Author Topic: Will S&P 500 Retest Recent Low By End of April  (Read 39518 times)

KJP

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Re: Will S&P 500 Retest Recent Low By End of April
« Reply #10 on: April 04, 2020, 06:50:56 AM »
Buffett talked about how markets work on 17 years cycles (though his same size was pretty small). I wonder if we'll see early 2000s numbers as the low.

Gundlach made a great point about sacrificing and Biden saying people shouldn't have to "sacrifice anything." We are so entitled.

https://www.realclearpolitics.com/video/2020/03/27/biden_at_cnn_coronavirus_town_hall_you_should_not_have_to_sacrifice_anything.html

To be fair, the questioner was asking which of the following should her family give up:  food, shelter or healthcare?  So, in context, Biden appears to have said that we're not going to let families starve, live in Hoovervilles or lose all medical care.  Of course, Biden being Biden, he didn't articulate that as clearly as he could have. 


Viking

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Re: Will S&P 500 Retest Recent Low By End of April
« Reply #11 on: April 04, 2020, 12:09:25 PM »
My vote was low conviction ‘yes’. I am thinking about the Buffett quote: “If you've been playing poker for half an hour and you still don't know who the patsy is, you're the patsy.” When i was watching the business shows yesterday i was starting to feel like the patsy.

My read is the terrible economic news that is coming is not baked into stock prices today. Likely because most people can’t project in their minds what is happening; they have never experienced anything like this before so how could they? So they will react only when they ‘see’ and ‘feel’ the impact. Same with analysts and earnings estimates; downgrades will be slow and still to optomistic.

I also think there is a small (but growing) chance the economic outcome the next 12-18 months could be worse than 2008. The epicenters will be different. 2008 was housing. This one is very different; massive, rapid surge in unemployment where people and businesses had no time to prepare (i.e. build savings). Travel/hospitality is toast: airlines, hotels, restaurants, cruise etc. Oil is toast. A massive number of small businesses could also be toast. In Canada, we have a housing bubble that could be about ready to pop. And what do older people or those with underlying conditions do for the next 12-18 months until a vaccine is available? Makes sense their economic activity will stay low (with limited interaction with others). This is a significant portion of the population. And what to think about what the Fed is doing to its balance sheet (massive expansion) and the amount of debt governments are taking on? Do we get a government debt crisis with Italy leading the way? This could easily morph into a severe economic contraction in the next year. But it will take time to play out as there is still much we do not know.

My current plan  is to slowly scale in. Today i am about 35% invested and 65% cash. For every 5% decline in the market put another 10% of cash to work. So if we see markets fall 35% from highs be 60-65% invested. If markets fall 50% be 90-100% invested. I am being very cautious because i do not have a day job and i like my current life style. Stick with super high quality. Take advantage of volatility by actively trading  10% of portfolio (clip short term 4-6% gains... rinse and repeat).
« Last Edit: April 04, 2020, 12:40:21 PM by Viking »

stahleyp

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Re: Will S&P 500 Retest Recent Low By End of April
« Reply #12 on: April 04, 2020, 12:43:39 PM »
Buffett talked about how markets work on 17 years cycles (though his same size was pretty small). I wonder if we'll see early 2000s numbers as the low.

Gundlach made a great point about sacrificing and Biden saying people shouldn't have to "sacrifice anything." We are so entitled.

https://www.realclearpolitics.com/video/2020/03/27/biden_at_cnn_coronavirus_town_hall_you_should_not_have_to_sacrifice_anything.html

To be fair, the questioner was asking which of the following should her family give up:  food, shelter or healthcare?  So, in context, Biden appears to have said that we're not going to let families starve, live in Hoovervilles or lose all medical care.  Of course, Biden being Biden, he didn't articulate that as clearly as he could have.

I would imagine they wouldn't have to "sacrifice" any of those things if they would have prepared ahead of time.
Paul

randomep

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Re: Will S&P 500 Retest Recent Low By End of April
« Reply #13 on: April 04, 2020, 02:00:46 PM »

I was 80 pct cash going in but then I've been that way for years.

What the heck? I am interested to know how you can be that disciplined? How many years? Are you an investor in normal times, and where do you keep the cash?

