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Learning, Sharing, and Teaching => Investor Alley => Topic started by: bwall on April 17, 2020, 06:22:36 PM

Title: The DOW is running like a chicken with it's head cut off.
Post by: bwall on April 17, 2020, 06:22:36 PM
Headline only.

I just can't F*N believe it, that's all.

I grew up on a farm. At the age of six I saw chickens that'd had their heads cut off, running around like mad, without their head on. Quite a sight for a six year old, looking back.

To me, that's what the market is like now. Everyone knows that earnings are going to be lower than whale s***. But, yet, prices are holding steady, P/E wise and the market is rallying like a chicken with it's head cutoff. Never mind that in a minute or two it will be dead, in an hour or two it'll be plucked and at dinnertime it'll be on the table.

Now it's just running around with it's head cut off.



Title: Re: The DOW is running like a chicken with it's head cut off.
Post by: celerystalks on April 17, 2020, 07:41:04 PM
Headline only.

I just can't F*N believe it, that's all.

I grew up on a farm. At the age of six I saw chickens that'd had their heads cut off, running around like mad, without their head on. Quite a sight for a six year old, looking back.

To me, that's what the market is like now. Everyone knows that earnings are going to be lower than whale s***. But, yet, prices are holding steady, P/E wise and the market is rallying like a chicken with it's head cutoff. Never mind that in a minute or two it will be dead, in an hour or two it'll be plucked and at dinnertime it'll be on the table.

Now it's just running around with it's head cut off.

Earnings declines will be temporary. Also when earnings yield is compared to the yield on bonds perhaps the price on stocks isnít unreasonable.. everything is relative.
Title: Re: The DOW is running like a chicken with it's head cut off.
Post by: Ladychips on April 17, 2020, 07:48:05 PM

I grew up on a farm. At the age of six I saw chickens that'd had their heads cut off, running around like mad, without their head on. Quite a sight for a six year old, looking back.

On a side note, it's worse when the chicken has had its neck wrung rather than cut off...
Title: Re: The DOW is running like a chicken with it's head cut off.
Post by: Heckler on April 17, 2020, 08:13:28 PM
I've got a planned $40k (now ~$30k) annual rollover to move from high cost US and EAFE index funds (Sunlife) to lower cost similar indices (Vanguard).  Unfortunately it'll take at least a normally innervating  week or two to move from my work plan to my personal Vanguard funds.  Fuck me if I didn't make it happen in January when I should have according to IPS, but I was enjoying Italian winter weather and didn't have access to a fax machine to send in the forms.  Now, my brokerage has automated everything online, but I doubt it's faster since they say they're overloaded with requests to bail out.

So, now I believe I must wait until the inevitable rebound and stabilization.     The Sunlife is costing me an extra ~$10/month in fees.

Your thoughts?  Wait or take a chance?
Title: Re: The DOW is running like a chicken with it's head cut off.
Post by: moneytaichi on April 17, 2020, 09:44:28 PM
I shake my head in disbelieve too - and checked I still have my head on top of my shoulders :-) Thanks for a vivid image!

It seems to me that the Wall Street takes only the information they want to believe (e.g. a promising cure in trial and Trump's reopening tweets) and willingly ignore fundamentals such as unemployment rates, declining sales/profits, and inconvenient truth from health experts and most of governors.

It's interesting to see that the stocks don't go up higher. VTI only rose 8.43% since April 6. Perhaps the Wall Street has some reservation on its pumped up optimism.  Let's see how the chicken will end up next week - dinner tables or still hop.
Title: Re: The DOW is running like a chicken with it's head cut off.
Post by: Wrenchturner on April 17, 2020, 10:23:38 PM
I might end up selling off some shares next week.  I think it'll be a while before we see new highs.  I know it's market timing.  The tail of this covid situation could be a very long one, and the market seems to be underpricing that risk.  See: Singapore.
Title: Re: The DOW is running like a chicken with it's head cut off.
Post by: Jack0Life on April 17, 2020, 10:54:21 PM
Yup, markets been going up last 2 weeks with record unemployment and shitty earnings.
But I'm going with the flow. I can't hold out forever waiting for the market to bottom out.
I'm hedging my portfolio bits by bits to not lose out if it keeps going up.
I reallocated $50k back into VTSAX earlier this past week.

Title: Re: The DOW is running like a chicken with it's head cut off.
Post by: MustacheAndaHalf on April 18, 2020, 12:29:21 AM
Unemployment numbers aren't a surprise.  Most malls and restaurants either locked down, or had no customers and shut down.  Those workers are getting zero hours, regardless of their hourly pay.

Or think of the customers at home under lock down.  They're spending money on rent and food, but lots of discretionary expenses are gone.  I think more than 20% of people's salary is going into savings accounts.  If they lose their job, that's less money for savings, but the same essential purchases of rent and food.

I would also encourage people to use the S&P 500 as a more representative and less arbitrary benchmark than the DOW.  Or even better, a total U.S. stock market ETF, like VTI, which had various -2% and +3% days, with a net change of +2.7% for the week (measured at Friday close).
Title: Re: The DOW is running like a chicken with it's head cut off.
Post by: frugledoc on April 18, 2020, 02:21:17 AM
Headline only.

I just can't F*N believe it, that's all.

I grew up on a farm. At the age of six I saw chickens that'd had their heads cut off, running around like mad, without their head on. Quite a sight for a six year old, looking back.

To me, that's what the market is like now. Everyone knows that earnings are going to be lower than whale s***. But, yet, prices are holding steady, P/E wise and the market is rallying like a chicken with it's head cutoff. Never mind that in a minute or two it will be dead, in an hour or two it'll be plucked and at dinnertime it'll be on the table.

