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

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1130Super
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Re: Head Fakes and Dead Cats .. your thoughts on the rally?

Post by 1130Super » Thu Apr 09, 2020 7:53 pm

johnanglemen wrote:
Thu Apr 09, 2020 12:26 pm
rascott wrote:
Wed Apr 08, 2020 3:33 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.

Assuming this is true, then it would appear to me that a 34% drop (March 23rd bottom) would be a dramatic overreaction. I understand that past 3 quarters, we may see muted earnings for perhaps another 5 quarters (until vaccine is in and distributed). but still that's only 13% of the total earnings you were paying for. And of course there is another lever (the one that perhaps people are willing to pay more than 15 P/E) because, hey - where else you going to go? Cash earning bupkus? T-Bonds earning at almost record lows? So, based on all this it has me thinking Mar 23rd was the low (and the bounce is not hopeful/wishful at all) but rather a measured response to these sorts of estimates.

Yes that's actually very accurate. .... Bernstein discussed this in the (great) interview that was posted here this past week. Stock prices are a discount of future years earnings. And even taking this years earnings to zero (or even negative) doesn't impact current values that much.

And a 15 PE equates to to a 6.7% earnings yield.
Considering T bills are 0%.... that's a 6.7% equity risk premium.... something very high historically. And why PEs should revert back to the low 20s if everything flipped back to normal tomorrow.

The bear case is that the "E" is totally trashed, useless and unknowable. This situation is hammering main street businesses like no other..... and we don't have a clue what the longer term implications will be on corporate earnings in future years.

There were several rallies of this size during 2008.... and we know what happened there.
Can you give examples of such rallies in 2008?
At the end of 2008 the Dow rallied 20% before making new lows in 2009

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

Post by watchnerd » Thu Apr 09, 2020 8:07 pm

marcwd wrote:
Thu Apr 09, 2020 7:31 pm
[
How about assigning some metrics and numbers for “high” “middle” and “low”?

Take your pick on what valuation metrics you like / hate the least.

All valuation metrics have issues.

I like to look at several.

The Buffet ratio is one of my faves, but slow moving.

High = top quartile valuations.
Middle = middle two quartiles
Low = bottom quartile valuations
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Re: Head Fakes and Dead Cats .. your thoughts on the rally?

Post by BW1985 » Thu Apr 09, 2020 8:22 pm

marcwd wrote:
Thu Apr 09, 2020 7:44 pm
livesoft wrote:
Thu Apr 09, 2020 9:16 am
jrbdmb wrote:
Thu Apr 09, 2020 9:01 am
Target Retirement Funds and LifeStrategy Funds are invested in a fixed allocation of stock index funds and bond index funds. Aside from periodic rebalances in the Target Retirement Funds, what exactly are those managers doing?
They are saving some investors from the behavioral finance traps that many investors fall into. For instance, small-cap equities are up more than 10% in the past 25 hours. I suspect those fund managers had rebalanced into small caps per their IPS when small caps became underweighted in the past 10 days. That is, when those managers got punched in the mouth the week of March 16th, they had a plan. Did you?
Huh? Target Retirement and LifeStrategy funds are comprised of broad-based, cap-weighted indices. Small-cap representation and thus the capture of that 10% rise is commensurately small. Further, as has been suggested, the managers of these funds needn’t look at anything. Surely, all the rebalancing to the target proportions is computer driven. As it should be.
I was confused on that comment as well.
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Re: Head Fakes and Dead Cats .. your thoughts on the rally?

Post by whodidntante » Thu Apr 09, 2020 8:24 pm

madbrain wrote:
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.
If you have negative earnings, build trendy electric cars and express boy genius dreams of getting mankind to live on Mars. Thus attracting virtually unlimited capital.

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

Post by YRT70 » Thu Apr 09, 2020 8:39 pm

watchnerd wrote:
Thu Apr 09, 2020 3:23 pm
ballons wrote:
Thu Apr 09, 2020 2:28 pm

"Market timing is the strategy of making buying or selling decisions of financial assets (often stocks) by attempting to predict future market price movements. The prediction may be based on an outlook of market or economic conditions resulting from technical or fundamental analysis."

Looks like a duck...
Well, I guess I'm a sinner.

