Head Fakes and Dead Cats .. your thoughts on the rally?

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
User avatar
El Greco
Posts: 443
Joined: Tue Aug 23, 2016 2:21 pm

Re: Head Fakes and Dead Cats .. your thoughts on the rally?

Post by El Greco » Wed Apr 08, 2020 4:32 pm

HomerJ wrote:
Wed Apr 08, 2020 2:58 pm
livesoft wrote:
Wed Apr 08, 2020 2:54 pm
HomerJ wrote:
Wed Apr 08, 2020 2:50 pm
Either teach us all how to accurately spot head fakes and dead cats, or post every time you spot them.
I have never made any predictions. I can look at my asset allocation now because I use ETFs and tell if I am overweigh in equities or in bonds. I can see now if I have hit any trigger bands right now. This is not the market timing you think it is because I am not predicting at all what will happen in the next 5 minutes nor beyond. I am only looking that the present and the past.

The Bogleheads wiki has a link to opportunistic rebalancing paper, but I don't do it in exactly the same way.
That's just normal rebalancing based on trigger bands then... Nothing special about that, like you say, and it's part and parcel with "stay the course".

Thank you for the clarification, but I still don't understand why you thought "stay the course" is like standing in the road and getting hit by a car because you're too stupid to move.

"Stay the course" means keeping your target Asset Allocation. Normal rebalancing based on trigger bands is part of "stay the course".

You just have tight trigger bands, and do it even intra-day with ETFs.. That's still "staying the course".
Wouldn't just being invested primarily in balanced funds accomplish essentially the same thing?

User avatar
HomerJ
Posts: 14737
Joined: Fri Jun 06, 2008 12:50 pm

Re: Head Fakes and Dead Cats .. your thoughts on the rally?

Post by HomerJ » Wed Apr 08, 2020 4:33 pm

Swivelguy wrote:
Wed Apr 08, 2020 4:06 pm
My thoughts on the rally: I'm afraid that the stocks my 401k will automatically buy at the end of this week will look pretty expensive in a month or two, but I'll buy them all the same.
But the important thing is how cheap they will look in 10-20 years...

You guys need to get into long-term thinking here.
A Goldman Sachs associate provided a variety of detailed explanations, but then offered a caveat, “If I’m being dead-### honest, though, nobody knows what’s really going on.”

livesoft
Posts: 71912
Joined: Thu Mar 01, 2007 8:00 pm

Re: Head Fakes and Dead Cats .. your thoughts on the rally?

Post by livesoft » Wed Apr 08, 2020 4:33 pm

El Greco wrote:
Wed Apr 08, 2020 4:32 pm
Wouldn't just being invested primarily in balanced funds accomplish essentially the same thing?
Yes, I believe so, but taxes could reduce the accomplishment. We use a LifeStrategy fund and a target date fund as the single investment in 3 different tax-advantaged accounts.
Wiki This signature message sponsored by sscritic: Learn to fish.

7eight9
Posts: 1050
Joined: Fri May 17, 2019 7:11 pm

Re: Head Fakes and Dead Cats .. your thoughts on the rally?

Post by 7eight9 » Wed Apr 08, 2020 4:36 pm

HomerJ wrote:
Wed Apr 08, 2020 4:33 pm
Swivelguy wrote:
Wed Apr 08, 2020 4:06 pm
My thoughts on the rally: I'm afraid that the stocks my 401k will automatically buy at the end of this week will look pretty expensive in a month or two, but I'll buy them all the same.
But the important thing is how cheap they will look in 10-20 years...

You guys need to get into long-term thinking here.
In the long run we are all dead.
I guess it all could be much worse. | They could be warming up my hearse.

fatcoffeedrinker
Posts: 203
Joined: Mon Mar 23, 2020 2:03 pm

Re: Head Fakes and Dead Cats .. your thoughts on the rally?

Post by fatcoffeedrinker » Wed Apr 08, 2020 4:36 pm

rascott wrote:
Wed Apr 08, 2020 3:52 pm
adave wrote:
Wed Apr 08, 2020 3:31 pm
I wonder how much of the economy is really “shut down” per se. Certain industries absolutely are getting crushed but just based on my own household much of the pre-Covid activity continues. Most of my kids activities have moved online and I continue to pay them, we still do plenty of shopping but have things delivered, same with food from restaurants delivered by grub hub etc. I’m even investigating buying a new car off the lot completely online soon at a nice discount..... ultimately people and businesses adapt and life goes on. Either it’s really the end of the world or not, and this seem to be in the not category.

Those running a business that in any manner requires in person interaction is being destroyed... like apocalypse destroyed. 1/4th are on the brink of permanent closure.

Huge swaths of the country aren't making mortgage or rent payments.

End of the world? Certainly not. Neither was 1930.
Morningstar thinks only 15% of GDP is directly shut down. Sure, there are secondary effects of that. But businesses representing 85% of GDP before the virus are still operating.

Edit: To clarify, 30% of GDP is nonessential and technically shut down, but half of that continues to operate remotely.

https://www.morningstar.com/articles/97 ... -recession
Last edited by fatcoffeedrinker on Wed Apr 08, 2020 4:43 pm, edited 1 time in total.

exoilman
Posts: 755
Joined: Wed Oct 15, 2008 1:38 pm
Location: New Jersey

Re: Head Fakes and Dead Cats .. your thoughts on the rally?

