Financial Markets Meltdown

[fishtank]

slight jump in the vix ...

[raab]

Worth watching for anyone who's missed it. Nice to see Dalio educating people when he could easily be sitting back on a beach somewhere.

https://www.youtube.com/watch?v=XGveJ5MyJRc

[bdub]

^^^ Thanks for posting the video. It's always worth listening and reading what he's got to say I think.

Sure didn't see much action on bonds today, they are not the equity hedge they have been in the past. I'm betting lots of folks are going to find that out the hard way that they are going to be in for a rougher ride than expected if they are holding the typical 60/40 stock bond portfolio. Investors need to be thinking outside that box imo.

[Map Maker]

If the markets drop heavily for the next three weeks, it will regain my confidence that the markets are always correct.

[raab]

Originally Posted by bdub

^^^ Thanks for posting the video. It's always worth listening and reading what he's got to say I think.

Sure didn't see much action on bonds today, they are not the equity hedge they have been in the past. I'm betting lots of folks are going to find that out the hard way that they are going to be in for a rougher ride than expected if they are holding the typical 60/40 stock bond portfolio. Investors need to be thinking outside that box imo.

I think the big thing to realize is cash is worthless, and to be invested in high quality stocks, land, or housing to protect against inflation. Workers will be hit the hardest as they're the last to see the effects of inflation.

[fishtank]

Originally Posted by Map Maker

If the markets drop heavily for the next three weeks, it will regain my confidence that the markets are always correct.

Aim for November

[bdub]

Originally Posted by raab

I think the big thing to realize is cash is worthless, and to be invested in high quality stocks, land, or housing to protect against inflation. Workers will be hit the hardest as they're the last to see the effects of inflation.

Maybe not worthless just yet but certainly a depreciating asset. When you can borrow it at the low rates of interest today its hard to make sense of holding a large chunk of cash equivalents as a semipermanent part of the portfolio. GICs are paying next to nothing. Bonds scare the crap out of me here with little in the way of a tailwind anymore with ten year yields in the .60 range and the USD tanking despite the FEDs lower for longer stance. I would add precious metals, commodities, and even art or collectibles to your list as a way to protect your wealth.

Another item of note today is Chinas statement that they are reducing their holdings of UST’s by 20% due to the level of US debt/deficits. Economic warfare between the US and China is picking up.

[fishnguy]

Surprisingly, airlines and cruise companies were up for the better part of the day. Tech was due for correction. Especially Tesla and it will probably sink more in the days to come. Musk won’t be the third richest man in the world for long, lol.

Edit: just looked and Tesla is down almost 25% (including the post market) from the high point on September 1 of $502.08. Didn’t think it was that bad, but insanity must have stopped somewhere.

[Sundancefisher]

Markets had to fall. They’ve been propped up artificially for a while and spending and growth on average is way down.

Even a stagnant economy for a year should impact markets.

With all the trade fights. Low demand indicators for oil. Bankruptcies. Impact of hurricane damage down south. Massive debt and growing deficits.

Yup...a shake up should come. Question is what is the market going down? 2%. 5%. 10%. 15%?

Should be interesting.

[bdub]

Originally Posted by fishtank

slight jump in the vix ...

Have a look at the VIX vs the Nasdaq or SP500 since mid August and in particular from Aug 17 until things started to crack. Thats not a normal correlation. To much speculation to the upside.

[fishnguy]

Originally Posted by fishnguy

Surprisingly, airlines and cruise companies were up for the better part of the day. Tech was due for correction. Especially Tesla and it will probably sink more in the days to come. Musk won’t be the third richest man in the world for long, lol.

Edit: just looked and Tesla is down almost 25% (including the post market) from the high point on September 1 of $502.08. Didn’t think it was that bad, but insanity must have stopped somewhere.

That Tesla is flying, lol.

Past five days:



The returns are still good though. I would be worried about what’s left of the monthly gains if I was holding:



Year-to-date and yearly gains are really amazing though.

[Map Maker]

As a self-perceived Value Investor, one of the first things I look at is P/E ratio. Anything under 20 is considered for a second look.
With a P/E of 872, this stock boogles the mind. It's all speculation that Tesla will be the Ford of the future.
Not worth it for me.

I'm glad to see the markets continue to drop. It was artificial anyways, and it's better to drop now than the bubble burst in 6 months.
I would like to see the TSX at 14,500 but think that may be optimist.

[Dynamic]

I got some shares in TSLA and wow glad that day is over lol. That being said I’m still got most of my shares before it took off this year so it’s going to have to go down way more before I start sweating. I’m in for the long game.

[KinAlberta]

Originally Posted by Map Maker

If the markets drop heavily for the next three weeks, it will regain my confidence that the markets are always correct.

