, but the market is acting like we are.

I’ve been investing in index funds and continuing the buy regardless of price for my whole investing career since 2002. This time is different. No other time was different, because no other time did I have access to definitive pandemic outbreak numbers to see that things were not only not under control, but worse than they were when they were so bad we had to initiate the shut downs in the first place. I stayed in the market during the first initial drop, when things could go either way. I even reallocated heavier into stocks near the bottom (when the whole country was taking the pandemic seriously and acting aggressively to mitigate it) and would have reallocated heavier again if it hit another drop trigger mark, according to my IPS.

If timing the market now is going to make you time the market later, then this will likely be a net negative for your future net worth. But if timing the market now is a one time thing based on extraordinary circumstances that we actually have data for, then this will likely be a net positive for your future net worth. This is why I wouldn’t recommend doing this to most people.

thanks for this - yes this is one time only..im already invested in pensions all in stocks havent touched them due to any factors here.. but i have been doing that for years so what is the point? my 2nd stage is coming upon me and it is a new pot..  a pot i want to get the most of growth out of. the act of shutting down the economy is a suicidal one which i dont see how any well reasoned person cant see the market is in crazytown..... people are saying we dont know.. we really do know... in my view


if you are so convinced you 'know' then why are you asking a message board to confirm?

i think this is the last time i will respond to a waste of time response... if you are not going to come forward with anything sensible then why post a response? see anyone can answer anything with a question instead of a good counter argument

waltworks

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Re: Delusional markets stalling my start to aggressive investing
« Reply #116 on: May 02, 2020, 10:41:45 AM »
BB, it's happening! The rails are getting slick! OP is asserting things that he/she didn't actually check and getting snippy, Maizeman is fact-checking, we're getting there!

Jamese20, seriously? If you're trolling, chapeau! If not, claiming that you're getting only garbage responses while simultaneously ignoring people fact-checking your erroneous claims is pretty rich.

-W

Jamese20

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Re: Delusional markets stalling my start to aggressive investing
« Reply #117 on: May 02, 2020, 10:46:58 AM »
BB, it's happening! The rails are getting slick! OP is asserting things that he/she didn't actually check and getting snippy, Maizeman is fact-checking, we're getting there!

Jamese20, seriously? If you're trolling, chapeau! If not, claiming that you're getting only garbage responses while simultaneously ignoring people fact-checking your erroneous claims is pretty rich.

-W

the irony of this response

waltworks

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Re: Delusional markets stalling my start to aggressive investing
« Reply #118 on: May 02, 2020, 10:47:33 AM »
I thought you weren't going to respond to garbage?

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Jamese20

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Re: Delusional markets stalling my start to aggressive investing
« Reply #119 on: May 02, 2020, 10:50:38 AM »
I thought you weren't going to respond to garbage?

-W

you said it.. and i did say "i think"

waltworks

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Re: Delusional markets stalling my start to aggressive investing
« Reply #120 on: May 02, 2020, 11:01:32 AM »
The next big question: will OP insist on having the last word?

Even if it's just $50 a week, start investing, dude.

-W

Buffaloski Boris

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Re: Delusional markets stalling my start to aggressive investing
« Reply #121 on: May 02, 2020, 11:13:36 AM »
I'll take a crack at this. A lot of unsettling emotion is going around here and in my friend circles that is weighing me down as well. So I'm mainly writing this to myself to keep me sane.

I work for a company that is not in the SP500, but is 30 billion+ market cap. Our main product is data. Our business has increased 950% since the virus started. We live in the data age. Data is the new oil and this virus has sprung a massive new leak of the stuff.

Looking at all the top companies in the SP500, I can see how a lot of them would greatly benefit from this.

the top 5 companies are Facebook, Alphabet, Amazon, Apple and Microsoft.  They account for 17.5% of the SP500 (https://www.cnbc.com/2020/01/28/sp-500-dominated-by-apple-microsoft-alphabet-amazon-facebook.html) Can you see how this virus is a huge boon to every single one of those? Not just in a "doubling" factor, but in a 950% increase in business way? I can see looking back on this how every tech company benefits, and a lot of B2B consumers of tech as well. Costco getting more online shopping, more personal data from that? Check. People becoming more willing to buy things online instead of physical forms thus increasing margins? Check.

This virus has the potential to leap us forward 20 years into where we would otherwise be in terms of society. Yes, just like every other transition it will be painful, and we are getting a nice 10% discount right now for that pain. This is offset by the potential opportunity being far greater than it was a mere few months ago.

That’s a really cool insight. Thanks for posting it.

I’m an optimist so I really like this perspective. As well as the tech companies may do, I wonder if that will pale compared to what we’ll see as a result of a sudden shift to more use of tech? This whole shut down has been illuminating for me. I’ve thought of myself as a Luddite, generally a late adopter or tech stuff. But I’m coming to realize that compared to most people, I adopt tech fairly quickly. Terrifying as that may be. So there is a huge potential as there really isn’t much of a choice but to adopt more remote tech solutions.

maizefolk

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Re: Delusional markets stalling my start to aggressive investing
« Reply #122 on: May 02, 2020, 11:16:00 AM »
i see the exact opposite for those... especially facebook and apple in particular and amazon didnt make any money q1 this year already - creative thinking none the less

Apple made money in Q1.