Now it's just running around with it's head cut off.

Short term earnings donít really affect equity prices that much.  Equities are attempting to price future decades of profit. 

I am very pleased with how my one fund vanguard all world portfolio has performed
Title: Re: The DOW is running like a chicken with it's head cut off.
Post by: reeshau on April 18, 2020, 02:26:41 AM
Headline only.

I just can't F*N believe it, that's all.

I grew up on a farm. At the age of six I saw chickens that'd had their heads cut off, running around like mad, without their head on. Quite a sight for a six year old, looking back.

To me, that's what the market is like now. Everyone knows that earnings are going to be lower than whale s***. But, yet, prices are holding steady, P/E wise and the market is rallying like a chicken with it's head cutoff. Never mind that in a minute or two it will be dead, in an hour or two it'll be plucked and at dinnertime it'll be on the table.

Now it's just running around with it's head cut off.

Short term earnings donít really affect equity prices that much.  Equities are attempting to price future decades of profit. 

I am very pleased with how my one fund vanguard all world portfolio has performed

Agreed.  As an investor, all that's required during the crisis is that the company I am investing in survives, i.e. does not go bankrupt.  The future will have more debt to pay off, and perhaps less revenue for a while, but in 5 years we won't notice much, and I'm not spending my investments before then, so that's the timeframe to think of.  And when you're index investing, even more so, as it's even less likely the whole market will go bankrupt through this process.
Title: Re: The DOW is running like a chicken with it's head cut off.
Post by: American GenX on April 18, 2020, 07:02:17 AM

I don't follow or care much about the Dow specifically.  I'm invested much more across the S&P 500 and elsewhere.   Stocks are way too overpriced now, and as we continue in this recession, I expect them to drop to new YTD lows when reality finally hits that this isn't going to be a V shaped recovery.
Title: Re: The DOW is running like a chicken with it's head cut off.
Post by: Buffaloski Boris on April 18, 2020, 08:19:20 AM
Of course.  Short term the market is full on, 100% bat**** crazy.  Not just a little, but completely bonkers. I have no doubt that if a comet was racing straight for the earth, it would be viewed as a bullish sign and the DOW would go up 5,000 points.  With the EMH crowd insisting that the high chance of our imminent extinction was already priced in.

Bigger picture than the short term craziness is that the valuations (CAPE and PE) are just absurd. You're paying a princely sum for a distinctly meh earnings picture. However the US market is and has been relatively expensive as compared to other markets.
Title: Re: The DOW is running like a chicken with it's head cut off.
Post by: ctuser1 on April 18, 2020, 09:03:11 AM
It seems a little odd to see Dow run back up so much without anything concrete happening.

However, anyone thinking international - cheap - stocks will win out in the long term over the expensive SP500 are basically betting against the macro trends of AI/tech and biotech driven growth.

The US is likely to be leaders in both of those sectors. The only other likely candidate is China - where you canít really invest.

Even if the US is, say, 40% more expensive compared to Europe - these macro tailwinds for the US can easily justify that extra cost, and then some more.

Disclaimer(s):
1. This is not a screed against appropriate asset allocation. 100% stocks is not appropriate for most people.
2. The above macro tailwind is not a foregone conclusion. The culture of accepting immigrants of all color, religion, culture  drove US innovative ness. That culture is under attack. If that vanishes, all bets are off.
Title: Re: The DOW is running like a chicken with it's head cut off.
Post by: Buffaloski Boris on April 18, 2020, 10:53:27 AM
It seems a little odd to see Dow run back up so much without anything concrete happening.

However, anyone thinking international - cheap - stocks will win out in the long term over the expensive SP500 are basically betting against the macro trends of AI/tech and biotech driven growth.

The US is likely to be leaders in both of those sectors. The only other likely candidate is China - where you canít really invest.

Even if the US is, say, 40% more expensive compared to Europe - these macro tailwinds for the US can easily justify that extra cost, and then some more.

Disclaimer(s):
1. This is not a screed against appropriate asset allocation. 100% stocks is not appropriate for most people.
2. The above macro tailwind is not a foregone conclusion. The culture of accepting immigrants of all color, religion, culture  drove US innovative ness. That culture is under attack. If that vanishes, all bets are off.

I mostly agree with your analysis but I think youíre missing one important thing:

The US dollar.

Being an American and all Iím over-exposed to it. There arenít many ways to hedge that other than buying foreign currencies, buying foreign bonds and getting a negative interest rate (woohoo), or buying equities.

With regards to innovation, I donít think we have the lock on that and with the rise of more nationalistic views, other countries will probably move ahead.

One last thing to consider is that the SP 5+495 as Iíve taken to calling it is over 20% cap weighted in the top 5 stocks. Mostly tech. Antitrust policies in the US are toothless. Not so much overseas.
Title: Re: The DOW is running like a chicken with it's head cut off.
Post by: hodedofome on April 18, 2020, 11:01:39 AM
Normally we have a small drop for weeks or months before a crash. After the crash, thereís a retest of the low before the uptrend is sustained back to new highs.

This drop never gave traders and investors a chance to get out. It went straight from all time highs to 35% crash. Therefore, I believe (and have thrown my chips on the table to back up my beliefs) we will not see a retest of the low. The drop wasnít normal, and the recovery wonít be normal as well.

It also appears the smarter, more intelligent and more liberal the person is Iím talking to, the more they donít understand the market being where it is, and where itís going. I suppose having been humbled by the market so many times over the years has given me a different perspective of this environment.

