Have We Hit The Top?

[formthirteen]

7 hours ago, adesigar said:

Schiller PE hit 40

 

Now is probably a good time to try to imagine what it would feel like if a stock in your portfolio is down 50%.

[kab60]

1 hour ago, formthirteen said:

 

Now is probably a good time to try to imagine what it would feel like if a stock in your portfolio is down 50%.

I think that's always a good idea. Shouldn't buy stocks unless you can cope with at least a 50 pct. drawdown.

 

If you're worried about a temporary drawdown, stocks are probably a bad idea. If you didn't buy hand over first in March 2020, I'd really question whether or not holding cash and trying to time the market increases your expected returns.

 

With smaller amounts of money and +40.000 listed stocks around the globe, there are always bargains to be had.

 

If you're worried about inflation, higher rates etc. I think there are still a ton of things to do.

 

I understand if you're retired and need regular cash coming in, that it's more tricky. But even some resilient dividend payers are looking like good value at the moment despite low rates.

 

There's big tobacco, but you could also put together a handful of decent/good business in HK trading around NCAV with 7-11 pct. yields. Even in NA you can easily find decent stuff with pretty fat yields (midstream assets, telcos, some BDC's like TSLX).

 

Another way to cope with the effects of a big drawdown is investering in resilient businesses where mngmt has shown they buyback stock when it gets cheap - hell or high water. That way you know the company is working for you despite being fully invested. Einhorns pick, BHF, has quite the track record - trading at like 0,2-0,3xBV and buying stock during the depths of the pandemic.

If I had to guess, I say markets keep grinding higher. It seems like all the smart people are bracing themselves for a crash. There is this huge wall of worry. Which to me probably increases the odds of things moving higher, though things going lower would be better for long term expected returns.

 

Personally I think the current market is pretty nuts, but I don't think my own portfolio is. When possible I've shifted into more defensive names with what I expect to be better risk/rewards (I'm pretty big in Berkshire, Big Tobacco, fiber telcos and auto dealerships (resilient fuckers).

Edited November 6, 2021 by kab60

[Guest]

Even with CAPE over 40, it was over 40 for over a 1.5 years during the late 90s/early 2000s...and that was with the 10 year at over 6.5% at times. To act like 40 is "high" with the 10 year under 1.5% and huge stimulus...we have no idea what CAPE  "ought" to be in this environment. 

 

Keep in mind that in the dotcom bubble there were high rates and negative stimulus (shrinking government debt).

 

But yes, stocks can drop 50% or more at any time...and I'm more than okay with that.

[changegonnacome]

Perma-bear extraordinaire:

 

https://www.hussmanfunds.com/comment/mc211108/

[TwoCitiesCapital]

8 hours ago, changegonnacome said:

Perma-bear extraordinaire:

 

https://www.hussmanfunds.com/comment/mc211108/

 

Thing is, I think he's liable to be right this time. 

 

Sure, hold him accountable for missing the bottom in 2009. But I think history will look upon his bubble research over the last 1-2 years kindly. 

[changegonnacome]

2 minutes ago, TwoCitiesCapital said:

 

Thing is, I think he's liable to be right this time. 

 

Sure, hold him accountable for missing the bottom in 2009. But I think history will look upon his bubble research over the last 1-2 years kindly. 

 

Sorry posted on the run and reading my comment it looks like I'm editorializing....guess i just wanted to acknowledge I was aware of his long standing reputation lest someone come on and enlighten me....wanted to share for everyone to read its a well thought out piece.....I think his arguments and data are compelling......S&P profit margins peaking (think everyone can see labour's leverage increasing everyday), implied expectations and optimism built in to many many stocks & retail investors unrealistic return projections, inflationary trend (& deflationary effects of China/E.Europe dissipating) meaning the next 20 years is likely to one of gradually rising rates as opposed to the last 40 being falling ones.

