Stocks and Trading Thread - Channeling your inner Mono

[DGuller]

Let's say you have a large-ish amount sitting in cash equivalents.  You decide to be buying now.  Do you just plop all of that cash in Vanguard index mutual fund in one go?  Asking for a friend.

When you posted this, the S&P 500 was 27% off its peak.

And I put my leg hair or two in the market right around that time, but it took a while to set up the brokerage, so I didn't quite get in at the bottom.  I think even 27% off the peak is optimistic, and 15% is just nuts.  Yes, I know I could've bought at -27% and sold at -15%, but that's just trying to predict the irrationality of the crowd.  S&P 500 fell almost 50% during the Great Recession.

[Admiral Yi]

And the Mississippi and South Seas companies fell 100%.

But hey, it's your money.  Just don't get crabby if I gloat about my gains.

[DGuller]

  When have I ever been crabby? 

[Admiral Yi]

Self deprecating humor is the highest form.

[alfred russel]

I just don't see what others are seeing.  Before the worldwide pandemic we already had a market that was running a little hot.  Now everything is crashing down with a pretty bleak and uncertain near-term outlook, and we're just 15% off the highest of sugar highs?  I don't get it, and I'm not yet letting the daily movements shake my confidence in my judgment.

I'm certainly not buying now, but the crisis has "short term" written all over it. If you are investing for the long haul, a 15% discount may be enough for 12-18 months of shit.

Also, I don't want to be super cynical, but small businesses are probably getting hit harder than the bigger players represented in the financial markets. To the extent there is a battle between the two for market share, this could have some long term benefits. And the risk of a new democratic administration coming in and putting into place onerous taxes and regulations is tempered by the liklihood it will inherit a dire economic situation.

[Tamas]

Yes its a short term thing but also one of the attempted remedies has been to slash interest rates. I am assuming that taking free money from the printer and inflating stock prices with it to make your results look awesome is what's going on.

I mean what else are you going to do?

[DGuller]

The crisis is definitely a short term shock, but short-term shocks have a way of bringing on long-term complications, especially if delivered to a system with pre-existing conditions.  We're not just going to instantly reboot back to 4% unemployment once this is over.

[crazy canuck]

Yes its a short term thing but also one of the attempted remedies has been to slash interest rates. I am assuming that taking free money from the printer and inflating stock prices with it to make your results look awesome is what's going on.

I mean what else are you going to do?

Here is one view of what is happening - there is nowhere else to invest because bond prices are so low.  Also, the market is not the economy.

https://www.nytimes.com/2020/04/30/opinion/economy-stock-market-coronavirus.html?searchResultPosition=3

[Admiral Yi]

Just got back to my personal February high. 

Course a good chunk of that is unemployment top up I'm stashing in savings, but still feels like an important milestone.

[FunkMonk]

US jobless rate rises to 14.7% as coronavirus pandemic devastates the economy - 20.5 million jobs lost in April

This'll be the story the world over this Spring. 

Quick back of the napkin calculations:

33 million have filed for unemployment--that is about 20.1% of the workforce.

Beginning unemployment was 3.2%.

So that has 23.4% unemployed at some point in the stretch, so if we are at 14.7% now that means either 8.7% of the workforce has found a new job in this environment or has dropped out.

Honestly, with how fast everything is moving, I wonder how accurate that unemployment number is.

There seems to have been some confusion in the data collection as well.

In addition to the increase in the number of unemployed
people, there was also an increase in the number of workers who
were classified as employed but absent from work for the entire
reference week. As in March, special instructions sent to
household survey interviewers called for all employed people
absent from work due to coronavirus-related business closures to be classified as unemployed on temporary layoff. However, not all such workers were so classified in April. As is our usual
practice, no ad hoc actions were taken to reassign survey
responses; the data were accepted as recorded. If the workers
who were recorded as employed but absent from work due to ?other reasons? (over and above the number absent for other reasons in a typical April) had been classified as unemployed on temporary layoff, the overall unemployment rate would have been almost 5 percentage points higher than reported (on a not seasonally adjusted basis). Additional information is available online at www.bls.gov/cps/employment-situation-covid19-faq-april-2020.pdf

Quoting this because this methodological issue is being brought up after the recent jobs report, which came in better than expected. Some conspiracy theory floating around on Twitter that BLS intentionally cooked the numbers this month to give Donald something to brag about. Krugman made a lazy tweet that he later took back and it sort of blew up. There's an article in the WaPo about the misclassification now.

[crazy canuck]

I have given the green light to my guy to start investing.  So probably best to run for the hills.

So far it has worked out.

[crazy canuck]

Jinxed it

[Tonitrus]

I dunno...holding on to my TSLA has paid off pretty well so far.

[Admiral Yi]

 

How you feeling about that "maybe 1,000 by 2024" prediction now Tonto?

[Tonitrus]

Jinxed it

I jinxed it worse.