U.S. stocks continue to soar!

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
Lee_WSP
Posts: 2120
Joined: Fri Apr 19, 2019 5:15 pm
Location: Arizona

Re: Something Can't Be Right

Post by Lee_WSP » Thu Mar 26, 2020 2:02 pm

willthrill81 wrote:
Thu Mar 26, 2020 1:52 pm
Lee_WSP wrote:
Thu Mar 26, 2020 1:45 pm
magicrat wrote:
Thu Mar 26, 2020 1:30 pm
pacodelostigres wrote:
Thu Mar 26, 2020 1:05 pm
magicrat wrote:
Thu Mar 26, 2020 12:29 pm
The potential downsides are priced in. So are the potential upsides. Prices will change as potential becomes reality, whatever that turns out to be.
I generally believe in EMH, but I disagree with you here on everything but your last point. This is not a set of circumstances that the models are well built to address, and I think that the novelty of the situation is both driving volatility and quite a bit of mispricing. Even if you believe that the models can handle this, what inputs do you use for earnings, or anything else for that matter? I've worked in FP&A for many years and I'd have no idea how to even do a corporate budget in this scenario, much less any kind of valid equity analysis.

VIX sitting at 60 is a pretty good indicator that the markets are struggling to correctly price anything.
A well-priced market reflects uncertainty and a range of potential outcomes. The range of potential outcomes is much, much higher than usual, so of course markets will be more volatile, and will move up or down substantially when real outcomes replace the very wide range of potential outcomes.
Can you explain to me how it prices in uncertainty about the price? Serious question. Although, if there's no good answer, I will remain convinced that EMH cannot explain today's market prices.
Due to loss aversion, I would assume that ceterus paribus (e.g. return expectations are unchanged), greater uncertainty would lead to lower prices.
But how does that square with the existence of short-ers and the subsequent squeezers?

If the vast majority of the market prices in uncertainty and is unwilling to bid higher than say 2200, that allows for a few actors to bid prices higher by buying up the much fewer sell orders.

magicrat
Posts: 863
Joined: Sat Nov 29, 2014 7:04 pm

Re: Something Can't Be Right

Post by magicrat » Thu Mar 26, 2020 2:04 pm

Lee_WSP wrote:
Thu Mar 26, 2020 1:45 pm
magicrat wrote:
Thu Mar 26, 2020 1:30 pm
pacodelostigres wrote:
Thu Mar 26, 2020 1:05 pm
magicrat wrote:
Thu Mar 26, 2020 12:29 pm
The potential downsides are priced in. So are the potential upsides. Prices will change as potential becomes reality, whatever that turns out to be.
I generally believe in EMH, but I disagree with you here on everything but your last point. This is not a set of circumstances that the models are well built to address, and I think that the novelty of the situation is both driving volatility and quite a bit of mispricing. Even if you believe that the models can handle this, what inputs do you use for earnings, or anything else for that matter? I've worked in FP&A for many years and I'd have no idea how to even do a corporate budget in this scenario, much less any kind of valid equity analysis.

VIX sitting at 60 is a pretty good indicator that the markets are struggling to correctly price anything.
A well-priced market reflects uncertainty and a range of potential outcomes. The range of potential outcomes is much, much higher than usual, so of course markets will be more volatile, and will move up or down substantially when real outcomes replace the very wide range of potential outcomes.
Can you explain to me how it prices in uncertainty about the price? Serious question. Although, if there's no good answer, I will remain convinced that EMH cannot explain today's market prices.
Sure, illustratively. There are thousands of stocks, and there are hundreds of thousands (?) of people who analyze those stocks and try to figure out how much to pay for them. They all have a model of some sort (some complex, some not so). Good models have a range of outcomes (valuations) that are probability weighted. Add up the probability weighted outcomes (valuations) and you have a price. You can also get to the same spot by toggling the discount rate in your valuation model. All of the people who try to price any given stock will update their models as new information comes in and trade accordingly.

EMH does not suggest that stock prices predict the future, it suggests that available information is incorporated into prices, and therefore you cannot beat the market (on a risk-adjusted basis), because you don't know anything that is not available to the rest of the market participants.

Lee_WSP
Posts: 2120
Joined: Fri Apr 19, 2019 5:15 pm
Location: Arizona

Re: Something Can't Be Right

Post by Lee_WSP » Thu Mar 26, 2020 2:08 pm

magicrat wrote:
Thu Mar 26, 2020 2:04 pm
Lee_WSP wrote:
Thu Mar 26, 2020 1:45 pm
magicrat wrote:
Thu Mar 26, 2020 1:30 pm
pacodelostigres wrote:
Thu Mar 26, 2020 1:05 pm
magicrat wrote:
Thu Mar 26, 2020 12:29 pm
The potential downsides are priced in. So are the potential upsides. Prices will change as potential becomes reality, whatever that turns out to be.
I generally believe in EMH, but I disagree with you here on everything but your last point. This is not a set of circumstances that the models are well built to address, and I think that the novelty of the situation is both driving volatility and quite a bit of mispricing. Even if you believe that the models can handle this, what inputs do you use for earnings, or anything else for that matter? I've worked in FP&A for many years and I'd have no idea how to even do a corporate budget in this scenario, much less any kind of valid equity analysis.

VIX sitting at 60 is a pretty good indicator that the markets are struggling to correctly price anything.
A well-priced market reflects uncertainty and a range of potential outcomes. The range of potential outcomes is much, much higher than usual, so of course markets will be more volatile, and will move up or down substantially when real outcomes replace the very wide range of potential outcomes.
Can you explain to me how it prices in uncertainty about the price? Serious question. Although, if there's no good answer, I will remain convinced that EMH cannot explain today's market prices.
Sure, illustratively. There are thousands of stocks, and there are hundreds of thousands (?) of people who analyze those stocks and try to figure out how much to pay for them. They all have a model of some sort (some complex, some not so). Good models have a range of outcomes (valuations) that are probability weighted. Add up the probability weighted outcomes (valuations) and you have a price. You can also get to the same spot by toggling the discount rate in your valuation model. All of the people who try to price any given stock will update their models as new information comes in and trade accordingly.

