Have We Hit The Top?

[Paarslaars]

No cash here either, I tend to treat my BRK position similar to a cash position, if I really need money for something interesting, I reduce that position: 

 

50% BRK

34% O&G (IPCO, GXE, OXY, OBE & PPR)

7% crypto ETF

3% BABA leaps

3% MNDY

3% PCYO

 

Should've just stuck with the top two, crypto, baba and monday.com are all down 20-30%.

Nevertheless, I'm up 18% YTD while the market is down, can't complain I guess.

I believe there is a cycle to ride here on O&G, which I'm going to do, after that we'll see.

Edited April 15, 2022 by Paarslaars

[ValueArb]

ARKK is $49.87 right now. Its down -47% YTD,  -59% over last year, and it's trailing the S&P 500 and QQQ over all periods including YTD, Year, 5 Year, and since inception.

 

And the most obvious part, ARKK continues to have net inflows this year, up nearly a billion.

[Gregmal]

On 8/20/2021 at 4:43 PM, changegonnacome said:

Confidence termites…..I like the analogy

 

His bubble popping/deflating template does seem to be playing out…….the fastly’s & their ilk the most egregiously overvalued stocks etc. have indeed been taken out and shot…..to a certain extent……Russell is struggling and I see in my own portfolio (which skews value) a disconnect between the SP500 being up daily but my modestly priced stocks are having daily drawdowns. 
 

I foresee significant long term capital gains selling effects kicking in soon too - I’m certainly sitting on large gains in certain positions where I’m waiting only for the clock to toll midnight to sell. Suspect I’m not alone…..I’ve a hit list of domino positions that will fall over the next couple of months with 90% of them done by the end of October.
 

 

 

Confidence termites. Over time this has proven quite prescient. @muscleman kind of hit it too. First the grim reaper comes for the crap. Then it takes the overvalued and overowned quality. Then it washes out all the weak hands. Nothing has shown this to not be the case. It’s played out almost exactly as the textbook would have indicated it should.

[Sweet]

Probably still much more downside to come.  The big tech stocks are still trading at large valuations.

[mattee2264]

How much downside? So far despite all the dramatics the overall index is only down 15% or so from a market top that was clearly based on unrealistic expectations about the economic recovery ("The Roaring 20s") and tech optimism ("The New Normal") as well as an assumption that inflation was transitory and the Fed would keep interest rates low and continue rescuing markets at the first sign of trouble.

 

And usually that level of confidence is only found at the end of a multi-year secular bull market and they generally end with 30-50% declines. .

 

 

 

 

 

 

 

 

 

[Gregmal]

7 minutes ago, mattee2264 said:

How much downside? So far despite all the dramatics the overall index is only down 15% or so from a market top that was clearly based on unrealistic expectations about the economic recovery ("The Roaring 20s") and tech optimism ("The New Normal") as well as an assumption that inflation was transitory and the Fed would keep interest rates low and continue rescuing markets at the first sign of trouble.

 

And usually that level of confidence is only found at the end of a multi-year secular bull market and they generally end with 30-50% declines. .

 

 

 

 

 

 

 

 

 

The majority of those things haven’t really changed. Consumers are still doing extremely well. Job market is awesome for lower and middle class. Meh for upper middle but not bad, and cooling for super high end, but they re fine regardless. Maybe some tech engineers will need to put on hard hats. Oh the horrors. 
 

Rates are still low. And more importantly well below inflation. So yea, 15% isn’t a big number. Under the surface energy has buoyed a good chunk of that. Much of tech minus the big ones have been annihilated. I think the excess in the market has to a degree been squeezed out. Fundamentals seems relatively healthy. There’s just always a reason for folks to get carried away. Maybe Mr Market is waiting for me to panic…IDK, been bored more than anything. But we are starting to see some real good opportunities. So idk guess we ll just have to see. I suppose too we ll have a few moments like BXC last week. Where the market and the computers get carried away and then they report numbers and for a moment it’s like “hey the real world just called and said what’s up”. 

[wabuffo]

So far despite all the dramatics the overall index is only down 15% or so from a market top

 

I think its a lot worse than that. The average stock is probably down 25-30% since the middle of last year to today.

 

Bill

[changegonnacome]

 

22 hours ago, Gregmal said:

Confidence termites. Over time this has proven quite prescient.

 

Yep the termites are inside the house and they are heading for the family jewels..........trying to game plan this and the only thing I'm doing today I think is selling long dated calls on the COVID darling companies using their ATH's as my strike price........so selling volatility when vol is high & creating a synthetic short positions in the future at what I consider to be bubble strike prices.......I dont think any of these darlings are going back anywhere near those ATH for years......even so I'm modestly selling vol such that none of these things could be even close to carrying me out.

