Investing Thread

[Benny B]

Looks like we're headed toward a recession, yes?

In hindsight, I wish we wouldn't have passed tax cuts that reduced available tax revenue. And then pushed the fed to drop rates to further prop up an already sinking economy. I don't think the fed has any bullets left in the chamber to help out here.

Coronavirus certainly plays a role as well.

Meh... tax cuts are the primary driver behind why the markets were at historic highs before covid-19, and as Eng said, fundamentals are still strong, so a lot of the current move isn't so much correction as it is reaction to an unknown; so arguably, we'd still be down right now, with or without tax cuts, but the starting point would have been much lower without.  Not to mention, whatever extra revenue there would have been likely would have already been spent, i.e. it's not probable that there would have been this war chest to fight a virus.  So in a scenario where CDC's budget was not cut, there may be more staff right now without the tax cuts, but most of them would be standing around with no funding.  But let's say that with more staff (and nothing to do) it's much more likely that the CDC would not have royally botched the ordering/production of test kits which led to the assumed shortage, but more testing could indicate the virus is already more widespread in the US, and nobody overreacts to anything like the American public... so even though 80% of people who are exposed will have mild or no symptoms, we could be dealing with a tremendous over-reaction - pushing markets even lower.  And I haven't even broached the Russo-Canadian invasion scenario that might have been borne out of no tax cuts; however, with oil where it is, we might still see that with, so we can call that a wash.

In other words, pick your poison.  Or not... no one says you have to drink any of it.

[Golden Avalanche]

Looks like we're headed toward a recession, yes?

In hindsight, I wish we wouldn't have passed tax cuts that reduced available tax revenue. And then pushed the fed to drop rates to further prop up an already sinking economy. I don't think the fed has any bullets left in the chamber to help out here.

Coronavirus certainly plays a role as well.

The Fed does have bullets left. They're not ideal but they're bullets. The cut last week will likely have come too quickly as it did nothing to assuage and tied their hands a tad in the 10 days that are coming. But the Fed can still have a positive mitigating impact, political strong-arming influence notwithstanding.

The issue above all as mu03eng pointed out, the market was due for a reset. The expansion has been on fumes for eight to 15 months. And the economy has been stuck for some time at 1.8-2.5 which is basically autopilot. Our biggest issue in months and years ahead is that we have starved the bank. We didn't pay down when we should have and that leaves us exposed when the next "crisis" shows itself.

[mu03eng]

Looks like we're headed toward a recession, yes?

In hindsight, I wish we wouldn't have passed tax cuts that reduced available tax revenue. And then pushed the fed to drop rates to further prop up an already sinking economy. I don't think the fed has any bullets left in the chamber to help out here.

Coronavirus certainly plays a role as well.

One other note (this is not intended as an argument for or against those particular tax cut policy), our tax receipts are up year over year. The federal government doesn't have a revenue generation problem IMO, it has a spending problem. Annual deficits have been accelerating over the last couple of years so the US treasury has become significantly overleveraged especially should some sort of real economic crisis hit. The one nice mitigating factor of the overleverage with this particular financial concern is the fact that China holds most of that leverage but given their issues with Covid-19 and their need to restart the economic engine that the US is very, very unlikely to face any leverage risk. So spend away Uncle Sam, put a drunken sailor to shame!

[Frenns Liquor Depot]

One other note (this is not intended as an argument for or against those particular tax cut policy), our tax receipts are up year over year.

What source are you using.  Things look relatively flat when using FRED.

https://fred.stlouisfed.org/series/W006RC1Q027SBEA

[mu03eng]

What source are you using.  Things look relatively flat when using FRED.

https://fred.stlouisfed.org/series/W006RC1Q027SBEA

Department of the Treasury report site

https://fiscal.treasury.gov/reports-statements/

[Frenns Liquor Depot]

Department of the Treasury report site

https://fiscal.treasury.gov/reports-statements/

Odd - if you flip my graph to annual 15-17 flat.  18 down.  Then presumably 19 up.

[TSmith34, Inc.]