EMH does not suggest that stock prices predict the future, it suggests that available information is incorporated into prices, and therefore you cannot beat the market (on a risk-adjusted basis), because you don't know anything that is not available to the rest of the market participants.
But if the market participants target prices are widely divergent, doesn't that provide for the opportunity to arbitrage and manipulate short term prices?

Or does EMH only accurately model the long term?

rascott
Posts: 1721
Joined: Wed Apr 15, 2015 10:53 am

Re: U.S. stocks continue to soar!

Post by rascott » Thu Mar 26, 2020 2:18 pm

rudeboy wrote:
Thu Mar 26, 2020 1:54 pm
Silk McCue wrote:
Thu Mar 26, 2020 1:50 pm
rudeboy wrote:
Thu Mar 26, 2020 1:41 pm
These past few days have really demonstrated that nobody knows nothing. 5% increase on the same day the worst jobs report of all time comes out. Did anyone see that coming?

Is this a dead cat bounce or have we hit the bottom?

I'm glad I don't have to try to predict it. Buy-and-hold makes life simpler.
The bad jobs report was not a surprise to anyone. It was already baked into the mental calculus.

Cheers
The anticipation of a bad report may have been baked in, but no one new the actual numbers until they were released. The numbers were higher than many predicted.

The number is totally irrelevant. Jobs reports are only relevant when they are used as market guidance for how the economy is doing. Everyone knows the economy is basically shut down and the numbers are going to be horrific for a few months. The market cares more about what the numbers will look like in August and beyond..... not April.

That every unemployed person is going to be paid $4k/mo for the next 4 months gives enough breathing room to bridge. The data on the virus is what matters.... not an unemployment report.

magicrat
Posts: 863
Joined: Sat Nov 29, 2014 7:04 pm

Re: Something Can't Be Right

Post by magicrat » Thu Mar 26, 2020 2:37 pm

Lee_WSP wrote:
Thu Mar 26, 2020 2:08 pm
magicrat wrote:
Thu Mar 26, 2020 2:04 pm
Lee_WSP wrote:
Thu Mar 26, 2020 1:45 pm
magicrat wrote:
Thu Mar 26, 2020 1:30 pm
pacodelostigres wrote:
Thu Mar 26, 2020 1:05 pm


I generally believe in EMH, but I disagree with you here on everything but your last point. This is not a set of circumstances that the models are well built to address, and I think that the novelty of the situation is both driving volatility and quite a bit of mispricing. Even if you believe that the models can handle this, what inputs do you use for earnings, or anything else for that matter? I've worked in FP&A for many years and I'd have no idea how to even do a corporate budget in this scenario, much less any kind of valid equity analysis.

VIX sitting at 60 is a pretty good indicator that the markets are struggling to correctly price anything.
A well-priced market reflects uncertainty and a range of potential outcomes. The range of potential outcomes is much, much higher than usual, so of course markets will be more volatile, and will move up or down substantially when real outcomes replace the very wide range of potential outcomes.
Can you explain to me how it prices in uncertainty about the price? Serious question. Although, if there's no good answer, I will remain convinced that EMH cannot explain today's market prices.
Sure, illustratively. There are thousands of stocks, and there are hundreds of thousands (?) of people who analyze those stocks and try to figure out how much to pay for them. They all have a model of some sort (some complex, some not so). Good models have a range of outcomes (valuations) that are probability weighted. Add up the probability weighted outcomes (valuations) and you have a price. You can also get to the same spot by toggling the discount rate in your valuation model. All of the people who try to price any given stock will update their models as new information comes in and trade accordingly.

EMH does not suggest that stock prices predict the future, it suggests that available information is incorporated into prices, and therefore you cannot beat the market (on a risk-adjusted basis), because you don't know anything that is not available to the rest of the market participants.
But if the market participants target prices are widely divergent, doesn't that provide for the opportunity to arbitrage and manipulate short term prices?

Or does EMH only accurately model the long term?
Not sure what you mean by "manipulate short term prices." If you think that you have a better view of a stock's price than what it is trading at, then yes by all means act on it and make your money. EMH just suggests you will not be good at that. Also, EMH is not a model.

peskypesky
Posts: 165
Joined: Fri Mar 08, 2013 8:56 pm

Re: Something Can't Be Right

Post by peskypesky » Thu Mar 26, 2020 2:41 pm

keyfort wrote:
Thu Mar 26, 2020 12:18 pm
[This topic has been merged into the existing thread "U.S. stocks continue to soar!" Moderator Misenplace]

I'm not sure I understand this.. unemployment figures just released show the biggest sudden filing for unemployment in the US in a single week, almost in the entire history of the country. 3.3 million people suddenly unemployed. Unemployment already up to 5.5%.

News that although NY is slowing the hospitalization rate, apparently people need to be on ventilators for something like 11-21 days, unlike the 3-4 days for other respiratory problems. India just locked down over a billion people. European countries have cases exploding still (Spain, Netherlands etc), UK has locked down.

And yet, the market is just going up and up. I simply don't understand this and I don't see how!
Maybe because a certain individual has basically said we'll be back to business as normal in a couple of weeks. I guess the "rational" market believes this individual.

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willthrill81
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Location: USA

Re: Something Can't Be Right

Post by willthrill81 » Thu Mar 26, 2020 2:48 pm

magicrat wrote:
Thu Mar 26, 2020 2:37 pm
Also, EMH is not a model.
All hypotheses and theories imply some kind of model, but it might not be a mathematical model.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

rudeboy
Posts: 216
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Re: U.S. stocks continue to soar!

Post by rudeboy » Thu Mar 26, 2020 2:57 pm

rascott wrote:
Thu Mar 26, 2020 2:18 pm
rudeboy wrote:
Thu Mar 26, 2020 1:54 pm
Silk McCue wrote:
Thu Mar 26, 2020 1:50 pm
rudeboy wrote:
Thu Mar 26, 2020 1:41 pm
These past few days have really demonstrated that nobody knows nothing. 5% increase on the same day the worst jobs report of all time comes out. Did anyone see that coming?

Is this a dead cat bounce or have we hit the bottom?

I'm glad I don't have to try to predict it. Buy-and-hold makes life simpler.
The bad jobs report was not a surprise to anyone. It was already baked into the mental calculus.

