When do we reach the bottom of the dip? (2022-24 Edition)

[Barto]

@dbu

Honestly these “indices” are mostly meaningless for everyday life.

I quoted it because it was the news that caused interest rate expectations and therefore CHF FX rate to change. The interest rate change will also impact house prices and existing rental contracts

[ternes11]

@PhilMongoose

In the end I think Fed will have to cut when the recession bites.

Who actually gives a monkey’s about if there is a recession? Either the economy is during great or not. The obsession with “recession” in the media is so tiring. Furthermore, if someone can just say “no it was not a recession” like in 2022 from some US-President, even tough the (unofficial) criteria was met, it just shows how meaningless it is. Considering that the market values the future, it appears even less relevant and would be priced in anyway. Sorry for the rant but can’t stand reporting on recession

[PhilMongoose]

@oslasho

oil & gas

It was the Uranium sector.

[Mirager]

@PhilMongoose

Now the market had a long overdue reality check

Did it? We’re almost where we were 2 days ago Millennial market, throwing toys out the pram like it dropped its lollipop on the ground.

[Dr.PI]

The CPI/LIK for Switzerland came out on Monday and now I can do calculations according to the procedure that I have outlined.

But first another milestone of note. My benchmark, “MSCI ACWI IMI Net Total Return” in (nominal) USD have started to make new All-Times Highs since few days, the latest being, you have guessed it, on 12.02.2024.

Does it mean that we are out of the dip? Not in my playbook.

The latest 2024 maximum of my usual benchmark “MSCI ACWI IMI Net Total Return in CHF” was 1855.57 CHF, also on 12.02.2024. In nominal terms, this is a level not seen from February 2022, i.e. we have reached a 2 years maximum. It is only -4.7% from the previous ATH (1947.97 CHF, on 16.11.2021), +21.9% from the 30.09.2022 bottom, +16% (!!!) from the 26.10.2023 bottom and +6.7% YTD.

However on inflation-adjusted basis it looks as follows: -9% from the previous ATH, +20.1% from the 30.09.2022 bottom, +15.9%from the 26.10.2023 bottom and +6.5% YTD.

Nevertheless, the drawdown of less than 10% from ATH, a level last seen in May 2022, means that we are now in a “normal” market state, although the last ATH was more than 2 years ago.

Statistics, black magic and financial mathematics

To classify the state of the stock market, as quantified by a specific index, I am going to consider these three regimes: Normal State: The market is classified as in a ‘Normal State’ when the market index is less than 10% below its all-time high (ATH). Correction: The market enters a ‘Correction’ phase when the index is between 10% and 20% below the ATH. Bear Market: The market is in a ‘Bear Market’ regime when the index drops more than 20% from the ATH. These regimes can be utilize…

This means, for example, if I were a retiree living from my portfolio, I would go from “soft economy mode” (“correction” phase in the market) to the “normal” portfolio withdrawal mode.

Stay tuned.
PI

[Compounding]

That’s an interesting way to look at it, I like it (assuming you believe in mean reversion). You could combine that with the classic retirement strategies like guardrails, buckets etc.

[encaxajd]

Interesting summary, thanks! Where do you pull the data for the inflation-adjusted “MSCI ACWI IMI Net Total Return in CHF”? Or do you have a own spreadsheet for that?

[Dr.PI]

@encaxajd

“MSCI ACWI IMI Net Total Return in CHF”

That one is from MSCI. Then,

Statistics, black magic and financial mathematics

I have thoughts about the benchmarking of the stocks market recently, will dump here some notes. To adjust for inflation in Switzerland, I use these data: Landesindex der Konsumentenpreise (LIK): In the table view, the data can be exported as CSV. I define the inflation-adjusted index as the index’s value in CHF divided by LIK value for the previous month. Depending on the time frame, I will use different reference dates for LIK. The result should reflect the purchasing power of a unit of…

@encaxajd

Or do you have a own spreadsheet for that?

Of course !

[Cortana]

So is now a good moment to invest my bonus?

I always invest my money as soon as it‘s available. Got unlucky more often than lucky, but there should be some reversion to mean longterm? So all-in today?

[Salming]

All-in plus margin

[Moustachienne]

Congrats on the bonus.
If I were undecided, I’d invest half of it today and decide about the rest (lump sum or DCA) in the next couple of days.
Establish investment rules for yourself regarding future bonuses.

[baldur]

Maybe the timing of the bonus is the reason that you were unlucky more often than lucky? Of course nobody knows what would happen this year.

[Mirager]

Let’s see the pump today after NVDA’s earnings…
Still not planning to buy anything for a couple of months.

[conquestador]

I have considered buying NVDA yesterday, so pretty sure that the peak is close by . However, I keep saying since 2021 during the Crypto craziness that NVDA is way over priced and it has railed ever since

[Mirager]

These earnings gave it at least another 3 months runway in my opinion. Also important bit is the cloud service part of earnings which has skyrocketed and will boost many other sectors. Of course now greed will become even more extreme. Sitting still, on my hands, with handcuffs.

This quote is confusing me:
““Accelerated computing and generative AI have hit the tipping point,” said Nvidia chief executive Jensen Huang.”".

“Tipping point” basically means “point of no return”, but in my book it’s always had bad connotations, which is not what the nVidia boss is saying, obviously.

[Mirager]

NYSE S&P500 10 mins in:

[Moustachienne]

The weird psychology in the accumulation phase:

Going down: Yeah, I’m going to be buying low!
Going up: Yeah I’m getting richer!

(Also going up but buying soon on autoinvest: why does it ALWAYS get expensive now?)

It’s not entirely rational…

[Mirager]

@Moustachienne

Going down: Yeah, I’m going to be buying low!
Going up: Yeah I’m getting richer!

It’s not entirely rational…

Totally, need tricks to stay motivated while earning good money and being frugal. Very long-term benefit is not that easy to keep committed to when it can feel that one is losing comfort today, tomorrow, for a month, for six months, for a year etc.

Anything to remain motivated is golden and whoever thinks otherwise needs to better understand human psychology. Humans are anything but rational.

[assemblyrequired]

@Moustachienne

Going down: Yeah, I’m going to be buying low!
Going up: Yeah I’m getting richer!

At least you have positive emotions
For me it’s:
Going down? Oh no, I’m losing money
Going up? Oh no, I’ll have to buy high

[PhilMongoose]

More like:

Going higher: OMG. I under-estimated how much these morons are willing to overpay!