Gregmal Posted October 16, 2022 Posted October 16, 2022 All I know is for the first time in a really long time, I can find companies where I am legitimately excited about owning them on both an asset value and a cash flow basis. If I were a VC or PE fund, I take some of these deals and run. However the stock market investor buys or sells and then let’s tomorrows stock price validate or invalidate their decision. MSGE for instance trades at like 7x normalized EBITDA. Give me that all day for a trophy asset. I also think one of the bull scenarios out there is that apparently the economy is still great.. ok. No opinion there. Should some of the big inputs such as housing and rent decline(as they already have started to) before rate caused destruction, those things are off to the races. LPX is like 5x. What if mortgage rates return to normal spread? 160-180 bps to 10 year… meaning high 5s? Moonshot. Banks I don’t own, but same deal. Who cares what Amazon or Tesla need to justify their valuation?
UK Posted October 16, 2022 Posted October 16, 2022 Again, I agree on opportunities, and I also am in a process in changing my portfolio defensiveness. And it is just a discussion on "market bottom". I do not think one should try to time or wait for it too much or care about to much if he is invested in good companies for longer term.
meiroy Posted October 16, 2022 Posted October 16, 2022 It's a bear market. There could be some local bottom at some point but it's still a bear market.
UK Posted October 16, 2022 Posted October 16, 2022 https://www.wsj.com/articles/whiplash-in-stock-market-shows-investors-are-still-on-edge-11665871144?mod=hp_lead_pos3
SharperDingaan Posted October 16, 2022 Posted October 16, 2022 Any capable marketing person will tell you that equities are simply products (shares, funds, etc.), experiences (momentum, buy/hold, etc.), and stories (hot sectors, FANGs, etc.). Experiences and stories spread virally, we just collectively call it 'sentiment'. Valuations as primarily story machines; buy/sell versus some calculated value. Unusual levels of dissonance amongst the talking heads, is evidence that it is hard to sell experiences and story when you don't have a resonating story line. Most indexes are significantly down YTD, there are currently clearly more marketing people and HF's than are really needed, we are already 3 weeks into Q4, and it isn't looking good for job prospects. As fear within the marketing community rises, so will market volatility. We are being routinely presented with very good trading opportunities on every rate hike, both in NA and Europe; use them. If you trust your own processes, 5-10% on near every rate hike, adds up very quickly SD
Spekulatius Posted October 16, 2022 Posted October 16, 2022 (edited) Is wasn't in the US at that time, but people were not extremely bearish in 1981 and 1982 either. It was just a grinding bear market and a lot of disinterest. Lots of interest in Gold, silver, oil Yieldcos etc and real estate. Neither of these did great in the 80’s. Edited October 16, 2022 by Spekulatius
backtothebeach Posted October 16, 2022 Posted October 16, 2022 18 hours ago, SharperDingaan said: … Our lad chose to transport our load in mislabeled plastic barrels, stack the corpses on top, and travel with them. Upon the expected 'inspection' he 'woke-up', scared the hell out of everyone, and asked for another bottle of Stolichnaya to replace his near empty one. He got kicked off the train, and our load traveled through without any disturbances. … Respect!
Gregmal Posted October 16, 2022 Posted October 16, 2022 7 hours ago, Spekulatius said: Is wasn't in the US at that time, but people were not extremely bearish in 1981 and 1982 either. It was just a grinding bear market and a lot of disinterest. Lots of interest in Gold, silver, oil Yieldcos etc and real estate. Neither of these did great in the 80’s. I think this is a great point. When everybody expects something to happen, it usually doesn’t. Everyone is waiting for two things, the massive washout, and the pivot. Perhaps there’s no pivot and we just see raises to a guided point and then plateau, and maybe rather than a total washout we just see a continued grind lower. It’s all kind of interesting and also somewhat of a distraction. In a good economy that warrants 5% rates Berkshire is going to make a lot of money. That’s just an example but at some point the fundamentals will matter again
thowed Posted October 17, 2022 Posted October 17, 2022 16 hours ago, Gregmal said: I think this is a great point. When everybody expects something to happen, it usually doesn’t. Everyone is waiting for two things, the massive washout, and the pivot. Perhaps there’s no pivot and we just see raises to a guided point and then plateau, and maybe rather than a total washout we just see a continued grind lower. It’s all kind of interesting and also somewhat of a distraction. In a good economy that warrants 5% rates Berkshire is going to make a lot of money. That’s just an example but at some point the fundamentals will matter again I take your point - I suppose it depends whether you think that everyone is into Gold/Silver, Oil Yield & Property yet. I'd argue that it's only a loud minority of internet geeks/investors who are doing that so far, & in that sense perhaps we're more in the 70s with this stuff to become more popular, before we get to the early-80s bottom. I don't know - I really want to be more optimistic - but it feels like we've had so many years of liquidity injections, with terrible capital misallocation, and there's more to unwind.
