Market Euphoria?

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tiburblium
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Market Euphoria?

Post by tiburblium »

With the recent, and what appears to be unstoppable run up in equity prices, I am getting worried about my behavior and being tempted to increase risk. There is a voice in my head that is convinced this will never end, and I feel like I am starting to cave. I have an AA that I have stuck to, on the recent ride down it was easy to manage my emotions by comparison, the urge to be greedy is much, much, much stronger.

Is this what Market Euphoria feels like? I was not an investor in the 90s, but have read stories that at the time seemed crazy and so obvious... with people leveraging to the hilt to invest as much as possible. I looked back at these stories and think “these people were fools, were they not expecting this to never end”? And yet, here we are, now that I am a participant in this run up, I feel like I am going to do the same thing at some point. I feel like the voice is slowly convincing me that the run up will never end. The risk “feel” less and less “real” as this continues.

What is actionable here? I don’t know, I am just curious if others are wrestling with the same emotions and what advice they may have for “staying the course” and not maxing out every form of leverage possible
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mrspock
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Re: Market Euphoria?

Post by mrspock »

Stop feeling. Pull out your IPS from your desk drawer, and do exactly what it says. Euphoria is just another mis-placed emotion (good for roller coasters...not so much with investing) which you should completely ignore, and this includes if you observe others "feeling" this.

Once you are done following your IPS, get out a nice watering can and go water the plants.
Chicken Little
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Re: Market Euphoria?

Post by Chicken Little »

tiburblium wrote: Fri Jun 05, 2020 4:55 amWhat is actionable here? I don’t know, I am just curious if others are wrestling with the same emotions and what advice they may have for “staying the course” and not maxing out every form of leverage possible
This was the most telegraphed financial crisis in history. If you didn’t actively manage it correctly when you really should have known the future, how can you expect to manage it now when you don’t know the future?

1. Were you leveraged up to February?
2. Did you become defensive/short in February?
3. Did you buy in March?

The virus signaled it was coming. The fed signaled they were coming. Doesn’t get any easier than that.

There’s no signal right now.

Spend less, save a lot, invest every week or two, stick to the plan.
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dwickenh
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Re: Market Euphoria?

Post by dwickenh »

mrspock wrote: Fri Jun 05, 2020 5:06 am Stop feeling. Pull out your IPS from your desk drawer, and do exactly what it says. Euphoria is just another mis-placed emotion (good for roller coasters...not so much with investing) which you should completely ignore, and this includes if you observe others "feeling" this.

Once you are done following your IPS, get out a nice watering can and go water the plants.
+1 Bingo!!
The market is the most efficient mechanism anywhere in the world for transferring wealth from impatient people to patient people.” | — Warren Buffett
Call_Me_Op
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Re: Market Euphoria?

Post by Call_Me_Op »

mrspock wrote: Fri Jun 05, 2020 5:06 am Stop feeling.... Euphoria is just another mis-placed emotion....
Spoken like a true Vulcan! :)
Best regards, -Op | | "In the middle of difficulty lies opportunity." Einstein
whereskyle
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Re: Market Euphoria?

Post by whereskyle »

tiburblium wrote: Fri Jun 05, 2020 4:55 am With the recent, and what appears to be unstoppable run up in equity prices, I am getting worried about my behavior and being tempted to increase risk. There is a voice in my head that is convinced this will never end, and I feel like I am starting to cave. I have an AA that I have stuck to, on the recent ride down it was easy to manage my emotions by comparison, the urge to be greedy is much, much, much stronger.

Is this what Market Euphoria feels like? I was not an investor in the 90s, but have read stories that at the time seemed crazy and so obvious... with people leveraging to the hilt to invest as much as possible. I looked back at these stories and think “these people were fools, were they not expecting this to never end”? And yet, here we are, now that I am a participant in this run up, I feel like I am going to do the same thing at some point. I feel like the voice is slowly convincing me that the run up will never end. The risk “feel” less and less “real” as this continues.

What is actionable here? I don’t know, I am just curious if others are wrestling with the same emotions and what advice they may have for “staying the course” and not maxing out every form of leverage possible
I went 100% stocks last year, and that's where I plan to stay for the foreseeable future. I will not use leverage.

What's your AA? How many downturns have you held on through? How much have you lost in previous downturns and how did you react?
"I am better off than he is – for he knows nothing and thinks that he knows. I neither know nor think that I know." - Socrates. "Nobody knows nothing." - Jack Bogle
UpperNwGuy
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Re: Market Euphoria?

Post by UpperNwGuy »

Just stay the course.
MindBogler
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Re: Market Euphoria?

Post by MindBogler »

tiburblium wrote: Fri Jun 05, 2020 4:55 am There is a voice in my head that is convinced this will never end, and I feel like I am starting to cave.
Don't listen to voices in your head and if this continues seek medical attention. /sarc

This is just another emotion. Follow your plan.

