Stock Market thoughts (continued - no politics please!)

SoonerAviator said:
Going to need more than an inverted yield curve and “we’re past due” to support that recession claim. Generally recessions have a large bubble that gets corrected in the market (dot com, mortgages) Is there a particular bubble you think is getting ready to have a large correction? Consumer debt? Fed monetary policy?
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I'm not sure who you were quoting when you said "we're past due" because I didn't say that. I'm not making any "recession claim" either. All I am saying is that historically, an inverted yield curve resulted in a recession roughly 1 year later.
 
tspear said:
I have heard the counter claim but never found a reference. Which recession either started without an inverted bond yield or when did an inversion happen and no recession within two years?
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https://www.reuters.com/article/us-...t-an-inverted-yield-curve-means-idUSKCN1V320S

"The U.S. curve has inverted before each recession in the past 50 years. It offered a false signal just once in that time."
​
The charts in the article don't show a false indication that I can see, but they only go back forty years, so it must have been before then. Whether there were any prior to fifty years ago, they don't say.
 
SoonerAviator said:
Last time I saw the graphic of consumer debt, student loans were increasing as a proportion of total consumer debt, but it didn't just jump off the page because the growth was so tremendous over the past few years. From when I graduated ('06) it has gone haywire though. I'll see if I can find it.

Edit: Auto loans have also gone up significantly almost lock-step with student loans. $70K Ford/GM full-size suv's that used to sell for $45K bear that out.

MW-HL737_consum_NS_20190619152202.png
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The total is of less concern than the per person median as a percentage of median income. e.g. the total can go up, but what is the median individuals ability to pay it back.

Tim
 
SoonerAviator said:
Understood, but I was asking if there was anything he had specifically identified or suspected as a likely culprit. We can all just wait a year or two after a recovery from a recession and then immediately start saying "we're overdue" until it happens, then claim "I told you so", lol. I'm not in disagreement about an economic slowdown (as I mentioned), I just don't know what will put us into full-blown recession. Auto loans are concerning, but generally people can sell expensive vehicles to ease some of the loan note to avoid default. The problem comes when lots of people lose their jobs (like a country-wide manufacturing slowdown) and are no longer able to afford payments on anything, expensive autos included.
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Manufacturing is already in an employment decline. Total revenue is also down.

Tim
 
topgun260 said:
I'm not sure who you were quoting when you said "we're past due" because I didn't say that. I'm not making any "recession claim" either. All I am saying is that historically, an inverted yield curve resulted in a recession roughly 1 year later.
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Not so much a direct quote as paraphrasing. I put it in quotations to emphasize the verbalization of the concept, consider it an air-quote. You said:

topgun260 said:
We are currently in one of the longest Bull Markets in history. It will not go on forever.

The 3-month/10-year bond yield curve was recently inverted. Historically this has preceded every recession since 1956.

The S&P 500 is at or near it's all time high.

Sounds like a good time to take profits.
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That sounds like you are indicating that it's time to take profits in and secure a bearish position with investment portfolios because a recession/severe retraction is imminent.
 
All it takes is one person crying, "The sky is falling" and the market collapses into a heap of ashes.
The lemmings, who all followed 'what's hot' chasing that 'big winner' take it in the rear (as usual)
The big guys (who likely put the chicken up to cluck about the sky falling) were already out of the market before the first drop of blue sky hit the ground.
Those of us who quietly bailed out when they saw the chicken warming-up, waited a bit and used the money to begin buying back into quality stocks a fire sale prices.
The most money I made in the market was made by sitting on a few good stocks for 30 years - until I bailed out in the first week of Jan 2008.
My broker had a shivering fit over how much tax I was going to pay.
I figured that owning the 80% that was left in cash (after tax) was a hell of a lot better than losing 30-40-50-60-? percent. I was right.
The next most money I made was taking a big chunk of that 08 cash and putting it into a no-load fund of large cap stocks and sitting on it. (yeah, I'm too cheap to pay some sob for holding my money - and yeah, groups of big companies do not get big by being stupid as a group) As of this morning every $1 I put in would pay $4+ if I pulled the trigger.
And even if I don't pull the trigger and chose to ride out the correction, in another 10 years the stock will have climbed back and gone past (shrug)
sounds like you are indicating that it's time to take profits in and secure a bearish position
If you chose to cash out and take a bearish position, consider farm land. You won't win big - you won't lose big. But more likely than not you won't lose anything over a 5 or 10 year span. And you make money by renting the land to a farmer earning you some 3% to 5% ROI, per annum of your investment. Lets take the high end estimate over 10 years. 5% x 10 equals 50% ROI, plus the 3% (historical) annual appreciation of farm land, giving you 80% ROI - and you still hold the principal (shrug) And yes, I have taken my own advice.
 
I'm a big fan of the Boglehead philosophy. Most of my investments are in Vanguard index funds and ETF's that track the total market. I have about 40 years until retirement if I stay healthy, so I am not terribly concerned about short term market drops. I just keep adding as much as I can to my accounts each pay check.
 
austin757 said:
I'm a big fan of the Boglehead philosophy. Most of my investments are in Vanguard index funds and ETF's that track the total market. I have about 40 years until retirement if I stay healthy, so I am not terribly concerned about short term market drops. I just keep adding as much as I can to my accounts each pay check.
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This is how I did it, it’s easy when you’re in your 20s and 30s. When you get into your 40s, and your investment balance is substantial, it’s a lot more difficult to stay the course.
It will test your resolve.


