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This guy is selling the current rally: Why I Cashed Out of the Covid-19 Rally

A gentle reminder to Wall Street: There is in fact a pandemic.
. . .
One more thing. Bear in mind that the market wasn’t cheap even before the pandemic came along. Yes, analysts argue endlessly about valuation measures, and the standard metrics are especially hard to read when interest rates are very low. (The Shiller cyclically-adjusted price-to-earnings ratio has been saying “sell” for at least five years.) Still, it’s fair to say that the stock market’s current view of future earnings would look pretty optimistic even if Covid-19 had never happened. A gentle reminder: Covid-19 is in fact happening — and the new risks it has introduced are large and notably skewed, as they say, to the downside.

If you ask me, not that you should, it’s a case of really irrational exuberance.

But I don't really expect stocks to mirror reality, nor the economy. I view them as pretty different things, and with the amount of central bank intervention in the market, it's plausible that stocks could keep rallying even as we enter a Depression. The Federal Reserve alone (not even including other central banks) has printed about $2.5 trillion in just a few weeks, and today they will start buying ETFs in the next phase of their market manipulation campaign.

The pandemic is not the only factor affecting stock prices. And when you've got central banks manipulating markets to such an enormous degree (as they have done since 2009) I don't think one should expect stocks to match economic reality.
 

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Discussion Starter #542
With markets tanking again today, interesting how little discussion there is about our investments.

Seems CMF has become just a chat room :) Not that that is a bad thing. For serious discussion of investments, there are likely alternatives :)
 

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With markets tanking again today, interesting how little discussion there is about our investments.

Seems CMF has become just a chat room :) Not that that is a bad thing. For serious discussion of investments, there are likely alternatives :)
I agree, where's all the discussions about investing and trading? These are by far the most interesting markets we've had in years!
 

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I watch CNBC a lot for a change of pace, and they are all shaking their heads trying to figure the markets out.

The worst economic news comes out and markets go up. They know that future corporate reports will be nasty and markets go up.

It has not gone unnoticed that Warren Buffet has sold stocks and is sitting on his mountain of cash.

With the Fed dispensing all the cash, he can't even find distressed companies to lend to, as he did in the 2007 recession.

Up....down....up.....down.....it makes no sense, so what can you say about it.

Personally, I think as long as there is a tiny light at the end of the COVID tunnel, there remains a huge amount of optimism.

If there is a second wave and everything gets closed down again........that little light goes out.

Mark Zandi of Moody's Analytics said......we are in a recession. If there is a second wave, we will be in a depression.

I think he is probably right.
 

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I watch CNBC a lot for a change of pace, and they are all shaking their heads trying to figure the markets out.
You should only watch CNBC for pure entertainment. These people have no clue why the market does anything (nobody really knows) but they come up with elaborate stories and rationalize the movements.

I promise you that they have no idea why the market moved X% on any given day
 

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True - we have become numb to triple figure drops. We don't even talk about them or what the cause might have been.
What excites me is not the daily movements at this point, but the big questions about where in the market cycle we are.

Is this just a pause in the bull market? Are we still in a long term uptrend? Or are we now experiencing a shift into a bear market, with many bad years to come?

For the last 10 years, whenever there was a drop like this, it was always a "buy the dip" opportunity and then the market rocketed to new all time highs. Is that what's going to happen?

It's very tough to get a reading on where we're headed. For example, in 2000, the market started crashing and fell for over a year. When 9/11 happened, stocks crashed for just a couple days, and then started a massive rally. I think the NASDAQ rallied 50% right after 9/11. Imagine how many people thought the bull market was back. Many people probably even bought stocks, only to then get destroyed by the next leg down in the bear market.
 

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With markets tanking again today, interesting how little discussion there is about our investments.

Seems CMF has become just a chat room :) Not that that is a bad thing. For serious discussion of investments, there are likely alternatives :)
In March, the S&P 500 on average was trading up and down 5% a day. Down 1-2% is nothing.

I pretty much only talk about investments here. I can chat anywhere!