Cheers
The anticipation of a bad report may have been baked in, but no one new the actual numbers until they were released. The numbers were higher than many predicted.

The number is totally irrelevant. Jobs reports are only relevant when they are used as market guidance for how the economy is doing. Everyone knows the economy is basically shut down and the numbers are going to be horrific for a few months. The market cares more about what the numbers will look like in August and beyond..... not April.

That every unemployed person is going to be paid $4k/mo for the next 4 months gives enough breathing room to bridge. The data on the virus is what matters.... not an unemployment report.
Well, the data on the virus is disasterous, so.... why is the market up 5%?

Hindsight is 20/20 -- you're coming up with an explanation as to why the jobs report didnt impact the market after-the-fact. Did you predict yesterday that the market would be soaring today?

keyfort
Posts: 160
Joined: Thu Apr 04, 2019 12:46 pm

Re: U.S. stocks continue to soar!

Post by keyfort » Thu Mar 26, 2020 3:01 pm

EMH, like most economics, is a soft science, isn't it? We're dealing with people's emotions and behavior, not the gravitational constant which doesn't vary anywhere in the universe. EMH doesn't exist anywhere else in the universe nevermind not vary anywhere else in the universe. Sorry for stating the obvious but I find it irksome that EMH and other hypotheses are talked about as if they were derived from first principles. Maybe the market has priced in something, maybe it hasn't, maybe people don't understand what they've been told, maybe they've been told a lie, maybe there was a mistake etc etc, maybe investors are irrational etc etc.

But I do agree that this is pretty much never actionable in a good way, so it's probably better for me to buy and hold as I sure can't figure it out!

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Stinky
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Re: U.S. stocks continue to soar!

Post by Stinky » Thu Mar 26, 2020 3:03 pm

Cheez-It Guy wrote:
Thu Mar 26, 2020 8:51 am
Could it be three in a row? That's called a WINNING STREAK. It HAS happened before.
Yes. A legitimate WINNING STREAK.

Three in a row!
Last edited by Stinky on Thu Mar 26, 2020 3:03 pm, edited 1 time in total.
It's a GREAT day to be alive - Travis Tritt

keyfort
Posts: 160
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Re: U.S. stocks continue to soar!

Post by keyfort » Thu Mar 26, 2020 3:03 pm

rudeboy wrote:
Thu Mar 26, 2020 2:57 pm
rascott wrote:
Thu Mar 26, 2020 2:18 pm
rudeboy wrote:
Thu Mar 26, 2020 1:54 pm
Silk McCue wrote:
Thu Mar 26, 2020 1:50 pm
rudeboy wrote:
Thu Mar 26, 2020 1:41 pm
These past few days have really demonstrated that nobody knows nothing. 5% increase on the same day the worst jobs report of all time comes out. Did anyone see that coming?

Is this a dead cat bounce or have we hit the bottom?

I'm glad I don't have to try to predict it. Buy-and-hold makes life simpler.
The bad jobs report was not a surprise to anyone. It was already baked into the mental calculus.

Cheers
The anticipation of a bad report may have been baked in, but no one new the actual numbers until they were released. The numbers were higher than many predicted.

The number is totally irrelevant. Jobs reports are only relevant when they are used as market guidance for how the economy is doing. Everyone knows the economy is basically shut down and the numbers are going to be horrific for a few months. The market cares more about what the numbers will look like in August and beyond..... not April.

That every unemployed person is going to be paid $4k/mo for the next 4 months gives enough breathing room to bridge. The data on the virus is what matters.... not an unemployment report.
Well, the data on the virus is disasterous, so.... why is the market up 5%?

Hindsight is 20/20 -- you're coming up with an explanation as to why the jobs report didnt impact the market after-the-fact. Did you predict yesterday that the market would be soaring today?
Good point. Did they predict yesterday that the jobs report would be worse than expected but that the market would go up anyway?
Last edited by keyfort on Thu Mar 26, 2020 3:03 pm, edited 1 time in total.

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J G Bankerton
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Re: U.S. stocks continue to soar!

Post by J G Bankerton » Thu Mar 26, 2020 3:03 pm

rudeboy wrote:
Thu Mar 26, 2020 2:57 pm
Well, the data on the virus is disasterous, so.... why is the market up 5%?

Hindsight is 20/20 -- you're coming up with an explanation as to why the jobs report didnt impact the market after-the-fact. Did you predict yesterday that the market would be soaring today?
6.24% at the close. My last buy of VOO at 201 is up 19.52%. Buy the dips. :greedy
Last edited by J G Bankerton on Thu Mar 26, 2020 3:09 pm, edited 1 time in total.

vipertom1970
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Re: U.S. stocks continue to soar!

Post by vipertom1970 » Thu Mar 26, 2020 3:03 pm

WOW 3/26/2020 DOW up another 1,322 points :sharebeer

theorist
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Re: U.S. stocks continue to soar!

Post by theorist » Thu Mar 26, 2020 3:14 pm

vipertom1970 wrote:
Thu Mar 26, 2020 3:03 pm
WOW 3/26/2020 DOW up another 1,322 points :sharebeer
Somehow, this worries me. (Yes, I know, I don’t know nuthin’; and I am still fully invested at my AA.)

vipertom1970
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Re: U.S. stocks continue to soar!

Post by vipertom1970 » Thu Mar 26, 2020 3:18 pm

theorist wrote:
Thu Mar 26, 2020 3:14 pm
vipertom1970 wrote:
Thu Mar 26, 2020 3:03 pm
WOW 3/26/2020 DOW up another 1,322 points :sharebeer
Somehow, this worries me. (Yes, I know, I don’t know nuthin’; and I am still fully invested at my AA.)
I have been buying big chunks on every dip since Dow at 24,000 and got one large bullet left but will wait for retesting new low and not chasing this rally.
Last edited by vipertom1970 on Thu Mar 26, 2020 3:19 pm, edited 1 time in total.

RayKeynes
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Re: U.S. stocks continue to soar!

Post by RayKeynes » Thu Mar 26, 2020 3:18 pm

Sold another 20% of my portfolio. :sharebeer

rkhusky
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Re: U.S. stocks continue to soar!

