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 ltsddd on June 11, 2020 - 6:25am.

Coronita wrote:
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.

Wait for it to break below 25000 then all hell will break loose.

Submitted by The-Shoveler on June 11, 2020 - 6:55am.

should have bought that sh scaredy scolded me about.

Another link on what I was referring to earlier.

https://moneyandmarkets.com/bullish-mill...

Submitted by Coronita on June 11, 2020 - 7:30am.

The-Shoveler wrote:
should have bought that sh scaredy scolded me about.

Another link on what I was referring to earlier.

https://moneyandmarkets.com/bullish-millennial-investors-sound-like-its-1999-2007-again/?post_ids=22427%2C22391%2C22359%2C22303%2C22277&utm_source=MAM-Newsletter&utm_medium=Email&utm_campaign=Daily-Article-Traffic&bsft_eid=c3094756-dbec-41c9-87ed-b4d236488042&utm_content=061120_mam_am&bsft_clkid=9a4c239f-06eb-4b07-b6f4-d88e9a4bdd1b&bsft_uid=d650caa8-ac77-4560-8516-efe0e2afd506&bsft_mid=a59702ec-6854-4764-a903-8605ef4bff56&bsft_utid=d650caa8-ac77-4560-8516-efe0e2afd506-MONMARW&bsft_link_id=45&bsft_ek=2020-06-11T12%3A50%3A53Z&bsft_mime_type=html

people are really buying cheaspeake and hertz?

oof....

Dow down 900. Like I said, I was overdue to be wrong about the markets. And I'd rather
pay capital gains taxes versus being stuck with capital loss carryovers.

Submitted by svelte on June 11, 2020 - 10:12am.

svelte wrote:
From June 3:

Unless something happens earlier to make folks flee, I think it will happen at the end of June, +/- 2 weeks.

Once people see how bad earnings are in a number of industries from the quarterly numbers and starting thinking through that even though we are slowly getting moving again, there will be many companies that don't make - a minor panic will set in and people will sell. In other words, if you want to beat the rush, you should pull your money out in the next 13 days.

I certainly could be wrong, but that sounds like what is about to happen to me.

Well I was five days off. Not too bad.

Submitted by Coronita on June 11, 2020 - 10:49am.

Dow down 1500. on top of the 500 point drop over the past 2 days.

ooof....

Submitted by scaredyclassic on June 11, 2020 - 10:49am.

Is there value yet

Submitted by pinkflamingo on June 11, 2020 - 12:57pm.

-1800

Submitted by Coronita on June 11, 2020 - 1:18pm.

another day or two like this, maybe there is some value to reenter.

must resist temptation....
must resist temptation....
must resist temptation.....

Submitted by The-Shoveler on June 11, 2020 - 4:20pm.
Submitted by Coronita on June 11, 2020 - 4:25pm.

The-Shoveler wrote:
The Buffett indicator.

https://moneyandmarkets.com/what-the-buffett-indicator-tells-us-about-stock-market-valuation/?post_ids=22407%2C22370%2C22292%2C22215%2C22173&utm_source=MAM-Newsletter&utm_medium=Email&utm_campaign=Daily-Article-Traffic&bsft_eid=c3094756-dbec-41c9-87ed-b4d236488042&utm_content=061120_mam_am&bsft_clkid=65a7b4b8-7cf9-49a4-aff2-6d0f4e6b3b2e&bsft_uid=d650caa8-ac77-4560-8516-efe0e2afd506&bsft_mid=a59702ec-6854-4764-a903-8605ef4bff56&bsft_utid=d650caa8-ac77-4560-8516-efe0e2afd506-MONMARW&bsft_link_id=40&bsft_ek=2020-06-11T12%3A50%3A53Z&bsft_mime_type=html

Warren buffet has been wrong a few times lately.

Submitted by The-Shoveler on June 11, 2020 - 5:44pm.

LOL yea maybe but I think the BI still gives a good indicator for market long term value.

The further it gets below 100 the safer a long term S&P Index buy will be IMO.
(March 22 it was about 105 in chart below)
But then again, maybe it will never get below 100 in my life time going forward.

https://www.longtermtrends.net/market-ca...

Submitted by Coronita on June 11, 2020 - 6:13pm.

The-Shoveler wrote:
LOL yea maybe but I think the BI still gives a good indicator for market long term value.

The further it gets below 100 the safer a long term S&P Index buy will be IMO.
(March 22 it was about 105 in chart below)
But then again, maybe it will never get below 100 in my life time going forward.

https://www.longtermtrends.net/market-cap-to-gdp/

Perhaps. let me read that. My brain is officially turned off. It's almost Furlow Friday, lol.

Submitted by temeculaguy on June 12, 2020 - 12:43am.

Search old threads about my advice when taking stock advice here, circa 2008. Fool me once.