Quote
Apple today announced financial results for its fiscal 2020 second quarter ended March 28, 2020. The Company posted quarterly revenue of $58.3 billion, an increase of 1 percent from the year-ago quarter, and quarterly earnings per diluted share of $2.55, up 4 percent.

Facebook made money in Q1 too.

Even amazon, notorious for trying to never report a net profit, made money in Q1.

amazon is having to spend 4bn on corona related things... so although the q1 states operating profit... its going to be wiped out essentially

So stranger on the internet advice, take it for what it is worth, but I'd suggest it might be a good time to sit back and think for a moment about what just happened.

1) You thought that three of the biggest companies in the USA didn't make a profit in Q1. This belief played into you reaching the conclusion: "i cannot think of any realistic scenario where we dont have declining few years in terms of stocks."

2) I pointed out that all three of the companies you listed actually did make a profit in Q1.

3) Instead of pausing to reflect on a piece of the data you thought you knew being incorrect and thinking about whether this new data might change your conclusion, based at least in small part on that incorrect belief about apple, amazon, and facebook, you instead immediately jumped to new, different, assertion support the same conclusion: amazon might not report a net profit in the future (Q2).

Without saying that this is what you personally are doing, the pattern above is one a lot of folks exhibit when people start out with a conclusion they feel must be true and then reason backwards to try to find evidence or logical arguments to back up that feeling. And people who do this, finding ways to convince themselves gut feelings are supported by evidence and reasoning, then to do really poorly in the stock market, selling low when they and everyone around them feel pessimistic, and buying high when they and everyone around them feel optimistic.

Again, I'm not saying you're one of those people. Just that it's a very easy trap to fall into, so it's worth taking a little time to think and reflect.

Jamese20

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Re: Delusional markets stalling my start to aggressive investing
« Reply #123 on: May 02, 2020, 11:19:03 AM »
i see the exact opposite for those... especially facebook and apple in particular and amazon didnt make any money q1 this year already - creative thinking none the less

Apple made money in Q1.

Quote
Apple today announced financial results for its fiscal 2020 second quarter ended March 28, 2020. The Company posted quarterly revenue of $58.3 billion, an increase of 1 percent from the year-ago quarter, and quarterly earnings per diluted share of $2.55, up 4 percent.

Facebook made money in Q1 too.

Even amazon, notorious for trying to never report a net profit, made money in Q1.

amazon is having to spend 4bn on corona related things... so although the q1 states operating profit... its going to be wiped out essentially

So stranger on the internet advice, take it for what it is worth, but I'd suggest it might be a good time to sit back and think for a moment about what just happened.

1) You thought that three of the biggest companies in the USA didn't make a profit in Q1. This belief played into you reaching the conclusion: "i cannot think of any realistic scenario where we dont have declining few years in terms of stocks."

2) I pointed out that all three of the companies you listed actually did make a profit in Q1.

3) Instead of pausing to reflect on a piece of the data you thought you knew being incorrect and thinking about whether this new data might change your conclusion, based at least in small part on that incorrect belief about apple, amazon, and facebook, you instead immediately jumped to new, different, assertion support the same conclusion: amazon might not report a net profit in the future (Q2).

Without saying that this is what you personally are doing, the pattern above is one a lot of folks exhibit when people start out with a conclusion they feel must be true and then reason backwards to try to find evidence or logical arguments to back up that feeling. And people who do this, finding ways to convince themselves gut feelings are supported by evidence and reasoning, then to do really poorly in the stock market, selling low when they and everyone around them feel pessimistic, and buying high when they and everyone around them feel optimistic.

Again, I'm not saying you're one of those people. Just that it's a very easy trap to fall into, so it's worth taking a little time to think and reflect.

when you post misrepresentations of what i said i stopped reading at this very misrepresentation

"1) You thought that three of the biggest companies in the USA didn't make a profit in Q1. This belief played into you reaching the conclusion: "i cannot think of any realistic scenario where we dont have declining few years in terms of stocks.""

maizefolk

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Re: Delusional markets stalling my start to aggressive investing
« Reply #124 on: May 02, 2020, 11:28:42 AM »
It's a word for word quote from your post on the first page of this thread:

i cannot think of any realistic scenario where we dont have declining few years in terms of stocks... the unrerlying assets are going to suffer in the short term for a couple of years and unemployment levels will be testing depression time

Edit: Although upon reflection I guess I don't know that your belief about Apple, Facebook, and Amazon's earnings played into reaching the conclusion I quoted. Are you saying they are completely independent of each other?
« Last Edit: May 02, 2020, 11:30:47 AM by maizeman »

Jamese20

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Re: Delusional markets stalling my start to aggressive investing
« Reply #125 on: May 02, 2020, 11:30:27 AM »
It's a word for word quote from your post on the first page of this thread:

i cannot think of any realistic scenario where we dont have declining few years in terms of stocks... the unrerlying assets are going to suffer in the short term for a couple of years and unemployment levels will be testing depression time

no... this part "You thought that three of the biggest companies in the USA didn't make a profit in Q1" - is it a lie or just not properly reading?

maizefolk

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Re: Delusional markets stalling my start to aggressive investing
« Reply #126 on: May 02, 2020, 11:32:47 AM »
It's a word for word quote from your post on the first page of this thread:

i cannot think of any realistic scenario where we dont have declining few years in terms of stocks... the unrerlying assets are going to suffer in the short term for a couple of years and unemployment levels will be testing depression time

no... this part "You thought that three of the biggest companies in the USA didn't make a profit in Q1" - is it a lie or just not properly reading?

