I'm looking for a double bottom this week starting Tuesday. If I were a young person, I'd wait 2 weeks and then start a very modest dollar-cost-average for 2-3 weeks, then review and depending on market activity, slow down or make a modest increase. If virus mitagation./containment efforts look like they are paying good results in 5-10 weeks and some areas get back-to-work clearance, step it up even further. With a long investment time horizon, young people don't have to risk missing the bottom ... they will be just fine over the long run. The key is getting them to invest on a regular basis.
Stock Market is the bottom in?
- Thread starter Peplin Creek
- Start date
Telemark
5 year old buck +
It sounds like a great plan. Investing shouldn't be sexy, it should be effective. ETFs are a great way to invest if you don't want to pick individual stocks. I like SPY, which follows the S&P 500.
I'm 58 and own 0 bonds and am 100% equities. While I have 1 mutual fund (my 401k landing zone is an index fund but I xfer from there to brokerage annually), I enjoy picking individual stocks (I have 31 in my portfolio now) and have done very well doing so. That surely is not for everyone. I prefer good dividend stocks over bonds. I like holding stocks at least 3 years but I don't always follow that rule. I will dabble on short term plays but rarely day trade. To me, it all comes down to when do you need the money. I keep what would amount to 5 years worth of projected expenses in cash and will do so throughout retirement which I hope will happen in 4 years. I will remain in all equities then too along with my 5 years of cash. I will remove the DRIPs from the dividend stocks to make the dividends income at that time too.
This is a very rare wealth building time just like the dot com bubble and the housing bubble. Everything, save for Zoom (ZM), is on sale. I am looking forward to doing more buying but I am waiting because I still think we're nowhere near bottom. I do feel sorry for all those people who panicked and sold at losses. I hope they get back in soon and buy at low prices.
I totally agree that tomorrow (Monday) will suck. Every Monday sucks as of late. There are too many emotional investors and way too many AI algorithms doing automated selling. The latter has not helped.
This is a very rare wealth building time just like the dot com bubble and the housing bubble. Everything, save for Zoom (ZM), is on sale. I am looking forward to doing more buying but I am waiting because I still think we're nowhere near bottom. I do feel sorry for all those people who panicked and sold at losses. I hope they get back in soon and buy at low prices.
I totally agree that tomorrow (Monday) will suck. Every Monday sucks as of late. There are too many emotional investors and way too many AI algorithms doing automated selling. The latter has not helped.
SD51555
5 year old buck +
I like the SPY right now. Lots of unknowns that need to be digested before anyone can declare direction and who is going to win and lose. As much as the SPY has recovered already it's still off 25% from it's peak. Are we headed back for that peak? Sometime I suppose, but it could take a while.
Once we get through a couple months of economic data and get some quarterly earnings commentary on the health of companies, I'd feel a lot better about picking again. My favorite stocks are those with a modest dividend yield of 1-3%, that consistently raise their payouts faster each year.
If your dividend payments aren't rising faster than inflation, you're losing. Given how much money is being printed to paper over this crisis and the peacetime deficit, I figure real inflation is running 6-8%, so that is where I aim when looking for annual dividend raises.
Once we get through a couple months of economic data and get some quarterly earnings commentary on the health of companies, I'd feel a lot better about picking again. My favorite stocks are those with a modest dividend yield of 1-3%, that consistently raise their payouts faster each year.
If your dividend payments aren't rising faster than inflation, you're losing. Given how much money is being printed to paper over this crisis and the peacetime deficit, I figure real inflation is running 6-8%, so that is where I aim when looking for annual dividend raises.
Bill
Administrator
If the #of cases didn’t do it the Pres announcing continued stay at home until April 30th sure will. Tomorrow may not be the final bottom but I predict lower than we’ve seen.
BuckSutherland
5 year old buck +
This is for those of you trying to decide what to do about the markets. This is from the wealth division of Morgan Stanley today.
1) GIC WEEKLY: Lisa Shalett writes “We believe such actions will be sufficient to bridge the crisis” referring to the actions by the Fed and Congress. “Bear markets have ended when recessions have begun. But recessions produce opportunities, and this one will be no different. We are beginning to redeploy cash and profits from long-duration bond sales into risk assets.” What is she watching:
a. Credit Spreads
b. US Dollar
c. VIX
2) US EQUITY STRATEGY WEEKLY: “We are buyers of dips.” “Recession is a trigger for Growth to Value rotation.” We believe “forced liquidation is behind us”. “We stick to our view that the worst is behind us and current levels are buying points on a 6-12 month basis.” We are not saying it’s a straight line up from here, but our base case is that the lows are in for this bear market for most stocks.
