[2020] A little stock market sense

[easyrider]

As to the QID, you can make really good money buying & selling but really watch carefully. Some watch the 20 day Moving Average.

Does anyone have educated opinions on the u.s. dollar tanking? That's been bothering me lately.

I read that Citigroup expects the USD to be down 20% in 2021 which is good for precious metal , real estate and other commodities.

Bill

 

[DannyTS]

Has anyone calculated the odds of missing only the best 5 or 10 days of the last 20 years?

 

[Brett]

This fellow offers a free newsletter. Here's this week's issue with his commentary on the stock market:

Technically Speaking: S&P 500 - Trading At Historical Extremes - RIA (realinvestmentadvice.com)

Much of the issue is devoted to traditional stock market valuation.

For the technically inclined, notice that his S&P500 charts are data from Dec 31. He uses different moving averages on the different S&P500 charts in the article. The first chart uses 20 and 200 days, the next uses 52 and 200, and the third uses 12 and 48 days.

Also, he is using different MACD histogram settings on the various charts in the article than the defaults. On StreetSmart Edge (from Schwab), I believe the defaults are 12, 26, and 9. MACD (and the MACD histogram) is going to look a little different depending on the settings you select for the chart. So he shows the MACD histogram to the good (green). Using 12, 26, and 9 it turns out that I see it just a little in the red.

that first chart of the S&P 500 vs EPS is scary ...

 

[Ironwood]

...and despite the storming of the capital yesterday, the market continues to roar upwards. A complete disconnect to the realities of 2020 and the first week of the new year. This could continue for a while, as the market typically climbs a wall of worry before tumbling down. Watch out this spring!

 

[VacationForever]

...and despite the storming of the capital yesterday, the market continues to roar upwards. A complete disconnect to the realities of 2020 and the first week of the new year. This could continue for a while, as the market typically climbs a wall of worry before tumbling down. Watch out this spring!

Mm.. we bought a new home, closing next week and are taking a small mortgage on it because we could not resist 2.75% fixed interest rate. We have been debating each day if we should just sell our investments while the market is up and forget about the mortgage.

 

[PigsDad]

...and despite the storming of the capital yesterday, the market continues to roar upwards. A complete disconnect to the realities of 2020 and the first week of the new year. This could continue for a while, as the market typically climbs a wall of worry before tumbling down. Watch out this spring!

But one has to ask: will the actions of yesterday affect corporate earnings? If not, it shouldn't affect the stock market. The market is forward-looking, and can certainly see that the current president will be out of the office in 13 days. Given the recent market moves, many think that will be good for many companies.

Kurt

 

[bluehende]

But one has to ask: will the actions of yesterday affect corporate earnings? If not, it shouldn't affect the stock market. The market is forward-looking, and can certainly see that the current president will be out of the office in 13 days. Given the recent market moves, many think that will be good for many companies.

Kurt

My only explanation that makes sense is that after the events of yesterday a lot of very conciliatory speeches were made from some congressional firebrands. I am guessing the markets feel there will be much more bipartisanship in the future. Time will tell.

 

[PigsDad]

My only explanation that makes sense is that after the events of yesterday a lot of very conciliatory speeches were made from some congressional firebrands. I am guessing the markets feel there will be much more bipartisanship in the future. Time will tell.

One can hope.

Kurt

 

[Brett]

Mm.. we bought a new home, closing next week and are taking a small mortgage on it because we could not resist 2.75% fixed interest rate. We have been debating each day if we should just sell our investments while the market is up and forget about the mortgage.

compare the equivalent rates of return and the source of your funds. If it's a 10 year mortgage loan and the 10 year bond rate is around 2.75% then pulling money from fixed investments could work. If you're selling stocks then that would lower your investment risk but may involve paying additional taxes.

 

[VacationForever]

compare the equivalent rates of return and the source of your funds. If it's a 10 year mortgage loan and the 10 year bond rate is around 2.75% then pulling money from fixed investments could work. If you're selling stocks then that would lower your investment risk but may involve paying additional taxes.

10-year treasury rate is about 1%. It is a matter of whether we believe the recent run-up is due for a correction and start of a bear market for several years.

 

[bogey21]

All my silver are 1 oz .999 mint condition coins. I am thinking about adding some common date Morgans to my stache...