After the initial crash in late March/Early April I bought two cruise stocks, 3 airlines and an automaker. All at least half off, some at a far greater discount. Two days ago, after doubling my investment I sold it all, transferred my original investment back to my bank and will play with house money from here on out. Kudos to Warren Buffet's theory about running into burning buildings. Admittedly I was nervous.

What should make anyone nervous right now is real estate described as "urban"that relies on mass transit and rental properties in jurisdictions described politically as progressive. California's Judicial Council just kicked zero bail to the counties to decide and evictions/foreclosure moratoriums in cali will likely see the same fate. Landlords will likely be subsidizing this social experiment based on zip codes.

The world is upside down, next you'll see Zillow factor in the political leanings of a zip code into their valuations. Some of the estimates about renters not paying are astonishing. Some of the terms from 2008 will need to be updated, "shadow inventory" will need to be renamed "blue shadow inventory." How do I copyright a phrase? This is not a political statement, it's an investment statement. But I chose to post so I can take full credit when Diana Olick uses that phrase, I'm still her biggest fan and will consider it an honor for her to use it. Anyone else needs permission.

Good luck piggs, investing is just math, leave your feelings out of it.

Submitted by Coronita on June 12, 2020 - 3:53am.

Welcome back TG!

Submitted by Coronita on June 12, 2020 - 3:55am.

Can we rename this thread to "Old Timer Hangout Talking About the Stock Market? "

Lol

Submitted by FlyerInHi on June 12, 2020 - 10:58am.

temeculaguy wrote:
What should make anyone nervous right now is real estate described as "urban"that relies on mass transit and rental properties in jurisdictions described politically as progressive. California's Judicial Council just kicked zero bail to the counties to decide and evictions/foreclosure moratoriums in cali will likely see the same fate. Landlords will likely be subsidizing this social experiment based on zip codes.

Not sure what TV show you saw this on, but is is the accurate into.
https://www.latimes.com/california/story...

I suppose Santa Monica and San Francisco are at the top is the list for a real estate crash?

Submitted by sdrealtor on June 12, 2020 - 10:47am.

temeculaguy wrote:
Search old threads about my advice when taking stock advice here, circa 2008. Fool me once.

After the initial crash in late March/Early April I bought two cruise stocks, 3 airlines and an automaker. All at least half off, some at a far greater discount. Two days ago, after doubling my investment I sold it all, transferred my original investment back to my bank and will play with house money from here on out. Kudos to Warren Buffet's theory about running into burning buildings. Admittedly I was nervous.

What should make anyone nervous right now is real estate described as "urban"that relies on mass transit and rental properties in jurisdictions described politically as progressive. California's Judicial Council just kicked zero bail to the counties to decide and evictions/foreclosure moratoriums in cali will likely see the same fate. Landlords will likely be subsidizing this social experiment based on zip codes.

The world is upside down, next you'll see Zillow factor in the political leanings of a zip code into their valuations. Some of the estimates about renters not paying are astonishing. Some of the terms from 2008 will need to be updated, "shadow inventory" will need to be renamed "blue shadow inventory." How do I copyright a phrase? This is not a political statement, it's an investment statement. But I chose to post so I can take full credit when Diana Olick uses that phrase, I'm still her biggest fan and will consider it an honor for her to use it. Anyone else needs permission.

Good luck piggs, investing is just math, leave your feelings out of it.

Congrats on doing what I know you always wanted to great success.

Submitted by temeculaguy on June 12, 2020 - 11:53am.

If the courts allow counties to set their own timeline when to resume evictions, San Francisco and Santa Monica might wait 6 more months. Landlords not collecting rent and unable to evict will become distressed especially if they have a mortgage on that property. It may present a buying opportunity more so in some counties than others, from an investor point of view. Whichever county or city waits the longest to resume evictions will be less favorable to investors and REITs if the next county over is evicting non payers. It might be the next fire to run into, who knows, those Santa Monica rentals might have a window where they are at a discount, not a crash. Or it may be a disaster and they might like the new “affordable housing” but I think it will be a short window. Then again, I’m not going to get cocky because I got lucky on my recent stock prediction. There will be some shifts, I just haven’t figured them all out. But times like these usually present some opportunities. I’m watching Seattle as a canary in the coal mine for clues.

Submitted by temeculaguy on June 12, 2020 - 11:57am.

Thanks SD, I finally overcame my fear, took along time for me to act. But it wasn’t giant amounts, it was thousands and not tens of thousands. Pragmatism is a hard habit to break. Baby steps

Submitted by scaredyclassic on June 12, 2020 - 12:21pm.

temeculaguy wrote:
Thanks SD, I finally overcame my fear, took along time for me to act. But it wasn’t giant amounts, it was thousands and not tens of thousands. Pragmatism is a hard habit to break. Baby steps

FFTB.

Submitted by sdrealtor on June 12, 2020 - 1:25pm.

temeculaguy wrote:
Thanks SD, I finally overcame my fear, took along time for me to act. But it wasn’t giant amounts, it was thousands and not tens of thousands. Pragmatism is a hard habit to break. Baby steps

Yes but you uttered two of my favorite words and even better in combination

HOUSE....MONEY!

