Where are we at in this downturn?

[Blake Hampton]

2 hours ago, mattee2264 said:

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. 

 

I disagree. I think people have just lost their minds on the upside.

[Eldad]

3 hours ago, mattee2264 said:

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. 

There is more information and more sophisticated money, but the shortsightedness may even be worse now, causing periods of extreme inefficiency. 
 

The market may be more efficient now when nothing is happening but even more of a raging manic/depressive when something unexpected happens. 

[brobro777]

56 minutes ago, Eldad said:

There is more information and more sophisticated money, but the shortsightedness may even be worse now, causing periods of extreme inefficiency. 
 

The market may be more efficient now when nothing is happening but even more of a raging manic/depressive when something unexpected happens. 

 

I think it's programs and machines that are buying and selling now (and not just stocks but futures and options) much more than in the past, that is creating these relentless one way moves; and in the process, pushing volatility to the max in very short time periods (60 VIX). I thought I saw glimpses of it in the past but I really feel that I saw it happen during COVID. If humans were making decisions, there would be counters and bounces on the way down, even during something like COVID. But in spring 2020 I would watch the futures and it would just sell, hit another level, puke out more in size, no bounce, sell, no pause, another big size, and it kept going. Even during the dark days of autumn 2008 it didn't relentlessly sell off like that. 

 

And once the programs switched, there was no pause going the other way - just relentless buy, no pause, buy, no counters, buy. Hence the result of fast crash and fast recovery - https://www.morningstar.co.uk/uk/news/210394/covid-crash-the-shortest-in-history.aspx

 

Now is that same kind of thing happening during the sell off last month and now? Well this is all just an observation from some piker posting on an internet forum, backed by no data but just feelings, so who knows

 

haha

 

[Gregmal]

8 minutes ago, brobro777 said:

 

I think it's programs and machines that are buying and selling now (and not just stocks but futures and options) much more than in the past, that is creating these relentless one way moves; and in the process, pushing volatility to the max in very short time periods (60 VIX). I thought I saw glimpses of it in the past but I really feel that I saw it happen during COVID. If humans were making decisions, there would be counters and bounces on the way down, even during something like COVID. But in spring 2020 I would watch the futures and it would just sell, hit another level, puke out more in size, no bounce, sell, no pause, another big size, and it kept going. Even during the dark days of autumn 2008 it didn't relentlessly sell off like that. 

 

And once the programs switched, there was no pause going the other way - just relentless buy, no pause, buy, no counters, buy. Hence the result of fast crash and fast recovery - https://www.morningstar.co.uk/uk/news/210394/covid-crash-the-shortest-in-history.aspx

 

Now is that same kind of thing happening during the sell off last month and now? Well this is all just an observation from some piker posting on an internet forum, backed by no data but just feelings, so who knows

 

haha

 

Nah that’s a good observation. The market is generally more efficient but when it reacts it often overreacts.

[Libs]

4 hours ago, mattee2264 said:

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. 

 

I've been fully invested going into every crash / bear market and have done just fine. During the selloff, you just sell .75 cent dollars and scoop up .40 cent dollars. I think I was down 40% in 2008 and up 150% in 2009. IMO this is a far better approach than trying to build up cash waiting for the decline that never comes.

 

Honestly to pass on a bargain stock today because you fear a bear market tomorrow is a fool's game.

[Gregmal]

20 minutes ago, Libs said:

 

I've been fully invested going into every crash / bear market and have done just fine. During the selloff, you just sell .75 cent dollars and scoop up .40 cent dollars. I think I was down 40% in 2008 and up 150% in 2009. IMO this is a far better approach than trying to build up cash waiting for the decline that never comes.

 

Honestly to pass on a bargain stock today because you fear a bear market tomorrow is a fool's game.

Fool who hits you with the wisdom that "the market might not recover next crash" incoming in......3, 2, .....

[Castanza]

On 5/5/2025 at 8:56 AM, Blake Hampton said:

It says they spend 50 seconds on average analyzing fundamentals.

And?

[Dinar]

2 hours ago, Castanza said:

And?

Listen, you know the research is bullshit when the author says risk is measured by volatility.  Also, the "researchers" never checked whether their sample size was representative.  

[Castanza]

8 minutes ago, Dinar said:

Listen, you know the research is bullshit when the author says risk is measured by volatility.  Also, the "researchers" never checked whether their sample size was representative.  