Post by exoilman » Wed Apr 08, 2020 4:37 pm

Sandtrap wrote:
Wed Apr 08, 2020 3:19 pm
Thoughts on the Rally:
I can't help but think:

If only I'd have gotten out of a large equity position before 2/20/2020

If only I'd have bought in at the 30% drop

If only . . . . . I'd had the courage to kiss 8-) Ann Corbyn at that 8th grade school dance in the Winter of '64. . . . . :shock: :shock:


There are a lot of "If Only. . s . .. ." in life. . .. .

j :happy
:sharebeer

AlphaLess
Posts: 2620
Joined: Fri Sep 29, 2017 11:38 pm
Location: Kentucky

Re: Head Fakes and Dead Cats .. your thoughts on the rally?

Post by AlphaLess » Wed Apr 08, 2020 4:46 pm

Triple digit golfer wrote:
Wed Apr 08, 2020 2:44 pm
I have no idea. I don't care. I am just investing like normal.

As Jack Bogle said, "The stock market is a giant distraction from the business of investing.”
I would add a corollary: "Investing is a giant distraction from the business of retiring well".
"A Republic, if you can keep it". Benjamin Franklin. 1787. | Party affiliation: Vanguard. Religion: low-cost investing.

User avatar
El Greco
Posts: 443
Joined: Tue Aug 23, 2016 2:21 pm

Re: Head Fakes and Dead Cats .. your thoughts on the rally?

Post by El Greco » Wed Apr 08, 2020 4:49 pm

livesoft wrote:
Wed Apr 08, 2020 4:33 pm
El Greco wrote:
Wed Apr 08, 2020 4:32 pm
Wouldn't just being invested primarily in balanced funds accomplish essentially the same thing?
Yes, I believe so, but taxes could reduce the accomplishment. We use a LifeStrategy fund and a target date fund as the single investment in 3 different tax-advantaged accounts.
Sounds pretty much like us. And it takes the rebalancing decisions out of our hands. Maybe I'm not so dumb after all... :happy

bigskyguy
Posts: 140
Joined: Sat Jan 24, 2015 4:59 pm

Re: Head Fakes and Dead Cats .. your thoughts on the rally?

Post by bigskyguy » Wed Apr 08, 2020 4:53 pm

KEotSK66 wrote:
Wed Apr 08, 2020 4:26 pm
initially the model predicted 2.5 million deaths, now 60k, and it might go lower
In all fairness, he scenarios have changed. The initial assumptions and outcomes were based upon living life normally, no interventions. The predicted numbers now are based upon vigorous adherence to human risk avoidance. Our present reality is neither, so expect the numbers to likely be somewhere in between.
Additionally, cases to date have concentrated. In urban areas where medical resources are relatively accessible, and personal avoidance efforts gave been more or less accepted. As this pandemic spreads to rural, less affluent America, I fear the carnage will rise substantially.
We are a long way from this pandemic running its course; until it does, I don’t foresee us returning to anything close to normal.

User avatar
ResearchMed
Posts: 10237
Joined: Fri Dec 26, 2008 11:25 pm

Re: Head Fakes and Dead Cats .. your thoughts on the rally?

Post by ResearchMed » Wed Apr 08, 2020 4:56 pm

livesoft wrote:
Wed Apr 08, 2020 2:54 pm
HomerJ wrote:
Wed Apr 08, 2020 2:50 pm
Either teach us all how to accurately spot head fakes and dead cats, or post every time you spot them.
I have never made any predictions. I can look at my asset allocation now because I use ETFs and tell if I am overweigh in equities or in bonds. I can see now if I have hit any trigger bands right now. This is not the market timing you think it is because I am not predicting at all what will happen in the next 5 minutes nor beyond. I am only looking at the present and the past.

The Bogleheads wiki has a link to opportunistic rebalancing paper, but I don't do it in exactly the same way.

Furthermore, I never go to cash unless I might be moving money between financial institutions.
Here is a link to that 2008 paper on opportunistic rebalancing:

http://resource.fpanet.org/resource/09B ... yanani.pdf

RM
This signature is a placebo. You are in the control group.

Swivelguy
Posts: 403
Joined: Sun Jan 18, 2009 11:37 pm

Re: Head Fakes and Dead Cats .. your thoughts on the rally?

Post by Swivelguy » Wed Apr 08, 2020 5:02 pm

HomerJ wrote:
Wed Apr 08, 2020 4:33 pm
Swivelguy wrote:
Wed Apr 08, 2020 4:06 pm
My thoughts on the rally: I'm afraid that the stocks my 401k will automatically buy at the end of this week will look pretty expensive in a month or two, but I'll buy them all the same.
But the important thing is how cheap they will look in 10-20 years...

You guys need to get into long-term thinking here.
Stocks I buy at price X today will be higher in 20 years, but they'd be even more higher if I bought them at price <X a month from now. Then again, I don't know for sure that I'm right about prices going down again, so that's why I am staying the course, as you can see in my post.

JackoC
Posts: 1354
Joined: Sun Aug 12, 2018 11:14 am

Re: Head Fakes and Dead Cats .. your thoughts on the rally?

Post by JackoC » Wed Apr 08, 2020 5:08 pm

Carol88888 wrote:
Wed Apr 08, 2020 4:11 pm
Too many people are predicting a retest of the lows; therefore I predict we don't we don't get one. The market will do whatever it takes to disappoint the most people.

