Where are we at in this downturn?

[Charlie]

The world is adopting to the peculiarities of the Trump administration.

The shock was after the tariffs announcement.

Everybody is adopting and will find new ways in doing business.

 

[hardcorevalue]

6 hours ago, Charlie said:

The world is adopting to the peculiarities of the Trump administration.

The shock was after the tariffs announcement.

Everybody is adopting and will find new ways in doing business.

 

Agreed!

 

This Trump admin is moronic and a danger to democracy but I don't really see how that affects AI demand and transformation. Bears always sound smart but get owned over the longer term.

 

Never bet against the US especially at only 20x forward, there's no bubble here. 

 

 

[brobro777]

20k Nasdaq futures took forever but maybe the Johnny come latelys can push it to 21k this month

 

haha

 

[Hektor]

Opportunities on the way!

 

https://www.bloomberg.com/news/articles/2025-05-01/schwab-phoned-thousands-nearing-margin-calls-as-volatility-rose

 

Schwab Warned Thousands at Risk of Margin Calls as Volatility Soared on Trade War

 

 

Charles Schwab Corp. telephoned thousands of its retail-investing customers who were close to margin calls last month as US President Donald Trump’s trade war sent stocks sinking, Chief Executive Officer Rick Wurster said.

 

It’s a “pre-margin-call call,” Wurster said Thursday at a Reuters event. Schwab reaches out to clients if they’re nearing a margin call — triggered when money is needed in a margin account to meet minimum capital requirements — because some clients opt to add funds rather than being automatically pulled out of a position, he said. “We absolutely have had to do a lot more of those.”

[Jaygo]

21 hours ago, RichardGibbons said:

 

My memory is unreliable, but the thing from the GFC that really sticks with me is that before the major collapse, people on CoBF were basically saying, "All these numbers are horrible. How is the market still going up? It makes no sense!" And that mode didn't last for a couple weeks, but literally for months.

The market is supposed to be forward-looking, but I think in that particular instance, it only priced in the bad news well after it was obvious that the world was ending.  I think it was Bear Stearns that finally made the market actually react to the atrocious news.

 

Thank you for your answer. That's kind of how I feel now. I am generally cautious but not a perma bear by any means.

 

I look at the economy, I see my own customers pulling back, listen to calls with poor or no guidance and am fully aware of the carry forward of sales due to frontrunning the tariffs and all I can think is these summer numbers are going to be terrible.

 

I need to ask myself the big Q. Is AI investment going to carry the economy through? if not I think we have 20-30% down from here. If the massive investments is going to keep the economy afloat then maybe we have seen the lows or at least close. 

 

 

[Jaygo]

2 hours ago, hardcorevalue said:

Agreed!

 

This Trump admin is moronic and a danger to democracy but I don't really see how that affects AI demand and transformation. Bears always sound smart but get owned over the longer term.

 

Never bet against the US especially at only 20x forward, there's no bubble here. 

 

 

The bubble is not at 20x mag 7. And nobody is trying to be a bear here. But a little history would tell you this type of thing has happened before. And the results were not good. The market can lead the economy but it can also lag the economy. 

 

Right now the economy is not doing too well but the market seems pretty agnostic as long as AI investment remains strong. Maybe this all works out fine and the economy pulls through and the market moves higher. I dont know, i'm just trying to rationalize how the numbers can suck and the market doesn't care.

 

On "the Bubble" To me the bubble if any exists is in the American industrials and American global brands etc.  

 

18 months ago I was talking about how insane the industrials were. My portfolio holdings all got trimmed back to cost basis SSD, Graco, Toro, Federal Signal etc. The reason being a company growing 5% with outsized margins should not trade a 30X. So if a bubble exists its in those companies Imo. 

[Sweet]

The market is grinding higher but the intraday volatility remains very high.  I have a gut feeling, which is often wrong, that there is more pain ahead.

 

However, if you hold good companies at reasonable prices I don’t see why you would sell.  And if you have cash I don’t think you should be in any rush to buy.  This feels like a check what the market is doing each day but otherwise just ignore the noise for few months, maybe all summer.

 

Edited May 1, 2025 by Sweet

[Gregmal]

I just hope that whenever it is, the next time we have a correction there’s more articles telling us how Warren Buffett wisely raised a record amount of cash by selling huge chunks of stock at prices well below their current marks. 
 

Also maybe a Grantham or Gundlach interview where they get introduced as “the guy who called the crash”.

Edited May 1, 2025 by Gregmal

[brobro777]

15 hours ago, Gregmal said:

I just hope that whenever it is, the next time we have a correction there’s more articles telling us how Warren Buffett wisely raised a record amount of cash by selling huge chunks of stock at prices well below their current marks. 
 

