How low can we go?

[Tim]

“Price creates it’s own narrative”.
I think the media actors know it’s Kubuki theatre, the peanut gallery at the front also, but the newcomers think it’s a reality.

It’s interesting that 170,000 Robinhood “investors” decided to play Hertz. Hey, it’s only $2 . Surely it can head back to $20, it’s just a liquidity crunch.
https://www.ccn.com/170000-robinhood...-stock-spiral/
Easy solution? Issue $500m of new worthless stock?
https://techcrunch.com/2020/06/17/al...-in-new-stock/
https://www.google.com/search?q=hert...;client=safari
Quick and “easy” 800% gain if played right.
The “recovery story” makes it difficult to predict “zombie” companies individually or even in total.
Fast moving case study. $500m, Hertz could have raised.

[Zzyzx]

the opposite of a falling knife...
it's gambling

[xraygoggles]

The tech/cloud/biotech/remote companies are leading the rally since the crash, with no apparent end in sight.

It's been a fun ride, but who knows when the party ends.

[Kennyt7]

Jeremy Grantham predicting a financial bubble "THE REAL McCOY" and to get out of equities completely
Google him and listen to the CNBC video

[Dont_know_mind]

Jeremy Grantham predicting a financial bubble "THE REAL McCOY" and to get out of equities completely
Google him and listen to the CNBC video

I like George Soros’ quote: :
““When I see a bubble forming, I rush in to buy, adding fuel to the fire... That is not irrational.”

I stopped taking Grantham seriously in 2012. He is a self proclaimed bubble-ologist but completely missed the 2010-13 resources bubble and in fact kept saying for 2 years after the top that resources would keep rising as all manner of resources were depleting everywhere. I remember reading his multiple, very long story/analyses about how potash was going to run out. Here is a shorter piece:
https://thereformedbroker.com/wp-con...rEver_3Q11.pdf


He is a charismatic writer. Although he sounds rational, I find his writing pretty slim on actual analysis and very heavy on narrative.

That he kept being bullish on resources despite lower and lower prices and as the market cratered is pretty unforgivable from an analysis perspective. It’s hard to take anyone seriously who can’t admit they’re wrong until the bottom. That’s a pretty serious mistake and anyone who followed him on resources in 2012 would have been badly hurt.

I also find it hard to take his self-touted status as a bubble expert seriously. It’s like this guy I knew who kept touting himself as “you know I’m the only Phillipino Psychiatrist in The whole of X city”. And I thought, really? What about W,Y,Z and the other 10 people I can think of ???

I guess you have to look at peoples assertions.

Buffett I think has been able to call bubbles. They are pretty rare. I’m not sure if the current situation is a bubble, but maybe it will become one. Maybe it already is and I’m wrong.

[CordMcNally]

If Grantham were a baseball player he would be scouted as a 'high strikeout, swing and miss guy'.

[Zaphod]

I like George Soros’ quote: :
““When I see a bubble forming, I rush in to buy, adding fuel to the fire... That is not irrational.”

I stopped taking Grantham seriously in 2012. He is a self proclaimed bubble-ologist but completely missed the 2010-13 resources bubble and in fact kept saying for 2 years after the top that resources would keep rising as all manner of resources were depleting everywhere. I remember reading his multiple, very long story/analyses about how potash was going to run out. Here is a shorter piece:
https://thereformedbroker.com/wp-con...rEver_3Q11.pdf


He is a charismatic writer. Although he sounds rational, I find his writing pretty slim on actual analysis and very heavy on narrative.

That he kept being bullish on resources despite lower and lower prices and as the market cratered is pretty unforgivable from an analysis perspective. It’s hard to take anyone seriously who can’t admit they’re wrong until the bottom. That’s a pretty serious mistake and anyone who followed him on resources in 2012 would have been badly hurt.

I also find it hard to take his self-touted status as a bubble expert seriously. It’s like this guy I knew who kept touting himself as “you know I’m the only Phillipino Psychiatrist in The whole of X city”. And I thought, really? What about W,Y,Z and the other 10 people I can think of ???

I guess you have to look at peoples assertions.

Buffett I think has been able to call bubbles. They are pretty rare. I’m not sure if the current situation is a bubble, but maybe it will become one. Maybe it already is and I’m wrong.

Granthams probably right here but big deal literally everyone can see this, and has mentioned it. His major bubble is picking EM to outperform for the last couple decades "cuz PE, value" and just getting smoked. Hes in a market he doesnt get and cant change.