 

Burry, Grantham & Hussman cant be more vocal right now......but more than vocal I think there's a tone now to their warnings which is taking on the shrill of someone screaming fire in a crowded theatre.....it seem to me you only do that when your fairly certain your going to proven right!

 

As Howard Marks says - "move forward, but with caution" and I'm heeding that advice right now with a conservative posture

[Gregmal]

I agree, be cautious. But do so in a way where you leave yourself in the game. Where you can win even in the caution isnt warranted. 

 

Here's Hussman...check out the long term record.

 

https://seekingalpha.com/symbol/HSGFX

[bathtime]

19 minutes ago, Gregmal said:

I agree, be cautious. But do so in a way where you leave yourself in the game. Where you can win even in the caution isnt warranted. 

 

Here's Hussman...check out the long term record.

 

https://seekingalpha.com/symbol/HSGFX

I feel grateful for having had success trading this year, AND, this week I’m feeling exhausted from the last 18 months of grinding out equity trades/investments. 
 

I wonder about just going to mostly cash and doing strategic options trades with 5-10% of the account, as a way to stay in the game but not risk the 90-95% of the account to a bursting bubble. 

[Morgan]

8 hours ago, Gregmal said:

I agree, be cautious. But do so in a way where you leave yourself in the game. Where you can win even in the caution isnt warranted. 

 

Here's Hussman...check out the long term record.

 

https://seekingalpha.com/symbol/HSGFX

Caution is good, but how do you even keep a business open with performance like that? Wow. 

[Gregmal]

6 minutes ago, Morgan said:

Caution is good, but how do you even keep a business open with performance like that? Wow. 

Salesmanship. There’s always suckers out there buying a good doomsday story. 

[Spekulatius]

30 minutes ago, Morgan said:

Caution is good, but how do you even keep a business open with performance like that? Wow. 

Financial Doomporn keeps selling.

[Morgan]

Jeez. Maybe I should start managing other people’s money. 

[formthirteen]

1 minute ago, Morgan said:

Jeez. Maybe I should start managing other people’s money. 

 

Here, take my money

[Guest]

To Hussman's credit he had amazing performance from inception to about 2010. This is obviously cherry picking data but from inception to March of 2009 a $10,000 investment in the S&P 500 would have been worth about $5,500 vs over $20,500 for HSGFX. He's not an idiot; he is stubborn and arrogant though. If the stimulus didn't happen last year, I'd say there is an excellent chance we'd all be admiring his perspective and all of that.  He also has a ton of his own money in the fund from what I remember. Compare that to the folks who run BEARX...and you'll see he isn't just selling fear.

 

On another fun (ie nerd) note, I guess my former neighbor knows him quite well. He even invested with him but sold out over the last couple of years or so.

[fareastwarriors]

1 hour ago, Morgan said:

Jeez. Maybe I should start managing other people’s money. 

Waiting for your RE fund. 

[Spekulatius]

7 hours ago, stahleyp said:

To Hussman's credit he had amazing performance from inception to about 2010. This is obviously cherry picking data but from inception to March of 2009 a $10,000 investment in the S&P 500 would have been worth about $5,500 vs over $20,500 for HSGFX. He's not an idiot; he is stubborn and arrogant though. If the stimulus didn't happen last year, I'd say there is an excellent chance we'd all be admiring his perspective and all of that.  He also has a ton of his own money in the fund from what I remember. Compare that to the folks who run BEARX...and you'll see he isn't just selling fear.

 

On another fun (ie nerd) note, I guess my former neighbor knows him quite well. He even invested with him but sold out over the last couple of years or so.

I think it is a cautionary tale of an investment manager marketing a certain style. Sure, if one sticks to a certain style one may do either extremely well or badly and it is easy to market if you do well.

 

However, when you stick to a certain style box, it is unlikely you will do well for extended periods of time. Most likely, you just have been lucky if you performed well from the get go.

What you want from an investor perspective is a manager who remains flexible which inevitably means that the style is going to drift over time. This is harder to market though.

