Investing Thread

[curbina]

Helicopter Money
Helicopter money would mean the Fed taking the extraordinary step of going over the head of America's duly elected politicians to take action. If enacted, it could give Congress the right to end the Fed — the very antithesis of everything chair Jerome Powell has been fighting for since he was confirmed.

[Benny B]

That's all we ever do.

You really want people to stay home? Don't make them stress about paying their bills temporarily. Give individuals money.

Corporate give-backs have a better chance of ending up in campaign coffers; unfortunately, both parties know this all too well, which is why that's always the default.


Honestly, I'm not sure where we go from here.  We are in a health/wellness crisis, not an economic/productivity/employment crisis.  Granted, the latter can have a profound effect on the former, but I would argue that if we're going to print money, give it into the NIH and CDC to partner with the private sector to solve the health/wellness problem so all of the other problems can resolve themselves.

[curbina]

The covid-19 crisis is a black swan event, which accelerated/amplified any market turndown that might have otherwise occurred

Are you stating that the market was not very overbought?

[curbina]

The covid-19 crisis is a black swan event, which accelerated/amplified any market turndown that might have otherwise occurred

I am having a difficult time understanding why anyone would be in a very overbought market. Actually there is a term for this “Chasing The Market.”

[mu03eng]

Corporate give-backs have a better chance of ending up in campaign coffers; unfortunately, both parties know this all too well, which is why that's always the default.


Honestly, I'm not sure where we go from here.  We are in a health/wellness crisis, not an economic/productivity/employment crisis.  Granted, the latter can have a profound effect on the former, but I would argue that if we're going to print money, give it into the NIH and CDC to partner with the private sector to solve the health/wellness problem so all of the other problems can resolve themselves.

This. If the federal government and private sector were to treat this as a "war time event" and focus all effort and as much manufacturing capacity as possible on output that is directly related to the health care crunch this will steady the ship. It will give investors sectors and companies to start investing in, etc.

What I mean by all this, where piratical start converting manufacturing capacity to make things like masks, respirators, medical supplies, hand sanitizer, soap, lab equipment, materiale for testing, etc. Whereas in WWII we converted auto manufacturing to build plans, tanks, and trucks we can convert Food & Bev, etc manufacturing to health care focused manufacturing until the crisis passes.

[skianth16]

What I mean by all this, where piratical start converting manufacturing capacity to make things like masks, respirators, medical supplies, hand sanitizer, soap, lab equipment, materiale for testing, etc. Whereas in WWII we converted auto manufacturing to build plans, tanks, and trucks we can convert Food & Bev, etc manufacturing to health care focused manufacturing until the crisis passes.

Getting more help from companies that are able to produce needed items would be helpful. But to play devil's advocate here, I think a key difference between the epidemic and war-time scenarios is timing. Using China as an example, by the time companies to change up manufacturing lines and re-allocate resources to produce these items in mass, there may no longer be a significant need for them. Wars last for years, which gives companies time to respond and help. This virus may only last a few months.

[TSmith34, Inc.]

I am having a difficult time understanding why anyone would be in a very overbought market. Actually there is a term for this “Chasing The Market.”

1) The market was "overbought" for years, but with historically low interest rates TINA (there is no alternative).
2) The axiom that the market can stay irrational longer than you can stay liquid applies
3) If you don't think the coronavirus is a black swan event I don't know what to tell you.

[mu03eng]

Getting more help from companies that are able to produce needed items would be helpful. But to play devil's advocate here, I think a key difference between the epidemic and war-time scenarios is timing. Using China as an example, by the time companies to change up manufacturing lines and re-allocate resources to produce these items in mass, there may no longer be a significant need for them. Wars last for years, which gives companies time to respond and help. This virus may only last a few months.

Some manufacturers can convert in days, especially the chemical and process industry. We can't assume this will last weeks at this point, I'd say plan for at least 4 months, so start moving now. Additionally, it will create a stimulative effect as the plants wiill need to "retool" to some extent, their suppliers will need to respond, etc. and then they will need to revert back. And we are going to burn through all of our back log so we're going to have to restock for sure when this ends so this is really at least a 12-18 month event.