I have been a buyer throughout this decline.
I happened to watch an evening 'crisis coverage' show on CNBC for a few minutes and an in initial bull v bear segment the bull (Brian Belsky IIRC) cited the very large % of prognosticators saying 'we'll retest the lows'. We well might, VIX still at 43 (not 70's like it was for awhile, but still very high historically). But predominant bearishness by prognosticators is generally a bullish signal, albeit not perfect. As I argued on another thread, assessing the validity of the market's price by anecdotally sampling what random people on the internet say is a fool's errand. Still, the kind of people who say stuff like 'the market still has no idea what carnage there's going to be' are often the kind who turn into panic buyers at higher levels once they're convinced they were wrong. They actually have no idea if the market has any idea about that. :happy I don't either but at least realize it.

I have no opinion on market direction. But market perception of risk is higher than usual, the VIX measures that roughly. My 'stay the course' is generally not to buy stocks to 'rebalance' on downturns, not as a formula anyway. I sell when stocks exceed a max %, but below that max just give myself license to buy risk assets using safe assets in excess of 20 times annual spending. That would now allow me to deploy a 2+ times annual spending to risk assets, but I've only bought a little so far (mainly emerging market local currency bonds rather than stocks). Also I expect to have to spend more safe assets to live next couple of years as stock dividends decline 30-40% (not the index level decline necessarily, but dividends, that's what dividend futures on major world stock indicies say). However I'm completely fine if risk asset markets go straight to new highs from here. I'll make enough money if that happens, as far as I'm concerned.
Last edited by JackoC on Wed Apr 08, 2020 5:11 pm, edited 1 time in total.

JackoC
Posts: 1354
Joined: Sun Aug 12, 2018 11:14 am

Re: Head Fakes and Dead Cats .. your thoughts on the rally?

Post by JackoC » Wed Apr 08, 2020 5:08 pm

duplicate
Last edited by JackoC on Wed Apr 08, 2020 5:10 pm, edited 1 time in total.

User avatar
Makaveli
Posts: 596
Joined: Mon May 19, 2014 11:18 pm

Re: Head Fakes and Dead Cats .. your thoughts on the rally?

Post by Makaveli » Wed Apr 08, 2020 5:09 pm

KEotSK66 wrote:
Wed Apr 08, 2020 4:26 pm
initially the model predicted 2.5 million deaths, now 60k, and it might go lower
This is simply misleading.

User avatar
willthrill81
Posts: 19065
Joined: Thu Jan 26, 2017 3:17 pm
Location: USA

Re: Head Fakes and Dead Cats .. your thoughts on the rally?

Post by willthrill81 » Wed Apr 08, 2020 5:16 pm

minimalistmarc wrote:
Wed Apr 08, 2020 3:49 pm
willthrill81 wrote:
Wed Apr 08, 2020 2:52 pm
midareff wrote:
Wed Apr 08, 2020 2:37 pm
What's your take on this?
Rampant and possibly reckless hope.
Nope. Just realistic. Human race is progressive. Victory against COVID19 is inevitable, then it’s onwards and upwards with an additional inflationary tailwind
I don't think that many every thought that the human race was ever facing extinction. Everyone knew that we would eventually beat it somehow. But the question was and is how long that victory would take and at what cost.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

corp_sharecropper
Posts: 239
Joined: Thu Nov 07, 2013 2:36 pm

Re: Head Fakes and Dead Cats .. your thoughts on the rally?

Post by corp_sharecropper » Wed Apr 08, 2020 5:17 pm

Assuming one has an investment horizon beyond just a few years I don't see how this would make a bit of difference. The way I see it, the two main alternatives being discussed here for the last month boil down to either market timing (I'm going to be smart & move money here now, there next week, etc and in the end I will win!) or some degree of capitulation from flying too close to the sun with your equity allocation (and what now? You're going sell some of those beaten down shares and plow it into anemic, near zero yield, bonds... Now? Really?!).

I've become convinced, slowly, that if anything, most people are too conservative. I think it's possible to work on one's ability to mentally withstand these situations, and that one should indeed actually expend focused time & energy on improving their investing psychological fortitude rather than adjusting & hobbling their allocation with investments that are nearly cash, and that ultimately investing success is far more predicated on psychology than chosing the perfect ETF, mutual fund, bond, and the exact allocation of each. I say count your human capital, count your pension, even count your SS and realize it's ok to go full bore with investments in equities but stay shy of pure speculation/gambling/high leverage.

Well that's just my opinion, it's worth exactly what you paid to read it, but I hope it may help some to stay the course or look into adjusting their mental approach rather than adjusting their asset allocation to be less productive.

Ocean77
Posts: 216
Joined: Wed Oct 23, 2019 3:20 pm

Re: Head Fakes and Dead Cats .. your thoughts on the rally?

Post by Ocean77 » Wed Apr 08, 2020 5:19 pm

fatcoffeedrinker wrote:
Wed Apr 08, 2020 4:36 pm
Morningstar thinks only 15% of GDP is directly shut down.
If I look at past recessions since 1945, there isn't one that comes even close to this level of GDP decline ("only" 15%).

minimalistmarc
Posts: 939
Joined: Fri Jul 24, 2015 4:38 pm

Re: Head Fakes and Dead Cats .. your thoughts on the rally?

