Down goes the Dow

:-)

TUR has never been lower, $15.05…..

SPX now down around 4% from its all time highs

Feels like more, right?

NASDAQ down 8%

I'd estimate small caps down 10%

VIX will be interesting to watch today. Traders are going to be willing to pay a lot to hedge their portfolios through the end of the year...that might create a very large snapup in indices when they sell their hedges in the new year.

We're almost back down to where I cut my stock exposure from 68%ish to 60%ish

So I feel less foolish about that big sale.

danube steak wrote:

carmine9 wrote:

I think it took the Dow Jones about 5 years to recover from the 2008 dive and only 4 months to recover last year after the Covid collapse. Unless you are very close to retirement I really think it is best to ride out any storm. Do not exit the equity markets.

If you feel a massive drop is on the short horizon, why take the beating?

I am not saying a massive drop is coming soon. I just know you can't time the market and I am in for the next 20 years.

Why do you know that? Isn't that what all the Big players do?

As one who has timed the market successfully for many years, I will tell you 2 things about it:

1-successfully timing big market moves down was never too difficult, but optimum timing was, but I got pretty close. Good market moves down since the covid one, I have no idea. I do not have even a good guess what will happen going forward, just a vague sense that there are sufficient control mechanisms in place today to avoid deep sustained drops, and that the economic difficulties will manifest in another dimension, i.e. currency. And voilà, we have inflation and the USD drops as I had predicted. So far, so good, large-scale. This drawdown, my guess is 5-12% to clear out some dead wood, then a snapback. As they say, lather-rinse-repeat. We will see if this guess is correct.

2-timing individual stocks, as I just did with tsla, is mostly luck unless you have insider info, or a very keen insight into a very particular mechanism that will rule the stock. I have done it only a handful of times, and gotten lucky.

Yes, lots of guesswork—but it keeps you nimble and in shape to pivot as needed, which I have found worthwhile.

My 2 cents.

carmine9 wrote:

danube steak wrote:

If you feel a massive drop is on the short horizon, why take the beating?

I am not saying a massive drop is coming soon. I just know you can't time the market and I am in for the next 20 years.

Why do you know that? Isn't that what all the Big players do?

This is why buy-and-hold should be your strategy and not trying to time the market

1) Bank of America published a paper quantifying the effects of missing the 10 best and worst days of each decade. An investor who invested in the S & P from 1930 to 2020 would have achieved a return of 18,000% return. If someone missed the best 10 days of each decade that drops to 28%.

2) A study in the '90s found that the performance of one's portfolio is 4% based on stock-picking and market-timing. Basically nothing. 96% is based on diversification.

3) The performance of the S & P can be attributed to a small number of days. One paper found that over a 20-year period the 35 best days accounted for all the gains. That is less than 1% of the 5,000 days across the two decades. Most of the best days occur within a week of the worst days.

4) When trying to time the market you have to time it twice. When you exit the market and when you get back in.

Timing a market bottom is low but following that up with timing a market top is much more difficult.

I would be very curious to see how your investments performed over the long haul versus the market. Care to share the details? The best mutual fund investors are unable to beat the indexes over the long haul and the ones that do in the short-term is usualley due to happenstance and won't happen over the long haul, Peter Lynch excluded.

Given the market cap size of the top dozen companies in the S&P 500 that seems wishful thinking.

I used to invest/trade a lot, and it depends on your benchmark. I would be in, but not the whole market, or across sectors. Diversification is the way to limit your gains. Mostly I would just pick what I saw as the top 10-25 US momentum stocks, and ditch them for newer/more vogue ones to long-term the CG.

A few years ago, shortly before covid, I started to get nervous, which was when I started posting my potential sources of market problems in this thread. What I considered to be my “investable assets” dropped significantly, and I moved some money into foreign RE, fine art, antiquities, and a few standard collectibles (unfortunately not watches), etc as diversifications, and reduced my US equity exposure dramatically.

I beat “the markets” (eg SP500) every year until last year or so, depending on how you measure, and how you window. Difficult to say, because things like art and antiquities are one-off’s, and have no standard value, so I exclude them. With them, of course I beat markets, but it doesn’t count because I have no plans to sell or borrow against them.

I am now such a wanker that not only am I almost completely out of the equity markets, but I have also started to buy...bonds!😂😂😂. In trivial amounts, but my wife and I are maxxing-out on I-series, this year and next. Not a big dollar amount, but the shift is telling, psychologically.