:sharebeer
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firebirdparts
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Re: Market Euphoria?

Post by firebirdparts »

Interesting stuff. I am pretty skeptical about investor behavior. It was interesting to see that Vanguard-linked research report quoted last week saying retail investors tend to buy at the top and sell at the bottom. Obviously somebody does. The data might not really support that it's us, but there was at least a hint of it.

I can not imagine being tempted to buy more now. Evidently my mind doesn't work the same way as a retail investor.
A fool and your money are soon partners
MindBogler
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Re: Market Euphoria?

Post by MindBogler »

firebirdparts wrote: Fri Jun 05, 2020 7:58 am Interesting stuff. I am pretty skeptical about investor behavior. It was interesting to see that Vanguard-linked research report quoted last week saying retail investors tend to buy at the top and sell at the bottom. Obviously somebody does. The data might not really support that it's us, but there was at least a hint of it.

I can not imagine being tempted to buy more now. Evidently my mind doesn't work the same way as a retail investor.
I can assure you there were people selling to me at the bottom. :twisted:
staustin
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Re: Market Euphoria?

Post by staustin »

Chicken Little wrote: Fri Jun 05, 2020 5:26 am
tiburblium wrote: Fri Jun 05, 2020 4:55 amWhat is actionable here? I don’t know, I am just curious if others are wrestling with the same emotions and what advice they may have for “staying the course” and not maxing out every form of leverage possible
This was the most telegraphed financial crisis in history. If you didn’t actively manage it correctly when you really should have known the future, how can you expect to manage it now when you don’t know the future?

1. Were you leveraged up to February?
2. Did you become defensive/short in February?
3. Did you buy in March?

The virus signaled it was coming. The fed signaled they were coming. Doesn’t get any easier than that.

There’s no signal right now.

Spend less, save a lot, invest every week or two, stick to the plan.
+1....
Fallible
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Re: Market Euphoria?

Post by Fallible »

tiburblium wrote: Fri Jun 05, 2020 4:55 am With the recent, and what appears to be unstoppable run up in equity prices, I am getting worried about my behavior and being tempted to increase risk. ...
With all the rationality you can muster in this emotional state of temptation, consider that you are basing increased risk of your hard-earned money on this (in your own words): "What appears to be unstoppable run up in equity prices." Then repeat: "appears to be."

Then remind yourself that nobody knows what the stock market will do. Then repeat: nobody.

Then give yourself a pat on the back for recognizing the temptation, questioning it, and seeking advice.

What is your AA?
"Yes, investing is simple. But it is not easy, for it requires discipline, patience, steadfastness, and that most uncommon of all gifts, common sense." ~Jack Bogle
Xrayman69
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Re: Market Euphoria?

Post by Xrayman69 »

Stick with your comfortable AA and plan during the steady times when emotions were not so volatile.

The last 4 months have been exhausting if you didn’t have a plan and are prone to emotional panic or “euphoria”. I’m thankful that the BH community reminds me to be calm. Rebalance accordingly. Rebalanced in March as equity values decreased and bought some extra with cash reserves. Increased my AA of equities by 5% which was for the cash reserves. Will need to rebalance again in June because of the 30% + rise in equities since March lows. When i rebalance will likely take the 5% prior increase AA of equities back. I realize this is technically “timing” but allows me to sleep well at night. Actually up for the year due to the 5% change.
Glockenspiel
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Re: Market Euphoria?

Post by Glockenspiel »

Rat_Race wrote: Fri Jun 05, 2020 7:21 am Did you ever stop to think the big players and the Fed who are running things want to you act on your greed? The free market no longer exists...it is all manipulated.
This^^. There's just no way that the stock market deserves to be only 8.5% off the all-time highs. In July, when the expanded unemployment insurance ends, a lot of people are going to be in a world of hurt.
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jeffyscott
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Re: Market Euphoria?

Post by jeffyscott »

firebirdparts wrote: Fri Jun 05, 2020 7:58 am Interesting stuff. I am pretty skeptical about investor behavior. It was interesting to see that Vanguard-linked research report quoted last week saying retail investors tend to buy at the top and sell at the bottom. Obviously somebody does. The data might not really support that it's us, but there was at least a hint of it.

I can not imagine being tempted to buy more now. Evidently my mind doesn't work the same way as a retail investor.
Same here. If anything, I'd be tempted to sell US, but there's nothing to tempting buy in it's place (other than more international stocks and my investment policy does not let me buy much more of that). I only regret that I did not buy more during the decline and that I did most of my Roth conversions in Jan and Feb, instead of March.