Post by minimalistmarc » Wed Apr 08, 2020 5:31 pm

willthrill81 wrote:
Wed Apr 08, 2020 5:16 pm
minimalistmarc wrote:
Wed Apr 08, 2020 3:49 pm
willthrill81 wrote:
Wed Apr 08, 2020 2:52 pm
midareff wrote:
Wed Apr 08, 2020 2:37 pm
What's your take on this?
Rampant and possibly reckless hope.
Nope. Just realistic. Human race is progressive. Victory against COVID19 is inevitable, then it’s onwards and upwards with an additional inflationary tailwind
I don't think that many every thought that the human race was ever facing extinction. Everyone knew that we would eventually beat it somehow. But the question was and is how long that victory would take and at what cost.
Answer: probably not that long and probably not that much :)

I think people need to stop obsessing about the stock market. It’s probably bottomed and will irritatingly climb for no obvious reason.

Just focus on what you can control. Mainly your family’s wellbeing.

I understand a lot of people are shaken by this, but the stock market is a pretty minor issue. Just enjoy the ride.

User avatar
watchnerd
Posts: 5981
Joined: Sat Mar 03, 2007 11:18 am
Location: Seattle, WA, USA

Re: Head Fakes and Dead Cats .. your thoughts on the rally?

Post by watchnerd » Wed Apr 08, 2020 5:31 pm

HomerJ wrote:
Wed Apr 08, 2020 4:33 pm
Swivelguy wrote:
Wed Apr 08, 2020 4:06 pm
My thoughts on the rally: I'm afraid that the stocks my 401k will automatically buy at the end of this week will look pretty expensive in a month or two, but I'll buy them all the same.
But the important thing is how cheap they will look in 10-20 years...

You guys need to get into long-term thinking here.
Right.

If near to retirement:

New payroll contributions::net worth = small
Time to value = short
Net impact of weekly purchase price changes now at time to sell = small

If far from retirement:

New payroll contributions:: net worth = large
Time to value = long
Net impact of weekly purchase price changes now at time to sell = small
70% Global Market Weight Equities | 15% Long Treasuries 15% short TIPS & cash || RSU + ESPP

User avatar
watchnerd
Posts: 5981
Joined: Sat Mar 03, 2007 11:18 am
Location: Seattle, WA, USA

Re: Head Fakes and Dead Cats .. your thoughts on the rally?

Post by watchnerd » Wed Apr 08, 2020 5:35 pm

Swivelguy wrote:
Wed Apr 08, 2020 5:02 pm

Stocks I buy at price X today will be higher in 20 years, but they'd be even more higher if I bought them at price <X a month from now. Then again, I don't know for sure that I'm right about prices going down again, so that's why I am staying the course, as you can see in my post.
Are you 20 years from retirement?

That's 400+ paychecks if you get paid 2x a month.

Why obsess over the price of this one purchase?
70% Global Market Weight Equities | 15% Long Treasuries 15% short TIPS & cash || RSU + ESPP

surfstar
Posts: 2131
Joined: Fri Sep 13, 2013 12:17 pm
Location: Santa Barbara, CA

Re: Head Fakes and Dead Cats .. your thoughts on the rally?

Post by surfstar » Wed Apr 08, 2020 5:38 pm

Makaveli wrote:
Wed Apr 08, 2020 5:09 pm
KEotSK66 wrote:
Wed Apr 08, 2020 4:26 pm
initially the model predicted 2.5 million deaths, now 60k, and it might go lower
This is simply misleading.
and that is exactly how it will be used.

MotoTrojan
Posts: 9923
Joined: Wed Feb 01, 2017 8:39 pm

Re: Head Fakes and Dead Cats .. your thoughts on the rally?

Post by MotoTrojan » Wed Apr 08, 2020 5:43 pm

mancich wrote:
Wed Apr 08, 2020 4:16 pm
David Jay wrote:
Wed Apr 08, 2020 2:41 pm
The stock market is forward-looking. If the country is going back to work then I expect the market will be reasonably lenient with Q1 earnings, etc.

And where are they going to go? T-Bills?
This. Psychology aside, it is a leading indicator. The market already knows that Q2 numbers will be ugly. Now, if they are uglier than expected, that is a different story :shock:
While true, I would argue the biggest threat is not that Q2 is uglier than expected, but that those ugly numbers persist for more quarters than anticipated. The market has the information today to do a much better job of determining how much economic power has been removed than it does how long that power will be missing.

fatcoffeedrinker
Posts: 203
Joined: Mon Mar 23, 2020 2:03 pm

Re: Head Fakes and Dead Cats .. your thoughts on the rally?

Post by fatcoffeedrinker » Wed Apr 08, 2020 5:50 pm

Ocean77 wrote:
Wed Apr 08, 2020 5:19 pm
fatcoffeedrinker wrote:
Wed Apr 08, 2020 4:36 pm
Morningstar thinks only 15% of GDP is directly shut down.
If I look at past recessions since 1945, there isn't one that comes even close to this level of GDP decline ("only" 15%).
It won't last a whole year. Read the article. Morningstar estimates -2.9% growth rate for GDP for 2020, which is a 5 percentage point decrease from the 2.1% consensus estimate before the virus.

Silverado
Posts: 304
Joined: Fri Oct 18, 2013 6:07 pm

Re: Head Fakes and Dead Cats .. your thoughts on the rally?