But at least my sinning is backed by statistics:

"Following periods of top-quartile valuations, the S&P 500 Index has delivered single-digit or negative returns 99% of the time."

https://www.gsam.com/content/dam/gsam/p ... ?sa=n&rd=n
I don't know about you but single digit returns are fine for most investors.

While those statistics may be right, the real question is: is market timing based on valuations likely to improve returns?

Ben Felix reviews the evidence: https://youtube.com/watch?v=w_aOERmUWdA

Written version: https://www.pwlcapital.com/does-market- ... ever-work/

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

Post by Brianmcg321 » Thu Apr 09, 2020 8:41 pm

whodidntante wrote:
Thu Apr 09, 2020 8:24 pm
madbrain wrote:
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.
If you have negative earnings, build trendy electric cars and express boy genius dreams of getting mankind to live on Mars. Thus attracting virtually unlimited capital.

Lol. I love this.
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Re: Head Fakes and Dead Cats .. your thoughts on the rally?

Post by marcwd » Thu Apr 09, 2020 8:46 pm

watchnerd wrote:
Thu Apr 09, 2020 8:07 pm
marcwd wrote:
Thu Apr 09, 2020 7:31 pm
[
How about assigning some metrics and numbers for “high” “middle” and “low”?

Take your pick on what valuation metrics you like / hate the least.

All valuation metrics have issues.

I like to look at several.

The Buffet ratio is one of my faves, but slow moving.

High = top quartile valuations.
Middle = middle two quartiles
Low = bottom quartile valuations
Ok, but I’m looking for some numbers to assign to your valuation groupings. Say we take the Buffett ratio as a metric. Do we then look back at the Buffett ratio over some long period of time (decades), divide the range (max minus min) of that metric over that long period into quartiles, and then assess whether the current value of the metric is High, Middle, or Low?

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

Post by 1130Super » Thu Apr 09, 2020 9:28 pm

whodidntante wrote:
Thu Apr 09, 2020 8:24 pm
madbrain wrote:
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.
If you have negative earnings, build trendy electric cars and express boy genius dreams of getting mankind to live on Mars. Thus attracting virtually unlimited capital.
Ford has a real bankruptcy coming in the near future, Tesla will scoop up this factories for pennies on the dollar

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

Post by whodidntante » Thu Apr 09, 2020 9:31 pm

1130Super wrote:
Thu Apr 09, 2020 9:28 pm
whodidntante wrote:
Thu Apr 09, 2020 8:24 pm
madbrain wrote:
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.
If you have negative earnings, build trendy electric cars and express boy genius dreams of getting mankind to live on Mars. Thus attracting virtually unlimited capital.
Ford has a real bankruptcy coming in the near future, Tesla will scoop up this factories for pennies on the dollar
At least they didn't buy a Chevy.

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

Post by madbrain » Thu Apr 09, 2020 9:33 pm

whodidntante wrote:
Thu Apr 09, 2020 9:31 pm
At least they didn't buy a Chevy.
I love my Chevys - 2015 Volt PHEV and 2017 Bolt EV. 2 cars from the price of one Tesla.

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

Post by madbrain » Thu Apr 09, 2020 9:35 pm

1130Super wrote:
Thu Apr 09, 2020 9:28 pm
Ford has a real bankruptcy coming in the near future, Tesla will scoop up this factories for pennies on the dollar
Why would Tesla fare any better than Ford ? With the recession, gas prices so low, and driving distances greatly reduced nationwide, doesn't Tesla stand to make even fewer sales than Ford ?

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

Post by Lee_WSP » Thu Apr 09, 2020 9:42 pm

If current prices reflect the present value of the next ten years or so of dividends/buybacks, then I still think the price is pretty high given the very likely scenario of zero/vastly reduced dividends for at least a few quarters.

I suppose the risk of large swathes of medium/large cap companies going bankrupt is pretty much off the table given the recent government actions.

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

Post by Grt2bOutdoors » Thu Apr 09, 2020 9:47 pm

1130Super wrote:
Thu Apr 09, 2020 9:28 pm
whodidntante wrote:
Thu Apr 09, 2020 8:24 pm
madbrain wrote:
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.
If you have negative earnings, build trendy electric cars and express boy genius dreams of getting mankind to live on Mars. Thus attracting virtually unlimited capital.
Ford has a real bankruptcy coming in the near future, Tesla will scoop up this factories for pennies on the dollar
Is that so? On the basis of what? At year end, Ford had $34.4 billion of liquidity in the form of cash and marketable securities, it had only $1.3 billion of debt maturing this year, it's sales in the first quarter are down 12.5%. Is that the basis for your opinion?

