Have We Hit The Top?

[Gregmal]

Look, lets face it. We know being a bear is a perpetual thing. But even if it wasnt, and you got all bearish in H2-2021....we re now pushing 4 years with not much to show for it, and probably(as evidenced by all the hedge funds you heard about after 2022 that proceeded to then blow up) have losses to show for it. When you coulda just bought Berkshire or Apple or an index. 

[james22]

49 minutes ago, frommi said:

Sometimes i think that every generation has to relearn the same lessons again, because young investors are not able to learn from their parents/grandparents because they think they know better.

 

Most young investors, sure. But not all.

 

And it doesn't follow that father's can't learn anything from their sons.

 

49 minutes ago, frommi said:

His son is probably in for a rude awakening.

 

Howard Marks as well? 

 

49 minutes ago, frommi said:

(as is most of this board)

 

Really?

 

I'd think most here are Value investors and so more likely to be surprised to the upside than down.

[frommi]

30 minutes ago, james22 said:

 

Most young investors, sure. But not all.

 

And it doesn't follow that father's can't learn anything from their sons.

 

 

Howard Marks as well? 

 

 

Really?

 

I'd think most here are Value investors and so more likely to be surprised to the upside than down.

Yes Marks son. And yes also this board. The true value investors here are rare, at least that is my impression. Most people here are now crypto gurus?

Edited Wednesday at 03:15 PM by frommi

[Blake Hampton]

Pg. 12, Eye on the Market - JPM

 

@Spooky posted this on the Tidbits thread and It's quite telling. Thanks by the way, it really is an interesting document.

 

Edited Wednesday at 04:41 PM by Blake Hampton

[Spooky]

3 minutes ago, Blake Hampton said:

Pg. 12, Eye on the Market - JPM

 

@Spooky posted this on the Tidbits thread and It's quite telling. Thanks by the way, it really is an interesting document.

 

 

The charts above caught my eye as well. Saw it and sent some funds to my Spouse to put in her Wealth Simple account which is more globally diversified equities. S&P non-tech and financials looks interesting and so does the S&P 600.

Edited Wednesday at 04:45 PM by Spooky

[brobro777]

1 hour ago, frommi said:

Yes Marks son. And yes also this board. The true value investors here are rare, at least that is my impression. Most people here are now crypto gurus?

 

You right man, I'm not a value investor, I make bets and I take ideas from everywhere, as long as they're positive EV

 

I'm a tobacco guy tho, not a crypto guru, haha

 

 

[Blake Hampton]

I don’t blame people for not understanding the situation. This stuff is all a convoluted mess of data, figures, policy, and other esoteric stuff that most people won’t ever understand.

 

And this is precisely what makes it so dangerous. There are so many people now taking on unbelievable amounts of risk, and they don’t even realize it.

[james22]

14 minutes ago, Blake Hampton said:

I don’t blame people for not understanding the situation. This stuff is all a convoluted mess of data, figures, policy, and other esoteric stuff that most people won’t ever understand.

 

And this is precisely what makes it so dangerous. There are so many people now taking on unbelievable amounts of risk, and they don’t even realize it.

 

And there are others who assume a different form of risk because they believe they understand the situation.

 

Better to accept it's not understandable.

[Malmqky]

27 minutes ago, Blake Hampton said:

I don’t blame people for not understanding the situation. This stuff is all a convoluted mess of data, figures, policy, and other esoteric stuff that most people won’t ever understand.

 

And this is precisely what makes it so dangerous. There are so many people now taking on unbelievable amounts of risk, and they don’t even realize it.

The best way to approach it is to be humble and realize you don’t understand it yourself, even if you think you do. Much less anyone else. This is all incredibly complex and why free market is so much better than planned economy, etc.

 

Once you have a couple decades of experience under your belt, you realize this is stuff that’s all been talked about/people have lived through before. History doesn’t repeat, but it rhymes.

 

Hedge accordingly, and always inverse, especially your own beliefs and assumptions. Like you said, so many people don’t understand the risk, don’t acknowledge they have blind spots, and essentially recklessly gamble. Flip side of the coin is a lot of people think they do understand the risks, and miss out on bull markets. 2011ish and 2018ish being recent examples.

Edited Wednesday at 05:32 PM by Malmqky

[Gregmal]

Can we please find an $SPY 3000 greatest hits compilation from 2022? It was glorious watching then and even more so now.

 

Mind you most of it occurred with $SPY at like 3800 and the greatest straw grabbing reprieve we had was that on October or something we had a brief intraday low at like 3500….yea they’ll all try to scare us with the “fear the pullback” rhetoric, but once you learn to embrace it rather than fear it, you improve greatly as an investor. 