Post by rkhusky » Thu Mar 26, 2020 3:21 pm

Sold some more to maintain my AA.

JLJL
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Re: U.S. stocks continue to soar!

Post by JLJL » Thu Mar 26, 2020 3:25 pm

All I know for sure is recency bias is strong with this crowd.

I remember Jan/Feb timeframe reading something from someone who said (paraphrase) "well if it drops below 25 [DJI 25,000] we're all screwed anyway"

By mid-march, a high number of people - dare I say majority - quite confident that this had a long way down yet.

Early this morning, most people were predicting an end to the 'rally' based on expected bad news in the jobless numbers and all but certain we haven't seen the bottom. It's been a month since we've had 3 + days in a row, so we know today won't be up. Heavy consensus we haven't bottomed.

Then we have a 3rd strong day. Now the sentiment seems to be "market knew all this bad virus news and jobless stuff, it was priced in ya dumdum".

We're at 22 and climbing, now 15 seems unimaginable unless... I don't know Archduke Ferdinand is assassinated. We were at 18 what a week ago? Ope nope that was MONDAY.

I have to say to all of you Thursday afternoon QBS who are saying this stuff was all "priced in": how on earth was the stimulus not priced in last week? It was obvious well over a week ago that an enormous package :!: was in works and would be through the senate this week, but if not, next at the latest. The terms being thrown around were 1.5T, $1k-2k per person, and encompassed the other big things that are apparently in it.

No reason the thing (market) should have dropped further last week and this week if the stimulus is the reason for the rally. For those of you today saying an insta-recession, 10s of thousands of deaths (pretty evident there will be) and 3M jobless claims on month 1 (to be clear the average prediction of an array of experts predictions was more like 1.5M) and on and on were "priced in", the stimulus sure as shit should have been.

https://www.marketwatch.com/story/coron ... 2020-03-19

I'd like to say that in an equivalent relative timeline of 2-3 weeks ago in the US, China had completely locked down Wuhan, and then interprovince travel extending the lunar new year by weeks, and effectively shut down all industry and movement entirely. And when I say locked down Wuhan, you know what I mean. Not this namby-pamby "go for a walk through the dogwoods" kind of lockdown. Not only that, they were ID'ing the ill and extracting them from their homes, taking them to quarantine centers, in total isolation even from their families. They expanded it to the rest of the country when they realized thousands had left before the lockdown.

I hate to say it this way, but regarding that Wuhan epicenter, we have essentially 5 of them broiling up in the US right now: NYC, NJ, Detroit, New Orleans, FL, and others with hundreds or thousands of new reported cases per day. US people are free to come and go in and out of these epicenters, and have done so in droves. None of those hot spots are seeing anywhere near the level of controls that were placed on Wuhan. I have more to say on that, but this is the stock soaring thread where we are sure that what's happening right before our eyes is evidence of things to come. I promise you this, ask 10 Americans if they'd be willing to visit Wuhan right now and 9 would laugh you out of the room. DC or Tampa on the other hand...

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J G Bankerton
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Re: U.S. stocks continue to soar!

Post by J G Bankerton » Thu Mar 26, 2020 3:28 pm

JLJL wrote:
Thu Mar 26, 2020 3:25 pm
All I know for sure is recency bias is strong with this crowd.
As it is with all the talking heads. I find it amusing. :D

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Nicolas
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Location: The country I come from, is called the Midwest.

Re: U.S. stocks continue to soar!

Post by Nicolas » Thu Mar 26, 2020 3:30 pm

Bluce wrote:
Thu Mar 26, 2020 12:48 pm
J G Bankerton wrote:
Thu Mar 26, 2020 12:15 pm
Bluce wrote:
Thu Mar 26, 2020 9:03 am
J G Bankerton wrote:
Wed Mar 25, 2020 11:58 am
I'm back in the black, and have killed more bares than Davy Crockett. :mrgreen:
What kind of "bares"?
A timber be'are. I kilt more be'ares today. They are dropping left and right. :greedy
kilt him a be 'are when he was only three
Point 1) I was tweaking whoever misspelled "bear" as in bear market. They spelled it "bare." Today, with many people not knowing their native language, it's always a crap shoot to know if they're misspelling on purpose or not.

Point 2) Having been a young lad during Davy's era, I distinctly remember seeing it spelled in comic books as he pronounced it: "b'ar."

:sharebeer
Daniel Boone (not Crockett) was famously reported to have spelt bear as bar but it’s apparently apocryphal. From Wikipedia:
Frontiersmen often carved messages on trees or wrote their names on cave walls, and Boone's name or initials have been found in many places. A tree in present Washington County, Tennessee reads "D. Boon Cilled a. Bar on tree in the year 1760". A similar carving, preserved in the museum of the Filson Historical Society in Louisville, Kentucky, reads "D. Boon Kilt a Bar, 1803." The inscriptions may also be among numerous forgeries of the famous trapper, part of a long tradition of phony Boone relics. https://en.wikipedia.org/wiki/Daniel_Boone
Last edited by Nicolas on Thu Mar 26, 2020 3:36 pm, edited 2 times in total.

MotoTrojan
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Re: U.S. stocks continue to soar!

Post by MotoTrojan » Thu Mar 26, 2020 3:31 pm

What a difference a few days makes! I was getting sad that I didn't have a chance to buy more small-cap value, then I realized it is still more than 20% off the December 2018 lows :twisted:.

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Nicolas
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Location: The country I come from, is called the Midwest.

Re: U.S. stocks continue to soar!

Post by Nicolas » Thu Mar 26, 2020 3:32 pm

MotoTrojan wrote:
Thu Mar 26, 2020 3:31 pm
What a difference a few days makes! I was getting sad that I didn't have a chance to buy more small-cap value, then I realized it is still more than 20% off the December 2018 lows :twisted:.
Wait for it to go back down, is my advice.

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Stef
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Re: U.S. stocks continue to soar!

