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 Coronita on June 8, 2020 - 9:44pm.

https://www.bloomberg.com/news/articles/...

Speculation on steroids. Shoveler, maybe you are on to something ... People staying home have nothing better to do.

Submitted by Coronita on June 9, 2020 - 12:23am.

https://www.bloomberg.com/news/articles/...

98% of S&P500 zoomed passed their 50 day moving average.

Submitted by The-Shoveler on June 9, 2020 - 6:43am.

If I was younger I would probably cave to the FOMO.

Going to sit this out out for now.

I did get a little SPYD, I am good/better off if the economy just takes off like the market seems to be predicting (or maybe just the fed).

Submitted by ltsddd on June 9, 2020 - 7:05am.

Just dumb luck my broker rejected my attempts to short tsla last week and chk yesterday - they both shot up a lot higher from where I tried to short.

ah...chk is halted. A stock that shot up almost 200% in one day is planning to file for bankruptcy. Rigged.

nkla is halted.

Submitted by The-Shoveler on June 9, 2020 - 7:07am.

In other news,
“Citi Warns Equity Euphoria at Highest Since 2002.”

I don't pay attention to the talking heads much anymore but that was the headline yesterday.

Submitted by Coronita on June 9, 2020 - 8:05am.

I think it's time to be less greedy... I sold a good portion this morning and will keep things mostly in cash. Im going to hold onto my AMD options to see how long the hype lasts, along with TSM, and XLP consumer staples etf, That's about it in my trading account.
I'll try to build up in international equity etfs... thinking something like SCHF or vanguard's version of an international index. No change to my 401k and retirement account. that's on autopilot.

My YTD ended up around 20.3%

You guys that caught the bottom during covid and went in heavy I'm sure did way better on your YTD. Congrats on jumping in head first, I wish I had a stomach for it. Unfortunately, Ididn't go all in at the bottom, being risk adverse as I am. But better than my original targets for this year before covid. The market corrections helped a lot, especially towards the end of May when things started to pop up again There's no reason for me to continue taking greater risks, and it feels a little frothy now, so I'm out, mostly,.for now. I'm sort of envious that some of you got bigger balls than me ...All I do is move in and out of tiny positions here and there like 300 times this year. Thankfully there's no trading commissions or its very low for option contracts, lol.

Oh well, I can't complain. I'm
pretty happy about the returns this year.

coviditacovidita

Happy trading and good luck people

Submitted by The-Shoveler on June 9, 2020 - 8:26am.

You're not helping my FOMO

Submitted by plm on June 9, 2020 - 5:27pm.

That's one big tax hit. I don't sell since I hate paying taxes. My plan is to sell after I quit my job or get laid off. Thanks to progressive tax rates, I plan on paying zero fed taxes on 105K of income each year. Most of my stock gains are long term now so I should be able to sell 80K in long term gains tax free and 25K in short term tax free (standard deduction).

If I was going to sell it all at one. you are looking 23.8 percent fed tax on long term.

Submitted by Coronita on June 9, 2020 - 5:37pm.

I am already bending over on my W-2 wage AGI anyway. At this point any extra amount on top of that doesn't really make that much more of a difference. Plus I'd rather pay a larger tax up front than earn a lifetime membership to the exclusive Capital Loss Carryover Club that I almost earned one bad year a long time ago when I was greedy. Almost all derivative trading has to be short term capital gains anyway, because option contracts don't normally last more than a year

Submitted by plm on June 9, 2020 - 6:04pm.

Only started seriously doing stocks about 4 years ago so never went though a crash (close this year). so never had huge losses. Seems so easy to make money as I've only experienced a bull market till this year.

Submitted by The-Shoveler on June 9, 2020 - 7:13pm.

Your turn LOL.

Submitted by Coronita on June 9, 2020 - 7:43pm.

no, it is not nearly as easy at it is. Anyone who says otherwise is either exceptionally lucky or is lying . if it really was as easy as it seems, many of us wouldn't be buying real estate too. and that in itself is not a walk in the park too.