Oh your quote on that statement is here:

especially facebook and apple in particular and amazon didnt make any money q1 this year already

I assumed you wouldn't be confused about this one since it was actually quoted and linked in the post you just responded to while your other statement was simply put in quotation marks.
« Last Edit: May 02, 2020, 11:34:55 AM by maizeman »

Jamese20

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Re: Delusional markets stalling my start to aggressive investing
« Reply #127 on: May 02, 2020, 12:01:07 PM »
It's a word for word quote from your post on the first page of this thread:

i cannot think of any realistic scenario where we dont have declining few years in terms of stocks... the unrerlying assets are going to suffer in the short term for a couple of years and unemployment levels will be testing depression time

no... this part "You thought that three of the biggest companies in the USA didn't make a profit in Q1" - is it a lie or just not properly reading?

Oh your quote on that statement is here:

especially facebook and apple in particular and amazon didnt make any money q1 this year already

I assumed you wouldn't be confused about this one since it was actually quoted and linked in the post you just responded to while your other statement was simply put in quotation marks.

yes it clearly states i mention amazons earning only nothing about facebooks or apples

Radagast

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Re: Delusional markets stalling my start to aggressive investing
« Reply #128 on: May 02, 2020, 12:04:44 PM »
I'll take a shot since I didn't yet. Here is a post I made about a six weeks ago:

This is why it is a good idea for new investors to set their investments on autopilot. What we have here is a chart of an investor who invested $1,000 into Vanguard Total Stock Market (VTSAX) every month starting in January, 2008. You can't tell from the chart, but that was exactly the right timing for when the economy drove off a cliff.

Over these three years, the market lost value at an annualized rate of -1.63% as seen in the Time Weighted Rate of Return (TWRR). Wowza!

Our intrepid investor made money on their investments at an annualized rate of 14.48% as seen in the Money Weighted Rate of Return (MWRR)

Just by making regular contributions this person beat the market by 16.1% annualized over three years! They have an amount of money nearly equal to four years of contributions after just three years! That is the kind of return that would make even Warren Buffet proud. Anybody using any method of market timing would have been very unlikely to have made a higher rate of return. People who sold their investments at any point in this cycle almost certainly did much worse.

The important thing to understand is that a new investor making regular contributions without stopping is the closest thing that exists to magic in the investing world. It is guaranteed to reduce investment risk and increase returns during the worst times, and the worse things get the better it works. And yet it is so simple that you can literally set it up once and then walk away for a decade.

Realize that stocks do not become cheap without a strong reason. What we are seeing now is one of those strong reasons. Any time that stocks become cheap, there will always be a feeling in the air at least a little bit similar to this (though maybe not with as much concern for personal health). Not everybody will remain employed to do this, but that is how the world goes. If you are able to invest and fear getting caught up in events, now is the best time to follow a set-it-and-forget-it investing strategy.

Link to this back test at PortfolioVisualizer:
https://www.portfoliovisualizer.com/backtest-portfolio?s=y&timePeriod=2&startYear=2008&firstMonth=1&endYear=2010&lastMonth=12&calendarAligned=true&initialAmount=1000&annualOperation=1&annualAdjustment=1000&inflationAdjusted=true&annualPercentage=0.0&frequency=2&rebalanceType=1&absoluteDeviation=5.0&relativeDeviation=25.0&showYield=false&reinvestDividends=true&portfolioNames=false&portfolioName1=Portfolio+1&portfolioName2=Portfolio+2&portfolioName3=Portfolio+3&symbol1=VTSAX&allocation1_1=100

Another source:
Even if you have perfect knowledge of when the bottom will happen, by delaying investing you will only come out ahead by 0.4% annually: https://ofdollarsanddata.com/why-market-timing-can-be-so-appealing/

If you live in the UK, maybe you'd feel more comfortable not investing in the US at market weight, and instead prefer the cheap ol' UK. Use 25% UK stock, 25% US stock, 25% Ex-US Ex-UK stock, 25% bonds. Not only will that underweight the US (which is also probably a good risk reduction move for someone not living there), it will also put you on a sound theoretical footing for currency risk.

maizefolk

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Re: Delusional markets stalling my start to aggressive investing
« Reply #129 on: May 02, 2020, 12:26:07 PM »
Oh your quote on that statement is here:

especially facebook and apple in particular and amazon didnt make any money q1 this year already

I assumed you wouldn't be confused about this one since it was actually quoted and linked in the post you just responded to while your other statement was simply put in quotation marks.

yes it clearly states i mention amazons earning only nothing about facebooks or apples

You said that facebook and apple and amazon didn't make any money in q1. It is right there in your own words.

Look, I'm not going to keep arguing with you about what you did or didn't say when there is a written record.

Particularly when even if we ignore what you originally said, what you are now saying you said "amazon didnt make any money q1" would still be incorrect, since they made 2.5B in profit in Q1.

