Down goes the Dow

Cramer's lightning round: Virgin Galactic is like a lottery ticket

Jeffrey Gundlach:

Flag, it’s not surprising that you’re unaware of your own inarticulation.

Yeah idiot the Canuck stuff I bought is doing ok for the most part, although the banks seem to be flagging. I’m not too far above that 2.6%, that is a good showing so far. I have thought of getting some xiu to add to the collection.

Hey carmine9, Chag Pesach sameach.

we're in an interesting time....

normally, we use extreme bearishness or bullishness as contrary indicators. When there is a historically bearish mood, we buy, thinking most of the selling is already done. When there is a historically bullish mood, we sell, thinking most of the buying is already done.

We are in an extremely bearish time right now. Many indicators of sentiment show that 'smart' money is terrified. I've seen several pieces saying basically 'I can't even articulate the bull case - there is none.' And indeed there are a lot of things going against stocks right now.

And yet we are just 9% off ATH in the SP500 and just 2% off ATH in value stocks.

Here is an extraordinary chart - showing extremely bearish sentiment, and this poster has found very strong returns after such lows in sentiment.

So is this just another time when a down market 'feels' different than usual but in the end it isn't any different and buying on the dip proves profitable? In other words, is Racket righat that 'stocks always go up?'

Or is the once-in-a-generation crash of the bond market suggesting the bearish sentiment is correct this time and buying the dip is foolish?

How is anyone this foolish? Wow.

I suppose this is the anti-inflation case: That the much-discussed 'end of globalism' is a phony concept. The evidence is that global trade just keeps going up. Which implies that the invisible hand is still at play and will find ways to increase supply to capture profits while ever-lowering costs. Which will reduce inflation. By finding cheaper places to build widgets and exporting technologies to make mfgrs more efficient and lower prices.

The other case is that the invisible hand is in a cement cast because companies no longer want long, diverse supply chains and will have to pay more for goods because low cost won't be the most important characteristic - dependability will be. In other words, paying high-wage Americans to make low-margin stuff will make final goods more expensive but more dependable. That would increase inflation I suspect. Higher cost supply chains = higher cost to consumers.

advisorservices.schwab.com

Deglobalization Is Political, Not Economic

Schwab.com

Politics may have little impact on economic globalization or corporate profits—which gives little reason for investors to deglobalize their portfolios despite the headlines.

Link:advisorservices.schwab.com/content/deg...

the history of investing is sprinkled heavily with stories and fads like this. Just a normal thing in investmentlandia. Best just to smirk to yourself and just keep walking, without taking too much care.

There are always investment fads and there will always be investment fads - doesn't mean much to the performance of the stock and bond markets 99% of the time.

Sadly many people think: 'oh there's an invesment fad - I better sell the SP500.'

Will not invest in Big Pharma or the weapons industry

ah day drinking. Worked for Ernest, will work for you.

Not sure what that means.

I guess it means you will invest in anything you think will make you money.

Weapons, drugs...all good for you

agreed + Facebook, which is trading at a significant discount.

Facebook too.

I think after all the dust clears from this year, we will be astonished by the great bond crash.

Investment grade credit. The best bonds. Fell 10% in total return in 3 months. 12% down year to date now.

In a sense it's fairly bullish for stocks that bonds have cratered in historic fashion without causing mass problems in the economy. Interest rate spikes are often correlated with crises. Maybe it's just too early and we will get a major unexpected blowup.

Or maybe the bond crash IS the blowup....that funds or institutions are throwing bonds over the side, having levered up and now taking enormous losses. Or maybe russia or china are dumping or manipulating.

If funds are blowing up and dumping their bonds, that would be good - clear out the dead wood and we might get a V shaped recovery for bonds.

Certainly, investors all over the world are looking at high yields in the US together with a strong dollar...could be very very tempting to grab these yields vs what you can get in Japan or Europe. That shold support bond prices soon.

I understand and salute the wish not to profit from arms....but as much as I've tried to understand it, boycotting *health care* and saying you don't want to profit from *health care*...just leaves me shaking my head. Big pharma has saved millions of lives and extended many more millions.

But I really hope you won't be able to troll me into a discussion. I'm sober and need to do some trabajo.

Big Pharma is not about health care.

It is about forcing dangerous drugs into us for $$.

Saving lives? Please

Big disagree, but don't have time to reply in full. Remind me to come back to this. But also, since when is politics and economics mutually exclusive?