Tom
 
SoonerAviator said:
Not so much a direct quote as paraphrasing. I put it in quotations to emphasize the verbalization of the concept, consider it an air-quote. You said:



That sounds like you are indicating that it's time to take profits in and secure a bearish position with investment portfolios because a recession/severe retraction is imminent.
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I like to buy low and sell high. If the stock market is at all time highs then yes I like to take profits or put in a stop to protect profits.

The bond inversion and long Bull Market is history. Maybe things will be different this time but in my opinion they are things that are still worth watching. I will take a bearish position when the market warrants.
 
topgun260 said:
I like to buy low and sell high. If the stock market is at all time highs then yes I like to take profits or put in a stop to protect profits.
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If that has worked for you, great!

Problem is, people followed that advice when the Dow hit 1,000 for the first time, an all time high. Similarly at 2,000, 10,000, 20,000, or whatever all time high you choose. Some may have gotten back in on a dip, others may have stayed out thinking the market continued to be ”overpriced”, and lost out on the huge overall gains that followed.

Like I said, if it works for you, by all means keep doing it. But historically, trying to time markets has been a very poor way of maximizing returns.
 
tspear said:
What companies or industries do well when the economy slows; or enters a recession?

Tim
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Utilities, consumer staples, precious metals

Of course "do well" can be a very relative term....

Sent from my SM-G975U using Tapatalk
 
jsstevens said:
I do. He expands a lot of the concepts in Black Swan into other areas as well as the concept of systems that grown stronger when disturbed (which is Antifragile).
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I like Taleb as well but boy that guy has a huge ego.
 
denverd1 said:
Utilities, consumer staples, precious metals

Of course "do well" can be a very relative term....

Sent from my SM-G975U using Tapatalk
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I think to say they do "less poorly" is probably more to the point. The only industries I can think of that would "do well" during a recession would be repossession companies, predatory lenders, bankruptcy lawyers, and maybe rent-to-own companies. Possibly car mechanics, too.

Rich
 
topgun260 said:
I'm not sure who you were quoting when you said "we're past due" because I didn't say that. I'm not making any "recession claim" either. All I am saying is that historically, an inverted yield curve resulted in a recession roughly 1 year later.
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Curve is the real fly in the ointment IMO.

RJM62 said:
I think to say they do "less poorly" is probably more to the point. The only industries I can think of that would "do well" during a recession would be repossession companies, predatory lenders, bankruptcy lawyers, and maybe rent-to-own companies. Possibly car mechanics, too.

Rich
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agree 100%.
 
I’m curious how improvements in the maths that underly automated trade systems may be built to bias against allowing or creating a sell off that may spawn a recession.

I get that historically they have amplified some aspects of volatility, but it’s the AI logic or other learning that’s been injected that makes me wonder.
 
TCABM said:
I’m curious how improvements in the maths that underly automated trade systems may be built to bias against allowing or creating a sell off that may spawn a recession.

I get that historically they have amplified some aspects of volatility, but it’s the AI logic or other learning that’s been injected that makes me wonder.
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Have to think there would be fewer systems positioned to buy than there would be to sell, especially on big down days. Unfortunately, i think a lot of auto trading risks remain largely unchecked.
 
At least we don't have negative interest rates like Europe and Japan. Look at the multiple lost decades japan has had.
 
1RTK1 said:
At least we don't have negative interest rates like Europe and Japan. Look at the multiple lost decades japan has had.
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Negative interest rate....does that mean they will pay me to borrow their money?!?

Georgia schools and Majored in aviation ;)
 
Radar Contact said:
Negative interest rate....does that mean they will pay me to borrow their money?!?

Georgia schools and Majored in aviation ;)
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:) Yep, you pay back less money than what you borrowed, conversely they will take money from you for putting it in the bank............ Last ditch effort to stimulate the economy.
 
denverpilot said:
If you need it, take it off the table at record highs. Yeah it can go higher but the old greedy vs slaughtered joke applies.
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My great grandfather was noted for a number of sayings. This one applies here - "Nobody ever went broke taking a profit!"

Not bad for someone who didn't even go to high school.
 
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S&P 500 down 10.7% over the last five days, which doesn't happen too often.
Over last 20 years:
-Yuan Deval (2015)
-Eurozone crisis (2011)
-GFC ('08/'09)
-Dotcom bubble ('00,'01,'02)
 
Walboy said:
The stock market is readjusting for uncertain earnings in the future. One theory of stock market valuation is that current price is future earnings discounted back to present. There are uncertainties with future earnings and with the discount rate.

It all seems pretty rational to me.
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You said rational and stock market in the same post. I'm not of that mind; too much emotion involved.
 
JOhnH said:
I have a lotta problems with cannabis stocks.

One, I try to never buy into a fad. This may or may not be a fad, but at least in the early days, it is a novelty.
Second, I envision the people behind these stocks as a bunch of the pot-heads I used to know. I would never invest in them.

Timing and due diligence is important to any trade. One cannabis stock may do well and another may flop. You have to look at their backers and their business plan. Not just say "oh boy, legal weed, I want some!"
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The problem with CBD stocks is they all end going up in smoke!
 
they said "buy low, sell high", so I did.

that was the most fun I had selling losing stock...….
 
Fear and greed rule the markets.

COVID virus has awakened the fearful.

The greedy had a long run.
 
Time to do what I've done every month for 30 years...... buy....... consistency smooths the rough edges. :D
 
as I am forced to unload some stocks (mostly ETFs, actually) to free up some cash for further diversification of my portfolio, I will just have to remind myself that while they're not as good as the were last week... they're still for the most part a darn sight better than they were a year ago. And this exact thing is why I'm diversifying...
 
Market was at record highs and needed an excuse for a pull back.

Already seeing May delivery dates for certain electronics and components out of China. Laptop batteries, etc.
 
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