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  #61  
Old 02-28-2020, 06:20 AM
ColdNoMore ColdNoMore is offline
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Originally Posted by JimJohnson View Post
If this wakes voters to reality, then I consider it god sent.

  #62  
Old 02-28-2020, 06:32 AM
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Originally Posted by JimJohnson View Post
If this wakes voters to reality, then I consider it god sent.
The reality of the support brings to mind your namesake - Robert Johnson and his investment at the crossroads.
  #63  
Old 02-28-2020, 07:02 AM
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Originally Posted by Chi-Town View Post
Curious as to what principal preservation you are employing during this freefall.
I still have a 401K. 401Ks frequently have a product (under some various names) that's known as a "stable value" fund. It's a principal protection fund - a bond fund that's wrapped by insurance. The insurance companies are on the hook to cover any losses. IRAs don't have stable value funds. Different investment companies might have their own marketing name for them, but stable value is the generic term you can usually find in a 401K.

Stable Value Fund Defined

My IRAs have been very conservative, but even conservative investments are still losing money now. I'm about half-cash now in my IRAs but may have to bite the bullet and go all cash and take the losses. I just don't see any sustained upside to the markets in the near future.
  #64  
Old 02-28-2020, 08:16 AM
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A good piece to read.........................

A capital market framework

Capital markets continue to react to virus-related developments around the globe, including new cases in Britain and Switzerland, tightening borders across the Middle East, and the first case in the U.S. with an unknown origin. The World Health Organization (WHO) highlighted today that the coronavirus is at a “decisive point” and could shift from an epidemic to a pandemic. In addition to virus headlines, continued speculation about the upcoming Presidential election and U.K./European trade negotiations have left investors with open questions; their response has been to sell riskier asset classes and buy historically safer assets. In the process, domestic government interest rates, which move inversely to prices, have reached historic lows based on 10-year Treasury note yields. Global stocks, which reached all-time highs two weeks ago, have shed over 8 percent, with some regions and indices experiencing double-digit declines.


So when will this stop? No one can say definitively, of course, but we do want to provide you with a framework to help process the news surrounding this development. While every news event carries its own unique properties, significant news events with uncertain outcomes and implications tend to follow a three-stage capital market absorption process: a reactionary stage, a liquidity stage, and finally a fundamental stage. These stages can interact with one another, but a framework can help contextualize market movements beyond what appears in headlines.


Stage 1: The Reactionary Stage. Once a news story emerges, some investors act quickly, either buying or selling without engaging in deep analysis. Their time horizon, investment style, or patience level may be short, and their reaction time follows. An example would be a trader who buys or sells a stock immediately following a company earnings report release; they see the headlines emerge and they enter their order. They do not wait for the company conference call explaining their results or the slew of Wall Street generated reports in the days that follow said release. With the advent of algorithmic and program trading, where more investors rely on formula and rules-based momentum strategies, the reactionary stage in events like the coronavirus can be drawn out. Unlike a company earnings release and the following conference call for investors, the coronavirus has extended news and developments, including new cases in previously unaffected countries, as well as updates from already affected countries. Additionally, there are business effects, with many companies issuing updated guidance for sales or earnings based on the coronavirus, so capital markets have plenty of new information to incorporate.


Stage 2: The Liquidity Stage. This stage is distinct from the reactionary stage in that certain investors are forced to sell assets. For example, some investors purchase or sell securities on margin (a specific loan to purchase securities) and margin lenders have strict rules about when a margin borrower must either exit their position or post more collateral (typically additional cash or securities deposits). If the investor has no more collateral to post, they are forced to exit their positions. The same is true for certain types of professional investors. At certain investment firms, if prices move against an existing position and price movements breach a risk limit, a portfolio manager is forced to liquidate that position. In an environment like this, where volatile prices may trip margin and risk boundaries, selling can beget more selling. Eventually, markets clear and the selling cascades, but prices tend to drive the investment decisions.


Stage 3: The Fundamental Stage. This stage is shaped by investors who wait to make investment decisions based on the longer-term implications of a given event. Those investors will sacrifice speed for analysis; they pay attention to price, but typically price will not drive their buy or sell decisions unless extreme levels emerge. These investors’ views may be shaped by ongoing event updates, but more fundamentally-driven investors tend to make buy or sell decisions after the proverbial dust settles.
Brexit in 2016 is an illustrative example. While the eventual “No” vote does not completely parallel a viral infection, investor reactions followed the three-stage sequencing. The vote results came late in the British evening, and immediately U.S. equity market futures sold off. Within a day, U.K. stocks fell 13 percent, the British pound fell to a 31-year low versus the dollar, and oil dropped 5 percent. The reactionary phase eventually drove the liquidity phase, and once investors anticipated a more limited impact than prices suggested, fundamentals prevailed.




We are believers in the adage that mental capital trumps financial capital. Market volatility can drive investors to take immediate action within their portfolio to improve their psychological well-being.
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  #65  
Old 02-28-2020, 09:03 AM
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Quote:
Originally Posted by Heyitsrick View Post
I still have a 401K. 401Ks frequently have a product (under some various names) that's known as a "stable value" fund. It's a principal protection fund - a bond fund that's wrapped by insurance. The insurance companies are on the hook to cover any losses. IRAs don't have stable value funds. Different investment companies might have their own marketing name for them, but stable value is the generic term you can usually find in a 401K.

