I was thinking about this dissonance: we believe in market efficiency and in intelligent people responsible for trading billions, and at the same time the stock market behaves like its mentally unstable.
I guess the reason might be, most of investors do not have a 30+ year investing horizon, and many want to time the market, instead of letting it ride, which leads to a cascade effect. The price of an asset is not the price from a perspective of a long-term investor (30+), but a mix of expectations of all the investors, starting from a day trader. What do you think? Btw do they have any 30-year S&P 500 futures? Maybe investing in it would be less nerve-wrecking, as all the market timers would stay away.
Preventing companies from going bankrupt doesnât mean that theyâre going to return to profitability or normality anytime soon.
Must be the ones which have liquidity issues or whose survival is in question. Sure, one could try to pick those stocks.
It is panic - but how is it mispricing? Equity valuations have been already way above the their historical mean lately.
And these valuations (in relations to earnings) are going to get lower neither by suspending or restricting economic activity or the next months, nor by sustaining unsustainable âzombieâ companies through bailouts.
I am going to believe the mispricing if and once you (or someone) explain convincingly why this time it really is different. Money being cheap does only go so far.
PS: In other words: Havenât stocks already been overvalued on the last years - and this is just the external shock thatâll send them back to ânormalâ levels?
Pricing models and algorithms only work if there is data available. At a time like now, NO data is available, and no precedence to use as a a model This is why we had 3 limit-down and 2 limit-up days on the SP500 this week. I personally believe it will start calming down and even if we see another test of the previous bottom or a new bottom, the downside is limited.
I always put actions behind my words which is why I was buying on every large leg down in the last couple of weeks.
I will also open a small crisis-investing corner in my portfolio where Iâll put some funny money in companies like TUI, Lufthansa etc. (and average all the way down if I have to).
If you put other âMarch 12â 's (say 2002 or 2008 for instance) it will look less impressive .
But sure, Iâll look closely at the market situation in March 2021 or 2022 .
I believe it once I have seen the panic on the streets and in the hospitals of New York and London - or these cities having been spared from it. Which remains yet to be seen.
By the way, Apple has just announced it is going to close ALL stores worldwide - except for, of all countries, Greater China - until at least March 27.
Companies need to pay bills and salaries during this time. Many have large debts to roll over and need to pay interest as well. So it 's not 0 revenue for a few months, itâs a deep loss for a few months.
Plus, is a 50% drop from the top so meaningful for a share price that has made x10 from the last bottom?
Airline, tourism, hospitality industries in general. I gave two examples above: TUI and Lufthansa.
This is however a minefield, some may not survive. This is reflected in valuations. High risk, but high reward (if you pick wisely).
I want to share my 1st bear market experience and what Iâve learned from it.
I will never buy leveraged ETFs. I was thinking about it in the last couple of months, luckily this correction hit.
I wonât tilt to tech, SCV or other market segments. Global market cap weight is my target (VT as reference). Thatâs why I sold my VIOV position yesterday.
I lump summed right at the top, but that wonât keep me from lump summing in the future. I got unlucky this time, but I still believe that lump sum will beat DCA longterm. Iâll invest everything what I save immediately, no matter what. Iâll use DCA only in extremely volatile environments (like today) for amounts that are way bigger than my monthly savings rate, but keep it short (3 months max).
I wonât try to time the market ever again. After I sold my VIOV position markets went up 5% without me reinvesting in VTI. Now Iâm waiting for SP500 to drop to 2500ish level to reinvest it in VTI. I hope it does, because I feel sick about it realizing my 35% loss on VIOV without reinvesting it. If yesterday was the lowest point and markets are going up from now, I wont wait more than a couple of weeks and drop it anyway.
You know the best thing about all this lessons? I learned them at the beginning of my investment career with 26k in assets (15 months of saving). So no big damage was done. It will prevent me from losing big money in the future, so Iâll look at it in a positive way.
The big damage is done when it happens with 26! Think of compounding interest! Sorry to hear it. I was thinking of rebalancing TLT back to stocks on Thursday, but was afraid, then on Friday the corrections.
I do believe the market has not priced in yet all the damage. So far the first dominos have fallen, and many of you guys have listed a lot of dominos that are still going to fall.
Yes⊠Iâve been a bit surprise about the falling of AGG those days, of course has been only a bit. I sold 1/3 of AGG Thursday and bought VTI practically in the bottom.
Iâm very happy having bought lot of AGG in the past. I had more than 2% dividends for it and now I have cash for buying VTI and VXUS. I recommend 100% this strategy.
Day 0: Market bottoms out
Day 1: 10% up? Now this is crazy, the virus is ravaging the economy. This canât be going up
Day 2: +2% Suckers buying. This is cooling off already. Crash is coming
Day 3: -3% HA! Told ya. Iâll buy when it gets even cheaper.
Day 4: +5% What? Why?
Day 5: +5% Again? Damn. Itâll crash next week for sure!
Day 6: ⊠god damn it. Up again? Well, next time Iâm not going to miss it. These pandemics come at regular intervals anyway.
For gambling (the âmad moneyâ part of your porfolio (1% to 2%)) itâs okay, but even so it is difficult to evaluate the odds of which airlines / tourism enterprises / ⊠will be rescued by states and which not. And remember that shares have the lowest priority when a company is liquidated.
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Maybe investing in it would be less nerve-wrecking, as all the market timers would stay away.
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