Down goes the Dow

Sally, thanks but that is not necessary. If however you would like to donate to a good cause here is my favorite:

lymphoma.org

Home

LRF is the nation's largest nonprofit organization devoted exclusively to funding lymphoma research and serving those impacted by this blood cancer.

Link:lymphoma.org/

Interestingly, lymphoma is a risk factor for extreme endurance athletes. The disease taking the life of 1988 Olympic Trials Marathon winner Mark Conover this past year. Ken Martin a 2:09 marathoner is a survivor, and a quite a bit slower Igy. There are 62 sub-types of Lymphoma, a blood cancer; mine Follicular Lymphoma 3a is considered cure-able with RCHOP biologic plus chemotherapy, and radiation for insurance. Much of the research advance have been in biologics that target compounds that encourage tumor growth.

Igy

Getting closer to 2000-2002 dot com blowup range for a lot of these big tech names. Would be interesting to know how tech did in 2003, 2004,2005. In other words, did tech do well after bottoming or did they continue to underperform.

This is stolen data and I did not factcheck it.

Current drawdowns from the highs:
Tesla -73%
Facebook -69%
Amazon -55%
Netflix -58%
Nvidia -57%

well the question is did tech stocks outperform in 2003, 2004, 2005. I know they did not regain their highs for a very long time. I'm wondering if buying tech now might be a good idea, or just a 'fighting the last war' move.

I continue to build a position in short term junk bonds, on the thesis that the economy will stay in growth mode. While the stock market roller coasters I'll collect my 8% coupons, with less risk than stocks.

That said, I'm using money I'd normally allocate to stocks, so this is in the high risk pocket of my portfolio. If we have a recession this will be a loser. But so will stocks, and for now I get 8%.

Yeah … how dare he allow the truth to be exposed!!!

one problem is that the short term junk bonds could continue to depreciate in excess of 8% per year. In the last 12 months they have dropped more than 10% as gauged by the price of SJNK.

I remember that back in the aftermath of the popping of the tech bubble in 2000, i was loading up on small caps instead, and as I recall, that worked for many years, so maybe there is something to your thinking.

“well the question is did tech stocks outperform in 2003, 2004, 2005. I know they did not regain their highs for a very long time. I'm wondering if buying tech now might be a good idea, or just a 'fighting the last war' move.”

The first assumption would be “has tech bottomed?” Using that time period as a model, I think the answer is “of course not.” After falling 82% 3/2000 to 10/2002 tech did have a recovery of sorts 2003-2005. But many stocks did not experience as dramatic of a drop and had a faster recovery. So, likely you would be “fighting the last war.”

You guys maybe want to consider Vanguard health care fund. VGHCX. Its past performance is pretty much unrivalled. Its inception was in 1984 and since has returned about 18% annually (this all from memory but memory pretty good) - 18% annually for almost 40 years is crazy - and I mean CRAZY good. At 18% the fund is doubling every 4 years. Last year it was only down 2%. Much better than almost every other investment. It is ranked 3 out of all the other funds in its category but again its past performance is pretty much the best you will ever see.

Valuations reset will likely take us to the March 20, 2020 lows of S&P 500 2,300 and NASDAQ 7,000 in 2023. An inversion to the mean could reach 1,600 and 5,500.

right, NAV of SJNK has fallen, but the high dividend has made up for a lot of it.

short term junk has done better than just about anything else. Probably because discounted cash flow models reward immediate cash flows and an 8% dividend is about as immediate as it gets.

The bet is that this continues.

Briefly:

1 year:

Value stocks -1%

Short term junk: -5%

Bonds -12%

Non-US developed -15%

emerging: -18%

USA: -19%

When?

As GAAP EPS declines. Using S&P 500, 2021 GAAP EPS came in at $197.87. The current estimate for 2022 continues to decline with the latest at $181.03. Historic PE multiple for valuation use is 16 times EPS. So current fair value is $181.03 x 16 = $2,896.48. Non-GAAP estimate is $200, again applying a 16 multiple gets you to $3,200. It is not surprising that lately we see several Wall Street analysts with 2023 yearly low targets around 3,000-3,200.

I am operating under the assumption that Covid era EPS was inflated by Government stimulus, transfer payments, and Fed monetary policy. If S&P 500 EPS were to decline to pre-Covid high of $139.47 (12/31/2019) x 16 = $2,231.52 S&P 500 valuation. Under a more serious decline to 3/31/2020 previous year GAAP EPS of $99.23 x 16 = $1,597.65 fair value S&P 500.

I would think when and if S&P 500 hits 3,200, earning estimates will be marked down, and at that point we will see price targets in the two thousands. Omnibus bill may extend the time to a low along with keeping inflation higher. Timing other than a likely 2023 event is not something I am willing to pin.

Hey la gente, your jogging my memory by dredging JDS Uniphase on another thread.
Remember Level 3 Communications?
Or Comcast's giant run-up? Cisco did the same.
I learned early on, even before the crash, that the cable and hardware guys was not the way to play the internet/tech space.

JDSU = Just Don’t Sell Us

Got the S+P 500 as down 19.6% YTD 2022.

Let's push that to 25% in the next 3 days.

I think I’ve mentioned this before, but a buddy who played goalie for a couple of beer league ball hockey teams was one of the first 15 employees at JDS Fidel. For a short time he was crazy rich with stock options, although mostly on paper. After the dot-com crash he had to sell the nice house he had bought and he fell right back to earth, becoming a normal schlub like the rest of us again. Sad to watch, he was a really decent guy. Watching that happen, along with my own experiencing holding Norte shares as they turned to ash, is one of the events that makes me more risk averse than some in this thread. There have been others along the way, but those two were important educational events for me.

🎰

JDS Fitel and Nortel, not what the stupid autocorrect wrote…

Due to various circumstances (one being the owner is almost 80), I am becoming worried about the stability of my job. And my skills aren’t that transferable, so losing it would likely lead to retirement. So, my question to you smart people is ….

If forced to retire (I’m 58 1/2), how risky would taking 5% of my 401k a year, until I start taking SS at 70, be? (I’d supplement with the small amount of savings I have outside the 401k).

Once starting SS, the amount I’d need to take from my 401k would drop to about 2% (of the current balance).

I know it ultimately all depends on the returns during that timeframe, but wondering what some of you think in terms of how feasible that would be. Thanks!