The stock market is tanking, we should be happy right????

User Forum Topic
Submitted by Coronita on February 6, 2018 - 8:46am

I remember there were a lot of folks here banking on a large correction to allow them to come out financially ahead versus everyone else....The rational was to sit out the market for a very long time, maybe years, and then when the market correct , jump right in and do much better than everyone else.

I am just curious, now that we have a 1500+ pt Dow plunge, are you folks hoping for that crash now jumping in or are you waiting for an additional 1500pt plunge on top of another 1500pt plunge, just like waiting for real estate to correct 40-50% after previously correcting during the last meltdown.

....or were you a bear that finally capitulated after seeing the markets going up week after week, and jumped right into the market head and toe, when the markets were high..
and are now part of this market correction just like most everyone else?

it just seems like there are no cheerleaders of the market correction here, which is sort of surprising....because I thought this is exactly what some folks wanted... things seem really quite...

What says you spdrun?

Submitted by kev374 on March 30, 2018 - 2:57pm.

April boost +1.5% monthly gain forecasted:

https://www.cnbc.com/2018/03/30/stocks-s...

Frankly I think we have tested the bottom and we are heading to 3000.

Submitted by spdrun on March 30, 2018 - 3:40pm.

We'll see. Jan-Mar broke trends in the downward direction -- their argument is mostly "the trend says so it will be." LOL.

Submitted by harvey on March 30, 2018 - 4:35pm.

kev374 wrote:
April boost +1.5% monthly gain forecasted:

https://www.cnbc.com/2018/03/30/stocks-s...

Frankly I think we have tested the bottom and we are heading to 3000.

If you don't like the current forecast on CNBC, just keep watching. It won't be long before another guest analyst/expert/guru/psychic tells you what you want to hear.

Submitted by carlsbadworker on March 30, 2018 - 5:16pm.

harvey wrote:

If you don't like the current forecast on CNBC, just keep watching. It won't be long before another guest analyst/expert/guru/psychic tells you what you want to hear.

LOL.

Submitted by kev374 on April 2, 2018 - 12:42am.

very bearish sentiment around here when it comes to stocks and very bullish on housing.. seems strange to me as I think if equities do poorly it will affect housing but this is a housing forum so...

Submitted by Coronita on April 2, 2018 - 3:21am.

kev374 wrote:
very bearish sentiment around here when it comes to stocks and very bullish on housing.. seems strange to me as I think if equities do poorly it will affect housing but this is a housing forum so...

Not really bullish on housing....but...all else being equal, if one wanted to speculate and put a big sum of money on one hand between the stock market and housing when both are high beginning of this year, I would picked housing if I was still paying a làndlord each month . At least if both declined, one would still be able to live in the later. Can't live in stocks. and I doubt housing would fall as hard and fast as the stock market can.

In fact, I would have tried to have my cake and eat it too by doing housing instead of rent, and then slowly drip whatever I had left into basket of indexes, both foreign and domestic. You know, that dollar cost average "scam" as some say, lol. Although it certainly wouldn't allow one capture a big whale, it would have reduced exposure to a sudden in fall in the market if my timing was off

Submitted by Coronita on April 2, 2018 - 9:22am.

I'd say we are finished for the rest of the year. trade war looms. s&p ends negative this year

Submitted by carlsbadworker on April 2, 2018 - 11:04am.

kev374 wrote:
nothing to worry as long as it's over the 200 dma, s&p500 2585.

Did you say that 2585 was a resistance level?

Submitted by carlsbadworker on April 2, 2018 - 11:08am.

flu wrote:
I'd say we are finished for the rest of the year. trade war looms. s&p ends negative this year

Unless the trade war indeed materializes, I find it hard for S&P to trend negative continuously if the corporate earning still trends upward. Not that they don't deserve to go lower based on its sky-high PE10 ratio.

Submitted by carlsbadworker on April 2, 2018 - 11:13am.

kev374 wrote:
very bearish sentiment around here when it comes to stocks and very bullish on housing.. seems strange to me as I think if equities do poorly it will affect housing but this is a housing forum so...