Also maybe a Grantham or Gundlach interview where they get introduced as “the guy who called the crash”.

 

Peter Schiff is calling it a bear market rally: https://www.zerohedge.com/markets/schiff-bounce-just-bear-market-rally

 

This probably means SPX makes all time highs by the end of the year

 

haha

 

[Sweet]

41 minutes ago, brobro777 said:

 

Peter Schiff is calling it a bear market rally: https://www.zerohedge.com/markets/schiff-bounce-just-bear-market-rally

 

This probably means SPX makes all time highs by the end of the year

 

haha

 

This is honestly bullish.  If these guys aren’t calling it a bear market I get uncomfortable.

[brobro777]

10 minutes ago, Sweet said:

This is honestly bullish.  If these guys aren’t calling it a bear market I get uncomfortable.

 

Of course bro betting against these kinda guys say have been pretty profitable over the years. Some are just layup locks, it's incredible

 

I mean you still have to respect risk and position size your bets because they could turn out to be right (usually because of reasons other than they argued) but it's like thanks a lot man 

 

haha

 

 

 

[mattee2264]

Well we are back to where we were before Liberation day. And before then most of the correction was Big Tech related due to concerns about capex overspend.

 

Big Tech earnings were pretty impressive in Q1 2025. The AI trade seems to be back on and I suspect that similar to COVID investors will seek safety in Big Tech on the basis that either their business models are less affected by tariffs (cloud computing long term contracts and digital advertising) or they will benefit from exemptions (e.g. Apple). 

 

Also it does look as if the trade war will just be with China as other nations haven't retaliated and have been open to trade talks and even China are trying to de-escalate. So markets are back to the idea that tariffs are just a negotiating tool and the reciprocal tariffs won't get reintroduced and the universal 10% tariff won't stick (or won't stick for long).

 

The risk is that Trump loses credibility when the trade deals don't materialize and after the pause tries to continue with the universal tariffs along with higher sectoral tariffs. That would probably trigger another sell off. And another pause and teasing trade deals is unlikely to be as effective as stemming the next sell off especially if the negative impact of all the tariff uncertainty starts to seep into economic data and corporate earnings. 

 

 

 

[Red Lion]

6 minutes ago, mattee2264 said:

Well we are back to where we were before Liberation day. And before then most of the correction was Big Tech related due to concerns about capex overspend.

 

Big Tech earnings were pretty impressive in Q1 2025. The AI trade seems to be back on and I suspect that similar to COVID investors will seek safety in Big Tech on the basis that either their business models are less affected by tariffs (cloud computing long term contracts and digital advertising) or they will benefit from exemptions (e.g. Apple). 

 

Also it does look as if the trade war will just be with China as other nations haven't retaliated and have been open to trade talks and even China are trying to de-escalate. So markets are back to the idea that tariffs are just a negotiating tool and the reciprocal tariffs won't get reintroduced and the universal 10% tariff won't stick (or won't stick for long).

 

The risk is that Trump loses credibility when the trade deals don't materialize and after the pause tries to continue with the universal tariffs along with higher sectoral tariffs. That would probably trigger another sell off. And another pause and teasing trade deals is unlikely to be as effective as stemming the next sell off especially if the negative impact of all the tariff uncertainty starts to seep into economic data and corporate earnings. 

 

 

 

I feel like another outcome could be that the narrative shifts to a tax deal and the markets keep rallying. Not that I’m pro tariff, but I just think the markets make a big deal sometimes and then have a short attention span. 

[Spooky]

Glad I deployed some funds when I did. Already up 20% on Amex!

 

Where we go from here who knows. Just have to be prepared for anything.

[mattee2264]

You could be right Red Lion. Rate cuts could be another thing that could get markets excited especially if the economic data worsens but corporate earnings (and especially Mag7 earnings hold up). 

[Jaygo]

13 hours ago, Spooky said:

Glad I deployed some funds when I did. Already up 20% on Amex!

 

Where we go from here who knows. Just have to be prepared for anything.

 

Well said. This is basically life in general. In investing being mentally prepared is almost more important than any particular portfolio. The guys in cash need to be prepared to see that market move up without them, the guys on margin have to know we could go lower. 

 

 

[Paarslaars]

45 minutes ago, Jaygo said:

 

Well said. This is basically life in general. In investing being mentally prepared is almost more important than any particular portfolio. The guys in cash need to be prepared to see that market move up without them, the guys on margin have to know we could go lower. 

