Stock Market thoughts (continued - no politics please!)

Are you talking about stocking shelves at the local market? Yeah, soups are in one aisle, lettuce and green stuff is usually way down at one end, there's a whole cooler of beers of questionable quality (with few decent examples of good craft beer) and the baking aisle has these awesome new espresso chips from Nestle that my wife baked into some amazingly delicious cookies. Those cookies, incidentally, are nearly always in my thoughts.
 
Well, not really “overall stock market”, but I think a lot of O&G-related stocks are going to take a hit as the market outlook continues to be soft going into 2020. Lots of E&Ps are still highly-leveraged so that could drive bankruptcy and restructuring as well as merger activity to try and trim the fat. Those changes will trickle down to other heavy-equipment markets (semi trucks/trailers, etc) which could further impact stock market growth.
 
As I have no insider knowledge it would all be a guess, if I had insider knowledge it would be illegal. Much like a casino.
 
SoonerAviator said:
Well, not really “overall stock market”, but I think a lot of O&G-related stocks are going to take a hit as the market outlook continues to be soft going into 2020. Lots of E&Ps are still highly-leveraged so that could drive bankruptcy and restructuring as well as merger activity to try and trim the fat. Those changes will trickle down to other heavy-equipment markets (semi trucks/trailers, etc) which could further impact stock market growth.
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What companies or industries do well when the economy slows; or enters a recession?

Tim
 
Eddie, nobody has a crystal ball. The real question to ask is what can you afford to risk?

Even a bull market isn’t a great deal for someone who can’t afford to ride the waves.

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.

The market lately and all the people who go on TV pretending to have a crystal ball seem to badly not want to get caught telling people to buy at near record or record highs. They got burnt by that so bad the last two times that they’re almost acting terrified.

Real earnings have been mixed with the usual bounces and panics when certain companies report good and bad.

In silly boom and bust town here I’m seeing a LOT of commercial real estate construction that JUST started. That’s very interesting to me, but isn’t a national trend.

Family who sells high end, really high end, houses for a living are doing okay but there’s a lot of scrambling to do a lot of customization which means they don’t have the massive volume they had for a while and buyers are there but they’re very picky about exactly what they want.

Some execs of some interesting names have been cashing out, but not en masse. That one has always been a nice bellwether for me. Many aren’t paid much in salary anymore so seeing them suck more capital out in any particular sector is always telling if it’s a sector that compensates their execs that way.

The pundits may get their self-licking popsicle with all of their warnings of crashes and recession to come. They push the panic button and everyone follows. Meanwhile it’s an always inflationary economy with nearly everyone working, so a lot of real value is being created in the right companies. It’s hard to make an argument against a workforce that effectively has no significant unemployment.

The other interesting thing I was reading about recently is that every time we do the crash thing, computers have been heavily involved and each time more and more forced stops are pushed into the system rules. Really big sell offs halt trading now more than ever, and people sit and think while its halted. At least if it seems like institutional investor’s computers are causing it.

October has traditionally been rough — it’s when companies get rid of staff before the holidays and Q4 for many sectors where business slows in winter. Not seeing wholesale layoffs jn October to me is also a positive sign.

Interest rates basically staying at the “free money” level still. Fed still as worried to push them up and slow anything as they’ve been did two decades. Not too many sneaky monetary games doing any real “quantitative easing” or similar right now either. Sneaking inflation in the back door, isn’t happening. Other than Brexit, even Europe seems more sane than usual. LOL.

China is a big driver and lever on all of it and I have no good advice there, but even with tariffs, I’m still buying tons of crap from them I don’t need.

Agriculture seems stable but high — food costs drive stuff. As does oil, and it’s hanging in. People still more concerned about gas taxes than gas prices.

So there’s a lot of tailwinds pushing against the desires of the pundits and such that say a pullback is going to happen. Which to me is why the peaks and valleys keep climbing for the moment.

Still it’s an excellent time to exit if personal risk of needing money is high in the next few years. I always have to say that because I see folks who need to live on the proceeds of good investments stay in them too long and get pummeled. That’s such a personal question though, nobody can answer it for anyone else.

I took about 5% off the table into cash or easy to liquidate investments this year due to wanting to mitigate risk from my new medical condition. I’ll probably be bummed at what it could have made, but it gives Karen the ability to make a phone call and have a check if I suddenly have a bad relapse. Ya know? Better she has that option than the possible upside far down the road.

We won’t regret that decision even if we miss that upside. It’s likely still earning at the inflation rate, but I won’t know for sure for a few quarters. That would be ideal vs it losing value.

And of course we are still at an age where we’re in it for the long haul and the stats support us riding out whatever comes for now.
 
People are going to buy and sell. Half the people will be right and half will be wrong.

I believe events over the next 18 months will tend to drive the market down but I can’t say why.
 
Checkout_my_Six said:
I'm sitting in 80% cash.....waiting for the next correction.
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My FIL has been saying that for the past 3 years. He has made nothing in that time and counting withdrawals, his portfolio has gone down. And he blames someone else.
In those same 3 years, I am up over 40% if correcting for withdrawals.

