sideways market?

[mistymoney]

Seems very boring.....3 months of just vascillating over the same territory.

What is your take on:

How long until it makes a definite move?

Up or down?

Precipating causes/events?

Any strategies you are enacting based your above assumptions?

[Rob_bob]

No idea how long it will go sideways.

Could be a bear market rally phase so down next?  A real recession with rising unemployment of say 10% should bring the market down.

Or a shallow recession and a top to inflation could give the market confidence and continue to the upside.

No change to what I'm doing.

[MustacheAndaHalf]

I've been investing against the market since April.  In June investors learned interest rates aren't rapidly falling - they rose.  And then I exited my bearish positions at the end of June, and avoided a +19% move upwards until mid Aug.  Then the Fed's Jackson Hole speech revealed the Fed planned to hold rates high longer than expected, which send markets falling.  When you look at events this way, it doesn't seem like a sideways market.

I've started investing against the market again.  Historically, September has a -1% average return (measured 1929-2021), making it the worst month by far.  The treasury yield curve is inverted, which makes a recession likely.  I don't believe the Fed will pull off a "soft or softish landing" with "a high degree of difficulty" to quote Fed Chair Powell.  I'm waiting for further market drops until I flip to bullish.

[2Birds1Stone]

These predictions are about as useful as this thread.

[nereo]

Seems very boring.....3 months of just vascillating over the same territory.

Yup - and this is exactly the sort of thing an investor should expect from time to time

How long until it makes a definite move?

No idea.  Often that ‘definite move’ will only seem obvious plotted on a graph weeks later.  In the moment it can still feel like just a to of volatility and randomness.

Seems very boring.....3 months of just vascillating over the same territory.
Up or down?

Again, no idea.  It could also definitively move sideways for quite some time.  That’s a perfectly legitimate direction, a broad indication that valuations are holding steady.

Precipating causes/events?

Could be a bunch of things… energy supply in Europe is particularly vulnerable, as is an escalation or de-escalation of ware in Ukraine. Pandemic flare ups or a major natural disaster (e.g. direct hurricane hit) or China downgrading their forecasts or a heat dome shutting down the grid in California.  THe fed acting more aggressively (or not aggressively enough). Or a black swan event that by definition we aren’t thinking about.

Or… the absence of a major event can boost markets.  A lack of major global events with fairly mild weather could boost everything.

Any strategies you are enacting based your above assumptions?

Yeah, stay the course and stick to your IPS. If this is somehow causing you to get itchy then it’s reason to rethink your strategy, your expectations and your risk tolerance and perhaps alter your approach (permanently, long term).  This is normal - if your urge is to “do something different’ then you need to decide whether you can retrain your brain to stay the course or if you need to be divested into things that won’t flop around with a lot of volatility and little obvious direction.

Oh, and stop paying attention to daily movements. It’s counterproductive for long-term investors. The last time I looked at my accounts was at the end of June, when we did our ‘twice-annual checkup” - I probably won’t look again until after Christmas.  Checking your accounts more frequently than every few months is counterproductive to long-term investment and mental health.

[ChpBstrd]

It ALL depends on how inflation works. We don't know how inflation works. For an overview of how we and the markets don't know shit, see:
https://www.youtube.com/watch?v=zxwO4xw4CZ0

Inflation's next move will determine whether bank overnight lending rates six months from now are 4%.... OR... 6%. That matters because the earnings yield on stocks is <5% and the Shiller PE is still at levels that have only ended in tragedy in the past.

If inflation goes back down on its own, rates might peak at 4%, stock earnings growth might maintain a reasonable risk premium, real estate values might not crash, financial institutions might not experience a crisis, and the inflation of 2021-22 will be remembered as another headline in the wall of worry that shook out a lot of weak-handed investors.

If inflation continues... overnight lending rates will hit 5-7% or higher, risk premiums will expand, the S&P500's PE will go down from over 20 to the low teens so that the earnings yield remains higher than the new higher risk-free rate, real estate could correct, and financial institutions might fail.

In my opinion, now is a riskier time than most to be invested due to the large degree of uncertainty and the large magnitude of the downside. If you know how to hedge, do that.

[clarkfan1979]

Seems very boring.....3 months of just vascillating over the same territory.

What is your take on:

How long until it makes a definite move?

Up or down?

Precipating causes/events?

Any strategies you are enacting based your above assumptions?

I will be fully vested into my retirement account at my work in 24 months. Around that time, I should be pretty close to FIRE. I'm hoping for a two-year bear market and then have it take-off.

This prediction is purely self-serving.

[ATtiny85]

Seems very boring.....3 months of just vascillating over the same territory.

