Sell

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Submitted by davelj on June 2, 2020 - 5:27pm

In my view...

You should pretty much sell every risk asset that you can - pretty much. This recent rally is a gift from the market gods to de-risk in the face of financial armageddon.

Amazingly, incredibly, beyond all reason... the S&P500 is down just 10% from it's (significantly overvalued) February all-time high. Despite what's likely to be 15%+ peak-to-trough decline in GDP, 15%+ unemployment, profit decimation, overwhelming corporate and personal bankruptcies, myriad bank failures... and no bullets left in the Fed's gun where rates are concerned... stocks levitate. I would argue that this stock market is the most overvalued US market I've ever seen - possibly including 1999/2000.

And it's all a trade - just like all of the classic sucker rallies. Only the big liquid names are moving and driving the indices higher. No one wants to actually "hold" anything. Everyone thinks they'll be the first ones out the door.

The good news is that the banks are *much* better capitalized than they were going into the Financial Crisis. The bad news is that they're going to need every dime of that capital to stave off a crushing wave of bad commercial and CRE loans. Drive down whatever street near you has a lot of strip malls. I live in Mexico now but I drove down Broadway in Chula Vista the other day and just looked on either side of the street - restaurants, nail/hair salons, small hotels, miscellaneous services and retail... at least 1/3 of these businesses will fail by year-end. They simply do not have the wherewithall to survive. And the others will limp along for years afterward. Virtually all restaurants are fvcked. Even if they can seat using social distancing guidelines, only a small percentage can break even. It could be 18 months before there's a "normal" restaurant business. Hospitality (resorts, hotels, vacation rentals)... fvcked. Total wipeout. Airlines and other human transportation... fvcked. Energy... fvcked. I could go on and on and on. And then think about the employees of all of these businesses... there could be 10 million jobs that simply don't return to the US economy for several years - even after there's a vaccine.

Yeah, there will be a bump in economic activity after we hit bottom and then followed by the vaccine (whenever that becomes available). But that bump will ultimately leave the economy (still) in a pretty big hole and, to add insult to injury, there will be a certain, albeit modest, percentage of folks whose behavior is going to semi-permanently change even after things normalize. They're going out less, traveling less, spending less, saving more. When you have a highly-leveraged tanker like the US economy that grows 2-3% in a good year and all of a sudden you have a modest percentage of folks that change behavior like that... you have a long-term disaster on your hands. As the saying goes, "everything important happens at the margin"... and at the margin, things are going to he11 in a handbasket.

Another piece of good news is that the bank regulators are trying to get ahead of things and using forebearance tools - as opposed to capital tools - to try to right the ship. I think that's smart - they should've done more of that during the Financial Crisis (as opposed to cramming capital down everyone's throat) - but... it's still going to get very, very ugly. There are so many permanently damaged businesses out there - eg, think about all of the commercial real estate and how these owners are going to deal with massive waves of bankrupt leasees. Yes, there are regulatory tools that can help but when you see these being pulled out, you'll know the Powers That Be are panicking. This freight train is going to level pretty much everything in its path - I'll be very surprised if it's not worse than the Financial Crisis.

Drive around your town or city. Look around. Think about the businesses that aren't coming back. Think about the folks whose jobs aren't coming back for a long time. Think about how behavior is going to change even after things begin to normalize. Think about the leverage and how the banks are going to cope with all of this. Think about what this means for corporate profitability - short-term and long-term and then what that means for nosebleed-level stock valuations.

Meanwhile, our fair-haired Nero fiddles while Rome burns.

Discretion is the better part of valor. Sell.

I could be wrong. But I doubt it.

Submitted by sdrealtor on October 18, 2021 - 9:32am.

Empathy

Submitted by scaredyclassic on October 18, 2021 - 10:46am.

That's part of it. But there's more going on.

Hope, nostalgia
Beginnings
Clean slates.
Fear for them.

More shit too.

I tried to find the opposite of schadenfreude and one option was mitgefuhl. (Compassion, condolences) but not sure that'll work. May need a whole new word.

Submitted by davelj on October 18, 2021 - 3:02pm.

sdrealtor wrote:
The passage of time is what allows for those interventions.

Agreed but that's not what you wrote so I assume it's not what you meant. Without the intervention the passage of time alone is helpful but generally not sufficient (over any reasonable time horizon). [See: the Great Depression and Japan 1989-present.] Interestingly, in the case of Japan, despite decades of massive ongoing intervention, the Nikkei is still down 25% from it's peak... in 1989. But what's 32 years between friends...

sdrealtor wrote:

Saying I’ve been totally wrong would’ve been enough;)

That's what I said in my previous post, verbatim. This last post was in response to your "passage of time" comment.

Just to clarify, of course.

Submitted by scaredyclassic on October 18, 2021 - 5:50pm.

Weddings, for married spectators, produce a feeling related in some respect to that of horror films. You know the actors are in grave danger.

You know something bad will happen at some point.