 

 

I am still wondering which of those is hardest, the fomo or the pain.  

Currently I just tend to bear the pain, though as my portfolio grows I do think I'll be holding more reserves for special drawbacks.

[brobro777]

I remember in 2003 NQ traded around 1200 while ES was around 1000

 

Now nasdaq futures are at 20000 while S&P is at 5700

 

Nasdaq outperformed SPX for a long, long time but maybe things will be different going forward

 

 

[Jaygo]

39 minutes ago, Paarslaars said:

I am still wondering which of those is hardest, the fomo or the pain.  

Currently I just tend to bear the pain, though as my portfolio grows I do think I'll be holding more reserves for special drawbacks.

For me its the fomo

 

I am never bothered by a portfolio holding going down but if I sell and it goes up i have an unshakable feeling of being a useless idiot. I rode Terravest up from 27 to 130 where I sold the majority of my holdings. now its up another 15% and i'm really self loathing. I dont get excited about the gains, but the loss of gains is really messing my head up. This is psychology and its very difficult to overcome.

[Paarslaars]

1 hour ago, Jaygo said:

For me its the fomo

 

I am never bothered by a portfolio holding going down but if I sell and it goes up i have an unshakable feeling of being a useless idiot. I rode Terravest up from 27 to 130 where I sold the majority of my holdings. now its up another 15% and i'm really self loathing. I dont get excited about the gains, but the loss of gains is really messing my head up. This is psychology and its very difficult to overcome.

I get that, kicking myself for not taking that Blokchain group SA position at 0.45 a month ago...

 

However, whenever there is a big drop in the market, I am also kicking myself for not being greedy enough and waiting for bargains.

[schin]

On 5/1/2025 at 11:03 AM, Hektor said:

Opportunities on the way!

 

https://www.bloomberg.com/news/articles/2025-05-01/schwab-phoned-thousands-nearing-margin-calls-as-volatility-rose

 

Schwab Warned Thousands at Risk of Margin Calls as Volatility Soared on Trade War

 

 

Charles Schwab Corp. telephoned thousands of its retail-investing customers who were close to margin calls last month as US President Donald Trump’s trade war sent stocks sinking, Chief Executive Officer Rick Wurster said.

 

It’s a “pre-margin-call call,” Wurster said Thursday at a Reuters event. Schwab reaches out to clients if they’re nearing a margin call — triggered when money is needed in a margin account to meet minimum capital requirements — because some clients opt to add funds rather than being automatically pulled out of a position, he said. “We absolutely have had to do a lot more of those.”

@Hektor - This is a cool article... Is there any metric out there that shows pre-margin-call-call? For Fidelity? IBKR? 

[Hektor]

11 hours ago, schin said:

This is a cool article... Is there any metric out there that shows pre-margin-call-call? For Fidelity? IBKR? 

Thanks @schin. I am not aware of any such metric, primarily because I did not look

[Blake Hampton]

Benjamin Graham would be proud:

"The median investor, often drawn to a stock because it’s in the news, spends just six minutes of research before buying that stock, according to a new study by finance professors Toomas Laarits and Jeffrey Wurgler at New York University’s Stern School of Business. And the bulk of that already-short research time is devoted to perusing a price chart of the stock’s recent performance—and often just the current day’s trading session."

 

Guess How Much Time Many Investors Spend on Researching Stock Buys? - WSJ

[Blake Hampton]

It says they spend 50 seconds on average analyzing fundamentals.

[mattee2264]

Compared to Graham's day a far greater proportion of money invested is by institutions rather than by retail investors putting money in individual stocks with a lot of it passively invested.

 

Of course since COVID there has been a lot more day trading and speculation by retail investors but it isn't going to be a major determinant of stock prices outside of meme type stocks like Gamestop. 

 

Generally markets are a lot more efficient than in Graham's day. Any mispricing will most likely relate to company prospects but this is identifiable only with the benefit of hindsight. 

 

A lot of bears are quite suspicious of the rally noting that we are back to where we were before Liberation Day. 

 

But you can argue the market level is quite reasonable if you assume that there will be some combination of lower rates, lower taxes, lower tariffs (following trade deals) and the AI story is intact or gets even better. 

 

You can argue this is optimistic but generally looking at the broad sweep of market history optimism about the future is warranted and most of the anticipated crashes/recessions never end up happening. 

 

There are obviously exceptions to this rule such as dot com bubble and Great Financial Crisis. But these are comparatively rare and any benefit someone with a bearish bias gained from avoiding major losses during these events will have been far outweighed by all the gains they missed out on by being overly conservatively positioned the rest of the time.