V shaped recovery

[sevoflurane]

Nothing like 2008. I have personally never seen a market carve it’s way down and rebound so quickly.



Covid market has been the single best market I have ever seen in such short time. If you had the guts to invest heavily you accelerated your retirement.

Not out of the woods, but the market wants to move up and we are approaching an election year with a president whose main focus is the market highs.

Airlines and oil jumping. Still some value out there but drying up.

Those who sat on the sidelines and invested as “usual” may be at a disadvantage.

Hopefully this keeps up.

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[Greenbayslacker]

What would you suggest investing in at this moment?

 

[Arch Guillotti]

Those who sat on the sidelines and invested as “usual” may be at a disadvantage.

Maybe, but you are a fool if you are trying to predict the market.

 

[caligas]

What would you suggest investing in at this moment?

he didn’t

 

[sevoflurane]

Maybe, but you are a fool if you are trying to predict the market.

Lol. Ok.

 

[sevoflurane]

he didn’t

At this point I am just back to dollar cost averaging.

 

[sevoflurane]

Maybe, but you are a fool if you are trying to predict the market.

Classy comment and contribution as I would expect from you. Name calling?

Who said I am predicting the market?



I am not. But when the market is down 40% over a short period, I am an investor with a long horizon time.

You do you my dude.

Anywho... Nothing like 2008.

Not saying it won’t go back down.

 

[sevoflurane]

What would you suggest investing in at this moment?

My last purchase was RIG last Thursday. Up 48% today.

 

[marr65]

Easy come, easy go. I’m waiting when interest rate goes up and if we “punish” China for Covid-19. I’ll buy the dip at that point. This recovery smells like market manipulation at the moment.

 

[BLADEMDA]

I piled in at 2500 and more at 2400. I did not buy at the lows. My portfolio has now fully recovered to precovid levels. As I have posted this was an easy way to make 20-25 percent. Now, the market is over valued. I do not recommend US stocks except banks and maybe energy if you are bold.

Instead, European stocks are the better buy. They have not recovered to pre Covid levels. So, you probably could make about a 20 percent return over 1 year. It’s a good bet.

If you want US equities then look hard at the trash. Those stocks destroyed during the crash. Besides those stocks small caps have room to run as well.

 

[okayplayer]

Sevo, I would argue that those of us who didn’t adjust our asset allocation and just kept auto investing all the way down and all the way up through this (and all prior volatility) will do well in the long term.

I had several partners liquidate and go all cash back when we were down 30%, telling me “we aren’t anywhere near the bottom yet.” I’m not gloating. I feel bad for them. Now they are in a difficult spot.

If this thing has taught me any lesson at all it is that the market will never react as severely or for as long as we would anticipate to outside events. The reason being that the fed/congress/president will intervene to assure the equity markets recover.

Other than that, I remain humble. My crystal ball is still cloudy.

 

[BLADEMDA]

Easy come, easy go. I’m waiting when interest rate goes up and if we “punish” China for Covid-19. I’ll buy the dip at that point. This recovery smells like market manipulation at the moment.

This market is too expensive. I am not a buyer at these levels. But, I have more cash to invest so I’m not selling either. If I was 100 percent invested in equities I would sell 10 percent at these prices.

 

[Mad Jack]

Sevo, I would argue that those of us who didn’t adjust our asset allocation and just kept auto investing all the way down and all the way up through this (and all prior volatility) will do well in the long term.

I had several partners liquidate and go all cash back when we were down 30%, telling me “we aren’t anywhere near the bottom yet.” I’m not gloating. I feel bad for them. Now they are in a difficult spot.

If this thing has taught me any lesson at all it is that the market will never react as severely or for as long as we would anticipate to outside events. The reason being that the fed/congress/president will intervene to assure the equity markets recover.

Other than that, I remain humble. My crystal ball is still cloudy.

Never pull out. My strategy has always been to accelerate investing during bear markets and cut back to my usual level once things recover. Always add, never subtract until you're ready to retire.

 

[okayplayer]

Never pull out. My strategy has always been to accelerate investing during bear markets and cut back to my usual level once things recover. Always add, never subtract until you're ready to retire.

