Investments Trade Log

Ask your investment, budget, and other money related questions here
bigato
Posts: 2805
Joined: Sat Mar 05, 2011 12:43 pm
Location: Brazil

Re: Investments Trade Log

Post by bigato »

Woke up early today and read the news. Watched the market as the futures dropped. Then when they changed direction I changed my allocation. I'm now:
52% gold (future contract)
16% long bonds (maturing in 2045, paying 3.3% plus inflation per year)
16% PIBB11 (etf comprising 50 top companies from ibovespa)
16% SMAL11 (small caps etf)

Other than that, one year of expenses in CDs which are available for withdrawing at any time. And my rural property.
My reasoning for this change was that since so much money was going to be issued, it was not safe to stay heavy on cash anymore.

George the original one
Posts: 5336
Joined: Wed Jul 28, 2010 3:28 am
Location: Wettest corner of Orygun

Re: Investments Trade Log

Post by George the original one »

I'm in line with Seppia as far as the stimulus affecting markets and lost Fed opportunities. The stimulus is mainly letting investors who felt trapped get out of bad positions in a late timeframe.

Market will slump again. Traders are paid to trade, not sit still and play it safe, so the real question is who's money are they playing with? The stimulus buys maybe one week of joy, but since new COVID cases aren't slowing down overall, the truth will sink in again.

Mass travel, tourism, lodging, live entertainment, and dine-in restaurants are not going to survive unless they have deep pockets or can re-imagine their business. Vaccine or COVID burning out on its own are the only two options for this year. A treatment that keeps patients out of hospital beds (or at least off ventilators) will kickstart the economy because then we can risk catching it.

I suspect millennials are going to be hardest hit. Still paying off that student loan, no trust in the stock market, and now paying off a medical bill while their house just plummeted in value.

ertyu
Posts: 935
Joined: Sun Nov 13, 2016 2:31 am

Re: Investments Trade Log

Post by ertyu »

millenials don't have houses, it's all in toast + avocado

me and other millenials i speak with are hoping for property prices collapse cause we'll finally be able to afford our own place

George the original one
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Joined: Wed Jul 28, 2010 3:28 am
Location: Wettest corner of Orygun

Re: Investments Trade Log

Post by George the original one »

Note that the rally is not particularly wide-based nor strong (strong in the context of "we're saved"), being very concentrated on the DOW 30 and some of the S&P 500.

ertyu
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Joined: Sun Nov 13, 2016 2:31 am

Re: Investments Trade Log

Post by ertyu »

whoever's pumping it is gonna dump it

IlliniDave
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Joined: Wed Apr 02, 2014 7:46 pm

Re: Investments Trade Log

Post by IlliniDave »

George the original one wrote:
Wed Mar 25, 2020 12:52 pm
Note that the rally is not particularly wide-based nor strong (strong in the context of "we're saved"), being very concentrated on the DOW 30 and some of the S&P 500.
I think the main response was yesterday (~+10% or so) and the response was pretty solid across the board, at least in terms of Morningstar style boxes. Today just added a little to that, with small value being the standout, but I'm pretty certain it took the most, and biggest, kicks in the teeth.

I agree though that it's a temporary thing most likely. My guess is generally down until late summer/early fall.

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Bankai
Posts: 816
Joined: Fri Jul 25, 2014 5:28 am

Re: Investments Trade Log

Post by Bankai »

Singapore GDP -10.6% in Q1 and they didn't even have a lockdown. It's going to be brutal for the West - Q2 GDP the worst on record? What's the chance the stock market bottomed?

Lucky C
Posts: 561
Joined: Sat Apr 16, 2016 6:09 am

Re: Investments Trade Log

Post by Lucky C »

Bankai wrote:
Wed Mar 25, 2020 9:10 pm
What's the chance the stock market bottomed?
We've had about a 13% bounce from the current S&P 500 bottom. How would we do in past bear markets if we called the bottom after the first 13% rally?

1929: bear market (-20% from peak) started 10/28/29, 13% bounce only 3 days later on 10/31/29, bear market bottom 6/1/32
1957: bear start 10/21/57, bottom 10/22/57, up 13% on 5/9/58
1962: bear start 5/28/62, bottom 6/26/62, up 13% on 8/20/62
1966: bear start 8/29/66, bottom 10/7/66, up 13% on 12/12/66
1970: bear start 1/29/70, bottom 5/26/70, up 13% on 6/3/70
1973: bear start 11/26/73, bottom 10/3/74, up 13% on 10/11/74
1982: bear start 2/22/82, bottom 8/12/82, up 13% on 8/23/82
1987: bear start 10/19/87, 13% bounce 10/21/87, bottom 12/4/87
2001: bear start 3/12/01, 13% bounce 4/19/01, bottom 10/9/02
2008: bear start 7/9/08, 13% bounce on 10/31/08, bottom 3/9/09

A 13% gain was a bull trap in 1929, 1987, 2001, and 2008, so the three worst bear markets in US history and the 1987 crash with the worst daily losses in history (but otherwise a mild bear market). You would eventually lose 82%, 13%, 38%, and 43% (respectively) at the bottom if you bought into those bear markets after the first 13% gain. A 13% gain came after the bottom in the other 6 bear markets.

