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  • The market is overheated on limited and incomplete data. Trading up 4% on Gilead is crazy. Even if we get the economy back to 70% normal, it would still be a huge recession.

    Now, whether you should change your asset allocation or do anything different with your investments at all is a different point entirely (The WCI answer is obviously no).

    Comment


    • 70%? Employment is currently at 90%+. The first Q2 GDP forecasts come out tomorrow but they're probably going to be in the -10-15% range. So we're already at 85%+ on the economy.

      70% is not where we are, and markets are betting (have been betting since March 23) that we won't get to 70%, and that's why markets have already recovered 2/3 of their initial 35% losses.

      Markets are always wildly guessing at the future, by the time the data comes in to confirm their guesses, the market recovery (or crash) is well underway. If you wait for hard data to invest you will always be late. This is why market timing generally has a terrible track record.

      Comment


      • You're referring to lagging indicators. I'm referring to leading indicators. You need to understand the difference. That's how I predicted this recession and impact on the markets - treasury inversion and historical charts. It was so obvious, that's why I called it well in advance here.

        Employment can't be 90%+ when you add 27 million newly unemployed (in 5 weeks) to the baseline 3.5%...and counting. There are about 205M working age people in the US. 205M x 3.5% = 7M plus 27M = 34M/205M = 16.6% (real rate) already unemployed. Headline rate is lower because it excludes those that have given up looking for work.

        In addition to unemployment, how many are forced to work part time at this time due to the collapse in demand?

        Comment


        • “Headline rate is lower because it excludes those that have given up looking for work.”
          True statement. It does not apply in the current situation. That is a “fatigue “ phenomena. Benefits runout out and stop looking for work. The data actually exists. I’ll let you go find it.
          The investing method you describe is yield inversion and technical analysis. Specifically which charts and the chart analysis levels that you use. Not the novel, what chart software.
          Those charts and your system are critical . Thank you.

          Comment


          • Originally posted by FIREshrink View Post
            70%? Employment is currently at 90%+. The first Q2 GDP forecasts come out tomorrow but they're probably going to be in the -10-15% range. So we're already at 85%+ on the economy.

            70% is not where we are, and markets are betting (have been betting since March 23) that we won't get to 70%, and that's why markets have already recovered 2/3 of their initial 35% losses.

            Markets are always wildly guessing at the future, by the time the data comes in to confirm their guesses, the market recovery (or crash) is well underway. If you wait for hard data to invest you will always be late. This is why market timing generally has a terrible track record.
            Are you looking at this same data? This is quite obvious, point blank recession territory: https://www.wsj.com/articles/first-q...us-11588123665

            The S&P closed at 2939. It coincidentally was almost exactly the same a year ago in 04/2019. Is the economy anywhere near where it was then? Can we accurately price in that we'll get there soon?

            I should close by saying that I am NOT advocating for market timing, which we can agree has no track record of success. I'm saying the markets are way too hot on incomplete anti-viral data.

            Comment


            • A recession is two quarters of contraction. So what? Markets presaged that with a 35% decline last month. Now they're looking past the dip and predicting a solid rebound. They may be wrong, may be terribly optimistic, but unless you're narcissistic enough to believe you can predict the future, and better than thousands of institutional investors, hedge fund managers, endowments, quants, computer algorithms, fed economists, and so on, then what the heck do you (or I) know? Markets had one of their ten worst declines of all times last month - did you notice?

              I'm putting aside the insane moral hazard question of the Fed repeatedly - 5 times in the last thirty-three years? - bailing out the economy while corporations and investors are largely made whole. Privatize the gains, socialize the losses. No wonder stock market valuations are so high, investors believe the Fed will never let them down. The stock market has become a game of musical chairs. Running the world's reserve currency has its privileges. Someday the music will stop. The dollar will tank, and Fed assets will devalue. Then no more Fed to the rescue, no more deficit spending, no more stock market or corporate bailouts, no more 2.5% government backed mortgages. That's game over for the American economy (every hegemony has its expiration date). Don't know if that happens in my lifetime or not. But there is no such thing as a free lunch. You cannot print trillions of dollars in paper money and just hand it out forever without serious consequences. Chickens always come home to roost.

              ​​​​​​Given that I am not psychic, I'm happy to own globally diversified businesses and debt, as well as real assets (real estate). What else can a person do?

              Comment


              • Originally posted by Tim View Post
                “Headline rate is lower because it excludes those that have given up looking for work.”
                True statement. It does not apply in the current situation. That is a “fatigue “ phenomena. Benefits runout out and stop looking for work. The data actually exists. I’ll let you go find it.
                The investing method you describe is yield inversion and technical analysis. Specifically which charts and the chart analysis levels that you use. Not the novel, what chart software.
                Those charts and your system are critical . Thank you.
                How about this chart for starters. This goes back to 1982 and ends just before this recession started. Only fools and inexperienced (again) thought that this time it would be different. Yes, I obviously predicted this recession last year. It was very easy. Every single time the inversion occurred look what happened. I don't get it when the data slaps people in the face and they don't see it. Come on people, develop some skill rather than repeatedly insisting it's impossible to predict to justify repeatedly buying at market tops from which those funds can take years to recover. Impossible to predict is a comment from an uniformed investor, making for a bad investor. What do you think all these data points are there for? The wealthy are Goldman Sachs active investors. The masses are Vanguard index investors. Bogle talking points keep you from enlightenment and tied in your group, an invisible fence. That's why the rich (among other things) keep getting richer. Having seen the recession coming, I've recently generated 7 figures in tenant lease with recently accumulate RE while the market is still well below it's highs while investing in the business to record revenues. Those desperate for market returns lose their objectivity regarding market returns.