These are my thoughts after getting a good nights sleep and pondering about the markets this morning.
Title: Re: The DOW is running like a chicken with it's head cut off.
Post by: ctuser1 on April 18, 2020, 11:34:17 AM
With regards to innovation, I donít think we have the lock on that and with the rise of more nationalistic views, other countries will probably move ahead.

I can only offer a guess on this point - but I would posit that I have an informed guess because I have seen, and worked in, more than one culture up close for an significant period  (i.e. > 1 year).

The "innovation" gene in the US is very strong. It's not so in most other places. US culture has a LOT of problems. But so does everyone else. Typically, most other places have a significant anti-innovation strain that US doesn't have. Talk to any European, or Asian coming in to US, and they will probably say the same.

That part of the US culture *is* under attack - there is no mistake on that. I am hopeful it will withstand. However, all US has to do is to retain what has been there for 100+ years, whereas a China or an India has to build it up from ground up - which are on vastly different scales of difficulty. SP500 does, and rightfully should reflect this difference - in my opinion.

Someone told me once that you tend to like America and American culture more if you spend a significant time abroad. I would agree. You tend to only see the flaws when you are in here and always immersed in everything American. You tend to see the positives in a balanced way only from the outside.

Title: Re: The DOW is running like a chicken with it's head cut off.
Post by: fattest_foot on April 18, 2020, 01:48:32 PM
The massive drop was predicated on the market forecasting massive unemployment. While unemployment is definitely super bad, it's not AS bad as they projected. Hence why it's recovering some.
Title: Re: The DOW is running like a chicken with it's head cut off.
Post by: hodedofome on April 18, 2020, 03:04:19 PM
It seems a little odd to see Dow run back up so much without anything concrete happening.

However, anyone thinking international - cheap - stocks will win out in the long term over the expensive SP500 are basically betting against the macro trends of AI/tech and biotech driven growth.

The US is likely to be leaders in both of those sectors. The only other likely candidate is China - where you canít really invest.

Even if the US is, say, 40% more expensive compared to Europe - these macro tailwinds for the US can easily justify that extra cost, and then some more.

Disclaimer(s):
1. This is not a screed against appropriate asset allocation. 100% stocks is not appropriate for most people.
2. The above macro tailwind is not a foregone conclusion. The culture of accepting immigrants of all color, religion, culture  drove US innovative ness. That culture is under attack. If that vanishes, all bets are off.

I mostly agree with your analysis but I think youíre missing one important thing:

The US dollar.

Being an American and all Iím over-exposed to it. There arenít many ways to hedge that other than buying foreign currencies, buying foreign bonds and getting a negative interest rate (woohoo), or buying equities.

With regards to innovation, I donít think we have the lock on that and with the rise of more nationalistic views, other countries will probably move ahead.

One last thing to consider is that the SP 5+495 as Iíve taken to calling it is over 20% cap weighted in the top 5 stocks. Mostly tech. Antitrust policies in the US are toothless. Not so much overseas.

Whatís wrong with the US Dollar?
Title: Re: The DOW is running like a chicken with it's head cut off.
Post by: Body Surfer on April 18, 2020, 03:21:20 PM
I agree with this thread's premise that the market is irrationally over-positive right now. It is almost as if the market is in deep denial about how bad the circumstances are on main street. I understand the hope for the reduction in people suffering from this awful virus and the promising thoughts on reopening America. That has helped with market positivism; but, many folks and businesses are beginning to suffer financially. I have no idea how far the market's lows will drop, but it seems very unrealistic for the market to maintain the recent gains. Many investors I spoke with believe the market will drop. Some believe reality is about to come upon the market. Who knows?
Title: Re: The DOW is running like a chicken with it's head cut off.
Post by: Buffaloski Boris on April 18, 2020, 04:39:33 PM
With regards to innovation, I donít think we have the lock on that and with the rise of more nationalistic views, other countries will probably move ahead.

I can only offer a guess on this point - but I would posit that I have an informed guess because I have seen, and worked in, more than one culture up close for an significant period  (i.e. > 1 year).

The "innovation" gene in the US is very strong. It's not so in most other places. US culture has a LOT of problems. But so does everyone else. Typically, most other places have a significant anti-innovation strain that US doesn't have. Talk to any European, or Asian coming in to US, and they will probably say the same.

That part of the US culture *is* under attack - there is no mistake on that. I am hopeful it will withstand. However, all US has to do is to retain what has been there for 100+ years, whereas a China or an India has to build it up from ground up - which are on vastly different scales of difficulty. SP500 does, and rightfully should reflect this difference - in my opinion.

Someone told me once that you tend to like America and American culture more if you spend a significant time abroad. I would agree. You tend to only see the flaws when you are in here and always immersed in everything American. You tend to see the positives in a balanced way only from the outside.

Fascinating how people who have had similar life experiences come to different conclusions.  Iíve spent several years abroad and youíre right: you really come to appreciate what we have here (or had). Still, what Iíve seen is America adopting the really rotten bureaucratic practices and class sclerosis that you see abroad. We seem to be doing what we can to give up our innovative advantages at the same time that other cultures are trying to pull ahead. The trend hasnít been our friend. Peter Thiel has some interesting views on the lack of meaningful innovations of late.
Title: Re: The DOW is running like a chicken with it's head cut off.
Post by: Body Surfer on April 18, 2020, 05:52:25 PM
Certain politicians seem bent on taking from those who did/do to those who don't/can't. Many believe that is how you destroy a country.
Title: Re: The DOW is running like a chicken with it's head cut off.
Post by: SotI on April 18, 2020, 06:12:21 PM
My impression from an outside-in view as a European substantially invested in the US, but without any claim to deeper insight or expertise: The relative good performance may be based on comparative factors (such as likelihood to pull through or successfully shaping the economic "landing") and on lack of (better) alternatives.