Fair. I already automatically invest all excess money I can afford to (after paying living expenses, etc) so there is no “extra” for me.

 

[sevoflurane]

Good comments above. We are back on track to discussing the current market. It is certainly historical if this continues.

@okayplayer : Yeah dude. That is a great way to get to the end line. No problems with that. I am close to how @Mad Jack invests. I always dollar cost average and buy on dips. Hardly EVER sell unless I need to rebalance back to bonds. 10% drop I invest some, 20% I invest more, 30% I am totally happy dropping in some cash, 40% defiantly going in heavy and so forth.

I liquidated all of my money market accounts and sold a lot of other assets outside of my Vanguard accounts while maintaining 1 years worth of "ohh **** funds". Bought all the way down and all the way back up until last week (see my previous posts from a few months back). I didn't hit it the day we dropped 10%, but went in strong the day after. I actually didn't mind if it was going to be like another 2008 type of recovery. No big deal. I have time on my side.

VDE was at an ALL TIME low as were many others (stuck mostly to etf plus selective stock purchases of good companies I wanted to own or increase my position with those that were possibly oversold).

Didn't lump sum anything and have been pleasantly surprised at how the market has done (although it DOES feel disconnected). I am 12-14% above pre-covid returns and am factored in if we continue to go up- could easily still be negative without this rebound. Plenty of risk still out there as this has been one crazy ride considering everything that has been going on Covid/riots/oil wars/etc. Interesting times for sure... I feel very bad for those who sold at the bottom.

 

[sevoflurane]

BTW, someone said small caps... I am cautions with those for now. A lot of businesses btw 300 mil and 2 bil are going to go belly up if they haven't already. I could be wrong, but what this current market has told me is that the big companies stay big.

 

[D P356]

Dead Cat Bounce?

 

[pgg]

I had several partners liquidate and go all cash back when we were down 30%, telling me “we aren’t anywhere near the bottom yet.” I’m not gloating. I feel bad for them. Now they are in a difficult spot.

The bold buy-high sell-low strategy, Cotton, let's see if it pays off.

Ouch

 

[deleted126335]

The bold buy-high sell-low strategy, Cotton, let's see if it pays off.

Ouch

You can make it up by using leverage.

 

[pgg]

I'm not a market timer but we made some IRA deposits at the beginning of April when we did our taxes, so we were lucky to put in some cash near the lows. Of course, did the backdoor Roths in January. Never did change my asset allocation to 90/10 the way I was pondering a couple months ago, wish I had, oh well.

I have a hard time believing there won't be another huge dip between now and the election. The economy took a much bigger hit than a ~10% correction would seem to indicate. COVID will probably make a bounce back. Someone will manipulate something before the election. The S&P 500 being back at 3200 today seems like the irrational dial has been turned to 11.

Right now it's tempting to change my AA to 50/50 but I guess I won't do that either.

I'll just have to live vicariously through others, celebrating Sevo's success while recoiling with horror at okayplayer's partners' losses.

 

[OTCAwesome]

Dead Cat Bounce?

Cat would have to be made of completely irrational flubber

 

[dabears505]

I dont foresee the market going brown for the foreseeable future. The fed will do whatever it has to to keep it up.

 

[bobow98]

any good european etfs you have to recommend?

 

[sethco]

BTW, someone said small caps... I am cautions with those for now. A lot of businesses btw 300 mil and 2 bil are going to go belly up if they haven't already. I could be wrong, but what this current market has told me is that the big companies stay big.

Small caps are outperforming the broader stock market — Axios

While still trailing the S&P 500 and other major U.S. stock indexes by a solid margin year to date, the Russell 2000 index, which consists of many of the country's smallest public companies, has outpaced the broader market's rebound since March 23.

apple.news

The small cap recovery has been quite remarkable. However, this is what small caps are designed to do and they are not for those that panic easily. They are much more volatile than the very large caps that compromise the S & P 500 and make up the vast majority of the Total Stock Market. The very long term performance of the small value category has exceeded the large caps despite their volatility (despite the large caps beating them over the past 1-2 decades). I tilt slightly towards REITs, small cap and emerging markets (Also underproduced recently, but good long term track record) to the tune of 5-10% each. Rest of stocks come from total us stock and total international. 85/15 stock to bond ratio. Kept on dollar cost averaging throughout the downturn and steady rise and my only special actions have been 1) rebalancing to maintain my asset allocation and 2) tax loss harvesting. I have no complaints or regrets about anything I have done so far this year and going forward don't plan to make any major changes based on market conditions

 

[okayplayer]

^
I
smart dude

 

[MikeMerk-MtS]

What would you suggest investing in at this moment?