Gregmal Posted October 17, 2022 Posted October 17, 2022 3 minutes ago, thowed said: don't know - I really want to be more optimistic - but it feels like we've had so many years of liquidity injections, with terrible capital misallocation, and there's more to unwind. So there’s the whole market or index or whatever, but underneath there’s investment opportunities. If the economy is hot enough that the Fed needs to keep raising, a solid, well run company trading at sub 15x is gonna make some serious money both in absolute terms and relative to the market cap and especially relative to the prevailing negative sentiment. I don’t like the big tech because if nothing else, to your point about all the liquidity, there’s been few bigger beneficiaries of the past decades policies and practices than FANG stocks. So I just think they’re way too overowned. But otherwise, ignoring that, they’re great business and what? If the stock market sentiment remains poor or rates temporarily go to 6% they’ll stop making money? Don’t think so.
UK Posted October 17, 2022 Posted October 17, 2022 Another one on sentiment: https://www.bloomberg.com/news/articles/2022-10-17/small-time-options-traders-bet-big-on-us-stocks-falling-further?leadSource=uverify wall
Gregmal Posted October 17, 2022 Posted October 17, 2022 https://nypost.com/2022/10/16/average-american-is-losing-34k-and-everything-else-on-bidens-watch/ Fuck those guys and their 401ks.
Guest Posted October 17, 2022 Posted October 17, 2022 2 minutes ago, Gregmal said: https://nypost.com/2022/10/16/average-american-is-losing-34k-and-everything-else-on-bidens-watch/ Fuck those guys and their 401ks. Should have cashed out and bought an electric car. Freakin' losers.
Gregmal Posted October 17, 2022 Posted October 17, 2022 Nah bro, it’s about the 40 year old french fry operator making $20 an hour who is getting swindled by an extra $75 in monthly gas and grocery costs. It’s not his fault he doesn’t want to commute further to go work at the Howard Hughes food kitchen for $35.
changegonnacome Posted October 17, 2022 Posted October 17, 2022 18 minutes ago, Gregmal said: https://nypost.com/2022/10/16/average-american-is-losing-34k-and-everything-else-on-bidens-watch/ Fuck those guys and their 401ks. So much to unpack...squeezing complicated issues into headlines is always fun........conversely the headline could read: "Average American who's 401k gained $100k during stock market bubble caused by recklessly low interest rates & money printing, resulting in runaway inflation destroying the purchasing power of America's working poor, have lost $34k year to date" I can see both sides....others dont seem to be able too.....
Gregmal Posted October 17, 2022 Posted October 17, 2022 I know. I’m a fan of hyperbole and sensationalism sometimes…makes life more colorful. On this issue though I think we need to pay attention to the core American. The middle class with respect to lower-middle to upper middle and all in between. Worrying about those on the extreme upper or extreme lower is, simply from a math based angle, kind of pointless. Besides, for the lowest of lower end folks, we have social welfare programs that are more than generous, and yes, those are a result of sinister taxes on everyone else. The average person works 40+ years of their life, makes huge personal sacrifices, and relies on the system, not with their hand out, but simply trusting that if they do the right thing, eventually, if they live that long, they’ll be able to retire and enjoy maybe their final decade or two of useful life. I have way more respect of compassion for those folks then the people who just always seem to be in the same space, often by their own doing.