Update - Just for the heck of it I bought 10 nice looking common date Morgan and 10 common date Peace Dollars yesterday. Both contain roughly 77% silver. If anyone cares I paid $27 for the Morgans and $26 for the Peace Dollars. Total cost was $530. I have no idea if those prices are reasonable or not. If I find them cheaper I may buy more....

George

 

[TravelTime]

Mm.. we bought a new home, closing next week and are taking a small mortgage on it because we could not resist 2.75% fixed interest rate. We have been debating each day if we should just sell our investments while the market is up and forget about the mortgage.

I would stay diversified. Small mortgage and stick with investments. Best thing over the long term.

 

[VacationForever]

I would stay diversified. Small mortgage and stick with investments. Best thing over the long term.

Pretty much that is what we are doing. We just got off the phone with my FA and he said our portfolio went up 4% over the past 2 days and the painful part about applying for a mortgage is over. His words were that we had taken the enema so why not to just go through with it.

 

[Brett]

10-year treasury rate is about 1%. It is a matter of whether we believe the recent run-up is due for a correction and start of a bear market for several years.

For me that financial decision should not be a matter of whether the stock market will be a "correction" or 'bear market' or a "run up" in several years.

It's more about matching retirement financial objectives with specific asset category 'return on investments".

 

[HitchHiker71]

But one has to ask: will the actions of yesterday affect corporate earnings? If not, it shouldn't affect the stock market. The market is forward-looking, and can certainly see that the current president will be out of the office in 13 days. Given the recent market moves, many think that will be good for many companies.

Kurt

Indeed. The democratic senate majority also means that the likelihood of federal spending on COVID related relief is also much higher. They are already talking about $2000 checks in February 2021. Additional stimulus results in more consumer spending which translates to sustained earnings.

Tesla has risen 10% this week due to ratings upgrades and general consensus of better BEV tax incentives that Schumer has talked about for the past two years.


Sent from my iPhone using Tapatalk

 

[VacationForever]

For me that financial decision should not be a matter of whether the stock market will be a "correction" or 'bear market' or a "run up" in several years.

It's more about matching retirement financial objectives with specific asset category 'return on investments".

I am not sure what you mean. Our annual target/estimated investment growth is much higher than the mortgage interest rate, if that is what you mean. We just do not like to take on a debt even though we can well afford it.

 

[GetawaysRus]

My only explanation that makes sense is that after the events of yesterday a lot of very conciliatory speeches were made from some congressional firebrands. I am guessing the markets feel there will be much more bipartisanship in the future. Time will tell.

I think the stock market senses stimulus. That's crack cocaine for the stock market. With the Democrats in control, the likelihood of a trillion dollar or multi-trillion stimulus bill is much greater.

Oops. I see that as I was typing this, HitchHiker71 posted essentially the same thought.

The big question in my mind: how effective will a large stimulus bill be to stimulate the economy? Will consumers spend all that cash or will they save some of it? Obama's "shovel ready jobs" were a bit of a bust, and I do have major doubts about the effectiveness of politicians in delivering helpful stimulus. Where there are politicians, I smell pork.

 

[Brett]

I am not sure what you mean. Our annual target/estimated investment growth is much higher than the mortgage interest rate, if that is what you mean. We just do not like to take on a debt even though we can well afford it.

no, that's not what I mean, everyone hopes that their retirement assets increase at a higher rate.
But it sounds like you are doing what is best for your situation. A mortgage loan reduces future investment risk and you won't have to worry (much) about the stock market going up or down.

 

[Ralph Sir Edward]

Update - Just for the heck of it I bought 10 nice looking common date Morgan and 10 common date Peace Dollars yesterday. Both contain roughly 77% silver. If anyone cares I paid $27 for the Morgans and $26 for the Peace Dollars. Total cost was $530. I have no idea if those prices are reasonable or not. If I find them cheaper I may buy more....

George

That works out to about $33/ounce. Silver quarters (pre-64) currently run about $28/$29 an ounce. But they aren't big. . . (I bought a few(3) 1 ounce Britannias a few days ago @ $30/oz. The new ones (2021) have a hologram carve into them. . . .Nifty.)

