Down goes the Dow

TSLA up 1% after hours on earnings.

so we've had support from MSFT and TSLA earnings, two market leaders.

netflix was a disaster. But that's not really a market leader anymore.

We've had a drag from the Fed I guess...but seems to me that I'll take company results over the massive unprecedented dangerous and completely uncalled for threat of a 0.5% fed funds rate.

Anybody interested in funds like THD, FLKR, VNM, etc?

EM’s just haven’t participated.

J. Hardy wrote:

carmine9 wrote:

Another day where the market looks real good thru mid afternoon and then you come back and check on it at closing and all the gains are lost.

This is some BS

Have you learned nothing? Relax.

That carmine9 guy is almost assuredly our old friend The Unkle aka K5 aka a million other names

Maser wrote:

Anybody interested in funds like THD, FLKR, VNM, etc?

EM’s just haven’t participated.

Emerging markets got blown out the hardest by COVID. If you go that route then you better have 25 years to sit and wait around, and why would anyone do that when the US economy is decidedly stronger than any other in the world right now

Markets firming up after hours, not looking so bad after all.

Maser, House at about 10% - 15% of NW, depending if you figure in a pension, and paid for.

What a day.

And pertaining to the other topic of the day, I was banned once for a few days, too.

* And it was totally worth it.

Watched an interview of Jeremy Grantham who's a permabear but very intelligent, calling a superbubble. What say you all on some calling such crashes? Whether we go down hard or rebound well, it's hard as a long term investor to pick a strategy: Hire a money manager (who?), self manage and pick what sectors, Boglehead three fund index strategy?

Prof. Racket wrote:

J. Hardy wrote:

Have you learned nothing? Relax.

That carmine9 guy is almost assuredly our old friend The Unkle aka K5 aka a million other names

100%. LRC’s favorite anti-Semite.

FIGHT THE FED!

during a Fed rate-hike period the average return for the Dow Jones Industrial Average DJIA, -0.38% is nearly 55%, that of the S&P 500 SPX, -0.15% is a gain of 62.9% and the Nasdaq Composite COMP, +0.02% has averaged a positive return of 102.7%, according to Dow Jones, using data going back to 1989 (see attached table

https://www.marketwatch.com/story/heres-what-history-says-about-stock-market-returns-during-fed-rate-hike-periods-11643212370?siteid=yhoof2

seattle prattle wrote:

And pertaining to the other topic of the day, I was banned once for a few days, too.

* And it was totally worth it.

Lololol!

Well, the place we were looking at got taken off the market, so that’s that. They decided not to sell, darnit. No wonder, it was great. We can have it if they change their minds, which they won’t.

Tomorrow, once again anything can happen—except for bonds rising meaningfully 😂.

Today I picked up some NVS, RHHBY, and other things. Would like to hit some RDS-B, but will wait for a more opportune time.

DXY at 96.60

Maser wrote:

seattle prattle wrote:

And pertaining to the other topic of the day, I was banned once for a few days, too.

* And it was totally worth it.

Lololol!

Well, the place we were looking at got taken off the market, so that’s that. They decided not to sell, darnit. No wonder, it was great. We can have it if they change their minds, which they won’t.

Tomorrow, once again anything can happen—except for bonds rising meaningfully 😂.

Today I picked up some NVS, RHHBY, and other things. Would like to hit some RDS-B, but will wait for a more opportune time.

DXY at 96.60

Too bad about the house. Maybe something as good or better will avail itself.

Sounds like you are doing some selective buying. Today I finally pared down a bulk of my leveraged holdings, so essentially just 100% in the market. It feels like a relief and I have to fight the temptation to start buying it back in some kind of FOMO trade at every little bounce the market takes throughout the day.

Futures solidly down by quite a bit at the moment. But we have been seeing these things make big and fast reversals so often, and during the trading session for that matter, that its hard to take it seriously.

J. Hardy wrote:

carmine9 wrote:

Another day where the market looks real good thru mid afternoon and then you come back and check on it at closing and all the gains are lost.

This is some BS

Have you learned nothing? Relax.

Why do you say that?

So I have a bit of a side question to all this. I've been looking into investing using margin, and Robinhood's rate is 2.5%. Since the S&P 500 gains an average of about 10% per year (including dividends) and basically never falls more than 50%, rarely more than 30%, wouldn't it be both extremely profitable and zero risk to use margin to buy an S&P 500 ETF like SPY or VOO? Assuming the margin maintenance level is 50% or so, this seems like a ~zero risk strategy... Am I missing something?

Computer Geek wrote:

So I have a bit of a side question to all this. I've been looking into investing using margin, and Robinhood's rate is 2.5%. Since the S&P 500 gains an average of about 10% per year (including dividends) and basically never falls more than 50%, rarely more than 30%, wouldn't it be both extremely profitable and zero risk to use margin to buy an S&P 500 ETF like SPY or VOO? Assuming the margin maintenance level is 50% or so, this seems like a ~zero risk strategy... Am I missing something?

You clearly don't understand what zero-risk means. Of course there is risk, and you may want to read a little primer about trading on margin before you choose to do it.