Tesla - $6.3 billion of cash, $1.8 billion of debt coming due this year and still has not turned a net profit for 2019 or any of its past years.

Ford was just backstopped by the Federal Reserve on its Ford Credit issuance's so no problem with providing financing for those buyers of its profitable trucks and suv's.
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Re: Head Fakes and Dead Cats .. your thoughts on the rally?

Post by Grt2bOutdoors » Thu Apr 09, 2020 9:49 pm

madbrain wrote:
Thu Apr 09, 2020 9:35 pm
1130Super wrote:
Thu Apr 09, 2020 9:28 pm
Ford has a real bankruptcy coming in the near future, Tesla will scoop up this factories for pennies on the dollar
Why would Tesla fare any better than Ford ? With the recession, gas prices so low, and driving distances greatly reduced nationwide, doesn't Tesla stand to make even fewer sales than Ford ?
Don't forget that Ford is also producing electric car vehicles that will appeal to the masses unlike the wannabe's buying Tesla's.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

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

Post by eye.surgeon » Thu Apr 09, 2020 9:53 pm

madbrain wrote:
Thu Apr 09, 2020 9:35 pm
1130Super wrote:
Thu Apr 09, 2020 9:28 pm
Ford has a real bankruptcy coming in the near future, Tesla will scoop up this factories for pennies on the dollar
Why would Tesla fare any better than Ford ? With the recession, gas prices so low, and driving distances greatly reduced nationwide, doesn't Tesla stand to make even fewer sales than Ford ?
Tesla just sold a record number of cars in March. Despite Covid-19, cheap gas, and expired rebates.
"I would rather be certain of a good return than hopeful of a great one" | Warren Buffett

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

Post by madbrain » Thu Apr 09, 2020 10:00 pm

Grt2bOutdoors wrote:
Thu Apr 09, 2020 9:49 pm
Don't forget that Ford is also producing electric car vehicles that will appeal to the masses unlike the wannabe's buying Tesla's.
I know they made some, but none looked like anything attractive in the past. I am probably going to replace my 2015 Volt in 2-3 years and I have no idea what other PHEV I would choose. I ruled out the Ford C-Max Energi in 2015 because its EV range was too low. Before COVID-19 I would use just about 100% of my Volt battery each day on average. Maybe 105% in the winter (meaning I would need a tiny bit of gas at the end) and 95% in the summer.

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

Post by HomerJ » Thu Apr 09, 2020 10:10 pm

eye.surgeon wrote:
Thu Apr 09, 2020 9:53 pm
madbrain wrote:
Thu Apr 09, 2020 9:35 pm
1130Super wrote:
Thu Apr 09, 2020 9:28 pm
Ford has a real bankruptcy coming in the near future, Tesla will scoop up this factories for pennies on the dollar
Why would Tesla fare any better than Ford ? With the recession, gas prices so low, and driving distances greatly reduced nationwide, doesn't Tesla stand to make even fewer sales than Ford ?
Tesla just sold a record number of cars in March. Despite Covid-19, cheap gas, and expired rebates.
Heh, a record number.

88,000 vehicles 1st quarter 2020.

Ford sold 516,000 1st quarter 2020

GM sold 612,000 1st quarter 2020.

Yet Telsa's market cap is two times Ford and GM combined.

Talk about the market being irrational longer than one can stay solvent... :)
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.”

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

Post by watchnerd » Thu Apr 09, 2020 10:54 pm

marcwd wrote:
Thu Apr 09, 2020 8:46 pm


Ok, but I’m looking for some numbers to assign to your valuation groupings. Say we take the Buffett ratio as a metric. Do we then look back at the Buffett ratio over some long period of time (decades), divide the range (max minus min) of that metric over that long period into quartiles, and then assess whether the current value of the metric is High, Middle, or Low?
Use whatever metric you like.

Getting proscriptive about what valuation metrics to use ends up in a catfight because they all have issues.

The method you proposed is crude, but okay for cocktail math. What you really want to do is download the dataset and plot all the points, calculate the distributions.
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Re: Head Fakes and Dead Cats .. your thoughts on the rally?