The US may throw billions or trillions into economic recovery, but so do the EU or China. Maybe the US citizens will be individually hit harder (financially) than their more cushioned European counterparts -which really sucks on a personal level. However, they may also bounce back faster (than others) based on less centralized decision-making and a stronger entrepreneurial culture in the US.

The thing is, no one knows. There is no clear evidence (yet) that the overall trade and production structures are irrevocably changed. Maybe the US is getting more sclerotic, but in Europe, the trend seems to move into ever more risk-averse directions, too. So, while economically things look bad, they seem to look pretty bad everywhere. The Dow may be a headless chicken. Or investors  just don't see better alternatives.  Just guessing, ofc.
Title: Re: The DOW is running like a chicken with it's head cut off.
Post by: ctuser1 on April 18, 2020, 06:29:53 PM
America was innovating by the oodles at all levels during the post-war period.

It's only after the war on American middle class started by Reagan in 80s that the "low level" innovation (as measured by entrepreneurship in this social class) fell off the cliff.

The high level technology innovation (i.e. the high tech, biotech etc) has not really been impacted that much yet. But if the crazy right is not chased away soon, and manage to suppress science everywhere (e.g. where they don't teach evolution: https://www.theatlantic.com/education/archive/2019/09/schools-still-dont-teach-evolution/598312/) - then it soon will.

I'm hopeful that once the millennials take over the polity, we will be able to scrap everything since Reagan and bring America back in all income levels.
Title: Re: The DOW is running like a chicken with it's head cut off.
Post by: Paper Chaser on April 18, 2020, 07:47:22 PM
The market overall is up because the tech sector is up. Many other sectors of the market are dropping (Industrial's, financials, real estate, etc):

https://www.marketwatch.com/story/coronavirus-creates-a-market-of-haves-and-have-nots-with-the-dow-posting-its-best-2-week-run-in-82-years-amid-22-million-job-losses-2020-04-18

This could be investors choosing companies that are doing fairly well in the current market, or it could be investors trying to chase stability and buy good companies that are likely to stick around while prices are low-ish.
Title: Re: The DOW is running like a chicken with it's head cut off.
Post by: PDXTabs on April 18, 2020, 08:25:50 PM
Prescient or Pollyannaish?: Explaining the Marketís Rally (https://www.wsj.com/articles/prescient-or-pollyannaish-explaining-the-markets-rally-11587231876) - WSJ
Title: Re: The DOW is running like a chicken with it's head cut off.
Post by: hodedofome on April 18, 2020, 09:43:03 PM
My impression from an outside-in view as a European substantially invested in the US, but without any claim to deeper insight or expertise: The relative good performance may be based on comparative factors (such as likelihood to pull through or successfully shaping the economic "landing") and on lack of (better) alternatives.

The US may throw billions or trillions into economic recovery, but so do the EU or China. Maybe the US citizens will be individually hit harder (financially) than their more cushioned European counterparts -which really sucks on a personal level. However, they may also bounce back faster (than others) based on less centralized decision-making and a stronger entrepreneurial culture in the US.

The thing is, no one knows. There is no clear evidence (yet) that the overall trade and production structures are irrevocably changed. Maybe the US is getting more sclerotic, but in Europe, the trend seems to move into ever more risk-averse directions, too. So, while economically things look bad, they seem to look pretty bad everywhere. The Dow may be a headless chicken. Or investors  just don't see better alternatives.  Just guessing, ofc.

Population growth in the US is better than most places in Europe. Regulations are more prevalent in the EU as well. Both make for a worse investing climate in the EU, and the stock market performance of the past 10 years reveals this.
Title: Re: The DOW is running like a chicken with it's head cut off.
Post by: markbike528CBX on April 19, 2020, 01:40:59 AM
Re: Thread Title

Magnetic Fields
https://www.youtube.com/watch?v=WDZkrqM0L4g

Well my heart's runnin' round like a chicken with its head cut off
All around the barn yard falling in and out of love
Poor thing's blind as a bat
Gettin' up, fallin' down, gettin' up
Who'd fall in love with a chicken with its head cut off?
Title: Re: The DOW is running like a chicken with it's head cut off.
Post by: bwall on April 19, 2020, 02:52:19 AM

I grew up on a farm. At the age of six I saw chickens that'd had their heads cut off, running around like mad, without their head on. Quite a sight for a six year old, looking back.

On a side note, it's worse when the chicken has had its neck wrung rather than cut off...

I've never seen a neck wrung, I've only heard it as an expression. Have you participated in a neck wringing? If yes, please describe! I'd love to know what it was like.
Title: Re: The DOW is running like a chicken with it's head cut off.
Post by: bwall on April 19, 2020, 02:58:09 AM
This drop never gave traders and investors a chance to get out. It went straight from all time highs to 35% crash. Therefore, I believe (and have thrown my chips on the table to back up my beliefs) we will not see a retest of the low.

I'm not quite sure I follow the above statement. If traders and investors weren't getting out, then who was doing all the selling? The only way for a, say, $100 trillion market cap stock market to drop 35% is for $35 trillion dollars worth of stock to be sold, i.e. a net outflow of $35 trillion dollars into someone's pocket(s). If traders and investors weren't getting out, then who was?
Title: Re: The DOW is running like a chicken with it's head cut off.
Post by: reeshau on April 19, 2020, 03:23:05 AM
This drop never gave traders and investors a chance to get out. It went straight from all time highs to 35% crash. Therefore, I believe (and have thrown my chips on the table to back up my beliefs) we will not see a retest of the low.

