OT - Dow plunges 1,175 - worst point decline in history

[Clean39T]

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[goonster]

Originally Posted by kppolich

If enough people on a given day think a group of stocks will go up, the index goes up.

1. Not people, but the capital they leverage
2. Not in a short squeeze

[Clean39T]

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[echappist]

Originally Posted by kppolich

The stock market is not the economy.
The stock market moves based on speculation that the value of the individual stocks will either go up or down in the future.
If enough people on a given day think a group of stocks will go up, the index goes up.
The past does not matter, it is all speculation on the future, rather 1 day, 30 days, or forever.
Each trade is unique and can be held for 1 second or an entire lifetime.
Enter at your own risk. Hold at your own risk. Exit at your own risk.

Except for those of us fortunate enough to sock money into our retirement accounts, we have to play this risky game, or face the near certainty that the present amounts saved today would be significantly eroded by inflation. Though given where things are going, who knows if we are even going to have inflation for the next few years.

[kppolich]

Yep, long term retirement planning is a risky game.

New contributions are completely under your control and could be stored in a Money Market or put into the market as part of monthly contributions ala dollar cost averaging over time.

Existing holdings could be left in the game to recover or fall further. They could also be sold off to cover current needs, but once sold the realized gain/loss is real as well as taxes.

Again, for at least the 10th time in this thread-- An individuals holdings are their responsibility and should be lined up with their current needs and current risk tolerance. Being that some needs have likely changed, the holdings should likely change as well. Ditto for the Risk Tolerance as this is a perfect situation to revisit if you are really OK being completely exposed to the markets ups and downs.

Very interesting time here as we approach 3,000 again in the S&P. It certainly has me thinking about moving some funds around knowing it's an election year and this next year could be extra tumultuous given the current state of things.

[C40_guy]

Originally Posted by Clean39T

I pulled all of my positions out of the SP500 a couple weeks ago, so I've missed the extra 10% of upside or so that's accumulated, but I fully expect a deep recession and opportunity to buy back in at a significantly lower level. I could be wrong. We'll see. I'm investing for the long-term, just looking for short-term opportunities to get the benefit of buying depreciated assets once the reality of the economy actually gets priced in.....and I can't see that not happening in the next 3-9 months...

Completely agree with you. I put some money into the market a month ago -- Zoom, LabCorp, Quest Diag, a couple of others...

Now I'm thinking that it is a good time to clean up all the longer term holds. Anything that isn't stellar is gone. The speculative plays are mostly still in place. Everything else has been trimmed, even AAPL.

Here's an interesting article...can't remember where I first saw it posted. Apologies if it was here.

https://seekingalpha.com/article/434...content=link-2

From the article:

[C40_guy]

Watching CNBC right now...it's amazing how giddy the pundits are regarding the current perceived strength of the market.

[zap]

Money isn't worth much so what else are you going to do with it.

Lend it out at meager rates.

House prices are still too high.

Collecting art or automobiles close to highs.

Stock market that has declined a bit.............

[veloduffer]

Over the last couple of years, there's been a disconnect between the equity markets and economic fundamentals. My concerns are

the virus is a long term game - there are only enough tests for 2% of the p

• opulation and no vaccine in near term. The number of infected and deaths are probably well understated. Moreover, we still don't know a lot about transmission and immunity.
  
• A 2nd virus wave is possible and based on history, highly probable.
  
• Economic growth will be slow as folks are cautious. Businesses that have to open to survive will try. But for some firms, they will remain closed and watch & learn from mistakes. My firm believes we will not return to the office until 2021; 97% of the workforce is working from home and effectively (not optimal but nothing impactful).
  
• As such, unemployment will remain high, peaking at 20-25% and may stay above 10% in 2021.
  
• Payment deferrals and forbearance will only last a few months. The increase in bankruptcies has not started in earnest yet. That will sustain high unemployment and keep consumers from buying.

Folks don't have to own equities. Treasuries are up over 10% this year, like iShares 7-10 yr Treasury ETF (symbol IEF). Investment grade bonds are down about 3% but returned 18% in 2019 (symbol LQD).

Other sectors to think about are Gaming (ETFs like HERO, NERD) and Data Center REITs (DLR, CONE, COR, EQIX).

[C40_guy]

Originally Posted by veloduffer

Other sectors to think about are Gaming (ETFs like HERO, NERD) and Data Center REITs (DLR, CONE, COR, EQIX).