What is your take on:

How long until it makes a definite move?

Up or down?

Precipating causes/events?

Any strategies you are enacting based your above assumptions?

I will be fully vested into my retirement account at my work in 24 months. Around that time, I should be pretty close to FIRE. I'm hoping for a two-year bear market and then have it take-off.

This prediction is purely self-serving.

I'm with you, give me two years or so of sideways or even a bit more down.

[MustacheAndaHalf]

These predictions are about as useful as this thread.

I think prediction should be compared against a benchmark.  Personally from April to June I beat my benchmark (US/intl/bond) by over 20%.  Unlike 2020-2021, I don't plan on running an experiment in public view.

But look at the years leading up to 2022.  We had the longest bull market in history starting in 2009.  Academics will claim it ended in 2020... when the S&P 500 rose over 18% while bankruptcies were unchanged.  I don't see a bear market there, so I think we're overdue.  Historically, bull markets don't last this long.... will this time be different?

Also historically, when quantitative tightening (QT) has begun, a recession has always been the result.  The Fed has already started QT... will this time be different?

The market believes this Fed is special, and will bring about the first soft landing ever. Fed Chair Powell says it is not his job to estimate the odds, but he has said this has a "high degree of difficulty", and that China's lockdowns and Russia's invasion of Ukraine "increased the difficulty level".  Past Feds failed, and the current Fed calls it very difficult.  I see a soft landing as investors thinking this time will be different.

[achvfi]

I hope it stays sideways and boring for next 5 years.

[mistymoney]

These predictions are about as useful as this thread.

And slightly more useful than this comment

[Niceday]

No one knows. If someone gives you a prediction, I would be careful.

If the interest rate goes up, then the market does X.
If inflation comes down, then the market does Y.
If unemployment goes up, then the market does Z.

The above 3 statements are simply BS. There are millions of factors at play in the market. The market is an art, not science. There are no definite answers.

When you feel the prices are right, buy your favorite companies and hold.

[mistymoney]

one thing I've heard is to buy and sell during sideway: sell when up, buy again while down. Just for the pretax accounts of course. sell x holding when up, buy x+1 or two when down.

seems risky, you never know when up is going to go more up.

[achvfi]

one thing I've heard is to buy and sell during sideway: sell when up, buy again while down. Just for the pretax accounts of course. sell x holding when up, buy x+1 or two when down.

seems risky, you never know when up is going to go more up.

If you leave your investments alone you likely get better returns long term. If you are bored focus on something else. You can gamble with small % of your portfolio to scratch the itch, but leave your long term investments be.

[Niceday]

one thing I've heard is to buy and sell during sideway: sell when up, buy again while down. Just for the pretax accounts of course. sell x holding when up, buy x+1 or two when down.

seems risky, you never know when up is going to go more up.

If you leave your investments alone you likely get better returns long term. If you are bored focus on something else. You can gamble with small % of your portfolio to scratch the itch, but leave your long term investments be.

I agree with achvfi. You have to be very patient. Watch the market but be ready to pounce. A lot of watching but very little buying/selling.

[ATtiny85]

one thing I've heard is to buy and sell during sideway: sell when up, buy again while down. Just for the pretax accounts of course. sell x holding when up, buy x+1 or two when down.

seems risky, you never know when up is going to go more up.

If you leave your investments alone you likely get better returns long term. If you are bored focus on something else. You can gamble with small % of your portfolio to scratch the itch, but leave your long term investments be.

I agree with achvfi. You have to be very patient. Watch the market but be ready to pounce. A lot of watching but very little buying/selling.

Not sure you understood achvfi. No pouncing, no prep for pouncing. Buy, hold, have new money, buy, hold, repeat until retirement, hold, have need for money, sell to meet need, hold, hold.

That will beat an awful lot of other plans and requires no skill or luck.

[Niceday]

one thing I've heard is to buy and sell during sideway: sell when up, buy again while down. Just for the pretax accounts of course. sell x holding when up, buy x+1 or two when down.

seems risky, you never know when up is going to go more up.

If you leave your investments alone you likely get better returns long term. If you are bored focus on something else. You can gamble with small % of your portfolio to scratch the itch, but leave your long term investments be.

I agree with achvfi. You have to be very patient. Watch the market but be ready to pounce. A lot of watching but very little buying/selling.

Not sure you understood achvfi. No pouncing, no prep for pouncing. Buy, hold, have new money, buy, hold, repeat until retirement, hold, have need for money, sell to meet need, hold, hold.

That will beat an awful lot of other plans and requires no skill or luck.

The investing style you mentioned works for many people.
The statement from achvfi I agree with is this: "If you leave your investments alone you likely get better returns long term."