This is where my adviser has earned his fees. He has steered me away from making drastic moves and helps make minor adjustments to the portfolio on regular basis. The other thing he does for me is he keeps reminding me of how often the talking heads are wrong when they make their agenda driven predictions. (Their agenda is to make splash headlines that draws more readers and more advertisers).

When those talking heads keep saying "A recession is coming", it reminds me of people running around saying "we're all gonna die". Of course we are. But nobody knows when it is going to happen.
 
ya but.....I just sold everything at Sept highs....so I missed the MSFT and AAPL bumps.

bought back TWTR and new positions in BMY and UNC.
 
JOhnH said:
When those talking heads keep saying "A recession is coming", it reminds me of people running around saying "we're all gonna die". Of course we are. But nobody knows when it is going to happen.
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And there may well be but the last one was an anomaly in length. Recessions statistically average 18 months. Even here 3 1/2 years from retirement I can likely weather that without a long-term lifestyle hit.
 
I just put my money in low fee market index funds. Not very sexy but it has worked out good for me so far. I’m 25+ years from retirement so I can weather some dips. Ive maxed out my 401k and and my IRA the last few years, hopefully I don’t have to work until I’m 80.
 
Groundpounder said:
I just put my money in low fee market index funds. Not very sexy but it has worked out good for me so far. I’m 25+ years from retirement so I can weather some dips. Ive maxed out my 401k and and my IRA the last few years, hopefully I don’t have to work until I’m 80.
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That's a recipe for success. Slow and steady dollar cost averaging wins the race. I'll be 59 and we'll be joining you in NH.
 
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Groundpounder said:
I just put my money in low fee market index funds. Not very sexy but it has worked out good for me so far. I’m 25+ years from retirement so I can weather some dips. Ive maxed out my 401k and and my IRA the last few years, hopefully I don’t have to work until I’m 80.
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Keep it up and you will find retirement might not be 25 years away, unless you want it to be.
 
Pugs said:
That's a recipe for success. Slow and steady dollar cost averaging wins the race. I'll be 59 and we'll be joining you on NH.
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My “success” story.

Started making maximum allowable contributions to a conventional IRA back in the early 1980’s, mutual funds diversified thusly:

25% Blue Chip Growth
25% Emerging Growth
25% Utility Income
12.5% Technology
12.5% Software & Computing

Later added small positions in Gold and China mutual funds. With the benefit of hindsight, I should have put it ALL in Technology and Software & Computing from the beginning, but one diversifies because it’s difficult if not impossible to predict which sectors will do best over the long haul.

Overall, the funds have grown nicely, right now valued at 7 to 8 times the amount invested.

At age 70 1/2, the government requires mandatory withdrawals from a conventional IRA. That always seemed so far in the future, but for me it happens next year. The minimum you must withdraw is based on the value at the end of the prior year times a life expectancy factor from a chart. You can take it as a lump sum or structure it as regular payments over the course of a year. Being a conventional IRA, income tax is due on the total amount distributed, which is fair since the contributions to it were tax deductible and it grew tax free for about 40 years. Regardless, those mandatory withdrawals will go a long way towards a comfortable retirement. What is not needed can always be reinvested, of course, outside of the IRA.

The above is meant not to brag, but maybe to prod some youngun’s into acting sooner rather than later into funding retirement.
 
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FastEddieB said:
My “success” story.

Started making maximum allowable contributions to a conventional IRA back in the early 1980’s, mutual funds diversified thusly:
. . .
Overall, the funds have grown nicely, right now valued at 7 to 8 times the amount invested.
. . .
At age 70 1/2, the government requires mandatory withdrawals from a conventional IRA. That always seemed so far in the future, but for me it happens next year.

The above is meant not to brag, but maybe to prod some youngun’s into acting sooner rather than later into funding retirement.
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I hope the young'uns pay attention to Eddie's advice.
There are two excuses for not doing this that I hear over and over that make me cringe:
1. Investing in the stock market is like going to Vegas and putting all your money on RED.
2. I know people that save and invest all their lives then die of a heart attack or get hit by a truck as soon as the retire.

Both of those excuses suck.

1. Investing in the stock market might seem like Vegas, but it is a casino where the odds are heavily on your side. Just look at any stock market graph for more than a 10 year span. Unless you keep screwing up, like putting all your money on RED, you will always come out ahead in the long run. (please see my sig).

2. For every person that saves up and then dies before being able to enjoy it, there are scores of us that are now truly enjoying our lifetime of planning in retirement. Personally, I think it is much more sad to see penniless old people that spent everything as they earned it, living beyond their means and now living in squalor eating cat food, than it is to see people that saved and sacrificed all their lives.

But so far, this is still a country where your choices matter. Make good ones.
 
JOhnH said:
There are two excuses for not doing this that I hear over and over
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You forgot the 3rd excuse: "I don't make enough money to save..."

And truth be told, I thought the same in my 20s. Then someone taught me about compound interest over time. When I hear any of these 3 excuses from a young person, I simply use the "penny a day and double it for 30 days" example or others to show them how a small amount of investment savings grow and possibly even provide a path to retire early like I did. Some have heeded that advice and are at a level higher than I was at a similar age. But most won't or try and give up. It's a shame they don't teach this important life skill in school.
 
tspear said:
What companies or industries do well when the economy slows; or enters a recession?