Pay particular attention to what would trigger a margin call from your broker. Another words, if you investment loses a sufficient value and your account reserves are below a prescribed level, the broker will force you to liquidate your holding at a loss, and on their schedule, and whether you like it or not.

Plus that fee is steep. It's not the kind of thing most of us would be getting excited about.

Some traders do trade on margin, it is not uncommon in certain circles. You would be well advised to learn about what it entails and enter into it on a trial basis if you choose to get into it.

The returns are never guaranteed, as you seem to suggest.

Also, leveraged ETFs might achieve similar things to what your are attempting, though they are usually not intended for long term positions.

seattle prattle wrote:

I have to fight the temptation to start buying it back in some kind of FOMO trade at every little bounce the market takes throughout the day.

How about during every huge intraday bounce?😁

Yeah, things are very tempting. I have never used margin, and my use of geared vehicles is in small amounts and intraday, just for playing around, really. A few years ago I made a big bet with SPXL which turned out well, but I nearly had a coronary while waiting.

Yes I have been doing selective buying, this has been planned for a while. Of course most of the things I had planned to buy have enjoyed a recent bump in the shift to value, but many still look hood on the 5-yr, for instance. And even with the bump, P/E’s are still very reasonable. Oil responds to itself, the oil guy I know is currently neutral to positive on certain stocks.

So I have been buying, but not all at once, things that potentially get cheaper when the DXY rises. It’s interesting now because of the opposing pricing forces of rotation to value and currency changes. My guess is that they will get a bit cheaper in the short term, as FOMO’ers pile back into the seemingly inevitable US pump and as US interest rates rise. I will be buying, regardless.

Futures are now up, but that means little. As often, it’s about expectations. Yesterday, some expected (more hoped, really) that the Fed would retreat a bit, which they more-or-less didn’t. Now the prior expectations count in the industry as “settled expectations”, and everyone will move forward on that basis until such time as there is a dislocation, if ever.

Powell also admitted that they were wrong on inflation and that it could sustain longer than expected (even with their fudging!). Interesting.

One thing that I found disturbing is how the Fed is seemingly catering to the markets, rather than to sound economic/monetary policy. Powell said that monetary policy is driven by/based on/all about expectations, which I find an amazing statement. The basic value of money is ignored, and the role it plays in secondary markets is paramount. Tells me that money is now a big boy’s game, and that it has lost utility for the everyman because the “store of value” role is entirely subservient to the social policy execution role.

I am glad that I am moving out of USD. Even the minor amounts I have put into savings bonds will soon be able to be withdrawn immediately, with what amounts to very little penalty. With the Fed inflation projection, I might even spring for some paper bonds this year, to maxx out the buy.

from a market psychology basis, today is probably quite important.

we have good earnings news, we have great GDP news, the VIX is under 30...market is up

if this upday reverses itself and we go down a percent or two by the close...I think that will be quite disheartening. it will feel like there is something systematic going on, dumping stocks no matter the good news or bad.

but if we hold, it could give confidence that the market cares about good earnings and good econ news so it is safer to buy and take on risk again.

Anybody here have any experience with things like FXF?

this is a lot of people:

Ben Carlson

@awealthofcs

How to survive a correction:

Watch every tick of the overnight futures market. Sleep when dead

Panic sell on big down days & buy back after big up days

Take your advice from ppl who have been calling for a crash every day for the last 12 yrs

Blame the Fed for any huge losses

Take hedge-fund activity in the manic Monday session. When the S&P 500 wiped out an intraday loss of nearly 4%, the fast money tracked by Morgan Stanley duly cut their short positions at the fastest clip in a year.

Goldman Sachs Group Inc. clients also rushed to close out bearish exposures at the fifth-largest rate in the past five years. The deleveraging was mostly concentrated in the world of exchange-traded funds.

So while hedging demand in one form or another remains elevated by last year’s standards, a cohort of investors is cutting their protective buffers -- in a bullish sign for the Wednesday stock rebound ahead of the Federal Reserve meeting.

“It seems like there has been a decent amount of short-covering,” said Stuart Kaiser, head of equity derivatives research at UBS Group AG. “The feeling is that net exposure is higher but gross exposure hasn’t moved much this week, so that would imply some shorts getting covered.”

Hedge funds cut ETF short wagers cross the board in the Monday market roller-coaster, making the biggest single-day reduction since October 2020, the Goldman analysis also shows. Meanwhile, bearish bets against the world’s largest passive product appear to have fallen. Put open interest on the $406 billion SPDR S&P 500 ETF Trust (ticker SPY) has dropped near a 2014 low -- dragging the ETF’s put-call open interest ratio to the lowest levels since around March 2021.

this should take some of the selling pressure and volatility off the market. When all these shorts are closed out, traders have less incentive to sell at every twitch of the market. a significant step back to normalcy.

on the other hand, all that short covering is the same as buying and that is already done. So less big buying from institutions coming up now. That will not help.

But this is how big money shorting works...it accelerates the downside and the upside, and creates a giant well of buying, waiting to be come back into the market, when the shorts are covered.