I don't think I know what market euphoria feels like, I never get that feeling. I have more of the opposite, I began investing in the mid-90s and the market has almost always seemed overly optimistic to me and the few times it has not seemed that, it never really got to the point of seeming overly pessimistic to me. I think the only exception would be that I, perhaps, felt international (but not US) was overly pessimistic back in March.
The two greatest enemies of the equity fund investor are expenses and emotions. ― John C. Bogle
CardioMD
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Re: Market Euphoria?

Post by CardioMD »

Glockenspiel wrote: Fri Jun 05, 2020 8:36 am
Rat_Race wrote: Fri Jun 05, 2020 7:21 am Did you ever stop to think the big players and the Fed who are running things want to you act on your greed? The free market no longer exists...it is all manipulated.
This^^. There's just no way that the stock market deserves to be only 8.5% off the all-time highs. In July, when the expanded unemployment insurance ends, a lot of people are going to be in a world of hurt.
Or will they be back at work?
“The stock market is a giant distraction from the business of investing.” -Jack Bogle
MindBogler
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Re: Market Euphoria?

Post by MindBogler »

CardioMD wrote: Fri Jun 05, 2020 8:53 am
Glockenspiel wrote: Fri Jun 05, 2020 8:36 am
Rat_Race wrote: Fri Jun 05, 2020 7:21 am Did you ever stop to think the big players and the Fed who are running things want to you act on your greed? The free market no longer exists...it is all manipulated.
This^^. There's just no way that the stock market deserves to be only 8.5% off the all-time highs. In July, when the expanded unemployment insurance ends, a lot of people are going to be in a world of hurt.
Or will they be back at work?
The whole point is it is a fool's errand trying to predict the future. More money has been lost trying to outsmart the market than just going with the flow.
Elysium
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Re: Market Euphoria?

Post by Elysium »

Just follow the plan and re-balance. It was hard to do it in March, I did it anyway, when many threads here were talking about 50% to 60% drops. It is hard to re-balance now, because it feels like the rally is never ending. Greed vs Fear. It's always there. Best thing to do is develop an automatic plan and re-balance. I am going to re-balance very soon, since I purchased in March allocations are out of step again, this time on the upside. In a year like this, you end up doing more frequent re-balancing due to all the volatility, if you follow the plan correctly. That will keep the risks in check.
Last edited by Elysium on Fri Jun 05, 2020 9:17 am, edited 2 times in total.
CardioMD
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Re: Market Euphoria?

Post by CardioMD »

MindBogler wrote: Fri Jun 05, 2020 8:54 am
CardioMD wrote: Fri Jun 05, 2020 8:53 am
Glockenspiel wrote: Fri Jun 05, 2020 8:36 am
Rat_Race wrote: Fri Jun 05, 2020 7:21 am Did you ever stop to think the big players and the Fed who are running things want to you act on your greed? The free market no longer exists...it is all manipulated.
This^^. There's just no way that the stock market deserves to be only 8.5% off the all-time highs. In July, when the expanded unemployment insurance ends, a lot of people are going to be in a world of hurt.
Or will they be back at work?
The whole point is it is a fool's errand trying to predict the future. More money has been lost trying to outsmart the market than just going with the flow.
Exactly.
“The stock market is a giant distraction from the business of investing.” -Jack Bogle
atdharris
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Re: Market Euphoria?

Post by atdharris »

In the grand scheme of things, we are up less than 200 points on the S&P in 2.5 years. It does feel strange to see the market where it is given we still have 38 million unemployed, the virus is still around and we have no idea what the fall will bring. But I have long learned to remain invested and stick to my plan of making 401k contributions every two weeks.
Wanderingwheelz
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Re: Market Euphoria?

Post by Wanderingwheelz »

CardioMD wrote: Fri Jun 05, 2020 8:53 am
Glockenspiel wrote: Fri Jun 05, 2020 8:36 am
Rat_Race wrote: Fri Jun 05, 2020 7:21 am Did you ever stop to think the big players and the Fed who are running things want to you act on your greed? The free market no longer exists...it is all manipulated.
This^^. There's just no way that the stock market deserves to be only 8.5% off the all-time highs. In July, when the expanded unemployment insurance ends, a lot of people are going to be in a world of hurt.
Or will they be back at work?
Talk to your small business owner friends and I think they’ll have a unanimous answer.
7eight9
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Re: Market Euphoria?

Post by 7eight9 »

David Rosenberg, who runs a market research firm in Toronto, argues emphatically that whatever the short-term movements of the market, major declines and an extended economic struggle will be coming. He compared the current rally to the rebound that began in November 1929 and lasted until April 1930. The market gained almost 50 percent in that period, he said, but no one remembers it. What we remember is the Great Depression.
https://www.nytimes.com/2020/06/05/busi ... e=Homepage

Investors speculators gamblers should hope that history doesn't repeat.
I guess it all could be much worse. | They could be warming up my hearse.
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firebirdparts
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Re: Market Euphoria?

