Investments Trade Log

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Seppia
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Re: Investments Trade Log

Post by Seppia »

Interesting article on the passive investor behavior.
Turns out I was wrong?
https://ritholtz.com/2020/03/wasnt-pass ... um=twitter

Lucky C
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Re: Investments Trade Log

Post by Lucky C »

2nd day of declining VIX and much lower correlation between assets. For now we are not facing everything falling in price at the same time.

ToFI
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Re: Investments Trade Log

Post by ToFI »

Few days ago, I had the urge to convert everything to cash but resisted after reviewing my investment plan and stick with it. My stocks still keeping the out performance with SP500. It's 10% above the SP500 Year to date (Since Dec 31, 2019) during the worse panic of last few weeks. It's consistent of the 15% out performance per year from the past 5 years so I'll keep the growth stocks.

When fear is maximized, bottom is near. It could be we are near the bottom.

wolf
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Re: Investments Trade Log

Post by wolf »

ToFI wrote:
Fri Mar 20, 2020 12:46 pm
It could be we are near the bottom.
Or it could be that the first panic is over and now follows the economical downturn, which could result in further financial crashes.

Do you have any indicators, showing that we are near at the bottom?

ertyu
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Re: Investments Trade Log

Post by ertyu »

There's a good argument to be made that oversold mkt + gvts finally getting fiscal stimulus started + fed opening spigots and singing "whatever it takes -- no, really" might halt the slide in the stock market even if the underlying ffundamentals keep deteriorating.

I'd argue that if the trend does turn, it's way likelier to be a bear rally than a trend flip though.

ToFI
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Re: Investments Trade Log

Post by ToFI »

@wolf
No indicator. Just feeling. Stock market is forward looking. It looks few months down the road.
As mentioned above, VIX has peaked for now.
Market knows the US case number is increasing exponentially. Market knows it'll peak in a few months due to the exponential growth. That US may experience many deaths like Italy. The market also knows the estimated job loss, estimated fatality rate. Major news are already priced in. Nothing major will come out.

The indiscriminating selling has finally stopped for now. So the difference in individual company earning is reflected on the share price. Now we can have some stocks to go up when the general market is down. Example: Zoom Video Communications, Inc. (ZM). Last 2 weeks, it was dragged down as everything else during the biggest panic. Now it's bouncing back.

bryan
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Re: Investments Trade Log

Post by bryan »

Bought to cover my short TSLA yesterday. Disappointed I didn't buy ZM when I first added it to my watchlist a couple weeks ago.. (I already own WORK).

This past week or so I've sold off my TIPS and bought a bit of commodities (base metals and energy stuff). Have started buying some crypto-currencies and precious metal ETFs after hearing about the possibility of the government cutting a $1500+ check to every citizen.

Told myself the last couple days I would sit down and figure out my short/medium/long investing strategy (and how it might differ from plans already in place). Played with the ideas of (1) focusing more on individual stocks (especially ones that seem like they should do well in this next year; or rather the ones that shouldn't do poorly) instead of strictly ETFs and (2) reducing exposure to both main-street bank accounts and also money market accounts (i.e. treasuries) but maintain cash, how? maybe spread evenly across my FDIC accounts.

I also need to start looking at rolling over my traditional IRAs to Roths (so far I have just let them sit as I have been harvesting gains; this year probably not so much).

But the markets are about to close already for the week so I guess I'll put it all off to next week! Interesting today to see so many international stocks up while the US stocks are down.

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Bankai
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Re: Investments Trade Log

Post by Bankai »

@ToFI: why buy on the way down? You're pretty much guaranteed to be in the red immediately. People were buying airlines when they were 20% down as 'bargains' - some of them are now down 65% or more. Re: oversold indicators - it's common in bear markets to have oversold indicators flashing for a long time. I'd wait until bottom is established and recovery starts.

ToFI
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Joined: Thu Jun 16, 2011 1:22 am

Re: Investments Trade Log

Post by ToFI »

@Bankai,
I am not buying. I've already fully invested.
It doesn't meant it'll go up from here if it's near bottom. It can flat line for a while. In 2008, market bottomed couple months after VIX peaked. Now VIX looks like has reached peak.

George the original one
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Re: Investments Trade Log

Post by George the original one »

ToFI wrote:
Fri Mar 20, 2020 4:48 pm
@Bankai,
I am not buying. I've already fully invested.
It doesn't meant it'll go up from here if it's near bottom. It can flat line for a while. In 2008, market bottomed couple months after VIX peaked. Now VIX looks like has reached peak.
Not staying flat. Market will go down when unemployment numbers are published next week (not sure what happens if they're not published, but as an investor I take it that they're even worse than the Trump administration expects) and then people realize that the stimulus package (and unemployment benefits) don't begin to replace lost wages because "gig economy".