The actors are blithely unaware of any risk.

you want to yell at them, warn them, but the bride and groom are as unable to hear as celluloid images on a screen

And those vows. Oy

Why else would the vows make you promise to love honor and obey, before witnesses, unless the audience knows that at some point you will be unable to do just that

But it's a good kind of danger.

Making crazy promises, binding future you, a self you cannot know, or perhaps even imagine can be a romantic, tragic and even intelligent thing to do.

a buy and hold strategy, with a reasonably good fund, or adequate mate, pays dividends. Though downturns are sickening, hold on ...too much trading virtually guarantees failure.

I'm available to officiate weddings, if you need a quirky officiant. Reasonable fees. No guarantee the bride won't despise me. Someday she'll get it.

Submitted by sdrealtor on October 18, 2021 - 6:46pm.

davelj wrote:
sdrealtor wrote:
The passage of time is what allows for those interventions.

Agreed but that's not what you wrote so I assume it's not what you meant. Without the intervention the passage of time alone is helpful but generally not sufficient (over any reasonable time horizon). [See: the Great Depression and Japan 1989-present.] Interestingly, in the case of Japan, despite decades of massive ongoing intervention, the Nikkei is still down 25% from it's peak... in 1989. But what's 32 years between friends...

sdrealtor wrote:

Saying I’ve been totally wrong would’ve been enough;)

That's what I said in my previous post, verbatim. This last post was in response to your "passage of time" comment.

Just to clarify, of course.

I've written on this many times here. More than I can count over many many years. Doomsayers all too often look at things with a myopic short term view. Things which seem impossible in the here and now are quite possible given the passage of time. Time for interventions, time for discounted dollars, higher wages/inflation, lower interest rates and more.

As for the "totally wrong" you followed it with a litany of excuses. You were wrong, dead wrong, not close by a long shot. I don't understand why people can't just take their lumps and move on. We all make mistakes

Submitted by davelj on October 18, 2021 - 10:57pm.

sdrealtor wrote:

As for the "totally wrong" you followed it with a litany of excuses. You were wrong, dead wrong, not close by a long shot. I don't understand why people can't just take their lumps and move on. We all make mistakes

Mistakes unaccompanied by some form of explanation - good or bad - are pretty much nonexistant. Reasons, excuses, tomatoes, tomahtoes... where you stand generally depends upon where you sit.

Indeed, we all make mistakes. I'm sure, for example, you've made many mistakes over the last 15 years... could you point to a single one you've acknowledged here? Just curious... enquiring minds and all. You raised the issue after all.

Submitted by Coronita on October 19, 2021 - 5:26am.

See futures are up because I sold some things yesterday. You want me to buy some things today to crash it again?

Submitted by sdrealtor on October 19, 2021 - 7:04am.

davelj wrote:
sdrealtor wrote:

As for the "totally wrong" you followed it with a litany of excuses. You were wrong, dead wrong, not close by a long shot. I don't understand why people can't just take their lumps and move on. We all make mistakes

Mistakes unaccompanied by some form of explanation - good or bad - are pretty much nonexistant. Reasons, excuses, tomatoes, tomahtoes... where you stand generally depends upon where you sit.

Indeed, we all make mistakes. I'm sure, for example, you've made many mistakes over the last 15 years... could you point to a single one you've acknowledged here? Just curious... enquiring minds and all. You raised the issue after all.

Sure! I've admitted to not foreseeing the rise in real estate over the last few years many times. It caught me completely off guard

Heck just this past weekend I thought why not take a drive up north to pick up some wine, catch a concert, grab a drink with a friend and drive back the next day. Five hundred miles each way. I'm too old for that. Now I've got a cyst in my left knee the size of a marble I'm gonna need to get cut out. I'm such a dumbass sometimes

Submitted by davelj on October 19, 2021 - 10:08am.

sdrealtor wrote:

Sure! I've admitted to not foreseeing the rise in real estate over the last few years many times. It caught me completely off guard

Your admission of a "mistake" is that your previous clients/buyers have done much better than you thought they would do with respect to their purchases? I'm not the last word, obviously, but I'm not certain that rises to the level of a material mistake. I've managed partnerships that did far better than I thought they would... but I didn't classify my underestimation as a mistake (although we generally exited too soon, which could be viewed as mistakes, I suppose). Now, if you didn't see the oughties bubble bursting, that would've been a mistake... but I can't remember where individual posters stood on that issue... too long ago.

sdrealtor wrote:

Heck just this past weekend I thought why not take a drive up north to pick up some wine, catch a concert, grab a drink with a friend and drive back the next day. Five hundred miles each way. I'm too old for that. Now I've got a cyst in my left knee the size of a marble I'm gonna need to get cut out. I'm such a dumbass sometimes

I'm not sure this is a mistake that rises to the level of being worth mentioning, but... reasonable people can disagree. (I forgot my keys in the house the other day... had to go back and get them. Almost didn't forgive myself.)

Five hundred miles... each way... that is one hell of a drive, though. I'm surprised that driving - even a long distance - would result in a cyst in your left knee (of all places), but... I'm no doctor and stranger things have happened. Good luck with the surgery.

Submitted by sdrealtor on October 19, 2021 - 1:00pm.