Edited May 9, 2022 by changegonnacome

[Simba]

4 hours ago, Sweet said:

Probably still much more downside to come.  The big tech stocks are still trading at large valuations.

Yup. Although I do think some of the tech names are good businesses (e.g. MSFT), so they remain high for good reason, but like NFLX, generals can be shot fairly quickly, if they start reporting weakening comps and margin deteriorates. 

 

I also don't think we've seen capitulation. I'm thinking maybe another -10  or -15% to go. Hoping for a -30% down year (one can hope, can't I?) 

 

Deployed cash today, first time in a long time.

Edited May 9, 2022 by Simba

[Xerxes]

At some point there ought to be a thread for BOTTOM IS COMING starting the 28 page discussion 

 

semi-perma-bear Jeremi Grantham always complained that the 2001-2003 bear market didn’t take the S&P500 below is a certain trend line that it should have. So it wasn’t a perfect correction. That was 20 years ago …. And rising 
 

Who cares ? Don’t get carried away by being a perfect bear. Each time it will be different and you ought to deploy if risk reward of individual name gets tilted in your favour. 
 

at the moment there is broad psychological good feeling safety of being a loud bear. It is like the analyst that keep raising price targets in a bull market. 

Edited May 9, 2022 by Xerxes

[Sweet]

How much more?  No idea.

 

It has proven to be very asymmetric selling, I think the tech stocks could get cut 50% or more again.

 

No idea though, finger in the air stuff.

[Gregmal]

26 minutes ago, Sweet said:

How much more?  No idea.

 

It has proven to be very asymmetric selling, I think the tech stocks could get cut 50% or more again.

 

No idea though, finger in the air stuff.

I think that’s the key here. Why bother with stuff you don’t have a hood handle on? 

[adesigar]

ARKK down 75% from peak, Some of the ARKK holdings are down 80-90% from their peak. 

Stuff like BABA, KWEB, CPNG, ETSY, SQ, PYPL, NFLX are down 70-80%.

Indexes are being help up by a few stocks.

 

I have started buying select stocks. I hope the quality names drop another 20%. 

 

I want DIS under $100, BRK under $290, PSH is at my buy because of Ackmans Interest rate swapation Hedges. Have a lot of JOE already but would love more under $40. Would also consider ARKK under $35 preferably under $30. Gregmal ETF stocks if they dropped another 10-20%. Come on Mr Market. 

 

 

[KCLarkin]

SPY wants to go lower. Bears anchor on the big 50% drops, but they are extremely rare. Probably looking at either a 2018 style "barely bear". Or a more typical -30s drop. So a range of -20 to -35. But the actual bottom will be very brief and most people will miss it. So the buyable bottom is probably -18 to -25.

 

A few more days like this and it will be buy time. But most likely we rally tomorrow to fake everyone out.

---

TLDR: Plenty of good values right now. But not many spectacular ones.

Edited May 9, 2022 by KCLarkin

[mattee2264]

Below 4000 for the first time since end of Q1 2021! Even oil got crushed today. Not very long before we enter bear market territory for the S&P 500. .

 

Feels a bit different from the barely bear markets of 2011/12 and 2018 which were short reversals in the long long bull market and from much more reasonably valued market levels. Of course a bear market rally would be typical and there is likely to be a lot more volatility before the actual low is reached which might not be until later this year or even next year. But 30-35% decline seems more likely unless there is a soft landing and inflation cools more quickly than expected or the Fed decides to rescue the stock market even with inflation still roaring. 

 

 

 

Edited May 9, 2022 by mattee2264

[Spekulatius]

Reassuring:

https://finance.yahoo.com/news/yellen-says-u-financial-system-165428712.html

[Gregmal]

It does feel a little different but ultimately seems a lot like the late 2018 flash crash. Everyone had a “reason” why they thought it happened, but really, nothing happened and momentum just kind of built up and puked. The only effects I see of this market swoon in the real world are people talking about it. Not much behaviorally different. Still can’t get restaurant bookings or a cheap vacation home any of that fun stuff that usually becomes more accessible to the privileged folks during hard times for the common man.
 

On the bright side, the next cycles 10-20 baggers are already probably buyable. Hard to find them though when everything looks like a turd. I close on some Ripple shares this week. Hooray private market liquidity!

[Sweet]

1 hour ago, Gregmal said:

I think that’s the key here. Why bother with stuff you don’t have a hood handle on? 

 

True.

I want to start averaging into certain sectors which are currently getting wrecked.

 

Technology is something I would like to own, but it’s been out of whack from fundamental for at least 5 years.

 

Then again, maybe technology is last years decade, and this decade with higher rates the market will want returns.

 

It does feel like a generational turning point.