Post by firebirdparts »

7eight9 wrote: Fri Jun 05, 2020 9:26 am t, major declines and an extended economic struggle will be coming.
The funny part is now FOMO while you have 20% unemployment. That's pretty curious. In comparison, the Hertz bankruptcy? That's not really strange at all.

You aren't going to need any famous people to make a prediction like that.
A fool and your money are soon partners
ValuationsMatter
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Re: Market Euphoria?

Post by ValuationsMatter »

firebirdparts wrote: Fri Jun 05, 2020 7:58 am I can not imagine being tempted to buy more now. Evidently my mind doesn't work the same way as a retail investor.
I couldn't have said it any better. It did not seem to me that we ever got to a point where bulls capitulated, though. Whenever I talked to Vanguard reps, I asked what the bulk of the people that they'd spoken to that day were doing, and it stayed pretty heavily on those who were rebalancing or buying. I was no bull at any point this year. I never felt like stocks were a smokin' deal, but I swallowed my concerns and went from 3% to 70% equities, before throttling back to 50% last month.

There's no way in hell I'm going to buy, right now. I'm resisting a strong temptation to throttle back even more to 30/70 or so. I actually think it's a sound move, but I'm trying to consider counter arguments in more detail before acting. Still, the big jump today has me feeling like this might be the day to act.
Last edited by ValuationsMatter on Fri Jun 05, 2020 10:05 am, edited 1 time in total.
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Nate79
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Re: Market Euphoria?

Post by Nate79 »

Unemployment rate was announced as 13.3%, with a huge number of jobs added. Most things are opening back up and people have huge amounts of built up demand.
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tvubpwcisla
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Re: Market Euphoria?

Post by tvubpwcisla »

If anything, the market is still depressed.

The market is still quite a bit on sale from the all time highs and investors will continue to buy up the beat down stocks. I would not bet against it. In fact, I would take out insurance it is going to keep climbing higher as the businesses reopen.
Stay invested my friends.
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TechGuy365
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Re: Market Euphoria?

Post by TechGuy365 »

atdharris wrote: Fri Jun 05, 2020 9:18 am In the grand scheme of things, we are up less than 200 points on the S&P in 2.5 years.
Sorry but that sounds low - how do you figure? In the beginning of 2018 (1/2/2018) S&P closed at 2,695. Last night S&P closed at 3,112, up 417 points without today's run-up. That's up 15.47% in 2.5 years. Just trying to understand the 200 that's all.
7eight9
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Re: Market Euphoria?

Post by 7eight9 »

If the workers who were recorded as employed but absent from work due to "other reasons" (over and above the number absent for other reasons in a typical May) had been classified as unemployed on temporary layoff, the overall unemployment rate would have been about 3 percentage points higher than reported (on a not seasonally adjusted basis).
https://www.bls.gov/news.release/jec.nr0.htm
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TechFI
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Re: Market Euphoria?

Post by TechFI »

Can anyone explain what is going on? VTSAX is only 6% down from the peak!

We have depression level unemployment, coronavirus is still out there and there is civil unrest throughout the country. We will most definitely get another coronavirus wave too. Please no politics comment.

So why is the market going up day after day? The market is not euphoric. It is delusional.
Candor
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Re: Market Euphoria?

Post by Candor »

I'm having the exact opposite feeling and fighting the urge to sell. Although, I will say I've had that feeling for a while and if I had acted on it that would have been a big mistake. So I do what I have always done and hold on for the ride and don't make any big moves either way.
Time is your friend, impulse is your enemy. - John C. Bogle
atdharris
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Re: Market Euphoria?

Post by atdharris »

TechGuy365 wrote: Fri Jun 05, 2020 10:21 am
atdharris wrote: Fri Jun 05, 2020 9:18 am In the grand scheme of things, we are up less than 200 points on the S&P in 2.5 years.
Sorry but that sounds low - how do you figure? In the beginning of 2018 (1/2/2018) S&P closed at 2,695. Last night S&P closed at 3,112, up 417 points without today's run-up. That's up 15.47% in 2.5 years. Just trying to understand the 200 that's all.
I was talking more about the January 2018 high where we closed at 2867 and was not factoring in today's surge into that statement.
TimeTheMarket
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Re: Market Euphoria?

Post by TimeTheMarket »

7eight9 wrote: Fri Jun 05, 2020 9:26 am David Rosenberg, who runs a market research firm in Toronto, argues emphatically that whatever the short-term movements of the market, major declines and an extended economic struggle will be coming. He compared the current rally to the rebound that began in November 1929 and lasted until April 1930. The market gained almost 50 percent in that period, he said, but no one remembers it. What we remember is the Great Depression.
https://www.nytimes.com/2020/06/05/busi ... e=Homepage

Investors speculators gamblers should hope that history doesn't repeat.
Ah, david rosenberg. Is that the david rosenberg quoted here on April 2, 2009, regarding a paper he published on April 1st, 2009?
https://www.businessinsider.com.au/henr ... ind-2009-4

That was a couple of weeks after the March 2009 S&P 500 lows. He says in this article:
S&P 500 will hit new lows...it would not surprise us to see the S&P 500 gravitate in a 475-650 range for an extended period of time
On the contrary he said this at the beginning of the best bull run in generations. Oops!