So based on historical occurrences, 60% of the the time a rally of this magnitude came after the bottom, which sounds like decent odds. On the other hand, this top was most in line with the 1929 and 2000 peaks in terms of high valuations, suggesting a more prolonged bear market with multiple legs down and rallies mixed in. One might also compare the credit risks of this scenario with those of 1929 and 2008. There doesn't seem to be much similarity between this bear market and one of the milder ones.

Finally, with the record steep selloff, extremely high volatility, and unprecedented stimulus measures, one would expect some random but meaningless extremely good days mixed in with the extremely bad days we've been having, compared to previous bear markets which were (so far) all milder than this one. This 13% rally may only be "equivalent" to an inconsequential 5%-10% rally in a more historically normal bear market.

Edit: there was also another bear market within the Great Depression starting in 1937, but since the S&P had not recovered from 1929-1932 to make new highs (new highs in price were not until 1954!) my lazy spreadsheet does not flag it as another new bear market. Its peak is 3/11/37 at about 41% down from the 1929 peak and bottoms exactly 5 years later, 3/11/42, -57% from the 1937 peak! In those 5 years there were big rallies > 13%.
Last edited by Lucky C on Thu Mar 26, 2020 10:23 am, edited 1 time in total.

CS
Posts: 554
Joined: Sat Dec 29, 2012 10:24 pm

Re: Investments Trade Log

Post by CS »

@lucky C
Thanks for the data on rallies - that was interesting to see.

Not really an investment, but my treasury direct reinvestment went through and I made 9 cents on 4k! Lol, I logged in half expecting to see it negative. In 2018 I was getting about six and half bucks every four weeks for 4k. This zero percent interest is not motivating. (Yes, I know it's more complicated with inflation and all that... I'm talking psychological reactions.)

@Bankai
Apropo no professional experience, I can't imagine this is the bottom.
Last edited by CS on Thu Mar 26, 2020 8:40 am, edited 1 time in total.

ertyu
Posts: 935
Joined: Sun Nov 13, 2016 2:31 am

Re: Investments Trade Log

Post by ertyu »

took profit on gdx. made up half of what i lost in my limp-wristed trade last month, and am almost entirely in cash again. Meanwhile SPY goes VROOOOOOOM like 3.5mln jobless claims and a global pandemic aren't happening and QE5 is

Market close rally edit: ok, today's rally officially gave me the creeps. There are refrigerator trucks backed into hospitals to cart out the bodies for god's sake.
Last edited by ertyu on Thu Mar 26, 2020 3:21 pm, edited 1 time in total.

Jason
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Joined: Mon Jan 30, 2017 8:37 am

Re: Investments Trade Log

Post by Jason »

Lucky C wrote:
Thu Mar 26, 2020 7:55 am
One might also compare the credit risks of this scenario with those of 1929 and 2008. There doesn't seem to be much similarity between this bear market and one of the milder ones.
Thanks for chart. My understanding of 1929 was that the personal devastation spiraled not merely on the precipitous drops in stock prices but because most personal investors borrowed money to invest and were basing their repayment of the loans on future gains. As opposed to today, where it's mainly 401K evisceration.

Seppia
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Location: Italy

Re: Investments Trade Log

Post by Seppia »

great stuff Lucky C, thanks for the data

Lucky C
Posts: 561
Joined: Sat Apr 16, 2016 6:09 am

Re: Investments Trade Log

Post by Lucky C »

You're welcome. I was interested in seeing how it's played out in the past and already had a spreadsheet handy. I don't know if it's of any use for making trading decisions. Mainly shows how much uncertainty there still is and we shouldn't jump to conclusions after such a rapid decline and now a multi-day rally.

thedollar
Posts: 149
Joined: Tue Feb 21, 2017 4:07 am

Re: Investments Trade Log

Post by thedollar »

Volkswagen burning 2.2 bn USD a week currently with no revenue..... I guess there are several other major corporations in a similar or worse position out there. Smaller companies are probably even worse off.

