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  • Originally posted by burritos View Post
    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...
    The market needs to maximize FOMO before making its final plunge

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    • Originally posted by Perry Ict View Post
      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?
      I think I will still have FOMO but it will be bearable at 100%. On the AA, I like listening to opinions here. In real life, I see mainly real estate investors. I think the AA is very divergent between the 2 groups.

      If you ask someone who is invested in stocks then an 80-20 portfolio would be sensible. Currently my allocation is : 90% real estate, 10% stocks (entirely international index funds). The stocks are in my retirement portfolio which is about 15% of my NW. My retirement account is 70% stocks, 30% real estate.

      I don’t have any leverage on the taxable real estate investments. This is considered insanely conservative by real estate investors. Probably I would run at 2M-4M debt if I found good investments to invest in. I had that for about 10 years before, so I am comfortable with that. The AA range for risk assets that I would like to run at nowadays is 90% to 140%.

      Currently I am 100% which is on the conservative end of my range. I haven’t been below 90% at any time since I started investing in 1999. This is considered too high for stock investors and too low for real estate investors who seem to like to run at 200% or at least 50% LVR’s.

      Comment


      • Originally posted by burritos View Post
        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...
        why does the economy have to go down again before going back up? what if the fed and govt buys up stocks to prop up the market and gives money to people to stimulate spending even if no one has a job? apparently stonks only go up

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        • Originally posted by Nysoz View Post

          why does the economy have to go down again before going back up? what if the fed and govt buys up stocks to prop up the market and gives money to people to stimulate spending even if no one has a job? apparently stonks only go up
          It doesnt, it only needs not bounce back as quickly as thought, which frankly has aready happened. There is indeed a second hit risk for the economy in fall/winter flu/covid season ofc.

          Next step is for everyone to realize earnings arent going to come close quick enough to justify nutty multiples. As long as stimulus keeps coming out and the fed is resolute though it will backstop things...for a while. I dont think we'll totally get out of the woods. If we do it will be a whole new market paradigm, which is possible ofc, just not most likely.

          I was saying similar in feb, that I'll bet against people not panicking and looking through to brighter times 11/10 since you know, theyve never done it before. We have a ton of money on the other side which is new, but if it gets rough again its nearly a certainty.

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          • Originally posted by Nysoz View Post

            why does the economy have to go down again before going back up? what if the fed and govt buys up stocks to prop up the market and gives money to people to stimulate spending even if no one has a job? apparently stonks only go up
            The unemployment rate is at depression level. That doesn’t mean we are going to have a depression and it doesn’t mean we won’t recover relatively quicker, but it is a metric hard to dismiss. But I could be a naysayer.

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            • 5 stocks holding up a majority of the market growth... what could go wrong?

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              • ^
                From what I know, that has served as an ominous sign in previous bear markets. Either the rest of the market catches up to the leaders or the leaders catch up (down) with the rest of the market.

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                • Originally posted by burritos View Post
                  The unemployment rate is at depression level. That doesn’t mean we are going to have a depression and it doesn’t mean we won’t recover relatively quicker, but it is a metric hard to dismiss. But I could be a naysayer.
                  Indeed unemployment rate is hard to dismiss. The caveat is at least some of the unemployed are temporarily unemployed and will get their jobs back quickly once things start reopening. The caveats to that are: we do not know how many will get their jobs back, how quickly they will get their jobs back, and/or whether they will lose their jobs again due a surge in COVID-19 cases.

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                  • I tend to think this is a good news is bad news type of situation.

                    I just read a great tweet series by Alex Barrow on Twitter about Soros points about false narratives :

                    You want to be a trend follower when there's a lot of people saying "this move makes NO SENSE" and a contrarian when people are saying "this makes so much sense". This is why a bull climbs a wall of worry & a bear falls down the stairs of hope. Trends are driven by (dis)belief.

                    Soros other point about false narratives is that: you only want to be a contrarian once the tape stops confirming the consensus narrative.

                    Trends that "make no sense" = robust. Trends that become consensus = fragile. Soros distinguishes 2 phenomenon as high and low "distortion regimes".

                    High distortion regimes = when price & sentiment form a reflexive loop, which then creates a budding consensus.

                    This looks like a low distortion situation with significant diversity of opinion. I therefore assess it as lower risk than a high distortion situation.

                    Just my guess.
                    It would not surprise me to see the market grind higher. Maybe announcement of a vaccine would mark the peak. It’s hard to imagine it going full on bubble mode but anything is possible. The preconditions for a tech bubble maybe there (overaccomodative fed + other situational), whether there will be a fire, who knows. It would be interesting if there was.

                    I am positioned ok whatever happens.

