Where are we at in this downturn?

[Ulti]

3 minutes ago, Gregmal said:

You can control what you invest in, and how you invest in it, which should mesh and be synthesized with your investing capabilities and mental skillset/emotional tolerance levels. 

Bingo… and having invested for a long time… I find this is still a dynamic system 

[frommi]

Top Monthly DJIA Drops (1929–1933):

1. October 1929

• Drop: ≈ −19.4%

• The infamous "Black Tuesday" (Oct 29, 1929) occurred this month.

2. September 1931

• Drop: ≈ −30.7%

• This is the largest single-month percentage drop of the Depression period.

3. May 1932

• Drop: ≈ −23.7%

• Markets were hitting rock bottom as confidence eroded completely.

4. March 1931

• Drop: ≈ −16.1%

5. June 1930

• Drop: ≈ −16.3%

---

Total Loss (1929–1932):

• The DJIA fell from ~381 points in Sept 1929 to ~41 points in July 1932, a loss of about 89%.

Let me know if you want a chart of the monthly drops or a visual timeline!

[rogermunibond]

1 hour ago, Blake Hampton said:

This economic stuff is bigger than Trump. If the democratic party were to consolidate both executive and legislative power tomorrow, I would have largely the same concerns. Of course, some of the smaller risks would change, some quite dramatically, but the systemic ones are just that — they're systemic. @dealraker has often said that events will soon control Trump rather than the other way around. I also believe this is true.

 

Systemic: relating to a system, especially as opposed to a particular part.

 

 

Yesterday, the 10 Year went from 3.89% to 4.2% and finished 4.14%.  Today it's up to 4.26% and bouncing in the 4.2s.

 

That's a huge move.  You sent from a stagflation scenario to an inflation scenario.  Cuts to no cuts.

 

The Admin wanted a lower ten year but they're not going to get it.  

 

This puts their tax cuts at risk imo.

[Gregmal]

4 minutes ago, frommi said:

It will take a lot of time to reach the bottom if the great depression replays, i doubt VIX options are a good idea for that scenario.

Of course it would. Same if we get hit with nukes. Whats the saying? More moneys been lost preparing for crashes than in the actual crashes? I just try baseline reality and have something small for the tails. The reality to the status quo isn't going to change much because the system is controlled by the folks with the most to lose. The reality isn't "the Great Depression 2.0".

[Gregmal]

2 minutes ago, rogermunibond said:

 

Yesterday, the 10 Year went from 3.89% to 4.2% and finished 4.14%.  Today it's up to 4.26% and bouncing in the 4.2s.

 

That's a huge move.  You sent from a stagflation scenario to an inflation scenario.  Cuts to no cuts.

 

The Admin wanted a lower ten year but they're not going to get it.  

 

This puts their tax cuts at risk imo.

Didn't the 10 year also quickly go from 4.4 to 4? Why do people insist on misleading themselves with this sort of stuff? You've basically just described a good ole UNCH as a big deal.

[rogermunibond]

You guys are missing the point with a NKE or LULU and the tariffs.

 

It's not passing on the 46-75-104% tariff cost on the imported value.  It's the gross margin compression, operating margin compression that happens if they just pass on the tariff increase alone.

 

They have to pass on the increase plus preserve their margins.  Margin compression means their multiples come down.

[Blake Hampton]

I wonder what Trump's blood pressure is. That man's heart is a BEAST.

[dealraker]

Yes we have a little rally today, there will be many more.  But you can be certain DJT will increasing need to deal with events he's created...on top of things already well in process.  It will be just as increasing unpopular one day to blame Clinton, Obama, Bush, and Biden as it was popular during the campaign and up until now.

 

Still Trump can maintain control with a much smaller fan base.  That's what's so unique about this man.  In our family business meetings we discuss Trump having a 5% approval and still being powerful.

[Charlie]

1 hour ago, dealraker said:

Yes we have a little rally today, there will be many more.

Tomorrow there are new announcements of tariffs and then there is the hostility with China.

Things can change pretty fast. 

