Post: #1

Surprised I haven't seen anything about this.

The stock markets are getting hammered. I'm getting dangerously close to my threshold of pulling out of the market.

Beyond the standard, "(((They))) are messing with the market" can we have a more informed discussion about what's going on?

Should this normalize in Q1/Q2?

Post: #2

If you’re young, have good cashflow and an appropriate risk tolerance / investment horizon, this is the single best buying opportunity you’ll probably have in this decade.

Be fearful when others are greedy, and greedy when others are fearful - Warren Buffett

Post: #3

It's not a true bear market yet. A bear market almost always requires a recession, which we are not in.

I suppose you could term this a "cyclical bear market with a secular bull market" The long term secular uptrend (bull market ) which started in 2009 is still in place.

To be classified a bear market, the markets have to be down 20% or more. As of now, the S&P 500 is down around 8% this year.

I think this will eventually bottom out, perhaps down as much as 12 - 15%, base out, then, eventually the long term uptrend will resume.

Could I be wrong? Sure.

We will have another recession and true bear market one day of course, I just don't think this is it.

Post: #4

"Quick buck artists come and go with every bull market, but the steady players make it through the bear market..."

Post: #5

I directed last month all future 401k and HSA contributions into capital preservation / cash. Keeping existing investments 'as is' with the DRIP turned on. A few of my funds pay regular dividends, which allows me to buy more shares on the cheap.

This strategy has worked well in the past three major bear markets I have been through.

Post: #6

I think it all depends on what happens with Trump. If he stabilizes, the market will shoot back up, he just needs to survive this wave of attacks.

I think the situation with this President is extremely important in how secure investors feel.

@highspeed I agree that this is a great opportunity, maybe just wait it out a little longer for it to bottom.

Post: #7

I think we are long overdue for a crash, it's been 10 years since the Big Bailout, and most banks and corporations are back to their old tricks. Stock buybacks with free (<1% interest) govt money has been running amok for a decade now, with the rich getting richer while Manufacturing has only recently made a big comeback. Quantitative Easing has proven to be a total disaster and one of the biggest robberies in the history of the world, and now that interest rates are going back up and the free money party is coming to an end with the Fed raising interest rates, corporations are freaking out. They've been borrowing trillions of dollars since Obama's first term, at near 0% interest rates, and using that money to buyback their own stocks and artificially inflate their own value to record levels. Now that the Fed has been raising interest rates again, that bill is coming due and many corporations will be going bankrupt again and trying to bail themselves out. This time we need to let them fail.

There are 2 economies in the USA, Wall St vs Main St, and there is quite a disconnect between Wall Street & Main Street, our REAL economy has been on fire the last 2 years, The real US economy, manufacturing, farming, producing goods will likely keep expanding and keep consumer prices level, while corporate executives are going to start jumping out of buildings again (hopefully).

Good article summing it up
https://theconservativetreehouse.com/201...ppose-him/

Post: #8

Not me.

I just dropped 50k into VTSAX, where it will sit for the next 30 years.

Turn off the noise, people!

That's what's going to determine if you are successful or not.

Post: #9

The stock market hasn't been this low since... (looks at tradingview)
October 2017!

God, I remember that terrible, terrible month of October 2017. Breadlines, 30% unemployment, riots in the streets... I had to sell a kidney just to make rent.
I can only hope that this time around, it won't be the nightmare that it was last time.

Post: #10

Just part of the melt up.

I'll see you at 40k, boys

Post: #11

President Trump is now proceeding as if he will not get re-elected due to a 20%+ stock market crash within the next few months, possibly worse as all of the companies that gorged themselves with debt to do stock buybacks collapse from the rising interest rates.

I am assuming he is correct and am now 100% short. I expect there to be violent green rallies followed by zigzags downwards if we are truly in a bear market.

Post: #12

Play volatility. It's been historically low since pretty much Trump got into office, good time to be selling options, long volatility indexes, looking into forex, etc.

Post: #13

(12-20-2018 09:27 PM)TheFinalEpic Wrote:  Play volatility. It's been historically low since pretty much Trump got into office, good time to be selling options, long volatility indexes, looking into forex, etc.

I thought you couldn't invest in the VIX directly?

Post: #14

(12-20-2018 02:47 PM)DamienCasanova Wrote:  I think we are long overdue for a crash, it's been 10 years since the Big Bailout, and most banks and corporations are back to their old tricks. Stock buybacks with free (<1% interest) govt money has been running amok for a decade now, with the rich getting richer while Manufacturing has only recently made a big comeback. Quantitative Easing has proven to be a total disaster and one of the biggest robberies in the history of the world, and now that interest rates are going back up and the free money party is coming to an end with the Fed raising interest rates, corporations are freaking out. They've been borrowing trillions of dollars since Obama's first term, at near 0% interest rates, and using that money to buyback their own stocks and artificially inflate their own value to record levels. Now that the Fed has been raising interest rates again, that bill is coming due and many corporations will be going bankrupt again and trying to bail themselves out. This time we need to let them fail.