Post by Stef » Thu Mar 26, 2020 3:33 pm

MotoTrojan wrote:
Thu Mar 26, 2020 3:31 pm
What a difference a few days makes! I was getting sad that I didn't have a chance to buy more small-cap value, then I realized it is still more than 20% off the December 2018 lows :twisted:.
I saw 2199 on Monday and now we are back to 2630 (+20%) in just 3 days, crazy.

columbia
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Re: U.S. stocks continue to soar!

Post by columbia » Thu Mar 26, 2020 3:33 pm

JLJL wrote:
Thu Mar 26, 2020 3:25 pm
All I know for sure is recency bias is strong with this crowd.

I remember Jan/Feb timeframe reading something from someone who said (paraphrase) "well if it drops below 25 [DJI 25,000] we're all screwed anyway"

By mid-march, a high number of people - dare I say majority - quite confident that this had a long way down yet.

Early this morning, most people were predicting an end to the 'rally' based on expected bad news in the jobless numbers and all but certain we haven't seen the bottom. It's been a month since we've had 3 + days in a row, so we know today won't be up. Heavy consensus we haven't bottomed.

Then we have a 3rd strong day. Now the sentiment seems to be "market knew all this bad virus news and jobless stuff, it was priced in ya dumdum".

We're at 22 and climbing, now 15 seems unimaginable unless... I don't know Archduke Ferdinand is assassinated. We were at 18 what a week ago? Ope nope that was MONDAY.

I have to say to all of you Thursday afternoon QBS who are saying this stuff was all "priced in": how on earth was the stimulus not priced in last week? It was obvious well over a week ago that an enormous package :!: was in works and would be through the senate this week, but if not, next at the latest. The terms being thrown around were 1.5T, $1k-2k per person, and encompassed the other big things that are apparently in it.

No reason the thing (market) should have dropped further last week and this week if the stimulus is the reason for the rally. For those of you today saying an insta-recession, 10s of thousands of deaths (pretty evident there will be) and 3M jobless claims on month 1 (to be clear the average prediction of an array of experts predictions was more like 1.5M) and on and on were "priced in", the stimulus sure as shit should have been.

https://www.marketwatch.com/story/coron ... 2020-03-19

I'd like to say that in an equivalent relative timeline of 2-3 weeks ago in the US, China had completely locked down Wuhan, and then interprovince travel extending the lunar new year by weeks, and effectively shut down all industry and movement entirely. And when I say locked down Wuhan, you know what I mean. Not this namby-pamby "go for a walk through the dogwoods" kind of lockdown. Not only that, they were ID'ing the ill and extracting them from their homes, taking them to quarantine centers, in total isolation even from their families. They expanded it to the rest of the country when they realized thousands had left before the lockdown.

I hate to say it this way, but regarding that Wuhan epicenter, we have essentially 5 of them broiling up in the US right now: NYC, NJ, Detroit, New Orleans, FL, and others with hundreds or thousands of new reported cases per day. US people are free to come and go in and out of these epicenters, and have done so in droves. None of those hot spots are seeing anywhere near the level of controls that were placed on Wuhan. I have more to say on that, but this is the stock soaring thread where we are sure that what's happening right before our eyes is evidence of things to come. I promise you this, ask 10 Americans if they'd be willing to visit Wuhan right now and 9 would laugh you out of the room. DC or Tampa on the other hand...
I appreciate your pessimism.
If you leave your head in the sand for too long, you might get run over by a Jeep.

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Re: U.S. stocks continue to soar!

Post by seychellois_lib » Thu Mar 26, 2020 3:42 pm

keyfort wrote:
Thu Mar 26, 2020 3:01 pm
EMH, like most economics, is a soft science, isn't it? We're dealing with people's emotions and behavior, not the gravitational constant which doesn't vary anywhere in the universe. EMH doesn't exist anywhere else in the universe nevermind not vary anywhere else in the universe. Sorry for stating the obvious but I find it irksome that EMH and other hypotheses are talked about as if they were derived from first principles. Maybe the market has priced in something, maybe it hasn't, maybe people don't understand what they've been told, maybe they've been told a lie, maybe there was a mistake etc etc, maybe investors are irrational etc etc.

But I do agree that this is pretty much never actionable in a good way, so it's probably better for me to buy and hold as I sure can't figure it out!
Boy, that is an accurate statement " I sure can't figure it out". There was a fascinating recent interview with Mohamed A. El-Erian linked elsewhere on the forum. My key takeaway from his thinking on the situation was "when you can not figure it out, make no changes to your portfolio from which you can not recover" (I am paraphrasing). He was warning on new investments such as junk bonds and over leveraged companies where the investor might be tantalized by high returns but could be completely wiped out ie wind up zero remaining value. He also warned on emerging markets due to the inevitable reevaluation of fragile supply chains when this is all over.

I immediately went back to my portfolio to re-examine my asset deployments which are now around 35% highly diversified equities (was 40%) 10% TIPS , 5% cash 25% short term treasuries, 25% Govt MF. I am retired and can sleep at night. I do have diversification into emerging markets however I plan to do nothing at this point. My exposure is not substantial.

My desired AA is 40/60 and I'll rebalance mid year, I may also look at options for safely increasing fixed returns at that time . I do not require "stellar" performance to support my lifestyle.

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Re: U.S. stocks continue to soar!

Post by seychellois_lib » Thu Mar 26, 2020 3:43 pm

delete

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Re: U.S. stocks continue to soar!

Post by JLJL » Thu Mar 26, 2020 3:46 pm

columbia wrote:
Thu Mar 26, 2020 3:33 pm
JLJL wrote:
Thu Mar 26, 2020 3:25 pm
All I know for sure is recency bias is strong with this crowd.

...
I appreciate your pessimism.
Thanks... it's a gift!

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Re: U.S. stocks continue to soar!

Post by Jim180 » Thu Mar 26, 2020 3:50 pm

I thought the market hates uncertainty.

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Re: U.S. stocks continue to soar!

Post by surfstar » Thu Mar 26, 2020 3:51 pm

JLJL wrote:
Thu Mar 26, 2020 3:46 pm
columbia wrote:
Thu Mar 26, 2020 3:33 pm
JLJL wrote:
Thu Mar 26, 2020 3:25 pm
All I know for sure is recency bias is strong with this crowd.