The issue above all as mu03eng pointed out, the market was due for a reset. The expansion has been on fumes for eight to 15 months. And the economy has been stuck for some time at 1.8-2.5 which is basically autopilot. Our biggest issue in months and years ahead is that we have starved the bank. We didn't pay down when we should have and that leaves us exposed when the next "crisis" shows itself.

Agree with this.  If there was ever a time to pare down the deficit is should have been over the last 5 years.

I nibbled on some more ABBV this morning.  We were near enough to 20%/official bear market that I started to deploy some of my first 10% of cash.

I have no idea where the bottom is, but if we run a similar timeline to China we are probably looking at another 4-6 weeks of instability at minimum.

[jesmu84]

Thanks for the clarifications everyone.

Examples like this are why I like scoop

[JWags85]

Agree with this.  If there was ever a time to pare down the deficit is should have been over the last 5 years.

I nibbled on some more ABBV this morning.  We were near enough to 20%/official bear market that I started to deploy some of my first 10% of cash.

I have no idea where the bottom is, but if we run a similar timeline to China we are probably looking at another 4-6 weeks of instability at minimum.

This afternoon will be very interesting.  I'm hearing rumblings of a TARP-like injection for travel/Covid related stocks.  If thats true, I think we have a backstop and we should squeeze higher and then start to ride out the effects.

[TSmith34, Inc.]

I'm hearing rumblings of a TARP-like injection for travel/Covid related stocks. 

Election year politics at its worst if true.

[mu03eng]

We are bail out happy.....sometimes you just have to let the system reset itself. It sucks if people are impacted but stumbling from economic reset to economic reset like a drunken sailor is not the answer.

[JWags85]

Election year politics at its worst if true.

I mean, one side looking to backstop, while the other has been relentlessly stoking the fires that have lead to this market free fall knowing it will badly reflect on the sitting administration.  Its dirty pool all across the table.

[mu03eng]

I mean, one side looking to backstop, while the other has been relentlessly stoking the fires that have lead to this market free fall knowing it will badly reflect on the sitting administration.  Its dirty pool all across the table.

This....never let a crisis go to waste....for either side.

[TSmith34, Inc.]

I mean, one side looking to backstop, while the other has been relentlessly stoking the fires that have lead to this market free fall knowing it will badly reflect on the sitting administration.  Its dirty pool all across the table.

I think the sitting administration is what is badly reflecting on the sitting administration, but my comment was more in line with mu03eng's, namely that it is ridiculous to throw tax money at bailout.

[curbina]

"The desire for constant action irrespective of underlying conditions is responsible for many losses in Wall Street even among the professionals, who feel that they must take home some money every day, as though they were working for regular wages."

By Jesse Livermore

[JWags85]

If we gap down another couple hundred points on the SPX/DOW tomorrow, I'd recommend just ignoring the market for awhile.  This is WILDLY overdone, and there is no guidance or illumination towards positives, so it allows the media, short sellers, and general agents of chaos to terrify retail into dumping and/or avoid buying.  We are down 10-12% in 3 days, off of a level that was already 10%+ off the highs.  On the biggest fall since 1987.  And people are screaming we need more, we haven't fallen enough and throwing every big scary word like recession, depression, pandemic, quarantine into every headline they can.

If you wanna say there are global contractionary supply chain effects we wont feel for awhile yet, and there is further downside in the future.  I can buy that.  However, for what is known, this is hysteria and just pretty disgusting to watch people continue to cheerlead.

[Jockey]

If we gap down another couple hundred points on the SPX/DOW tomorrow, I'd recommend just ignoring the market for awhile.  This is WILDLY overdone, and there is no guidance or illumination towards positives, so it allows the media, short sellers, and general agents of chaos to terrify retail into dumping and/or avoid buying.  We are down 10-12% in 3 days, off of a level that was already 10%+ off the highs.  On the biggest fall since 1987.  And people are screaming we need more, we haven't fallen enough and throwing every big scary word like recession, depression, pandemic, quarantine into every headline they can.

If you wanna say there are global contractionary supply chain effects we wont feel for awhile yet, and there is further downside in the future.  I can buy that.  However, for what is known, this is hysteria and just pretty disgusting to watch people continue to cheerlead.