 

[VacationForever]

no, that's not what I mean, everyone hopes that their retirement assets increase at a higher rate.
But it sounds like you are doing what is best for your situation. A mortgage loan reduces future investment risk and you won't have to worry (much) about the stock market going up or down.

I see it as reverse of what you have written here. Paying cash and not having a loan reduces future investment risk. Money once spent is done. But the amount is so small that there is no right or wrong.

 

[Ironwood]

Anyone buying bitcoin? I dabbled briefly a year ago and got out with a small loss as it tumbled just a couple of days after purchase. Haven't been back, but just increased my holding in a gold streamer this morning on the bullion sell off!

 

[Brett]

I see it as reverse of what you have written here. Paying cash and not having a loan reduces future investment risk. Money once spent is done. But the amount is so small that there is no right or wrong.

Maybe we view risk differently. My viewpoint on investment risk for that type of financial decision also depends on the source of the cash to buy an asset. (among other things)
An example - say a person has all their retirement money invested in bitcoins and Tesla stock and wants to buy a house.
Should they sell the Tesla stock and bitcoins and buy the house with the proceeds or should they get a bank mortgage. Would that decision differ if all their retirement savings were invested in cash or CD'S ?
Has their overall retirement assets 'risk' changed?

 

[geekette]

Maybe we view risk differently. My viewpoint on investment risk also depends on the source of the cash to buy an asset. (among other things)
An example - say a person has all their retirement money invested in bitcoins and Tesla stock and wants to buy a house.
Should they sell the Tesla stock and bitcoins and buy the house with the proceeds or should they get a bank mortgage. Would that decision differ if all their retirement savings were invested in cash or CD'S ?
Has their overall retirement assets 'risk' changed?

I don't count source of funding as part of any given "risk" to an investment. It would most every time come from cash vs selling something else. I invest for long haul vs liquidation on demand.

Opportunity cost is a different process for me, and would be part of funding decisions.

I don't generally devote a lot of headspace to "risk" since I am already seen as some super aggressive risk taker for being most all in stocks. I find it to be a sleepy income builder vs a sleep disturber, so my ideas on risk pertain to my life with "risky behavior" that has been quite rewarding, no losses. Risk mitigation for me is to own a lot of companies across many industries; most companies very old with a long history of rewarding shareholders. Good old diversification.

Someone waist deep into Tesla and bitcoin is certainly living more wildly than I am, someone tucked into cash and CDs is hopefully past the "more than enough" in savings territory and content with minuscule growth. I'm in between, not needing to shoot for the stars, yet, not in a situation where I'm confident of not outliving my money. Running background all this time is the only risk I worry about: becoming old and poor. My strategy provides monthly income from multiple sources. If the income is not sufficient, I could sell shares. Best of both worlds.

I never found it risky to have income from just one source, my job, so I am actually living less risk by getting paid from dozens of companies. Zero guarantees. Pandemic forcing closing of many businesses is probably the closest I'll have ever come to the biggest risk of them all: overnight vaporization of most all American commerce. I own biggies, tho, so no whammies visited my portfolios. In fact, they are oddly juiced. I'm not one that finds it risky to look at a toppy, sloppy market. Sure, probably more price volatility, consolidations in some industries, etc. But stock price is not a risk for me like it might be for a one-stock portfolio or "need money for something else" investor. Could be decades or never before I look at price for selling. That could be called risk tolerance but it's just normal for me.

 

[Luvtoride]

Anyone buying bitcoin? I dabbled briefly a year ago and got out with a small loss as it tumbled just a couple of days after purchase. Haven't been back, but just increased my holding in a gold streamer this morning on the bullion sell off!

Ironwood, from previous discussions here I have "dipped my toe" into Bitcoin by buying shares of Grayscale Bitcoin Trust and RIOT, a bitcoin mining company. With the surge in Bitcoin prices the past couple of weeks, both of these investments are up bigtime since i bought. I figured its a way to "play" the cryptocurrency market without the cost or risk of owning the coins directly (and certainly not at $40,000/ coin).

 

[bogey21]

You can't avoid risk. There is risk in everything. With cash you have inflation risk. With a pension you have counterparty risk. With stocks, market risk. With bonds, CDs ect there is interest rate risk, and on and on. All one can do is manage these risks best they can...

George