As I said over a month ago, SA is the puppet master and Russia less so because they can't play SA's game for a decade or more. USA shale is the puppet and we will continue to dance based on what the puppet master decides.
This is the way it has always been and it is the way it will always be. Nothing else matters.
At least for the foreseeable future it seems that way.. Two countries that are effective dictatorships that are playing the waiting game. The oil market is off on its own planet right now ; it's a circus sideshow with no significant bearing on the overall market IMHO. The biggest risk seems its debt in the junk bond credit markets, and some of the smaller regional banks. I'm not sure how significant the exposure is with the bigger institutional banks.
I think the big banks are in more than you would think. Private equity is heavy into this play and private equity borrows from banks, they are for sure on the hook for things more than many know. In addition, big oil is in the area so if things go bad it will impact things for stakes these oil companies have in the patch and banks have borrowed to big oil.
It matters more than we are considering but I think the market discounts everything so the odds they feel on a ripple impact are low...so they think.
Rush. This market move today is totally illogical. I would understand this move if J&J or some other biotech firm had announced that a vaccine would be ready by October or November, but that simply isn't the case. I used today's move to increase my cash positions to near 20%. When this all hit I was at 100% invested, so I am taking a 20% hit on that 20% of my portfolio. I can live with that.
I saw the Bank of America report yesterday that their analysis predicted that the bottoms are in. Again, without the E component, they are blowing a huge smoke screen that is apparently working.
I see no reason for this move today. The lies coming from China are best ignored. Italy peaked so yes that's good. However, imo the markets are not accounting for the rock skipping across the pond. The second and third waves are inevitable without a vaccine.
I have said in several posts in these various threads that absent of the COVID-19 crisis, that the markets would still be in a 20% bear market. The markets were ripe for a popping of the balloon. Oil would have been enough on its own.
Wow. 20% not that bad. But if you were comfortable before with 100% I guess that is okay. Without knowing details like age, years from retiring, plenty saved already for rainy day, expecting something major in life soon, etc. — no way could I recommend taking a hit right now. Depends on a lot of personal factors — like too much stress (which is understandable!) this is the wrong time to do that in my opinion.
I had another guy ask today if he should lower 401k or take to stable fund. I told him of course not. People always do this when these tough times come. It was not even all that unexpected. Something was bound to turn market down for a time. Maybe this coronavirus does it more than it should — I don’t think it does at all. But aside from normal market pressures, the coronavirus scare has moved the market. So, not at all unexpected move today. A lot of daytraders saw this coming middle of last week. So they go down with it late last week and play it to go up today, of course. But as far as longterm — the market sees signs of the coronavirus tapering off and even not meeting the hysterical levels so many were predicting. That part of the market reacted.
The question is how the economy recovers from all of this later in the year.
But you cannot try to time the market — it is so, so dicey.
For example, I tell the guy today to look at his return and growth last 10 years. If the market is up 190% the last 10 years — then, the market goes down 28% — I would take that every 10 years no problem. This does not take into dividends reinvested or employer matching, if you have it.
You are not supposed to try to time the market, but you are supposed to try and buy low and sell high. I knew people that got devastated in the last 3-4 of these markets I have seen like this. Worked way longer than they should have, etc.
In my opinion this is a buyer’s market, not a seller’s market. Even if it continues to go down more — that to me is an even better opportunity to invest.
I understand people worry and even try to claim they are at least going to lock in some profit. But then what? Put it back in when market finally goes back up?
if 20% is your number good for you. I would not worry though. 
Unless you plan to take that money and buy up some potential real estate that may get affected very soon! 
Raiders. Thanks for the point of view. I personally have always been very aggressive with my portfolio and have always been 100% invested. I retired last year at the age of 55 and should not have been so irresponsible to have virtually zero cash. I have basically been living on the dividends and capitol gains but 100% in the markets isn't logical for me in this uncertain environment. I'm willing to take the hit to my dividends and CG's to in an attempt to come into the market at a lower price than the close today.
The way I figure it, if I had not been in the market at 100%, I never would have experienced the 30% gains from 2019 on 20% of my portfolio. Selling to raise the 20% cash gives back that profit, but positions my portfolio more traditionally.
All of that said, I'm still 80% in and in it for the long haul. My bets are on the USA and our markets thriving into the future.
That's a very interesting point on the big bank exposure.... Thanks, Wall.
I'm totally with you Gamble. Trying to understand the daily movements of the stock market makes no sense. We are going to have so many fits and starts in this market until a vaccine becomes available. I sure hope the Trump Administration has a Team that is doing the smart thing, and looking out 3-6 months, for the inevitable flare up of cases (or a second wave). We better be prepared this time with Testing Kits AND Treatments that are effective in helping those that come down with the Chinese Virus.
And good for you Gamble in raising the 20% cash position. This doesn't get talked about much, if at all, but the right amount to be invested in stocks for a person (in addition to all the typical variables a financial advisor would consider) is the one that allows you to sleep well at night.