Stable Value Fund Defined

My IRAs have been very conservative, but even conservative investments are still losing money now. I'm about half-cash now in my IRAs but may have to bite the bullet and go all cash and take the losses. I just don't see any sustained upside to the markets in the near future.
very conservative, but even conservative investments are still losing money now. I'm about half-cash now in my IRAs but may have to bite the bullet and go all cash and take the losses. I just don't see any sustained upside to the markets in the near future.[/QUOTE]

My Fidelity 401k had a stable value fund which had the cash portion of my portfolio there. When I moved to a Morgan Stanley IRA after retiring that option was non existent. So that portion went into Cash Reserves in a Fidelity IRA along with the Freedom 2010 Fund.

Morgan Stanley has me scheduled for a 3/5 Coronavirus conference call.
  #66  
Old 02-28-2020, 09:58 AM
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We are now back to January 5, 2018 when the Dow first hit 25,000. Two years gone in a few days.
  #67  
Old 02-28-2020, 10:14 AM
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I sold everything yesterday morning and am glad I did. I've "road out" a couple of these and lost lots of money. Not taking the chance this time. Seems like a lot of panic and fear and real concerns about supply chain disruptions etc. Yikes.
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  #68  
Old 02-28-2020, 10:50 AM
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Quote:
Originally Posted by CoachKandSportsguy View Post
As a part time trader since 1981, and having run some predictive analysis on market behavior on the last 20 years of daily data, this move has several components to it:
  • Unquantifiable and potentially large effects on the economy
    potential bankruptcies from prolong supply disruptions
    high debt levels in the corporate world.
    slowing international trade and economies prior to the virus
    Rate cuts won't help much

Trading wise
from the beginning of February,
I am long $GLD gold
I am long PUTS on the $SPY Aug 300 strike
I am long PUTS on TSLA Jan 21 $210 strike on the bankruptcy of that ponzi scheme
Long small assortment of high dividend equities, and bonds.


So, normal overbought oversold indicators are going to be less useful
The closet resemblance to this non monetary / banking crises is the 9/11 incident.
After 9/11 when the market opened on Monday, the market dropped 10% intraday,
and then rallied to close down about 5%, Tuesday was flat and the rest of the week was red. 5 day reaction and the next Monday the market reversed and continued higher

With that and the weekend news cycle, my expected market scenario is that the market may have another significant down day due to some trading houses giving margin calls and changing margin requirements, and freezing some traders. predict another 3-5% down, again it is a prediction and the future is always uncertain.

Given any significant bad news over the week, Monday could be a Black Monday crash, which happens at very oversold levels where bids disappear. A no bid market with an oversold market, which is when there are no buyers left to buy, falls dramatically. Another 5% or so gets the market close to a 20% correction, which is a bounce location worthy of a 25% portfolio position in $SPY. The predictive part comes in if Monday is a big down day, then Tuesday has a high probability of a bounce lasting the rest of the week only. (that predictive is related to option expiry cycles)

If he market gets to 30% down from high, its worthy of a 50% market position. At 50% down, its worthy of adding another 25% increase in market exposure at 75%, I am all in.

Given I own gold, and have sold most stocks a long time ago for valuation and earnings growth and market breadth issues, I have plenty of cash waiting, and one very interesting point in history:

The roaring 20's followed the 1918 Spanish flu, in combination with the technology advancement of electrification, so remember to sell high, you must not be afraid of paying taxes, and to buy low, you must not be afraid of further downside, but the future is always uncertain, sometimes more so than other times.

sportsguy
Great post, we think alike.
  #69  
Old 02-28-2020, 04:11 PM
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The Fed just caught the falling knife...Be careful Monday.
  #70  
Old 02-28-2020, 04:27 PM
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The Fed just caught the falling knife...Be careful Monday.
Given how low interest rates already are and our nations out of control debt, there is not much that the Fed can do to bail out a bear market. They are going to war with a pea shooter instead of a gun.
  #71  
Old 02-28-2020, 04:40 PM
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Given how low interest rates already are and our nations out of control debt, there is not much that the Fed can do to bail out a bear market. They are going to war with a pea shooter instead of a gun.
All the Fed can do is put a floor under the equity markets thru Yak-Yak and their trading desk. The USA debt is manageable compared to others...China, EU, Japan are a complete debt joke. The USA is the best horse in the glue factory

The Banksters won't let TSLA fail. (What? You don't think Ruthless, Depraved, Thieving, Psychopaths virtue signal once in a while?)

Last edited by MorTech; 02-28-2020 at 04:51 PM.
  #72  
Old 02-28-2020, 05:02 PM
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Given how low interest rates already are and our nations out of control debt, there is not much that the Fed can do to bail out a bear market. They are going to war with a pea shooter instead of a gun.
YEP...you're absolutely correct.


And it's not just The Fed that is out of ammo...to kill a bear.

  #73  
Old 02-29-2020, 07:59 AM
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Somebody made lots of money the past few weeks.
  #74  
Old 02-29-2020, 08:55 AM
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Somebody made lots of money the past few weeks.
Quite true. Remember the market is essentially a zero sum game. For every dollar lost, one is made
  #75  
Old 02-29-2020, 07:52 PM
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This downside has little to do with reality. We have the strongest economy in the world, banks are the
Healthiest-they have ever been, consumer is flush and relatively unleaveraged, real estate strong
, gold selling off, so generally speaking we are in great shape for a V shape recovery. Just a matter of when.

Panic will get you nowhere.

US Flu Cases Increased by 4 Million Over the Last Week
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