Sell

[zk]

[quote=Coronita]
Cali Baguette Express
http://www.calibaguette.com
9225 Mira Mesa Blvd,
San Diego, CA 92126

…
They are off Mira Mesa Blvd close to a Wells Fargo.

I like there #6 sandwich and the watermelon smoothie with half sugar, no bobba and their fried banana chips in the bag.[/quote]

Yes, excellent stuff.

I also suggest supporting Chez Nous at 9821 Carroll Canyon just off the 15.

Try the Spicy Chicken sandwich. Best sandwich I’ve ever had. Or the Special Salad. Incredibly tasty. Cash only. They close at 2pm now and they’re closed on Saturday and Sunday. But truly great sandwiches and soups and salads.

[The-Shoveler]

IMO I think Rich is assuming it will not take “years” to get back to full employment and GDP.

BTW I hope he is correct, I could live with everything just taking off like a rocket.

[The-Shoveler]

Duplicate

[Coronita]

Given that we really don’t know for sure how this will shake out, I’m proceeding with a sort of half foot in the door and half foot outside, depending on when I might need the buckets of money.

IRA/401k. Since I can’t access this for another 20 years when I turn 65, I’m pretty much leaving this on autopilot and every so slightly rebalancing between the funds. Leaving things in a mix of stock, international stock, some short term bonds, with a heavier concentration in domestic/international stock

529k/UTMA account. Money from this buck is needed sooner, in about 5 years when my kid goes to college. I contribute $2000/month to it, and to reach my end goal in 5 years, I only need the existing balance to earn 3% annually for the next 5 years. So this pool is allocated in 10% stock and the rest in moneymarket/treasuries/short term bonds. No additional risk needed above 3% return.

For last pool, after tax my speculation pool, for practical purposes I treat this as daily liquidable. This is where I do my more frequent buying/selling and and contains my after tax index ETFs instead of (moved index mutual funds into their ETF equivalents).

[FlyerInHi]

[quote=Coronita][quote=FlyerInHi]Corona, no anti sky-is-falling miserable loser rant today? I thought you didn’t like any negative prediction.[/quote]

Brian,
Once again , you keep lobbying these personal attacks whenever you get a chance. I have simply stopped responding to any sort of personal attacks as suggested by several of people just so everyone else can see who is the one that instigated these. Clearly it is you.

I don’t know what you mean by loser rant. Im actually pretty happy and was just pointing out MY opinions as everyone else is able to.. I guess it doesnt jive with your thinking, which then triggers you to go low with the personal attacks. You, for the past few weeks seem to have an ax to grind.

I was happy to see OP post because he’s an old timer and some of us have been trying to get some of the old timers to come back. So I just thought pigg was starting to get better again because some of the real old timers were starting to come back… That’s just too bad that you would start pissing all over this thread too…

Sorry if the current environment is impacting you more so than others. I hope it gets better for you Brian…[/quote]

Corona, there are many examples of you calling people miserable losers (i paraphrase) for even suggesting negative outcomes. This sell-everything thread is as negative as gets, so I’m surprised you didn’t go down the usual path.

It’s funny that in attempting to take the high road on “personal attacks”, you make several right here in your reply. You seem unable to discuss ideas and events without resorting to inferences to character and assignments to personal circumstances. And that’s not a personal attack; it’s an accurate observation.

[Rich Toscano]

Brian, take it to another thread. Nobody cares.

[Rich Toscano]

[quote=zk]Davelj, your take is (I think) similar to my OP on the
thread

https://www.piggington.com/coronaviruseconomystock_market

(except yours is more informed and better stated).

I would be very interested in your ideas on Rich’s take on the situation:

[quote=Rich Toscano] when you buy stocks, you are buying a VERY long-term stream of earnings. Like, decades. This recession looks to be very severe, but it is short term by its very nature (at some point we contain the virus, or everyone has gotten it… this can’t go on for all that long).

So as bad as this recession may be, it’s hard to see it moving the dial all that much on the DECADES worth of earnings that determine what stocks are actually worth.

I should note here that I think the US stock market started out very overvalued, which complicates things. But assuming stocks were starting out reasonably valued (as many international stock markets were, imo) — then I think a 30%+ decline is a huge overreaction.

Whether the stock downturn gets worse before it gets better, I have no idea. But I think there’s a good chance that several years hence, people will look back at this as having been a good time to be investing in what everyone else was panicking out of. (Again, assuming it hadn’t started out very overvalued to being with).

Here is a very good (though pretty finance-y) piece examining the potential impact on long-term value of stock markets: https://www.gmo.com/americas/research-library/asset-allocation-covid-19-update%5B/quote%5D%5B/quote%5D

Whoa, hold on. Since I wrote that passage, markets (both US and intl) are up 36%. That changes the situation considerably in terms of what the market is pricing in, and in terms of prospective returns.

To put it in perspective, if we use the historical return of global stocks (5.2% real) — we just got over 6 years’ worth of return in less than 2 months. If you assume, as I do, that markets mean revert over time to deliver something close to the historical average return over the long haul, then the prospects for future returns just got a whole lot worse.

So, my opinion on the markets now is not the same as it was then… I would love to hear Dave’s take on my take, of course, but it’s important to adjust for the fact that my take was written 36% ago. (And for the record, I know and like Dave and he’s a great investor, so I always like hearing his take!).