Submitted by Coronita on June 12, 2020 - 1:39pm.

temeculaguy wrote:
Thanks SD, I finally overcame my fear, took along time for me to act. But it wasn’t giant amounts, it was thousands and not tens of thousands. Pragmatism is a hard habit to break. Baby steps

Congrats! Any win is still a win. Better than no win or a loss!

Congrats again!

Submitted by Coronita on June 12, 2020 - 1:47pm.

temeculaguy wrote:
If the courts allow counties to set their own timeline when to resume evictions, San Francisco and Santa Monica might wait 6 more months. Landlords not collecting rent and unable to evict will become distressed especially if they have a mortgage on that property. It may present a buying opportunity more so in some counties than others, from an investor point of view. Whichever county or city waits the longest to resume evictions will be less favorable to investors and REITs if the next county over is evicting non payers. It might be the next fire to run into, who knows, those Santa Monica rentals might have a window where they are at a discount, not a crash. Or it may be a disaster and they might like the new “affordable housing” but I think it will be a short window.

That's a good point. I'm just curious though how much of this mortgage forbearance will take place and how much of the property tax no penalty will materialize.

For example, let's say someone stops paying rent. Fine. Landlord stops making mortgage payments and asks for a forbearance. Also stops paying property tax, which in some.
counties is now allowed without a penalty. Isn't this sort of just like passing the buck along back to the state government and banks?

I guess it sucks for those landlords that count on the cashflow exclusively for income and have no other source of income.

BTW, I don't think this problem is just CA. It's going to be a problem for multiple states... I see it a bigger problem for states and locales that that depend on a specific industry that was wiped out by covid, particularly a lopsided local economy completely dependent on indoor leisure activity....if not now, later.

Submitted by saiine on June 12, 2020 - 4:26pm.

There's no version of reality where we are not at an ATH in November for the election. It took the fed 3 months to take us from 18 to 27k, during a global pandemic and with then touting stuff like "we have unlimited ammo".

SPY $400 calls for October gang! $13 a contract today.

Submitted by Rich Toscano on June 12, 2020 - 4:49pm.

saiine wrote:
There's no version of reality where we are not at an ATH in November for the election.

This reminds me of my business partner's friend who said "I'm 100% certain the market will be lower in a month" and sold everything... on March 23 (the day of the low... mkt was up 25% a month later).

If you believe you KNOW what the market will do over a short term time frame... you are fooling yourself, my friend.

Submitted by livinincali on June 13, 2020 - 4:01pm.

Coronita wrote:

BTW, I don't think this problem is just CA. It's going to be a problem for multiple states... I see it a bigger problem for states and locales that that depend on a specific industry that was wiped out by covid, particularly a lopsided local economy completely dependent on indoor leisure activity....if not now, later.

States and counties are always the last to feel the effects of an economic downturn. It's usually about a year behind the general populace. I worked for a county related company back in the 2000 internet crash and they were fine up until mid 2001 and then things went south real fast.

This current situation might not feel that bad if you're working from home in software or something but it's going to get really bad soon. I'd be surprised if the market doesn't take a 80% plunge in the next 2 years. Somebody is going to get in trouble with liquidity. Ie. commercial real estate or REITs.

Submitted by Coronita on June 15, 2020 - 4:45am.
Submitted by scaredyclassic on June 15, 2020 - 5:42am.

Rich Toscano wrote:
saiine wrote:
There's no version of reality where we are not at an ATH in November for the election.

This reminds me of my business partner's friend who said "I'm 100% certain the market will be lower in a month" and sold everything... on March 23 (the day of the low... mkt was up 25% a month later).

If you believe you KNOW what the market will do over a short term time frame... you are fooling yourself, my friend.

It seems like there sometimes very rarely a sure th8ng.

I can think of only 1.

1 day go short sp500 after 9/11.

Submitted by saiine on June 15, 2020 - 1:42pm.

Rich Toscano wrote:
saiine wrote:
There's no version of reality where we are not at an ATH in November for the election.

This reminds me of my business partner's friend who said "I'm 100% certain the market will be lower in a month" and sold everything... on March 23 (the day of the low... mkt was up 25% a month later).

If you believe you KNOW what the market will do over a short term time frame... you are fooling yourself, my friend.

You are correct Rich, but I ain't giving up my calls (yet) :)

Today was some of the most obscene market fuckery. Feds now buying individual Corp bonds. I can't wait for them to announce that they will start buying all Robinhood portfolios which solely contain Hertz.

Strange times we are living in..

Oh and if you didn't already realize that covid is cancelled, this should help https://www.independent.co.uk/news/world...

Submitted by Rich Toscano on June 15, 2020 - 2:42pm.

saiine wrote:
Feds now buying individual Corp bonds. I can't wait for them to announce that they will start buying all Robinhood portfolios which solely contain Hertz.

Ha!

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