Post by Silverado » Wed Apr 08, 2020 5:59 pm

livesoft wrote:
Wed Apr 08, 2020 3:43 pm
HomerJ wrote:
Wed Apr 08, 2020 3:38 pm
Did you really mean to say that ignoring the market completely is a stupid stupid move that could ruin one financially?
Folks who do nothing would likely be better off using a Vanguard Target Retirement or LifeStrategy fund if they could. The fund managers of those funds are not sitting on their hands doing nothing.
I think a key difference in what livesoft does versus what appears to be a ton of others is that he is doing something that is correct. When stocks go down enough (even intraday) he sells bonds and buys more. When the stocks go back up enough (even intraday) he sells some and buys bonds. Hey, he’s got the time and confidence to do it. Worst case is he get to 100% stocks at SP500 1000 or something. When it recovers goodness will he be in a good spot.

What I read over and over lately is the opposite: stocks go down and they start selling stocks, saying 'I think they will go down more and I will buy then'. It is really unfortunate for them and baffling for those with 15+ years before they could possibly need the money. Would these people buy back in at SP500 1000? Maybe, but maybe not.

rascott
Posts: 2098
Joined: Wed Apr 15, 2015 10:53 am

Re: Head Fakes and Dead Cats .. your thoughts on the rally?

Post by rascott » Wed Apr 08, 2020 5:59 pm

KEotSK66 wrote:
Wed Apr 08, 2020 4:26 pm
initially the model predicted 2.5 million deaths, now 60k, and it might go lower

To be fair... the 2m number was if we did absolutely nothing and continued on as normal.

fatcoffeedrinker
Posts: 203
Joined: Mon Mar 23, 2020 2:03 pm

Re: Head Fakes and Dead Cats .. your thoughts on the rally?

Post by fatcoffeedrinker » Wed Apr 08, 2020 6:34 pm

rascott wrote:
Wed Apr 08, 2020 5:59 pm
KEotSK66 wrote:
Wed Apr 08, 2020 4:26 pm
initially the model predicted 2.5 million deaths, now 60k, and it might go lower

To be fair... the 2m number was if we did absolutely nothing and continued on as normal.
And also to be fair, the model, even after it included assumptions of social distancing, has gone from a range of 100k-240k down to 60k. So even when considering social distancing, it was a vast over-estimation, assuming it is correct today (and it has been predicting daily death numbers fairly accurately over the past few days).

saintsfan342000
Posts: 156
Joined: Wed Apr 04, 2018 9:46 pm

Re: Head Fakes and Dead Cats .. your thoughts on the rally?

Post by saintsfan342000 » Wed Apr 08, 2020 6:51 pm

I figure the market has priced in massive, short-term drops in earnings, employment, GDP, etc. But I don’t think the current prices have taken into consideration this shut down lasting much beyond the end of the month. And it’s not currently priced for a second wave of infections.
Already impartial now

heyyou
Posts: 3699
Joined: Tue Feb 20, 2007 4:58 pm

Re: Head Fakes and Dead Cats .. your thoughts on the rally?

Post by heyyou » Wed Apr 08, 2020 6:55 pm

If you don't know and don't care, and don't watch your daily account balance, you have missed the Fakes and the Cats, and the rally. For a supposedly passive investing site, did the virus take out the passivity?

We are past a decade-long bull market, does it even matter what triggered the inevitable crash that follows bull markets? Which will be followed by volatility. It is all deja vu.

Jozxyqk
Posts: 261
Joined: Wed Jun 04, 2014 9:16 am

Re: Head Fakes and Dead Cats .. your thoughts on the rally?

Post by Jozxyqk » Wed Apr 08, 2020 6:58 pm

I don't know who I view as more goofy. The people who were certain that the market was doomed and made repeated predictions of such, or the people who (now that the market has briefly gone up), are now claiming that they are certain there was never any danger and declaring victory against the COVID crash.

TallBoy29er
Posts: 954
Joined: Thu Jul 18, 2013 9:06 pm

Re: Head Fakes and Dead Cats .. your thoughts on the rally?

Post by TallBoy29er » Wed Apr 08, 2020 7:21 pm

livesoft wrote:
Wed Apr 08, 2020 2:38 pm
Use opportunistic rebalancing to sell and buy as needed. My 401(k) is down less than 5% YTD, but I have moved more than 20% of its value back and forth twice because of the head fakes and dead cats.

"Stay the course" does not mean "Be a deer in the headlights."
How do you avoid issues with round trip transaction restrictions?

Ocean77
Posts: 216
Joined: Wed Oct 23, 2019 3:20 pm

Re: Head Fakes and Dead Cats .. your thoughts on the rally?

Post by Ocean77 » Wed Apr 08, 2020 7:26 pm

fatcoffeedrinker wrote:
Wed Apr 08, 2020 5:50 pm
Ocean77 wrote:
Wed Apr 08, 2020 5:19 pm
fatcoffeedrinker wrote:
Wed Apr 08, 2020 4:36 pm
Morningstar thinks only 15% of GDP is directly shut down.
If I look at past recessions since 1945, there isn't one that comes even close to this level of GDP decline ("only" 15%).
It won't last a whole year. Read the article. Morningstar estimates -2.9% growth rate for GDP for 2020, which is a 5 percentage point decrease from the 2.1% consensus estimate before the virus.
Even if this holds, -2.9% still looks quite bad. Over the last 40 years, there was only one recession in the US on this level (the previous one in 2008).

