2022 investing thread

[Detroitgator]

Let The Wild Rumpus Begin*

 

[Concrete Helmet]

Is it over yet?.....

 

[Detroitgator]

Is it over yet?.....

it's probably just starting... we have to have the big rally that gives you false hope first, then it really starts...

 

[Gator By Marriage]

Let The Wild Rumpus Begin*

Good article; I found his comments on the Fed particularly interesting. As a Gator fan, I admit to being troubled by the author's name. Just coincidence I hope - and if not, well, you can't help to whom you are related.

 

[Detroitgator]

Good article; I found his comments on the Fed particularly interesting. As a Gator fan, I admit to being troubled by the author's name. Just coincidence I hope - and if not, well, you can't help to whom you are related.

Unlike the fat guy, this guy has had a solid track record! As for the article, I posted this to BdlP in the Poli box...

#1 indicator for me? Just like 2005, i'm seeing within 3 miles of my house where developers cleared land and put in streets, water, sewage, electric for anywhere from 50 to as many as 700 (not a typo, it's right down the road) homes... those lots are now sitting EMPTY with no activity in the last 2-3 months. Saw the SAME thing in 2005. Those development from back then took up until around 2017-18 to fully build out​

 

[Concrete Helmet]

it's probably just starting... we have to have the big rally that gives you false hope first, then it really starts...

Well I'll certainly admit I'm a little shaken. I did grab a little more oil/gas stocks while they were down this morning along with some gold/silver(Gold was the only thing green all day which scares the sh!t outta me).....hit the sell button too many times to remember on everything else....down to 50% cash by tomorrow on my self directed investments/trading account. Too afraid to look at the other retirement accounts.

 

[Detroitgator]

Well I'll certainly admit I'm a little shaken. I did grab a little more oil/gas stocks while they were down this morning along with some gold/silver(Gold was the only thing green all day which scares the sh!t outta me).....hit the sell button too many times to remember on everything else....down to 50% cash by tomorrow on my self directed investments/trading account. Too afraid to look at the other retirement accounts.

When you look at a trading day like today, in its totality, you realize that unless you are just going to buy an index of a broader market and let it ride no matter what, you are kidding yourself, you have NO control, and likely should look to put your money where there is less volatility over time (and thus probably less return, maybe), like more real estate.

 

[Concrete Helmet]

When you look at a trading day like today, in its totality, you realize that unless you are just going to buy an index of a broader market and let it ride no matter what, you are kidding yourself, you have NO control, and likely should look to put your money where there is less volatility over time (and thus probably less return, maybe), like more real estate.

You know I like RE but there is going to be a reckoning there more likely sooner than later as you mentioned in an earlier post....I'm not hearing nearly as much hammering and sawing in thses parts like it was a year or 2 back. We've dropped off about 25% at work on refi's and purchases are down about 40-50% in the last 6 month's..It's coming..

 

[78]

When you look at a trading day like today, in its totality, you realize that unless you are just going to buy an index of a broader market and let it ride no matter what, you are kidding yourself, you have NO control, and likely should look to put your money where there is less volatility over time (and thus probably less return, maybe), like more real estate.

Proof of that is the extraordinary damage done by the algos, which in their zeal to offload risk unloaded index holdings that really had no business getting sold off to the degree they did. AMZN, for example, is now trading at a very attractive oversold RSI of 25 and poised for a solid run the remainder of the year. MSFT, which reports after the bell tomorrow, is slightly above the line but with a more attractive P/E and a very good earnings trend.

I don’t know if we have seen the bottom, although the midday selloff on the heels of Friday’s big risk off felt like capitulation. But for the first time in a while the stock picking is desirable.

 

[Detroitgator]

Proof of that is the extraordinary damage done by the algos, which in their zeal to offload risk unloaded index holdings that really had no business getting sold off to the degree they did. AMZN, for example, is now trading at a very attractive oversold RSI of 25 and poised for a solid run the remainder of the year. MSFT, which reports after the bell tomorrow, is slightly above the line but with a more attractive P/E and a very good earnings trend.