I'm not quite sure I follow the above statement. If traders and investors weren't getting out, then who was doing all the selling? The only way for a, say, $100 trillion market cap stock market to drop 35% is for $35 trillion dollars worth of stock to be sold, i.e. a net outflow of $35 trillion dollars into someone's pocket(s). If traders and investors weren't getting out, then who was?

Umm...no.  The market cap of a stock is not a fixed bucket--it is not like changes to a company's balance sheet, where a debit matches a credit.

Take a hypothetical small, thinly traded stock.  Say there are 10,000 shares, selling at $100 each.  (So, $1M market cap)  If one day in March, I see the market dropping and offer to buy 1 share at $90.  If someone take me up on the bid, even if it's the market-maker in the stock, they get my $90. But the new market price gets posted with the successful trade, so the market cap just went down by 10%, or $100,000.  That money doesn't go to someone; it's a quantification of the market sentiment.

March was a high volume month, but only just more than January + February.  And the market low brought it back to 2016 levels--there was much less volume bringing it to that level, than what it look to get there in the first place.
Title: Re: The DOW is running like a chicken with it's head cut off.
Post by: vand on April 19, 2020, 03:52:32 AM
The markets are fine. They do what they do which is to keep people guessing. Rather than the market behaving irrationally, I would suggest it is the amateurs who can't understand why the market isn't bending to their will who are the ones running around like headless chickens...
Title: Re: The DOW is running like a chicken with it's head cut off.
Post by: bwall on April 19, 2020, 05:39:43 AM
This drop never gave traders and investors a chance to get out. It went straight from all time highs to 35% crash. Therefore, I believe (and have thrown my chips on the table to back up my beliefs) we will not see a retest of the low.

I'm not quite sure I follow the above statement. If traders and investors weren't getting out, then who was doing all the selling? The only way for a, say, $100 trillion market cap stock market to drop 35% is for $35 trillion dollars worth of stock to be sold, i.e. a net outflow of $35 trillion dollars into someone's pocket(s). If traders and investors weren't getting out, then who was?

Umm...no.  The market cap of a stock is not a fixed bucket--it is not like changes to a company's balance sheet, where a debit matches a credit.

Take a hypothetical small, thinly traded stock.  Say there are 10,000 shares, selling at $100 each.  (So, $1M market cap)  If one day in March, I see the market dropping and offer to buy 1 share at $90.  If someone take me up on the bid, even if it's the market-maker in the stock, they get my $90. But the new market price gets posted with the successful trade, so the market cap just went down by 10%, or $100,000.  That money doesn't go to someone; it's a quantification of the market sentiment.

March was a high volume month, but only just more than January + February.  And the market low brought it back to 2016 levels--there was much less volume bringing it to that level, than what it look to get there in the first place.

Makes sense. Thanks for the explanation. Clearly I wasn't an accountant in my previous life.
Title: Re: The DOW is running like a chicken with it's head cut off.
Post by: TomTX on April 19, 2020, 06:17:00 AM
The massive drop was predicated on the market forecasting massive unemployment. While unemployment is definitely super bad, it's not AS bad as they projected. Hence why it's recovering some.

Really? Not that bad?

By my calculations we're already at nearly 20% unemployment - without even counting self-employed. Start at 3.5%. Add up all the new unemployment claims. Presume the week ending April 17 is ~5 million (down slightly - but we know it's huge because of all the reports of systems still being swamped and unable to keep up). Divide by the the workforce in February.

19.5%. Not counting self-employed job losses.
Title: Re: The DOW is running like a chicken with it's head cut off.
Post by: bwall on April 19, 2020, 07:39:25 AM
Fascinating how people who have had similar life experiences come to different conclusions.  Iíve spent several years abroad and youíre right: you really come to appreciate what we have here (or had). Still, what Iíve seen is America adopting the really rotten bureaucratic practices and class sclerosis that you see abroad. We seem to be doing what we can to give up our innovative advantages at the same time that other cultures are trying to pull ahead. The trend hasnít been our friend. Peter Thiel has some interesting views on the lack of meaningful innovations of late.

I'm not so sure about the lack of meaningful innovations.  I encourage you to look up the companies TWST, CRSP, and ILMN. Major innovators in their field(s). This technology will change the world, IMHO.
Title: Re: The DOW is running like a chicken with it's head cut off.
Post by: GuitarStv on April 19, 2020, 08:24:50 AM
The massive drop was predicated on the market forecasting massive unemployment. While unemployment is definitely super bad, it's not AS bad as they projected. Hence why it's recovering some.

Really? Not that bad?

By my calculations we're already at nearly 20% unemployment - without even counting self-employed. Start at 3.5%. Add up all the new unemployment claims. Presume the week ending April 17 is ~5 million (down slightly - but we know it's huge because of all the reports of systems still being swamped and unable to keep up). Divide by the the workforce in February.

19.5%. Not counting self-employed job losses.

Yeah, but that's primarily the poors and small business owners who were barely making it.  If this stretches on long enough to significantly impact higher earners and bigger, more stable/profitable businesses then I think we'll see the markets begin to react quite differently.
Title: Re: The DOW is running like a chicken with it's head cut off.
Post by: Body Surfer on April 19, 2020, 08:53:42 AM
America was innovating by the oodles at all levels during the post-war period.

It's only after the war on American middle class started by Reagan in 80s that the "low level" innovation (as measured by entrepreneurship in this social class) fell off the cliff.

The high level technology innovation (i.e. the high tech, biotech etc) has not really been impacted that much yet. But if the crazy right is not chased away soon, and manage to suppress science everywhere (e.g. where they don't teach evolution: https://www.theatlantic.com/education/archive/2019/09/schools-still-dont-teach-evolution/598312/) - then it soon will.