I don't try to be right all the time. I just try to be right enough time to be worth the hassle. If that means taking much smaller bites each time, so be it. And if I am consistently wrong for a stretch of time, it means I should spend more time doing a passive index fund. I don't trust myself to put everything into my own abilities. it's just dumb luck. Tax time is a pain in the ass. Before one use to have to enter all 300+ transactions into turbo tax. Now, a lot of it is figured out for you by your brokerage including cost basis and wash sales rules. But sometimes the do get it wrong. Especially when it comes to option contracts. I don't think I have filed a 1040 less than 100 pages in a long time, and I have a weird case that I need to always mail the state tax in, and can't do electronic. at least I'm creating jobs. someone had to scan/enter >100 pages into the system.

Submitted by plm on June 9, 2020 - 8:54pm.

I didn't mean to say it wasn't hard work, it just seems to me since stocks usually go up if you buy any stock, you should make money statistically long term. I've learned to avoid the small caps and stick with large caps and not sell when it goes down because it will go up some day. So if there is a market crash, just hold and don't sell and a few years later you should be back. Buying chip and software stocks and FANG is the way to go I think. Playing it safe with large dividend stocks was a big mistake. I only know how to buy stocks and hold long term. No idea how to do options and don't want to even try.

Submitted by Coronita on June 9, 2020 - 10:11pm.

plm wrote:
I didn't mean to say it wasn't hard work, it just seems to me since stocks usually go up if you buy any stock, you should make money statistically long term. I've learned to avoid the small caps and stick with large caps and not sell when it goes down because it will go up some day. So if there is a market crash, just hold and don't sell and a few years later you should be back. Buying chip and software stocks and FANG is the way to go I think. Playing it safe with large dividend stocks was a big mistake. I only know how to buy stocks and hold long term. No idea how to do options and don't want to even try.

People who lived through the dot bomb days know how badly things can get. There was a point in time when people though Amazon would be just another internet company that fizzles. There was a point in time when Netscape seemed to be one of those companies that would be around. Who would have guessed Sun Microsystems would invented java would have tanked and need to be sold to Oracle at firesale prices. Yahoo evaporated and at once had a chance to purchase Google. There was a point in time Apple was near death and needed a lifeline from Microsoft. And more recently people wrote off AMD and thought they were going to go bankrupt, which probably would have happened if they never hired Lisa Su. Tesla wouldn't be Tesla without Elon. Trying to pick winners and losers on tech and consistently be correct is a crapshoot. And specifically when it comes to technology things change literally overnight and disappear. You might not ever heard of USRobotics,3COM, Ascend Communications but a lot of these companies were famous for their dial up modem equipment. They died because they failed to innovate. Technology is one of the riskiest bets because things change so quickly. If you are on the wrong side of that technology curve of a company, you could easily get wiped out and never recover.... That's a lot different from say a consumer staples company that churns out diapers that pays a decent dividend doing really boring stuff that doesn't change that quickly. I don't expect people who have never see a tech crash to understand this, and maybe you will be lucky and never will.

I don't know when the hype will be over. If I did I wouldn't have sold. It could be tomorrow it could be a year or two from now. What I do know is given my historical track record, I am way overdue for being wrong. So I am out.

Submitted by The-Shoveler on June 10, 2020 - 6:21am.

Wow really well said flu.

Submitted by ltsddd on June 10, 2020 - 6:35am.

Coronita wrote:
People who lived through the dot bomb days know how badly things can get.

You forgot to mention that the mantra back then was buy now and double your money or shares in 6 months. I remember at one time Sun Micro was doing 2 for 1 splits once every six months. Buy and hold like works just fine. I just don't have the stomach for the FANG stocks, though.

Submitted by gzz on June 10, 2020 - 10:26am.

Tesla is now worth more than Toyota, making it the most valuable car manufacturer in the world.

Last year, Toyota sold 10.6M cars and made a profit of $19B.

Last year, Tesla sold 0.367M cars and officially lost $862M, but the loss was larger without aggressive accounting.

Submitted by The-Shoveler on June 10, 2020 - 10:38am.

To paraphrase what many were saying in 1999.

Market can say crazy longer than you can stay solvent.