And frankly, your writing in this thread as been unclear enough I could even believe that you wrote that without intending to mean what you actually said.

Good luck to you.

Jamese20

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Re: Delusional markets stalling my start to aggressive investing
« Reply #130 on: May 02, 2020, 12:41:32 PM »
Oh your quote on that statement is here:

especially facebook and apple in particular and amazon didnt make any money q1 this year already

I assumed you wouldn't be confused about this one since it was actually quoted and linked in the post you just responded to while your other statement was simply put in quotation marks.

yes it clearly states i mention amazons earning only nothing about facebooks or apples

You said that facebook and apple and amazon didn't make any money in q1. It is right there in your own words.

Look, I'm not going to keep arguing with you about what you did or didn't say when there is a written record.

Particularly when even if we ignore what you originally said, what you are now saying you said "amazon didnt make any money q1" would still be incorrect, since they made 2.5B in profit in Q1.

And frankly, your writing in this thread as been unclear enough I could even believe that you wrote that without intending to mean what you actually said.

Good luck to you.

i dont care what you believe.. its just a fact i am only referring to amazons earnings... i call out 2 companies in particular that i thought the opposite to the gentlemans response... and i mention on the end about amazon earnings in Q1.. you misinterpreted and misread what i said to suit your narrative and are simply incorrect

Viking Thor

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Re: Delusional markets stalling my start to aggressive investing
« Reply #131 on: May 02, 2020, 12:49:58 PM »
Just to note 10% off the market high keeps getting mentioned and that's incorrect. The SP 500 is 17% off its market high.

International stocks are 21% off their 52 week high and even more than that off their all time high.

So stocks are significantly cheaper than all time highs.

Of course people argue they should be down more with the economy catering but essentially stocks are priced for long term earnings, terrible economic performance for the next year is priced into stocks already.

We could see stocks drop further but no one knows for sure.

waltworks

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Re: Delusional markets stalling my start to aggressive investing
« Reply #132 on: May 02, 2020, 01:01:23 PM »
I call troll. Nobody else would look at a quote of their own post and deny they said it.

Either that, or OP has actual mental health problems and probably *shouldn't* be investing in anything on their own.

-W

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Re: Delusional markets stalling my start to aggressive investing
« Reply #133 on: May 02, 2020, 01:07:09 PM »
BB, it's happening! The rails are getting slick! OP is asserting things that he/she didn't actually check and getting snippy, Maizeman is fact-checking, we're getting there!

-W

Beautiful, isn't it?  This topic has all the potential to go Jerry Springer on us!     

Jamese20

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Re: Delusional markets stalling my start to aggressive investing
« Reply #134 on: May 02, 2020, 01:11:44 PM »
I call troll. Nobody else would look at a quote of their own post and deny they said it.

Either that, or OP has actual mental health problems and probably *shouldn't* be investing in anything on their own.

-W

show me where i talk about q1 earning relating to apple and facebook.. i dont know them for a start so cannnot comment.... i read about amazons hence i mention them last... so a troll is anyone who doesnt align with your thinking? sounds more like a twitter mob on here by the day

maizefolk

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Re: Delusional markets stalling my start to aggressive investing
« Reply #135 on: May 02, 2020, 01:13:21 PM »
i dont care what you believe.. its just a fact i am only referring to amazons earnings... i call out 2 companies in particular that i thought the opposite to the gentlemans response... and i mention on the end about amazon earnings in Q1.. you misinterpreted and misread what i said to suit your narrative and are simply incorrect

Look, you can keep arguing with your own quote all you want. I cannot know what goes on inside of your head, just the words you chose to write down.  People can read what you wrote for themselves and decide if were just using unclear english which resulted in a different meaning from what you intended it to mean or if you were really intending to refer to all three companies.

But put all that side. Even you agree that you said amazon didn't make any money in q1. And we have their own data stating they made billions of dollars in q1 (2.5B in profit, substantially more than that in free cash flow).

So if you'd like to read:

"You thought that three of the biggest companies in the USA Amazon didn't make a profit in Q1. This belief played into you reaching the conclusion: "i cannot think of any realistic scenario where we dont have declining few years in terms of stocks."

The entire rest of my post continues to stand: you had a false belief that supported a conclusion. When you realized that belief was false, you didn't question your conclusion, you switched to a new belief (about what amazon's profits or loses might be in Q2) in order to continue with the same conclusion.

Then when this pattern was pointed out to you, instead of considering what that pattern might indicate about your overall reasoning about the future of the stock market and how accurately you can predict its certain course over the next several years, you decided to focus on a point where you disagreed with what you yourself had previously said (and I will freely admit it is at least possible you may not have realized you were saying at the time) that didn't effect the overall pattern you were  exhibiting either way.

maizefolk

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Re: Delusional markets stalling my start to aggressive investing
« Reply #136 on: May 02, 2020, 01:16:50 PM »
show me where i talk about q1 earning relating to apple and facebook.. i dont know them for a start so cannnot comment....

You quoted a post containing apple's Q1 earning information and responded to it.