Post by marcwd » Thu Apr 09, 2020 11:21 pm

watchnerd wrote:
Thu Apr 09, 2020 10:54 pm
marcwd wrote:
Thu Apr 09, 2020 8:46 pm


Ok, but I’m looking for some numbers to assign to your valuation groupings. Say we take the Buffett ratio as a metric. Do we then look back at the Buffett ratio over some long period of time (decades), divide the range (max minus min) of that metric over that long period into quartiles, and then assess whether the current value of the metric is High, Middle, or Low?
Use whatever metric you like.

Getting proscriptive about what valuation metrics to use ends up in a catfight because they all have issues.

The method you proposed is crude, but okay for cocktail math. What you really want to do is download the dataset and plot all the points, calculate the distributions.
Ok, thanks. I was really trying to understand the mechanics involved once a metric was chosen and your last sentence helped.

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

Post by reln » Fri Apr 10, 2020 1:40 am

midareff wrote:
Wed Apr 08, 2020 2:37 pm
My opinion.. I just don't see anything meriting the climb from the bottom we have seen so far. I don't think we have a glimpse of the carnage to the economy as of now, and the down draft shock and awe is yet to be replaced by a steady grind down based on to be reported earnings going forward.

What's your take on this?
So the market is not efficient enough? Short it.

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

Post by firebirdparts » Fri Apr 10, 2020 2:30 am

marcwd wrote:
Thu Apr 09, 2020 8:46 pm
Ok, but I’m looking for some numbers to assign to your valuation groupings. Say we take the Buffett ratio as a metric. Do we then look back at the Buffett ratio over some long period of time (decades), divide the range (max minus min) of that metric over that long period into quartiles, and then assess whether the current value of the metric is High, Middle, or Low?
I hate to say this, but the "proper" target for the Buffet ratio ought to depend on the cost of capital and that is going to interfere with your history. I just mention that because the cost of capital is at an extreme, and it might stay pinned there.
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Re: Head Fakes and Dead Cats .. your thoughts on the rally?

Post by watchnerd » Fri Apr 10, 2020 9:14 am

firebirdparts wrote:
Fri Apr 10, 2020 2:30 am
marcwd wrote:
Thu Apr 09, 2020 8:46 pm
Ok, but I’m looking for some numbers to assign to your valuation groupings. Say we take the Buffett ratio as a metric. Do we then look back at the Buffett ratio over some long period of time (decades), divide the range (max minus min) of that metric over that long period into quartiles, and then assess whether the current value of the metric is High, Middle, or Low?
I hate to say this, but the "proper" target for the Buffet ratio ought to depend on the cost of capital and that is going to interfere with your history. I just mention that because the cost of capital is at an extreme, and it might stay pinned there.
This is why I refuse to get proscriptive on valuation metrics.

They all have flaws and it just becomes a rat hole debating which flaws suit one's personal preferences.
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Dead Cat Bounce ?

Post by skor99 » Fri Apr 10, 2020 9:43 am

Or is the cat using one of its nine lives ? Amid all the talk about a severe recession maybe worse than 2009 ( maybe even a depression ) and the horrific unemployment numbers , the market seems to be ignoring all that. Last I checked there is still not a cure or vaccine and the Covid cases are still going up. How to make sense of this ?

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Re: Dead Cat Bounce ?

Post by March2009 » Fri Apr 10, 2020 10:03 am

The Fed is injecting money in bond markets including junk bonds. That has had a massive effect on stock prices.
In bear markets, stocks return to their rightful owners. - J.P. Morgan

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Tax loss harvest plan is ready!

Post by hudson » Fri Apr 10, 2020 10:09 am

midareff wrote:
Wed Apr 08, 2020 2:37 pm
My opinion.. I just don't see anything meriting the climb from the bottom we have seen so far. I don't think we have a glimpse of the carnage to the economy as of now, and the down draft shock and awe is yet to be replaced by a steady grind down based on to be reported earnings going forward.

What's your take on this?
I'm optimistic. I think that it's all going to work out. I have no data to support that.

I don't rebalance because I don't own any stocks.

This panic has given me a chance to think seriously about my investment options.
If bonds drop again so that I have a loss, my tax loss harvest plan is ready. I'm going to move from VWIUX to BMBIX....high quality intermediate bond to higher quality intermediate bond...sell low, buy low.
I should have had the plan ready on March 20th.