But there is a lot of FOMO and wishful thinking about the March lows. The reality of March lows is that lots of people thought it would go lower and refused to buy. It was chaotic, but perspective was necessary. March was a massive drop. 40% drop in markets in just weeks! That is economic chaos levels! And we're still 15-20% below the all time highs.

This isn't green pastures - markets might take several years to return to all time highs. 7-8% a year will take 3-4 years before most markets have recovered solidly. Sure stocks are up. But from a massively oversold bottom.
 

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Right now I think it's a boring market.

All the pandemic news has been priced in. I think we're in for a few months or years of catchup, then things will be back to normal.

It would be nice if I could see something clearly undervalued, but I'm not.
 

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Discussion Starter #551
In March, the S&P 500 on average was trading up and down 5% a day. Down 1-2% is nothing.

This isn't green pastures - markets might take several years to return to all time highs. 7-8% a year will take 3-4 years before most markets have recovered solidly. Sure stocks are up. But from a massively oversold bottom.
I don't watch the S&P500 much (nothing invested there), but you are right that 1-2% is small compared with the volatility we had before and after the March bottom. Nevertheless, down 1-2% in one day USED to get our attention! Now we just accept it as the new norm. Not much we can do about it anyway, unless we want to do day trading!

Our overall portfolio including fixed income is down in value about 15%, but cash flow from dividends and interest is now actually higher. (due to changes in holdings). Now fully invested. Equity allocation lower at about 50%, in part due to market valuation.

Hard to believe we won't have another market pull back once the full effects of the lockdowns are felt. Maybe larger than 1-2% so it will get out attention ;)
 

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I watch CNBC a lot for a change of pace, and they are all shaking their heads trying to figure the markets out.

The worst economic news comes out and markets go up. They know that future corporate reports will be nasty and markets go up.

It has not gone unnoticed that Warren Buffet has sold stocks and is sitting on his mountain of cash.

With the Fed dispensing all the cash, he can't even find distressed companies to lend to, as he did in the 2007 recession.

Up....down....up.....down.....it makes no sense, so what can you say about it.

Personally, I think as long as there is a tiny light at the end of the COVID tunnel, there remains a huge amount of optimism.

If there is a second wave and everything gets closed down again........that little light goes out.

Mark Zandi of Moody's Analytics said......we are in a recession. If there is a second wave, we will be in a depression.

I think he is probably right.
I missed buying at the March lows. Put in an order and price went up afterwards. I've been holding cash for months until the recent weeks where I have been buying the dips including today (mostly dividend paying stocks that I think will maintain their dividend). I was scared to buy and still scared to buy but I figure that I am already buying at 5 year lows (if you take out the March lows) and I am too impatient to sit on cash and have it do nothing. I guess there's the old adage don't try to time the market?

Personally, I'm betting that there won't be any more huge dips. Perhaps some slow steady decline over the next few months.
 

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I won't be buying anything until the Fear and Greed Index comes down to around 20.
And what if everyone remains afraid, the disease risk continues for the next 3 years, while markets also keep rallying to new all time highs?

What if central banks pump a few trillion $ into stocks, as they've already been doing, and push the market higher than it's ever been? The Federal Reserve is already buying bond ETFs and it may not be long before they start buying stock index ETFs, just like Japan and Switzerland have done for years.
 

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I agree with James....don't fight the Fed. They are putting unlimited funds to backstop the economy.
 

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Discussion Starter #559

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And what if everyone remains afraid, the disease risk continues for the next 3 years, while markets also keep rallying to new all time highs?

What if central banks pump a few trillion $ into stocks, as they've already been doing, and push the market higher than it's ever been? The Federal Reserve is already buying bond ETFs and it may not be long before they start buying stock index ETFs, just like Japan and Switzerland have done for years.
I strongly believe that the market would drop again later this year similar to what happened in 2018. I will buy at that time. I am still fully invested and will have another $35K to invest by 2020.

Fed will do whatever they need to do to reelect Trump in November. After that, there is not much incentive to help the market keep going.
 
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