Supply and demand. The housing demand may decline rapidly, but its supply is very limited. So it is easier to balance. Stock on the other hand has much bigger supply as most people are holding stocks only because it is trending up. The tide could turn easily, as someone sees that 200 dma is crossed and turning it into a self-fulfilling prophesy. Just ask bitcoin.

Submitted by Coronita on April 2, 2018 - 11:19am.

carlsbadworker wrote:
flu wrote:
I'd say we are finished for the rest of the year. trade war looms. s&p ends negative this year

Unless the trade war indeed materializes, I find it hard for S&P to trend negative continuously if the corporate earning still trends upward. Not that they don't deserve to go lower based on its sky-high PE10 ratio.

Doesn't corporate earnings reflect what happened in previous quarter. I am.just looking at this from the tarriff perspective. So China just decided to impose tarriffs on farm goods. What if it escalated to other things like auto and aerospace, and then those things trickle.down to parts supplier.

meanwhile seems like trump is hell bent on attacking FANG companies and it looks pretty effective.

seems to me the markets are just looking for an excuse to sell off.

I'm sorry, but things just seem pretty out of wack and pretty overinflated especially in tech. A home we're trying to rent out we got interest from a bunch of folks, and the comp packages being thrown around is just mind boggling, I don't see how it can be sustainable...For example, a Tesla engineer applying to lease reported his annual comp is.....$600k...this is from a company that is bleeding cash.... I don't see how this is sustainable.

Submitted by spdrun on April 2, 2018 - 12:04pm.

Thing is ... I have no problem with FAANG companies being kicked.

Trump is an authoritarian at heart, but if he manages to rein in the FAANG companies, he'll have done a service to privacy. Their business model is basically ... "you're the product, we want all of your personal data, we'll sell it to the highest bidder, advertiser or government, whether you agree or not." Even the auto companies are being evil by tracking new vehicles with 4G data connections -- I think Tesla started THAT nice trend.

The tariffs? If they act as a tax on throw-away consumption, it might not be such a bad thing. The trend (started by liberal darling firm, Apple, BTW) of not even having easily replaceable batteries and having a walled garden with a limited OS update cycle is awful for the environment. E-waste is basically impossible to recycle cleanly, so long-term use is a better alternative.

Retaliatory tariffs on US pork? Good. Pig farming is a vile, polluting industry -- the fewer pig farms the US has, the better it will be for our water quality.

Trump may end up being the best accidental, bumbling, blathering environmentalist and privacy advocate the US has had in 30 years. As long as his ass-kissing to the coal and oil industries and his more authoritarian decisions are tied up in court for the next 6.5 years, of course.

Submitted by carlsbadworker on April 2, 2018 - 12:13pm.

Of course, I don't know anything about what's going to happen in the future, but I am just trying to make a more educated guess.

I completely agree with you that if the trade war happens, stock market will crash from here. The discussion is ONLY to assume that it won't happen, as both China and US do not really want escalation in the trade war.

With that, I quote Jeremy Grantham in one of his recent writing:

The fundamentals are improving. The global economy is in sync for the first time in a dozen years and global profit margins are at a high; in the US, a corporate tax cut is on the way, which in today’s sticky, more monopolistic world, is unlikely to be quickly competed away as theory suggests, but very likely to further fatten the corporate share of the GDP pie.

There is just no sign of corporate future earnings to decline, excluding a big external shock such as trade war. Therefore, I am just presenting the argument that the decline may not be sustainable.

Yes, interest rate is rising, but the corporate debt to equity is at its lowest level in the past decade (the data itself, however, doesn't prove anything, as 2007 corporate debut to equity level is also very low but we all know what happened in 2008).

What's your side of argument of corporate earning decline except the trade war? Trump's tweet on FANG stocks isn't going to have a long-lasting effect.

Submitted by Coronita on April 2, 2018 - 1:46pm.

carlsbadworker wrote:
Of course, I don't know anything about what's going to happen in the future, but I am just trying to make a more educated guess.

I completely agree with you that if the trade war happens, stock market will crash from here. The discussion is ONLY to assume that it won't happen, as both China and US do not really want escalation in the trade war.