IMO TSLA has a almost cult following, going to be hard to go against that.

Disclosure I am a big Elon Musk fan but not a TSLA stock holder.

Submitted by Coronita on June 10, 2020 - 11:20am.

ltsddd wrote:
Coronita wrote:
People who lived through the dot bomb days know how badly things can get.

You forgot to mention that the mantra back then was buy now and double your money or shares in 6 months. I remember at one time Sun Micro was doing 2 for 1 splits once every six months. Buy and hold like works just fine. I just don't have the stomach for the FANG stocks, though.

Buy and hold works great for index funds because it's a aggregate of a basket of companies so any one failure of one company doesn't wipe your net worth out.

Buy and hold of a tech company works well if you happen to luckily pick the winners that last through decades of technology shifts. that has more to do with luck than anything else. For every Qualcomm, Intel, Microsoft, Amazon, Google, I can think of a dozen or so other tech companies that at one point showed a lot more promise but don't exist anymore. Telco tech companies is a prime example. nokia, motorola, ericcson, lucent were market leaders for the longest time. It didn't take long for lucent to go under , Motorola to die, and Nokia/Ericsson to become significantly irrelevant versus the Korean and Chinese telcos.

But I get it, when things are on a winning streak, especially during the last few years which tech has generally not seen a downturn, it's hard to imagine how bad things could get and how quickly that could happen. You have time though. I think Powell will juice the markets as long as he can. maybe for another 2-3 years. this really is like 1999 all over again. Things are irrationally exuberant or getting close to it.

AMD is a prime example. There's no reason why it should be where it is today, definitely the recent 8% rise is unwarranted. No new news from their earnings which while good wasn't really that great. But for some reason there's a big cult around it too. I'm simply on it to ride the cult wave. Those options a have already been paid for by previous options, so even of the expire worthless this time, it's not a big deal. Yes, this is gambling, not investing. lol.

Submitted by Coronita on June 10, 2020 - 11:26am.

Speaking of Powell, looks like we have near 0% until 2022. not really surprised....

https://finance.yahoo.com/news/fed-fomc-...

not surprised sdrealter is also reporting 17 offers on a home that just was listed in 4s

https://www.piggington.com/april_2020_ho...

Covid doesn't seem to have knocked the wind out of home buyer here in SD.

Submitted by ltsddd on June 10, 2020 - 11:25am.

Strange stocks like NKLA, DUO, CHK came out of nowhere and shot up 200-300% in a single day. Lots of shady stuff going on. Whatever it is, it's quite unsettling.

Submitted by Coronita on June 10, 2020 - 11:26am.

ltsddd wrote:
Strange stocks like NKLA, DUO, CHK came out of nowhere and shot up 200-300% in a single day. Lots of shady stuff going on. Whatever it is, it's quite unsettling.

yes, exactly.

Submitted by plm on June 10, 2020 - 11:38am.

I try to pick tech companies with a strong moat but can always be wrong. Just can't sell and will let it ride and hope for the best. It's not like every stock I own are FANG. It's just FANG does the best and is becoming a much larger part of my portfolio since I do not sell winners.

I can't imagine Apple, Microsoft, and Amazon going under but anything is possible. They are up 3, 4, and 2 percent just today. How can you sell?

AMD I never understood and lost money twice on it. But this time I'm holding it. Maybe Apple not using Intel anymore, people assume they are licensing stuff from AMD? I think you just have to own companies run by Bezos, Lisa Su and jensen huang.

Anyway more pressing problems than the overheated stock market. I think I have a rat inside by wall since there's been noise inside it all night. My pest control company sucks. Anyone have a good experience with a pest control company for rats?

Submitted by Coronita on June 10, 2020 - 11:48am.

plm wrote:
I try to pick tech companies
Anyway more pressing problems than the overheated stock market. I think I have a rat inside by wall since there's been noise inside it all night. My pest control company sucks. Anyone have a good experience with a pest control company for rats?

Oof....I'm sorry. or raccoons....

https://www.youtube.com/watch?v=6S27dgeGqfA

maybe try these guys :

https://sandiegowildlife.net/index.html

Submitted by The-Shoveler on June 10, 2020 - 11:54am.