[Dont_know_mind]

Granthams probably right here but big deal literally everyone can see this, and has mentioned it. His major bubble is picking EM to outperform for the last couple decades "cuz PE, value" and just getting smoked. Hes in a market he doesnt get and cant change.

It could well be double topping out.
What I don’t like is the advice or insinuation in the Grantham article that it’s a bubble and so you should go all cash now.

What if it does go into full on bubble mode ?

I think his advice is potentially hazardous to newbies. If it is a bubble and they sell out here, and it continues to bubble, they could well buy at the top due to FOMO and then find themselves selling at the bottom, which is worse than just freaking out and selling at the bottom.

I like your cognitive flexibility Zaphod. Reminds me of a guy who used to blog called Polemic Paine.

[Tim]

Just to emphasize the “potentially hazardous to newbies”. What seems trendy and hip or touted in investment media, has danger below the surface.

https://www.forbes.com/sites/sergeiklebnikov/2020/06/17/20-year-old-robinhood-customer-dies-by-suicide-after-seeing-a-730000-negative-balance/

It is amazing so many Robinhood people (170k) bought stock in Hertz a bankrupt company. But I guess “free trades” really do some damage after all.
Not the internet or brokers fault. A lot of financial horsepower is available.

[Zaphod]

It could well be double topping out.
What I don’t like is the advice or insinuation in the Grantham article that it’s a bubble and so you should go all cash now.

What if it does go into full on bubble mode ?

I think his advice is potentially hazardous to newbies. If it is a bubble and they sell out here, and it continues to bubble, they could well buy at the top due to FOMO and then find themselves selling at the bottom, which is worse than just freaking out and selling at the bottom.

I like your cognitive flexibility Zaphod. Reminds me of a guy who used to blog called Polemic Paine.

Absolutely, bubbles can go on for a long time. Many many called the bubble in the late 90s and were correct, a whole bunch did actually in 97-98, it then went super insane and by the time it crashed years later (divs reinvesting) it was at those same levels...so not so great.

The only way you really gain is missing a drawdown or being diversified out of it with say bonds, and there is risk there as well.

[StateOfMyHead]

It could well be double topping out.
What I don’t like is the advice or insinuation in the Grantham article that it’s a bubble and so you should go all cash now.

What if it does go into full on bubble mode ?

I think his advice is potentially hazardous to newbies. If it is a bubble and they sell out here, and it continues to bubble, they could well buy at the top due to FOMO and then find themselves selling at the bottom, which is worse than just freaking out and selling at the bottom.

I like your cognitive flexibility Zaphod. Reminds me of a guy who used to blog called Polemic Paine.

If it is a bubble and newbies make a commitment to wait it out as some of us are already doing there needs to be discipline involved. Acting on FOMO rarely seems to be beneficial regardless of the activity.

[Tim]

“Acting on FOMO rarely seems to be beneficial regardless of the activity.”

Ah the days of the hostile corporate raiders.
Gulf at $33 bid $50. The key was to get to cash when the it was topped at $80. Bidding wars were exciting.

[Dont_know_mind]

If it is a bubble and newbies make a commitment to wait it out as some of us are already doing there needs to be discipline involved. Acting on FOMO rarely seems to be beneficial regardless of the activity.

Maybe bubble is too pejorative and we don’t know the outcome. All I know is that the largest hit I’ve had is from being run over in a crazy end stage real estate bull market. That nearly killed me and I ended up buying at the top. So I am absolutely paranoid about end of cycle euphoria.

I know I will be succumbing to every man and his dog telling how well they are doing and my wife telling me things are going to the moon and we’re missing out. So I am fully allocated here as I’m terrified about leaving anything to buy at the top.

If this is the top, I intend to apply leverage to buy some further down.

[Perry Ict]

Are you fully allocated, as in, all of your liquid net worth? A lot of "all-weather" portfolios advocate a baseline 25-50% allocation to the stock market (the remainder to some combination of bonds, precious metals, cash, depending on which portfolio you are looking at, and adjusting for your own preferences and risk tolerance). I know you aren't asking for advice and you seem to have thought this through, but what if you went 85-90% instead and just left 10%-15% cash for the drops, instead of living on the edge and applying leverage for the drops. Would you still catch "FOMO" with that 10-15% cash if there is a big market melt-up even as you are 90% invested?

[burritos]

Are these market surges annoying anyone else? Based on future prospects we know the economy is going down before it is going up again. So why can’t we blue collar docs get more positions on sale? Sorry just whining. 1st world problems...