Viking

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Re: Will S&P 500 Retest Recent Low By End of April
« Reply #14 on: April 04, 2020, 02:43:20 PM »

I was 80 pct cash going in but then I've been that way for years.

What the heck? I am interested to know how you can be that disciplined? How many years? Are you an investor in normal times, and where do you keep the cash?

How you invest will be informed by a number of things including net worth, risk tolerance, age, employment status and investment objectives. Pretty complex.
- net worth: big or small? Diversified (savings, investments, real estate, small business) or more focussed? Living in Canada, we have had a housing bubble for the past 20 years. My current net worth includes significant paper gains in the value of my house. Should the housing bubble pop a 20% or even 30% fall in prices is not out of the question. As a result of the risk of a housing contraction here i am being a little more cautious with my equity portfolio.
- risk tolerance: portfolio needs to be constructed to allow one to ‘sleep well at night’
- age: generally speaking the younger the more risk/equities
- employment status: employed or retired? If employed, is the job secure in current environment?
- investment objectives: total return or preservation of capital

In my case, i learned a lot riding the 2018 20% correction. For the past 18 months i have been very cautious (i called it being ‘a fraidy cat investor’) and was in 100% cash for extended times earning 1.6%. And i was good with that. Because i have enough saved to live a good life (but if my portfolio fell 20-30% that might not be the case). Preservation of capital was and is far more important to me than total return. I learned this back in Dec 2018 and Jan 2019.

Gregmal

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Re: Will S&P 500 Retest Recent Low By End of April
« Reply #15 on: April 04, 2020, 02:48:57 PM »

I was 80 pct cash going in but then I've been that way for years.

What the heck? I am interested to know how you can be that disciplined? How many years? Are you an investor in normal times, and where do you keep the cash?

How you invest will be informed by a number of things including net worth, risk tolerance, age, employment status and investment objectives. Pretty complex.
- net worth: big or small? Diversified (savings, investments, real estate, small business) or more focussed? Living in Canada, we have had a housing bubble for the past 20 years. My current net worth includes significant paper gains in the value of my house. Should the housing bubble pop a 20% or even 30% fall in prices is not out of the question. As a result of the risk of a housing contraction here i am being a little more cautious with my equity portfolio.
- risk tolerance: portfolio needs to be constructed to allow one to ‘sleep well at night’
- age: generally speaking the younger the more risk/equities
- employment status: employed or retired? If employed, is the job secure in current environment?
- investment objectives: total return or preservation of capital

In my case, i learned a lot riding the 2018 20% correction. For the past 18 months i have been very cautious (i called it being ‘a fraidy cat investor’) and was in 100% cash for extended times earning 1.6%. And i was good with that. Because i have enough saved to live a good life (but if my portfolio fell 20-30% that might not be the case). Preservation of capital was and is far more important to me than total return. I learned this back in Dec 2018 and Jan 2019.

Easier explanation? Are you a Warren Buffet type or Elon Musk/Masayoshi Son?

Thats definitely a helpful perspective though. Met a bunch like this, including my father. $5M is no different than $500M to these people. They have what they need to live the life they desire with the freedoms they wish, protecting that is more meaningful than getting "richer". There should be classes taught regarding this, unfortunately there arent even classes on how to manage a checking account until university in most places.

Viking

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Re: Will S&P 500 Retest Recent Low By End of April
« Reply #16 on: April 04, 2020, 03:07:29 PM »

I was 80 pct cash going in but then I've been that way for years.

What the heck? I am interested to know how you can be that disciplined? How many years? Are you an investor in normal times, and where do you keep the cash?

How you invest will be informed by a number of things including net worth, risk tolerance, age, employment status and investment objectives. Pretty complex.
- net worth: big or small? Diversified (savings, investments, real estate, small business) or more focussed? Living in Canada, we have had a housing bubble for the past 20 years. My current net worth includes significant paper gains in the value of my house. Should the housing bubble pop a 20% or even 30% fall in prices is not out of the question. As a result of the risk of a housing contraction here i am being a little more cautious with my equity portfolio.
- risk tolerance: portfolio needs to be constructed to allow one to ‘sleep well at night’
- age: generally speaking the younger the more risk/equities
- employment status: employed or retired? If employed, is the job secure in current environment?
- investment objectives: total return or preservation of capital

In my case, i learned a lot riding the 2018 20% correction. For the past 18 months i have been very cautious (i called it being ‘a fraidy cat investor’) and was in 100% cash for extended times earning 1.6%. And i was good with that. Because i have enough saved to live a good life (but if my portfolio fell 20-30% that might not be the case). Preservation of capital was and is far more important to me than total return. I learned this back in Dec 2018 and Jan 2019.

