2020 Covid-19 Recession

[crimsonghost747]

I'm not familiar with NUE but I did a 5 minute research and it does look cheap. But I also see that the stock price has been in a downward trajectory for over 2 years now, any reason for that?

[Otter]

(04-23-2020, 06:24 AM)crimsonghost747 Wrote: I'm not familiar with NUE but I did a 5 minute research and it does look cheap. But I also see that the stock price has been in a downward trajectory for over 2 years now, any reason for that?

Steel price has been in a downward trend for two years. Highly cyclical business. 

You will find very few dividend aristocrats in the basic materials sector. The low margins and boom/bust nature of the industry results in few companies that can navigate the cycles successfully and continue to pay increasing returns to their shareholders. NUE and SON are the only two that I can think of, off the top of my head.

[fenders53]

(04-23-2020, 08:36 AM)Otter Wrote:

(04-23-2020, 06:24 AM)crimsonghost747 Wrote: I'm not familiar with NUE but I did a 5 minute research and it does look cheap. But I also see that the stock price has been in a downward trajectory for over 2 years now, any reason for that?

Steel price has been in a downward trend for two years. Highly cyclical business. 

You will find very few dividend aristocrats in the basic materials sector. The low margins and boom/bust nature of the industry results in few companies that can navigate the cycles successfully and continue to pay increasing returns to their shareholders. NUE and SON are the only two that I can think of, off the top of my head.

It's an amazing feat that XOM and CVX have also pulled it off in the energy sector.  Even a ten year run of Div raises is an accomplishment.

[crimsonghost747]

(04-23-2020, 08:36 AM)Otter Wrote: Steel price has been in a downward trend for two years. Highly cyclical business. 

Somehow their EPS seems to have an OK trajectory though. And that is an "meh, ok" not an "OKAY!". But still pretty decent looking earnings, at least on paper, during the past two years. I'm guessing there was some sort of a one-time fluke in 2018 though with the EPS being that high.

But yeah, this might be a company that I will be keeping my eye on if we can get a red day or two instead of the indexes going up a couple percentages daily.

[fenders53]

(04-23-2020, 09:37 AM)crimsonghost747 Wrote:

(04-23-2020, 08:36 AM)Otter Wrote: Steel price has been in a downward trend for two years. Highly cyclical business. 

Somehow their EPS seems to have an OK trajectory though. And that is an "meh, ok" not an "OKAY!". But still pretty decent looking earnings, at least on paper, during the past two years. I'm guessing there was some sort of a one-time fluke in 2018 though with the EPS being that high.

But yeah, this might be a company that I will be keeping my eye on if we can get a red day or two instead of the indexes going up a couple percentages daily.

It's kind of like this.  The industry is very tough.  When the storm clouds roll in they find a way to raise the dividend.  Meanwhile their competition is trying to sell office furniture in the empty parking lot after they lay off half their employees.    That's not much of an exaggeration.  Most of the once strong US steel producers are gone or in trouble most of the past few decades.

[rayray]

(04-23-2020, 05:04 AM)fenders53 Wrote:

(04-22-2020, 09:40 PM)Otter Wrote:

(04-19-2020, 12:56 PM)fenders53 Wrote:

(04-19-2020, 10:56 AM)rayray Wrote: And this is why I don't try to play the market--if I feel like I can't own a stock for 10 years I move on to something else. If we are already on the mend, leading to a V recession then I bought through it. If we get another downturn, I'll buy through that one too. U-shaped recession will give us a longer time frame to accumulate.

A U shaped economic recovery seems reasonably certain.  The market on the other hand is going to go up 1000pts a week for the rest of our lives.  I look very forward to it. 

The interesting thing to me is that half of the GICS sectors are trading straight-up U or L-shaped recession priced in. Just look at NUE. Dividend Aristocrat (47 years of DGI growth) steel producer, which has managed to raise the payout through every imaginable market condition for nearly half a century, trading at 2009 lows. Many similar stories in Consumer Discretionary, Financials, Industrials, Materials, and REITs. 

The other half are trading V-shaped (especially Tech), even after reporting lackluster earnings and pulling guidance. I'm not touching those. 

I still think we retest some recent lows, but the stocks that are currently down 50% from their highs aren't the ones that I think are going to take the biggest beating when that happens. In the meantime, I'm selling covered calls against my SQQQ position that's down 12%.

Ray is the only one that is going to keep his hair lol.  

There are huge inconsistencies in equity prices.  There was no proper capitulation.  It's like we were a week or two away though at the rate it fell.  I continue to sell covered calls very sparingly.  It is tempting to sell many more but there is too much risk the beaten up sectors will run 20% and never give you another chance.  Like you said, ten year lows for some.  The indexes are too dominated by a handful of companies to be a meaningful measure.

Ha! I wish I had the head of hair of my teenage self lol.


Yea...some analyst, can't remember who, said investors have to remember while there are certain types of market recoveries, individual stocks can recover differently independent of the market as a whole.

[fenders53]

(04-26-2020, 06:10 AM)rayray Wrote:

(04-23-2020, 05:04 AM)fenders53 Wrote:

(04-22-2020, 09:40 PM)Otter Wrote:

(04-19-2020, 12:56 PM)fenders53 Wrote:

(04-19-2020, 10:56 AM)rayray Wrote: And this is why I don't try to play the market--if I feel like I can't own a stock for 10 years I move on to something else. If we are already on the mend, leading to a V recession then I bought through it. If we get another downturn, I'll buy through that one too. U-shaped recession will give us a longer time frame to accumulate.