...
I appreciate your pessimism.
Thanks... it's a gift!
Agreed with your thoughts, but I prefer Realist:
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Re: U.S. stocks continue to soar!

Post by Bluce » Thu Mar 26, 2020 4:00 pm

Nicolas wrote:
Thu Mar 26, 2020 3:30 pm
Bluce wrote:
Thu Mar 26, 2020 12:48 pm
J G Bankerton wrote:
Thu Mar 26, 2020 12:15 pm
Bluce wrote:
Thu Mar 26, 2020 9:03 am
J G Bankerton wrote:
Wed Mar 25, 2020 11:58 am
I'm back in the black, and have killed more bares than Davy Crockett. :mrgreen:
What kind of "bares"?
A timber be'are. I kilt more be'ares today. They are dropping left and right. :greedy
kilt him a be 'are when he was only three
Point 1) I was tweaking whoever misspelled "bear" as in bear market. They spelled it "bare." Today, with many people not knowing their native language, it's always a crap shoot to know if they're misspelling on purpose or not.

Point 2) Having been a young lad during Davy's era, I distinctly remember seeing it spelled in comic books as he pronounced it: "b'ar."

:sharebeer
Daniel Boone (not Crockett) was famously reported to have spelt bear as bar but it’s apparently apocryphal. From Wikipedia:
Frontiersmen often carved messages on trees or wrote their names on cave walls, and Boone's name or initials have been found in many places. A tree in present Washington County, Tennessee reads "D. Boon Cilled a. Bar on tree in the year 1760". A similar carving, preserved in the museum of the Filson Historical Society in Louisville, Kentucky, reads "D. Boon Kilt a Bar, 1803." The inscriptions may also be among numerous forgeries of the famous trapper, part of a long tradition of phony Boone relics. https://en.wikipedia.org/wiki/Daniel_Boone
I have no "Google Knowledge" on the subject. I'm going from memory 60 years ago, as "b'ar" was how the author spelled it in the comic books. :mrgreen:
"There are no new ideas, only forgotten ones." -- Amity Shlaes

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Re: U.S. stocks continue to soar!

Post by Nicolas » Thu Mar 26, 2020 4:00 pm

Barron’s says the bear is over, we’re now at the start of a new bull market.

The Stimulus Bill Just Lifted the Dow Back Into a Bull Market.
The blue-chip index achieved a gain of 20% from its low in just three trading days. That ties the three day period ending October 8, 1931, for the quickest bear market low to bull market entry on record. This bear market lasted for 11 trading days, making it the shortest ever.

https://www.barrons.com/

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Re: U.S. stocks continue to soar!

Post by Cheez-It Guy » Thu Mar 26, 2020 4:05 pm

LOL! What happened out there today?!

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Re: U.S. stocks continue to soar!

Post by abuss368 » Thu Mar 26, 2020 4:06 pm

Cheez-It Guy wrote:
Thu Mar 26, 2020 4:05 pm
LOL! What happened out there today?!
Seems like the crazy selling has stopped! Wait, I will probably eat those words tomorrow.
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Re: U.S. stocks continue to soar!

Post by J G Bankerton » Thu Mar 26, 2020 4:20 pm

Cheez-It Guy wrote:
Thu Mar 26, 2020 4:05 pm
LOL! What happened out there today?!
I'm no longer losing principal and have paper gains. :mrgreen:

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Re: U.S. stocks continue to soar!

Post by BW1985 » Thu Mar 26, 2020 4:21 pm

J G Bankerton wrote:
Thu Mar 26, 2020 4:20 pm
Cheez-It Guy wrote:
Thu Mar 26, 2020 4:05 pm
LOL! What happened out there today?!
I'm no longer losing principal and have paper gains. :mrgreen:
When did you start investing?
"Squirrels figured out how to save eons ago. They buried acorns. Some, they dug up, for food. Others, they let to sprout, in new oak trees. We could learn from squirrels." -john94549

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Re: U.S. stocks continue to soar!

Post by rascott » Thu Mar 26, 2020 4:33 pm

rudeboy wrote:
Thu Mar 26, 2020 2:57 pm
rascott wrote:
Thu Mar 26, 2020 2:18 pm
rudeboy wrote:
Thu Mar 26, 2020 1:54 pm
Silk McCue wrote:
Thu Mar 26, 2020 1:50 pm
rudeboy wrote:
Thu Mar 26, 2020 1:41 pm
These past few days have really demonstrated that nobody knows nothing. 5% increase on the same day the worst jobs report of all time comes out. Did anyone see that coming?

Is this a dead cat bounce or have we hit the bottom?

I'm glad I don't have to try to predict it. Buy-and-hold makes life simpler.
The bad jobs report was not a surprise to anyone. It was already baked into the mental calculus.

Cheers
The anticipation of a bad report may have been baked in, but no one new the actual numbers until they were released. The numbers were higher than many predicted.

The number is totally irrelevant. Jobs reports are only relevant when they are used as market guidance for how the economy is doing. Everyone knows the economy is basically shut down and the numbers are going to be horrific for a few months. The market cares more about what the numbers will look like in August and beyond..... not April.

That every unemployed person is going to be paid $4k/mo for the next 4 months gives enough breathing room to bridge. The data on the virus is what matters.... not an unemployment report.
Well, the data on the virus is disasterous, so.... why is the market up 5%?

Hindsight is 20/20 -- you're coming up with an explanation as to why the jobs report didnt impact the market after-the-fact. Did you predict yesterday that the market would be soaring today?

Nobody can predict what the market will do what will do on a daily basis.

I'm just saying that this jobs report was totally irrelevant to today's market action. The worst jobs reports in recessions often actually come after the market has bottomed.

I don't think the market has bottomed.... and I fully expect coming weeks jobs reports to be even worse. Those numbers will be equally irrelevant. Only thing that matters in the next month or two is the new data that will come out regarding the virus. Is the virus data worse than was projected last week? Not that I've seen.

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Re: U.S. stocks continue to soar!

Post by Lee_WSP » Thu Mar 26, 2020 5:36 pm

Nicolas wrote:
Thu Mar 26, 2020 4:00 pm
Barron’s says the bear is over, we’re now at the start of a new bull market.

