How low can we go?

[EntrepreneurMD]

This article mirrors my sentiment now. The graph with the emotions mirrored my sentiment when and the reason I called a bear market recession last year.

https://finance.yahoo.com/news/suckers-stock-market-rally-122402728.html

[EntrepreneurMD]

[Tim]

https://www.whitecoatinvestor.com/forum/personal-finance-and-budgeting/131-cyai-it-s-back-afford-both-college-and-med-school-for-the-kids/page2u

Boy, for starting in June 2019 asking for advice about affording college for both kids (medical school, no less) . At one point, the building was rather new. Some debt on car and now it seems the 5 year plan has actually been accomplished in 9 months. All this by cherry picking high margin services with two employees and you have weathered the storm. At one point, the goal was to wait for a drop and pump a ton of cash back into the market.
Would you consider writing an autobiography with a timeline based upon all these accomplishments. Please include the car loans and the zero balance credit cards.
I hope your kids are well along in the college careers. They will probably cash flow med school based upon earnings from their business/medical skills.
Nice graphs. No need to educate with more narratives.
Just a good natured poke. I personally think you might be wasting time, as a "sponge", not much to be learned for you. Yes it is snarky, but seriously it isn't a personal attack. Just an observation, not one suggestion seems to have benefited you.

[DEE F]

My only current debt is essentially a fraction of what I paid for the building just 3 years ago, I already have the funds for payoff in the next 2-3 months when my 3% CD's mature. It's under $500K (13% of total project cost). Most debt was paid off pre-COVID as I did better than expected. Paying it off or not at this point is going to have very small impact as it is a relatively negligible percentage of net worth. Not really comfortable investing instead in any investment (market or other) in a recession that has just started. To everything there is a season. There will be plenty of safer times in the future to invest post existential threat. I need wealth preservation at this point not necessarily accepting risk for return. My gut feeling is that deleveraging is the thing for me to do in this environment, above looking for risk assets as a matter of personal choice potentially not the better financial choice if things go well.

Frankly it was a nearly $4M project payoff within 3 years. If everything stabilizes and we're looking at a new bull market I probably would have on problem raising the like in the next 3 years for the early years of a bull run. I may have had another $3M if I had not prepaid (for possible investment purpose), but going into the coming year or two with that much debt and a threat to the business is a hard pill for me to swallow. How low can we do - a heck of a lot lower. Will we is more the question and nobody knows AKA current uncertainty.

I've been all about short term low interest rate leverage, but I'm obsessively averse to any debt beyond 5 years, probably to my detriment...oh well.

You're clearly well versed. What are you doing? Paying down any existing debt? Do you stomach market injections now? Looking at alternative investments in low rate environment? Feel free to disagree. .

I am usually debt averse. I never really studied commercial real estate and I would like to study it before getting there. I do not trust all these RE syndications. I agree in your case, it was best to get rid of debt. it benefitted you and your employees. We refinanced our home that will further decrease our expenses. We decided to keep our mortgage since with all this money printing, it will be inflated away. We thought of pulling out some money just to have it from out home equity but decided against it. We opened line of credit just in case we will need it.
We just reviewed what we have currently. With all the money being injected into the system, it is very frustrating. I consider myself disciplined with investing. I feel like FED is changing the rules while you are playing it. Responsible and prudent investors are penalized. You know how some consider themselves value investors but they buy anything that is cheap, we are absolute value investors, look at number and determine whether businesses are sound. I do not expect anybody to agree with me because this is definitely not wci philosophy. Probably 1/2 or more of our portfolio are in cash or Tbills. We have more gold than equities. Our equities are still <10% though we added some positions last downturn that met the criteria. During the bull run, one company approached us if we wanted invest. it met criteria for company valuation and we went for it. we have not counted our gains on that yet but that looked promising. Another speculative investment is one that we said we will never do is put very tiny amount to BTC. Unlike many here, I do not feel comfortable losing money. I am a simple internist, who do not make a lot of money. So when people say how much they have lost, I keep thinking, that would have been my entire year salary already. As we go for another possible bull rally, we will just keep our discipline. this cannot go on forever right?

[FIREshrink]

The pessimists are ignoring about $6 trillion of new money that is now sloshing around the US financial system. That is worth a few points of PE, at least. Inflation is not a concern right now because of the immense demand destruction of the virus and our containment efforts. Will there be inflation in a year or five, who knows? 10 and 30 year treasuries aren’t worried about it all - rather they’re signaling serious worries about long term deflation. The bet is the Fed can suck the money back out of the system if inflation ever rears its head.

The absence of inflation has bewildered economists for at least 20 years. Why didn’t we get inflation after the Greenspan put in the Asian Financial Crisis of 98, the tech bubble of 00-02, the GFC of 07-09? All of those crises resulted in the Fed injecting large sums of money into the system; yet there was little inflation in goods or wages, instead the inflation went directly into asset prices. If anything we struggled with negative real rates recently, which is a signal the bond market continues to be worried about deflation, not inflation. Someday we may have an inflation problem but until that day is reached, no one is worried about it; hence $6 trillion is really about the closest thing there is to ‘free money.’