[MU82]

1) The market was "overbought" for years, but with historically low interest rates TINA (there is no alternative).
2) The axiom that the market can stay irrational longer than you can stay liquid applies
3) If you don't think the coronavirus is a black swan event I don't know what to tell you.

All this.

There were many companies with expected earnings growth in the low single digits trading at 30x earnings or more. It's just not sustainable, and those low-margin-for-error companies often get hit hard when the market swoons.

It's one reason utilities - often seen as a safe harbor - have been some of the hardest-hit companies lately. I mean, I love NEE's business, but there was no way it should have been trading at 32x earnings. Even after this correction, it's STILL well overvalued.

SRE was bid up to $162 - that was 23x forward earnings even though growth is only expected to be 5%. As I write this, it's trading around $96. That's more like it.

Etc, etc, etc. And not just utilities either, obviously.

[Hards Alumni]

Some manufacturers can convert in days, especially the chemical and process industry. We can't assume this will last weeks at this point, I'd say plan for at least 4 months, so start moving now. Additionally, it will create a stimulative effect as the plants wiill need to "retool" to some extent, their suppliers will need to respond, etc. and then they will need to revert back. And we are going to burn through all of our back log so we're going to have to restock for sure when this ends so this is really at least a 12-18 month event.

^agree fully. 

[mu03eng]

Basically, if I were advising the federal government I would move to a war time footing with the enemy being anything that threatens public health. Unless it is basic infrastructure or military I would refocus and reposition it to public health. One, it will practically make a positive impact on what's going on, but almost as important it will give people a focus and purpose that if they aren't in the medical field they just don't feel right now. It will also distract wall street and give them something quantitative to focus on.

Think of it as Churchhill rallying England during the Blitz. Only this time its Covid-19 instead of the Nazis

[jficke13]

Basically, if I were advising the federal government I would move to a war time footing with the enemy being anything that threatens public health. Unless it is basic infrastructure or military I would refocus and reposition it to public health. One, it will practically make a positive impact on what's going on, but almost as important it will give people a focus and purpose that if they aren't in the medical field they just don't feel right now. It will also distract wall street and give them something quantitative to focus on.

Think of it as Churchhill rallying England during the Blitz. Only this time its Covid-19 instead of the Nazis

100% agree.

[The Hippie Satan of Hyperbole]

Is that really necessary at this point?  We aren't fighting a lengthy war here.  We are fighting a virus that could rise fast and overwhelm our medical system - but in the short term. If you look at China, Japan, etc., the new cases level off and the health system can manage.  I fully expect that by and large people are going to be back to their normal routine in less than a month with only items only like "less than 50 at a public event" remaining.

That's what I don't understand about helicoptering cash in right now.  A lot of people aren't spending because they've been told to stay home.  But unless something compromises their underlining employment, they are likely just delaying big purchases and going to hit restaurants again when the everything lifts.  I think its the same for business spending as well.

Maybe I'm being too optimistic, but I think most of this stimulous would be better off a month or two from now when the health crisis lessens and the financial implications are more known.

[TSmith34, Inc.]

Basically, if I were advising the federal government I would move to a war time footing with the enemy being anything that threatens public health. Unless it is basic infrastructure or military I would refocus and reposition it to public health. One, it will practically make a positive impact on what's going on, but almost as important it will give people a focus and purpose that if they aren't in the medical field they just don't feel right now. It will also distract wall street and give them something quantitative to focus on.

Think of it as Churchhill rallying England during the Blitz. Only this time its Covid-19 instead of the Nazis

Can't argue with any of this.  The market has been reacting to the lack of a coherent plan as much as the outbreak itself.  The market hates uncertainty.

[curbina]

1) The market was "overbought" for years, but with historically low interest rates TINA (there is no alternative).
2) The axiom that the market can stay irrational longer than you can stay liquid applies
3) If you don't think the coronavirus is a black swan event I don't know what to tell you.