Benjamin Graham once said something to the effect that: in the short term markets are voting machines and in the long term they are weighing machines. This is a widely quoted sentiment.

Now think about that. We live in the short term. We never live in that long term. Today is all we ever have so we are always in that state where the value of the market is just an aggregation of airy-fairy participant votes. Every day in every market is just a confidence game. People saying that no one can predict the future but then proceeding to do just that.

[KinAlberta]

Originally Posted by Map Maker

As a self-perceived Value Investor, one of the first things I look at is P/E ratio. Anything under 20 is considered for a second look.
With a P/E of 872, this stock boogles the mind. It's all speculation that Tesla will be the Ford of the future.
Not worth it for me.

I'm glad to see the markets continue to drop. It was artificial anyways, and it's better to drop now than the bubble burst in 6 months.
I would like to see the TSX at 14,500 but think that may be optimist.

Using a below 20 PE is a very old standard of practice. It’s not a good practice as it hasn't worked well over the past couple decades. Same with low book value investing.

Decades ago Buffett said that value and growth are two sides of the same coin. That makes sense to me.

On bursting bubbles. Nothing better can happen for a prepared investor. Busts cause panic pricing through liquidity crises and collateral damage. Slow declines are better for the economy and society but they suck the life out of the investing game.


A good read below. I agree that governments have repeatedly bailed out investors by privatizing the gains and socializing losses. Conservative thoughtful intrinsic value or better seeking investors have been thoroughly screwed over via ZIRP and other market manipulations:

Bob Rodriguez: Welcome to the ‘End of the Capital Markets as We Know Them’ | ThinkAdvisor

“We have entered a far more dangerous environment where normal rules of analytics will likely not apply,” where “the risk side of the equation” has been “truncated,” making a “return-vs.-risk evaluation essentially meaningless” — because “everything is essentially socialized as to risk.”

Thus, “There is no accurate pricing discovery in the capital markets because we have entered into a period of total manipulation,” he wrote. ...”

...

Do you have any respect at all for what the Fed is doing?

I’ve been outraged at the incompetence of the Federal Reserve starting with [former chair] Alan Greenspan. He started this perversion — the socialization of risk — and the Fed has been continuing to build it for over 30 years. Here we are now basically guaranteeing everything. If that’s not a distortion of the system, I don’t know what is!

Before Alan Greenspan was chair, did the Fed meet your expectations?

There have been only two great Fed chairmen: Paul Volcker and ...”

https://www.thinkadvisor.com/2020/03...-we-know-them/

[Drewski Canuck]

When it comes to the so called "socialisation of risk" what you have to ask is WHO IS THE BIGGEST INSTITUTIONAL INVESTORS IN THE MARKETPLACE???


Take a wild guess who has 10's of Billions invested in the stock market???

How about Canada Pension Plan, Quebec Pension Plan, Sovereign Funds like the Heritage Trust Fund and AIMCO (Alberta's Provincial Pension Plans and Investment Funds).

We are small fish in the marketplace.

Go to State Employee Pension Plans like California and New York and you will understand why the markets have been controlled.

Its because Governments are some of the biggest institutional investors out there. Imagine Norway's Sovereign Investment Fund rolling into a Market, or a Segment of a Market. They don't make a splash. They make a TIDAL WAVE. Likewise, when Norway's Fund says to a Company that they are pulling out because Norway does not like the environmental policies of the Company, they have the ability to steer any Company in any direction they want, for fear of a massive sell off of the stock.

The scary part is, Nations like Saudi Arabia have the clout to change the policies of other Nations through removal of investment or large purchases in the target Nation's Stock Market. All you have to look at is what a hornet's nest was created by a few female Liberal MP's making comments about Saudi Arabia's policies towards Women, and the backlash that created for Canada when Sparkle Socks had to wag his tail for his back benchers. Canada almost lost the General Dynamics LAV Sale over that one ($16 Billion total Contract Value).

Drewski

[Sundancefisher]

So is this the start of the second wave stock market pull back and normalizing?TSE down 315
DOW down 690

[Buckhead]

I like to watch this fellow from time to time.
It doesn't hurt to include some Elliot Wave analysis.
https://www.youtube.com/watch?v=cQfifaFGryw

[elkhunter11]

Originally Posted by Sundancefisher

So is this the start of the second wave stock market pull back and normalizing?TSE down 315
DOW down 690

If it is, I will be doing some buying

[badbrass]

Silver dropped $2.81 a oz
Gold dropped $41.59 a oz.

[Sundancefisher]

Originally Posted by badbrass

Silver dropped $2.81 a oz
Gold dropped $41.59 a oz.

