What Did You Buy Today?

[Otter]

(04-08-2020, 12:00 PM)fenders53 Wrote:

(04-08-2020, 11:36 AM)Otter Wrote:

(04-08-2020, 11:29 AM)fenders53 Wrote:

(04-08-2020, 10:59 AM)Otter Wrote:

(04-08-2020, 10:57 AM)fenders53 Wrote: We are going to struggle with recent low price bias.  I don't know about anybody else, but I didn't start a DGI port from scratch last month and buy all my positions at five year low prices.  This is why we need some earning guidance.  I was good with blindly buying quality brands that were suddenly 50% off.  Now I look at a stock only 15% off it's ATH and think hmmmmm, I wonder if they will struggle for five quarters with much higher debt?   That's not priced in anymore.  That greatly affects how much I am going to pay.  There will be more deals soon.

Yes. I have been waiting for more clarity on the "E" side of the P/E equation. That clarity will also end up moving the P.

Edited to add - The "E" information also plays in to most of my other metrics for determining DGI value, like payout ratio, and how realistic Chowder Numbers based on past 5yrs results are likely to be.

This may not be the best plan but I do have a plan.  I nibbled quality all the way down and it was scary, and slowly trimming all the way back up.  I prayed for a bear market bounce but nobody predicted this outcome.  I suspected it would be months before we had any clarity on company financials and that came true.  I do want some earnings guidance, but waiting for the all clear signal will be WAY too late like always.  The market is running on nothing this week.  The last bounce was understandable.  There were stocks selling for pre-BK pricing (Wendy's at sub $8 when they are not shut down comes to mind).  This run is irrational.  The momentum algo machines have taken over lol.  The market will work it out when they get some facts.  There will be some downgrades when the numbers come to light.

Still holding a few SPY puts just in case.  I am four years from needing some of this port and another 30% haircut would not be welcomed.  Anything I share here should be read in that context.  When I was 30 I invested with my hair on fire.  Painful but it worked out.

Even if you waited for the all-clear and technical end of the last recession (June 2009, actual reported figures confirming available a few months later), you did okay in the decade afterwards. 

My initial buys after earnings come out will be companies with pristine balance sheets that don't have earnings deteriorating to a point that points to skyrocketing debt.

Stuff lower down the quality food chain can wait for the all-clear. I won't catch the bottom, but debt is dynamite with a lit fuse at this point.

I understand your fear of the current uncertainties and you can make a case.  I can also make a case I've been rewarded for looking a forward and taking a chance by averaging back into the fear.  I'll respectfully disagree on waiting for a vibrant economy.  A considerable portion of the rebound happens while the sky is gray, not blue.  You are younger than I am.  That affects my decisions.  

I am receptive to being disagreed with.  I watch the too bullish fools on S.A. high five themselves into crushing losses in certain sectors.  Oil, REITs.  I doubt I need to explain that further.  I come here everyday hoping somebody will disagree with me and cause me to research something I may have underestimated.  

Excessive fear, greed, and a closed mind are the greatest risk to my net worth.  I believe that strongly.

I wasn't talking about a vibrant economy. I remember 2008 and 2009 vividly. Even when the technical data showed an end to the recession, no one thought the economy was vibrant in 2009. The U-shaped recovery took a long time, and people and analysts were generally pessimistic into 2011, as the market continued to climb a wall of worry.

My strategy is to start buying the highest-quality companies with pristine balance sheets after upcoming earnings. Even if this is equivalent to purchasing in October/November 2008, those picks should still do well within five years (and I will average into them if they continue to decline).

The lower quality equities with worrying debt/equity levels can wait for my purchases until there are technical indicators that a recession has ended and their earnings are stable. Even missing the bottom should be fine, on those. It's a fair risk trade-off given those companies' historically poor allocation of capital