Now it's certainly possible that you don't read the posts that you're quoting, but it's considered somewhat bad forum etiquette to admit to not having read what you replied to.
« Last Edit: May 02, 2020, 01:20:45 PM by maizeman »

maizefolk

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Re: Delusional markets stalling my start to aggressive investing
« Reply #137 on: May 02, 2020, 01:18:35 PM »
BB, it's happening! The rails are getting slick! OP is asserting things that he/she didn't actually check and getting snippy, Maizeman is fact-checking, we're getting there!

-W

Beautiful, isn't it?  This topic has all the potential to go Jerry Springer on us!   

Happy I could entertain.


Jamese20

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Re: Delusional markets stalling my start to aggressive investing
« Reply #138 on: May 02, 2020, 01:25:59 PM »
i dont care what you believe.. its just a fact i am only referring to amazons earnings... i call out 2 companies in particular that i thought the opposite to the gentlemans response... and i mention on the end about amazon earnings in Q1.. you misinterpreted and misread what i said to suit your narrative and are simply incorrect

Look, you can keep arguing with your own quote all you want. I cannot know what goes on inside of your head, just the words you chose to write down.  People can read what you wrote for themselves and decide if were just using unclear english which resulted in a different meaning from what you intended it to mean or if you were really intending to refer to all three companies.

But put all that side. Even you agree that you said amazon didn't make any money in q1. And we have their own data stating they made billions of dollars in q1 (2.5B in profit, substantially more than that in free cash flow).

So if you'd like to read:

"You thought that three of the biggest companies in the USA Amazon didn't make a profit in Q1. This belief played into you reaching the conclusion: "i cannot think of any realistic scenario where we dont have declining few years in terms of stocks."

The entire rest of my post continues to stand: you had a false belief that supported a conclusion. When you realized that belief was false, you didn't question your conclusion, you switched to a new belief (about what amazon's profits or loses might be in Q2) in order to continue with the same conclusion.

Then when this pattern was pointed out to you, instead of considering what that pattern might indicate about your overall reasoning about the future of the stock market and how accurately you can predict its certain course over the next several years, you decided to focus on a point where you disagreed with what you yourself had previously said (and I will freely admit it is at least possible you may not have realized you were saying at the time) that didn't effect the overall pattern you were  exhibiting either way.

you can argue and make your own made up conslusions all you want about my main point.. the point your clinging onto represents one comment relating to someone who made a case about about 4 tech companies. my whole point has nothing to do with just 4 tech companies on its own... or q1 earnings of 1 of those companies.. i stand by what i was trying to say. the q1 earning although show some profit.. bezos alluded to a rocky road due to covid 19 costs of 4bn... so i came to the conclusion that in essence q1 profits were therefore not money making if he already has costs that are not factored in.

maybe instead of obsessing over what you hoped i have said.. maybe just focus on what outweighs my main point as i dont think you have even addressed it or made a strong case for it. please make your case why the market is stabilising and will likely not go down as a result. If you say you dont know, fine but dont be on the apposing side with a "i dont know" answer


waltworks

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Re: Delusional markets stalling my start to aggressive investing
« Reply #139 on: May 02, 2020, 01:53:20 PM »
James, I agree that you should definitely not be investing. So in that sense, you have won the argument!

-W

maizefolk

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Re: Delusional markets stalling my start to aggressive investing
« Reply #140 on: May 02, 2020, 01:54:57 PM »
maybe instead of obsessing over what you hoped i have said.. maybe just focus on what outweighs my main point as i dont think you have even addressed it or made a strong case for it. please make your case why the market is stabilising and will likely not go down as a result. If you say you dont know, fine but dont be on the apposing side with a "i dont know" answer

I made my case twice on the first page of this thread that you started. In summary:

Firstly, not being able to envision a reason for stocks to go up isn't a good argument that they may not go up. After all before this whole coronavirus situation happened, none of us would have envisioned that the events of the last two months would produce the stock market valuations we see today.

Secondly, I presented one example* of what I think is a quite plausible scenario for why stock market valuations might go up, rather than down over the next several years. This particular example of what the future might hold doesn't even require you to question your certainty about the poor state of the economy, and how long that poor state will last, at all!

As far as I can tell, so far you haven't had any answer so far to dangers of inflation in your argument that stocks are absolutely certain to decline rather than increase for the next few** years and therefore there isn't a risk to keeping your money in cash rather than stocks. Have you posted an answer to the inflation scenario that I missed?

Just in general, I find that it is a lot easier to have productive discussions about people's main points and big ideas if we first resolve misunderstandings about the facts that underlying those conclusions***. I realize this can feel silly (why focus on the details instead of jumping right to the main idea?)

However, trying to have a discussion about big ideas with a person who doesn't agree about the actual facts on the group is just a recipe for frustration and impass. This thread for example. ... Unless you feel like you've gotten a lot of valuable big ideas discussion out of insisting people not focus on the details of what you are claiming about the world.

*Certainly not the only one.

**As an aside, I'm reading "few" as meaning "three or more" is that how you intended it to be meant?

***Big tech companies are profitable, apple, facebook and amazon made money in Q1, you either are aware of apple's Q1 earnings or are quoting and replying to posts you haven't even read.

Jamese20

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Re: Delusional markets stalling my start to aggressive investing
« Reply #141 on: May 02, 2020, 02:02:28 PM »
James, I agree that you should definitely not be investing. So in that sense, you have won the argument!