Oil and gas prices dropping also.

https://www.bloomberg.com/energy

[Buckhead]

Originally Posted by elkhunter11

If it is, I will be doing some buying

Likewise.
I have some cash sitting on the sidelines waiting for an opportunity.

[Sundancefisher]

TSX down 2% to 15,817 (as high as 17,933)

DOW down 1.9% to 26,763 (as high as (29,551)

Interesting to see the stock market fighting the numbers and forecast. I still see more correction coming. Especially in Canada after the budget.

[badbrass]

Silver going lower! Down $4.66 a oz, in a couple days!

[fishnguy]

Government support is drying up, so down she goes.

Any lucky bastard was holding SPI Energy yesterday at close and sold at high today? Closed at 1.05 yesterday. High of $46.65 today. Man...

[bdub]

If I wasn't already fully loaded up on gold here I would be buying this dip. The last opportunity came around in March and we took full advantage of that one.

[badbrass]

When thing get tough! There are always sellers! Bought a 1/4 oz Gold Maple Leaf today! My first gold coin!!!!!

[badbrass]

[Dean2]

Below is the First post I made on this thread Feb 25 and my last post prior to this on Nov 11th. Was looking at the indexs and various stocks today. DOW over 30,000, NASDAQ at record highs and the TSX is very close to the High of Feb this year. Except for Oil and Gas, Travel and REITs almost all other stocks have come back to their previous levels or even exceed them.

It was interesting to read through this post from the beginning this morning and see just how much stuff has happened since the thread started. It is also very interesting to see just how wrong and how pessimistic the expectations were in March and April. Considering the second wave of Covid is far worse than the first in Case count but not in severe outcomes, the fact the market continues to roar ahead as a result of the massive infusions of free cash tells you that fundamentals are important and liquidity is a fundamental issue. Hope everyone has a great Santa Rallty happening to them and a Merry Christmas.


Nov 11, 2020

Originally Posted by Dean2

Figured it was time to awaken this thread. So, NASDAQ is at an all time high, from previous high to low back to record high in less than 5 months, qualifies as the shortest bear market cycle in history. TSX is back to within 1400 points of its previous high of 18,000 mid Feb this year and is 200 points above the 16,400 it was at Aug 2019.

So, anyone that sold out in the drop fearing it will drop more and are still on the sidelines, you missed the window big time. Those that sold out in Feb and are still sitting on the sidelines, you missed out to but your rational is you are probably waiting for the next big drop to buy back in because it is going to crash again this fall don't you know. How are you feeling about earning 1/4 of a percent interest in an environment where real inflation is still clipping along above 2%. Hope you don't need income from your investments to live on.

For those that had quality stocks and gutted it out, you are back to where you were, TSX at 16,600 now, versus 12 months ago when the TSX was at 16,400 and closing in on where you were Feb 20th before the drop. In addition you have collected your dividends for the past 6 months and if they were in a DRIP you were buying more of that stock at depressed prices.

For those that sold out prior to Feb 20th and bought back in in late March early April, my hat is off to you, you are the truly rare breed that can time the market perfectly.

Feb 25,2020

Originally Posted by Dean2

I know Justfishin has all his stuff in tax free accounts like RRSP and TFSA so getting in and out may make sense if he can manage to get back in somewhere near the bottom. For the majority of the long term buy and hold investors the tax consequences means getting in and out doesn't work.

Let me see if numbers can make the case more simply.

If I am holding 100,000 in ENB stock and my cost on that stock is 30,000 ($16.50 cost on what is now a $55 stock, that is also yielding me 19.7% dividend on my original investment, paid quarterly), I pay the government $17,500 in tax on the gain. That is a 17.5% drop in capital and I also lose the 20% dividend. Dividend income, because of it preferred tax treatment is a very effective form of earning money. A couple can basically earn $84,000 a year tax free if all their income comes from dividends. Not something you want to give up.

Even if ENB drops 20% from today's price, I will basically have broke even with having sold out and paid the tax. The problem with selling out and paying the tax is, I now only have $85,000 to buy back in with. No matter how you cut it, selling out your gains costs you a min of 25% of the gain, and that is a permanent reduction in capital. It also means that when you buy back in at $43, you will have another taxable position on that gain as the stock climbs back to $55, so the whole theory of avoiding downdrafts does not bear out unless everything you are transacting is in tax free accounts.

I do however have some cash on the side to deploy as some top quality stocks are going to be a deal as this market drop keeps up.

[KinAlberta]

Originally Posted by badbrass

When thing get tough! There are always sellers! Bought a 1/4 oz Gold Maple Leaf today! My first gold coin!!!!!

They should make gold two-bitscoins.