3) BIOTECHNOLOGY COVID-19 MODEL UPDATE: Matthew Harrison and the BIOTECHNOLOGY team have updated their model suggesting cumulative infections of ~570,000 in the US with daily infection growth slowing in late April (in ~20 days). The largest risk to this model is a second wave of infections in the central region of the Country after the coasts have peaked in mid-April. The Central region may be tracking 2 weeks behind the East and West Coast. This model still may understate the number of peak cases in the US.
1) GIC WEEKLY: Lisa Shalett writes “We believe such actions will be sufficient to bridge the crisis” referring to the actions by the Fed and Congress. “Bear markets have ended when recessions have begun. But recessions produce opportunities, and this one will be no different. We are beginning to redeploy cash and profits from long-duration bond sales into risk assets.” What is she watching:
a. Credit Spreads
b. US Dollar
c. VIX
2) US EQUITY STRATEGY WEEKLY: “We are buyers of dips.” “Recession is a trigger for Growth to Value rotation.” We believe “forced liquidation is behind us”. “We stick to our view that the worst is behind us and current levels are buying points on a 6-12 month basis.” We are not saying it’s a straight line up from here, but our base case is that the lows are in for this bear market for most stocks.
3) BIOTECHNOLOGY COVID-19 MODEL UPDATE: Matthew Harrison and the BIOTECHNOLOGY team have updated their model suggesting cumulative infections of ~570,000 in the US with daily infection growth slowing in late April (in ~20 days). The largest risk to this model is a second wave of infections in the central region of the Country after the coasts have peaked in mid-April. The Central region may be tracking 2 weeks behind the East and West Coast. This model still may understate the number of peak cases in the US.
That seems exceptionally pessimistic. I think we bottomed out last week. Time will tell
bueller
Moderator
It's early yet. But I am shocked it didn't open and stay deep in the red this morning. As they say, there is no sure thing when it comes to the stock market.
Telemark
5 year old buck +
I am very pessimistic about how things are going. If things suddenly change, then I will change my mind on the market as well. I think what we are seeing is a lot of optimism around the stimulus that will fizzle out when people realize how little they can do with $1200.
I really hope things change. I hope people can get back to work and planes can get back in the air, but at the rate we are going, I think the worst is far from over. If certain precautions are made in shops to slow the spread of the virus, and everyone starts taking the infection a bit more seriously, then I will become a lot more optimistic.
One thing that has me bummed out is the lasting effects in many of those who have "recovered". So far a frightening percentage have lasting effects like reduced lung function.
SD51555
5 year old buck +
Pay close enough attention, and you can find conflicting outlooks from the same bank in the same day. Marketwatch is really good for that.
"Goldman: 'Stocks Have Room To Run'."
three hours later
"Goldman analyst, 'Recession already here and worse than expected'."
I am really happy to be wrong that today is not (yet) a sea of red. Perhaps people are tired of selling and are now understanding what reality really is with the virus.
I'm still waiting a little to add more to the market. We're still down like 25% from the highs so there is plenty of time to bargain shop still.
I'm still waiting a little to add more to the market. We're still down like 25% from the highs so there is plenty of time to bargain shop still.
BuckSutherland
5 year old buck +
https://www.cnbc.com/2020/03/30/cor...-unemployment-rate-of-32percent-fed-says.html
Oil is at 18 year low. While there is lots of bad news out there already there is still plenty to come. Q1 will be ugly. Q2 will make Q1 look like the worlds most prosperous times. Until we have some sustained good news the path of least resistance is down.
Oil is at 18 year low. While there is lots of bad news out there already there is still plenty to come. Q1 will be ugly. Q2 will make Q1 look like the worlds most prosperous times. Until we have some sustained good news the path of least resistance is down.
Dont know if y'all find these reports helpful or not but this is a daily insight from the folks I work with. I'll continue forwarding as relevant .
I wanted to send out two research pieces this morning for review. I sent the US EQUITY STRATEGY piece yesterday but I wanted to highlight one passage more specifically on page 3:
“RECENT LOWS WERE MADE DURING WHAT CAN ONLY BE DESCRIBED AS A FORCED LIQUIDATION BY LEVERED PLAYERS – aka shadow banks. Based on data and analysis from our Quantitative and Derivative Strategies and Prime Brokerage content teams, we think both systematic strategies and active managers are now basically “sold out” and have very low risk/leverage at this point. In other words, it’s hard to imagine the kind of liquidation that we just witnessed in March could happen again from these much lower levels of leverage.” We may be contrarian in this view but Mike Wilson and his team believe peak volatility and the lows in this Bear Market have already occurred. That does not mean that individual stocks will not reach new lows, but the overall market has likely seen the lows of this cycle.
On oil, I have attached a revised analysis we are further lowering our near-term forecast.