-W

its not about winning or losing.. so far your responses and some others are just patronising merely because i dare to question - i have already stated i already index regular and dont change my position in term sof my pensions that i have been in for a while.

frankly.. id rather "lose" to use your way of putting it... then i would have more understandings and learning... but i have not seen alot of substance for why in a current economic coma where lots of economists and 1 or 2 billionares are using words like great depression to describe what is coming... I read this in an article recently.. do you agree with it out of interest?

"If consumers can't borrow money, they can't spend it. When consumers can't spend money, companies can't sell products; low sales means lessened value, and so the company's stock price per share declines. Businesses trim costs by laying off workers, so unemployment increases and consumers spend even less."

waltworks

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Re: Delusional markets stalling my start to aggressive investing
« Reply #142 on: May 02, 2020, 02:27:15 PM »
Whether I agree or not with short term economic projections is meaningless, because the market does not always respond the way I think it will, and things have a way of working out differently than I project. It's a shame, I could be even richer if I could predict the future!

Actually, come to think of it, I'm not sure I'd need money at all if I could predict the future. I would just happen to show up to the Thai place when they made an extra tofu curry and strike up a conversation with a lady I know will drive me to a hotel where they'll mistake me for Peter Fonda and give the the fanciest room in the place... and so on.

I think Teela Brown was sort of like that in the later Ringworld Novels.

But I digress.

We have lots of data on what happens if you market time *as badly as possible* - but stick with regular investing. Go read the world's worst market timer article. Dude ended up filthy rich anyway.

But hey, I know you're not going to. So BB will keep laughing and Maizeman will keep earnestly and pleasantly making you look incredibly foolish I suppose.

-W

Jamese20

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Re: Delusional markets stalling my start to aggressive investing
« Reply #143 on: May 02, 2020, 02:41:31 PM »
maybe instead of obsessing over what you hoped i have said.. maybe just focus on what outweighs my main point as i dont think you have even addressed it or made a strong case for it. please make your case why the market is stabilising and will likely not go down as a result. If you say you dont know, fine but dont be on the apposing side with a "i dont know" answer

I made my case twice on the first page of this thread that you started. In summary:

Firstly, not being able to envision a reason for stocks to go up isn't a good argument that they may not go up. After all before this whole coronavirus situation happened, none of us would have envisioned that the events of the last two months would produce the stock market valuations we see today.

Secondly, I presented one example* of what I think is a quite plausible scenario for why stock market valuations might go up, rather than down over the next several years. This particular example of what the future might hold doesn't even require you to question your certainty about the poor state of the economy, and how long that poor state will last, at all!

As far as I can tell, so far you haven't had any answer so far to dangers of inflation in your argument that stocks are absolutely certain to decline rather than increase for the next few** years and therefore there isn't a risk to keeping your money in cash rather than stocks. Have you posted an answer to the inflation scenario that I missed?

Just in general, I find that it is a lot easier to have productive discussions about people's main points and big ideas if we first resolve misunderstandings about the facts that underlying those conclusions***. I realize this can feel silly (why focus on the details instead of jumping right to the main idea?)

However, trying to have a discussion about big ideas with a person who doesn't agree about the actual facts on the group is just a recipe for frustration and impass. This thread for example. ... Unless you feel like you've gotten a lot of valuable big ideas discussion out of insisting people not focus on the details of what you are claiming about the world.

*Certainly not the only one.

**As an aside, I'm reading "few" as meaning "three or more" is that how you intended it to be meant?

***Big tech companies are profitable, apple, facebook and amazon made money in Q1, you either are aware of apple's Q1 earnings or are quoting and replying to posts you haven't even read.

I'll focus on your plausible answer... Doesn't feel very plausible to me, already 10% unemployed so more to come which is leading to at least a hard recession as a result at the very least... Also the unemployment figures hit 10% way quicker than the great depression did.

That leads me to the conclusion this will be another major recession like other major historic ones.. I can't see any examples of that history where stocks pricing have suffered less than a few months of decline only and continued to go back up after it.

The stimulus packages haven't saved jobs or lay offs or pay cuts already so I fail to see how the stimulus argument stacks up in that sense.

I feel it doesn't outweigh job losses which are real.. Lack of overall confidence in going out and about resulting in less spending and less earnings for businesses across the globe.

20% unemployment during the great depression and it already is 10% and rising.. The stock market crashed like crazy.. 2008 deeper crash than now just based on 2 sectors. Most sectors are suffering not thriving at the moment.

How does one country set of metrics also relate to the global crisis we are in now?

Let's say your point is very plausible and possible for arguments sake, I still don't see how it outweighs the current facts at hand and trumps what we have seen each time in history to such global severe events

Jamese20

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Re: Delusional markets stalling my start to aggressive investing
« Reply #144 on: May 02, 2020, 02:53:43 PM »
Whether I agree or not with short term economic projections is meaningless, because the market does not always respond the way I think it will, and things have a way of working out differently than I project. It's a shame, I could be even richer if I could predict the future!

Actually, come to think of it, I'm not sure I'd need money at all if I could predict the future. I would just happen to show up to the Thai place when they made an extra tofu curry and strike up a conversation with a lady I know will drive me to a hotel where they'll mistake me for Peter Fonda and give the the fanciest room in the place... and so on.

