What Did You Buy Today?

[divmenow]

We’re getting a nice dip in NKE this morning. Love those dips lol

[NilesMike]

NKE at 63 P/E? No thank you.

[fenders53]

(03-25-2021, 06:52 AM)divmenow Wrote: We’re getting a nice dip in NKE this morning.  Love those dips lol

It's the new "sassing the CCP" trade.  I really did get lucky closing my NKE put TUES.  I will probably sell a 
new one if it stays down more the 2 minutes. It's been a good option trade but its risky if the market dips hard.

[kblake]

NKE is just one of many stocks that will get punished this year. Everything is over valued. Stocks that were left for dead are up 100, 200 percent off the lows. You have companies that aren't making a dime make new highs. I can see 2021 being one of the worst in the market in some time. All these young investors believe buy everything and become a millionaire over night. Those people are in for a rude awakening. Buying a CD and keeping cash may be the best investment this year lol

I'm looking at buying puts in certain stocks. In no way am I a bear. I just don't see this buy everything mentality working forever lol.

[Otter]

(03-25-2021, 08:21 AM)kblake Wrote: NKE is just one of many stocks that will get punished this year. Everything is over valued. Stocks that were left for dead are up 100, 200 percent off the lows. You have companies that aren't making a dime make new highs. I can see 2021 being one of the worst in the market in some time. All these young investors believe buy everything and become a millionaire over night. Those people are in for a rude awakening.  Buying a CD and keeping cash may be the best investment this year lol

I'm looking at buying puts in certain stocks. In no way am I a bear. I just don't see this buy everything mentality working forever lol.

Statistically, the major indices are likely to have double-digit gains this year (16-20%), if past performance in the last several 2nd years of a bull market (going back 40years) hold any predictive power. It's usually the third year of a bull that sees a slight pullback (less than 10%). Doesn't mean there won't be pullbacks, volatility, and sector rotations along the way.

I don't buy the 10yr yield story. Inflation just isn't a thing right now with labor force participation sitting at half of its pre-pandemic level. Even with the current covid spike in European countries, 2021 is going to be the year of reopening and substantially increased economic activity, with most companies in most sectors reporting monster growth/comps at some point during the year. 

I suspect in a year we will look back on March 2021 as equivalent to the great crash of December, 2018. Essentially, a non-event.

[Otter]

The volume chart on SPY and QQQ over the past 30 days also tells a story. Average to below-average volume during this recent decline. Not a tsunami of sell orders like a year ago.

[fenders53]

(03-25-2021, 08:21 AM)kblake Wrote: NKE is just one of many stocks that will get punished this year. Everything is over valued. Stocks that were left for dead are up 100, 200 percent off the lows. You have companies that aren't making a dime make new highs. I can see 2021 being one of the worst in the market in some time. All these young investors believe buy everything and become a millionaire over night. Those people are in for a rude awakening.  Buying a CD and keeping cash may be the best investment this year lol

I'm looking at buying puts in certain stocks. In no way am I a bear. I just don't see this buy everything mentality working forever lol.

If you are going to do it, get it done while the VIX is low.  It rarely works out otherwise.  I was calling for the market to be choppy since OCT 2020 through 2021.  It took a while but it's still my thesis.  This won't be 2020 repeated.

I've noticed a trend on this forum lately.  Somebody throws up a buy of a quality stock and we all tell them it's overvalued.  It's because it is lol.  We are trying to justify buys on minor dips off overvalued.  The way I see it is our other choices are sit on cash, or just get all in and ride the rollercoaster.  My port if fairly defensive.  I'll try to trade some on the side and snipe some of the runs off dips.  It will work until it doesn't.  I see no signs of a imminent crash, but IMO the market is going to scare easily with all the noise.  It will remain irrational.  Just look at something as boring as utilities.  They pulled back hard when he 10YR treasury hit 1.60%.  Most of what I bought is up 10-15% a few weeks later on the exact same rate that hurt them.  A few vague comments from Powell is all that has changed.  Easy to find other examples in other sectors.

Added literally just a couple shares of NKE in my growthy port. Sold puts in CSIQ-XOM-ALE so far.

[crimsonghost747]

Okay so I have to ask you guys. Since I keep seeing this happen again and again and again. And it's stupid. But the pattern is there.

So every time the US gets bad unemployment or other major economic numbers, the market goes up.
When the numbers are good, such as today (new unemployment claims at their lowest point since corona started) then the markets tank.

It appears as if any sign of a recovery in the actual economy is met with a red day. Any sign of things getting worse and it's a green day.

Now if this is true, then the only force holding together this market is Uncle Joe and the FED pumping more free money everywhere. Again, if this is true, then the markets have become completely disassociated from the economic realities are running simply on the dream of infinite free money from the government.

Someone tell me how this does not end badly?
Or better yet, tell me what I'm missing?