The Stimulus Bill Just Lifted the Dow Back Into a Bull Market.
The blue-chip index achieved a gain of 20% from its low in just three trading days. That ties the three day period ending October 8, 1931, for the quickest bear market low to bull market entry on record. This bear market lasted for 11 trading days, making it the shortest ever.

https://www.barrons.com/
:shock:

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Predicting stock market returns

Post by Taylor Larimore » Thu Mar 26, 2020 6:01 pm

Nicolas:

I hope Barron's is right but I remember when the front page of Barron's screamed "BUY GM NOW!" -- A few months later GM went bankrupt.

I doubt if anyone can predict (except by luck) what stocks will do in the future. I learned the hard way that I can't.

Best wishes.
Taylor
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Re: U.S. stocks continue to soar!

Post by Nicolas » Thu Mar 26, 2020 6:19 pm

Taylor Larimore wrote:
Thu Mar 26, 2020 6:01 pm
I hope Barron's is right but I remember when the front page of Barron's screamed "BUY GM NOW!" -- A few months later GM went bankrupt.
Yes, I remember that headline well!

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Re: Predicting stock market returns

Post by abuss368 » Thu Mar 26, 2020 6:56 pm

Taylor Larimore wrote:
Thu Mar 26, 2020 6:01 pm
Nicolas:

I hope Barron's is right but I remember when the front page of Barron's screamed "BUY GM NOW!" -- A few months later GM went bankrupt.

I doubt if anyone can predict (except by luck) what stocks will do in the future. I learned the hard way that I can't.

Best wishes.
Taylor
Jack Bogle's Words of Wisdom: "After nearly 50 years in this business, I do not know of anybody who has done market timing successfully and consistently. I don't even know anybody who knows anybody who has done it successfully and consistently."
Ah the good ole financial crisis.
John C. Bogle - Two Fund Portfolio: Total Stock & Total Bond. "Simplicity is the master key to financial success." || Buy Total Stock until it hurts. Then find a way to buy even more!

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Re: U.S. stocks continue to soar!

Post by J G Bankerton » Thu Mar 26, 2020 7:30 pm

BW1985 wrote:
Thu Mar 26, 2020 4:21 pm
J G Bankerton wrote:
Thu Mar 26, 2020 4:20 pm
Cheez-It Guy wrote:
Thu Mar 26, 2020 4:05 pm
LOL! What happened out there today?!
I'm no longer losing principal and have paper gains. :mrgreen:
When did you start investing?
The last time was in September 2014 after I finally got out of debt form a divorce. This virus ain't nothing compared to a divorce.

I was flying high before both disasters but I recovered much quicker from this one. :mrgreen:
rascott wrote:
Thu Mar 26, 2020 4:33 pm
I don't think the market has bottomed....
Will VOO fall below 201? I hope not my limit buy bot is set to buy at 199. I already borrowed heavily from my venture capital fund buying dips. I need a few months to pay it back.

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Re: U.S. stocks continue to soar!

Post by fanmail » Fri Mar 27, 2020 6:05 am

Nicolas wrote:
Thu Mar 26, 2020 4:00 pm
Barron’s says the bear is over, we’re now at the start of a new bull market.

The Stimulus Bill Just Lifted the Dow Back Into a Bull Market.
The blue-chip index achieved a gain of 20% from its low in just three trading days. That ties the three day period ending October 8, 1931, for the quickest bear market low to bull market entry on record. This bear market lasted for 11 trading days, making it the shortest ever.

https://www.barrons.com/
How come they’re counting intraday lows for this but didn’t in Dec 18 when the market fell over 20% intraday?

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Re: U.S. stocks continue to soar!

Post by JLJL » Fri Mar 27, 2020 6:27 am

surfstar wrote:
Thu Mar 26, 2020 3:51 pm
JLJL wrote:
Thu Mar 26, 2020 3:46 pm
columbia wrote:
Thu Mar 26, 2020 3:33 pm
JLJL wrote:
Thu Mar 26, 2020 3:25 pm
All I know for sure is recency bias is strong with this crowd.

...
I appreciate your pessimism.
Thanks... it's a gift!
Agreed with your thoughts, but I prefer Realist:
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lol

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Re: U.S. stocks continue to soar!

Post by Broken Man 1999 » Fri Mar 27, 2020 2:58 pm

I have never thought the market movements displayed anything rational.

The market is driven by humans, and algorithms that have been developed by humans.

Good luck trying to determine WHY the market goes up or down. For the most part it is a fools errand, perhaps impossible.

Long term it does go up, and that is why I invest. Short term, I do not worry about market moves; that doesn't mean I don't take note, and adjust our AA when it gets too out of whack. Not sure what else one can do, as the market hasn't given me any reasons why it does what it does. Might as well try to read the entrails of a goat. That would be a waste of a goat, though.

I remain optimistic of our long term situation, but it is possible I could be horribly wrong.

Broken Man 1999
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Re: U.S. stocks continue to soar!

Post by Bluce » Fri Mar 27, 2020 3:08 pm

Broken Man 1999 wrote:
Fri Mar 27, 2020 2:58 pm
I have never thought the market movements displayed anything rational.

The market is driven by humans, and algorithms that have been developed by humans.

Good luck trying to determine WHY the market goes up or down. For the most part it is a fools errand, perhaps impossible.

Long term it does go up, and that is why I invest. Short term, I do not worry about market moves; that doesn't mean I don't take note, and adjust our AA when it gets too out of whack. Not sure what else one can do, as the market hasn't given me any reasons why it does what it does. Might as well try to read the entrails of a goat. That would be a waste of a goat, though.

I remain optimistic of our long term situation, but it is possible I could be horribly wrong.

Broken Man 1999
I agree.

I see the stock market as being driven by millions of people making millions of self-interested decisions every moment.

Good luck trying to hit that moving target (in the short term). Some people seem to view it as a living, breathing thing that can be somewhat predicted. It isn't, it can't, it doesn't know what it did yesterday.
"There are no new ideas, only forgotten ones." -- Amity Shlaes

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Re: U.S. stocks continue to soar!

Post by keelerjr12 » Fri Mar 27, 2020 3:38 pm

Bluce wrote:
Fri Mar 27, 2020 3:08 pm
Broken Man 1999 wrote:
Fri Mar 27, 2020 2:58 pm
I have never thought the market movements displayed anything rational.