1) We now believe inventory build will exhaust the world’s storage capacity
2) Oil price floor not in sight
3) Revised WTI price target for 2Q20 is now 17.50, 3Q20 is now 22.50, 4Q20 is now 27.50, and 2021 is now 40.0
4) WTI Midland – a key pricing point for Permian production – is now tracking below $14/bbl
5) When storage capacity is exhausted, physical oil markets can only balance through curtailment of already producing fields
6) The 12-month forward price of WTI is a key driver of activity for shale layers, as they typically hedge a large part of their production. The current 12-month forward WTI price is trading at ~35/bbl. This prices is below break-even, but not enough to drive steep enough declines to support near-term pricing. WTI forward pricing is still assuming that the OPEC+ agreement gets revived.
7) To prevent a build-up of oil product stocks, refinery runs will need to decline sharply. This will lead to a build up in crude stocks, which will likely roll over into floating storage. This will increase tanker rates, forcing refiners to source crude closer to home. As a result, crude typically shipped over long distances will come under pressure.
Lastly, for the first time in 3 weeks, I wrote down the number of US Coronavirus cases last night at 163,807, and 13 hours later it sits at 164,785 (source: https://coronavirus.jhu.edu/map.html). This is the smallest % increase I have personally observed since I first wrote down the number of cases on Sunday, 3/15/2020 @ 2,200 cases. I have no expert analysis or explanation, and this simply may be anecdotal, it may be a catch up in testing, but I also saw a news story this morning that the number of ICU admittances in NYC were down. This may be only a short term anomaly, but I will be watching the numbers, and will pass along analysis from our BIOTECHNOLOGY team as I receive it…
I wanted to send out two research pieces this morning for review. I sent the US EQUITY STRATEGY piece yesterday but I wanted to highlight one passage more specifically on page 3:
“RECENT LOWS WERE MADE DURING WHAT CAN ONLY BE DESCRIBED AS A FORCED LIQUIDATION BY LEVERED PLAYERS – aka shadow banks. Based on data and analysis from our Quantitative and Derivative Strategies and Prime Brokerage content teams, we think both systematic strategies and active managers are now basically “sold out” and have very low risk/leverage at this point. In other words, it’s hard to imagine the kind of liquidation that we just witnessed in March could happen again from these much lower levels of leverage.” We may be contrarian in this view but Mike Wilson and his team believe peak volatility and the lows in this Bear Market have already occurred. That does not mean that individual stocks will not reach new lows, but the overall market has likely seen the lows of this cycle.
On oil, I have attached a revised analysis we are further lowering our near-term forecast.
1) We now believe inventory build will exhaust the world’s storage capacity
2) Oil price floor not in sight
3) Revised WTI price target for 2Q20 is now 17.50, 3Q20 is now 22.50, 4Q20 is now 27.50, and 2021 is now 40.0
4) WTI Midland – a key pricing point for Permian production – is now tracking below $14/bbl
5) When storage capacity is exhausted, physical oil markets can only balance through curtailment of already producing fields
6) The 12-month forward price of WTI is a key driver of activity for shale layers, as they typically hedge a large part of their production. The current 12-month forward WTI price is trading at ~35/bbl. This prices is below break-even, but not enough to drive steep enough declines to support near-term pricing. WTI forward pricing is still assuming that the OPEC+ agreement gets revived.
7) To prevent a build-up of oil product stocks, refinery runs will need to decline sharply. This will lead to a build up in crude stocks, which will likely roll over into floating storage. This will increase tanker rates, forcing refiners to source crude closer to home. As a result, crude typically shipped over long distances will come under pressure.
Lastly, for the first time in 3 weeks, I wrote down the number of US Coronavirus cases last night at 163,807, and 13 hours later it sits at 164,785 (source: https://coronavirus.jhu.edu/map.html). This is the smallest % increase I have personally observed since I first wrote down the number of cases on Sunday, 3/15/2020 @ 2,200 cases. I have no expert analysis or explanation, and this simply may be anecdotal, it may be a catch up in testing, but I also saw a news story this morning that the number of ICU admittances in NYC were down. This may be only a short term anomaly, but I will be watching the numbers, and will pass along analysis from our BIOTECHNOLOGY team as I receive it…
chummer
5 year old buck +
I am no market expert but I really thought there would be a big dip this week. Hasn’t happened yet. Why? Certainly no good news. My thought is the trillions that came out have no where to go, there is no other attractive option. With interest rates where they are at money has to come back to stocks. I kicked myself for not getting in when it went under 19k so half way through yesterday I put half my powder back in. I will hold the rest for below 18k but that seems to be the point my gut is telling me go all in. The problem I have now is 2 of the stocks I sold 6 weeks ago(and made nice profit) are now selling higher than when I sold. I really botched getting back in because at one point they were down a lot. Now I will have to take a smaller position or ride different stocks back up. I did buy an oil stock yesterday at 5x off its high so that is probably proof to not listen to me.
