Gregmal

The decline in Dec of 2018 was speculated to be a number of things, it seems after the fact it became consensus “Fed”….IMO it seemed like a slower version of the 2010 flash crash which was mainly algo driven, but whatever. Either way, again, you’re talking about a 3 week correction and acting like it was a turning point? In 2018-19 the Fed raised rates and maintained the entire time they were monitoring the situation. When consensus became that they may be moving too fast, they slowed down? Why would they all of a sudden abandon caution after a decade of being really caution? Cuz they want to ruin Biden? Makes no sense. If March 2020 was so obvious, why were you 100% in cash? This ain’t meant as a slight but over and over again I see people doing this hindsite stuff. With all that liquidity how come everyone was so bearish? Not just in 2020 but most of the decade! With all the rate hikes in 2018 why only a brief 3 week run of the mill correction? Even now, if the fed hikes as expected, you think the consensus of sophisticated investors will simply decide to stop investing? Throw in the towel? Come on

I mean I’ve literally been hearing about this Fed punch bowl for what seems like an eternity and it’s always the gold and cash hoarders and idk, if a thesis is wrong for that long maybe it’s just not as potent as we think it should be? We had a period where Fed tightened, raised rates, etc. Ended up being pretty spectacularly uneventful for the “punch bowl bear” thesis. Are we all really just afraid of having to invest on fundamentals ?

I am not sure all the underpinnings of this are entirely there. Is it possible to have a 10% correction in the stock market? What about 20%? Should shitty companies that got bid up for silly reasons get punished shortly thereafter? That’s perfectly sensible to me. Will people who don’t know how to invest sell their stocks because other people are selling? Sure. I don’t see why there always needs to be a lot more to it than that. The Fed put doesn’t need to be there, unless the bet is that the Fed destroys the economy…which…seems like a poor bet to me. Much of the short trade I think is done. The decline in the stuff that deserves it have been huge. It could still continue but my take is there’s better use of time than shorting for the last couple drops in the bottle. Otherwise? What? Shorting good companies hoping they go down tomorrow or the day after? Not a game I wanna play. Can you explain where you see a bubble in real estate? Every thesis I’ve heard basically simplifies to “prices went up 20% in a year” which doesn’t really seem like a bubble to me, especially compared to where the rest of the world is with it. Or relative to where real estate prices have been for the past decade plus. Sometimes I think we try to hard to see what we want to see. The Fed raised rates and all that in 2018/19 and we were fine. +32% if I recall. However all we hear about is a 3 week correction in December. All in all this whole “the Fed controls stock market returns” narrative has been around forever and I kind of think it’s repeatedly been shown to be a mistake to fall back on assuming it’s true every time we have a few down days or weeks.

Exactly. A bunch of folks have spent a decade over investing because everything went up and a bunch of folks spent a decade shorting or being under invested because everything went up. Now people everywhere think the world is ending because of……a two week correction in the amount of ….10%. We can talk about the Fed all we want but NEN is illiquid as they come and has done A-ok. Saying the market needs liquidity to go up makes no sense. You simply need to remember what the purpose of it is. And if you’re “investing”, then I am not sure what Fed liquidity has to do with it. Rates, sure. But it’s definitely overblown

You’re double counting. If the inflation is causing economic weakness you have no need to raise rates because supply and demand will take care of it. So saying an economic slowdown, plus fed raising rates substantially? Not happening.

For those looking to do this….who knows what VIX 35+ means?

Sold NKLA puts, trimmed 20% of AAPL puts, and cut GOOG. bought MSGS, MSFT, BC, BAC with proceeds. Picking at more PCYO but volume ain’t great.

Maybe, maybe not. It’s good relative and absolute value and if those obvious doubles and triples start showing up, at worst it’s low beta capital you can recycle into something more torquey. Main thing though is you have to be in it to win it. Stocks going down 50% would be an “exception to the rule” type of situation. Fact of the matter when you look at the big, quality names, especially tech, is that they’re still up massive if you bought them any time but recently. So while you could sit around on cash or equivalents waiting for the next 30% decline across the board, everything at my disposal points to that being a losing strategy. I’d rather wade in and just let the market do it’s thing. If your horizon for accumulating is more than a few months, there’s tremendous advantage. Especially if you can hit on some shorts or hedges to generate more liquidity while protecting low basis, long term investments. I mean if I chucked my long term holdings at the first sign of a hiccup, as you say @LearningMachine I’d be sending Sam a dividend and immediately suffering an unnecessary 20% loss.

The February, March and April 2020 portion of the COVID thread was super enlightening. Another thing to ponder is this….if your temperament changes that wildly with fluctuations, are you really investing? Again I have a trading portfolio and an investment portfolio. The trading one protects the core investing portfolio. So at times I am definitely short term oriented. But for core investments…you shouldn’t really be worrying about the short term noise. Just make sure you’re comfortable with what you own. And that the noise isn’t fundamentally related to what you own! I picked up a few MSGS today. Panic selling in stocks has what??? to do with sports teams?

Case in point though is DIS. I love Disney. Started building a position recently after selling out late 2019. It’s world class in every regard. But cheap? LOL where’s “cheap” on Disney? $75? You generally don’t get Disney’s or Costco’s cheap. Maybe, maybe once a decade. So buy small and often and otherwise just roll with it. Apples another’s one. Took off about 20% of my puts total, but cheap? Ha!

Still lots of crap trading at crazy multiples and to be honest, the quality stuff is still hardly cheap. Non tech though, getting juicy. Blackstone told us all we needed to know this morning. And if they didn’t, Kohls did.