Forgive me if I have no interest whatsoever in his predictions of the market this time around.
Username is not serious :)
CardioMD
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Re: Market Euphoria?

Post by CardioMD »

Wanderingwheelz wrote: Fri Jun 05, 2020 9:23 am
CardioMD wrote: Fri Jun 05, 2020 8:53 am
Glockenspiel wrote: Fri Jun 05, 2020 8:36 am
Rat_Race wrote: Fri Jun 05, 2020 7:21 am Did you ever stop to think the big players and the Fed who are running things want to you act on your greed? The free market no longer exists...it is all manipulated.
This^^. There's just no way that the stock market deserves to be only 8.5% off the all-time highs. In July, when the expanded unemployment insurance ends, a lot of people are going to be in a world of hurt.
Or will they be back at work?
Talk to your small business owner friends and I think they’ll have a unanimous answer.
They do. They’re rehiring and almost back to full capacity.

My point was to take the other side of his/her statement about being “in a world of hurt.” No one knows that and usually things aren’t as bad as the “experts” predict. This was an obvious temporary situation with a known cause outside of the financial system or economic machinery which is why I doubled down as bought as much FXAIX as possible.

Betting against America getting back to normal sooner rather than later is typically a poor bet to make.
“The stock market is a giant distraction from the business of investing.” -Jack Bogle
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TechGuy365
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Re: Market Euphoria?

Post by TechGuy365 »

7eight9 wrote: Fri Jun 05, 2020 9:26 am David Rosenberg, who runs a market research firm in Toronto, argues emphatically that whatever the short-term movements of the market, major declines and an extended economic struggle will be coming. He compared the current rally to the rebound that began in November 1929 and lasted until April 1930. The market gained almost 50 percent in that period, he said, but no one remembers it. What we remember is the Great Depression.
https://www.nytimes.com/2020/06/05/busi ... e=Homepage

Investors speculators gamblers should hope that history doesn't repeat.
The same scenario won't happen again because the Fed has learned their lessons since the Great Depression. Per Wikipedia: "Many economists, following Nobel laureate Milton Friedman, believe that the Federal Reserve inappropriately refused to lend money to small banks during the bank runs of 1929; Friedman argued that this contributed to the Great Depression." Today's Fed is doing the absolute the opposite - making money supply widely available forcefully and very very quickly, boosting wall street and main street confidence.
7eight9
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Re: Market Euphoria?

Post by 7eight9 »

TechGuy365 wrote: Fri Jun 05, 2020 10:53 am
7eight9 wrote: Fri Jun 05, 2020 9:26 am David Rosenberg, who runs a market research firm in Toronto, argues emphatically that whatever the short-term movements of the market, major declines and an extended economic struggle will be coming. He compared the current rally to the rebound that began in November 1929 and lasted until April 1930. The market gained almost 50 percent in that period, he said, but no one remembers it. What we remember is the Great Depression.
https://www.nytimes.com/2020/06/05/busi ... e=Homepage

Investors speculators gamblers should hope that history doesn't repeat.
The same scenario won't happen again because the Fed has learned their lessons since the Great Depression. Per Wikipedia: "Many economists, following Nobel laureate Milton Friedman, believe that the Federal Reserve inappropriately refused to lend money to small banks during the bank runs of 1929; Friedman argued that this contributed to the Great Depression." Today's Fed is doing the absolute the opposite - making money supply widely available forcefully and very very quickly, boosting wall street and main street confidence.
I agree the Fed has boosted Wall Street confidence. Main Street? Not so much.

If anything the Fed's actions have led to even more of a Wall Street / Main Street divide. Savers have seen their already paltry interest rates reduced while speculators have reaped outsized gains.
I guess it all could be much worse. | They could be warming up my hearse.
atdharris
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Re: Market Euphoria?