Well that's one way of looking at it but not the right way. I talked some friends out of buying and others into selling. So that's not a case of them doing much better but rather missing out on windfall profits.

As for the cyst, it wasn't there before it was there after. We'll see after I get in to see ortho what's necessary. It was a great show I thoroughly enjoyed but next time I'll fly if I'm doing a one day turn around.

Submitted by svelte on October 21, 2021 - 9:00am.

scaredyclassic wrote:
That's part of it. But there's more going on.

Hope, nostalgia
Beginnings
Clean slates.
Fear for them.

More shit too.

I tried to find the opposite of schadenfreude and one option was mitgefuhl. (Compassion, condolences) but not sure that'll work. May need a whole new word.

weddings confuse me. So much stupid ritual. I like those who think outside the box and do it their way, do it different. Not just the same old rituals because everyone else does them.

I'm also usually totally mystified on why the bride and groom picked each other. Very few times do I think "now there's a great match!".

We sort of psuedo-eloped for ours and so there are very few photos of it. I've dug them out recently and have been cleaning them up digitally...found a couple of good shots I didn't know we had. Looking at it from almost a third party perspective now since so much time has passed, I bet people thought we were an odd couple too. The geek and the beauty. I sure looked geeky and had no idea that I looked that way.

I'm not sure I'm happy when I go to weddings. Amused. Curious. Mystified. Hopeful for them. Sometimes they enlist me as a second photographer because I'm great at capturing human spontaneous moments...they let the official photographer capture the ritualistic poses filled with stiff postures and fake smiles.

Submitted by scaredyclassic on October 23, 2021 - 1:04pm.

People in love getting married are flying high on hormonal brain craziness such that the drug equivalent is a cocktail of 10 mg oxycontintin, 100 micrograms LSD, .5 grams cocaine and one (1) Cosmopolitan.

No small wonder the matches seem odd.

Submitted by flyer on October 23, 2021 - 5:36pm.

Sure, we all make mistakes, and, occasionally, learn from them, but marriage and real estate investment were two of the best decisions I ever made--and still going strong after 30+ years--the magnitude of which I could never have initially foreseen. Sometimes you just have to go with the moment.

Submitted by scaredyclassic on October 24, 2021 - 11:03am.

Luck.

Submitted by flyer on October 24, 2021 - 5:03pm.

Agree luck had something to do with it, but there were and are many other variables in play that required decisions--it didn't all happen by chance.

It's easy to ascribe the outcome of one's life to luck--good or bad--since that removes personal accountability, but I don't buy that. IMO, it's definitely a combination of elements.

Submitted by scaredyclassic on October 24, 2021 - 6:58pm.

flyer wrote:
Agree luck had something to do with it, but there were and are many other variables in play that required decisions--it didn't all happen by chance.

It's easy to ascribe the outcome of one's life to luck--good or bad--since that removes personal accountability, but I don't buy that. IMO, it's definitely a combination of elements.

Free will does not exist.

Submitted by flyer on October 24, 2021 - 11:31pm.

So I've read. Scientific determinism vs. free will.

Definitely an interesting topic.

Submitted by scaredyclassic on October 25, 2021 - 11:00am.

This discussion and my response was predeterminable from the moment the universe came into being.

And this too.

Also this.

This?

Yeah that.

Nothing could have happened any other way than it did and will. You cannot make any difference whatsoever.

It is what it is.

With enough computer power and a sufficient program, the fart I just let loose could have been foreseen from the moment of the big bang

Submitted by The-Shoveler on October 25, 2021 - 11:07am.

You start exercising free will and the TVA will send Loki after you.

Submitted by Coronita on November 5, 2021 - 6:46am.

More all time highs

Submitted by XBoxBoy on November 5, 2021 - 7:25am.

Coronita wrote:
More all time highs

And despite a good jobs report, bond prices go up causing lower interest rates.

Submitted by svelte on November 5, 2021 - 8:19am.

scaredyclassic wrote:
This discussion and my response was predeterminable from the moment the universe came into being.

And this too.

Also this.

This?

Yeah that.

Nothing could have happened any other way than it did and will. You cannot make any difference whatsoever.

It is what it is.

With enough computer power and a sufficient program, the fart I just let loose could have been foreseen from the moment of the big bang

Classic! You have missed your calling scaredy. You should have been a writer. Or perhaps that is what you can do in retirement!

Submitted by Coronita on November 5, 2021 - 11:54am.

I sold AMD too early. $140/share now... Damnit.

Submitted by The-Shoveler on November 5, 2021 - 4:30pm.

Coronita wrote:
I sold AMD too early. $140/share now... Damnit.

It's easy to have sellers remorse for just about any asset this year.

Crazy distorted markets IMO but what do I know.

Submitted by svelte on November 6, 2021 - 1:59am.

The-Shoveler wrote:
Coronita wrote:
I sold AMD too early. $140/share now... Damnit.

It's easy to have sellers remorse for just about any asset this year.

Crazy distorted markets IMO but what do I know.

And the meek shall inherit the earth

- "2112", Rush

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