A second thing I want to note is that Dave is really focused here on the S&P500. There I agree completely. In my view, it came into this very overvalued to begin with, and it is pricing in virtually no uncertainty about the cv19 outcome. I am completely on board with his assessment of the S&P500.

Where we might part ways is in other risk assets. There are areas of the global stock market that — even after this huge rally — are still priced for positive long-term returns. In specific, developed intl value stocks are priced for returns that are slightly under the average stock returns — not great but ok. Emerging value stocks are priced for substantially higher than normal returns.

I know it makes things more complex but I think it’s important not to lump all stocks together. At times, you can, but this is not one of those times. The valuation spread between the S&P500 and value anywhere (including US), and between the S&P500 and international, has literally never been higher. So the prospective returns of those things are very different.

One last note. In the other thread, zk made a very good point, which I will paraphrase here: “ok maybe the underlying value of that long term income stream has not changed, but still, in recessions and other crises, markets tend to drop.” That’s a great point and I totally agree. The thing is, though… you are now in the realm of market timing. When will it drop? How much? When will it stop dropping? When do you buy back in? I don’t know. I don’t think anyone does, really, and I know for sure I don’t. This past 2+ months should show how hard that is… who was expecting a 36% rally from the day I posted that last thing? Not me, that’s for sure.

So I largely focus on fair value and the assumption that markets will get back there at some point. Because that’s what I think I have a handle on, and I have absolutely no handle on timing. (Subnote: with that said, I do think it’s fair to adjust for very heightened medium-term uncertainty as we have now. But the valuation/expected return thing is the main thing for me, and that’s what I have been addressing).

[ucodegen]

[quote=Coronita]IRA/401k. Since I can’t access this for another 20 years when I turn 65, [/quote]
Withdraws from IRAs/401ks are penalty free after 59.5.

[Coronita]

[quote=ucodegen][quote=Coronita]IRA/401k. Since I can’t access this for another 20 years when I turn 65, [/quote]
Withdraws from IRAs/401ks are penalty free after 59.5.[/quote]

I don’t think I will need to withdraw until I am 65. But yes, thanks for the reminder of the early withdraw

[zk]

[quote=Rich Toscano]
Whoa, hold on. Since I wrote that passage, markets (both US and intl) are up 36%. That changes the situation considerably in terms of what the market is pricing in, and in terms of prospective returns.

[/quote]

Sorry, I was trusting readers (and Dave) to factor that in. I should know better than that. Obviously you, Rich, could factor in the change and read your previous comments in the light of the 36% surge and extrapolate them. But I shouldn’t expect everybody to. I’m not even sure I could do that accurately. My bad.

[Rich Toscano]

[quote=zk][quote=Rich Toscano]
Whoa, hold on. Since I wrote that passage, markets (both US and intl) are up 36%. That changes the situation considerably in terms of what the market is pricing in, and in terms of prospective returns.

[/quote]

Sorry, I was trusting readers (and Dave) to factor that in. I should know better than that. Obviously you, Rich, could factor in the change and read your previous comments in the light of the 36% surge and extrapolate them. But I shouldn’t expect everybody to. I’m not even sure I could do that accurately. My bad.[/quote]

No worries… just wanted to make sure the timeline was clear to everyone, especially if they didn’t know the context of the last thread.

[gzz]

AN, spot on. I don’t personally think we will have substantial inflation. The fed print, while large, is not large enough to make up for the decline in income and demand.

However, my confidence in saying there won’t be high inflation is weak. We’ve simply never had a peacetime deficit anywhere close to this large. And there isn’t much sign of it letting up: Dems want to spend, and Trump and the Senate GOP don’t want a depression as they run for reelection.

Keeping your assets as money could mean both a 5% a year loss because of inflation AND missing out in an inflation-fueled asset bubble. All the while making 1% interest and being taxed on the 1% as ordinary income!

Where to hide out? Real estate! It will benefit from both asset inflation, fed-fueled low rates, and rent inflation. Also, defensive stocks like utilities. My 2nd largest recent buy has been Hanes, HBI. Good economy or bad, people will continue to buy socks, underwear, t-shirts, and athletic wear. I did a deep dive into their financials, and they are pretty strong, and they are not exposed to China as they manufacture mostly in S and SE Asia and Latin America.

[gzz]

Expanding on Rich’s point about long-term value, if we use a 3% nominal discount rate, earnings going to zero in 2020 then recovering fully mean only a 3% decline in a stock’s NPV. Less than 3% if we assume there’s a long term upward trend in earnings, which is reasonable.

While this exercise I think is useful, the market is now heavily fueled by a tech bubble that is more extreme than 1999-2000. And there’s not much sign of it crashing, since there isn’t much leverage involved in terms of debt financing, and the large owners of these stocks are true believers and also have no need to ever sell. To the extent they need cash, they can get margin loans, but they need little cash compared to their holdings.

[Coronita]

It feels like 1999 all over again. Bad news? Doesn’t matter. People can’t go to Vegas? No problem. Stay at home and day trade. lol

[The-Shoveler]

Millennials opening trading accounts like crazy during the covid-19 lock-down.

Most boomers are on sidelines at this point.

[Author]

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