changegonnacome Posted October 17, 2022 Posted October 17, 2022 (edited) 2 hours ago, Gregmal said: I have way more respect of compassion for those folks then the people who just always seem to be in the same space, often by their own doing. Many pages back here we talked about this.......if you remember......its an under-appreciated reality..........that there exists a proportion of the population perhaps as much as 15%......who through pure genetic lottery are unable to navigate the modern economy in a way that would see them earn anything more than less than subsistence income levels. You can say its their fault.....in the same way you can say it's my fault for having blue eyes. Edited October 17, 2022 by changegonnacome
Castanza Posted October 17, 2022 Posted October 17, 2022 On 10/15/2022 at 9:00 PM, dealraker said: Somewhere along the line our club voted to establish a 4 person investment committee to recommend stocks to the rest of the members (to be bought and sold), then we'd vote on those buys/sells. We did that primarily because most of the members enjoyed the club but were older and had no energy/interest in doing much work. Keep in mind these guys are not poor, they all know one another, and the atmosphere while at times had some jousting so to speak....well it is a wonderful setting where anything within reason is forgiven and accepted. We were absolutely "value" focused through the years although in the early 1990's we did buy some tech stocks like EMC, Cisco, and Intel, etc at very reasonable PE's (below 20) that were growing fast. We failed to sell a lot of them anywhere close to their peaks so... In the end we bought EMC at a split adjusted less than $1 per share and it went to $105! Yes 105. We ended up selling it at $7. Yes all the way down to $7. We too (not me, I never owned it personally and thought we should sell that one) got fearful of selling things going up at 50% a year! We ended up selling Cisco at $12 after it sold for $82 (we did well, our basis was $4 or so). For your humor, at one point we had averaged 35% a year for 7 or so years...only to eventually (after 10 years) do even with Mr. Market! LOL!!! That is our system and for us it works ok and nobody has challenged it for the last 25 years. If it ain't broke don't fix it! Sounds like a solid setup with a good group of members and a simple no nonsense investment strategy. Win some lose some, long term it sounds like you've done well. thanks for sharing
Spekulatius Posted October 17, 2022 Posted October 17, 2022 LOL, Joe's ice cream social has the answers:
Gregmal Posted October 17, 2022 Posted October 17, 2022 (edited) Is it just me or is the day to day sentiment hilarious. Every time the market is down, even on a random, no news Tuesday, folks are like “money printing”, “bubble bursting” as if its deserved for the market to go down every day even though often there’s no real reason. One day of gains and it’s like “wtf, why, this is bullshit!” all angrily. Edited October 17, 2022 by Gregmal
dealraker Posted October 17, 2022 Posted October 17, 2022 (edited) On 10/15/2022 at 10:55 PM, Viking said: Just re-reading a couple chapters in Peter Lynch’s One Up on Wall Street. Scariest time for him was between July 1981 and November 1982. This was a period when there was 14% unemployment, 15% inflation and a 20% prime rate. (Funny how people today are freaking out with Fed funds rate forecast to go to 4.5% and unemployment going to 4% or horrors 5%.) “Then at the moment of greatest pessimism, when eight out of 10 investors would have sworn we were headed into the 1930s, the stock market rebounded with a vengeance, and suddenly all was right with the world.” I had started a business and borrowed $500,000 in 1980. By 1982 I told my banker, "I can't make those payments on time." His reply was, "Don't worry, nobody else is either." A very tough go of it back then. Those loving attention in our media urging caution (that's substitute wording for Greg's more accurate description that they are stomping the panic button repeatedly) are getting exactly what they want...attention. Does it help you as an investor? Only you can make that call. This terrible time was in the future during 2021's euphoria. Some predicted it, but most who did have been predicting it for a decade or longer...some 2 and 3 decades, maybe more. Old dealraker thinks three things: 1) Financial repression has been ongoing...and is going to get far worse. 2) The world will look to collapse, but won't, and the process timeline can be short or long. 3) So given a belief in 1) and 2) above, it is probably best to choose a starting point for your investments knowing that the odds are about a trillion to one you will be pissed off in a big way that you missed the bottom by miles and miles all while the media will find one person who they claim nailed that bottom. If you are typically human like me, you will have so much envy of the perfect timing hero the media choses you might just beat your own head in. Edited October 17, 2022 by dealraker
Spekulatius Posted October 17, 2022 Posted October 17, 2022 (edited) 1 hour ago, Gregmal said: Is it just me or is the day to day sentiment hilarious. Every time the market is down, even on a random, no news Tuesday, folks are like “money printing”, “bubble bursting” as if its deserved for the market to go down every day even though often there’s no real reason. One day of gains and it’s like “wtf, why, this is bullshit!” all angrily. That’s because people become macro traders in times like this when stocks movement become correlated and typically very lousy ones. As if people had a clue what the next inflation print is going to look like much less how the market reacts to it. Edited October 17, 2022 by Spekulatius
randomep Posted October 17, 2022 Posted October 17, 2022 7 hours ago, stahleyp said: Should have cashed out and bought an electric car. Freakin' losers. huh? why such venom directed at the nameless average folks?
randomep Posted October 18, 2022 Posted October 18, 2022 1 hour ago, Spekulatius said: That’s because people become macro traders in times like this when stocks movement become correlated and typically very lousy ones. As if people had a clue what the next inflation print is going to look like much less how the market reacts to it. Ya so many people are saying the market will drop another 10-20% (including myself) it is making me very uneasy, collectively, we cannot predict where the market is going, that's why the market is at the level it is. I am stating the obvious, but I wouldn't be surprised if this is the bottom because more often than not, when I think the market is going in one direction it does the reverse.
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