You neglect to speak about the causes of the hysteria.

Incompetence and serial lying cause the hysteria. “Live by the lie, die by the lie.”

The media does not force anyone to lie on a daily basis. That is a choice made by the liars. I don’t know if you believe the lie that this is a media “hoax”, but millions do.

[mu03eng]

You neglect to speak about the causes of the hysteria.

Incompetence and serial lying cause the hysteria. “Live by the lie, die by the lie.”

The media does not force anyone to lie on a daily basis. That is a choice made by the liars. I don’t know if you believe the lie that this is a media “hoax”, but millions do.

The media certainly doesn't (as a collective) lie. However, the media also has it's own agenda that A) contribute to an artificial sense of panic and B) create a space for millions to believe the lies that are uttered.

Now this isn't a new phenomenon, there is a reason the term yellow journalism exists. The difference now is simply how fast things move and how much harder it is to break through the noise to get the signal out there.

[JWags85]

You neglect to speak about the causes of the hysteria.

Incompetence and serial lying cause the hysteria. “Live by the lie, die by the lie.”

The media does not force anyone to lie on a daily basis. That is a choice made by the liars. I don’t know if you believe the lie that this is a media “hoax”, but millions do.

Don't make it political.  I'm not and never was.  I'm speaking to driving clicks.  Fear and panic sells.  5 new cases somewhere where there was previously 1 is shared as "new cases EXPLODE by 500%".

[mu03eng]

Don't make it political.  I'm not and never was.  I'm speaking to driving clicks.  Fear and panic sells.  5 new cases somewhere where there was previously 1 is shared as "new cases EXPLODE by 500%".

Or the classic "the number of deaths have doubled" when it went from 2 to 4 or something like that

*all deaths are tragic but inevitable

[TSmith34, Inc.]

If we gap down another couple hundred points on the SPX/DOW tomorrow, I'd recommend just ignoring the market for awhile.  This is WILDLY overdone, and there is no guidance or illumination towards positives, so it allows the media, short sellers, and general agents of chaos to terrify retail into dumping and/or avoid buying.

Rather than ignore, I am attempting to stick to my plan of investing 10% of available cash at 20% decline, another 20% if we reach 30% down, etc.

I was sitting on 15% cash available for a downturn, and it piled up higher both from more dividends coming in and from some poor sucker buying my covered calls on OHI and then calling it away from me at $44/share, AFTER it went ex-dividend.

[GooooMarquette]

So how badly do well-established dividend aristocrats really want to remain dividend aristocrats?

With oil tanking, XOM is at a point where its dividend yield is over 8%. Seems like a good long-term play, even though the short term could be a roller coaster....

[JWags85]

Rather than ignore, I am attempting to stick to my plan of investing 10% of available cash at 20% decline, another 20% if we reach 30% down, etc.

I was sitting on 15% cash available for a downturn, and it piled up higher both from more dividends coming in and from some poor sucker buying my covered calls on OHI and then calling it away from me at $44/share, AFTER it went ex-dividend.

But thats a fairly well thought out, structured strategy.  I was speaking more to the "is this a good time to buy" crowd.

The Fear/Greed index is historically stretched towards fear, but people are acting like the Italy news is fuel for another crater, who knows at this point honestly.

[Hards Alumni]

But thats a fairly well thought out, structured strategy.  I was speaking more to the "is this a good time to buy" crowd.

The Fear/Greed index is historically stretched towards fear, but people are acting like the Italy news is fuel for another crater, who knows at this point honestly.

People see Italy as a taste of things to come, and they should.  So they're properly freaking out.

[JWags85]

People see Italy as a taste of things to come, and they should.  So they're properly freaking out.

 

Agree to disagree.  Or Italy is a case study on how not to handle it, exacerbated by a very physical culture that can often lack in hygiene.  The US and the UK have both had multiple cases stretching back to the same timeline as Italy without an explosion like is seen there.  So its not like Italy is just the tip of the spear.  Same with Canada and Germany who are both not experiencing wild outbreaks.