Investments Trade Log

[jacob]

@Lemur - That is true. Sideward trading ranges too. Index investing is essentially a "large cap momentum"-strategy which is hard to beat when the market just goes up and up. Indeed the only way to beat it is by leverage... which is why some of the optimists were talking about doing just that until a few weeks ago. However, during other kinds of markets, other strategies do better.

Here's a book ... https://www.amazon.com/More-Than-You-Kn ... 231143737/

[Lucky C]

Sold again in the last few minutes of this glorious close.
Sorry for all the posts; it's been a busy week. Satisfied with this nice bounce, I'm done with the short term trades for now.

[jacob]

That was a supreme FOMO rally. Some futures traders are making a lot of money these days! We seem to have a trend of one up one down one up ... with wilder and wilder swings.

[Lucky C]

Yes and now that it's a clear trend it will cease to work!
I have no clue whatsoever what the next few weeks will look like.

[classical_Liberal]

Elder healthcare REITs are being pounded without mercy. Like OHI is down over 50% compared to mid-February, LTC is down 40% (share repurchase announced), & UHT is down 40%.

Nursing home's have two components. The long term care and SNF, or short term rehab. The former is paid, generally by medicaid, sometimes LTC insurance, or privately. The later is paid by medicare. Medicaid is very state dependant and payment tends to vary with the winds of politics, while Medicare is pretty well established and bypasses state politics. SNF tends to be the more profitable arm of these facilities. If COVID-19 does take its toll, lots of medicare aged folks will need the short term SNF stays for rehab post hospitalization. I highly doubt the fed's will pick this moment to change Medicare and start shorting funding for such stays. The price drop on solid companies like OHI makes me very bullish over the medium term on these stocks.

[IlliniDave]

Unsurprisingly, a lot of "passive" investors quickly become very active when the stock market stops going up slowly and steadily
without volatility.
I would be curious to see what's happening in the MMM forum. Is it still populated only by index ajatollahs who "will never sell", or is someone caving?

Can't speak to MMM indexers, I'm descended from the Bogleheads. I'm buying again, had been selling from Jan 2017 through February 2020. In defending my orthodoxy I'm just trying to maintain an AA (In this nascent Bear I'm currently too light in stocks). However, since I habitually make series of small moves to get from A to B versus individual larger moves, I'm not above picking my days. I've bought on all the days the drops were north of 5%, but very small buys, like on the order of a few percent.

Haven't spent much time on bogleheads these last 3-4 weeks, but there in the past I've often seen that fear trumps reason even in the buy/hold community. Even the staunches ideologues respect the fact that when SWAN is violated change is in order. I'm sure some jumped all the way out, and would guess it is the same on MMM. People are people no matter what ideology they profess.

[Seppia]

Thanks Dave.
That is on of the reasons why when I talk with people* I ALWAYS stress that psychology is the most underrated part of an investing plan.
A disciplined, reasonably diversified stock picker will often do significantly better than a prone to panic index investor.
I laugh when people obsess about 0.000000001% TER between funds. That’s never what really matters.

* I’m somehow recognized as a sort of “investing expert” among my peers, probably because 1- I’ve been investing since I was 26 (that’s 14 years ago) which is very young by Italian standards and 2- I’ve never panicked so far and people seem to respect that.
This in spite of the fact that I have made multiple mistakes throughout my years (recently, being overweight RDSA being the most obvious, never going all-in FAANG being the most damaging recently)

[IlliniDave]

Index funds are definitely playing a larger role this time. The selling is driving everything down more or less equally, even solid businesses. This is different than 2008/09 where fundamentals played a bigger role. It's really annoying to lose market value due to price-insensitive sellers, but on the other hand the index pressure is creating much better prices in the good stuff than was the case during the credit crunch.

Also, we're now seeing a live demonstration of the kind of risk of so many piling into index funds creates. We've discussed this on and off on the forums over the years.