[fenders53]

(03-25-2021, 10:11 AM)crimsonghost747 Wrote: Okay so I have to ask you guys. Since I keep seeing this happen again and again and again. And it's stupid. But the pattern is there.

So every time the US gets bad unemployment or other major economic numbers, the market goes up.
When the numbers are good, such as today (new unemployment claims at their lowest point since corona started) then the markets tank.

It appears as if any sign of a recovery in the actual economy is met with a red day. Any sign of things getting worse and it's a green day.

Now if this is true, then the only force holding together this market is Uncle Joe and the FED pumping more free money everywhere.  Again, if this is true, then the markets have become completely disassociated from the economic realities are running simply on the dream of infinite free money from the  government.

Someone tell me how this does not end badly?
Or better yet, tell me what I'm missing?

The answer is yes.  You just now notice?  

And Otter is speaking of "the crash of March 2021?"  It's not over yet, but I've had one month  (NOV) that was better since last spring.  I'm serious.

[Otter]

(03-25-2021, 10:11 AM)crimsonghost747 Wrote: Okay so I have to ask you guys. Since I keep seeing this happen again and again and again. And it's stupid. But the pattern is there.

So every time the US gets bad unemployment or other major economic numbers, the market goes up.
When the numbers are good, such as today (new unemployment claims at their lowest point since corona started) then the markets tank.

It appears as if any sign of a recovery in the actual economy is met with a red day. Any sign of things getting worse and it's a green day.

Now if this is true, then the only force holding together this market is Uncle Joe and the FED pumping more free money everywhere.  Again, if this is true, then the markets have become completely disassociated from the economic realities are running simply on the dream of infinite free money from the  government.

Someone tell me how this does not end badly?
Or better yet, tell me what I'm missing?

This was also true during 2008-2020. Buy the rumor sell the news, taper tantrums, etc. The markets always climb a wall of worry. Investing websites were full of articles in 2011 talking about how overvalued everything was. People who bought and held a decade ago are doing quite well.

[fenders53]

(03-25-2021, 10:21 AM)Otter Wrote:

(03-25-2021, 10:11 AM)crimsonghost747 Wrote: Okay so I have to ask you guys. Since I keep seeing this happen again and again and again. And it's stupid. But the pattern is there.

So every time the US gets bad unemployment or other major economic numbers, the market goes up.
When the numbers are good, such as today (new unemployment claims at their lowest point since corona started) then the markets tank.

It appears as if any sign of a recovery in the actual economy is met with a red day. Any sign of things getting worse and it's a green day.

Now if this is true, then the only force holding together this market is Uncle Joe and the FED pumping more free money everywhere.  Again, if this is true, then the markets have become completely disassociated from the economic realities are running simply on the dream of infinite free money from the  government.

Someone tell me how this does not end badly?
Or better yet, tell me what I'm missing?

This was also true during 2008-2020. Buy the rumor sell the news, taper tantrums, etc. The markets always climb a wall of worry. Investing websites were full of articles in 2011 talking about how overvalued everything was. People who bought and held a decade ago are doing quite well.

They do and it usually last for years.  Individual stocks do as well and it causes me to sell significantly early about 50% of the time.  I do need the market to make some sense long-term though.  I only get truly concerned when I have no thesis for a company to grow into their lofty PE.  If a mature company has traditionally traded with a PE between 15-25 for decades and now it is 65, I need a legitimate growth story.  How do they get part way to justifying it in three years, not 15 years.  Part of our motivation to hold Aristocrats is we will not see a fatal drawdown during recession.  Some of the blue chips are ripe for a 60%+ pullback.  Whether it's next year or five years it will be painful and something I'd like to avoid or at least mitigate.  I typed an entire paragraph and all I said was I am convinced valuation still matters eventually.  I refuse to get destroyed when FED magic ends, and someday it will.

NKE is a good one to discuss. With one exception year since 2011 (before now) their High/Low PE range was typically 35/25 and it didn't stray much. Now they are at 65. Clearly overvalued right? We'll not if they grow EPS at 45% CAGR the next three years, and that is what many analysts predict. Many other blue chips can't be justified as the growth story isn't there or even predicted.

[Otter]

A P/E of 15 representing a benchmark for value was formulated when the Federal funds rate was 6%. Even then, investors would traditionally pay 20 or more for "blue chips" or "aristocrats."

When interest rates crater 75% and stay near historical lows for more than a decade, asset competition comes into play. Money ends up invested somewhere. It tends to go where the largest potential returns are, which can re-set traditional valuations that were measured against the expectation of treasuries yielding 6%.

I'm not saying everyone should go out and load up their portfolios with junk-rated equities with no revenues to speak of, but TINA is a real phenomenon, and I am not too keen on fighting the Fed. I sold my SPY puts last year pretty damn quick after the Fed opened the money floodgates. There are absolutely zero signals from the Fed of a near-term tightening of monetary policy. All market-directed statements from Powell and Yellen signal exactly the opposite.