 

To me that "research" screams opportunity for me. Why would I care what every Millennial with 1k in a Robinhood account does? Sure investing is more accessible. Retail still doesn't move the needle in markets to any significant degree. People have done dumb shit with money since the beginning of times. Never understand the fixation on things like this. Nothing new under the sun. If anything it provides slightly more volatility which is a boon for those who can value and acquire assets with a long-term horizon. Anyone with serious money is likely not that dumb outside of a few outliers @Blake Hampton 

[Eldad]

1 hour ago, Castanza said:

 

To me that "research" screams opportunity for me. Why would I care what every Millennial with 1k in a Robinhood account does? Sure investing is more accessible. Retail still doesn't move the needle in markets to any significant degree. People have done dumb shit with money since the beginning of times. Never understand the fixation on things like this. Nothing new under the sun. If anything it provides slightly more volatility which is a boon for those who can value and acquire assets with a long-term horizon. Anyone with serious money is likely not that dumb outside of a few outliers @Blake Hampton 

Right. 
 

I was listening to an old BRK meeting the other day from some time in the 90s I believe. Warren and Charlie were basically saying they pretty much know every great business in the US that is of any size and have a general idea of what they would pay for it. 
 

If you are always studying you can pull the trigger in about a min when something crazy happens. 

[gfp]

I haven't seen much news and the SPY is shooting higher after hours - is this simply because Bessent will meet with Chinese trade representatives?

 

https://www.bloomberg.com/news/articles/2025-05-06/bessent-greer-to-meet-with-china-to-start-trade-talks-this-week?srnd=homepage-americas

Edited May 6, 2025 by gfp

[cubsfan]

34 minutes ago, gfp said:

I haven't seen much news and the SPY is shooting higher after hours - is this simply because Bessent will meet with Chinese trade representatives?

 

https://www.bloomberg.com/news/articles/2025-05-06/bessent-greer-to-meet-with-china-to-start-trade-talks-this-week?srnd=homepage-americas

 

This one too:

 

https://finance.yahoo.com/quote/KWEB/

 

[Gregmal]

Well the market did go down because of China trade hostilities. Any sign that this may reverse should logically lead to gains. Unless of course you’re one of those folks whom believe “market only deserves to go down”.

[Dalal.Holdings]

https://kedm.com/archives/

 

I agree with Kuppy. Now is the time for caution. I'm not following Retail into buying every dip...

 

Like Warren, never a bad idea to have cash on hand.

 

[mattee2264]

I don't think large moves in either direction necessarily indicate inefficiency. 

 

Rather they reflect massive amounts of policy uncertainty created by Trump's trade policy and therefore the probabilities will change depending on the news flow or rather Trump's tweets and policy statements.

 

Liberation Day there was a non-zero chance that we'd see tariff levels last seen during the Great Depression so markets priced in a certain recession.

 

Then it turned out that everything was up for negotiation and we got the pause and the only retaliation came from China indicating that the trade war was likely to just be with China similar to 2018 and that greatly reduced the probability of a recession and therefore markets recovered to a large extent.

 

Of course there is also some momentum at play whereby selling begets selling and buying begets buying and also deleveraging and re-leveraging and these all exaggerate market moves. But the underlying moves are rational. 

 

 

[Eldad]

4 hours ago, mattee2264 said:

I don't think large moves in either direction necessarily indicate inefficiency. 

 

Rather they reflect massive amounts of policy uncertainty created by Trump's trade policy and therefore the probabilities will change depending on the news flow or rather Trump's tweets and policy statements.

 

Liberation Day there was a non-zero chance that we'd see tariff levels last seen during the Great Depression so markets priced in a certain recession.

 

Then it turned out that everything was up for negotiation and we got the pause and the only retaliation came from China indicating that the trade war was likely to just be with China similar to 2018 and that greatly reduced the probability of a recession and therefore markets recovered to a large extent.

 

Of course there is also some momentum at play whereby selling begets selling and buying begets buying and also deleveraging and re-leveraging and these all exaggerate market moves. But the underlying moves are rational. 

 

 

I don’t think it’s rational for MCO to go down 25% on tariffs that have 0% chance of staying in place longterm. 
 

To use a Buffett analogy, would you sell your family farm for 75% of last months value because your neighbor found a weevil that MIGHT harm this years crop or even next years crop? Affecting nothing about the crop of the next 100 years after that? 

[Pellom]

This is genuinely one of the most befuddling market rebounds I have ever witnessed. 

 

I can't find any good reason for it other than "this stuff was down so we're buying it." 

[backtothebeach]

Someone built a big, beautiful wall ... of worry.

[SharperDingaan]

Recognize that you are playing against an algorithm with a short investment horizon. Play the game presented and you will lose ... with good reason.

