Author Topic: Only 5.8% Between Me and a Full Recovery  (Read 1776 times)

alcon835

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Only 5.8% Between Me and a Full Recovery
« on: June 07, 2020, 08:08:16 AM »
I've got a few old 401Ks with a good chunk of money in them that I've been using as a metric to determine when the market has recovered. I check about once a week to see where we are in relation to the worst. My funds haven't been changed in these accounts and I haven't added any money to them, so they're a neutral indicator on how the market is doing.

Today I noticed that I'm almost back to February highs - only 5.8% away.

Was the drop so artificial that we're back to normal within four months? Are we all just numb to the reality? Did the loss of sports and gambling add so much to the market that it's overcompensating for the craziness?

I'm happy and all, but this feels too good to be true. At this rate I'll be back to February this month.

Maenad

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Re: Only 5.8% Between Me and a Full Recovery
« Reply #1 on: June 07, 2020, 09:32:18 AM »
Remember that the stock market is a leading indicator, it usually goes up before the economy improves (employment is a lagging indicator and usually recovers much more slowly). The market is rebounding because states and countries are slowly opening back up and the world didn't come to an end. If we get another wave of infections, hospitalizations, and deaths in the fall/winter, we'll have another big drop as people freak out that the world is ending, etc., especially if it would coincide with news that vaccine trials are showing low effectiveness, or the virus has mutated in ways the vaccine candidates can't fight.

American GenX

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Re: Only 5.8% Between Me and a Full Recovery
« Reply #2 on: June 07, 2020, 10:13:48 PM »

Also, once the high inflation really kicks in due to the Fed and Government action that was taken, those dollars won't be worth as much.  It might just take a while for it to play out.

use2betrix

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Re: Only 5.8% Between Me and a Full Recovery
« Reply #3 on: June 08, 2020, 09:00:48 AM »
My net worth is $50k above where I was at in my February peak. Granted, Iíve saved a lot, and also invested a LOT out of my emergency fund in March/April. I invested $15k in one major oil and gas company during the drop, and itís now worth $23k.


Personally, I think the market is recovering too quickly. Small businesses have been hammered and unemployment is still incredibly high.

I foresee another drop coming then taking a bit longer to recover next time. I donít think itíll be like March/April drop by any means, but wouldnít be surprised to see another 10% drop from where weíre at now within the next 3-4 months.

Dibbels81

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Re: Only 5.8% Between Me and a Full Recovery
« Reply #4 on: June 08, 2020, 09:26:28 AM »
Absolutely nuts that it's rebounding this quick. 2020 is like getting a swift kick in the nuts followed by an immediate back massage while the crotch is still throbbing.

BicycleB

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Re: Only 5.8% Between Me and a Full Recovery
« Reply #5 on: June 09, 2020, 02:51:07 PM »
The Fed either saved the day and are geniuses of the age, correctly using the vast power of the world's reserve currency shield investors from harm without any side effects, or else the side effects are a wound-up spring that will clobber the brass bull on Wall Street one day.

Enjoy your recovery. :)

MustacheAndaHalf

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Re: Only 5.8% Between Me and a Full Recovery
« Reply #6 on: June 09, 2020, 11:55:35 PM »
Also, once the high inflation really kicks in due to the Fed and Government action that was taken, those dollars won't be worth as much.  It might just take a while for it to play out.
You're guaranteeing the Fed fails at their core purpose of controlling inflation?

alcon835

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Re: Only 5.8% Between Me and a Full Recovery
« Reply #7 on: June 10, 2020, 07:08:45 AM »
Yeah, this has been an insane few months. Like others, my overall Net Worth is actually quite a bit above where it was in February, but my post has more to do with the overall recovery of the market.

I honestly don't know if we all overreacted a few months ago or if things really are getting that much better that faster - or if we're all in for some more pain in a few months.

Weird times.

GuitarStv

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Re: Only 5.8% Between Me and a Full Recovery
« Reply #8 on: June 10, 2020, 07:18:12 AM »
There is no real reason for optimism.  The US won't be back to pre-coronavirus production capacity for another year and a half at least, and there are signs in many of the states that have re-opened of increasing hospitalization rates which could well lead to another lock-down.  I have to think that much of the money coming into the market is coming from people who are afraid that their dollars will inflate away otherwise.

simonsez

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Re: Only 5.8% Between Me and a Full Recovery
« Reply #9 on: June 10, 2020, 07:51:05 AM »
Absolutely nuts that it's rebounding this quick. 2020 is like getting a swift kick in the nuts followed by an immediate back massage while the crotch is still throbbing.
Haha, @Dibbels81 that's perfect!

I'm sure we'll have an uppercut coming while getting a pedicure in the near future.

