[MrBlackhill]

I'm still thinking this year feels "too easy" so far.

What bear market?

Last year I was saying we should move towards value. For my kid's RESP I don't buy stocks, only diversified ETF. I went into the one-stop shop VVL.TO, a 100% equity globally diversified ETF, but with the value tilt. With this current little bounce, it's in the green YTD, up +2%.

I believe the market will crash hard in 2023. At the moment, the market is only pricing the rate hikes, but the real pain hasn't started yet, when everything will fall apart. The dominoes are all aligned, though.

 

[londoncalling]

I hope we see a bit of a rally here as I let my cash accumulate. I will be fine if this bear is shortlived and fine if it continues. My guess, and it's as good as anyody's, we got a ways to go. The actions of the Fed will likely be the biggest factor on how long this goes on. Those actions will be based on inflation results. The 2022 hikes have just started to impact people/company balance sheets. Even the recent quarterlies for the most part have been ok. Some are feeling the squeeze but the rates are normailzed, the overall market performance (in Canada) has barely declined. Is today the calm before the storm or did we avoid the hurricane?

 

[james4beach]

What bear market?

Well that's the thing. Slowdowns are supposed to hurt investors. There hasn't been a wipeout and capitulation.

As you know I'm pretty risk averse and even with all these losses, this still feels like "nothing" to me. It should be much more painful and agonizing.

IMO the central banks have not tightened conditions nearly enough yet. Even the leveraged people are trying to get back in, already.

 

[Gator13]

Well that's the thing. Slowdowns are supposed to hurt investors. There hasn't been a wipeout and capitulation.

As you know I'm pretty risk averse and even with all these losses, this still feels like "nothing" to me. It should be much more painful and agonizing.

IMO the central banks have not tightened conditions nearly enough yet. Even the leveraged people are trying to get back in, already.

I recall you mentioning at one point that your sphincter was tightening up. 😂 I hit a low on October 12th at -12.5% and that was uncomfortable. I was feeling some pain at that point. I have since rebounded to -3.6%. The loss would be less if I included my cash hoard in the results.

 

[MrMatt]

Well that's the thing. Slowdowns are supposed to hurt investors.

I'm not sure what you're trying to say.
Sure if things slow down, maybe revenue and profits might fall, but that doesn't have to "hurt"

Also we really don't want to hurt investors, we want them to be healthy and able to invest in more.

As you know I'm pretty risk averse and even with all these losses, this still feels like "nothing" to me. It should be much more painful and agonizing.

IMO the central banks have not tightened conditions nearly enough yet. Even the leveraged people are trying to get back in, already.

What losses, my portfolio is still up.

I think the various actors are working against each other causing a mess.

I think rates are close to right, but we have to wait for things to adjust. We're undergoing big changes that will take a while to have their impacts fully felt.

For all those massive tech layoffs, many of those people are still pulling in paychecks for a few more weeks or months, I think when Xmas bills come due we're going to see some interesting stuff.

I was really interested in Goeasy and the other payday scammers, but I think there is a bit of risk as people run out of money.

 

[Covariance]

We have not reached the recession yet. Can we move higher with conviction? I'm not prepared to make that bet until I see more signal. That said, a sideways market or Santa Claus rally are quite possible, maybe even probable. At the moment I'm not bullish but not bearish either. I'm picking away at companies I think will do well in the next expansion of the economy, generating income from short term FI, cash yields, HY credit, and doing lots of research. No need to be hasty. This will take a bit of time to get from where we were to where we are going.

 

[MrMatt]

We have not reached the recession yet. Can we move higher with conviction? I'm not prepared to make that bet until I see more signal. That said, a sideways market or Santa Claus rally are quite possible, maybe even probable. At the moment I'm not bullish but not bearish either. I'm picking away at companies I think will do well in the next expansion of the economy, generating income from short term FI, cash yields, HY credit, and doing lots of research. No need to be hasty. This will take a bit of time to get from where we were to where we are going.

I'm actually thinking it is looking more probable that the markets will go sideways, and maybe a slight recession as we recalibrate.

I'm still a bit concerned that they're trying to fight inflation with interest rates, when the problem is still shortages and free government money.

 

[Covariance]

Raising rates to slow demand has a lagging effect. This we know. The challenge is no one really knows how long the lag is, nor how high they really need to go.

We also know that politicians spend to get re elected.

 

[MrMatt]

Raising rates to slow demand has a lagging effect. This we know. The challenge is no one really knows how long the lag is, nor how high they really need to go.

We also know that politicians spend to get re elected.

But that's the point, they're attacking demand, while ignoring supply.

For example we still have car shortages, and do we really want to cut the economy to the point where people can't afford to buy a car to get to work?

 

[AltaRed]

Nothing much can be done about increasing supply short term which is the ability or willingness of the supply chain to invest to increase supply, and not just physical plant. One must find workers. It might take 5 years minimum if brownfield or greenfield plants and transportation vehicles must be built. Ports don't expand, nor do ships get built quickly.