There are 2 economies in the USA, Wall St vs Main St, and there is quite a disconnect between Wall Street & Main Street, our REAL economy has been on fire the last 2 years, The real US economy, manufacturing, farming, producing goods will likely keep expanding and keep consumer prices level, while corporate executives are going to start jumping out of buildings again (hopefully).

Good article summing it up
https://theconservativetreehouse.com/201...ppose-him/

can you elaborate more on how QE has been a failure?

Post: #15

This 10 year run since the financial collapse of 08 is unprecedented in modern financial history. Now the that Fed is normalizing and its effects are starting to show, I would be prepared for anything. My conspiracy brain says that they want sth to happen under Trump's watch. To disclose, I'm in cash. I'm waiting for something bad to happen because I believe that it necessarily will. 08 was swept under the rug and many debt problems have only been exacerbated. Stay frosty!

Post: #16

(12-20-2018 02:51 PM)LINUX Wrote:  Not me.

I just dropped 50k into VTSAX, where it will sit for the next 30 years.

Turn off the noise, people!

That's what's going to determine if you are successful or not.

Disagree. How long have we been in a bull market? 8 years? This is a record, the market works in cycles.

If you want to make money, get out and wait for it to bottom then get back in.

I say this but I am overall a buy and holder, but I'm happy to keep scaling back, taking some profits.

Post: #17

(12-21-2018 12:16 AM)Shinebox Wrote:  This 10 year run since the financial collapse of 08 is unprecedented in modern financial history. Now the that Fed is normalizing and its effects are starting to show, I would be prepared for anything. My conspiracy brain says that they want sth to happen under Trump's watch. To disclose, I'm in cash. I'm waiting for something bad to happen because I believe that it necessarily will. 08 was swept under the rug and many debt problems have only been exacerbated. Stay frosty!

Exactly. I posted the short version of this at the same time as you. The thread seems a little Bull. How long can a Bull Run? This is how the Bankers harvest their returns.

Post: #18

It should be a big, BIG warning to everyone that the largest economy in the world, which has had cheap debt (low interest rates/free money when accounting for inflation) for around a decade, can't handle a modest increase in interest rates without having a major panic attack.

The entire world economy has been propped up on cheap debt and there is gong to be a crash of epic proportions sometime in the near future.

Some major areas of concern:

1. Entire sectors like the tech sector for example, basically can't function without access to cheap debt. Anyone who has worked in tech can tell you about the many joke companies that still exist with tons of revenue but haven't been profitable for years. That bullshit can only last in a world with cheap debt. Silicon Valley culture has been drunk for long time on keeping alive non-sustainable business models. A reckoning is coming.

2. Emerging markets are having massive currency issues. What happens if they default due to weak currency/strong dollar? What happens to their ability to purchase exports?

Quote:Over $200 billion of USD-denominated bonds and loans issued by emerging market governments and companies will come due during the remainder of 2018, according to the Wall Street Journal. About $500 billion will come due in 2019. They will need to be paid off or refinanced.

https://seekingalpha.com/article/4199297...arket-debt

3. The EU, fiscally speaking, is a disaster. It's a realistic possibility that Italy could pull the pin any day, leave the Euro to get control of their country back (they have not benefited at all from the Euro), and blow up the EU/Euro in the process. Politically, Hungary and other countries might quit the EU eventually after getting bullied and stripped of their EU power because they won't bend the knee to globalist migration bullshit. Shit, look at the whole Yellow Vest deal recently. The EU has an economy around the size of the USA and is hot and ready to pop from multiple directions.

4. Brexit? - Hard exit/soft exit? Who knows.

5. Muller investigation ending with bullshit charges and/or Democrat overt coup originating from the House? - Very real possibilities.

6. Entitlement spending in US federal/state/local governments is going to explode over the next decade as we hit Peak Baby Boomer. Federal SS/Medicare/Medicaid spending is 2 TRILLION dollars or thereabouts right now. Federal revenues are around 3.5 Trillion. And interest rates are going up = debt payment expenses are going to increase.

7. China Trade War - The largest economies in the world in a overt fiscal war is a real possibility.

8. China internal issues/housing/debt - 1 in 5 apartments/housing units in urban areas (need to double check the urban areas bit) in China are unoccupied and much of the populace holds their overall net worth in housing; including 2nd and 3rd properties. The gov't has been propping up the housing market to keep the house of cards together. What happens if China has their own version of a housing related financial crisis?

This is just a sampling of how many fucked up things are floating around out there in the the overall world economies right now that could trigger a major economic crash. We honestly need a hard reset back down to reality, one that should have occurred in 2008-2009 (which was postponed), but I'd be wary of being invested in the market right now.