A U shaped economic recovery seems reasonably certain.  The market on the other hand is going to go up 1000pts a week for the rest of our lives.  I look very forward to it. 

The interesting thing to me is that half of the GICS sectors are trading straight-up U or L-shaped recession priced in. Just look at NUE. Dividend Aristocrat (47 years of DGI growth) steel producer, which has managed to raise the payout through every imaginable market condition for nearly half a century, trading at 2009 lows. Many similar stories in Consumer Discretionary, Financials, Industrials, Materials, and REITs. 

The other half are trading V-shaped (especially Tech), even after reporting lackluster earnings and pulling guidance. I'm not touching those. 

I still think we retest some recent lows, but the stocks that are currently down 50% from their highs aren't the ones that I think are going to take the biggest beating when that happens. In the meantime, I'm selling covered calls against my SQQQ position that's down 12%.

Ray is the only one that is going to keep his hair lol.  

There are huge inconsistencies in equity prices.  There was no proper capitulation.  It's like we were a week or two away though at the rate it fell.  I continue to sell covered calls very sparingly.  It is tempting to sell many more but there is too much risk the beaten up sectors will run 20% and never give you another chance.  Like you said, ten year lows for some.  The indexes are too dominated by a handful of companies to be a meaningful measure.

Ha! I wish I had the head of hair of my teenage self lol.


Yea...some analyst, can't remember who, said investors have to remember while there are certain types of market recoveries, individual stocks can recover differently independent of the market as a whole.

The overweight of the indexes by a few huge companies is getting gradually worse.  We are almost to the point where ten companies running higher could cause the index to return to ATH, while 300 more are still way off their highs.  If the FANG stocks ever capitulate that will be an ugly day for index investors.  It would take us down too of course.  

I can think of a half dozen sub-sectors that will be in deep trouble for years.  Patience is great until they BK and you lose it all.  That is why I do a flight to quality when things get horrible.  I'll get another chance to re-invest in airlines, restaurants, amusement parks etc.  I sleep better with those funds parked in a sector that I know will recover at some point.  I've only ridden a couple stocks to zero.  It's something I don't enjoy lol.

[rayray]

Another up day

This back to work movement is going to make the market go up

If there is a covid19 relapse then the market will drop, maybe big? idk at this point

At this time, the market might behave very forward looking, if it thinks the worst is over it's not behaving what's happening now or even within the next two quarters it's looking out 6 to 12 months from now.

We might not only see the market high--it might break that high in 2021

Having said that, it doesn't mean there won't be some big drops on negative news or even profit taking here and there along the way...

We make our money in times of turmoil, the question is how long does that turmoil last? This corona came quick, caused a lot of chaos--imho--when we look back on this time we will realize this was a very good accumulation phase but short--not as long as a lot of people thought it was going to be....jm2cents


I'm a perpetual bull because I believe the market spends more time going up then down--however--I thrive in bad times--gets my blood flowing!

[fenders53]

Ray,

I am having a blast trading this. Just trading 10% of my port in and out with the volatility. I'll get back to boring soon enough. I know it may not sound like it but the reality is 75% of my port is always boring and I prefer it that way. I got where I am acting like you. I debate you for fun but we aren't that much different in our thinking. I did sell a little now and then over the years when the story changed, and sometimes that was a very good idea. But I went 5 years at a time never touching my port. I am really hoping for a hard dip soon. There are a couple stocks I really want to buy and hold for a decade. They are clearly too expensive right now. They never did get cheap so I'll have to accept almost cheap enough if I get the chance. I try to never never buy euphoria and hopium and that is where a few of the great stocks are at right now.

[EricL]

Nice day for biotech.

ABBV up 4.7% today, and now just 10% below 52-week highs. Still yields 5.4%, although I think that will be dropping quickly with the AGN deal finalized.

AMGN up 3.3% and now at 52-week highs.

[divmenow]

(05-11-2020, 04:04 PM)EricL Wrote: Nice day for biotech.

ABBV up 4.7% today, and now just 10% below 52-week highs. Still yields 5.4%, although I think that will be dropping quickly with the AGN deal finalized.

AMGN up 3.3% and now at 52-week highs.

ABBV is headed to $100. It’s the best bio to buy on Valuation and yield. BMY headed higher as well. It’s a good space to be in.

[EricL]

(05-12-2020, 07:32 AM)divmenow Wrote:

(05-11-2020, 04:04 PM)EricL Wrote: Nice day for biotech.

ABBV up 4.7% today, and now just 10% below 52-week highs. Still yields 5.4%, although I think that will be dropping quickly with the AGN deal finalized.

AMGN up 3.3% and now at 52-week highs.

ABBV is headed to $100. It’s the best bio to buy on Valuation and yield. BMY headed higher as well. It’s a good space to be in.

I agree on ABBV, wouldn't be surprised at all if it ran to $120, which would be a ~4% yield.

It's still trading at a sub-9 PE on 2020 estimates, and earnings showed that Humira's becoming a smaller piece of the pie.

It's historically traded at about a 14 PE, which would be $144 on current estimates.

Glad it is one of the larger positions in my portfolio.