Post by atdharris »

TechGuy365 wrote: Fri Jun 05, 2020 10:53 am
7eight9 wrote: Fri Jun 05, 2020 9:26 am David Rosenberg, who runs a market research firm in Toronto, argues emphatically that whatever the short-term movements of the market, major declines and an extended economic struggle will be coming. He compared the current rally to the rebound that began in November 1929 and lasted until April 1930. The market gained almost 50 percent in that period, he said, but no one remembers it. What we remember is the Great Depression.
https://www.nytimes.com/2020/06/05/busi ... e=Homepage

Investors speculators gamblers should hope that history doesn't repeat.
The same scenario won't happen again because the Fed has learned their lessons since the Great Depression. Per Wikipedia: "Many economists, following Nobel laureate Milton Friedman, believe that the Federal Reserve inappropriately refused to lend money to small banks during the bank runs of 1929; Friedman argued that this contributed to the Great Depression." Today's Fed is doing the absolute the opposite - making money supply widely available forcefully and very very quickly, boosting wall street and main street confidence.
This. Exactly. I also believe the federal government tried to raise taxes and balance the budget at the onset of the Great Depression - obviously something we did the opposite of this time around.
atdharris
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Re: Market Euphoria?

Post by atdharris »

7eight9 wrote: Fri Jun 05, 2020 10:55 am
TechGuy365 wrote: Fri Jun 05, 2020 10:53 am
7eight9 wrote: Fri Jun 05, 2020 9:26 am David Rosenberg, who runs a market research firm in Toronto, argues emphatically that whatever the short-term movements of the market, major declines and an extended economic struggle will be coming. He compared the current rally to the rebound that began in November 1929 and lasted until April 1930. The market gained almost 50 percent in that period, he said, but no one remembers it. What we remember is the Great Depression.
https://www.nytimes.com/2020/06/05/busi ... e=Homepage

Investors speculators gamblers should hope that history doesn't repeat.
The same scenario won't happen again because the Fed has learned their lessons since the Great Depression. Per Wikipedia: "Many economists, following Nobel laureate Milton Friedman, believe that the Federal Reserve inappropriately refused to lend money to small banks during the bank runs of 1929; Friedman argued that this contributed to the Great Depression." Today's Fed is doing the absolute the opposite - making money supply widely available forcefully and very very quickly, boosting wall street and main street confidence.
I agree the Fed has boosted Wall Street confidence. Main Street? Not so much.

If anything the Fed's actions have led to even more of a Wall Street / Main Street divide. Savers have seen their already paltry interest rates reduced while speculators have reaped outsized gains.
Absolutely. It almost feels wrong to see my portfolio now positive for the year while 38 million people are unemployed. Inequality has to be even worse than it was before all of this began. Those with assets continue to reap the benefits while those without are hurt even more than they already were.
CardioMD
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Re: Market Euphoria?

Post by CardioMD »

atdharris wrote: Fri Jun 05, 2020 10:57 am
7eight9 wrote: Fri Jun 05, 2020 10:55 am
TechGuy365 wrote: Fri Jun 05, 2020 10:53 am
7eight9 wrote: Fri Jun 05, 2020 9:26 am David Rosenberg, who runs a market research firm in Toronto, argues emphatically that whatever the short-term movements of the market, major declines and an extended economic struggle will be coming. He compared the current rally to the rebound that began in November 1929 and lasted until April 1930. The market gained almost 50 percent in that period, he said, but no one remembers it. What we remember is the Great Depression.
https://www.nytimes.com/2020/06/05/busi ... e=Homepage

Investors speculators gamblers should hope that history doesn't repeat.
The same scenario won't happen again because the Fed has learned their lessons since the Great Depression. Per Wikipedia: "Many economists, following Nobel laureate Milton Friedman, believe that the Federal Reserve inappropriately refused to lend money to small banks during the bank runs of 1929; Friedman argued that this contributed to the Great Depression." Today's Fed is doing the absolute the opposite - making money supply widely available forcefully and very very quickly, boosting wall street and main street confidence.
I agree the Fed has boosted Wall Street confidence. Main Street? Not so much.

If anything the Fed's actions have led to even more of a Wall Street / Main Street divide. Savers have seen their already paltry interest rates reduced while speculators have reaped outsized gains.
Absolutely. It almost feels wrong to see my portfolio now positive for the year while 38 million people are unemployed. Inequality has to be even worse than it was before all of this began. Those with assets continue to reap the benefits while those without are hurt even more than they already were.
What would you suggest?
“The stock market is a giant distraction from the business of investing.” -Jack Bogle
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TechGuy365
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Re: Market Euphoria?

Post by TechGuy365 »

atdharris wrote: Fri Jun 05, 2020 10:57 am
7eight9 wrote: Fri Jun 05, 2020 10:55 am
TechGuy365 wrote: Fri Jun 05, 2020 10:53 am
7eight9 wrote: Fri Jun 05, 2020 9:26 am David Rosenberg, who runs a market research firm in Toronto, argues emphatically that whatever the short-term movements of the market, major declines and an extended economic struggle will be coming. He compared the current rally to the rebound that began in November 1929 and lasted until April 1930. The market gained almost 50 percent in that period, he said, but no one remembers it. What we remember is the Great Depression.
https://www.nytimes.com/2020/06/05/busi ... e=Homepage

Investors speculators gamblers should hope that history doesn't repeat.
The same scenario won't happen again because the Fed has learned their lessons since the Great Depression. Per Wikipedia: "Many economists, following Nobel laureate Milton Friedman, believe that the Federal Reserve inappropriately refused to lend money to small banks during the bank runs of 1929; Friedman argued that this contributed to the Great Depression." Today's Fed is doing the absolute the opposite - making money supply widely available forcefully and very very quickly, boosting wall street and main street confidence.
I agree the Fed has boosted Wall Street confidence. Main Street? Not so much.