Bitcoin.

 

[sevoflurane]

Emerging markets have been dog-$hit for a very long time. My 2 cents.

 

[deleted126335]

Emerging markets have been dog-$hit for a very long time. My 2 cents.

If you believe in mean reversion they are due. Also exceptionally cheap. I have an overweight in DGS and SFENX.


Sent from my iPhone using SDN mobile

 

[deleted126335]

Small caps are outperforming the broader stock market — Axios

While still trailing the S&P 500 and other major U.S. stock indexes by a solid margin year to date, the Russell 2000 index, which consists of many of the country's smallest public companies, has outpaced the broader market's rebound since March 23.

apple.news

The small cap recovery has been quite remarkable. However, this is what small caps are designed to do and they are not for those that panic easily. They are much more volatile than the very large caps that compromise the S & P 500 and make up the vast majority of the Total Stock Market. The very long term performance of the small value category has exceeded the large caps despite their volatility (despite the large caps beating them over the past 1-2 decades). I tilt slightly towards REITs, small cap and emerging markets (Also underproduced recently, but good long term track record) to the tune of 5-10% each. Rest of stocks come from total us stock and total international. 85/15 stock to bond ratio. Kept on dollar cost averaging throughout the downturn and steady rise and my only special actions have been 1) rebalancing to maintain my asset allocation and 2) tax loss harvesting. I have no complaints or regrets about anything I have done so far this year and going forward don't plan to make any major changes based on market conditions

I have been tilting to small and value for a long time. Loved 2000-2010. 2010-2020 not so much.


Sent from my iPhone using SDN mobile

 

[linkin06]

Vanguard target funds have equities 60:40 US:INT

 

[BLADEMDA]

My crystal ball tells me NOT to buy more U.S, equities at these prices. I agree that the market needs to pullback at least once during the summer. For those that need or want to invest more money (like me) a pull back represents opportunity as 2021 should be a very good year for equities. That said, if Biden wins the election (likely) and the Dems pass huge tax increases I am less certain about 2021. Healthcare has been a good investment but a Democrat win could mean more Medicare Options and attacks on the healthcare industry leading to FEAR about those companies.

My 2 cents is to maintain your allocation at this time. For those that are 100% invested in equities consider an allocation of 90/10 so you have cash on hand to buy more at lower prices.

 

[BLADEMDA]

BTW, someone said small caps... I am cautions with those for now. A lot of businesses btw 300 mil and 2 bil are going to go belly up if they haven't already. I could be wrong, but what this current market has told me is that the big companies stay big.

During the recent selloff I did not add to my small cap value or small cap blend. But, I did add a little to small cap growth and that paid off. I did add a chunk to midcap value and large cap value which are both trading at a discount to large cap growth. But, my biggest purchases were Vanguard ETFs like MegCap, Information Technology and the S and P 500. All easy to pick winners over the past 3 months.

 

[BLADEMDA]

Vanguard target funds have equities 60:40 US:INT

Last year I reduced my International exposure by 10% in my portfolio. I am 80:20 Us/International and am happy with that exposure. Of course, when International does rally I expect my overall portfolio to be more like 75/25. The USA is still the best place to invest long term and large cap developed international exposure does not add to diversification per Morningstar. What does add to diversification is Emerging markets. IMHO, most developed international companies trade with their U.S. counterparts in terms of gains/loses so one should just pick the best companies regardless of location. That means International ETFs don't add much to a portfolio in terms of the overall market.

I chose to buy the best Chinese companies for my portfolio. There are probably only like 5-10 worth holding long term for the average investor. I have 3 of them.