Tim
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Healthcare? Companies that specialize in repairs? Companies that manufacture staples like toilet paper, soap, etc? All that said, I think you missed my point. I wasn’t implying that a widespread recession was on the horizon, I was saying that the O&G sector has been stagnant for the past year, and outlook for 2020 is worse. That retraction in revenue/earnings is going to squeeze many of the highly-leveraged producers and affects companies like Kenworth/Peterbuilt as orders for new trucks slow down from E&P companies needing new sand/chemical transports.

The economy as a whole may be just fine and continue its steady growth, but unless something pushes oil prices back up toward the upper 60’s/low-70’s, that segment is going to have to lean-out operations further for 2020.
 
SoonerAviator said:
Healthcare? Companies that specialize in repairs? Companies that manufacture staples like toilet paper, soap, etc? All that said, I think you missed my point. I wasn’t implying that a widespread recession was on the horizon, I was saying that the O&G sector has been stagnant for the past year, and outlook for 2020 is worse. That retraction in revenue/earnings is going to squeeze many of the highly-leveraged producers and affects companies like Kenworth/Peterbuilt as orders for new trucks slow down from E&P companies needing new sand/chemical transports.

The economy as a whole may be just fine and continue its steady growth, but unless something pushes oil prices back up toward the upper 60’s/low-70’s, that segment is going to have to lean-out operations further for 2020.
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Oh yeah. I knew that. O&G = OIl and Gas. In my old brain, it took me a while and a hint to remember that.

You are right. Even in a recession, which we are not, there are two sides to every trade. Generally one side does better than the other. Your challenge is to be on the side that does better.
 
One of the things my dad instilled in me at an early age was to save for retirement. I got a pretty big check from an ESOP program that I had somehow become fully vested in when I was 20 years old. By pretty big I mean $25k, which in the late 90's for someone my age, that was a lot. I could have cashed it out and just paid the taxes on it, but I decided to roll it into an IRA. It is worth a lot more than $25k now, as you can probably imagine.
 
FastEddieB said:
And now, cannabis stocks!
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A friend of mine thought he was getting in early and getting a good deal on cannabis stocks. Those stocks are doing so badly that he can't afford to sell. He says the first few months looked good, but it has been down hill ever since. Are you showing something different.??

Every week I listen to him say how big of a mistake it was to buy.
 
tspear said:
What companies or industries do well when the economy slows; or enters a recession?

Tim
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Bonds. When the economy slows, interest rates generally fall, increasing the value of the bond, and your capital is guaranteed, as is a return if you hold to maturity. However, due to ( not able to be discussed here), that strategy may not be as profitable as it has been previously, because of deficits, and artificially low rates in a time of a healthy economy. Stagflation hurts everybody.

Second choice is bond-equivalent stocks that pay a good dividend, like consumer staples, people still gotta eat, and utilities that keep the lights on as well as communications. But these are generally a way to tread water, because though you are paid a dividend, the equity price drops ex-dividend. And again, due to ( unable to be discussed here), dividends are paid out of retained earnings, and it's more advantageous to mgmt to use those funds for share repurchase than distribution.

And don't forget to factor in tax consequence if you are trading outside of an IRA.
 
Zeldman said:
A friend of mine thought he was getting in early and getting a good deal on cannabis stocks. Those stocks are doing so badly that he can't afford to sell. He says the first few months looked good, but it has been down hill ever since. Are you showing something different.??

Every week I listen to him say how big of a mistake it was to buy.
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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!"
 
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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Cannabis as an intoxicant has problems as an industry. But cannabis as hemp products, textiles, etc could have a good future if ( unable to be discussed here ). But in any case, I thi k they are all still penny stocks.
 
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Chip Sylverne said:
Cannabis as an intoxicant has problems as an industry. But cannabis as hemp products, textiles, etc could have a good future if ( unable to be discussed here ). But in any case, I thi k they are all still penny stocks.
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Assuming you have the same low opinion of penny stocks that I do, then I agree with you.
 
SoonerAviator said:
Well, not really “overall stock market”, but I think a lot of O&G-related stocks are going to take a hit as the market outlook continues to be soft going into 2020. Lots of E&Ps are still highly-leveraged so that could drive bankruptcy and restructuring as well as merger activity to try and trim the fat. Those changes will trickle down to other heavy-equipment markets (semi trucks/trailers, etc) which could further impact stock market growth.
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I have lost confidence in O, G, E & P. I’m planning to invest in some T & A stocks.
 
I'd like to invest in "cord cutting" (maybe ROKU, HULU) stocks and sell short Dish, Direct, and other worthless old fashioned providers.
 
ROKU has done well, HULU does not come up as a stock, they may still be pre IPO or already merged into some other company.
 
geezer said:
ROKU has done well, HULU does not come up as a stock, they may still be pre IPO or already merged into some other company.
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ROKU just had a big pop in the last coupla weeks. May be little ahead of itself right now.
 
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