With all the people looking for “The Top” and wondering when it will be….it was already found. Hopefully that helps with all the confusion.

Cleared my FRFHF. Figured I’d take my $50 in two months and run on a turd most have not gotten a penny out of longer term. Rather play the inflation game on my own than hold the bag on Prems crapfolio should things go south.

Added a few COST into the close

Added DIS and shorted some CLF puts

If rates go on a multi decade run higher theres definitely a playbook for that. The main thing though is that I think its important to keep perspective and not run for cover over the prospects of a fear inspired correction but to remain positioned for the long haul. I still really dont see anything that has gotten whacked that didnt deserve to. The big Xmas 2018 selloff was a whopping 3 week correction LOL. And the following year the SPY did like 30%. The Thanksgiving variant panic sell off, one whole week. So I try to just keep in mind that its important not to make more of something than necessary.

Yea Im deducing from the way he put the question that he s talking like $100k or less, and for family at that. So its not like entering a real business proposition where thats the model. And its not like its a life changing(I guess debatable depending upon the audience) amount of money. I would never suggest doing this with the intention of making a profit or a living out of it, with the ingredients involved above. Mainly, as Ive said Ive done for friends and family, is to get them off and running. Typically, with larger amounts or meaningful money, I just tell people its easy and they can do it them selves and then just give them ultra conservative investments and tell them to buy it in their personal accounts. I agree managing it is probably fruitless in close proximity situations where theres more to lose than just money.

Did the same with a few family members mainly to get them started and over many of the typically “stock market” fears. On what’s fair, IDK depends on the objective. Are you trying to make money for yourself? With the above structure? If so I’d just guarantee 5% and then go 50/50 on profit over that. If not then just do it for free. Or a case of beer every now and then

I think the false aspect of @Viking post above is with respect to “all this is happening because the Fed is talking”…. what is “all this”? The Fed s been talking about rate hikes for almost a year and last year the market did 25%. We ve pulled back like 3-4% to start the year and are like 10% off even on the overvalued Nasdaq. In a certain day and time this was really just something markets did. I remember the flash crash in 2010 maybe, when stuff like ACN went to a penny or something nuts. Dow lost 1000 points mid day FOR NO REASON! Everyone tried to make up a reason for it but really it was just markets doing market things and algos going berserk. Now I feel like folks spent way too much time trying to “survive” what was once just considered a standard pullback or correction. It, in terms of a market or whatever, seems to be acting like a market can act from time to time. The last Fed meeting and notes were all pretty much orchestrated and laid out a plan that’s been known for months. Tech has been blowing up since February of 2021. That was the start of the bubble deflating. It actually I thinking started with the vaccine announcement if you followed stocks like ZM and PTON…they never saw those highs again. But it’s not like anything new has been happening really. I would just caution ascribing too much to the narrative of the week which is currently “it’s the Fed”. A pullback can just be a pullback. Corrections happen. Tech garbage that was getting destroyed is still getting destroyed and excessive valuation is being questioned. This is a good opportunity to pick up stuff getting dumped over fear of “the stock might go down tomorrow”. Maybe another leg down happens but I don’t see anything fundamentally having changed. I do feel like we ve conditioned a generation of investors to run for the hills at the first sign of turbulence. I should start getting everyone their “i survived the 10% crash of January 22” shirts though. Would be nice gifts.

Ya I agree on Nasdaq for sure. Was talking with a few folks today. Old COBF friend Cardboard loaded up on Jan 28 expiration $500 Netflix puts and just made a fortune. But the other point was how AMZN might be the trophy elephant. Why? It’s the last stock anyone is talking or thinking about shorting. And it’s growth is behind it, EPS lacking, and yea there’s also a possibility some of this monopoly stuff starts coming home to roost. It’s not a great absolute short, and I no longer short for the sole intention of making money but rather to hedge, but between that and AAPL I think a half intelligent gent can easily get some crash/correction protection in size and cheap.

I love how Grantham arrives at his S&P value by using a trend line LOL. Guy never has anything new to say and what he says is always from the same script.

Ive always found anecdotal stuff useful. The only question I ask ahead of it, is does this experience reflect that of a typical person in a typical situation. IE is this indicative of the broader market. Whats cool with housing, is you can go make a few calls and get to the bottom right away. Take a brokerage statement(or another proof of resources) and contact a few agents anywhere you're looking to invest, letting them know you have the funding to buy already secured. In a day or two you can start making offers. See how easy or difficult it is to buy a house right now. Spoiler alert: its definitely not easy.

Well more importantly, I dont think KO or AXP is a HTB.

I’ll preface this by saying that I probably trade just as much as anyone, so I appreciate all datapoints, but when I step back and put the following into perspective, I find it really amusing how much focus the average investor has(or doesn’t have). Since 2018 we’ve gone from ….sell everything the fed is tapering(wrong call) to OMG next Great Depression(wrong), to OMG the economy is too good! At a certain point it’s just like STFU and focus on investing longer term LOL

In that case I'd agree. But short interest and borrow rates fluctuate like the temperature and are typically short term phenomenon. You are probably 99% accurate, at least from my long list of recollections in that the long term prognosis is terrible if you track those companies. That said, even with eventual 0 SHLD, every instance I can remember where borrow went over 50% annually it was a great long for the next few weeks. Man I miss that one. We'll probably never find out but I always had a suspicion something was going on there cuz Eddy almost always waited for the borrow spike to drop a form 4. Then you'd get a 50% rip. Rinse, repeat. TLRY too that mega squeeze started after the borrow went from like 25% to 500% in a few days. Then the shares went from about $80 to $250.