Income/revenue destruction will cause shit to hit the fan if the lockdown (now 3bn people under lockdown) is kept up for more than a few weeks more. I have been wrong before but this and daily cases/hospitalised increasing exponentially surely will add uncertainty to the market. I predict a major drop for equities Monday/next week.

ertyu
Posts: 935
Joined: Sun Nov 13, 2016 2:31 am

Re: Investments Trade Log

Post by ertyu »

@thedollar: the countereargument to your argument: https://brrr.money/

The logo is the Fed's, but all major central banks are QE-ing through the roof. Everyone is in "whatever it takes" mode. These nice people here have made us charts:
https://e-markets.nordea.com/api/resear ... ent/109171

While I agree with you that the real economy isn't faring well, the amount of money printing done means that it is difficult to translate this into short term market predictions. The market might do well, or it might not. I was thinking about just this today and it seems to me the potential unwinding (or not) of institutional risk parity trades + the "gamma flip" dynamic + QE will have much greater impact on mkt trends than conditions in the real economy -- as they did before the spx tumbled off a cliff.

winedarksea
Posts: 1
Joined: Thu Mar 26, 2020 4:18 am

Re: Investments Trade Log

Post by winedarksea »

@Lucky C

Good job on this research. If anyone's interested in more info on the bear market bounce phenomenon there's a discussion on the latest episode of the Macro Voices podcast #212 https://www.podbean.com/ew/pb-5yia4-d755f0

eregal
Posts: 9
Joined: Sun Dec 02, 2018 12:43 pm

Re: Investments Trade Log

Post by eregal »

@ertyu, seeing your other comment (viewtopic.php?p=208285#p208285), how are you planning to re-enter the market and jump in before the prices get too expensive (even if it looks as if the Central Banks are making an asset bubble)? I worry about this scenario.

ertyu
Posts: 935
Joined: Sun Nov 13, 2016 2:31 am

Re: Investments Trade Log

Post by ertyu »

I'm erring on the side of staying out for now. Yes, it is possible I miss a move up, but I am fundamentally risk averse and a chicken. I'd much rather miss a move up than risk a move down. While the Fed is printing, the worst is not over out there. I'm waiting for a second leg down with the full awareness that there might not be one. Smarter people than me are making the argument that we need another shock / surprise before that can happen - but in these weird times, the probability of weird shocks isn't small at all. This is what's right for me at this point, given age, employment status, size of stash, etcetera. Someone younger or currently gainfully employed might have a different risk calculus.

Update: this guy here makes sense to me

https://seekingalpha.com/article/433437 ... -to-decide

Though the guys that say printing is just beginning and nominal stock prices will rise make sense to me also. This group recommends capital preservation through being long quality companies with good balance sheets. But I have not done the research to know what those are.

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Lemur
Posts: 615
Joined: Sun Jun 12, 2016 1:40 am

Re: Investments Trade Log

Post by Lemur »

Two weeks ago, I sold cash covered puts on GE, KO, WFC, Apple, WMT, and BRK.B. I was assigned on KO ($50 strike, stock closed ~$44) and Walmart ($120 Strike, closed at $109).

The stock chart for WFC was fun. Like the last 10 seconds of a close basketball game or something. My strike was $30 and stock closed at $30.28.

With IV so high, I'm enjoying collecting great premiums and setting strike prices about 10-15% below current price. Next Monday's move are to wheel the above again. For the ones I was assigned, going to set covered calls. I'm still bearish.

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Bankai
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Re: Investments Trade Log

Post by Bankai »

Coronavirus: Six months before UK 'returns to normal' - deputy chief medical officer

https://www.bbc.co.uk/news/uk-52084517

This is the first time the UK government hinted at just how long the lockdown might really be in place. The implications on GDP/economy will be on a scale not seen before. In my opinion, this makes whole sectors of the economy uninvestable - travel/leisure industry, airlines, restaurant sector, cinemas, non-food retailers without a strong online presence, etc. It's highly likely that a large number of companies in these sectors will go bust and although there will obviously be winners benefitting from reduced competition during recovery, it would be extremely difficult to figure out in advance which ones will survive. As for the government bailing out companies - you can't bail out the whole economy. The government had already ruled out an industry-wide bailout for airlines/airports and would only be looking to step in if all other options are exhausted. Now, some airlines sit on billions of £ and are likely to survive with no revenue for several months, maybe over a year. But, those who don't and actually need government help, are likely to see existing shareholders diluted or completely wiped out. The same applies to other sectors. It looks increasingly likely to me that bottom picking stocks in this environment is nothing more than a gamble. Waiting for the recovery to start and only then backing up the ones still standing seems a superior strategy.

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