Market Philosophy: What You Got?

Z wrote

Looking like 18k on the Dow was the bottom

How much are you betting on this.

https://www.cnbc.com/2020/03/30/cramer-warns-shorts-about-betting-against-science-in-coronavirus.html

Maybe needs it's own thread but been seeing a crush of articles on how to handle the pandemic financially.

They all seem to start out with "have an sufficient emergency fund."  Yea of course. How does that help?  Either you have one right now, good on you, or you don't.  

There is no good way to create one now.  If you have assets like a 401k and you sell part of it to create one... well you may have to do it but you're just selling low. Not exactly valuable advice.

Harvey wrote

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They all seem to start out with "have an sufficient emergency fund."  Yea of course. How does that help?  Either you have one right now, good on you, or you don't.  

There is no good way to create one now....

There's always time to create an emergency fund. Here's the secret: spend less than you earn. Anyone can do that at anytime. If I got a $1200 check, that could be an emergency fund right there. I could even take on extra work if I wanted. Grocery delivery services are booming right now.

As far as the stock market, the Dow went from 29,500 to 18,500 and now it's back to 23,700. So, all told, it has lost about 20%? It just doesn't seem like financial calamity to me. Yeah, some industries will struggle (airlines, tourism, movie theaters, bars, etc.), but other industries will adapt and sell. As Cramer says, there is always a bull market somewhere.

Of course, I wouldn't listen to Cramer any more than I'd listen to any other perma-bull. Here is what he was saying in January:

https://www.cnbc.com/2020/01/09/cramer-wall-street-catch-up-on-stock-rally-a-very-bullish-moment.html

The point of an emergency fund is to put money aside when times are good for when they aren't.  If you don't need your cash now and can set it aside, you're not experiencing an emergency.  I'm using mine now, not adding to it.

MC2 5678F589 wrote

. If I got a $1200 check, that could be an emergency fund right there.

What kind of emergency does 1200 bucks cover.

Mortgage payment for the month.

Common, you could go a month without pay and still pay your mortgage. MM would be sad for you if not.

Yep.

Why are you asking about what $1200 would cover then?

I was curious what emergency would be covered by 1200.

I didn't say it would cover anything. You did. You really can't believe 1200 is an emergency fund. That's just life crap. 4 tires and a brake job if you're lucky. That's maintenance, not an emergency imo.

I think that's the idea. Then paycheck or unemployment with the kicker on top each week. Meant as maintenance for the family making between 40 up to about 120k.  Above that you better have a cushion or low bills and tighten the belt for a while.
I guess if we took the federal and state workers pensions away we could afford it without tax hikes.

campgottagopee wrote

I was curious what emergency would be covered by 1200.

I didn't say it would cover anything. You did. You really can't believe 1200 is an emergency fund. That's just life crap. 4 tires and a brake job if you're lucky. That's maintenance, not an emergency imo.

I'm sorry, I still don't get what you're talking about.

Are you saying that it's not big enough? Sure! But I thought Harv's point was that it seemed too late to tell people to get an emergency fund. And I was saying that they can start an emergency fund with the $1200. And, in an emergency, that would cover my mortgage for another month while I took extra work or whatever.

I'm sorry if I was unclear.

I think this is what I’m hearing:
Harv was saying that it’s too late for people who have already been laid off or otherwise had their income reduced to create an emergency fund.
MC was saying it’s never too late but I think he was implicitly speaking about people who are still employed.
Camp was saying that 1200 by itself is not enough to count as a good rainy day fund.
Feel free to correct me if I got that wrong.
You’re all right.

Thanks for explaining, Brownski.

But I was saying that, even if you aren't employed, if you're taking in more money than you're spending, then you're building your savings. And yeah, it might be a little tiny bit at a time, but you can eventually build it up pretty good.

I was assuming that if you are unemployed your expenses exceed your income.  

How many here have income that exceeds there basic expenses (no luxuries, just food, rent etc) after subtracting your paycheck?

I'm not even close.

Just checked everything, 401k, wife's 403b etc, added it all up for the first time since Jan 1. Down 4.7%.

Obviously down more than that from market peak whenever it was in Feb, but I never really looked or recorded it then.

Personally I think there is a good chance for more market pain coming.  

Still not doing anything to react, just keep on buying 50/50 a little bit each week. All low cost index funds.*









*Hoping to draw out Z!  :)

I was starting to look yesterday, for the first time in a month, but I didn’t.  With the markets having been down Thursday (and the Friday numbers in my main account reflecting the previous day) I figured Monday might be a slightly better day.

Harvey wrote

Just checked everything, 401k, wife's 403b etc, added it all up for the first time since Jan 1. Down 4.7%.

Obviously down more than that from market peak whenever it was in Feb, but I never really looked or recorded it then.

Yeah, I'm surprised at how quickly it bounced back.

Sadly, I made more in stock market gains in the 26 days since the market hit its low than many of the nurses & grocery store workers made working their asses off for 50-60 hours a week (market is up 30% since then). Gates/Zuckerberg/Bezos made billions. This economy is fucked up.

I agree that we might not have seen the bottom yet. I feel like some traders are spiking the football a little early. But I really have no idea.

For a lot of companies the impacts of social distancing may not show up in the financials until the third or fourth quarter, or later.  As bad earnings reports come in it will lead to some down days, but hopefully by then the uncertainty regarding coronavirus will have been tamed.  I think gains will be slow, but I’m not sure we’ll get back near the recent bottom.  But who knows....

JTG4eva! wrote

For a lot of companies the impacts of social distancing may not show up in the financials until the third or fourth quarter, or later.  As bad earnings reports come in it will lead to some down days, but hopefully by then the uncertainty regarding coronavirus will have been tamed.  I think gains will be slow, but I’m not sure we’ll get back near the recent bottom.  But who knows....

Earnings aren't the only issue.  The income statement only tells part of the story.  Many balance sheets are awash in debt.    The government can only handout money for so long.  Debts will soon go unpaid... a flood of defaults is forthcoming.
 If I recall correctly, the "false start" phase went on for 18 to 24 months before we saw any meaningful momentum.

IMO: We have a lot of downside risk from here.