[thepupil]

4 hours ago, Gregmal said:

It's important to continue evaluating the big picture. This sort of drunken price action induced stupor is indeed very reminiscent of the early covid days. Remember when the frauds and attention seekers, IDK maybe it was April or May 2020, would proudly state "just wait til you see what Q2 GDP is" as if they were on to something? Like one quarter meant anything to 20-30 year priced assets? It was so dumb and THIS was the consensus for a bit! Everyone raved about uncertainty, and also "the market is obviously so overvalued because how can we only be 10-15% below ATHs with the economy shut down?" They were fools and just couldn't think beyond the moment.

 

This? Small potatoes compared to that. I ran the Nike exercise... 30% off the market cap because shoes might increase $10-15 a pair? LOL nah...and that's one of the worst case ones! Even the stooopid simp Lutnick has matter of factly stated that tariffs will not be removed "for days or weeks"! And many of you are hook, line, and sinker all in on trying to forecast bottoms and bounces? Let's say everyone gets a Vietnam style tariff rate...and it lasts for more than "days/weeks", heck a quarter or two? How much should that impact your thinking in acquiring a decent asset? Or is it "more long term than that" and say the Nike tariff effect for the next 10 years translates to an extra $3 per pair of shoes...SPY 3000? Resist the urge to think like sensationalist bozos guys. 

 

There's also the qualitative stuff Ive mentioned too. Whenever certain COBF specific signs start showing up, pattern recognition should automatically kick in. Happy hunting. 

 

it could be because I lost like 3-5 years of wealth accumulation in a few weeks during March 2020 and this time around i lost 30 days (so far...maybe things change), but I didn't get the sense  that this feels at ALL like covid. covid was panic, saw liquidations of levered vehicles, margin calls, etc. this felt pretty rational / orderly with the exception of sunday night and yesterday (which featured a fake headline that drove a short lived massive rally). 

 

this felt like a rational (partial?) repricing of significantly increased economic tail risk and the most poignant reminder yet of the chaotic/incompetent nature of our country's executive branch. 

 

I also don't really understand why we should think of risk as confined to paying a little extra for Nike's. Is not the risk massive business failure as business models of importing from China (and others) are  greatly disrupted/ margins decrease for many businesses, levered businesses get really hurt, defaults of all kinds spike. some prices potentially increase and strain lower end consumers. rich people feel a little less rich and don't spend as much...oh by the way a month or two after we the country's larges employer fired ~10% of workforce. 

 

so for me it felt (and feels) like the market's not down much and the risk is massively up. 

 

i dicked around with some index trades just because I have to preclear stocks and it's just something to do while waiting for the rest of the portfolio / prospective ideas to decline in value, but that urge to run into the burning building and buy something at the epicenter down just like 30% or to buy some "unaffected" (if there is such a thing) business down 10-15% just isn't there. 

 

the fact that DJT may be neutered  by mid terms doesn't really provide solace to any US businesses seeing a massive spike in cost of materials/goods from China / elsewhere that will potentially be out of biz before then. 

 

my feeling may also be influenced by the fact that my largest position has traded $2,000 (not shares) since April 4th 

 

 

[Gregmal]

6 minutes ago, thepupil said:

 

it could be because I lost like 3-5 years of wealth accumulation in a few weeks during March 2020 and this time around i lost 30 days (so far...maybe things change), but I didn't get the sense  that this feels at ALL like covid. covid was panic, saw liquidations of levered vehicles, margin calls, etc. this felt pretty rational / orderly with the exception of sunday night and yesterday (which featured a fake headline that drove a short lived massive rally). 

 

this felt like a rational (partial?) repricing of significantly increased economic tail risk and the most poignant reminder yet of the chaotic/incompetent nature of our country's executive branch. 

 

I also don't really understand why we should think of risk as confined to paying a little extra for Nike's. Is not the risk massive business failure as business models of importing from China (and others) are  greatly disrupted/ margins decrease for many businesses, levered businesses get really hurt, defaults of all kinds spike. some prices potentially increase and strain lower end consumers. rich people feel a little less rich and don't spend as much...oh by the way a month or two after we the country's larges employer fired ~10% of workforce. 