Are there any hard numbers behind that yet? From the anecdotal pile I still see gainers on "most active" lists and "top gainers" lists even on the days the market overall falls 5%-7% or more. Although I'm majority indexed (and an equities buyer since February) I do have a few other things in my play money Roth account. Some have fallen noticeably sharper than the market (e.g., an energy sector fund) and others have fallen noticeably less (a healthcare sectors fund). Overall I believe small cap has been hit harder than large cap as well, and "value" worse than "growth". Even deeper into the anecdotal realm, all the people I know who have totally jumped out are pickers. All the indexers I know personally are buying in right now. Small sample size in both cases.

I know some traders traffic in ETFs, especially the SP500 type, but if they were driving the boat regarding the decline wouldn't large caps be down significantly compared to non-large caps? Maybe that's the case and I'm just misunderstanding what I'm looking at? I haven't actually gone out and collected the numbers, just a glancing comparison of the YTD returns of funds I either hold or that are available in my 401k plan. No doubt people jumping out of mutual funds puts an amount of indiscriminate pressure on the market, but is it really different this time due solely to index funds? Once they get it all sorted out it will make for an interesting read.

[IlliniDave]

Seppia, as you know I have an attachment to the area where you live, and should have prefaced my last note by saying that it pains me to see what has been happening in that region and I hope that the crisis will subside quickly. I've heard from a third cousin that we still have family living in the area, although I've never met any of them. Funny side note: this cousin was a friend in high school, a year behind me, and at the time we had no idea we were related. At one point just before I departed for college we came within a hair's breadth of "dating". Had that happened I'd feel pretty weird about it in hindsight, although at least here in the US it wouldn't technically be illegal to follow that path to the traditional successful conclusion (i.e., marriage).

The people I know who obsess over hundredths of a percent of expense ratio (assuming that's what you mean by "TER") are often the same people who will drive five miles out of their way across town to save a penny on gas. Missing the forest for the trees. But there is a reason "Where are the Customer's Yachts?" was written. The difference between 1.5% and 0.05% is significant for those of us that rely on mutual funds for most of our investing. The DIY approach of picking probably beats even the best-run index funds for cost, but to quote an old movie, "A man has to know his limitations."

[Lemur]

@Jacob

Thanks for the book recommendation. Picked it up.

[jacob]

ZIRP has arrived in the US. Furthermore, QE restarts with $700B.

[Lucky C]

And stock futures hit limit down anyway.
Goodbye hopes of a quick V-shaped recovery.

[Jin+Guice]

Does anyone think that doing the rate cuts and QE at the start of the outbreak is not a wildly terrible idea?

[TheWanderingScholar]

@Jin+Guice:
I don't know man. This is so much different from other financial crisis's I just don't know. All I know is a recession is pretty much guaranteed at this point, listening to my gut instinct.

[George the original one]

Remember that Wuhan is still under lockdown, case counts have only stabilized, and we haven't even gotten to a lockdown yet. Italy's lockdown only began a week ago (10(?) days for Lombardy).

So, yes, a recession is a guarantee.

[ertyu]

deflationary or stagflationary?

[Lucky C]

Recession odds during Trump's 1st term at 75% currently on predictit.org

Supply chain disruptions -> shortages = inflationary?
Unsustainable US govt debt -> loss of faith in USD = inflationary?

[George the original one]

I think a lot depends on how many go broke rather than merely deeply in debt.

[Bankai]

Bloodbath continues, FTSE opened 7% down and is now 35% off last July's peak. How low can it go? I start to think it might drop 50% by summer's epidemy peak. Which would mean 8-9% dividend yield when (if) earnings return to previous levels.

[Seppia]

If we keep this on we may be 50% down by the end of this week
This is getting better by the day, P/E of a european index is around 10.8 now (granted, earnings will drop significantly). Div yield now at 5.1% which is extremely juicy considering where bonds are