I'm hopeful that once the millennials take over the polity, we will be able to scrap everything since Reagan and bring America back in all income levels.

These opinions could not be more wrong or incorrect. 
Title: Re: The DOW is running like a chicken with it's head cut off.
Post by: ctuser1 on April 19, 2020, 09:12:33 AM
America was innovating by the oodles at all levels during the post-war period.

It's only after the war on American middle class started by Reagan in 80s that the "low level" innovation (as measured by entrepreneurship in this social class) fell off the cliff.

The high level technology innovation (i.e. the high tech, biotech etc) has not really been impacted that much yet. But if the crazy right is not chased away soon, and manage to suppress science everywhere (e.g. where they don't teach evolution: https://www.theatlantic.com/education/archive/2019/09/schools-still-dont-teach-evolution/598312/) - then it soon will.

I'm hopeful that once the millennials take over the polity, we will be able to scrap everything since Reagan and bring America back in all income levels.

These opinions could not be more wrong or incorrect.

OK Boomer.

Title: Re: The DOW is running like a chicken with it's head cut off.
Post by: Retire-Canada on April 19, 2020, 09:26:12 AM
Now it's just running around with it's head cut off.

Really? Interesting. I missed it. My quarterly portfolio updates are really bad for conveying all the market drama. OTOH they are great for keep my stress levels low.
Title: Re: The DOW is running like a chicken with it's head cut off.
Post by: FINate on April 19, 2020, 09:46:50 AM
The good news is that small-time investors in retirement accounts are being smart about this: https://www.pionline.com/defined-contribution/vanguard-most-its-investors-hold-steady-during-market-volatility

Maybe the average person is finally learning to ignore the bloviating "experts" on cable news who profit from stoking volatility. Who cares about these guys? Let them run around like chickens with their heads cut off. I'll continue ignoring the noise and ride this thing out.
Title: Re: The DOW is running like a chicken with it's head cut off.
Post by: frugledoc on April 19, 2020, 10:11:18 AM
The markets are fine. They do what they do which is to keep people guessing. Rather than the market behaving irrationally, I would suggest it is the amateurs who can't understand why the market isn't bending to their will who are the ones running around like headless chickens...

Yay, I agree with you. First time ever, high five!
Title: Re: The DOW is running like a chicken with it's head cut off.
Post by: VaCPA on April 19, 2020, 03:49:53 PM
The market is still way down from where it was before this happened. I think there's some optimism because the fed backstopped the economy big-time, and we're supposedly peaking soon for COVID. Some things are expected in the short-term, like high unemployment numbers and shitty corporate earnings but the market is priced like the worst is over. POTUS has made it clear the economy is his priority so I'm not sure I'd bet against that.
Title: Re: The DOW is running like a chicken with it's head cut off.
Post by: ChpBstrd on April 19, 2020, 08:57:52 PM
That's nothing. Between December 16, 1929 and April 6, 1930, the S&P 500 rose over 27%.

Can you imagine having to watch the market go up that much in less than 5 months, and to then still make the right call and stay out of the market? One would have to not pay much attention to what other investors are doing.
Title: Re: The DOW is running like a chicken with it's head cut off.
Post by: Wrenchturner on April 19, 2020, 11:16:31 PM
The market is still way down from where it was before this happened. I think there's some optimism because the fed backstopped the economy big-time, and we're supposedly peaking soon for COVID. Some things are expected in the short-term, like high unemployment numbers and shitty corporate earnings but the market is priced like the worst is over. POTUS has made it clear the economy is his priority so I'm not sure I'd bet against that.

I'm not an economist obviously, but I wonder how much capability the fed and other bankers actually have to maintain inflation/stave off deflation.  The fed doesn't eat at restaurants, or finance cars, or pay rent or mortgages.  Too much consumption has been sucked out of the economy due to lost wages.  I don't know what the implications are for the stock market in the context of banker bailouts but at some point I suspect contagion will affect it.  Am I misguided?
Title: Re: The DOW is running like a chicken with it's head cut off.
Post by: MustacheAndaHalf on April 20, 2020, 12:16:29 AM
The market is still way down from where it was before this happened.
If S&P 500 is "way down" at -10.5% YTD now, what do you call March 23 at -31% YTD?

In the past 4 weeks, the S&P 500 gained +29% (Mar 23 $204.27  vs  Apr 17 $263.61).
Title: Re: The DOW is running like a chicken with it's head cut off.
Post by: VaCPA on April 20, 2020, 05:35:13 AM
The market is still way down from where it was before this happened.
If S&P 500 is "way down" at -10.5% YTD now, what do you call March 23 at -31% YTD?

In the past 4 weeks, the S&P 500 gained +29% (Mar 23 $204.27  vs  Apr 17 $263.61).
I would say the market was way way down at 3/23. Not even sure the point of your post. My point seemed clear enough.
Title: Re: The DOW is running like a chicken with it's head cut off.
Post by: Paper Chaser on April 20, 2020, 06:03:57 AM
The market is still way down from where it was before this happened.
If S&P 500 is "way down" at -10.5% YTD now, what do you call March 23 at -31% YTD?

In the past 4 weeks, the S&P 500 gained +29% (Mar 23 $204.27  vs  Apr 17 $263.61).
I would say the market was way way down at 3/23. Not even sure the point of your post. My point seemed clear enough.

