"The market can remain irrational longer than you can remain liquid"

V

vanzandt

So goes the old adage right?

Question.

This axiom certainly applies to folks that like to short stocks that they believe have come too far too fast on the upside... but what about on the downside when markets are setting new lows?

Was John Maynard Keynes, who is attributed to this quote(?), referring to shorts only? And if not, was it a different time then?

I have to ask, because from a common sense point of view in the here and now, there are trillions and trillions of dollars under management (of some kind or the other) seeking a decent return... where can it all be parked? Bonds. Gold. T-notes. Real estate. Thats pretty safe I guess, but at some point...

There's some great stocks on sale right now. Highly profitable companies with rock solid balance sheets and tons of future growth ahead. I guess it comes down to multiple contraction and how much is too much. At what point does a great company become too cheap to ignore? Enter Warren Buffet I guess.

Anybody with half a brain could see tech in general and faang in particular was overvalued AF. Thats what's brought this market down.

Look at NKE.... it held a 7% gain yesterday. I guess all that "China exposure" and "global slowdown" (as per Fedex) doesn't apply to them. Currency headwinds? Not Nike. Yeah right. That just goes to show you, its all bs. NKE is on the DOW is why. The DOW... the easiest index in the world to manipulate if you control billions and you have the right supercomputers. The index that has a reserved space on the front page of your local newspaper for the last 130 years. The leader of the band. What a joke.

So everybody go to cash. Think only day to day. Check those headlines. Panic.
That way they can run the indexes right back up and you miss the big move. All the sudden.... the narrative will be "The Fed did the right thing, they moderated".... "China has 8% annual GDP growth".... "Trump is working across the aisle".... "Corporate profits are still strong".

And all that money will flow right back in after the big move is over. FOMO thing.
Rinse, wash, repeat.

"The markets always move in a manner that takes the most amount of money from the most amount of people".

Don't forget it.

Merry Xmas 2018

-vz
 
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There are (/ should be) three types of private individuals in the equities market -

investors - buy stocks for dividend income and pass the stocks on to your children: never sell;

traders - bet on stock indices rising in bull market times and bet on stock indices falling in bear market times: never own;

mugs - buy stocks for price appreciation in bear markets, sell in bull markets: never win.
 
In 2008, when we had the record number of foreclosures, there were a lot of opportunities. One of them was BAC. Nurses in the hospital where my friend worked, decided then, to save 3 months worth of salaries and buy BAC when it went all the way down to $5. I am sure they probably, got a couple of thousand shares of BAC. Yesterday BAC closed at $23.37. Even at that price, they have gains of 367% over a 10 year holding period. I am sure we will see a lot of opportunities in the coming year. We just have to step in and buy!
 
Almost everyon loses in bear markets except those that are in cash and might have missed the previous bull market.
When stocks fall hard, most cost average down only to get hit even harder with losses, its a natural reaction to falling stocks: “ my stock was at $200 and now its $135, valuation is ridiculously cheap”. Then bamm, the market falls again and margin calls and general fear cause more selling. You also have those that are still in the green in stocks such as MSFT and BA who will sell just to preserve gains. No matter how compelling a valuation is, bear markets bring everything down. There is a point will you have to start nibbling though , no one never knows where the bottom is. Thats the hard question, where to start nibbling. The higher stocks go, the further they can fall. The dow went to 27000, a 30% decline brings it down to 18900, which isnt a stretch in a bear market.
18000 just erases 2 years of gains and erases the Trump rally which brings the dow to 18000.
The nasdaq can retest the year 2000 highs of 5500 area.
Bear markets always bring stocks to “ unimaginable lows”..
 
vanzandt said:
So goes the old adage right?

Question.

This axiom certainly applies to folks that like to short stocks that they believe have come too far too fast on the upside... but what about on the downside when markets are setting new lows?

Was John Maynard Keynes, who is attributed to this quote(?), referring to shorts only? And if not, was it a different time then?

I have to ask, because from a common sense point of view in the here and now, there are trillions and trillions of dollars under management (of some kind or the other) seeking a decent return... where can it all be parked? Bonds. Gold. T-notes. Real estate. Thats pretty safe I guess, but at some point...

There's some great stocks on sale right now. Highly profitable companies with rock solid balance sheets and tons of future growth ahead. I guess it comes down to multiple contraction and how much is too much. At what point does a great company become too cheap to ignore? Enter Warren Buffet I guess.

Anybody with half a brain could see tech in general and faang in particular was overvalued AF. Thats what's brought this market down.

Look at NKE.... it held a 7% gain yesterday. I guess all that "China exposure" and "global slowdown" (as per Fedex) doesn't apply to them. Currency headwinds? Not Nike. Yeah right. That just goes to show you, its all bs. NKE is on the DOW is why. The DOW... the easiest index in the world to manipulate if you control billions and you have the right supercomputers. The index that has a reserved space on the front page of your local newspaper for the last 130 years. The leader of the band. What a joke.

So everybody go to cash. Think only day to day. Check those headlines. Panic.
That way they can run the indexes right back up and you miss the big move. All the sudden.... the narrative will be "The Fed did the right thing, they moderated".... "China has 8% annual GDP growth".... "Trump is working across the aisle".... "Corporate profits are still strong".

And all that money will flow right back in after the big move is over. FOMO thing.
Rinse, wash, repeat.

"The markets always move in a manner that takes the most amount of money from the most amount of people".

Don't forget it.

Merry Xmas 2018

-vz
More...
We'll need to see if we end up getting into a bear market. Right now, we just have confirm of a correction.
 
NY_HOOD said:
Almost everyon loses in bear markets except those that are in cash and might have missed the previous bull market.
When stocks fall hard, most cost average down only to get hit even harder with losses, its a natural reaction to falling stocks: “ my stock was at $200 and now its $135, valuation is ridiculously cheap”. Then bamm, the market falls again and margin calls and general fear cause more selling. You also have those that are still in the green in stocks such as MSFT and BA who will sell just to preserve gains. No matter how compelling a valuation is, bear markets bring everything down. There is a point will you have to start nibbling though , no one never knows where the bottom is. Thats the hard question, where to start nibbling. The higher stocks go, the further they can fall. The dow went to 27000, a 30% decline brings it down to 18900, which isnt a stretch in a bear market.
18000 just erases 2 years of gains and erases the Trump rally which brings the dow to 18000.
The nasdaq can retest the year 2000 highs of 5500 area.
Bear markets always bring stocks to “ unimaginable lows”..
More...

When someone loses in the stockmarket, someone else wins! That is the reality of it. Money does not vanish out of thin air! What about traders? They play both sides of the market and can profit either way. I got out of my short positions too soon so, made much, much less. That said, there will always be opportunities to make monies whether stocks are going up or down. Bias is still down so, I look to short weak stocks. You cannot let fear rule you! As Warren Buffett said, be fearful when others are greedy and greedy when others are fearful! It is as true today as has been in the past!
 
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