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Re: Dead Cat Bounce ?

Post by FiveK » Fri Apr 10, 2020 10:46 am


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Re: Dead Cat Bounce ?

Post by Misenplace » Fri Apr 10, 2020 11:27 am

skor99 wrote:
Fri Apr 10, 2020 9:43 am
Or is the cat using one of its nine lives ? Amid all the talk about a severe recession maybe worse than 2009 ( maybe even a depression ) and the horrific unemployment numbers , the market seems to be ignoring all that. Last I checked there is still not a cure or vaccine and the Covid cases are still going up. How to make sense of this ?
This topic has been merged into the existing thread.

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

Post by Jess Saying » Fri Apr 10, 2020 12:06 pm

I personally knew someone who tried shorting the market using ETFs throughout 2009 and 2010 because they were convinced the rally was a fraud. They didn't really lose anything in the crash because they were over 95% in bonds/money market/CDs, but the narrative of the crash had completely consumed their psyche. Yesterday, I personally made a final, small purchase I had reserved for a sub-S&P 2200 close (shame on me for attempting to time the market in the first place). It's tiny compared to my portfolio and I don't want to end up being one of those people who refuses to buy because "the real crash is almost here."

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

Post by iceport » Fri Apr 10, 2020 12:33 pm

Elysium wrote:
Thu Apr 09, 2020 5:44 pm
iceport wrote:
Thu Apr 09, 2020 2:47 pm
jibantik wrote:
Thu Apr 09, 2020 2:38 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."
This post should really be clarified with an edit to explain that you are not referring to market timing and instead normal rebalancing.

I read it the same way as Homer, and if a new investor misunderstands a post like this then that could be very damaging for them, considering your reputation.
What makes you think it's just normal rebalancing?

Rebalancing is all about maintaining portfolio asset allocations. What livesoft does is all about seeing a big swing in the market and reacting in a contrary direction, hoping it will improve returns. Whether it does or not is one of many big mysteries...
Re-balancing is a risk management tool, older investors need not do this on the downside, but most certainly do it on the upside, otherwise you would end up with much larger equity allocation than needed, and less likely to retain profits earned in good years when sudden drops occur. Younger investors can most certainly do the opposite, since the sum of their future contributions are going to be much higher than current balance. Obviously there are nuances depending on the personal situation, some older investors may have the ability to buy more on the dips, so they may do so. Overall re-balancing is not a mechanical thing that you apply for all, it should be used to manage risk in the portfolio based on individual situation.

Other forms of aggressive re-balancing including TAA are unlikely to have any level of significant success rate, you would need to be honest about tracking results and compare to a benchmark of passive portfolio over many years to see where it has landed you. Chances are that most investors will not be able to pull this off, except on the fringes. Do it too many times and you will get less than the averages.
Very well said, Elysium.

I do wonder if the proponents of "aggressive rebalancing" or "opportunistic rebalancing," some of whom even base decisions on emotion, have carefully tracked their results and compared them to an appropriate benchmark over the long term.

Without that kind of honest analysis, one could get a false sense of accomplishment. :wink:
"Discipline matters more than allocation.” ─William Bernstein

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

Post by epicahab » Fri Apr 10, 2020 12:35 pm

My suspicion is that outrageously historic unemployment numbers combined with bad earnings reports from companies will at some point HAVE to affect equity prices.

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

Post by watchnerd » Fri Apr 10, 2020 3:07 pm

epicahab wrote:
Fri Apr 10, 2020 12:35 pm
My suspicion is that outrageously historic unemployment numbers combined with bad earnings reports from companies will at some point HAVE to affect equity prices.
That's already priced in.


*duck*

(Sorry, I couldn't help it.....)

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

Post by HomerJ » Fri Apr 10, 2020 8:34 pm

epicahab wrote:
Fri Apr 10, 2020 12:35 pm
My suspicion is that outrageously historic unemployment numbers combined with bad earnings reports from companies will at some point HAVE to affect equity prices.
Have equity prices not moved recently?

Because I could have sworn they HAVE changed because of historic unemployment numbers combined with expected bad earnings reports.
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.”