I feel like if you buy now, you're basically buying right before the financial 2008 crisis or the dot com crash. Sure, you could make some gains but why not just wait it out a bit longer and catch the amazing bargain prices when the REAL freaking out starts.

Post: #19

(12-21-2018 12:35 AM)The Black Knight Wrote:  1. Entire sectors like the tech sector for example, basically can't function without access to cheap debt. Anyone who has worked in tech can tell you about the many joke companies that still exist with tons of revenue but haven't been profitable for years. That bullshit can only last in a world with cheap debt. Silicon Valley culture has been drunk for long time on keeping alive non-sustainable business models. A reckoning is coming.

If they have tons of revenue, what's causing them to not be profitable? Operating expenses just too high?

Post: #20

(12-21-2018 01:06 AM)nek Wrote:  

(12-21-2018 12:35 AM)The Black Knight Wrote:  1. Entire sectors like the tech sector for example, basically can't function without access to cheap debt. Anyone who has worked in tech can tell you about the many joke companies that still exist with tons of revenue but haven't been profitable for years. That bullshit can only last in a world with cheap debt. Silicon Valley culture has been drunk for long time on keeping alive non-sustainable business models. A reckoning is coming.

If they have tons of revenue, what's causing them to not be profitable? Operating expenses just too high?

A few factors (first two more important than the rest):

1. The culture of Silicon Valley venture capital is more focused on vision/scale as oppose to current fiscal sustainability. So, they will give 100 million to a company and give them a valuation of 1 billion DESPITE no profitability thus far. Shit, sometimes you barely have a prototype/proof of concept in some cases (ex: Theranos). They hope that once they scale up, some sucker will buy them out, they can cash out on an IPO, or maybe they dominant the market and actually turn a profit after accumulating tons of debt.

2. Many companies are created with the express purpose of being bought out/having a IPO as the end goal; not building a profitable business. Scaling up and generating enough revenue via investors is more important than creating a sustainable business model. This whole Silicon Valley culture deal doesn't really fly in most other places. Most people, sensible people, want to see profits and a sustainable model before investing. The valley is in its own world.

3. Tech workers are not cheap and have been coddle to believe they are entitled to all sorts of premium benefits/perks.

4. Customer acquisition cost can be very high. High-end sales teams are not cheap.

5. Many of theses companies are located in one of highest taxed states in areas with some of the most expensive real estate in the world.

6. Many companies don't hire/promote based on competence but promote based on political agendas. California just passed a law saying 50% of boards MUST be female now.

Short version: Dumb investors with access to super cheap money keep stupid companies alive with investment revenue. Interest rates go up and the music stops.

Post: #21

nah, watch it bounce back January/February. Have cash to buy at the bottom, this will be an epic bear trap.

Post: #22

(12-20-2018 11:52 PM)nek Wrote:  

(12-20-2018 02:47 PM)DamienCasanova Wrote:  DC's post

can you elaborate more on how QE has been a failure?

The short answer I can put in layman's terms. Simply put, a combination of QE and low to zero interest rates never allowed all the accumulated bad debt to be cleared out of the system, as, say in the 1920/21 "depression" (if you could call it that). In addition, low interest rates encouraged mal-investment of capital and resources given cheap money (stock buybacks, riskier investments to seek out a greater than 0 return etc). It just kicked the can down the road to where we are today and an end in QE and a rise in interest rates will inevitably do harm.

Post: #23

(12-20-2018 11:49 PM)nek Wrote:  

(12-20-2018 09:27 PM)TheFinalEpic Wrote:  Play volatility. It's been historically low since pretty much Trump got into office, good time to be selling options, long volatility indexes, looking into forex, etc.

I thought you couldn't invest in the VIX directly?

There are numerous volatility instruments, and you can use options on the VIX directly.

Post: #24

Since Oct Ive been 80% in cash. Valuations were getting stupid.

I'm making a killing with puts on SPY and will continue to do so as the market dives 20%.

I also got puts on a bunch of hyped tech companies with dumb business models that are years away from profitability:

Box BOX
Dropbox DBX
Eventbrite EB
Farfetch FTCH

In 2019 make $ on the death of hype while amateurs buy the dip.

Post: #25

(12-20-2018 02:22 PM)The Beast1 Wrote:  Surprised I haven't seen anything about this.

The stock markets are getting hammered. I'm getting dangerously close to my threshold of pulling out of the market.

Beyond the standard, "(((They))) are messing with the market" can we have a more informed discussion about what's going on?

Should this normalize in Q1/Q2?

I`ve posted about this in the Trump thread many times already. Basically I think there`s a chance that the Fed is raising the fed fund rate to create a recession in order to hurt Trump. Since the US economy is deeply flawed, it doesn`t take many rate hikes to achieve this.

If this is the case, and Trump can`t get the Fed to lower or at least stabilize rates, expect a serious recession that will probably last all the way to the 2020 election.