 

so for me it felt (and feels) like the market's not down much and the risk is massively up. 

 

i dicked around with some index trades just because I have to preclear stocks and it's just something to do while waiting for the rest of the portfolio / prospective ideas to decline in value, but that urge to run into the burning building and buy something at the epicenter down just like 30% or to buy some "unaffected" (if there is such a thing) business down 10-15% just isn't there. 

 

the fact that DJT may be neutered  by mid terms doesn't really provide solace to any US businesses seeing a massive spike in cost of materials/goods from China / elsewhere that will potentially be out of biz before then. 

 

my feeling may also be influenced by the fact that my largest position has traded $2,000 (not shares) since April 4th 

 

 

I don’t think we re near a buy anything point but there’s a lot of things that provide reasonable value for anyone with a time horizon of more than a few weeks or months. 
 

Macro wise everyone is just supercharged on emotion and all I’m really saying is I’m not really seeing what all the fuss is about. 

[Blake Hampton]

Destroying a century build up of global free trade is now no big deal.

[Gregmal]

lol emotionally supercharged on cue

[Blake Hampton]

"Whatever you think of the legitimate reasons for the newly announced tariffs—and, of course, there are some—or the long-term effect, good or bad, there are likely to be important short-term effects. As for the short-term, we are likely to see inflationary outcomes, not only on imported goods but on domestic prices, as input costs rise and demand increases on domestic products. How this plays out on different products will partially depend on their substitutability and price elasticity. Whether or not the menu of tariffs causes a recession remains in question, but it will slow down growth.

 

There are many uncertainties surrounding the new tariff policy: the potential retaliatory actions, including on services, by other countries, the effect on confidence, the impact on investments and capital flows, the effect on corporate profits and the possible effect on the U.S. dollar. The quicker this issue is resolved, the better because some of the negative effects increase cumulatively over time and would be hard to reverse. In the short run, I see this as one large additional straw on the camel’s back."

- Jamie Dimon, 2024 Letter to Shareholders

 

Edited April 8, 2025 by Blake Hampton

[thepupil]

16 minutes ago, Gregmal said:

I don’t think we re near a buy anything point but there’s a lot of things that provide reasonable value for anyone with a time horizon of more than a few weeks or months. 
 

Macro wise everyone is just supercharged on emotion and all I’m really saying is I’m not really seeing what all the fuss is about. 

 

i guess we agree since ultimately I'm long ahave little cash...i haven't emigrated just yet....i think my job's immune and assets are relatively well positioned / have a margin of safety...I'll survive....butit could be my TDS, but I view the fuss as we have a president who uses flawed inputs in chatGPT as an opening volley in trade negotiations...the geopolitical equivalent of "hey let's make a deal, my nukes are aimed at you, please aim your nukes at me, let's go..i have more nukes"...the most bullish interpretation is nothing can be taken at face value/ it's all bluster but it has consequences (like the redditors complaining about their input costs already spiking)...i mean what corporation wants to risk capital, make long term investments in various geographies with this shit going on...

 

i can't imagine how it feels to be a levered business with a chinese oriented supply chain....which I'm sure is MANY. Or how it feels to be say...Hawaii, where 85% of food is imported, mcuh of which from asia.

 

as a beneficiary of winning the incredible genetic lottery and being blessed with exorbitantly privileged USD earnings and assets it's just strange to see the (potentially disingenuous fleeting) attack on global prosperity occurring from the US, once a beacon of capitalism, by some intern who put the whole thing together the night before using chatGPT...it's like watching a dark comedy, but it's on the news. 

 

is that emotional enough for ya?