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

Post by fatcoffeedrinker » Fri Apr 10, 2020 8:40 pm

Grt2bOutdoors wrote:
Thu Apr 09, 2020 9:49 pm
madbrain wrote:
Thu Apr 09, 2020 9:35 pm
1130Super wrote:
Thu Apr 09, 2020 9:28 pm
Ford has a real bankruptcy coming in the near future, Tesla will scoop up this factories for pennies on the dollar
Why would Tesla fare any better than Ford ? With the recession, gas prices so low, and driving distances greatly reduced nationwide, doesn't Tesla stand to make even fewer sales than Ford ?
Don't forget that Ford is also producing electric car vehicles that will appeal to the masses unlike the wannabe's buying Tesla's.
Two words: Supercharger network. Makes Tesla a travel car, not a commuter car.

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

Post by epicahab » Fri Apr 10, 2020 8:47 pm

HomerJ wrote:
Fri Apr 10, 2020 8:34 pm
epicahab wrote:
Fri Apr 10, 2020 12:35 pm
My suspicion is that outrageously historic unemployment numbers combined with bad earnings reports from companies will at some point HAVE to affect equity prices.
Have equity prices not moved recently?

Because I could have sworn they HAVE changed because of historic unemployment numbers combined with expected bad earnings reports.
Sure they changed, then they marched right back up gaining back half of what they lost in a pretty sharp move without the full unemployment numbers (because 2/3 haven't been able to file yet due to crashing web sites) and before we've actually seen the horrific earnings results sure to come. Also, we don't yet have data on the upcoming wave of personal and professional bankruptcies.

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

Post by fatcoffeedrinker » Fri Apr 10, 2020 8:51 pm

epicahab wrote:
Fri Apr 10, 2020 8:47 pm
HomerJ wrote:
Fri Apr 10, 2020 8:34 pm
epicahab wrote:
Fri Apr 10, 2020 12:35 pm
My suspicion is that outrageously historic unemployment numbers combined with bad earnings reports from companies will at some point HAVE to affect equity prices.
Have equity prices not moved recently?

Because I could have sworn they HAVE changed because of historic unemployment numbers combined with expected bad earnings reports.
Sure they changed, then they marched right back up gaining back half of what they lost in a pretty sharp move without the full unemployment numbers (because 2/3 haven't been able to file yet due to crashing web sites) and before we've actually seen the horrific earnings results sure to come. Also, we don't yet have data on the upcoming wave of personal and professional bankruptcies.
Would it feel better if stocks just dropped 20% and stayed there? Seems like it's the retracement that is what is giving folks heartburn. Maybe it just overshot due to panic?

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

Post by epicahab » Fri Apr 10, 2020 8:58 pm

Obviously that's possible, I don't claim to know the future. But the drop was lower and more sustained in 2008 and people were still travelling, and living normal lives. This time people are getting sick and dying. Also I sort of feel like the highs of early 2020 were pretty frothy. Tesla has even been joked about in this thread...it got insanely high!

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

Post by madbrain » Fri Apr 10, 2020 9:28 pm

fatcoffeedrinker wrote:
Fri Apr 10, 2020 8:40 pm
Two words: Supercharger network. Makes Tesla a travel car, not a commuter car.
My Volt PHEV is also a travel car. I heard the Superchargers on Interstate 5 in CA have multi-hour lines on the busiest travel days.

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

Post by VeganBH » Fri Apr 10, 2020 11:35 pm

I obviously know nothing. It does seem like just yesterday that I was reading posts here where folks were pondering the possibility of the market going to zero. Since that seemed more plausible to me both then and now....I obviously know nothing (worth restating) :wink: . Especially with stories like this, nearly a dime a dozen:
Los Angeles Co. stay-at-home order could last into summer; more social distancing essential, officials say
Which is based on this sobering report (LA Times, today):
Officials outlined the stark paths ahead for Los Angeles County. If the stay-at-home order was quickly rescinded and people resumed their normal habits, an astonishing 95.6% of L.A. County residents would be infected with the coronavirus by Aug. 1, according to projections released by the county.

Staying at the current levels of physical distancing would still result in 29.8% of residents being infected by Aug. 1.