With that, I quote Jeremy Grantham in one of his recent writing:

The fundamentals are improving. The global economy is in sync for the first time in a dozen years and global profit margins are at a high; in the US, a corporate tax cut is on the way, which in today’s sticky, more monopolistic world, is unlikely to be quickly competed away as theory suggests, but very likely to further fatten the corporate share of the GDP pie.

There is just no sign of corporate future earnings to decline, excluding a big external shock such as trade war. Therefore, I am just presenting the argument that the decline may not be sustainable.

Yes, interest rate is rising, but the corporate debt to equity is at its lowest level in the past decade (the data itself, however, doesn't prove anything, as 2007 corporate debut to equity level is also very low but we all know what happened in 2008).

What's your side of argument of corporate earning decline except the trade war? Trump's tweet on FANG stocks isn't going to have a long-lasting effect.

My only argument is the trade war or at least the fear of it, causing a stock selloff, which makes shareholders upset, which causes companies to cut back/layoff people, which then leads to a cut in consumer spending. And I agree, if that happens, the markets are in big trouble.
But to some extent, I already think there's already some damage done.

Me thinks the markets and economy in general has a lot more to do with how people feel than how it really is, followed by perception turning in reality. But who knows. Interesting times though. Long term, this will just be a blip, so drip drip drip invest away.

Personally, I don't think rising rates are really that big a deal. but that's just me.

Submitted by spdrun on April 2, 2018 - 1:49pm.

Our current "tech" economy is based on waste, planned obsolescence, and personal data theft. Putting the brakes on it would be a good thing, even if it's not Trump's intended result. Let us slow down, step back, and evaluate where this is all going.

Submitted by kev374 on April 2, 2018 - 1:52pm.

carlsbadworker wrote:
kev374 wrote:
nothing to worry as long as it's over the 200 dma, s&p500 2585.

Did you say that 2585 was a resistance level?

yes, S&P broke a key resistance level today but only by a few points. We will see where this goes. Market is oversold per fundamentals but investors are panicking because lunatic in chief is tweeting all sorts of nonsense every day.

Submitted by spdrun on April 2, 2018 - 2:00pm.

When the leading tech companies' business models literally include theft, analysis, censorship, and possible resale of private user data, maybe the market is over BOUGHT. Facebook got caught with its pants down selling user data to political procurers. Google just got caught scanning files unrelated to Chrome on users' hard drives for "viruses." Also censoring nudity on Google Drive. Microsoft just cracked down -- their new ToS bans profanity on Skype... Apple is moving towards locking down MacOS, iOS style with a new processor platform. Probably heavily nudging people to their "cloud" as well. List goes on... everyone (Adobe/MS) is pushing software rental. Rent-seeking off of software that often just worked for 5-10 years.

We've gone from time-share computing, to personal computing, full-circle around to time-share corporate-controlled computing. At least with traditional time-share computing, the entity running the central computer was a known one like a university, not a faceless megalith like Google.

What do you call what's going on in the markets over the past few months? A good start. Let the house of cards collapse so we can rebuild it in a less horrible way.

Submitted by kev374 on April 2, 2018 - 4:18pm.

market is down only 11%, hardly a house of cards crashing... when we lose 30% then we can talk about a crash, but right now it's bullish.

Submitted by Coronita on April 2, 2018 - 7:35pm.

kev374 wrote:
market is down only 11%, hardly a house of cards crashing... when we lose 30% then we can talk about a crash, but right now it's bullish.

Huh?????

In the past you've complained so much about the affordability of housing and put off buying thinking if you bought, home prices might correct and if I remember were fretting over a decline of anything 10+% or more.

I don't get it. You worried about home prices falling for so long, despite it would have been your primary home and part of that would have been an alternative to paying rent....But losing 11% in the stock market in just a 3 month period is no big deal???? Perhaps the rationale is that since one hasn't sold the stock index funds, technically one didn't lose money yet. Ok fine... by the same note, technically if one doesn't sell a primary home with a declining price , one hasn't lost money either....and at least in the later case, you aren't paying a làndlord anymore too. How fast do you think SoCal home prices would correct 11+%?

Also, what is the average annual return of the stock market for the past 20 years? it isn't double digits, if I recall.