Don’t let your brain turn to mush fellas. Listening to folks whom sound smart but don’t put up numbers is the easiest way to do that. 

[Malmqky]

^

 

Also, 50% crashes happen. But guess what? Even in time periods where market is flat for a decade, there are people who have made phenomenal returns. 

 

The time period right before dot-com crash and the decade after was incredibly easy if you were a fundamental focused person who picked individual stocks. You just had to be ok with underperforming during some mania.

 

If you know what you’re doing, macro really doesn’t even matter all that much. If the market crashed 50%, I bet many members on this board wouldn’t be down nearly so much, and the buying opportunities and thus long term performance would be glorious.

Edited Wednesday at 05:39 PM by Malmqky

[Blake Hampton]

It took the S&P 500 13 years to fully recover from the Dot-com bubble, even amid the FED lowering rates to 0% and conducting large amounts of QE.

 

I vehemently doubt we will be so lucky in the future.

 

[spartansaver]

17 minutes ago, Gregmal said:

Can we please find an $SPY 3000 greatest hits compilation from 2022? It was glorious watching then and even more so now.

 

Mind you most of it occurred with $SPY at like 3800 and the greatest straw grabbing reprieve we had was that on October or something we had a brief intraday low at like 3500….yea they’ll all try to scare us with the “fear the pullback” rhetoric, but once you learn to embrace it rather than fear it, you improve greatly as an investor. 

Don’t let your brain turn to mush fellas. Listening to folks whom sound smart but don’t put up numbers is the easiest way to do that. 

I’ve seen in the past you state that you’re >100% long. Do you hedge or use options in any way or just let it ride? 

[Blake Hampton]

We live in an economy where personal consumption expenditures represent 68% of our GDP. Ever heard of the wealth effect? What do you think happens when reality kicks in? Do you really think people will feel the same when they witness half of their retirement accounts disappear? What about when the fiscal situation finally shows signs of breaking, and Congress is soon forced to reform entitlement spending?

 

Edited Wednesday at 05:57 PM by Blake Hampton

[Malmqky]

4 minutes ago, Blake Hampton said:

It took the S&P 500 13 years to fully recover from the Dot-com bubble, even amid the FED lowering rates to 0% and conducting large amounts of QE.

 

I vehemently doubt we will be so lucky in the future.

 

 

And those 13 years were some of the easiest, best performance years for many folks.

 

I doubt we'll be so lucky as well. But what do I know? Just seen this all before, lived through stuff like this, and despite make some really dumbass decisions over the years, outperformed and not blown-up.

[Malmqky]

5 minutes ago, Blake Hampton said:

We live in an economy where personal consumption expenditures represent 68% of our nation's GDP. Ever heard of the wealth effect? What do you think happens when reality kicks in? Do you really think people will feel the same when they witness half of their retirement accounts disappear? What about when the fiscal situation finally shows signs of breaking, and Congress is soon forced to reform entitlement spending?

 

Study 2009. Almost everyone thought the system WAS broken. And it kinda was and is tbf. But still...

 

Also I'm not saying you're wrong or necessarily disagreeing with anything you said. I'm just saying opportunity exists no matter what.

Edited Wednesday at 06:00 PM by Malmqky

[gfp]

3 minutes ago, Blake Hampton said:

We live in an economy where personal consumption expenditures represent 68% of our GDP. Ever heard of the wealth effect? What do you think happens when reality kicks in? Do you really think people will feel the same when they witness half of their retirement accounts disappear? What about when the fiscal situation finally shows signs of breaking, and Congress is soon forced to reform entitlement spending?

 

Just be careful being so sure you have a handle on all this.  You are young and it can all seem so obvious.  It isn't.

 

Being defensive is just fine.  Being sure is usually a mistake.

 

If you stick to ground level blocking and tackling in individual companies compounding your net worth you don't have to be sure about Congress being "soon forced to reform entitlement spending" - whatever you think that means.

[Blake Hampton]

Just now, Malmqky said:

Study 2009. Almost everyone thought the system WAS broken. And it kinda was and is tbf. But still...

I have studied 2009, and the system was broken. It took governments around the world printing tons of money to save the entire banking system. 
 

“If we don't do this tomorrow, we won't have an economy on Monday.”

- Ben Bernanke, 2008

[Malmqky]

1 minute ago, Blake Hampton said:

I have studied 2009, and the system was broken. It took governments around the world printing tons of money to save the entire banking system. 
 