I don’t know if we have seen the bottom, although the midday selloff on the heels of Friday’s big risk off felt like capitulation. But for the first time in a while the stock picking is desirable.

I get what you're saying, but you are in a bit of a different category than the rest of us given your work.

For the rest of us (and most professionals), Brad's teen daughter outperforms (NO INAPPROPRIATE JOKES!!!) all indices, professionals, and most algos and I think I know why...

When I took the Finance class that all biz majors had to take at UF, it was taught by Dr. Eugene Brigham. To this day, his textbook is the longest in print textbook in America (over 50 years now with basic revisions)... even SeaBee was using his textbook two years ago for a course at Univ of Colorado. He also started UFs Public Utility Research Center, and was also a very, very wealthy individual investor (his net worth is in the 10's of millions). During our class in 1991 or 92, he said this:

"People ask me what they should invest in. I tell them this, and I mean it: "Look around your house, then look around your friend's homes, what does everyone have in common? Buy those things, and hold them as long as everyone is buying those things." Given that time frame, he talked about things like Rubbermaid, blah blah blah... just standard household things. I would argue that NOTHING has changed since then and I told my kids the same thing... "What do you and your friends use? Buy those and hold them."

You could hardly have gone wrong with buying Sony (PlayStation), Microsoft (XBox and social media platforms/apps) , Facebook (and all the other social media platforms/apps they own), Google, and Amazon. Not much diversification, but you get the idea, and they ain't going away.

That is basically what Brad's daughter does.

For me personally, and I've said it a million times, the only stocks I have (and have had all of these for going on 15 years and will not sell any time soon) are: GD, NOC, LMT, and HII. Almost 100% dependent on Federal spending, and it ain't ever gonna stop. Sexy? Nope, but I don't ever have to think about what they are doing over the long haul. Anything else I do (like jumping on/off things like UCO or other 2x bull/bear ETFs) is purely speculation to generate cash full well knowing I might get burned.

 

[bradgator2]

I would add that she has no emotion in it. Zero. To her, this might as well be monopoly money. I made her sale some stocks in the last few months for her first sales ever. I only did that because several hit 1000% increase and it just seemed foolish (to me) to not pull the rip cord. But her AAPL, MSFT, PG, NKE, DIS she picked exactly how DG described above. And those holdings have absolutely slayed it since she bought, with a few of them over 300%. Then she started dabbling in some of these small, non revenue generating picks. All that crap is deep red. I told her the other day, "fuch that garbage".

 

[Concrete Helmet]

I have to say I agree with 78's statement about picking stocks in this environment...ETF's and MF's are fine for times when things are rolling(Trumps 4 years) and it's easy to get lazy when you're rolling in 16-20% returns on large cap ETF's..... but I believe it was Peter Lynch that once said when you go to war(like right now) you pull out your bullets...meaning bullet stocks.

I believe 75% or more of both the NASDAQ and S&P indexes are under preforming and have been for well over a year now...

 

[Concrete Helmet]

Anyone noticing the mature guy in the room(gold)....been chugging up against a stubborn dollar and rising rates it's 2 sworn enemies...some of my silver miners made nice gains today along with what else oil/NG, Alcoa and carbon credits.....if I had dumped the last of my chips I'd be 3/4 of the way back up the ladder....Intel may be a safe haven there in an exchange.

 

[Bernardo de la Paz]

Let The Wild Rumpus Begin*

Interesting point of view. Loved the emperor's new clothes analogy to crypto. I feel the same way about it. That said, I have a few criticisms (forgive me, it's what I do and probably tldr).

They didn't quite sell me on the idea that we are dealing with a super bubble, although I agree it's a possibility. Maybe just a small bubble though.

The three super bubble indicators they presented are based on technical indicators not fundamentals. The idea that economic growth will forever follow a single long term trend line is unlikely to be true. It's not even clear in this case whether they are adjusting the trend for inflation. Also, measuring the technical indicators from the covid panic bottom could be problematic given how unusual the market conditions were.