This is why I was very surprised you put a huge chunk back into the market after sitting out so long, all at once. it just seemed like it was inconsistebt with the aversion you had to risk in real estate, when imho both are have roughly the same investment/speculation risk.

Submitted by harvey on April 2, 2018 - 7:45pm.

kev374 wrote:
market is down only 11%, hardly a house of cards crashing... when we lose 30% then we can talk about a crash, but right now it's bullish.

Markets can't be bullish. Bullish is a sentiment. Markets don't have sentiments. Only people do.

If you are bullish, that's great. If you are bearish, that's great too.

You can flip a coin and that would be just as great as either.

Submitted by FlyerInHi on April 2, 2018 - 11:06pm.

spdrun wrote:
Thing is ... I have no problem with FAANG companies being kicked.

Trump is an authoritarian at heart, but if he manages to rein in the FAANG companies, he'll have done a service to privacy. Their business model is basically ... "you're the product, we want all of your personal data, we'll sell it to the highest bidder, advertiser or government, whether you agree or not." Even the auto companies are being evil by tracking new vehicles with 4G data connections -- I think Tesla started THAT nice trend.

The tariffs? If they act as a tax on throw-away consumption, it might not be such a bad thing. The trend (started by liberal darling firm, Apple, BTW) of not even having easily replaceable batteries and having a walled garden with a limited OS update cycle is awful for the environment. E-waste is basically impossible to recycle cleanly, so long-term use is a better alternative.

Retaliatory tariffs on US pork? Good. Pig farming is a vile, polluting industry -- the fewer pig farms the US has, the better it will be for our water quality.

Trump may end up being the best accidental, bumbling, blathering environmentalist and privacy advocate the US has had in 30 years. As long as his ass-kissing to the coal and oil industries and his more authoritarian decisions are tied up in court for the next 6.5 years, of course.

Yeah, let Trump be Trump and we all be the poorer. China will take over the global trading order we created. Their market now matches ours in size and they can set the standards for the future.

Submitted by spdrun on April 3, 2018 - 7:35am.

Assuming we don't create a global recession to crash them and slow them down. There are theories that the 2008 crisis was manufactured (or at least allowed to happen) to slow China down.

Submitted by kev374 on April 3, 2018 - 9:08am.

market is stabilizing nicely today, looks like we bounced off the 200 DMA and now heading higher.

The brief period of consolidation on Monday was perhaps healthy as it took off some excesses caused by Trump's ridiculous nonsense and now the market has had Trump fatigue so they can tune him out and we can focus on earnings season coming up driving the markets to recapture the old high and go higher.

The original forecast that most had was S&P 3000 by year end and that still looks likely given fundamentals.

Submitted by spdrun on April 3, 2018 - 9:19am.

Up Friday, down Monday, up Tuesday. Looks like a fun ride, see plane-crash footage from "Alive"... Nasdaq was up ~50, whoops! just fell to +15 after bouncing off zero. Fun to watch! Hope the ad-tech firms and their investors are feeling some agida today.

Submitted by Coronita on April 3, 2018 - 9:42am.

kev374 wrote:
market is stabilizing nicely today, looks like we bounced off the 200 DMA and now heading higher.

The brief period of consolidation on Monday was perhaps healthy as it took off some excesses caused by Trump's ridiculous nonsense and now the market has had Trump fatigue so they can tune him out and we can focus on earnings season coming up driving the markets to recapture the old high and go higher.

The original forecast that most had was S&P 3000 by year end and that still looks likely given fundamentals.

it's just interesting to observe one transform from being an uber bear in the housing and stock market for so many years (close to a decade) suddenly is a stock market permabull, at precisely the moment when the stock market was at an all time high, when a sizeable speculation was made.

Submitted by FlyerInHi on April 3, 2018 - 11:18am.

spdrun wrote:
Assuming we don't create a global recession to crash them and slow them down. There are theories that the 2008 crisis was manufactured (or at least allowed to happen) to slow China down.

Huh?! If that's the case, it was a huge fail. Since 2008 China has grown so much more. Ask a new Chinese immigrant with cash how much money they made in RE alone. They are not the poor immigrants of the past.
The Great Recession forced China to reform to a consumer market economy. They built the best and biggest HSR system within 10 years; and they are exporting the technology all over the world. They have a thriving tech economy full of innovation.