Thanks @veloduffer. We think alike. For the latter group, we're going to see an acceleration of movement away from traditional data centers to hosted/managed data centers, and to cloud. Amazon and Microsoft are strong plays. The DC REITs that you mentioned are strong players as well.

Of these, EQIX and DLR look to be the most solid (with no deep dive into fundamentals). They are flat or down today while much is up. Probably worth accumulating a bit, if you're into that sort of thing. (I am...)

[echappist]

Originally Posted by veloduffer

Over the last couple of years, there's been a disconnect between the equity markets and economic fundamentals. My concerns are

the virus is a long term game - there are only enough tests for 2% of the p

• opulation and no vaccine in near term. The number of infected and deaths are probably well understated. Moreover, we still don't know a lot about transmission and immunity.
  
• A 2nd virus wave is possible and based on history, highly probable.
  
• Economic growth will be slow as folks are cautious. Businesses that have to open to survive will try. But for some firms, they will remain closed and watch & learn from mistakes. My firm believes we will not return to the office until 2021; 97% of the workforce is working from home and effectively (not optimal but nothing impactful).
  
• As such, unemployment will remain high, peaking at 20-25% and may stay above 10% in 2021.
  
• Payment deferrals and forbearance will only last a few months. The increase in bankruptcies has not started in earnest yet. That will sustain high unemployment and keep consumers from buying.

Folks don't have to own equities. Treasuries are up over 10% this year, like iShares 7-10 yr Treasury ETF (symbol IEF). Investment grade bonds are down about 3% but returned 18% in 2019 (symbol LQD).

Other sectors to think about are Gaming (ETFs like HERO, NERD) and Data Center REITs (DLR, CONE, COR, EQIX).

Thanks, as always, for sharing your insights.

Unfortunately, I have only 5 choices of investment vehicles for my work-sponsored retirement account (TSP). I do have Roth, but could invest only 1/3 of what i could invest with TSP.

Will def look into treasuries, but how much of the return this year is due to the decrease in bond yield, b/c coupon rate is otherwise abysmal (so akin to the 1980s when yield went down)? One would think that the returns would take a haircut when yields rise?

Or perhaps my rationale is wrong, in which case, i could use a primer or two. I could probably use a primer or two, even if my rationale were on the right track.

[Tony T]

Originally Posted by C40_guy

Watching CNBC right now...it's amazing how giddy the pundits are regarding the current perceived strength of the market.

Powell?

[C40_guy]

Originally Posted by Tony T

Powell?

Even before Powell spoke. It's all roses and unicorns.

It is a nice change from the minute by minute death totals and photos of refrigerated tractor trailer morgues...

Isn't there a puppy channel on cable?

[froze]

what's weird my 403b choices I made are still showing more gain than US treasuries are. I'm not moving into treasuries I don't care if I could make more because as soon as you take money out of your retirement plan you lost a bunch of money, if you just stay the course it will come back, in fact this is the time to be increasing your withholdings so you can buy more shares at lower cost.

You still own the same number of shares you had when things were flying high, those shares have not gone away, the only thing that has changed is the value of those shares, so start increasing your shares and when things start to go back up you will be well into the double digit interest earnings.

Of course it's hard telling when everything will start going back up, I'm guess it could be as soon as 3 months, to as long as 3 years, either way don't sell those shares for a loss, like I said increase your withholding percentages and watch what happens when things go up, your interest earnings will skyrocket. I know because I did this in 2008 and was getting returns hovering near 30%! Chances are this down ward trend will last longer than the 2008 one did, which is good because you have more time to add a lot more shares at discounted prices before the elevator goes up.

[fkelly]

Timely discussion. Since November 2016 I've moved about 20 to 25% of my portfolio into fixed income. At various times I found CD's paying between 2.4 and 3% and purchased. The maturity dates were 3 to 5 years out from the time of purchase. I'm looking to do more of that. But a screen I just did at my brokerage shows that 3 to 5 year cds are yielding less than 1%. I guess that's no surprise given the overall situation and uncertainty, but it is also not much better than just keeping the money in cash. Or buying "conservative" dividend paying stocks and hoping the market doesn't totally crash.

Time to learn more about Inflation Protected Treasuries I think. Due to Covid we are piling debt on at a record rate (which I'm not protesting, it's needed). But down the road inflation is a risk we need to reckon with. TIPS are one way to do that.