From a fundamentals point of view, the most recent super bubbles were fraught with issues. With the dot coms there were tons of companies that were trading at insane market caps (can't point to multiples as many weren't even making money) with no real plan to ever be profitable. It was like instead of one GME there were a hundred of them making up a significant share of the market. With the housing bubble there were so many fundamental issues it would be difficult to list them all.

When I look at the value of equities from a price to earnings standpoint (one fundamental POV), I think of it in the context of interest rates and other investment options available. The value of equities is really a function of 2 components: earnings and growth. If you take the reciprocal of the PE ratio, you can get an idea of what the ROI would be from a stock if expected growth was zero.

Following that thread, if you look at the chart I posted previously, the low point for the s&p 500 PE was around 7 in 1980. That's an implied ROI of about 14% assuming no growth. That sounds wonderful until you consider that the 10 year treasury rate was about 14% at that time. That says that investors must have been counting on plenty of growth to cover the risk premium between equities and treasuries.

If you grab another data point on the higher end of the market PE, like 1999, you see the s&p 500 with a PE of around 34. That's an implied ROI of about 3% assuming no growth. The 10 year treasury rate was 5% at the time. That says that investors expectations for growth were probably too high. Irrationally exuberant one might say and ripe for a correction.

If you look at the most recent data point, a PE of 25, that's an implied ROI of about 4% assuming no growth. With the 10 year treasury rate below 2% it looks like investors are more conservative about their growth expectations today and allowing a risk premium on equities even when ignoring growth.

Here's an article discussing that POV:

S&P500 P/E Ratio vs Interest Rates

You look at that last chart though and you wonder whether equities are really undervalued as the chart suggests, or whether it's really that treasuries are massively overvalued with the Fed purchasing so many. After all, this is only showing the values of 2 asset classes relative to each other.

Going full circle back to the GMO article, the last critique I have is to question whether it's even possible to have simultaneous bubbles in almost every asset class. At that point isn't it really just inflation? Where is the money going to go when people pull out? (Side note I also disagree with their assertion that inflation makes the bubbles worse -- really it reduces the length of the fall back to trend)

And that's again where I see wealth at an all time high, massive appreciation in most asset classes and the only thing limiting inflation being weak consumption driven by fear. Will consumption pick back up slowly enough that the Fed can slowly unwind its balance sheet and hold asset prices relatively steady, or will strong action be necessary that causes a big correction?

 

[Concrete Helmet]

Well it's almost time to see how the rest of the afternoon and tomorrow go . Funny how these FED meetings charge up or shake out the market....for a day or 2 usually....btw I just hope he comes out and tells everyone to bend over and kiss their ass goodbye since the situation is f vcked….That way I can load up on more oil/gas and natural resources when they go down with everything else....give em hell, Jerome...

 

[Detroitgator]

For those who didn't learn last time around, this is exactly what the Fed did throughout all the QE's and Operation Twist: they talk/say they are going to do things, the market reacts to/prices in the TALK, then the meeting happens, no change... call me stunned, not. They got the reaction they wanted without doing anything, again.

 

[78]

Their words are indeed powerful. Powell didn’t say anything this afternoon we hadn’t already heard. Eight minutes after he got done talking, the Nasdaq had jumped 100 points to up 4.3%. From there, it’s been a steady decline. It’ll end slightly in the red for the day.

The world is full of investors that haven’t seen interest rate hikes and don’t know how to price them in. There remains uncertainty about how far the Fed will and can go. We’ve got a ways to go before we figure this all out.

 

[Bernardo de la Paz]

The world is full of investors that haven’t seen interest rate hikes

Hasn't it only been about 3 years?

 

[78]

Hasn't it only been about 3 years?

But it didn’t last long before the Fed did an about-face after the S&P dropped 18% in the fourth quarter. I think we may be again looking at a shorter period of time than forecast.

 

[Concrete Helmet]

Mother f vck....metals got taken out and shot by the dixie and sudden jump in rates....but hey at least BP and most of my uranium/lithium stocks gained.....someone please explain how financials drop with a rising dollar and interest rates?