Some investors feel they are smarter than everyone else. A few of them actually are, but not many. In investing there is no such thing as a free lunch. You pay for return with either risk or insurance. I have rarely seen an exception. And sometimes risk shows up. So small and value stocks just met risk. Munis just met risk. EMs just met risk. I for one do not think the fed should bail everyone out but I am in the minority apparently. Sometimes risk takers have to take their medicine or risky assets get mispriced as if they are riskless. Big mistake in the long run (moral hazard) which may be where we're at these days following three decades of socialized losses. On the other hand this may be the lesson, even the correct lesson, the fed learned from the GD: liquidate capital, liquidate labor never ends well, moral hazard be damned. We simply won't let that happen again if we can help it. What new catastrophes we'll create with the current plan is hard to predict, but we're going to do everything we can to prevent deflation.

In the long run US equities are priced to return 3-4% real; international 7%. I can eat on that. I can retire on that. I can sleep with that. So no reason to do any ************************ thing at all with my liquid portfolio, which was and remains 2/3 stocks.

By the way... My real estate is no picnic. Will my tenants pay their rent? Will they have jobs? Will I be able to evict them? Would I want to? Haven't yet seen any municipality offer to cancel the property taxes I owe them, my insurance premium is not lower, my utility bills are unchanged. So RE whether residential or commercial is no picnic these days.

[JBME]

futures are way up. market doesn't make sense-the market is reacting to the fact that the future doesn't look as grim as we thought from a health standpoint, but from an economic standpoint it really does! I do regret not doing an in-plan roth conversion on April 1 or 2 because I was waiting for the DOW to fall below 20 again, and it hasn't. I could convert anyway now since we're still 18% off of highs, but I probably wont. This goes back and forth in my head all the time and it's exhausting. I don't like living with this regret and just trying to forget about it. There are many positive things that came out of this experience...kept investing the same way we did before the drop, and even did our Roth IRA and 529 contributions in mid March due to the drop, and that, in hindsight, was definitely the right move. But I didn't know about it at the time. I had wanted to in-plan roth convert about $10k. oh well I guess

[Dont_know_mind]

I thought this too but maybe it’s too
obvious.

The other side would be:
”With everyone posting this same chart and seeming to believe the big sell-off is coming I'm reminded of a Jesse Livermore quote that the market's job is to fool most of the people most of the time.”

IDK. All I know is that I don’t see much value in equities currently. Based on previous cycles, I am hopeless at picking tops in equities but I did pick the bottom of the GFC. Could have been random luck though.

As a value investor, equities don’t interest me here. Oil looks like good value to me though. I bought an oil producer ETF today. Hopefully WTI will go all the way back to $10.

[Tim]

“As a value investor, equities don’t interest me here. Oil looks like good value to me though. I bought an oil producer ETF today. Hopefully WTI will go all the way back to $10”

No pass on the math. If you wish comes true, some serious permanent damage will happen.
Let alone my property value.

https://www.houston.org/why-houston/industries/energy

Cold hearted VC! Geez.

[Dont_know_mind]

“As a value investor, equities don’t interest me here. Oil looks like good value to me though. I bought an oil producer ETF today. Hopefully WTI will go all the way back to $10”

No pass on the math. If you wish comes true, some serious permanent damage will happen.
Let alone my property value.

https://www.houston.org/why-houston/industries/energy

Cold hearted VC! Geez.

Tim, WTI is $18 currently.
There is an oil glut.
Unlike 2016, they may actually reach storage capacity.
$10-$15 may not last long (or maybe it will be longer than I think)

I think Houston will still be around at the end of it.

This is a microcosm of why the fed liquidity probably can’t solve all the problems. The fed buying Junk bond ETF’s puts the cart before the horse. A lot of the HY debt/ oil producers will go broke to get rid of excess capacity. There problem is not that their debt became too expensive but because demand cratered due to Coronavirus. They will still go to the wall with cheaper debt, but it will just take longer and make the excess oil production slightly greater than it otherwise would have been IMO.

[Dont_know_mind]

OPEC+ Production Cuts: Way Too Little, Way Too Late

https://seekingalpha.com/article/4337511

[Tim]

OPEC+ Production Cuts: Way Too Little, Way Too Late
https://seekingalpha.com/article/4337511

Oil cyclical is nothing new. It is definitely not a result of Covid-19 impact on the market. By that I mean it’s not a technical play. . It is being magnified simply from the demand reduction which has been huge..
Staying at these prices will shutdown virtually all domestic Deeper wells gave way to fracking. Same song, different verse. I sure would hate to see the US dependent on OPEC again. Same with the Chinese drug and manufacturing. Between medical and energy, Houston would be a ghost town.

[FIREshrink]

Yes oil is in collapse first and foremost because of the OPEC Russia tantrum. COVID hasn't helped but is not the cause. US producers are stuck between two big players who can each produce far cheaper than we can .

[EntrepreneurMD]

If I did commodities I'd prefer gold at this time over oil. High risk for bankruptcy wave in oil. Netflix now worth more than XOM.

By the way, Mark Cuban has gone to all cash. I know, I know. "You're not Mark Cuban." He did mention though he likes commodities and...real estate!

[Peds]

all i know is gas is <1.80 here.....and im still driving ~200mi/week.....cray.....

[Tim]

All I know is the surgery restrictions in Texas are off on 4/22/20. The large revenue stream roadblock is removed.
Translation: Next Wednesday is going to be fully booked in virtually every OR.
Of course the county judges and mayors will want to standup, say a piece and then move to the side.
The real question is how the clinics want to resume operations. PPE has eased some, but supplies are still short.