Ocean77
Posts: 216
Joined: Wed Oct 23, 2019 3:20 pm

Re: Head Fakes and Dead Cats .. your thoughts on the rally?

Post by Ocean77 » Wed Apr 08, 2020 7:29 pm

Jozxyqk wrote:
Wed Apr 08, 2020 6:58 pm
I don't know who I view as more goofy. The people who were certain that the market was doomed and made repeated predictions of such, or the people who (now that the market has briefly gone up), are now claiming that they are certain there was never any danger and declaring victory against the COVID crash.
I'm afraid we'll have to wait for a year or so to answer this.

Jim180
Posts: 433
Joined: Wed Jun 26, 2013 9:47 pm

Re: Head Fakes and Dead Cats .. your thoughts on the rally?

Post by Jim180 » Wed Apr 08, 2020 7:35 pm

Carol88888 wrote:
Wed Apr 08, 2020 4:11 pm
Too many people are predicting a retest of the lows; therefore I predict we don't we don't get one. The market will do whatever it takes to disappoint the most people.

I have been a buyer throughout this decline.
But the reason so many started predicting a retest of the lows is because initially so many were predicting a V shape recovery. So now if the retest crowd is wrong it means the original concensus opinion of a V shape recovery was correct. However neither Ben Bernanke or Janet Yellen think we'll have the V shape recovery.

Jozxyqk
Posts: 261
Joined: Wed Jun 04, 2014 9:16 am

Re: Head Fakes and Dead Cats .. your thoughts on the rally?

Post by Jozxyqk » Wed Apr 08, 2020 7:37 pm

Ocean77 wrote:
Wed Apr 08, 2020 7:29 pm
Jozxyqk wrote:
Wed Apr 08, 2020 6:58 pm
I don't know who I view as more goofy. The people who were certain that the market was doomed and made repeated predictions of such, or the people who (now that the market has briefly gone up), are now claiming that they are certain there was never any danger and declaring victory against the COVID crash.
I'm afraid we'll have to wait for a year or so to answer this.
Regardless of which ends up being right (and it's entirely likely it will be neither -- there are results between "back to normal by Easter!" and extended Armageddon), I will still view anyone who confidently predicts market activity as quite silly.

Even broken clocks are right twice a day.

User avatar
JonnyDVM
Posts: 2165
Joined: Wed Feb 12, 2014 6:51 pm
Location: Atlanta, GA

Re: Head Fakes and Dead Cats .. your thoughts on the rally?

Post by JonnyDVM » Wed Apr 08, 2020 7:39 pm

Carol88888 wrote:
Wed Apr 08, 2020 4:11 pm
Too many people are predicting a retest of the lows; therefore I predict we don't we don't get one. The market will do whatever it takes to disappoint the most people.

I have been a buyer throughout this decline.
Yes, everyone I ask seems to think we haven’t seen the low yet and we’re dropping deep again. When everyone thinks something is going to happen, it seems like the opposite is usually true. Everyone waiting for that second big drop may be sorely disappointed. Heck, I’ve been waiting for a big down day for a week now because I hate buying on green days. I may be disappointed myself.
I’d trade it all for a little more | -C Montgomery Burns

User avatar
JonnyDVM
Posts: 2165
Joined: Wed Feb 12, 2014 6:51 pm
Location: Atlanta, GA

Re: Head Fakes and Dead Cats .. your thoughts on the rally?

Post by JonnyDVM » Wed Apr 08, 2020 7:42 pm

watchnerd wrote:
Wed Apr 08, 2020 5:35 pm
Swivelguy wrote:
Wed Apr 08, 2020 5:02 pm

Stocks I buy at price X today will be higher in 20 years, but they'd be even more higher if I bought them at price <X a month from now. Then again, I don't know for sure that I'm right about prices going down again, so that's why I am staying the course, as you can see in my post.
Are you 20 years from retirement?

That's 400+ paychecks if you get paid 2x a month.

Why obsess over the price of this one purchase?
Isn’t this the forum where people obsess over the cost of an ice cream cone because of what that $6 could have grown to in 30 years had it only been invested?
I’d trade it all for a little more | -C Montgomery Burns

Swivelguy
Posts: 403
Joined: Sun Jan 18, 2009 11:37 pm

Re: Head Fakes and Dead Cats .. your thoughts on the rally?

Post by Swivelguy » Wed Apr 08, 2020 7:51 pm

watchnerd wrote:
Wed Apr 08, 2020 5:35 pm
Swivelguy wrote:
Wed Apr 08, 2020 5:02 pm

Stocks I buy at price X today will be higher in 20 years, but they'd be even more higher if I bought them at price <X a month from now. Then again, I don't know for sure that I'm right about prices going down again, so that's why I am staying the course, as you can see in my post.
Are you 20 years from retirement?

That's 400+ paychecks if you get paid 2x a month.

Why obsess over the price of this one purchase?
25, probably. I guess if posting my thoughts on the rally in a thread titled "your thoughts on the rally?" is obsessing, then I guess I just... won't.

Rosencrantz1
Posts: 561
Joined: Tue Sep 10, 2019 12:28 pm

Re: Head Fakes and Dead Cats .. your thoughts on the rally?