At this time International stocks have NOT recovered like their U.S. counterparts so I would not sell them. But, once we return to the normal in 12-18 months I would not recommend a 60/40 ratio of U.S. to International. IMHO, such a portfolio will underperform a U.S. based portfolio significantly. I do think there is opportunity in International companies which is why I hold a 20-25% position in my portfolio. I used to think my main reason was DIVERSIFICATION to lower risk but that is no longer the case. Morningstar states the reason to hold developed international ETFs or Mutual Funds is to make money.

 

[BLADEMDA]

 

[BLADEMDA]

 

[BLADEMDA]

The graph above shows that the developed International market is closely correlated to the USA market. This limits the diversification argument for buying International equities.

But, there are great International companies out there worth owning which are selling much more cheaply than their U.S. counterparts. These companies offer "value" vs their U.S. counterparts which are much more expensive.

Hence, there is a strong argument to be made that every portfolio should have international exposure. The question is how much and what type of ETFs or Mutual Funds do you want to hold? The percentage varies from 15%-50% with many advisors recommending a 30% allocation to foreign stocks.

Like in the USA Foreign Large Cap Growth has outperformed Value.

 

[amyl]

pick up the airline stocks when they crash in october.

 

[BLADEMDA]

With a high P/E premium on international growth stocks, it’s time to take a closer look at value.

• The current P/E premium for international growth vs. value stocks is well above the historical average and the highest it’s been in 13 years.

• Rebalance portfolios with purpose. After a long period of growth leading value, now may be a smart time to diversify your equity exposure with value stocks, particularly on the international side.

 

[sethco]

Emerging markets have been dog-$hit for a very long time. My 2 cents.

How do you define a "very long time"? You may be exhibiting some recency bias. Emerging markets outperformed Large Caps from 2001(when it first appeared)-2007, 2009-2010, 2012, and 2017. So, out of the 18 years, Emerging markets outperformed the S&P 500 11 times. I'm not saying to dump 50%+ of one's stock allocation into EMs, but just as an option for slight tilting. Personally, I like 5-10%

 

[okayplayer]

You young guns should listen to Sethco. He consistently brings solid advice to the table on investing.

 

[sevoflurane]

View attachment 309108


How do you define a "very long time"? You may be exhibiting some recency bias. Emerging markets outperformed Large Caps from 2001(when it first appeared)-2007, 2009-2010, 2012, and 2017. So, out of the 18 years, Emerging markets outperformed the S&P 500 11 times. I'm not saying to dump 50%+ of one's stock allocation into EMs, but just as an option for slight tilting. Personally, I like 5-10%

I’ve owned emerging markets since 2007 and still own it. From 2007 to now, emerging markets have grossly underperformed compared to everything I own. My timeline is 13 years of investing. If it goes up great... for now it has been a flatline.

Past performance doesn’t equal future performance imo.

 

[twospadz]

The reason stocks havent dropped is because investors have been factoring in the FED and government intervening in advance this whole time. As of now, predicted earnings for 2021 and even 2020 are being also priced in. Also you have a lot of greedy people just investing their money and crossing their fingers. I do suspect a drop later this year when unemployment henefits dry up and unemployment numbers remain slightly high given reduced coporate earnings.

 

[deleted126335]

I’ve owned emerging markets since 2007 and still own it. From 2007 to now, emerging markets have grossly underperformed compared to everything I own. My timeline is 13 years of investing. If it goes up great... for now it has been a flatline.

Past performance doesn’t equal future performance imo.

If you choose to tilt away from the total market portfolio, you must be prepared to accept multi decade periods of under performance. That is the risk you bear for seeking outperformance, i.e., superior risk adjusted returns. Other than the fact that emerging markets haven't delivered for 10+ years, do you believe that your rationale for choosing to tilt that way was flawed? If so, abandon your tilt. If not stay the course or even commit the venal sin of increasing your tilt since they are so much cheaper now.

 

[sethco]

I’ve owned emerging markets since 2007 and still own it. From 2007 to now, emerging markets have grossly underperformed compared to everything I own. My timeline is 13 years of investing. If it goes up great... for now it has been a flatline.