 

the most bullish stuff coming out of Bessent trying to tame it and the heretofore loyal billionaire class universally denouncing everything as idiotic...feels more like china centered  than before (which still strikes me as quite negative bt not entirely unexpected)

 

Edited April 8, 2025 by thepupil

[Gregmal]

10 minutes ago, Blake Hampton said:

"Whatever you think of the legitimate reasons for the newly announced tariffs—and, of course, there are some—or the long-term effect, good or bad, there are likely to be important short-term effects. As for the short-term, we are likely to see inflationary outcomes, not only on imported goods but on domestic prices, as input costs rise and demand increases on domestic products. How this plays out on different products will partially depend on their substitutability and price elasticity. Whether or not the menu of tariffs causes a recession remains in question, but it will slow down growth.

 

There are many uncertainties surrounding the new tariff policy: the potential retaliatory actions, including on services, by other countries, the effect on confidence, the impact on investments and capital flows, the effect on corporate profits and the possible effect on the U.S. dollar. The quicker this issue is resolved, the better because some of the negative effects increase cumulatively over time and would be hard to reverse. In the short run, I see this as one large additional straw on the camel’s back."

- Jamie Dimon, 2024 Letter to Shareholders

 

Emotional again. Like the 8th time in the past few days you’ve copy and pasted Jamie Dimons letter. 
 

We are all aware of who Jamie Dimon is; some of us have been aware of him longer than you’ve been alive. 
 

But more broadly, being a doomsayer, constantly appealing to authority, and liking O&G are like the Holy Trinity for shitty long term investment results so maybe just take a chill pill or go play a round of golf.

[Blake Hampton]

1 minute ago, Gregmal said:

But more broadly, being a doomsayer, constantly appealing to authority, and liking O&G are like the Holy Trinity for shitty long term investment results so maybe just take a chill pill or go play a round of golf.

 

We'll see.

[John Hjorth]

11 minutes ago, thepupil said:

i guess we agree since ultimately I'm long ahave little cash...i haven't emigrated just yet....i think my job's immune and assets are relatively well positioned / have a margin of safety...I'll survive....butit could be my TDS, but I view the fuss as we have a president who uses flawed inputs in chatGPT as an opening volley in trade negotiations...the geopolitical equivalent of "hey let's make a deal, my nukes are aimed at you, please aim your nukes at me, let's go..i have more nukes"...the most bullish interpretation is nothing can be taken at face value/ it's all bluster but it has consequences (like the redditors complaining about their input costs already spiking)...i mean what corporation wants to risk capital, make long term investments in various geographies with this shit going on...

 

i can't imagine how it feels to be a levered business with a chinese oriented supply chain....which I'm sure is MANY. Or how it feels to be say...Hawaii, where 85% of food is imported, mcuh of which from asia.

 

as a beneficiary of winning the incredible genetic lottery and being blessed with exorbitantly privileged USD earnings and assets it's just strange to see the (potentially disingenuous fleeting) attack on global prosperity occurring from the US, once a beacon of capitalism, by some intern who put the whole thing together the night before using chatGPT...it's like watching a dark comedy, but it's on the news. 

 

is that emotional enough for ya?

 

the most bullish stuff coming out of Bessent trying to tame it and the heretofore loyal billionaire class universally denouncing everything as idiotic...feels more like china centered  than before (which still strikes me as quite negative bt not entirely unexpected)

 

Great post, @thepupil,

 

In short, I just have to say, that reading this post quoted above by @thepupil actually provided some kind of releif in the situation, telling me, that I'm not totally alone, mentally.

 

Other posts before that may require my attention and reply. I will get to them.

[Castanza]

3 minutes ago, Blake Hampton said:

 

We'll see.

 

We'll see what?! What are you predicting is going to happen? 

[Paarslaars]

7 minutes ago, Gregmal said:

 just take a chill pill or go play a round of golf.

 

Probably the best advice here yet.

 

Though I am not at retirement age yet so I'll play some padel instead.

[Gregmal]

5 minutes ago, Blake Hampton said:

 

We'll see.

At 23 with a brain you should view the macro as awesome. If stuff does fall apart, who’s the biggest beneficiary? 
 

Drop the reverence for dogma and the world and all its opportunities opens up.
 