For now, consumer discretionary spend must be squeezed and that is done by increasing consumer debt servicing costs. Central bankers are trying and politicians are derailing the effort by handing out free money, mostly indiscriminately rather than means tested. It is FUBAR.

 

[MrMatt]

Nothing much can be done about increasing supply short term which is the ability or willingness of the supply chain to invest to increase supply, and not just physical plant. One must find workers. It might take 5 years minimum if brownfield or greenfield plants and transportation vehicles must be built. Ports don't expand, nor do ships get built quickly.

For now, consumer discretionary spend must be squeezed and that is done by increasing consumer debt servicing costs. Central bankers are trying and politicians are derailing the effort by handing out free money, mostly indiscriminately rather than means tested. It is FUBAR.

I disagree, it isn't FUBAR, it is SNAFU

 

[james4beach]

I recall you mentioning at one point that your sphincter was tightening up. 😂 I hit a low on October 12th at -12.5% and that was uncomfortable. I was feeling some pain at that point. I have since rebounded to -3.6%. The loss would be less if I included my cash hoard in the results.

Yes I started feeling some pain, but my losses have eased now.

I'm not sure what you're trying to say.
. . .
Also we really don't want to hurt investors, we want them to be healthy and able to invest in more.

Two issues.

(1) the central banks have noted, and I think they are right, that the amazing performance of stocks, real estate, and other high-risk stuff has created a wealth effect, and contributes to the inflation problem. These all result in many people feeling wealthier, and therefore spending more, borrowing more, etc. So I think we want to see assets become disappointing for a while, to stop that wealth effect from continuing and making inflation worse.

Markets performing great right now is inflationary. Strong markets = easing financial conditions.

(2) one of the hallmarks of a bear market is the pain and suffering it causes investors. Since investors are having an easy time to so far, I'm not convinced that the bear market has really started yet. It makes me anxious. Once we go through a period where investors are crying with pain -- people are capitulating etc -- then at least I'll be more confident that the bear market could be over and we might be entering a new prolonged bull market.

In other words, investor pain always precedes a market bottom.

 

[londoncalling]

Or maybe the complacency is due to the sharp V like covid bear we just went through. This hasn't felt like 2008 at all. Nor should it. Most folks, and many here as well, are expecting a bail out should things get bad. I think in the current environment that would probably happen if things actually do get ugly. Many are already expecting

Friends - Ross Pivot - Bing video

 

[james4beach]

Or maybe the complacency is due to the sharp V like covid bear we just went through. This hasn't felt like 2008 at all. Nor should it. Most folks, and many here as well, are expecting a bail out should things get bad.

Good point. This isn't like 2008.

 

[AlwaysMissingTheBoat]

Good point. This isn't like 2008.

I think there's some potential for Europe to experience something closer to 2008. The North American markets should weather the storm better and China will provide a boost when Covid subsides, but that could be late spring. It's a huge mess over there now.

 

[Thal81]

I think we've pretty much bottomed as far as the markets go. The economy is not done going through the pains caused by rising rates, but people still need to buy stuff and companies will profit. Big tech is not coming back anytime soon though. Europe will have it harder than us, but hardship produces innovation. Today I'm pretty optimistic for 2023. Tomorrow I might change my tune.

 

[sags]

Many investors aren't feeling sufficient pay yet, but many other people are.

I know a young lady with a full time job in the field of mental health and she can't afford to pay her rent, car payments, insurance, gas, phone bill, and still buy food from her wages. Her rent alone takes 60% of her monthly income.

She needs the car to commute to work and missed several monthly insurance premium payments, so they cancelled her policy and she is driving around with no insurance.

She didn't tell us about it or ask for help, but I sent her some money anyways and told her to talk to her insurance agent about paying insurance upfront for the year and we will pay it.

I wonder how many people are cutting out things like car insurance, proper maintenance, dental appointments, medicines, food.... just to survive.

People may not approve of government support spending.......but I see no other way out of this mess for some people.

No government can stand idly by and say......sorry, it is your problem so deal with it.

 

[londoncalling]

Canadian bank earnings this week. Should be a good barometer of how the Canadian economy is doing and the big bank's thoughts on inflation, interest rates, and housing. Hoping to hear share buybacks and debt repayment announced.

 

[AlwaysMissingTheBoat]

Canadian bank earnings this week. Should be a good barometer of how the Canadian economy is doing and the big bank's thoughts on inflation, interest rates, and housing. Hoping to hear share buybacks and debt repayment announced.

I'm actually tempted to sell half of my shares in TD bank on Monday morning. Up 13% since July and it's been a good move upward over the past week or two. I think a pull back is highly likely, so I could buy back those shares perhaps in weeks or months for less.

 

[AltaRed]

I foresee a pretty big provision for loan losses from all of the banks.