Past performance doesn’t equal future performance imo.

What made you choose to start investing in Emerging Markets in 2007? You say "past performance doesn't equal future performance", which is absolutely true, but didn't the EM performance from 2001-2007 have something to do with you investing in them in the first place? All I'm saying, right now, is that the large caps have greatly outperformed the EMs and the Small Caps to the point that these are undervalued compared to the S & P 500. So, everybody around here always says to "buy the dip", well this is a relative dip in the long term for EMs and Small Caps. From 2008-present, the large caps have essentially ruled. Do you think this will hold for the next 10, 20, 30, or 40 years? If so, Historic data would disagree

 

[sevoflurane]

If you choose to tilt away from the total market portfolio, you must be prepared to accept multi decade periods of under performance. That is the risk you bear for seeking outperformance, i.e., superior risk adjusted returns. Other than the fact that emerging markets haven't delivered for 10+ years, do you believe that your rationale for choosing to tilt that way was flawed? If so, abandon your tilt. If not stay the course or even commit the venal sin of increasing your tilt since they are so much cheaper now.

View attachment 309142

Thanks Doze/Sethco.
Always listen to you guys clinical/investment related topics.
I have it, I own it, I don’t like it for now.
It definitely has been testing my patience.

 

[sevoflurane]

What made you choose to start investing in Emerging Markets in 2007? You say "past performance doesn't equal future performance", which is absolutely true, but didn't the EM performance from 2001-2007 have something to do with you investing in them in the first place? All I'm saying, right now, is that the large caps have greatly outperformed the EMs and the Small Caps to the point that these are undervalued compared to the S & P 500. So, everybody around here always says to "buy the dip", well this is a relative dip in the long term for EMs and Small Caps. From 2008-present, the large caps have essentially ruled. Do you think this will hold for the next 10, 20, 30, or 40 years? If so, Historic data would disagree

I am 5 years or so from retirement. I am not sure if 5-10% stake of my portfolio is what I am going to want by then. Will be rebalancing out of equities. I could be wrong.
For now I am keeping what I have.
I get what you guys are saying.

 

[deleted126335]

Thanks Doze/Sethco.
Always listen to you guys clinical/investment related topics.
I have it, I own it, I don’t like it for now.
It definitely has been testing my patience.

. Human beings are hard wired to be bad investors.

Think about your winning (outperforming) investment choices. They make you smile and feel good about yourself. So you are likely inclined to invest more AFTER the price has gone up. Think about your underperforming choices- They make you feel foolish, so you don't want to throw more $$ that way. Maybe even sell so you don't have to look at the damn loss every time you look at your portfolio. Even though they are now likely relatively cheaper to the market.
There are professorships built and fortunes made and lost on the study of behavioral finance.

THE BEST INVESTORS ARE DEAD OR DEMENTED OR FORGOT ABOUT AN ACCOUNT:

Fidelity’s Best Investors Are Dead | The Conservative Income Investor

A news item that has gotten a lot of attention recently concerned an internal performance review of Fidelity accounts to determine which type of investors received the best returns between 2003 and 2013. The customer account audit revealed that the best investors were either dead or inactive—the...

theconservativeincomeinvestor.com

 

[deleted126335]

I am 5 years or so from retirement. I am not sure if 5-10% stake of my portfolio is what I am going to want by then. Will be rebalancing out of equities. I could be wrong.
For now I am keeping what I have.
I get what you guys are saying.

The five or so years before and after retirement are the thorniest and most dangerous time time for investors.

 

[sevoflurane]

The five or so years before and after retirement are the thorniest and most dangerous time time for investors.

Yeah. I am a bit nervous about it.
It will be gradual. Testing the waters in a few years @ .5 fte. I am hoping that the investments in and out of the market will pay off.
Thanks for the article.

 

[deleted126335]

Don't sweat so much about growth vs. value, domestic vs. international, small vs. large. developed international vs. EM.

Worry about your stock/bond split. Every other portfolio decision pales in comparison, especially during these years.

Keep working part time, so you can flex up in case market(s) turn to ****. Much easier to do that than come back from full retiree.