                I was asked last year which sectors would outperform moving forward. How difficult is it to research which companies have higher growth rates, cash reserves a favorable product pipeline, etc? I responded semiconductors, biotech, healthcare, etc. and not energy and banking. Easy peasy. You really couldn't tell XOM and BAC were going to underperform AMZN and NVDA? Slapped us in the face, did you see it? That's why I called it.

                Comment


                • Fail: Not the narrative or charts you browse now.
                  There seems to be a assertion that economic indicators are used, leading indicators at that. Academically, these have been studied by economists (professional ones), financial academics (private and public), the various Fed locations. Peer reviewed and proprietary.
                  The oldest one is LEI.
                  Just wanted a list of your indicators. Compare them to other serious models. One invalid technique is to add and drop indicators. So .....
                  just curious for the list of indicators. No interpretation needed.
                  Just the factors in the business cycle you rely on.

                  Leading indicators are data driven decisions.
                  Thanks in advance.

                  Comment


                  • Originally posted by EntrepreneurMD View Post
                    You're referring to lagging indicators. I'm referring to leading indicators. You need to understand the difference. That's how I predicted this recession and impact on the markets - treasury inversion and historical charts. It was so obvious, that's why I called it well in advance here.

                    Employment can't be 90%+ when you add 27 million newly unemployed (in 5 weeks) to the baseline 3.5%...and counting. There are about 205M working age people in the US. 205M x 3.5% = 7M plus 27M = 34M/205M = 16.6% (real rate) already unemployed. Headline rate is lower because it excludes those that have given up looking for work.

                    In addition to unemployment, how many are forced to work part time at this time due to the collapse in demand?
                    The unique part about this whole experience however which I think is worth pondering... Is of that 27 +million unemployed, How many of those unemployed folks are actually making more money being unemployed. Restaurant workers, retail workers, car wash, etc.. are pulling in close to $23 an hour in unemployement(with the extra $600). which in many states is $5-10 raise for those folks. Combine that with less expenses, car/gas/childcare, etc. (I think statically It looked like the non college degree type were the ones suffering the greatest unemployement).
                    Its practically a distribution of wealth at the moment, so theoretically some of those people will have more money to spend and can help "jump start the economy" when everything re-opens. Don't get me wrong, there are going to be plenty of winners and loser from the whole experience. Its kind of a guessing game IMO though to how many are truly financially ruined versus how long this goes on. (i.e I dont think unemployment rate is as good an indicator of the economy as it has been in the past).

                    Comment


                    • Originally posted by Jack_Sparrow View Post

                      The unique part about this whole experience however which I think is worth pondering... Is of that 27 +million unemployed, How many of those unemployed folks are actually making more money being unemployed. Restaurant workers, retail workers, car wash, etc.. are pulling in close to $23 an hour in unemployement(with the extra $600). which in many states is $5-10 raise for those folks. Combine that with less expenses, car/gas/childcare, etc. (I think statically It looked like the non college degree type were the ones suffering the greatest unemployement).
                      Its practically a distribution of wealth at the moment, so theoretically some of those people will have more money to spend and can help "jump start the economy" when everything re-opens. Don't get me wrong, there are going to be plenty of winners and loser from the whole experience. Its kind of a guessing game IMO though to how many are truly financially ruined versus how long this goes on. (i.e I dont think unemployment rate is as good an indicator of the economy as it has been in the past).
                      I have heard from a few business owners/ managers that they are having a hard time getting some employees to come back. As you said making more with unemployment. One Manager of a resort was telling me that if they are getting push back they just move on to the next person. That first person might not have a job to come back too.

                      I think a lot of jobs are going to reappear but definitely not all of them. There are going to be some permanent reductions due to new forced efficiencies and contractions of businesses.


                      As for people with extra money due to the extra unemployment benefits I hope they are saving some for when it runs dry...

                      Comment


                      • my part of the world here in flyover country govs are saying once employees are asked back, unemployment benefits stop whether they elect to come back or not

                        Comment


                        • Originally posted by jacoavlu View Post
                          my part of the world here in flyover country govs are saying once employees are asked back, unemployment benefits stop whether they elect to come back or not
                          That makes sense to me but I wonder how much happens unofficially

                          Comment


                          • No doubt this is a wealth redistribution. Guaranteed by the graduated tax system.
                            The question is, whether lobbyists or politics allows special interests (business and personal) unfair advantages. Yes. Half of the country won’t care. They don’t pay much tax anyways.

                            Comment


                            • Originally posted by Tim View Post
                              Yes. Half of the country won’t care. They don’t pay much tax anyways.
                              Saying this worked out well for Mitt Romney...

                              I was sure a month ago that the market had nowhere to go but down. Since then unemployment is through the roof, the GDP is down (and by more than many estimates) and yet the market has only gone up. Just goes to show that market timing is a fruitless endeavor. I’m glad I learned the lesson with only about 10% of my investable assets sitting on the sideline after tax loss harvesting out of all of my viable fund choices.

                              Comment


                              • I caution against exiting the markets or avoiding further infusions unless significant leading indicators tell you to do so. That happened in 2019 and what I did to significant benefit.

                                The market can continue to go up, or can crash ?50%. You may not be so glad in that scenario. Concrete guidance is necessary to act accordingly.

                                By the way, it has not only gone up. Dow was at 29K in January. Perspective.
                                Last edited by EntrepreneurMD; 04-30-2020, 01:11 PM.

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