If anything the Fed's actions have led to even more of a Wall Street / Main Street divide. Savers have seen their already paltry interest rates reduced while speculators have reaped outsized gains.
Absolutely. It almost feels wrong to see my portfolio now positive for the year while 38 million people are unemployed. Inequality has to be even worse than it was before all of this began. Those with assets continue to reap the benefits while those without are hurt even more than they already were.
I think there is something positive to say about the policies Fed and Treasury put in place so quickly for main street. The PPP program is targeted for small business owners and now the threshold for forgiving those loans will be lowered even more to 60%. The forbearance plans have been put in place and with within a week of launch I see a notification on my banking app to apply (we won't). The $1200 per person payment - which I never thought would help with anything - may actually have helped to boost confidence. I feel guilty too - we are fortunately to not receive any money because of higher income and my portfolio hit ATH - but $1200 is a lot of money to a lot of people and it helps.

My point is - things could have been much worse if nothing was done in the beginning of the crisis.
guyinlaw
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Re: Market Euphoria?

Post by guyinlaw »

I reduced my stock allocation by 5% this week, will reduce further if stocks rise more in coming months. (yes market timing beyond just balancing)

Neg:
Yesterday was highest infections added across the world ~130k added in one day. Brazil added ~31.9K in a day, where it is start of their winter. We will see increased infections due to Memorial day and protests in the coming weeks.
There is less likely to be more stimulus as some economic indicators are better and differences..

Pos:
Hiring will continue as places reopen.. Unemployment rate is at 13.3% though it is a lagging indicator. And most important Fed is supporting stocks. Now they are also buying corporate bonds..

Image
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SouthernFIRE
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Re: Market Euphoria?

Post by SouthernFIRE »

TimeTheMarket wrote: Fri Jun 05, 2020 10:43 am
7eight9 wrote: Fri Jun 05, 2020 9:26 am David Rosenberg, who runs a market research firm in Toronto, argues emphatically that whatever the short-term movements of the market, major declines and an extended economic struggle will be coming. He compared the current rally to the rebound that began in November 1929 and lasted until April 1930. The market gained almost 50 percent in that period, he said, but no one remembers it. What we remember is the Great Depression.
https://www.nytimes.com/2020/06/05/busi ... e=Homepage

Investors speculators gamblers should hope that history doesn't repeat.
Ah, david rosenberg. Is that the david rosenberg quoted here on April 2, 2009, regarding a paper he published on April 1st, 2009?
https://www.businessinsider.com.au/henr ... ind-2009-4

That was a couple of weeks after the March 2009 S&P 500 lows. He says in this article:
S&P 500 will hit new lows...it would not surprise us to see the S&P 500 gravitate in a 475-650 range for an extended period of time
On the contrary he said this at the beginning of the best bull run in generations. Oops!

Forgive me if I have no interest whatsoever in his predictions of the market this time around.
Rosie is a well-known perma bear. Anyone who has followed his prognostications has done extremely poorly over the past decade.
mikep
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Re: Market Euphoria?

Post by mikep »

I just rebalanced more into bonds and I was buying in mid March as well.

Ignore the noise and stick to the plan...
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cashboy
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Re: Market Euphoria?

Post by cashboy »

tiburblium wrote: Fri Jun 05, 2020 4:55 am What is actionable here? I don’t know, I am just curious if others are wrestling with the same emotions and what advice they may have for “staying the course” and not maxing out every form of leverage possible
your investing decisions should not be based on emotions.
tiburblium wrote: Fri Jun 05, 2020 4:55 am What is actionable here? I don’t know, I am just curious if others are wrestling with the same emotion and what advice they may have for “staying the course” and not maxing out every form of leverage possible
if you do not have an IPS, create one.

if you have an IPS, follow what it says.
Three-Fund Portfolio: FSPSX - FXAIX - FXNAX (with slight tilt of CDs - CASH - Canned Beans - Rice - Bottled Water)
tbone555
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Re: Market Euphoria?

Post by tbone555 »

TechFI wrote: Fri Jun 05, 2020 10:24 am Can anyone explain what is going on? VTSAX is only 6% down from the peak!

We have depression level unemployment, coronavirus is still out there and there is civil unrest throughout the country. We will most definitely get another coronavirus wave too. Please no politics comment.

