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Tips for surviving a correction
#31
(03-02-2020, 05:39 PM)Dividend Watcher Wrote: Nothing to see here, folks. Move along.  Confused

Craziest dead cat bounce I've seen in a while. Pretty disappointing when I entered 6 not-so-lowball limit orders over the weekend and only one executed. Sad

When the market gets like this, I hate it when I can't monitor it.  I've been entering very low ball orders, then try to jump in and adjust up a few if it makes sense.  It makes it a little faster with my brokers site.  I had enough cash to make it impossible to manage last week.  I missed some deals for sure.  Of course some of them went lower the next day but we never know that.  

Stocks often dip very low at the open, and back up within a minute.  I don't even know if I could get those shares if I had an order down that low.  I never buy a spike at the open.  Drinking a cup of coffee and observing the first 30 minutes is often the best idea, but we never know.

And the dead cat did more than bounce. I've never seen anything like that. I hope the FED doesn't burn all it's powder at once. The Prez will scream but the market will get over it soon enough.
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#32
The S&P 500 sports a TTM P/E ratio of roughly 23 at the moment. The last time interest rates were slashed to zero, the market did not surge in response. TTM P/E actually dipped below 15 for a period.

Just a data point for those trying to estimate valuations in what is becoming an increasingly turbulent market, driven by uncertainty as to risk.

This is not a classic liquidity crisis. Interest rate drops are not going to restart factories/supply chains, resolve demand shocks caused by social distancing (voluntary or government-imposed), or address the many knock-on effects that flow from those issues.
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#33
Keep going down market. Another 2000 point loss would be great lol. I sold a lot of equities this morning and am now in 60% cash. I see it get much worse from here on out. Just too many issues to deal with now. I'm not buying until I see things improve in China.

I have a ton of stocks I'm watching but I wont be buying until I see better prices. Like Otter said. We need to get down to more reasonable levels.

GOLD and REITS should do well now in this environment.
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#34
(03-03-2020, 01:51 PM)kblake Wrote: Keep going down market. Another 2000 point loss would be great lol. I sold a lot of equities this morning and am now in 60% cash. I see it get much worse from here on out. Just too many issues to deal with now. I'm not buying until I see things improve in China.

I have a ton of stocks I'm watching but I wont be buying until I see better prices. Like Otter said. We need to get down to more reasonable levels.

GOLD and REITS should do well now in this environment.

Great minds think a like lol. I lightened up as well. I'm not 60% cash but almost 50%. I see a lot of great bargains coming our way.

MMM at $120
IBM at $110
AAPL at $175

Big Grin
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#35
Sold apple, pfizer( bought last week). Bought and sold some spy calls thorning aswell.
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#36
(03-03-2020, 02:25 PM)divmenow Wrote:
(03-03-2020, 01:51 PM)kblake Wrote: Keep going down market. Another 2000 point loss would be great lol. I sold a lot of equities this morning and am now in 60% cash. I see it get much worse from here on out. Just too many issues to deal with now. I'm not buying until I see things improve in China.

I have a ton of stocks I'm watching but I wont be buying until I see better prices. Like Otter said. We need to get down to more reasonable levels.

GOLD and REITS should do well now in this environment.

Great minds think a like lol. I lightened up as well. I'm not 60% cash but almost 50%. I see a lot of great bargains coming our way.

MMM at $120
IBM at $110
AAPL at $175

Big Grin
OK stock Swami, how many predictions you got in your crystal ball?  I'll hit you later with a few tickers I need you to call out.     

I don't argue with anything Otter says.  I just know we'll never time the market bottom unless it's blind luck.  I am coming from the opposite direction than many of you guys because I was WAY too cashy.  I couldn't get back in fast or deep enough last January.  Of course I thought there was no rush after that beat down with a V bottom.   I will trade my way in and out of stuff for now some just to take the sting out of some of my way too early buys.  (and it entertains me to be honest).  I have covered calls on a few of my DGI sticks like JNJ, PEP and a few others.  I buy a few back every time the market has a bad day.  Sold a few again yesterday.  Looks like I'm buying back some again tomorrow.
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#37
(03-03-2020, 01:23 PM)Otter Wrote: The S&P 500 sports a TTM P/E ratio of roughly 23 at the moment. The last time interest rates were slashed to zero, the market did not surge in response. TTM P/E actually dipped below 15 for a period.