I think Teela Brown was sort of like that in the later Ringworld Novels.

But I digress.

We have lots of data on what happens if you market time *as badly as possible* - but stick with regular investing. Go read the world's worst market timer article. Dude ended up filthy rich anyway.

But hey, I know you're not going to. So BB will keep laughing and Maizeman will keep earnestly and pleasantly making you look incredibly foolish I suppose.

-W

Well people who have weak arguments and nothing much to counter do tend to try to make fun and patronise.. It doesn't mean they are superior in their views believe it or not

maizefolk

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Re: Delusional markets stalling my start to aggressive investing
« Reply #145 on: May 02, 2020, 03:14:54 PM »
I'll focus on your plausible answer... Doesn't feel very plausible to me, already 10% unemployed so more to come which is leading to at least a hard recession as a result at the very least... Also the unemployment figures hit 10% way quicker than the great depression did.

The more severe the recession the greater the risk of sustained inflation, not less.

Quote
I can't see any examples of that history where stocks pricing have suffered less than a few months of decline only and continued to go back up after it.

Off the top of my head 1987 bear market -- during which stocks declined 34% peak to trough -- lasted a little less than 3.5 months before stocks started rising again, never to hit those same lows.

Now you can certainly argue about differences between today and 1987. But again you are stating a belief ("I can't see any examples of that history where stocks pricing have suffered less than a few months of decline only and continued to go back up after it." (see your own quoted text above if you're worried I'm twisting your words, although the emphasis on "any" is mine) which is not backed up by the facts.

Quote
The stimulus packages haven't saved jobs or lay offs or pay cuts already so I fail to see how the stimulus argument stacks up in that sense.

The case I made on the first page of the thread does not assume that the stimulus package saves a single job. In fact the fewer jobs the stimulus successfully saves, the longer and deeper the recession, and the more pressure on the Fed to create more money to both fight the recession and keep the federal government funded.

People disagree about how much money the Fed can create without creating significant inflation (from zero to lots). But everyone, I think, agrees that if enough new USD enter circulation, we will see inflation. And if we do see a prolonged period of inflation, you don't want to be sitting on a big pile of cash. Nor does anyone else.

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Let's say your point is very plausible and possible for arguments sake, I still don't see how it outweighs the current facts at hand and trumps what we have seen each time in history to such global severe events

It doesn't have to outweigh anything. You stated "i cannot think of any realistic scenario where we dont have declining few years in terms of stocks... "

All it should take to make you change your mind about that statement -- if you're open rationally reevaluating your beliefs in the face of new ideas or new information -- is at least one realistic scenario where stocks would not continue declining for a few years.

You never answered my question so I'll go ahead and assume that by "a few" you mean three or more years.
« Last Edit: May 02, 2020, 03:19:30 PM by maizeman »

maizefolk

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Re: Delusional markets stalling my start to aggressive investing
« Reply #146 on: May 02, 2020, 03:51:17 PM »
I really like my Argentina example but I decided I needed another. It might actually be fun to make a collection of these.

Let's look at Turkey.

Turkey's GDP peaked at the end of 2013 at $950B dollars. In the next four years the economy of declined 19% (~5%/year) in US dollar terms. (Source)

Must be a terrible time to own stocks, right? Yet from 2014 to 2018 the turkish stock market returned 14%/year (denominated in turkish lira). In USD terms the value of those stocks were essentially flat. But people who stayed out of the market and saved cash lost 8.4% per year for four years (29.6% total decline in purchasing power).
« Last Edit: May 02, 2020, 03:53:25 PM by maizeman »

Jamese20

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Re: Delusional markets stalling my start to aggressive investing
« Reply #147 on: May 02, 2020, 04:58:39 PM »
I'll focus on your plausible answer... Doesn't feel very plausible to me, already 10% unemployed so more to come which is leading to at least a hard recession as a result at the very least... Also the unemployment figures hit 10% way quicker than the great depression did.

The more severe the recession the greater the risk of sustained inflation, not less.

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I can't see any examples of that history where stocks pricing have suffered less than a few months of decline only and continued to go back up after it.

Off the top of my head 1987 bear market -- during which stocks declined 34% peak to trough -- lasted a little less than 3.5 months before stocks started rising again, never to hit those same lows.

Now you can certainly argue about differences between today and 1987. But again you are stating a belief ("I can't see any examples of that history where stocks pricing have suffered less than a few months of decline only and continued to go back up after it." (see your own quoted text above if you're worried I'm twisting your words, although the emphasis on "any" is mine) which is not backed up by the facts.

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The stimulus packages haven't saved jobs or lay offs or pay cuts already so I fail to see how the stimulus argument stacks up in that sense.

The case I made on the first page of the thread does not assume that the stimulus package saves a single job. In fact the fewer jobs the stimulus successfully saves, the longer and deeper the recession, and the more pressure on the Fed to create more money to both fight the recession and keep the federal government funded.

People disagree about how much money the Fed can create without creating significant inflation (from zero to lots). But everyone, I think, agrees that if enough new USD enter circulation, we will see inflation. And if we do see a prolonged period of inflation, you don't want to be sitting on a big pile of cash. Nor does anyone else.