So why is the market going up day after day? The market is not euphoric. It is delusional.
The stock market is not the economy and the economy is not the stock market.
https://youtu.be/0ECqDaPjjV0
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Re: Market Euphoria?

Post by LadyGeek »

I removed several off-topic posts. One for government conspiracy theory, another for a discussion of (wealth of stock owners vs. race). As a reminder, see: Non-actionable (Trolling) Topics
If readers can't do anything with the content of a topic other than argue about it, it does not belong here. Examples include:
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Re: Market Euphoria?

Post by pkcrafter »

TechFI wrote: Fri Jun 05, 2020 10:24 am Can anyone explain what is going on? VTSAX is only 6% down from the peak!

We have depression level unemployment, coronavirus is still out there and there is civil unrest throughout the country. We will most definitely get another coronavirus wave too. Please no politics comment.

So why is the market going up day after day? The market is not euphoric. It is delusional.
Welcome to Bogleheads,

What happened and what's happening now is the market runs on speculation and anticipation, whether it's verified information or not. The market is people trying to guess what is going to happen in the future. Also note there are three kinds of information: insider, little known, and widely known. Most all investors are in the third category, so you can guess what their results might be. This is why market timing is a really bad idea.

This is also why the Bogleheads method is good. Invest in the total stock market at the lowest cost and simply hold. You end up returns that are far better than average. Can you hope to do that with any other plan?

SPIVA report - see page 4

https://us.spindices.com/documents/spiv ... r-2019.pdf


Paul
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.
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warowits
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Re: Market Euphoria?

Post by warowits »

tiburblium wrote: Fri Jun 05, 2020 4:55 am With the recent, and what appears to be unstoppable run up in equity prices, I am getting worried about my behavior and being tempted to increase risk. There is a voice in my head that is convinced this will never end, and I feel like I am starting to cave.
I have to fight the urge to sell every day, in just the same way you fight the urge to increase risk.
garlandwhizzer
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Re: Market Euphoria?

Post by garlandwhizzer »

The market is a future discounting mechanism. It doesn't wait for things to happen it anticipates and buys the prevailing rumor. There is a lot of future good news currently priced into the market, indicating lots of optimism far in excess of the current dour economic numbers. Whether that optimism will be rewarded or fall flat on its face is IMO not certain at this time. If I had to bet I'd bet on another downturn before this is all over, but I don't like to bet. No one always makes the correct bet when it comes to the market's future in the near/intermediate term. There are no exceptions to that rule. There is a big difference between betting and investing IMO. This is precisely the reason why balanced portfolios are so attractive. You're not betting on exactly what the future will turn out to be in 6 or 12 months and aligning your portfolio optimally to prepare for it. Instead you assume there's a high level of uncertainty in the future and you're prepared for whatever happens which is especially important if you're retired.

Garland Whizzer
PDX_Traveler
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Re: Market Euphoria?

Post by PDX_Traveler »

atdharris wrote: Fri Jun 05, 2020 10:57 am
7eight9 wrote: Fri Jun 05, 2020 10:55 am
I agree the Fed has boosted Wall Street confidence. Main Street? Not so much.

If anything the Fed's actions have led to even more of a Wall Street / Main Street divide. Savers have seen their already paltry interest rates reduced while speculators have reaped outsized gains.
Absolutely. It almost feels wrong to see my portfolio now positive for the year while 38 million people are unemployed. Inequality has to be even worse than it was before all of this began. Those with assets continue to reap the benefits while those without are hurt even more than they already were.
It is what it is. While 55% of U.S. adults report owning some stock, that is highly concentrated too: 84% participation in equity ownership for households earning > $100,000 ; only 22% participation for households earning < $40,000 (that it is even that high for low-income earners is a surprise to me - I expect that is primarily through 401k or other insitutional plan participation). Source: https://news.gallup.com/poll/266807/per ... stock.aspx

I expect the trend is similar for the other generators of wealth - home ownership, and small business ownership. I don't think anything is "wrong" with this - it is the way wealth is generated. Without getting into a whole separate discussion, the role of public policy is to ensure the worst of the effects of wealth inequality are mitigated while preserving access to opportunity to all.

To connect this back to the topic at hand, as the short term voting machine of the markets does its thing of swinging up and down and hither and thither, the weighing machine still is working away in the background. And that weighing machine evaluates the weight of earnings of the broad markets - and let's not forget that the health of those earnings cannot be divorced from the health of the *whole* economy, not just the households earning more than some arbitrary threshold.
Hockey10
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Re: Market Euphoria?

Post by Hockey10 »

Call_Me_Op wrote: Fri Jun 05, 2020 7:29 am
mrspock wrote: Fri Jun 05, 2020 5:06 am Stop feeling.... Euphoria is just another mis-placed emotion....
Spoken like a true Vulcan! :)
Live long and prosper.
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