“If we don't do this tomorrow, we won't have an economy on Monday.”

- Ben Bernanke, 2008

 

Good. Continue to form your own opinions. Just remember to inverse them and stay away from absolutes and be agile. And learn from folks who lived through it and have had a decade+ to study the aftermath/what happened.

 

I think you're going to do well over the next few decades. Hope I'm not coming off as too preachy or anything.

Edited Wednesday at 06:03 PM by Malmqky

[Blake Hampton]

You guys are absolutely right when you say I don’t have a handle on this—it feels impossible to. I’ve spent the last couple of years really digging into this stuff, and every time I think I’ve figured something out, I quickly realize I’m wrong.

 

We don’t know what’s going to happen.

 

That said, I do think it’s possible to understand the different ways it could play out and position yourself for each scenario. The only thing I’m sure of is that none of this is good, and whatever bad comes from it will hurt a lot of people. I don’t plan to be one of them.

[Gregmal]

25 minutes ago, spartansaver said:

I’ve seen in the past you state that you’re >100% long. Do you hedge or use options in any way or just let it ride? 

Sometimes I hedge with index options. Mainly though I just view things on a look through basis. Stuff like FRPH or MSGS or even BRK are pretty easy to model stress related drawdown expectations. So from there I can determine what’s worth borrowing against. 
 

Obviously if you say Berkshire doesn’t have 50% downsides from here, you’ll get feedback that “there was this one time”….but I ignore that because in order to get to 50% drawdown it has to get to 10 or 20% drawdown and during that period of time I can adapt and adjust. 
 

Or stated another way, if you don’t think Berkshire has 50% downside, and the market wants to challenge you on that, and you didn’t think to have something on somewhere to capitalize on that…then you shouldn’t be using margin. But the example I stated a few years ago still sums it up well, you can be 70% long Berkshire, 50% long MSFT and GOOG, and have 10% long index puts….you’ll be fine. 

Edited Wednesday at 06:17 PM by Gregmal

[Blake Hampton]

16 minutes ago, Malmqky said:

Good. Continue to form your own opinions. Just remember to inverse them and stay away from absolutes and be agile. And learn from folks who lived through it and have had a decade+ to study the aftermath/what happened.

 

I think you're going to do well over the next few decades. Hope I'm not coming off as too preachy or anything.

Definitely not too preachy. If I didn't have any responses for my comments, I might as well go talk to a wall.

 

Edited Wednesday at 06:20 PM by Blake Hampton

[spartansaver]

6 minutes ago, Gregmal said:

Sometimes I hedge with index options. Mainly though I just view things on a look through basis. Stuff like FRPH or MSGS or even BRK are pretty easy to model stress related drawdown expectations. So from there I can determine what’s worth borrowing against. 
 

Obviously if you say Berkshire doesn’t have 50% downsides from here, you’ll get feedback that “there was this one time”….but I ignore that because in order to get to 50% drawdown it has to get to 10 or 20% drawdown and during that period of time I can adapt and adjust. 
 

Or stated another way, if you don’t think Berkshire has 50% downside, and the market wants to challenge you on that, and you didn’t think to have something on somewhere to capitalize on that…then you shouldn’t be using margin. But the example I stated a few years ago still sums it up well, you can be 70% long Berkshire, 50% long MSFT and GOOG, and have 10% long index puts….you’ll be fine. 

When are the times you’ve used index options?

Edited Wednesday at 06:23 PM by spartansaver

[Gregmal]

Just now, spartansaver said:

When are the times you’ve used index options?

It’s largely based on gut feelings. Generally if I’ve got a good year going I’ll do it into year end to lock some stuff in. House money approach. Or if there’s some new macro concern lingering it’s worth exploring. 
 

The biggest no nos though are just pointlessly throwing money away either proactively with negative or short positions, or passively with too much cash/equivalents on already know stuff. The market is expensive isn’t a thesis. Or post covid, more covid isn’t a thesis, or post inflation, inflation isn’t a thesis.
 

It’s always the first bout that gets the biggest returns. If you played a little bearish on covid in early 2020 you got paid. Anyone who played it after Spring 2020 got hosed. Same with inflation, same with rates, same with the recession post GFC. You generally get one shot at a payday on a macro thesis, after that it’s priced in.

[Castanza]

43 minutes ago, Blake Hampton said:

I vehemently doubt we will be so lucky in the future.

 

What does this even mean? What exactly are you expecting to happen? 

 

 

 

Edited Wednesday at 06:42 PM by Castanza