 

The ability to change is one reason why Buffett and others have been able to perform well for long periods of time. if he hadn't done this, he would have flamed out in the 70's and nobody would talk about him any more.

Edited November 11, 2021 by Spekulatius

[Errold]

Oof, I'm usually more of a lurker on here, but those returns bringing me out.  Figure most people would shut down and open a new fund under a new name after 5 years.

[formthirteen]

Evergrande officially defaulted:

 

 

 

http://dmsa-agentur.de/download/20211110_DMSA_EVG_PM_en.pdf

[Guest]

4 hours ago, Spekulatius said:

I think it is a cautionary tail of an investment manager marketing a certain style. Sure, if one sticks to a certain style one may do either extremely well or badly and it is easy to market if you do well.

 

However, when you stick to a certain style box, it is unlikely you will do well for extended periods of time. Most likely, you just have been lucky if you performed well from the get go.

What you want from an investor perspective is a manager who remains flexible which inevitably means that the style is going to drift over time. This is harder to market though.

 

The ability to change is one reason why Buffett and others have been able to perform well for long periods of time. if he hadn't done this, he would have flamed out in the 70's and nobody would talk about him any more.

 

 

I agree. I think the truth is somewhere in the middle. Do I think he's 4x better than the market (of course not) as the March 2009 numbers suggest. Do I think the market is 5x or so better than he is now? Nope. I do think he's much better than average though. If you look at his non-hedged portfolio, it's done quite well (last time I checked anyway). 

[CharlesMunger]

On 11/10/2021 at 7:18 AM, Gregmal said:

I agree, be cautious. But do so in a way where you leave yourself in the game. Where you can win even in the caution isnt warranted. 

 

Here's Hussman...check out the long term record.

 

https://seekingalpha.com/symbol/HSGFX

 

Thinking of just transferring my real estate basket into Berkshire and deleveraging my portfolio for the time-being. @Gregmal are you trimming your APTS, AIV, CLPR calls/shares or holding?

 

[boilermaker75]

About 10 years ago I invested $10,000 in HSGFX. After a couple of years I sold my HSGFX as the portfolio I was managing was up about 50% and my HSGFX funds were down slightly.

 

I think I would have probably done better with my own portfolio if I had not had the HSGFX funds. I kept reading Hussman's Market Comments, which kept scaring me.

[Gregmal]

4 hours ago, CharlesMunger said:

 

Thinking of just transferring my real estate basket into Berkshire and deleveraging my portfolio for the time-being. @Gregmal are you trimming your APTS, AIV, CLPR calls/shares or holding?

 

I've made standard adjustments over the course of the year but am largely holding or adding. As has been discussed in the APTS thread, the higher the shares can get the better the investment becomes from a risk perspective. Having basically doubled since the beginning of the year with only minimal dilution is huge. Now they've got a $200M credit line and $100M or so coming due from loans plus existing cash, so you figure the liquidity position is robust. Likely you get another preferred redemption of about $100M and an immaterial number of shares issued for the next few months. If the next major redemption is funded by share issuance at mid to high teens prices, even better. Same kind of thing just with different sub content for CLPR, CLI, and AIV. The stories just need to play out and simply by that they continue to get derisked. 

[boilermaker75]

https://www.yahoo.com/finance/news/michael-burry-dumped-just-everything-221800815.html

[muscleman]

Update: We still don't have all stars aligning yet, but more and more data set points to a major top right here.

I have no stocks at the moment and just applied to open the futures trading permission as I plan to start a small trial index short position.

Edited November 19, 2021 by muscleman

[boilermaker75]

9 hours ago, muscleman said:

Update: We still don't have all stars aligning yet, but more and more data set points to a major top right here.

I have no stocks at the moment and just applied to open the futures trading permission as I plan to start a small trial index short position.

 

To make a small fortune in the futures market, start with a large fortune.