12 of the 20 worst daily point drops (and 3 of the 20 worst percentage drops) in S&P500 history occurred in the last month and a half and the market overall is down just 15% from the record high immediately before the bottom fell out. YTD, the S&P is down just 11.7% and it's currently around where it was in late May/early June 2019. That probably feels like it's way down after years of continuous gains, but it's really pretty good overall, even historically.
Title: Re: The DOW is running like a chicken with it's head cut off.
Post by: ctuser1 on April 20, 2020, 06:23:03 AM
The market has two completely separate parts - Tech and non-Tech.

I have a $300k+ position in INTC and AAPL. These are from 10+ years ago, from small initial positions that just grew several hundred % over time.  Primarily due to these two - my overall portfolio is only down 8% from the peak as of today morning.

(I no longer bet on single stocks, never purchased one after 2014).

The tech names will hardly be impacted by the current consumer slowdown. A little bit - sure. But that will be temporary.

This is very different from other parts of the SP500 landscape. They are facing completely different fundamentals for many years to come - perhaps permanently.

Mixing these two parts together is misleading and confusing.
Title: Re: The DOW is running like a chicken with it's head cut off.
Post by: reeshau on April 20, 2020, 06:59:46 AM
The market has two completely separate parts - Tech and non-Tech.

I have a $300k+ position in INTC and AAPL. These are from 10+ years ago, from small initial positions that just grew several hundred % over time.  Primarily due to these two - my overall portfolio is only down 8% from the peak as of today morning.

(I no longer bet on single stocks, never purchased one after 2014).

The tech names will hardly be impacted by the current consumer slowdown. A little bit - sure. But that will be temporary.

This is very different from other parts of the SP500 landscape. They are facing completely different fundamentals for many years to come - perhaps permanently.

Mixing these two parts together is misleading and confusing.

Add to this Consumer Staples like P&G and their retailers, like Wal-Mart.  Dollar General has hit a series of 52-week highs during this timeframe.
Title: Re: The DOW is running like a chicken with it's head cut off.
Post by: MustacheAndaHalf on April 20, 2020, 08:27:19 AM
The market is still way down from where it was before this happened.
If S&P 500 is "way down" at -10.5% YTD now, what do you call March 23 at -31% YTD?

In the past 4 weeks, the S&P 500 gained +29% (Mar 23 $204.27  vs  Apr 17 $263.61).
I would say the market was way way down at 3/23. Not even sure the point of your post. My point seemed clear enough.
When you say "way", it can mean -15.5% (way way down) or it can mean -10.5% (way down), which seems hard to figure out compared to just posting the actual year to date loss of -10.5%.
Title: Re: The DOW is running like a chicken with it's head cut off.
Post by: ChpBstrd on April 20, 2020, 09:31:22 AM
The market is still way down from where it was before this happened. I think there's some optimism because the fed backstopped the economy big-time, and we're supposedly peaking soon for COVID. Some things are expected in the short-term, like high unemployment numbers and shitty corporate earnings but the market is priced like the worst is over. POTUS has made it clear the economy is his priority so I'm not sure I'd bet against that.

I'm not an economist obviously, but I wonder how much capability the fed and other bankers actually have to maintain inflation/stave off deflation.  The fed doesn't eat at restaurants, or finance cars, or pay rent or mortgages.  Too much consumption has been sucked out of the economy due to lost wages.  I don't know what the implications are for the stock market in the context of banker bailouts but at some point I suspect contagion will affect it.  Am I misguided?

I wonder about this too. What does it matter when demand for financial assets is temporarily boosted if the businesses issuing those assets are shrinking in terms of revenue, employees, and profits? Will there be fewer foreclosures or auto loan defaults if the Fed buys a bunch of bundled debt securities? Can the Fed corner the markets for corporate bonds, mortgages, etc. and keep their prices high forever regardless of defaults? Similarly, do small business loans and tax breaks cause it to make sense to lose letís say $50k a month running a business without enough customers to be viable? If already-leveraged corporations were to increase their debt loads by 10-20% in order to survive the next 12 months, wouldnít most of their credit ratings drop to junk? And even if they do survive, does that change the fact that unemployment is heading over 20% and that a financial crisis could ensue as investors flee downgraded bonds? Bottom line, this much demand and that many jobs canít go poof and then the Fed comes in and cures everything by picking up a few hundred billion in financial assets. For everything to go back to normal overnight, the Fed would have to offer grants, not loans, totaling most of the lost profits for the entire US economy. This would essentially be communism with a symbolic veneer of money so we could still call it capitalism.

That said, I agree with all existing efforts to support the economy and prevent certain kinds of financial crisis.  I just donít follow the idea that assets are efficiently priced when the government has a very big thumb on the scale. If financial asset prices are being artificially and temporarily boosted, thatís a good time to sell, not to buy. When else does one get an inefficient market where if you sell the government essentially subsidizes your losses?
Title: Re: The DOW is running like a chicken with it's head cut off.
Post by: Wrenchturner on April 20, 2020, 10:38:25 AM
The market has two completely separate parts - Tech and non-Tech.

I have a $300k+ position in INTC and AAPL. These are from 10+ years ago, from small initial positions that just grew several hundred % over time.  Primarily due to these two - my overall portfolio is only down 8% from the peak as of today morning.

(I no longer bet on single stocks, never purchased one after 2014).

The tech names will hardly be impacted by the current consumer slowdown. A little bit - sure. But that will be temporary.

This is very different from other parts of the SP500 landscape. They are facing completely different fundamentals for many years to come - perhaps permanently.

Mixing these two parts together is misleading and confusing.

Good points here; thanks.

Snip

Also good points.
Title: Re: The DOW is running like a chicken with it's head cut off.
Post by: hodedofome on April 20, 2020, 12:54:56 PM
The market has two completely separate parts - Tech and non-Tech.