The market is driven by humans, and algorithms that have been developed by humans.

Good luck trying to determine WHY the market goes up or down. For the most part it is a fools errand, perhaps impossible.

Long term it does go up, and that is why I invest. Short term, I do not worry about market moves; that doesn't mean I don't take note, and adjust our AA when it gets too out of whack. Not sure what else one can do, as the market hasn't given me any reasons why it does what it does. Might as well try to read the entrails of a goat. That would be a waste of a goat, though.

I remain optimistic of our long term situation, but it is possible I could be horribly wrong.

Broken Man 1999
I agree.

I see the stock market as being driven by millions of people making millions of self-interested decisions every moment.

Good luck trying to hit that moving target (in the short term). Some people seem to view it as a living, breathing thing that can be somewhat predicted. It isn't, it can't, it doesn't know what it did yesterday.
I will never buy into the fact that the market is completely random. And, therefore, cannot be predicted to some degree. Why is that? Let's assume we have 2 stocks: A & B.

You're basically saying that even though company A has solid valuations and fundamentals relative to B (let's call it on a magnitude of 10), that the probability that each stock goes up or down is equal, 50/50. That just doesn't make sense.

So now that we've established that it is not completely random (to some degree), this implies that, to some degree (again), the market CAN be predicted. Please see here: Randomness.
randomness is the apparent lack of pattern or predictability in events.
But we just said that there is some correlation between a company's valuations and their prices!

So now let's apply logic:
Something is completely random iff it cannot be predicted.

Inverse:
Something is not completely random iff it can be predicted

The market is NOT completely random.

Therefore, the market can be predicted.
In the computer science field, we deal heavily with randomness. With a true random number generator, the values produced are truly random with probability 1/N. However, with a pseudorandom number generator, there is some pattern or source that generates the number. It appears random to the user, but it's not. They've PROVEN that by using a neural network you can predict the next value from a PRNG (with some probability).

What we've done here is tried to say that because, on average, we cannot beat the market with the average investor that this must hold true for every case. That is not a valid proof in any mathematical sense. I'm NOT disagreeing that it is incredibly difficult to predict what the market is going to do. But taking empirical evidence from the average investment history and trying to theorize that the market is completely random because none of them beat the market is incorrect. Furthermore, there are numerous journal studies that have shown the ability to predict the next day's trend with 75-85% accuracy. Some of these examples use financial statements, consumer sentiment via twitter feeds, etc.

If you're calling the market a random walk, then these study's algorithms and their probability are far superior to your premise.
Last edited by keelerjr12 on Fri Mar 27, 2020 4:25 pm, edited 4 times in total.

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Re: U.S. stocks continue to soar!

Post by MoneyMarathon » Fri Mar 27, 2020 3:48 pm

JLJL wrote:
Thu Mar 26, 2020 3:25 pm
the stimulus sure as shit should have been.
Overall, I appreciate the point you're trying to make. Guesses about what moves the market tend to remain guesses, even in retrospect.

But there was uncertainty last week. A previous comparable stimulus bill took over a month from being introduced in Congress (January 6th) and being passed by both houses (February 10th), with planning starting the previous year. Legislation is far from being a swift and certain process, and back then a single party held a majority in both the House and Senate, instead of a more split Congress like there is today. The recent bill could have provided some surprise to the upside in how quickly differences were resolved and in the magnitude and targeting of the agreed-upon spending.

Source: https://en.wikipedia.org/wiki/American_ ... ct_of_2009

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Re: U.S. stocks continue to soar!

Post by Noobvestor » Fri Mar 27, 2020 4:33 pm

keyfort wrote:
Thu Mar 26, 2020 3:01 pm
EMH, like most economics, is a soft science, isn't it? We're dealing with people's emotions and behavior, not the gravitational constant which doesn't vary anywhere in the universe. EMH doesn't exist anywhere else in the universe nevermind not vary anywhere else in the universe. Sorry for stating the obvious but I find it irksome that EMH and other hypotheses are talked about as if they were derived from first principles. Maybe the market has priced in something, maybe it hasn't, maybe people don't understand what they've been told, maybe they've been told a lie, maybe there was a mistake etc etc, maybe investors are irrational etc etc.

But I do agree that this is pretty much never actionable in a good way, so it's probably better for me to buy and hold as I sure can't figure it out!
There are many forms of EMH. I don't think many believe that the market perfectly prices anything, or that it is necessarily 'right.' The problem is: can you use your own individual knowledge to outsmart the market consensus? I think you got it right at the end (in bold). I know I can't! :beer
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Re: U.S. stocks continue to soar!

Post by J G Bankerton » Fri Mar 27, 2020 5:04 pm

keelerjr12 wrote:
Fri Mar 27, 2020 3:38 pm
I will never buy into the fact that the market is completely random. And, therefore, cannot be predicted to some degree. Why is that? Let's assume we have 2 stocks: A & B.
Which one is going to be pooped on by a black swan?
Noobvestor wrote:
Fri Mar 27, 2020 4:33 pm
There are many forms of EMH. I don't think many believe that the market perfectly prices anything, or that it is necessarily 'right.' The problem is: can you use your own individual knowledge to outsmart the market consensus? I think you got it right at the end (in bold). I know I can't! :beer
Many carnival barkers make a living selling market timing snake oil. It always was and always will be.

I know, with 100% certainty, I will match the market minus three basis points. :greedy

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Re: U.S. stocks continue to soar!

Post by Bluce » Fri Mar 27, 2020 5:17 pm

keelerjr12 wrote:
Fri Mar 27, 2020 3:38 pm
If you're calling the market a random walk, then these study's algorithms and their probability are far superior to your premise.
IMO, you're making way, way too much out of this. Over-analyzing. "Lost in the weeds," or whatever the latest catch-phrase is. :oops:

Just take my simple statement from my previous post, brackets added for clarity: "I see the stock market [prices] as being driven by millions of people making millions of self-interested decisions every moment."

Do you disagree with it? :confused
"There are no new ideas, only forgotten ones." -- Amity Shlaes

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