Signed,

Someone who was in your spot during the worst of the GFC. 

[Blake Hampton]

1 minute ago, Gregmal said:

At 23 with a brain you should view the macro as awesome. If stuff does fall apart, who’s the biggest beneficiary? 
 

Drop the reverence for dogma and the world and all its opportunities opens up.
 

Signed,

Someone who was in your spot during the worst of the GFC. 

 

This is awesome. I'm in love with oil and it's falling off a cliff.

This is the most excited I've been in a year.

[John Hjorth]

Blake, @Blake Hampton,

 

It's getting a bit tiresome with your quotes in this topic of your quotes of Dimons JPM Shareholder Letter, without any personal comments from you attached or included to what sections of it you may be quoting.

 

Please go to the JPM topic for discussion, and you may likely learn a bit how to to read and interpret those letters. They really aren't what you read, how odd that even may read to you.

[Sinbius]

If this 104% tariff on China stay...more or less how long before it will be felt hard on business and consumers in your opinion?days? weeks? months?

How will it unfold?

Edited April 8, 2025 by Sinbius

[Spekulatius]

7 hours ago, mattee2264 said:

Yeah I would be very surprised if the lows were already in. 

 

There is a limit to how much you can expect markets to fall in a very short period of time. Forced selling and deleveraging comes to an end. Those with dry powder are attracted to the fact that stocks are selling at 20% or more discounts to prices prevailing only a month or two ago (recency bias). Talking heads and brokerages get the message through that markets always recover and time in the market is the most important thing. And the intensity of the negative news flow eventually peaks or no longer catches investors by surprise. 

 

In this case the market panic was caused by a policy shock. Everyone figured Trump would just announce 10% tariffs that would get diluted quickly. Instead he comes out with these crazy and illogical rates which amount to the declaration of a trade war. 

 

There will be a short term relief rally because Trump has made it clear everything is open to negotiation and most countries will try to negotiate. 

 

But it is difficult to imagine a V shaped recovery without a hard policy reversal which seems unlikely as tariffs are a fundamental part of Trump's policy agenda and he will lose face if he scraps the policy entirely.

 

Even the 10% offered to friendly nations e.g. the UK that might be the eventual end point of most negotiations and end the trade war is significantly higher than rates prevailing before Trump got elected and will have a negative impact on global economic growth. And I don't think we will get there too quickly because Trump will want to extract maximum concessions before he grants those rates to countries and most countries have vested interests that make it difficult for them to offer significant trade concessions. 

 

And in the interim period which could stretch for months there will be a lot of uncertainty and many companies and consumers will front wait and postpone buying and investments and where companies cannot do so will try to pass higher prices on to consumers and consumers may cut back on domestic consumption and spending as more of their budget goes on imports and there will be supply chain disruptions and lower consumer and business confidence and all of this is more than enough to push economies into recession and cause bankruptcies and layoffs and once these chain of events are set into motion they are difficult to reverse. And the economic recovery will only come when there is more certainty about the eventual resolution. 

 

In the background Trump is also trying to cut spending and the US economy has been buoyed over the last few years by multi-trillion dollar deficits run by Biden. So that is also going to be a negative to corporate earnings as well and it is a fantasy that tariff revenue can fill the gap.

 

 

 

 

Good summary of the situation and unfortunately I agree with everything. The current setup does not look great to me.

 

I don’t think people realize, how much the current uncertainty hurts the business. If you are a supply chain manager and need to order something from abroad (typically done 2-3 month before delivery) you have no idea how much it’s going to cost.

 

If you want to export something , you have no idea what sort of tariffs your customer may see and possibly cancel the order and return it to you.

 

If you are participant in a complex supply chain food like aerospace , you will likely see all sorts of grenades going off

snd the fist example was Howmet declaring force majeure and I suspect many more will do as well. That means they can cancel exiting contracts.

 

Then have this rare earth issue that’s going to blow up in few month from when the existing safety stocks are depleted.

 

There is lot of risk that is going to hit the news pretty soon, if everything stay like it is.