I have a $300k+ position in INTC and AAPL. These are from 10+ years ago, from small initial positions that just grew several hundred % over time.  Primarily due to these two - my overall portfolio is only down 8% from the peak as of today morning.

(I no longer bet on single stocks, never purchased one after 2014).

The tech names will hardly be impacted by the current consumer slowdown. A little bit - sure. But that will be temporary.

This is very different from other parts of the SP500 landscape. They are facing completely different fundamentals for many years to come - perhaps permanently.

Mixing these two parts together is misleading and confusing.

This is why I DO buy individual stocks. My accounts are all tech stocks (AAPL, AMZN, NFLX, SHOP, RNG, GOOGL, WORK, ZM, DOCU, BILL, AVLR, MSFT). My trading account is now breakeven for the year, and my IRA is up 5% on the year. The indexes have a bunch of junk (oil and gas, financial, real estate) who don't have nearly the margins of these software as a service stocks, and will not perform nearly as well over time.
Title: Re: The DOW is running like a chicken with it's head cut off.
Post by: ctuser1 on April 20, 2020, 01:24:12 PM
The market has two completely separate parts - Tech and non-Tech.

I have a $300k+ position in INTC and AAPL. These are from 10+ years ago, from small initial positions that just grew several hundred % over time.  Primarily due to these two - my overall portfolio is only down 8% from the peak as of today morning.

(I no longer bet on single stocks, never purchased one after 2014).

The tech names will hardly be impacted by the current consumer slowdown. A little bit - sure. But that will be temporary.

This is very different from other parts of the SP500 landscape. They are facing completely different fundamentals for many years to come - perhaps permanently.

Mixing these two parts together is misleading and confusing.

This is why I DO buy individual stocks. My accounts are all tech stocks (AAPL, AMZN, NFLX, SHOP, RNG, GOOGL, WORK, ZM, DOCU, BILL, AVLR, MSFT). My trading account is now breakeven for the year, and my IRA is up 5% on the year. The indexes have a bunch of junk (oil and gas, financial, real estate) who don't have nearly the margins of these software as a service stocks, and will not perform nearly as well over time.

This is really going off topic.

I have found it is very difficult to "predict" which sector will come out the winner for the long term. XOM looked just as much a "winner" back in 2009-2010 timeframe as AAPL does today. I know because I have a $6000 XOM position seating in my brokerage account back from those days. I kinda/sorta know that biotech related stocks, and some pharma will benefit from the spending boom in all things immunology that is under way. I don't yet know which individual stocks.

In fact, I once coded up High Frequency Trading routines for a hedge fund way back (before the great recession). What I found is that your basic strategies (e.g. momentum following with a hint of manual controls thrown in) work great - till more people start doing it and the market adapts to make that unworkable. This feedback loop makes *any* strategy a losing one in the long term - unless you can constantly bank on inventing one winning strategy after another - ad-infinitum.

Your tech positions look great for today's crisis. Your returns, however, will be predicated on whether they will look great for tomorrow's crisis, and there is no magic wand for that.
 
I *still* look for "sure shot" stocks (e.g. what AAPL looked like right after Mr. Market pummeled it after Jobs died), and will invest some money in them if/when I find them. But I don't use that as my dominant strategy any more for reasons outlined above. I haven't found any such sure-shots after 2014.
Title: Re: The DOW is running like a chicken with it's head cut off.
Post by: VaCPA on April 20, 2020, 03:34:10 PM
The market is still way down from where it was before this happened.
If S&P 500 is "way down" at -10.5% YTD now, what do you call March 23 at -31% YTD?

In the past 4 weeks, the S&P 500 gained +29% (Mar 23 $204.27  vs  Apr 17 $263.61).
I would say the market was way way down at 3/23. Not even sure the point of your post. My point seemed clear enough.
When you say "way", it can mean -15.5% (way way down) or it can mean -10.5% (way down), which seems hard to figure out compared to just posting the actual year to date loss of -10.5%.
I'm assuming you're basically trying to hit a certain post count per day to nitpick semantics like that. Why don't you substitute 'way down' in your mind for whatever wording bothers you less
Title: Re: The DOW is running like a chicken with it's head cut off.
Post by: J Boogie on April 20, 2020, 03:49:40 PM
In fact, I once coded up High Frequency Trading routines for a hedge fund way back (before the great recession). What I found is that your basic strategies (e.g. momentum following with a hint of manual controls thrown in) work great - till more people start doing it and the market adapts to make that unworkable. This feedback loop makes *any* strategy a losing one in the long term - unless you can constantly bank on inventing one winning strategy after another - ad-infinitum.

Your tech positions look great for today's crisis. Your returns, however, will be predicated on whether they will look great for tomorrow's crisis, and there is no magic wand for that.
 
I *still* look for "sure shot" stocks (e.g. what AAPL looked like right after Mr. Market pummeled it after Jobs died), and will invest some money in them if/when I find them. But I don't use that as my dominant strategy any more for reasons outlined above. I haven't found any such sure-shots after 2014.

I think the benefit of picking a large group of high conviction individual stocks as noted isn't so much to develop some novel trading strategy but simply to leave companies/industries in decline off your balance sheet. We might not know what companies look GREAT for tomorrow's crises, but it's not hard to figure out what companies look, to use a current phrase, "non-essential" during the next decade. Being part of the S&P means a company in decline is likely to have quite a few rungs to drop before it ends up in the Russel.

And without transaction fees, it's not too hard to build an index fund of a hundred or so companies throughout various industries that stand a better than average chance of being relevant and profitable a decade from now.