But increasing our efforts to stay apart from one another by one-third could reduce that to just having 5.5% of Los Angeles County residents infected by Aug. 1.
LA County has a population of 10M (about 1/4 of CA population). The "increasing efforts" include requiring face masks in public (now a requirement), and asking people to make fewer trips to grocery shopping, etc.
"Until we extend our circle of compassion to all living things, humanity will not find peace."​ ~ Albert Sc​hweitzer

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

Post by phantom0308 » Sat Apr 11, 2020 3:19 am

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 misleading. The initial numbers were 100-240k. The number you cited is without any intervention. The model on IHME assumes social distancing until June 1st and a few other things which can be found on their website.

Based on that assumption and the proposed reopening times my thoughts are that the current rally will end and the market will go back down as the market begins to understand the difficulty in reopening too early. It’s helpful to look at other countries that had contained this like Singapore, South Korea, and Japan and see that infections are slowly increasing again.

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

Post by midareff » Sat Apr 11, 2020 7:46 am

reln wrote:
Fri Apr 10, 2020 1:40 am
midareff wrote:
Wed Apr 08, 2020 2:37 pm
My opinion.. I just don't see anything meriting the climb from the bottom we have seen so far. I don't think we have a glimpse of the carnage to the economy as of now, and the down draft shock and awe is yet to be replaced by a steady grind down based on to be reported earnings going forward.

What's your take on this?
So the market is not efficient enough? Short it.
I don't think speculation is the right answer.

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midareff
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Re: Tax loss harvest plan is ready!

Post by midareff » Sat Apr 11, 2020 7:48 am

hudson wrote:
Fri Apr 10, 2020 10:09 am
midareff wrote:
Wed Apr 08, 2020 2:37 pm
My opinion.. I just don't see anything meriting the climb from the bottom we have seen so far. I don't think we have a glimpse of the carnage to the economy as of now, and the down draft shock and awe is yet to be replaced by a steady grind down based on to be reported earnings going forward.

What's your take on this?
I'm optimistic. I think that it's all going to work out. I have no data to support that.

I don't rebalance because I don't own any stocks.

This panic has given me a chance to think seriously about my investment options.
If bonds drop again so that I have a loss, my tax loss harvest plan is ready. I'm going to move from VWIUX to BMBIX....high quality intermediate bond to higher quality intermediate bond...sell low, buy low.
I should have had the plan ready on March 20th.
OK, if the plan should be ready on March 20th wouldn't you know that already when you posted on April 10?

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

Post by hudson » Sat Apr 11, 2020 7:55 am

Midareff,
Thanks! I should have had my tax loss harvest plan ready. I was not prepared. I didn't have it ready.
The elephant in the room is taxes on capital gains. VWIUX...Vang. Intermed. Muni's NAV came back up. If I sold it now, the capital gain would be too painful. My plan is to hold it until there's a loss.

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

Post by reln » Sat Apr 11, 2020 3:27 pm

midareff wrote:
Sat Apr 11, 2020 7:46 am
reln wrote:
Fri Apr 10, 2020 1:40 am
midareff wrote:
Wed Apr 08, 2020 2:37 pm
My opinion.. I just don't see anything meriting the climb from the bottom we have seen so far. I don't think we have a glimpse of the carnage to the economy as of now, and the down draft shock and awe is yet to be replaced by a steady grind down based on to be reported earnings going forward.

What's your take on this?
So the market is not efficient enough? Short it.
I don't think speculation is the right answer.
Who's talking about betting?

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

Post by Unladen_Swallow » Sat Apr 11, 2020 3:51 pm

epicahab wrote:
Fri Apr 10, 2020 12:35 pm
My suspicion is that outrageously historic unemployment numbers combined with bad earnings reports from companies will at some point HAVE to affect equity prices.
So the S&P has been unchanged and still at 3300?
"I think it's much more interesting to live not knowing than to have answers which might be wrong." - Richard Feynman

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

Post by midareff » Sat Apr 11, 2020 4:28 pm

reln wrote:
Sat Apr 11, 2020 3:27 pm
midareff wrote:
Sat Apr 11, 2020 7:46 am
reln wrote:
Fri Apr 10, 2020 1:40 am
midareff wrote:
Wed Apr 08, 2020 2:37 pm
My opinion.. I just don't see anything meriting the climb from the bottom we have seen so far. I don't think we have a glimpse of the carnage to the economy as of now, and the down draft shock and awe is yet to be replaced by a steady grind down based on to be reported earnings going forward.