PDXTabs

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Re: Only 5.8% Between Me and a Full Recovery
« Reply #10 on: June 10, 2020, 07:59:09 AM »
I have to think that much of the money coming into the market is coming from people who are afraid that their dollars will inflate away otherwise.

I would add the political crisis in the USA doesn't leave me wanting to have any extra US dollars laying around. Every dollar that I can spare is in VT because that seems like the safest place right now.

alcon835

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Re: Only 5.8% Between Me and a Full Recovery
« Reply #11 on: August 12, 2020, 09:03:21 AM »
An update: Even with everything that's happened since June, I'm now a mere -1.8% away from a full recovery. Been pumping money into the market the whole time, so I am significantly ahead of where I was back in February.

It's such a weird thing. I am doing exceptionally well financially while the rest of my life feels like its falling apart. I fully expect the market to be back to pre-COVID levels in the next month (assuming the stimulus happens). And with vaccines getting closer every day, I wonder if the future is pretty bright for retirement investors.

clarkfan1979

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Re: Only 5.8% Between Me and a Full Recovery
« Reply #12 on: August 13, 2020, 07:31:22 PM »
My personal rate of return on my retirement account is is 17.4% since January 1st. Since February 19th (peak), it's 14.06%. I bought a little more at the bottom and I got rid of my 10% bonds during the recovery.

alcon835

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Re: Only 5.8% Between Me and a Full Recovery
« Reply #13 on: August 17, 2020, 07:48:36 AM »
Wow, just looked at everything. If today is even a little bullish, the markets will have fully recovered to pre-covid levels. It will have taken almost 6 months from start to finish.

All the while, us Mustachians have been pouring money into the markets. Not sure what my real rate-of-return has been for the year, but planning to calculate that out soon.

It's amazing to me that, in spite of everything, most industries have weathered this thing pretty well.

alcon835

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Re: Only 5.8% Between Me and a Full Recovery
« Reply #14 on: August 17, 2020, 08:37:56 PM »
I think this will be my last update....

But as of 8/17/20, my indexes are officially at or above their value from their peak on 2/19/20. Almost exactly 6 months for a full recovery.

That's so crazy to me. Friends of mine are losing their jobs, Hong Kong has lost its freedom, Coronavirus is still killing people, and the market is back to pre-COVID levels.

I've made a lot of money these last 6 months. Not sure how I should feel about the whole thing.

clarkfan1979

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Re: Only 5.8% Between Me and a Full Recovery
« Reply #15 on: August 18, 2020, 12:38:39 PM »
I think the recovery has been mostly due to inflation from the government QE. It's not real growth.

alcon835

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Re: Only 5.8% Between Me and a Full Recovery
« Reply #16 on: August 18, 2020, 04:21:47 PM »
@clarkfan1979 I'll tell you, my organization just had one of the best quarters in the company's history - and this after a terrible Q1. Our business isn't really benefited by COVID in any way, but all the organizations that hit the pause button in March reopened their budgets in July.

clarkfan1979

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Re: Only 5.8% Between Me and a Full Recovery
« Reply #17 on: August 19, 2020, 04:17:10 PM »
I'm sure it's possible for individual companies to experience real growth during COVID-19 recovery. However, overall, I think the S & P 500 recovery is mostly inflation from government QE.

We will see the same trend in housing in 12-18 months.

Full_Beard

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Re: Only 5.8% Between Me and a Full Recovery
« Reply #18 on: August 19, 2020, 05:54:48 PM »
It's not inflation.

Yes, the Fed's quantative easing has helped (buying bonds and debt). It's also a handful of companies that are crushing it right now (Apple, Amazon, Google, Facebook, etc.), and they are doing much of the updward market driving. There also are some micro-bubbles out there (electric vehicles and alternative energy stocks). There is also the stimulus that had put $2400/month in people's hands. There are also the retail investors (gamblers and folks like you and me) that have been buying a lot of stocks, including moves that are hard to understand such as buying Kodak and Hertz and failing to grasp that a stock split is a non-event but buying it anyway. And, related to the Fed, the fact that the real, post-inflation return on Treasuries is negative has lead a lot of investors to buy riskier products (equities and corporate debt).

So, there are a lot things driving up the equity markets these days. Can it last? If no, will it just flatten, dip 10%, or crash? It's guesswork. Stick to your investment plan and we all should be fine.

alcon835

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Re: Only 5.8% Between Me and a Full Recovery
« Reply #19 on: August 19, 2020, 07:46:25 PM »
Agree with Full_Beard. The top dozen-ish companies in the S&P 500 are a massive chunk of the total market and have been doing quite well. Government money helps, but a lot of those orgs didn't need it (Walmart, Amazon, Apple, Facebook, Microsoft...). You would be surprised how many companies are doing well enough throughout everything.

The orgs that are being decimated are small businesses without representation on the stock market.