Just a data point for those trying to estimate valuations in what is becoming an increasingly turbulent market, driven by uncertainty as to risk.

This is not a classic liquidity crisis. Interest rate drops are not going to restart factories/supply chains, resolve demand shocks caused by social distancing (voluntary or government-imposed), or address the many knock-on effects that flow from those issues.
Really good point. Thank you
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#38
I think SPY 260 is likely. I think SPY 203 is within the realm of possibility (would be a 40% drawdown from the highs, based off of Scott Minerd's Bloomberg interview last week).

Unless the known pathogenic/epidemiological characteristics of the virus and our domestic mitigation efforts in the U.S. (pitiful to date) change drastically, I think we are looking at a nationwide healthcare situation similar to Hubei Province within 30 days. The statistical outcomes predicted for such an event would dwarf any similar event in modern U.S. history. Likely more than 2 million deaths in the U.S. alone (~58,000 Americans died in Vietnam, and ~400,000 died in WWII). It is not the end of the world, but the social and economic consequences will exact a heavy toll.

My math on the 2+ million deaths is derived in part from Professor Marc Lipsitch's latest estimate of population infected. He is an epidemiologist, and Director of the Center for Communicable Disease Dynamics at Harvard's T.H. Chan School of Public Health (considered the best in the world). He recently updated his assumptions using the latest available data, and estimates a range of 20-60% of population infected (Dr. Gabriel Leung of Hong Kong University has estimated as high as 60-80%, but I'll work with the lower numbers here). WHO's latest estimate for case fatality rate (issued today) is 3.4%. Go with the lower bound of infection rate. 330,000,000 Americans x 20% x 3.4% = 2.24 million. The numbers for people requiring ICU treatment and hospitalization for pneumonia are multiples of that, and there are not enough hospital beds or healthcare workers in the U.S. to handle that burden. Healthcare workers are also at highest risk for infection, and once infected and quarantined they are removed from the pool of available treaters for several weeks, at a minimum.

Even if the U.S. switches to extreme mitigation measures like China did, I think the very nature of those mitigation measures (extreme quarantine and transport shutdowns) would create a severe shock to the economy.

This is not the apocalypse. The U.S. and world are not going to go Mad Max and fall apart, but the latest available data indicate that societal and economic consequences of an event like this are likely to be extreme.
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#39
As much as I remain calm, I do expect the virus to cause near zero earnings growth this year. That should surely cause stocks to pullback 25-50% from these valuations right? Sounds logical to me. About 15 months ago we faced the very same prediction. It came true for the most part. While the GDP grew at 2%, most of my portfolio did in fact face zero or even negative growth in earnings, or at least revenues. Market ran nearly 30% in spite of it. Point being, it's great to have an opinion on market direction, I certainly do. Just don't over-react to your prediction. Don't go 100% in or out of stocks or cash ever. The market is not rational for years at a time. You'll get burned by your assessment eventually if you over-react.
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#40
Just remember the last too times the FED did an emergency rate cut the S&P 500 both times was cut in half. Valuations are too high now. We need to get back to 14-15 X PE. You are going to see most companies warn on the next few quarters and estimates are going to have to be revised down. That's just common logic. And you need to keep cash on hand for declines. If your fully invested then you are going to scramble to sell to buy other stocks you want. I'm not saying I'm right, but that's just my thinking and I'm sticking to it lol

I agree with GOLD and REITS and maybe add in Consumer stocks as well. I invested in a lot of gold stocks at or near there lows a few years back and there my biggest gainers right now. Reits will also do well in this environment.

I agree there are a ton of stocks I would be willing to buy right now. But the question I keep asking myself is?? Can they get cheaper on valuation. And the answer is yes lol

If you want to own BA, IBM, MMM and stocks like that. Buy small amounts and add on bigger pullbacks. Keep some powder dry so you dont come up empty.

One name I do like here is VTR.

BTW I took some money off the table as well. I 'm about 35% cash
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