China has new found confidence in the new Xi era, the third era since Mao.

I think we have more to lose in a trade war because our corporations will be essentially frozen out of the China market. But China will still be able to attract the investments they want because corporations are greedy and can't ignore a large market.

Now, a real war war, the USA would certainly win tactically. Long term strategically, maybe not.

Submitted by kev374 on April 3, 2018 - 12:26pm.

flu wrote:

it's just interesting to observe one transform from being an uber bear in the housing and stock market for so many years (close to a decade) suddenly is a stock market permabull, at precisely the moment when the stock market was at an all time high, when a sizeable speculation was made.

??? the market is what it is... I still don't believe in housing, I think housing is in a bubble. There is a huge difference between investing in stocks and buying a home. Buying a home is done with debt which I may not be able to repay if there is a huge recession. If stocks tank I will still be ok and will be able to ride it out.

Given the cost of homes and the burn rate required even for a shack these days unless you are a wealthy SOB you will lose everything in a major recession - this is fine with most people but not with me. Most people are idiots who did exactly that and lost it all in 2008 but they will never learn and make big bets that they cannot sustain and then think they are doing great... wait till all of them lose their homes.

Submitted by FlyerInHi on April 3, 2018 - 12:35pm.

Kev, it's too late now, but you could have bought a modest condo in an older but good area like Huntington Beach at the bottom, in cash. You would have almost tripled your investment. And, nicely remodeled, you would have a stylish place to live, free of rent.

Submitted by Coronita on April 3, 2018 - 1:55pm.

kev374 wrote:
flu wrote:

it's just interesting to observe one transform from being an uber bear in the housing and stock market for so many years (close to a decade) suddenly is a stock market permabull, at precisely the moment when the stock market was at an all time high, when a sizeable speculation was made.

??? the market is what it is... I still don't believe in housing, I think housing is in a bubble. There is a huge difference between investing in stocks and buying a home. Buying a home is done with debt which I may not be able to repay if there is a huge recession. If stocks tank I will still be ok and will be able to ride it out.

Given the cost of homes and the burn rate required even for a shack these days unless you are a wealthy SOB you will lose everything in a major recession - this is fine with most people but not with me. Most people are idiots who did exactly that and lost it all in 2008 but they will never learn and make big bets that they cannot sustain and then think they are doing great... wait till all of them lose their homes.

But that's the rub... You aren't "investing" in the stock market, at least based on your January actions.You are speculating. You speculated, by putting a large portion of your total investment capital into one basket (the stock market), all at one time, with the hope of a big score.

There's nothing wrong with speculation, just like folks who go to vegas and want to bet a large portion on one hand of blackjack...

I just don't follow that you think the stock market is a "safer" way of speculating then say real estate, especially when it would be also providing you shelter that you pay every month to someone else.

You keep railing against those folks that portion of the population who bought homes who lost homes as "idiots", which is only part of the population that overleveraged with a loan they normally won't qualify for. But at the same time, you're glossing of all of those equivalent folks that speculated poorly in the stock market back in 2001 by moving a huge portion of their assets into the market (after sitting out of it for a long time) right before that market tanked too, something that could be similar to the situation you find yourself in a few months or a few years from now. Especially since you committed to a significant portion of your capital all on one hand, which puts your capital at a much larger risk to your (correct) market timing, and limit your ability to take advantage of any future correction and purchase/re-entry at a lower price, should such a correction occur.

In a recession, your stock picks (unless you shorted the markets, which clearly ou didn't) gets hammered. So, if you're really planning for the gloom and doom, the worst case scenario would be, you lose your job just like during the time when the tech bubble burst, and you need to sell your stock at a loss to pay for rent that you still need to pay for.

Also, assuming you didn't put all your money into a downpayment for a house (I believe you said you had a working capital of $250k), I would assume you would have left yourself a cushion to pay mortgage+interest+tax etc for 3-4 years, in case you did lose your job...

So I'm not sure I get how the stock market is "safer" in your case.

Submitted by Coronita on April 4, 2018 - 4:37am.

futures way down with trade war escalation.

stabilization of the markets my ass.

Gold on the other hand....

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