Also my newfound interest in dividends, and alternative stores of wealth, even bitcoin. I am rapidly converting to an old douchebag, with different ideas about wealth, money, business, politics. We almost decided on Andorra, but my wife thinks it’s ugly, so she vetoed it😂. Tough for us to find a good place in the world. Guys like Igy have a nice situation, they have what they want, where they want it. We have yet to find that, due to a number of things—but it is getting dialed-in. And that will only be the next phase, I hope to have a lot of living left to do!

The bottom line is that I did very well, but that it looks like my time may be over. Yeah I took a flyer on tsla this year, but one data point in this new environment means nothing. Oh, I think I also made 3 figures on Gamestop, iirc😁.

“Guys like Igy have a nice situation, they have what they want, where they want it.”

There are some advantages to having a 75 IQ. :-)

I do have one regret, not buying TUR at $15.05 this morning. https://finance.yahoo.com/quote/tur

Ghost of Igloi wrote:

Maserati,

“While Igy laments the state of the US equities markets, the bond markets are no better. I have zero faith in the rating agencies, for various reasons.”

I said in my post real estate, stocks and BONDS are distorted by Fed (central bank) policy. The question should be how will those assets perform short and long term? In my view over the next 2 years: stocks -60-70% +47%, residential real estate -45-60%+23%, and bonds -5-10% approx negative 1%. Over a 10 year time horizon: stocks -2-0%, residential real estate -1-+1%, and bonds +2-3%.

Igy

here's today's prediction report - from our own Igy, posted 6/20/2020.

I inserted in bold the actual result, 1.5 years later on his 2-year forecast.

Not a great prediction so far, but he still has 6 months to go on it.

agip wrote:Not a great prediction so far, but he still has 6 months to go on it.

I think if you are going to be critical of others' predictions, you should make some of your own and also show they have panned out. Have you made any predictions in this thread, and if so, how have they done?

VS-SJW-IR-TS idiot wrote:

agip wrote:Not a great prediction so far, but he still has 6 months to go on it.

I think if you are going to be critical of others' predictions, you should make some of your own and also show they have panned out. Have you made any predictions in this thread, and if so, how have they done?

I try to make some predictions but usually they are wrong. I tend to panic sell when I should be taking a walk around the block.

I mean I don't market time much...just rebalance every few years really.

Doc Racket took some honor off me this year on a China bet. I was pretty shockingly bullish and wrong on China.

I made a big stock sale this year too early, although the market is now back down to where I sold.

Part of why I do this recounting of predictions is to show that predictions aren't very accurate in general.

Especially bearish predictions.

Although I do like it when the establishment like GS gets predictions correct. Shows that the system is not abusing the muppets.

agip wrote:

Ghost of Igloi wrote:

Maserati,

“While Igy laments the state of the US equities markets, the bond markets are no better. I have zero faith in the rating agencies, for various reasons.”

I said in my post real estate, stocks and BONDS are distorted by Fed (central bank) policy. The question should be how will those assets perform short and long term? In my view over the next 2 years: stocks -60-70% +47%, residential real estate -45-60%+23%, and bonds -5-10% approx negative 1%. Over a 10 year time horizon: stocks -2-0%, residential real estate -1-+1%, and bonds +2-3%.

Igy

here's today's prediction report - from our own Igy, posted 6/20/2020.

I inserted in bold the actual result, 1.5 years later on his 2-year forecast.

Not a great prediction so far, but he still has 6 months to go on it.

Fed balance sheet March 2020 $4.3 Trillion

Fed balance sheet December 2021 $8.7 Trillion

Government stimulus since March 2020 $5.3 Trillion

Never could I imagine this level of insanity. I would say over the next two years stocks down 70-85%, residential real estate down 60-70%, and government bonds down 10-15%, junk more equity like, large number of defaults. Ten year returns stocks down 5%, residential real estate down 4%, and bonds up 1%.

If you believe that valuations matter then all you have seen is the cycle extended by extreme monetary and fiscal policy. The downside gets greater and the damage is extended through a longer bear market. Of course this could be some virtuous cycle where even investing in the most ridiculous ideas, and there are many, is rewarded.

I am at a pizzeria, high on vin chaud, peeking at this thread, being reflective.

Many times I have been tempted to give Igy a few parameters, have him design me a broad-brush portfolio, and dump in an actual hundy or half.

valuations matter

but clearly, obviously, incontrovertibly, evidentially, factually, provably, they aren't allthat matter.

if valuations were all that mattered, we'd have had negative real results since the early 90s instead one of the best 20 or 30 year periods ever for stock investing.

Come to think of it, Maser probably thinks we have had negative real results from the 90s onward. what's the actual inflation rate maser? Just want to keep you warmed up and in the conversation.

And for pete's sake Igy man, you've been in this game for generations...you know better than to point at one or two weird corners of the investing world and extrapolate to the entire market.