Thinking more long term, at a minimum, we've got 3 weeks before new cases have a chance of stabilizing and that's only if the country is actually practicing their social distancing. Currently, I think we're poised for case explosions in Florida, Texas, & Tennesee. Plus a general round of explosions as a result of people returning from spring break.

thedollar
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Re: Investments Trade Log

Post by thedollar »

I predict the market will take a large hit on Monday.

Investors will have a few days to get anxious as number of new daily cases as well as US cases too has a few days to continue exponential growth.

Jin+Guice
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Re: Investments Trade Log

Post by Jin+Guice »

Seppia wrote:
Thu Mar 19, 2020 11:08 am
Interesting article on the passive investor behavior.
Turns out I was wrong?
https://ritholtz.com/2020/03/wasnt-pass ... um=twitter
This makes me think we still have a long way down. Buying into the crash is part of the passive index strategy and we've only been down for a few weeks. I'd be surprised if passive retail investors weren't buying right now, but can they hold out another 1-2 years?

This is my first rodeo, so this is all pure speculation, but I really don't think we're near the bottom. The coronavirus numbers will keep getting worse, it's almost impossible that at least one European nations or U.S. cities hospital system won't collapse, we're going to be in lockdown for at least another month and the numbers haven't even started coming out yet for the weeks we've been locked down. And now you're telling me retail investors are still buying the dip? Unless we miraculously get a vaccine or some miracle out of one of the drugs they're testing I can't imagine this is near the bottom. Are financial institutions not in danger of blowing up from this next month when no one can pay their bills? What I've seen so far looks like a scramble for cash.

classical_Liberal
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Re: Investments Trade Log

Post by classical_Liberal »

Jin+Guice wrote:
Fri Mar 20, 2020 10:26 pm
And now you're telling me retail investors are still buying the dip?
I am! Not because I expect a rebound, but because I believe, at this price level, my best chance for the best real returns over the next decade are with equities. Not cash, or bonds, or gold, or anything else i'm willing to invest in. I could be wrong. DCA'ing in from a large cash position, as long as they stay at or below a price level I believe the above to be true, only means I'm not sure where and when the bottom will hit. It only makes sense.

Edit: @J+G you're what, early 30's right. How many years of your life do you think US equities have been cheaper by the the most popular metric of CAPE? or even market cap to GDP? Once you determine that, tell if you think you'll have a better time to start buying the equity portions of your GB.

Edit # 2: My point is you have to pick a price point that, in your opinion, is a good deal compared to other potential investments with the information you have. Also be OK if it never reaches that point and you miss what may have been a good potential buying opportunity. Trying to guess bottom is a fools errand, IMO.

Seppia
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Re: Investments Trade Log

Post by Seppia »

Bankai wrote:
Fri Mar 20, 2020 3:47 pm
@ToFI: why buy on the way down?
*cut
I'd wait until bottom is established and recovery starts.
Because you don’t know when they will stop going down and start going back up.
How do you know when the bottom is established?

ertyu
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Re: Investments Trade Log

Post by ertyu »

but you can make an educated guess. right now, not in order of importance,

1. all negative info hasn't come out (e.g. unemployment numbers, pmis, earnings, etc)
2. Deaths are still accelerating throughout most of the developed world - thus the trajectory is for quarantines to get stricter not looser at this point. Thus numbers in (1) are likely on a trend to get worse
3. It hasn't hit NYC properly - I've seen it theorized that this is needed before the implications get through to the coked up stuffed shirts that were born in 1995 and have never experienced anything but a bull mkt as traders
4. the economic impact hasn't worked itself out through the system - no major bankruptcies/restructurings yet
5. Retail hasn't capitulated - mood is, "can we buy the dip yet, can we buy the dip yet"

I'm sure you can find other arguments too but imo chances are we're going down rather than up

Seppia
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Re: Investments Trade Log

Post by Seppia »

Depending on how sure one is about it, he/she should cash out of the relevant amount of equities.
Ie if you’re 100% sure you should go all cash
If you’re 50% sure it would make sense to sell 50% of your equities now.

How many have done so?

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Bankai
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Re: Investments Trade Log

Post by Bankai »

You can never be 'sure' what the market will do.

What makes you think the market will quickly recover from this level?