Post by Rosencrantz1 » Wed Apr 08, 2020 7:58 pm

Was it user name 'stinky' that claims to have called the bottom @ 2237 ? I'm inclined to believe that call (in hindsight). Certainly, the current bounce could be overdone, but, barring a significantly more grim infection/death rate, it's hard for me to imagine SPX going back down to the 1800-2000 level any time soon. Fortunately, I bought on the way down. And, I've bought some on the way back up too. And, if it reverses course and heads back down, I'll buy some more. I've decided to whittle our EF down to about 18 months. We're fortunate to have cola pensions > expenses.

User avatar
watchnerd
Posts: 5981
Joined: Sat Mar 03, 2007 11:18 am
Location: Seattle, WA, USA

Re: Head Fakes and Dead Cats .. your thoughts on the rally?

Post by watchnerd » Wed Apr 08, 2020 8:01 pm

Silverado wrote:
Wed Apr 08, 2020 5:59 pm

I think a key difference in what livesoft does versus what appears to be a ton of others is that he is doing something that is correct. When stocks go down enough (even intraday) he sells bonds and buys more. When the stocks go back up enough (even intraday) he sells some and buys bonds.
I thought that was just standard rebalancing practice if one uses bands instead of time-frames for rebalancing triggers.

At least that's what I do.
70% Global Market Weight Equities | 15% Long Treasuries 15% short TIPS & cash || RSU + ESPP

BogleAlltheWay
Posts: 381
Joined: Mon May 15, 2017 5:25 pm

Re: Head Fakes and Dead Cats .. your thoughts on the rally?

Post by BogleAlltheWay » Wed Apr 08, 2020 8:05 pm

With everyone predicting a downturn I am going to guess it is not happening.

Rosencrantz1
Posts: 561
Joined: Tue Sep 10, 2019 12:28 pm

Re: Head Fakes and Dead Cats .. your thoughts on the rally?

Post by Rosencrantz1 » Wed Apr 08, 2020 8:06 pm

JonnyDVM wrote:
Wed Apr 08, 2020 7:42 pm
watchnerd wrote:
Wed Apr 08, 2020 5:35 pm
Swivelguy wrote:
Wed Apr 08, 2020 5:02 pm

Stocks I buy at price X today will be higher in 20 years, but they'd be even more higher if I bought them at price <X a month from now. Then again, I don't know for sure that I'm right about prices going down again, so that's why I am staying the course, as you can see in my post.
Are you 20 years from retirement?

That's 400+ paychecks if you get paid 2x a month.

Why obsess over the price of this one purchase?
Isn’t this the forum where people obsess over the cost of an ice cream cone because of what that $6 could have grown to in 30 years had it only been invested?
If this isn't THAT forum, I'm hopelessly lost. Can you kindly redirect me? :sharebeer

Boglegrappler
Posts: 1262
Joined: Wed Aug 01, 2012 9:24 am

Re: Head Fakes and Dead Cats .. your thoughts on the rally?

Post by Boglegrappler » Wed Apr 08, 2020 8:11 pm

The stock market anticipates market turns by 6-9 months, if I remember the old stats. It's the old idea that if something is going to happen in the relatively near term future, the stock market reflects it today.

This leads to intervals of "irrationality" at the turning points. Near cyclical peaks the market heads down despite every day being a record day for the operating businesses. At least for the next six months or so.

At cyclical lows, the market heads up while the operating business environment continues to head down to the operating low months later.

It causes havoc in trying to figure out what's real.

We'll see whether this upturn is the signal for the upcoming beginning of the end, or not. We're experiencing something different than a typical cyclical movement, but the same ideas hold.

ge1
Posts: 549
Joined: Sat Apr 28, 2012 8:15 pm

Re: Head Fakes and Dead Cats .. your thoughts on the rally?

Post by ge1 » Wed Apr 08, 2020 8:12 pm

watchnerd wrote:
Wed Apr 08, 2020 3:49 pm


I think stock valuations became disconnected from EPS and economic reality long before the pandemic.

It's all about the speculative return now.
This. Spot on.

I don’t think the rally will last, but have been wrong many times before. In the meantime, I’m doing probably something similar to Livesoft and actively trade the ups and downs; I definitely don’t recommend it but works for me.

User avatar
watchnerd
Posts: 5981
Joined: Sat Mar 03, 2007 11:18 am
Location: Seattle, WA, USA

Re: Head Fakes and Dead Cats .. your thoughts on the rally?

Post by watchnerd » Wed Apr 08, 2020 8:16 pm

JonnyDVM wrote:
Wed Apr 08, 2020 7:42 pm


Isn’t this the forum where people obsess over the cost of an ice cream cone because of what that $6 could have grown to in 30 years had it only been invested?
Yes.

And where some people tell me my mechanical watches are horrible because they're less accurate than a Casio G-shock.

At some point, the church will schism.
70% Global Market Weight Equities | 15% Long Treasuries 15% short TIPS & cash || RSU + ESPP

Montgomery
Posts: 31
Joined: Sun Nov 17, 2019 1:11 pm

Re: Head Fakes and Dead Cats .. your thoughts on the rally?

Post by Montgomery » Wed Apr 08, 2020 8:22 pm

The “market” is erratic with wild swings and that may not go away for a while. I think it is highly likely testing is nationwide in 7-14 days to tell us who has the antibodies and can get back in the pool without restrictions. Others not so much.

A lot of companies won’t survive but the ones who do very likely become stronger.

