Market Philosophy: What You Got?

Harvey wrote

Why did the Saudi's short circuit the oil market? Desperation to steal scraps of market share?  Seems foolish.

Protect and consolidate market share, push weak competition out. Saudi’s can weather this way better than anyone else can.

As for the stock market - wow. Too much uncertainty. Look at Italy - and imagine that we will follow the same path. We were not prepared for this because our contagiious virus response team, infrastructure, and protocols were dismantled in 2018.

There is two takes on this Harv
1) the Saudi’s and Russians disagreed on reducing supply so the Saudi’s lowered prices to punish the Russians.  The ruble has taken a pounding
2) they are colluding to try to wipe out the shale and fracking oil producers because they are a huge threat to both Russia and Suadi Arabia.  If the price goes below a certain level shale production stops and if stayed there they would go out of business.

The market is a blood bath but if you have cash it’s going to be an all time buy low opportunity sometime soon maybe next week

What’s the play when this bottoms out? S&P ETF?

mm

VOO is a vanguard s&p500 etf but most people probably have a ton of index fund exposure anyway in their mutual funds

I’m looking at a  couple medical stocks HOLX and ISRG
Microsoft
Also like ALK as they have lower oil prices and a domestic  only footprint but that one I’d wait maybe a bit longer to see more people flying

What to not buy
Tesla cheap gas is really bad for Elon Musk

Cruise ship companies

Sounds believable.  How long does it take to put the permanent hurt on US energy/fracking?

I like VTSMX.

The US is the biggest shale oil producer. Russia hasn’t been happy for a long time wirh pricing and production levels which allow US shale producers to stay in business. Russia wants market share. Saudi isn’t trying to put US shale producers out of business - they’re trying to keep Russia in check and prevent them from gaining more market share and thereby more market influence. The Sauds can outlast Russia in a price war...it’s not even close. One of them has enormously deep pockets.

The economic impact of coronavirus is not close to clear for the US yet. Rate cuts won’t help. Neither will tax cuts for hourly workers who are less hurt by the stock market drop. Populist moves, nothing else.

The market will stabilize when uncertainty is cleared up - that’s not happening right now. Can’t clear things up based on hunches

Another good buy will be a few top tier defense companies. Excluding Boeing - airline down turn and continued 737 Max problems are going to drag them down for a while

billyymc wrote

Another good buy will be a few top tier defense companies. Excluding Boeing - airline down turn and continued 737 Max problems are going to drag them down for a while

I agree defense sticks except Boeing makes sense unless you think Bernie could get elected

Well how long would your business last Harv if you were forced to produce at a loss ?  Drive them out of business and then supply goes down prices go up and it takes a yr or two to get shale up and running again

After putting most of my 401k into a money market fund in February (slightly before the highs) I started putting a little back in last week. I don’t expect to pick the bottom so I’ll continue to slowly put more bavk to work because it has a long enough horizon and I already avoided a nice part of this drop.

But I’m in no rush. I won’t have much conviction about this until I see one or two things happening:

1) The US gets serious about testing and containing the spread of this coronavirus. It appears we’ve tested under 10,000 people so far. South Korea was testing 10-15 thousand a DAY. China had one epicenter and they got it under control by taking quick dexicive measures and it appears to be working. Italy didn’t act quickly or decisively and look at them now. The US has multiple epicenters and we are not testing enough or limiting travel. The number of confirmed cases is very likely small compared to the number of actual cases out there. If you believe we have this contained I have two words - Spring Break. This will be on the majority of college campuses soon.

2) If there is evidence that summers arrival will help quell the virus spread the market will take off and anyone not on board will be left behind. There is currently no evidence of that and if it does happen we won’t know for a few months. But we have hunches and prayers to help.

My opinion is the best case scenario is a short sharp recession in Q2. Right now the markets will continue wild swings with the possibility of breaking below 20k at maybe 15% - driven by uncertainty and not necessarily by reality. But in an information vacuum uncertainty reigns

Nice work billy.

My timeline isn't as long, and I don't have your courage.

About 2 years ago I went from 90/10 to 60/40.  I thought that would be enough to ease my mind in a total meltdown.  Im wishing now I was 50/50, so I learned something. If when the market gets back to 29k, I will make that move.  Otherwise just keep buying stocks and bonds as long as I can.

This is why I keep 3 to 5 years cash on hand and let the rest ride. I won’t try to play the markets, I’ll let my money managers do it.

Harvey wrote

Nice work billy.

My timeline isn't as long, and I don't have your courage.

Educated luck. The market was getting extended before the virus. A normal correction would have been healthy, and since the virus was ramping up, pulling everything into a money market seemed low risk. I won’t try to catch the exact bottom - too hard, too easy to miss out.

The best thing our leaders could do would be act with more transparency, and test more people. I think they believe testing more will cause more panic - because more testing will reveal the extent of the virus which is clearly not contained. However I think the market would stabilize because it would remove uncertainty.

I've thought we were at the top 2 years ago.  But I have never acted on those kinds of thoughts.  Everything I was taught (by the Bogleheads) was to set a plan and stick to it.

Although I only ever rebalanced once, two years ago, maybe that was market timing. After I did it I felt more relaxed. Still heading to 50/50 the next chance I get. (29,000)

Really at 61, my time frame could be 30 years or 5 so who knows what is the right thing to do.

Harvey wrote

Really at 61, my time frame could be 30 years or 5 so who knows what is the right thing to do.

That’s the right way to view it. Plan on living to 100 and if you don’t make it your kids will get a nice bump.

PeeTex wrote

Harvey wrote

Really at 61, my time frame could be 30 years or 5 so who knows what is the right thing to do.

That’s the right way to view it. Plan on living to 100 and if you don’t make it your kids will get a nice bump.

 unless the tax code changes and the govt steals it from your kids

So spend it!?

Don't want to count my chickens, but I go some serious longevity in my family, especially on my mom's side. Some on my dad's too.

W

Harvey wrote

So spend it!? Don't want to count my chickens, but I go some serious longevity in my family, especially on my mom's side. Some on my dad's too.

Ways to make sure that the money is taxed more than it should be Just have to get great lawyer's who knows law well.

Z wrote

PeeTex wrote

Harvey wrote

Really at 61, my time frame could be 30 years or 5 so who knows what is the right thing to do.

That’s the right way to view it. Plan on living to 100 and if you don’t make it your kids will get a nice bump.

 unless the tax code changes and the govt steals it from your kids

$11.5M for a single person, $23M for a couple before any tax is taken out now. Let’s just hope politicians don’t change it