Mr. Smith, Trading is a zero sum game. It appears to me you are holding losing stocks. I am NOT holding loosing stocks because l don’t chase the market or remain in a very overbought market. You should buy low and sell high. If you buy high and try to sell higher someone will be waiting to take your money! Low=Oversold and High=Overbought. You just keep blaming you loss on a “black swan” instead understanding the market you will loose. Zero sum game!

[TSmith34, Inc.]

But unless something compromises their underlining employment, they are likely just delaying big purchases and going to hit restaurants again when the everything lifts.

Many, many people in hospitality, entertainment, travel, and bar/restaurants industries are going to be without a paycheck.  The unfortunate reality is that a lot of those workers are paycheck-to-paycheck.  They won't be so much skipping big purchases as trying to figure out how to pay rent and bills.

[jficke13]

Mr. Smith, Trading is a zero sum game. It appears to me you are holding losing stocks. I am NOT holding loosing stocks because l don’t chase the market or remain in a very overbought market. You should buy low and sell high. If you buy high and try to sell higher someone will be waiting to take your money! Low=Oversold and High=Overbought. You just keep blaming you loss on a “black swan” instead understanding the market you will loose. Zero sum game!

Oh, that's how this is supposed to work?

[mu03eng]

I really hesitate to bring this up but I think its relevant in the context of the investing thread. What are the long term impacts of this pandemic on the following:
-Insurance industry, both health and life
-if the mortality rate is relatively high, especially amongst the elderly, what does wealth transfer look like?
-what is the long term impacts on medicare and social security? More viable or less

[TSmith34, Inc.]

Trading is a zero sum game.

It appears you fundamentally don't understand what the stock market is

It appears to me you are holding losing stocks.

Some are underwater.  Overall the value of my portfolio is multiples higher than what I paid for it.  It's just ~25% lower than it was a week ago

I am NOT holding loosing stocks because l don’t chase the market

So you've been out of stocks since 2014 or so?

You should buy low and sell high.

Why didn't you say so?  You should write a book and share your wisdom with the common folk

[curbina]

Oh, that's how this is supposed to work?

Well your free to use the Smith method. Please let us all know how it works out for you.

[curbina]

It appears you fundamentally don't understand what the stock market is
Some are underwater.  Overall the value of my portfolio is multiples higher than what I paid for it.  It's just ~25% lower than it was a week ago
So you've been out of stocks since 2014 or so?
Why didn't you say so?  You should write a book and share your wisdom with the common folk

Mr. Smith you just keep trading your method. I will be there to take your money. BTW, I can make more money by taking money from fools than writing a book.

[TSmith34, Inc.]

Mr. Smith you just keep trading your method. I will be there to take you money.

How can you take my money if you are out of the market?

I mean, had you explained your unique buy low- sell high method before I'd be so much better off.

[curbina]

How can you take my money if you are out of the market?

I mean, had you explained your unique buy low- sell high method before I'd be so much better off.

I will short your under water stock! You trade in the direction of the market. Mr. Smith do you know how to short a stock?

[Coleman]

I really hesitate to bring this up but I think its relevant in the context of the investing thread. What are the long term impacts of this pandemic on the following:
-Insurance industry, both health and life
-if the mortality rate is relatively high, especially amongst the elderly, what does wealth transfer look like?
-what is the long term impacts on medicare and social security? More viable or less

1. I don't think this moves the needle much on life insurance (as of now). Ultimately depends how many deaths there are. Health insurance premiums might go up a bit. Hard to measure the delta as they are already going up every year.

2. It just accelerates the wealth transfer that was already going to happen in the next 5-10 years.

3. Unclear. Most of the people dying are those taking from the system, not contributing. But if there are drastic cuts to employment then payroll tax contributions go down.

[rocky_warrior]

As adorable as it is that you think you're better at this "making money" thing than everyone else - knock it off.