Easier explanation? Are you a Warren Buffet type or Elon Musk/Masayoshi Son?

Thats definitely a helpful perspective though. Met a bunch like this, including my father. $5M is no different than $500M to these people. They have what they need to live the life they desire with the freedoms they wish, protecting that is more meaningful than getting "richer". There should be classes taught regarding this, unfortunately there arent even classes on how to manage a checking account until university in most places.

This also explains why everyone on this board needs to heavily filter what they read from other posters. Everyone’s situation is so different and changing over time. I know, stating the obvious. Lots of good discussion and information. Important to be rational and am independent thinker :-)

vinod1

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Re: Will S&P 500 Retest Recent Low By End of April
« Reply #17 on: April 05, 2020, 12:55:27 PM »
Purely anecdotally, almost all my friends are asking me if it is time to load up. The rationale is something along the lines of $2 trillion in stimulus and all the things Fed is doing, what else can S&P 500 do other than go up?

So I am getting the feeling that more drop is likely.

There is a short term over-reaction and long term under-reaction theory which I think seems to hold a lot of time. What it means is for short term events, the market over-reacts. Say a CEO quits or dies, the stock over-reacts and falls a lot in the short term, but gradually recovers.

On the other hand, if something really significant happens, the market does not fully price in its full impact immediately. Rather, it takes a while for the information to get incorporated. Say things like Amazon, disclosing AWS financials and the opportunity it presents. It might bump it up but not to the full extent that it deserved.

Covid-19 has the additional thing that it has little parallel to compare to. So it might take sometime to adjust.

My vote is low-conviction as in (60-40) odds, that we are likely to see a further drop.

Vinod
The fundamental algorithm of life: repeat what works. –Charlie Munger

bskptkl

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Re: Will S&P 500 Retest Recent Low By End of April
« Reply #18 on: April 05, 2020, 02:10:26 PM »
I voted yes - low conviction.

But I have put a lot of cash in the market already - more than 50% of my dry powder.
It is very hard to watch the market tick by tick and not get confused. Fear and greed are having a noisy conversation in my head. It's exhausting.
I think it is a stock picker's market and it is prudent to make judicious bets now as opposed to waiting because you think the SP will go lower.
I think various companies stocks have hit their lows, other's not so much.
For instance - does anybody think LAACZ will trade close to $1025 again?

What are we all going to say 5 years from now about that time the whole world stopped working because of Covid? Do we think there will be long term structural damage to the whole economy? I don't think so. I think it will be roughly business as usual minus many over leveraged companies. With that perspective, I don't think it will matter much that I bought BRKB at $200 (I did) instead of bottom ticking it at a future $150 or so. I made by BRKB bet, price wasn't great, don't feel like averaging down, don't want that bet to be too large relative to portfolio. I've made other bets, don't want to average down, etc. Spread the bets around and try to be patient when/if they recover. I feel schizophrenic though.

Spekulatius

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Re: Will S&P 500 Retest Recent Low By End of April
« Reply #19 on: April 05, 2020, 06:17:12 PM »
I voted yes, low conviction. I believe the market will base in the 1600-2000 point range for the SP500. I do believe the economy has taken on a lot of damage and will be take more. In 5 years we will be over it, but will still feel the consequences. I feel this is worse than the GFC crisis, but time will tell. I could easily see scenarios where in 5 years we just reach the same GNP level that we were supposed to have in 2020 before this happened. I can also see pressure on profit margins from insourcing as well as higher taxes, especially for corporations.

I feel like a V recovery is priced in, but any more dire scenario certainly not.
« Last Edit: April 05, 2020, 07:43:00 PM by Spekulatius »
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