FED expects 6%GDP decline this year.

How many "years" will it take to make that back I wonder.

Submitted by scaredyclassic on June 10, 2020 - 12:27pm.

plm wrote:
I try to pick tech companies with a strong moat but can always be wrong. Just can't sell and will let it ride and hope for the best. It's not like every stock I own are FANG. It's just FANG does the best and is becoming a much larger part of my portfolio since I do not sell winners.

I can't imagine Apple, Microsoft, and Amazon going under but anything is possible. They are up 3, 4, and 2 percent just today. How can you sell?

AMD I never understood and lost money twice on it. But this time I'm holding it. Maybe Apple not using Intel anymore, people assume they are licensing stuff from AMD? I think you just have to own companies run by Bezos, Lisa Su and jensen huang.

Anyway more pressing problems than the overheated stock market. I think I have a rat inside by wall since there's been noise inside it all night. My pest control company sucks. Anyone have a good experience with a pest control company for rats?

I had rats for a while and got them myself. very satisfying. Traps in the attic. i remmebr hearing a trap snap shut in the middle of the night and smiling. Not very buddhist or vegan of me. but man it felt good. the last one was the trickiest. man he was wily.

part of what pest guys will do you can definitely start- look for entry points, seal them up. we had a palm tree that gave access to the roof. stuff like that. I loved catching rats.

Submitted by plm on June 10, 2020 - 1:49pm.

I suppose it could be a raccoon but thought it would be too large to get in but who knows. I know there is a raccoon nearby getting into my food deliveries if I wait too long to bring my packages in.

I suppose I should just let experts take care of it. Alpha Wildlife Removal has great reviews. Researching, I saw that rats would leave if there was no food to get to. I was hoping the animal would just leave if there is no food. I think there might be leftover dead bees after the bee removal guy took out a hive last year from the attic.

Thanks

Submitted by gzz on June 10, 2020 - 4:28pm.

NKLA is a pretend electric car company that hopes to follow the Tesla model. And it is working, 0 revenue, 0 products, but has stock worth more than many actual car companies.

DUO is a Chinese company called Fangdd Network Group. It went from 10 to 115 yesterday, on no news, because people confused it with "FANG" stocks. Since then it has fallen almost 90% to 15.

While it isn't fun to get in on good short sells early, every time I've had high conviction on them, I end up wishing later on I had gone in bigger.

Just got in the mail a few days ago a notice that my short to 0 of BankUnited is now super-duper delisted. Something about no transfer agent for 7 years means it is considered permanently gone, not even a pink sheet stock.

The type of craziness going on now is a bullhorn blaring we're approaching the top of a bubble. Low information inexperienced retail buyers flooding the market, time and again, is the last stage of a stock bubble before the crash.

Submitted by scaredyclassic on June 10, 2020 - 7:09pm.

gzz wrote:
NKLA is a pretend electric car company that hopes to follow the Tesla model. And it is working, 0 revenue, 0 products, but has stock worth more than many actual car companies.

DUO is a Chinese company called Fangdd Network Group. It went from 10 to 115 yesterday, on no news, because people confused it with "FANG" stocks. Since then it has fallen almost 90% to 15.

While it isn't fun to get in on good short sells early, every time I've had high conviction on them, I end up wishing later on I had gone in bigger.

Just got in the mail a few days ago a notice that my short to 0 of BankUnited is now super-duper delisted. Something about no transfer agent for 7 years means it is considered permanently gone, not even a pink sheet stock.

The type of craziness going on now is a bullhorn blaring we're approaching the top of a bubble. Low information inexperienced retail buyers flooding the market, time and again, is the last stage of a stock bubble before the crash.

That last stage can shoot up pretty high

Submitted by Coronita on June 11, 2020 - 6:19am.

I guess sell was the right thing to do afterall. Dow has been down about 500pts for the past 2 days. And it seems like the futures are off by another 500pt . People getting concerned about a reinfection?

Sitting at the sideline watching this will be interesting.

edit dow futures now down 900.

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