 

But play the game differently .... and the algorithm becomes your friend. Lots of tariff deals being announced (distraction) and spiking markets upward .... when the west coast ports aren't offloading container ships anymore ... and New York runs out of cheap goods just in time for July 4. How do you think that really plays out? Different game 

 

SD

 

 

 

[backtothebeach]

Anything is possible. Maybe the economy is rotting beneath a façade of “trade deals”, and the market will fall off a cliff once it realizes. Or maybe employment and the economy will hold up just fine. Imports are not GDP, only the value added domestically. How much is that added value actually affected by a two month hiccup?

 

The mere existence of this thread is kind of funny. This is the Corner of Berkshire, right? Yet we still haven’t learned from Buffett that nobody knows where the market will be in three, six or 12 months. The guessing game is too much fun I suppose.

[brobro777]

28 minutes ago, SharperDingaan said:

Recognize that you are playing against an algorithm with a short investment horizon. Play the game presented and you will lose ... with good reason.

 

But play the game differently .... and the algorithm becomes your friend. Lots of tariff deals being announced (distraction) and spiking markets upward .... when the west coast ports aren't offloading container ships anymore ... and New York runs out of cheap goods just in time for July 4. How do you think that really plays out? Different game 

 

SD

 

 

 

 

Yea I was thinking that we'd get a steady grind higher throughout the year but maybe the machines and the guys who panicked and sold off NQ to 16451 last month are now spiking things up hard, really fast, like way too much 

 

If that's the case then maybe it would be better to sell remaining positions into this rally, maybe high at SPX 6200, and let some upcoming bad news work their magic - ports, geopolitical, could be anything - for a decent sized sell off to go long again at better levels 

 

I sold my nasdaq today but still got S&P futures...

 

 

[willypoo]

47 minutes ago, SharperDingaan said:

Recognize that you are playing against an algorithm with a short investment horizon. Play the game presented and you will lose ... with good reason.

 

 

Are you still swing trading oil and btc?

 

Thanks,

 

Will

[mattee2264]

A rapid V shaped recovery and a continuation to new highs is exactly what you'd expect of an event-driven bear market.

 

Bull market is back on and while there may be a correction if trade deals don't materialize quickly after the 90 day pauses expire we will probably need to look for another catalyst for the next downturn as it is unlikely to be tariffs.

 

Nothing imminently on the horizon. It is possible that Q2 and even Q3 economic data will be shit but markets will probably look through that because they'll attribute it to tariffs which have since been diluted. 

 

Even before tariffs there were a few concerns about Big Tech capex on AI. But so long as their core businesses keep growing strongly and they show no signs of slowing their investments in AI markets will probably give them the benefit of the doubt and wait patiently for the investments to bear fruit.

 

I do think the US economy is very reliant on large government deficits and if they ever get cut there will be a nasty hangover but Trump doesn't seem serious about that and is already proposing to increase the debt ceiling by $4TR. 

 

Moderate inflation is bullish for markets especially when most companies in S&P 500 have pricing power and can pass them on to consumers and grow nominal earnings as a result.

 

And the V shaped recovery will just embolden more investors to lever up and buy every dip and momentum will then take markets a lot higher 

[SharperDingaan]

3 hours ago, willypoo said:

 

Are you still swing trading oil and btc?

 

 

Added more to the oil at < USD 59/bbl to further lower the cost base, and raise the dividend yield > 11%. If we closed out today we would give up positive cash carry, and suffer an opportunity loss as while oil is up, BTC is up more. However, every wheel turns ... and should BTC not hold 100K, opportunity will prevail   

 

End of the day we get our BTC back at a lower cost base; and walk away with house money (net gain on the swing trades plus accumulated cash dividends), left in oil stock with a cash yield > 11%, and a very low cost base. It's BBQ season, the dividends pay for steak and suds, and we can afford to wait.

 

SD

Edited May 13, 2025 by SharperDingaan

[brobro777]

6 hours ago, backtothebeach said:

Anything is possible. Maybe the economy is rotting beneath a façade of “trade deals”, and the market will fall off a cliff once it realizes. Or maybe employment and the economy will hold up just fine. Imports are not GDP, only the value added domestically. How much is that added value actually affected by a two month hiccup?

 

The mere existence of this thread is kind of funny. This is the Corner of Berkshire, right? Yet we still haven’t learned from Buffett that nobody knows where the market will be in three, six or 12 months. The guessing game is too much fun I suppose.

 

https://www.bloomberg.com/news/articles/2025-05-13/jpmorgan-drops-us-recession-call-after-us-china-trade-truce?srnd=homepage-americas

 

so more fomo guys pile in to push SPX higher but maybe around 6300 it'll be good to sell

 

and a decent opportunity to buy back at lower prices in the fall

 

that's hilarious and fun haha