[Xerxes]

47 minutes ago, Spekulatius said:

Reassuring:

https://finance.yahoo.com/news/yellen-says-u-financial-system-165428712.html

If she says otherwise others will complain why are the even looking at the stock market, that is not their job 

[Gregmal]

If folks can’t handle volatility they shouldn’t be in the stock market. Yellen is correct. 

Edited May 9, 2022 by Gregmal

[shru]

Anyone thinks that China is intentionally keeping Covid zero policy to break western nations?? We all think that it is political and it has to do with Xi’s face saving and ineffectiveness of Sinovac.

but can it be there intentional move? Just like Russia know that europe depends on their oil and gas, China knows that world depends on their manufacturing. 
currently,
Due to money printing, more money is chasing less goods. And goods are becoming less and less in the market by their Covid zero policy. So even if the rate rises, inflation will not go until China opens up its trade. 
On the contrary, in western nations, rising rates has probability to burst its asset bubble which will alienate many investors, household and common individual. Job losses might be there due to lack on further investment in higher interest rate and inflationary environment. And that will amplify the impact on critical economic and day to day life. And western nations are not China that people here can be suppressed. Lot of will take upon street and show their dissatisfaction. Civil unrest may fall upon. Destabilize the governments. Destroy the fabric of western nations. And then China opens itself as more stronger nation than any other world nations.

guys, I may sound like conspiracy theories but when I see this in its entirety, I see that as one of the multiple pictures painted in this forum. 
I am up to know your thoughts.

[Thrifty3000]

4 hours ago, Gregmal said:

It does feel a little different but ultimately seems a lot like the late 2018 flash crash. Everyone had a “reason” why they thought it happened, but really, nothing happened and momentum just kind of built up and puked. The only effects I see of this market swoon in the real world are people talking about it. Not much behaviorally different. Still can’t get restaurant bookings or a cheap vacation home any of that fun stuff that usually becomes more accessible to the privileged folks during hard times for the common man.
 

On the bright side, the next cycles 10-20 baggers are already probably buyable. Hard to find them though when everything looks like a turd. I close on some Ripple shares this week. Hooray private market liquidity!

+1

2018 flash crash. deja vu all over again

[Spekulatius]

@shruI don’t think your hypothesis makes much sense.

1) a lockdown in China will hurt the  Chinese economy much more so than it does collateral damage to western economies (probably need order of magnitude more).

2.  china is not the cause of inflation in the west, the causes are lack of labor in western economies, and rising natural resource prices as well as shortages due to demand spiking.

3) China is in much more risk of having a bubble popping the west. China has a real estate bubble that far exceed what we have in the US or even Canada. Worse, since they have pegged the Yuan to the USD, their monetary policy is tied to US monetary policy, until they decide to get rid of the currently  peg. It seems like markets already predicting that this may happen, because the Chinese Yuan is very weak agains the USD.

 

I think Chinese has to be much more concerned about their social fabric than the west at the moment. We can tell  this from  “common prosperity” agenda which whacks their stock market , but I guess they feel they have to do it nevertheless.

[Simba]

16 minutes ago, Thrifty3000 said:

+1

2018 flash crash. deja vu all over again

 

4 hours ago, KCLarkin said:

SPY wants to go lower. Bears anchor on the big 50% drops, but they are extremely rare. Probably looking at either a 2018 style "barely bear". Or a more typical -30s drop. So a range of -20 to -35. But the actual bottom will be very brief and most people will miss it. So the buyable bottom is probably -18 to -25.

 

A few more days like this and it will be buy time. But most likely we rally tomorrow to fake everyone out.

---

TLDR: Plenty of good values right now. But not many spectacular ones.

 

This is my thought process - but I'm not really expecting a V shape recovery as we've been so fortunate to have in the past. 

 

IMO there's probably a ton of value in TECH land, if you can really spot out the compounders / winners, and not 1-trick COVID ponies (basically avoid whatever Cathie Wood owns)

[shru]

1 hour ago, Spekulatius said:

@shruI don’t think your hypothesis makes much sense.

1) a lockdown in China will hurt the  Chinese economy much more so than it does collateral damage to western economies (probably need order of magnitude more).

2.  china is not the cause of inflation in the west, the causes are lack of labor in western economies, and rising natural resource prices as well as shortages due to demand spiking.

3) China is in much more risk of having a bubble popping the west. China has a real estate bubble that far exceed what we have in the US or even Canada. Worse, since they have pegged the Yuan to the USD, their monetary policy is tied to US monetary policy, until they decide to get rid of the currently  peg. It seems like markets already predicting that this may happen, because the Chinese Yuan is very weak agains the USD.

 

I think Chinese has to be much more concerned about their social fabric than the west at the moment. We can tell  this from  “common prosperity” agenda which whacks their stock market , but I guess they feel they have to do it nevertheless.

Thank you for response and food for more thoughts. 

Value your response highly.