I can see us dropping 3-4K more, but the market sentiment is we WILL have a vaccine in 12-18 months and the easing of restrictions, due to testing are forthcoming in weeks not months. That’s a fact.
Last edited by Montgomery on Wed Apr 08, 2020 8:30 pm, edited 1 time in total.

madbrain
Posts: 5530
Joined: Thu Jun 09, 2011 5:06 pm
Location: San Jose, California

Re: Head Fakes and Dead Cats .. your thoughts on the rally?

Post by madbrain » Wed Apr 08, 2020 8:26 pm

TallBoy29er wrote:
Wed Apr 08, 2020 7:21 pm
How do you avoid issues with round trip transaction restrictions?
Some 401k have brokerage windows that allow you to trade ETFs with no round trip issues. I just signed up for mine yesterday. Not sure if it allows multiple round trips each day, though.

In my Roth IRA, I can do multiple round trips per day with something called "Limited margin".

madbrain
Posts: 5530
Joined: Thu Jun 09, 2011 5:06 pm
Location: San Jose, California

Re: Head Fakes and Dead Cats .. your thoughts on the rally?

Post by madbrain » Wed Apr 08, 2020 8:34 pm

sperry8 wrote:
Wed Apr 08, 2020 3:22 pm
A fellow on CNBC (don't crucify me... it seemed to make sense) said~: When P/E's are at 15 then you are buying the future 15 years of earnings at today's price. If we have 3 quarters of 0 earnings that's 5% of the earnings wiped away.
Earnings can also fall below 0. All businesses have fixed costs that can't be eliminated. If revenue goes to 0, but expenses remain non zero, you get negative earnings. Now, I'm not going to pretend I know how to price the impact of this. But it seems overly simplistic to discount just 3 quarters of earnings. Many businesses will go bankrupt during those 3 quarters, also.

illumination
Posts: 660
Joined: Tue Apr 02, 2019 6:13 pm

Re: Head Fakes and Dead Cats .. your thoughts on the rally?

Post by illumination » Wed Apr 08, 2020 8:47 pm

I think the worst is largely behind us, but I'm sure there will still be scary volatility. Most here are long term investors and not traders, I don't think you would be disappointed if you bought as these levels and came back and looked at it in like 3 years (which I would not even consider "long term"). I think "March 2009" is now in the rear view. Even if the market just moved sideways and you only collected the dividends, your return would be about 4 times higher than T-bills. I see nearly zero interest rates being the norm for a long, long time.

Lee_WSP
Posts: 2611
Joined: Fri Apr 19, 2019 5:15 pm
Location: Arizona

Re: Head Fakes and Dead Cats .. your thoughts on the rally?

Post by Lee_WSP » Wed Apr 08, 2020 8:51 pm

If this ends, this looks a lot more like 1987 than 2008.

garlandwhizzer
Posts: 2851
Joined: Fri Aug 06, 2010 3:42 pm

Re: Head Fakes and Dead Cats .. your thoughts on the rally?

Post by garlandwhizzer » Wed Apr 08, 2020 9:04 pm

Of course none of us know if this rapid market upward is a head fake or the real thing. Equity markets tend to look forward about 6 months or so and price in those expected economic changes. So the current bounce is due to optimism that the economy will bounce back very strongly in 6 months or so, plus the fact than many in accumulation phase see this as an opportunity to take advantage of buying quality assets at relative sales prices than have been available for years. That's probably what is driving this bounce.

I suspect the full depth of the massive economic decline in Q2 is going to be staggering in terms of corporate profits, GDP figures, etc., and that weakness will likely bleed into Q3, perhaps even Q4. Personally I don't think it's going to be the sharp full V shaped recovery that optimists expect. CV-19 has produced the quickest severe market decline in history, worse than the GD in terms of speed. The problem is that you can tear a house down in a few days with sledge hammers but putting it back together again takes a lot longer. Large economies are somewhat like houses in this regard. So much unemployment, so many losing their jobs, so little in the way of savings for emergencies in many households and businesses relative to income losses. It is a psychological and economic disaster for many that will not be soon forgotten. This could leave a deep scar on our collective psyche, impacting consumer and investment confidence going forward even after the virus is under control. Consumers may start shifting dollars away from consumption and into savings preparing for another such emergency. That has negative impacts on economic growth. Ours is a service economy and when people are homebound they don't spend much in the way of services. Restaurants, the travel industry, airline production, energy production, commodities other than gold, retail, amusement parks, movies--the list goes on and on and all of them are closed or closing. Those 10 million plus unemployed aren't going to be spending much so that further spreads the pain. Ours is a very complicated and interconnected economy and it may take a lot longer than the recent surge in optimism believes to revert to normal. I know I don't know when the damage will finally play out and I don't think anyone knows.

The bond market had been telling us that a bear market and recession were coming for many months before they actually arrived even while the stock market kept on making new highs. The bond market by yield spreads now (HYB - Treasury yields) and by all time low Treasury yields is suggesting that it's not clear sailing yet. Bond market could be wrong but usually when there is a disagreement between the bond and stock markets, it has been the bond market that proved to be right in time. When yield spreads are normalizing you'll know with fair certainty that the coast is likely to be clear but by that time stocks are likely to be priced a lot higher than they are are now. I think most experienced experts believe that there will be another testing of the low in this bear market before it's over but they, like you and I, could be wrong. I've got a balanced portfolio and I'm not doing anything but watching as it unfolds.


Garland Whizzer

Post Reply