                    Comment


                    • Originally posted by Zaphod View Post

                      It doesnt, it only needs not bounce back as quickly as thought, which frankly has aready happened. There is indeed a second hit risk for the economy in fall/winter flu/covid season ofc.

                      Next step is for everyone to realize earnings arent going to come close quick enough to justify nutty multiples. As long as stimulus keeps coming out and the fed is resolute though it will backstop things...for a while. I dont think we'll totally get out of the woods. If we do it will be a whole new market paradigm, which is possible ofc, just not most likely.

                      I was saying similar in feb, that I'll bet against people not panicking and looking through to brighter times 11/10 since you know, theyve never done it before. We have a ton of money on the other side which is new, but if it gets rough again its nearly a certainty.
                      The pattern I think of the past is that the Fed, by their interventions creates the conditions for a very one sided market which in itself is the condition for a large fall.

                      In this situation, anyone prudent or adjusting risk or holding cash, based on fundamentals will be punished. This reinforces/rewards the JBTFD strategy and those who are imprudent/slack with risk control. Which creates a situation where the bottom can and fall a long way.

                      I have thought about the best expression of playing the top. Due to the potential for Fed actions, I think this is not shorting stocks, as the risk is just too high. I think it is to go long bonds. Or even have a levered bond position. This benefits from a) risk aversion from investors b) moar fed stimulus. I’m not sure if the risk:reward is as favourable with rates being below a certain level.

                      And then of course, who knows where the top could be.

                      I guess also that nothing has to happen. I was looking back at why I missed the bottom in April. I was too anchored to the fed previously applying too little stimulus initially so basically assumed this would occur. I wasn’t paying attention. It took me about 2 weeks to realise that they had gone all in so early.

                      When you are anchored to a particular belief, you tend to filter out the data when it doesn’t cohere. I was anchored to the belief that it would have to be like previous recessions and the fed response would follow the 2008 playbook.

                      Comment


                      • You're right, the federal reserve intervened much more aggressively this time around. It seems to me that it's still open as to what kind of an effect that has. Will it just delay an inevitable second correction later this year? Or will it delay any significant market drops all the way to the start of the next business cycle, so that the market goes sideways for awhile until it is confirmed that the economy is back on its feet?

                        One thing I've read is that new business cycles / bull markets are usually marked by a rotation in leadership, or at least more breadth in the market, so value plays end up doing better in the beginning. It doesn't look to me like that has happened just yet, with qqq making fresh new highs while mid caps and more recently the majority of the s&p 500 struggling to get close to their previous highs from 2018 and 2020, respectively.

                        Comment


                        • Originally posted by Perry Ict View Post
                          You're right, the federal reserve intervened much more aggressively this time around. It seems to me that it's still open as to what kind of an effect that has. Will it just delay an inevitable second correction later this year? Or will it delay any significant market drops all the way to the start of the next business cycle, so that the market goes sideways for awhile until it is confirmed that the economy is back on its feet?

                          One thing I've read is that new business cycles / bull markets are usually marked by a rotation in leadership, or at least more breadth in the market, so value plays end up doing better in the beginning. It doesn't look to me like that has happened just yet, with qqq making fresh new highs while mid caps and more recently the majority of the s&p 500 struggling to get close to their previous highs from 2018 and 2020, respectively.
                          What this reminds me of is 1997 with the Asian financial crisis and LTCM. The fed eased, and stayed easy for too long due to fears of systemic risk issues.

                          Tech stocks then went parabolic over a period of 16 months.

                          After 1997, EM and resources rebounded strongly but then got whacked back to near or slightly below the 1997 low in 2000. I think by then resource bulls gave up hope. After 2000, resources did very well.

                          Tech fell apart from late 99.

                          I’d guess there might be 5-16 months of juice in this rally.

                          I don’t think I am nimble enough to be able to play the tech move, whatever it is. I have a position in EM/resources and will consider adding to it at the next downturn.

                          The economy then went into a recession in 2001-2 and a corresponding bear market. From my recollection, the Federales did not do as many heroics in 2001-2, possibly due to the criticism about them stoking the internet bubble in 1998-9.

                          Thats my recollection. If anyone has different recollections of the 90’s please add.

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                          • Originally posted by Dont_know_mind View Post
                            Thats my recollection. If anyone has different recollections of the 90’s please add.
                            I just remember wanting to watch Saved by the Bell.

                            Comment


                            • Originally posted by CordMcNally View Post

                              I just remember wanting to watch Saved by the Bell.
                              I'm so excited, I'm so excited, I'm so.... scared

                              Comment


                              • Even though I would hate to bet against the Fed, I think at least a 10-15% drop or so is inevitable in the next few weeks. There's just too much poop hitting the fan right now for it not to.

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