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Let's say your point is very plausible and possible for arguments sake, I still don't see how it outweighs the current facts at hand and trumps what we have seen each time in history to such global severe events

It doesn't have to outweigh anything. You stated "i cannot think of any realistic scenario where we dont have declining few years in terms of stocks... "

All it should take to make you change your mind about that statement -- if you're open rationally reevaluating your beliefs in the face of new ideas or new information -- is at least one realistic scenario where stocks would not continue declining for a few years.

You never answered my question so I'll go ahead and assume that by "a few" you mean three or more years.

1987 was a singular panic event with no underlying issues.. It was only significant in the amount it dropped in a single day if my memory of the history serves me well due to mass panic...didn't gdp growth grow by something like 5% in the USA? I don't put that down as one of the major economic recessions.. Bad example

There is not much proof that the stimulas leads to increased inflation far too many examples across the globe for that.. It is more in theory than a reality..

It does have to outweigh the clear and obvious though.. I dunno why you keep constantly knit picking quotes selectively to spin a narrative.

Did turkey and Argentina shutdown their economic outputs? If the answer is no then your comparison doesn't match the current situation

waltworks

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Re: Delusional markets stalling my start to aggressive investing
« Reply #148 on: May 02, 2020, 05:33:56 PM »
Ladies and gentlemen, the goalposts have been successfully moved!

_W

maizefolk

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Re: Delusional markets stalling my start to aggressive investing
« Reply #149 on: May 02, 2020, 05:43:25 PM »
I can't see any examples of that history where stocks pricing have suffered less than a few months of decline only and continued to go back up after it.

Off the top of my head 1987 bear market -- during which stocks declined 34% peak to trough -- lasted a little less than 3.5 months before stocks started rising again, never to hit those same lows.

Now you can certainly argue about differences between today and 1987. But again you are stating a belief ("I can't see any examples of that history where stocks pricing have suffered less than a few months of decline only and continued to go back up after it." (see your own quoted text above if you're worried I'm twisting your words, although the emphasis on "any" is mine) which is not backed up by the facts.

1987 was a singular panic event with no underlying issues.. It was only significant in the amount it dropped in a single day if my memory of the history serves me well due to mass panic...didn't gdp growth grow by something like 5% in the USA? I don't put that down as one of the major economic recessions.. Bad example

Note that the response to this was already written in my previous post that you quoted.

"Now you can certainly argue about differences between today and 1987. But again you are stating a belief ("I can't see any examples of that history where stocks pricing have suffered less than a few months of decline only and continued to go back up after it." (see your own quoted text above if you're worried I'm twisting your words, although the emphasis on "any" is mine) which is not backed up by the facts."


Also, you're moving the goal posts (as Waltworks observed). Before you stated "I can't see any examples of that history where stocks pricing have suffered less than a few months of decline only and continued to go back up after it." Nothing about only major recessions.

What criteria make a recession major in your mind and which recessions (whether here in the USA or internationally) qualify?

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There is not much proof that the stimulas leads to increased inflation far too many examples across the globe for that.. It is more in theory than a reality..

Creating money new money, not the federal government stimulus itself. The fed has committed to creating something like $4T so far. That may not be enough to create inflation because the velocity of money has declined a LOT (as it frequently does when the economy isn't doing well). Inflation results not only from the size of the money supply but the product of the money supply * the velocity of money. But if the fed has to create enough new money, yes we will have inflation. I don't know if we'll reach that point or not. But it's well within the realm of possibility. Enough so that I'm more worried about my cash on hand than my stocks (and glad I don't have bunch of my net worth in long term bonds).

Here are some examples of countries where central banks creating additional money to deal with an existing economic crisis produced substantial inflation: Italy (1975) Mexico (1995), Russia (1998), Argentina (2001), Turkey (2014). <-- And I'm not putting any of the fun hyperinflation examples on this list.

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It does have to outweigh the clear and obvious though.. I dunno why you keep constantly knit picking quotes selectively to spin a narrative.

Because I'm trying to illustrate to anyone reading this how otherwise reasonable people can arrive at complete confidence in ideas that aren't actually at all certain.

A person says to themself that "stocks never go down for only a few months, it lasts a few years". Then when people point out that's not true, they say to themselves "well those examples don't count because the circumstances are different." But they don't really appreciate how different those two statements are. 

They say to themself "amazon isn't making any money" and when it's pointed out that they actually made money "well I bet they'll lose enough money in the future that'll cancel out the money they just made." But they don't really appreciate how different those two statements are. 

They say "I cannot imagine any outcome but stocks going down for the next three years" and when other possible outcomes are pointed out "well I think my outcome is still more likely than the one that other person proposed." But they don't really appreciate how different those two statements are.

And all those mistaken data points and ignored uncertainty compound upon each other until a person is convinced that they can see future and are surprised and angry and frustrated that nobody agrees with them that the course of the future is so clearly predictable.

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Did turkey and Argentina shutdown their economic outputs? If the answer is no then your comparison doesn't match the current situation

As far as I know, no country anywhere in the world has ever shut down their economy before in the manner we're seeing right now.

So you're right. If that is your threshold for examples that are useful to understanding and predicting our current situation, we have zero precedent and the future could hold anything. We just don't know for sure. And we won't until we live through it.

Which has been my entire point all along.