What's your take on this?
So the market is not efficient enough? Short it.
I don't think speculation is the right answer.
Who's talking about betting?
Methinks shorting the market us betting, aka, speculation.

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

Post by reln » Sat Apr 11, 2020 4:34 pm

midareff wrote:
Sat Apr 11, 2020 4:28 pm
reln wrote:
Sat Apr 11, 2020 3:27 pm
midareff wrote:
Sat Apr 11, 2020 7:46 am
reln wrote:
Fri Apr 10, 2020 1:40 am
midareff wrote:
Wed Apr 08, 2020 2:37 pm
My opinion.. I just don't see anything meriting the climb from the bottom we have seen so far. I don't think we have a glimpse of the carnage to the economy as of now, and the down draft shock and awe is yet to be replaced by a steady grind down based on to be reported earnings going forward.

What's your take on this?
So the market is not efficient enough? Short it.
I don't think speculation is the right answer.
Who's talking about betting?
Methinks shorting the market us betting, aka, speculation.
It was sarcastic. Point being there is plenty of merit for all market moves.

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

Post by Wanderingwheelz » Sat Apr 11, 2020 6:09 pm

[quoted post removed by admin LadyGeek]

“to save the Main Street”. My wife and I each own a shop on Main Street and we are actually 100% closed down with only a weak PPP program to help us through this period, and that’s designed to help our employees mostly, not us as the business owners. Our employees are not high skill, so finding help isn’t too hard.

To make matters worse we earned a bit too much in 2018 to meet the threshold to receive the $2400 helicopter money.

This time is different. We were both just fine in 2007-2009 with strong sales and income. Now we aren’t even sure we will survive. It’ll be amazing is consumer spending doesn’t contract by epic measurements. Most of the business owners I know are ready to shed assets like Michael Jackson is people don’t flood small businesses with cash QUICKLY, and will have a big negative impact on the economy since consumer spending is 72% of it.

I say... stay balanced perhaps with a tilt towards safer assets. Let’s see if the consumer doesn’t pull through like the optimists on bubble tv think they are going to. Who knows? Maybe the government will find a way to fill the void with more stimulus.

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

Post by watchnerd » Sat Apr 11, 2020 7:42 pm

Wanderingwheelz wrote:
Sat Apr 11, 2020 6:09 pm


“to save the Main Street”. My wife and I each own a shop on Main Street and we are actually 100% closed down with only a weak PPP program to help us through this period, and that’s designed to help our employees mostly, not us as the business owners. Our employees are not high skill, so finding help isn’t too hard.
Do you mind sharing what kind of shop it is?

Today we dropped off our cat at the vet -- curb side pick up, no going in.

The pet food store next door was also selling curb side pick up pet food.

I know some businesses can't easily make this kind of pivot (e.g. antique store), and others it's almost impossible (e.g. nail salon).
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Jess Saying
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Re: Head Fakes and Dead Cats .. your thoughts on the rally?

Post by Jess Saying » Sat Apr 11, 2020 8:10 pm

Wanderingwheelz wrote:
Sat Apr 11, 2020 6:09 pm
It’ll be amazing is consumer spending doesn’t contract by epic measurements. ... Let’s see if the consumer doesn’t pull through like the optimists on bubble tv think they are going to. Who knows?
At least one major economist is recognizing the potential for inflation when the lockdown ends due to 1) several trillion in public sector wealth being *created* due to forced savings and 2) pent up demand to get out. For example, just between gym closure and not needing a bus pass, I'll be saving over $150/month. That's one reason why I believe in the rally we're seeing and will keep buying stocks. Rooting for you and your wife.

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

Post by HomerJ » Sat Apr 11, 2020 8:16 pm

Wanderingwheelz wrote:
Sat Apr 11, 2020 6:09 pm
[quoted post removed by admin LadyGeek]

“to save the Main Street”. My wife and I each own a shop on Main Street and we are actually 100% closed down with only a weak PPP program to help us through this period, and that’s designed to help our employees mostly, not us as the business owners. Our employees are not high skill, so finding help isn’t too hard.

To make matters worse we earned a bit too much in 2018 to meet the threshold to receive the $2400 helicopter money.

This time is different. We were both just fine in 2007-2009 with strong sales and income. Now we aren’t even sure we will survive.
If your AGI was over $200,000 last year, I think you should survive...
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.”

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