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Red Tuesday? Let's keep things in perspective. The DOW, which you follow, is down .75%. Hardly a crushing market down day.
It’s been a slow but steady bleed out for equities since July. Since the start of August, VTI is down 7%. Nothing crazy but the last two months have wiped out almost half of the YTD gains to that point. If the Fed maintains their hawkish stance and rates remain higher for longer, there’s a very good chance VTI ends the year lower than the current level. Should be a dead cat bounce soon though because equities are quite oversold at the moment.
Here's my outlook - overall big tech has kept the S&P and especially NASDAQ weirdly elevated - the rest of the market including international has been on a slump for quite some time.
I don't think there's that much more downside to small caps, bonds, and international - we have to be somewhat near a trough in those. And the gap between tech and the rest will close - either those will come down or the rest will bounce up to match.
Here's my outlook - overall big tech has kept the S&P and especially NASDAQ weirdly elevated - the rest of the market including international has been on a slump for quite some time.
I don't think there's that much more downside to small caps, bonds, and international - we have to be somewhat near a trough in those. And the gap between tech and the rest will close - either those will come down or the rest will bounce up to match.
I definitely agree with that. The equal weighted S&P is flat for the year and the median stock is slightly red for the year. It looks like the market is doing “well” this year because of a few mega cap tech stocks. The multiples on those names are very high. What happens when those names experience multiple compression in light of higher for longer rates?
A short time horizon of 3 years or less should be in investments with short-term horizons. The idea of a short term investment is for lower risk (but less gain), capital preservation (limited downside), safety and liquidity. These include things like Treasury Bills, MM funds, bank CDs, short term corporate or government bonds and bond funds and the like.
An investment of 4 years or more can be in the general market with more risk - longer than 10 years can take even more risk since have the time to recover from a significant event.
3 days of small declines is nothing - short sales are not for the faint of heart or small pocket books. It can only take one day to wipe out a years worth of gains if the market moves against you and are forced to cover a short sale loss whether you want to or not.
Last edited by Lizap; 09-26-2023 at 09:27 PM..
Reason: Cleanup from deleted post
An earlier post quoted W. Buffett, "never underestimate the economy of the USA". He also has the view which generally says a short sell (against the broad based market) is betting against the entire economy and market of the USA.
I agree that in turbulent times, one might adjust risk allocations here and there. Some speculators (tolerant of high risk) might find a handful of individual stocks that they attempt to sell short. A short sale against the broad stock market index of the USA would rank as the last thing that I would ever consider, money wise.
I've changed my style - ever since the Apple debacle early this year. I can't pick stocks to the long side and/or I don't have the patience for it.
Corporate bonds to anchor the account, combined with mostly short sales, in & out trades on the remainder - and it's a different story. Hoping the market stays cold.
I am confused. If you think the economy is going to go bad,interest rates soaring, companies will have financial problems etc why would you buy corporate bonds?
Wouldnt they be at a higher risk of default forball of the above scenarios?
I am confused. If you think the economy is going to go bad,interest rates soaring, companies will have financial problems etc why would you buy corporate bonds?
Wouldnt they be at a higher risk of default forball of the above scenarios?
absolutely the case .
if that is the thinking treasury bonds or treasury bond funds is where you want to be .
corporate bonds are joined at the hip to equities just like junk bonds .
beer geek is on vacation for a while so we will have to wait to ask him questions
BeerGeek might actually be right this time....hard to tell...
All I know is a noticeable sell off since mid september ....not that long ago .....
with absolute peak in late July.....
For example ....some stocks I own .....
AAPL.....171 today ....was 189 on september 14th.....late July peak 198.23
MSFT.....311 today....was 338 on september 14th .....with a 366.78 peak....
GOOG....129 today ...was 139.16 on september 19th ...just a few days ago....
Bucking the trend are FB ....around 300 ....not much lower than recent valuations
and TSLA ....around 245 ....has already seen big drops earlier from it's peak.
Don't know if some this is due to time of year.....late september / early october was not good last year
either....
In early november 2022 you could have picked up FB for less than 90.....wow....what a bargain!
A year ago you could have picked up FDX for only about 150.....now above 260....who knew
And don't forget NVDA (which I owned)....less than 110 .....now well over 400.....
BeerGeek might actually be right this time....hard to tell...
All I know is a noticeable sell off since mid september ....not that long ago .....
with absolute peak in late July.....
For example ....some stocks I own .....
AAPL.....171 today ....was 189 on september 14th.....late July peak 198.23
MSFT.....311 today....was 338 on september 14th .....with a 366.78 peak....
GOOG....129 today ...was 139.16 on september 19th ...just a few days ago....
Bucking the trend are FB ....around 300 ....not much lower than recent valuations
and TSLA ....around 245 ....has already seen big drops earlier from it's peak.
Don't know if some this is due to time of year.....late september / early october was not good last year
either....
In early november 2022 you could have picked up FB for less than 90.....wow....what a bargain!
A year ago you could have picked up FDX for only about 150.....now above 260....who knew
And don't forget NVDA (which I owned)....less than 110 .....now well over 400.....
Multiples on big tech stocks are still outrageous. There’s a long way down if they revert to “normal” historical multiples given current treasury yield rates.
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