The world - at lest the West - is heading for a pretty bad recession, possibly one of the worst in a century. The West is killing its' economies to 'save lives' (to me it looks more and more likely that the suffering caused by 'saving lives' > the suffering from 'lives lost to the virus'). Some experts already claim that 'social distancing' i.e. killing economies would need to last for up to 18 months or until the vaccine is found for it to be effective. This will leave scars for years/decades and hit the poorest the most (as always). Look how bad things look now and it's just starting - two months from now deaths will be in hundreds of thousands or even millions (hopefully not but this is how it looks now) - do you really expect the market to go up while the news is all about mega-recession and millions dying? The market is news driven for a couple of months now and unless good news > bad news, this will not change. I don't see any good news on the horizon but there's plenty more bad to come.

I guess where we differ is that you seem to think that buying 'bargains' is a way to make money, which I consider to be catching a falling knife/bottom fishing, while for me being long during a bull market is a way to make money. That's not to say I don't think your way can't work, it just seems way too optimistic and risky to me.

bigato
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Re: Investments Trade Log

Post by bigato »

Seppia: not exactly, since gold (in my opinion) will still go up at some point as money keeps being printed. I also didn't sell my long bonds portion because they will pay me inflation plus 3.3% at maturation and I like to have some defense against inflation. But I did sell all of my equities some days ago, and even sold my short-term bonds to have liquid money. I see Brazil's scenario going way worse than Italy's and I'm walking the talk.

IlliniDave
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Re: Investments Trade Log

Post by IlliniDave »

Seppia wrote:
Thu Mar 19, 2020 11:08 am
Interesting article on the passive investor behavior.
Turns out I was wrong?
https://ritholtz.com/2020/03/wasnt-pass ... um=twitter
After the financial crisis Vanguard published an analysis of their retirement plan clients. I don't remember their metric but they essentially showed that the turnover in their client's accounts was lower than that of the stock market overall (or maybe it was compared to mutual funds/ETFs overall). The difference wasn't eye-popping, but significant enough to conclude that they behaved differently in the aggregate, and not in a destabalizing way.

We're still pretty early into this fiasco making it well within the realm of possibility that we'll get to a spot where more indexers start to crack. I think the net effect would be to move the overall average systematic selling pressure closer to the systematic selling pressure of the non-index cohort.

The net buying Riholtz reports is a surprise to me. I wouldn't expect it to persist though the say, -40% point and beyond. Some of it is probably due to people like me who are misdemeanor market timers (we keep an eye out and are "aggressively proactive about rebalancing after significant declines"*). Then there are the orthodox "guard band" rebalancers who rebalance religiously if their asset allocation strays a certain distance from it's set point (I think most robo-advisory services do the same). They would have been buying too. Many indexers do automatic investing straight from their paychecks into funds, and they also would be buyers.**,***

I think in the worst-case indexer behavior in the aggregate would converge with overall behavior. People are people once they shed their ideological cloaks and run naked through the streets.

*But drag our feet during periods of chunky gains.

ETA

**There are also periodic rebalancers who will only rebalance at certain times of the year, and probably don't affect the reported information much.
***It's also tax season meaning refunds are being received and possibly invested, and last-minute 2019 IRA contributions are being made.

Seppia
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Re: Investments Trade Log

Post by Seppia »

Bankai wrote:
Sat Mar 21, 2020 4:51 am
You can never be 'sure' what the market will do.
What makes you think the market will quickly recover from this level?
I have no idea what the market will do in the coming weeks/months. Same as when the market was raging higher.
The only things I know for sure are:

1- starting late 2018/2019 I had a feeling the market was too high.
2- short term movements are totally unpredictable
3- long term, my prospects weren't great

so I decided to slowly increase my cash % (because 1 and 3) but also not sell anything (because 2).
I made a judgement call and acted accordingly.
I put myself in a situation where, mentally*, I was comfortable.

*the mind is ALWAYS teh most underrated aspect of investing
Bankai wrote:
Sat Mar 21, 2020 4:51 am
I guess where we differ is that you seem to think that buying 'bargains' is a way to make money
No sorry.
One has to consider also the situations.
I save 75% of my (relatively high) salary, and I am 39.
The consequence is that I must allocate a relatively important amount of funds every month.
So when the market is (in my consideration) overvalued, I look for individual stocks.
Another consequence is that when the market plunges 20-30% I can buy relatively aggressively with my builtup cash reserve, because
a) I did not go all-in yet (i'll do so if the plunge gets to 50% approx)
b) if it falls further i will have new cash to invest every single month

If I were ERE'd, with little/no income coming in and a good margin of safety, I would act completely different. If you have way more than you need (think 50y of expenses or more) then it makes more sense to play not to lose.
I would also act completely different if I were making minimum wage: maybe it would be worth swinging for the fences with some small, high upside investments (ie bitcoin)

What I do makes sense for me

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