It sounds so counter intuitive, but most folks would be better off not looking at their 401k in times of turmoil. As long as they were properly diversified before the crisis, what's changed in their life events and why tinker with the portfolio, now ? I get it . People are emotional .. They would be better off however Re-balancing at fixed 6-month intervals, and taking advantage of what the market gives you, which means buying more stocks and selling bonds at today's prices.
Good deal!
Let it run as far as it can run. I don't trust it either but the higher it goes the bigger the cushion for the fall. Having survived the tech bubble, 9/11, and the financial crisis we both know that it "feels" like much more pain should be coming. If the bottom is indeed in, I would be highly suspicious of our markets in the years moving forward.
I'm not so sure Gamble.. As soon as you pointed this out, I went to look at a select few oil companies, and even those E&P companies sitting in the cross hairs of shale are holding up OK today, as well as oil services. FANG +2.5%, HAL 1.39% , DVN +1.5%, RIG +6.25%, XOM +2.5%, CVX +2%.
This tells me this is a risk-on day in oil, with those with the most challenged balance sheets outperforming the bigger integrated companies. Oil is down almost -7% as I write this. What a strange time when the oil companies have become untethered from the price of oil... at least today and in recent days. They are actually outperforming the overall market today, too. Irrational Exuberance in today's market ??
Who the heck knows. I'm just glad I added to oil positions in only the big integrateds. Those will be the last ones standing.
I agree Mugg, although I'm not complaining. As Rush said, figuring out these markets on a day to day basis is impossible to predict. I think investors are getting comfortable with the notion that the Fed will be on their side no matter what happens....that makes the markets not the worst place to hide.
The period where I believe things will get rough for the markets is during July earnings.
Yep, then we'll have a full quarter of contracted earnings, & even if the virus has been corralled by then there will still be lots of fallout.......unemployment along with failed loans for houses, cars, etc. I wish I would've sold my house last summer when I was thinking about it. I'd be in great shape to move where I want to come this fall/winter.
Yeah the FED is really only interested in propping the markets and keeping the banks from falling into the abyss because if that happens then the whole shebang falls apart.
Every day the markets discount any bad news and are enthusiastic about any questionable or possible good news. Its the sign of excess and that the only way the market makes money for traders is going up. So unless there is an alternative or a shock the market seems to go up in general with down shocks happening very quickly and not for any duration.
The FED and Trump took away the alternatives by evaporating the bond market so there is nothing else that makes sense for the average to middle sized investors. Banks on the other hand and private equity/funds can leverage the hell out of the bond market and make money because as we constantly see the banks borrow from the FED at near zero, front run the FED using massive leverage to buy government bonds and then sell them back to the FED for a mark up and instant profit. Banks also gouge customers with astounding credit card rates and mortgage rates, student loan rates using all this cheap almost free leverage to amplify profits.
Well put, Wall.. I think your words I put in bold above sum up to a "T" what's taken place since the financial crisis ... The Fed has kept rates low (or near zero) ever since the financial crisis. When a crisis does come, it becomes so severe that the Fed must come in to save the system. I wonder how much of the general public really fully understands how big a problem it is when the Fed must come in to save the bond market AND the stock market (yet again... this is 2 crises in 12 years !!). Without their intervention , the system is at risk of falling apart. I haven't heard the term mentioned in awhile, but it is appropriate. TINA... as in, There Is No Alternative (to stocks).
We keep hearing all these people trying to define the "shape" of the recovery... As in , an "L" shaped recovery, a "U", a "V" shaped. I heard another interesting one the other day. How about a "square root" recovery . Lol. It indicates that a market will hit bottom (as it did in March), and recover around half of its losses, then trend sideways. No one know where markets go from here in a day to day basis, but it is worth pointing out that we have made up just about 1/2 of our losses from the March bottom. On a near term basis (< 1 year), it's hard to consider the markets getting even close to the market highs, and IMHO, stand a much better chance of retesting the bottoms. There are just too many unknowns out there, with economic and health risks as you guys Gamble & Mugg have pointed out.
Another note on today's action. We do have to give thanks to Bernie for dropping out of the race. It's worth noting that the bank and oil stocks were some of the best performing sectors today. Coincidence ? LOL. Bernie can now go on his 2nd honeymoon with his wife to the Soviet Union.... err Russia.
An aside from the market...... I'm watching CNBC as I usually do early on the west coast, & just caught an interview with Bill Gates concerning the virus situation. I know people have their opinion about him based on his past & Microsoft, but man, listening to him compared to Trump, or really any of the politicians, was a breath of fresh air........no politics, no ego, no pontificating, just very intelligent conversation about how the world can try to overcome this pandemic.
Yeah, Gates has poured an immense amount of time into world health ever since he stepped away from CEO of Microsoft. I just noted a couple of months ago he completely stepped away from the company, and is no longer a member of the board (though he still owns a tremendous amount of shares, I believe). This moment in time would seem to call for a "Manhattan Project" type of response from the world community. Would be nice if Gates or Trump, or someone in a leadership role, would advocate for the med/bio tech companies to work together to find a vaccine.
Back to our markets, today is yet another solid up day....so far. It's truly gone coo coo for cocoa puffs. But we'll take it while we can !!
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