Jump to content

Another freaking lovely day??


opihiman2
 Share

Recommended Posts

I guess not.  The General board seems pretty quiet after a massive two day drop.  Is everyone suffering from volatility fatigue?  I'm surprised at the lack of noise on here.

 

Not me!  Volatility doesn't bother me.  We aren't leveraged, we don't short and we've bought alot of quality businesses at discounted prices in the last couple of months.  I've still got cash and am buying things I like.  Cheers!

Link to comment
Share on other sites

I guess not.  The General board seems pretty quiet after a massive two day drop.  Is everyone suffering from volatility fatigue?  I'm surprised at the lack of noise on here.

 

i'm betting people have been too busy buying to post!  :)

 

yes, it's been a pretty lovely freaking day.  as i said on some other thread: if the world doesn't end, i think there will be some springs that uncoil fast.

Link to comment
Share on other sites

Same as Parsad, except I don't run a fund, and I don't have much cash left...  :'(

 

But my consolation is that the businesses I own are probably doing crazy buybacks and/or allocating capital in other businesses as we speak, so it should turn out well in the long-term.

Link to comment
Share on other sites

 

i'm betting people have been too busy buying to post!  :)

 

 

Exactly right -- I've been buying all day, actually.  I've still got about 33% in cash.  (Well, with a 10% position in Fairfax, which I view as being good as cash, it's about 43% cash & "cash equivalents.")

Link to comment
Share on other sites

 

i'm betting people have been too busy buying to post!  :)

 

 

Exactly right -- I've been buying all day, actually.  I've still got about 33% in cash.  (Well, with a 10% position in Fairfax, which I view as being good as cash, it's about 43% cash & "cash equivalents.")

 

Nice job.  With today's purchases it marks the first time in at least a year that I've been fully invested.  If prices drop more then it will be "selling at 5X to buy at 3X", which is much tougher psychologically than having cash on hand.

Link to comment
Share on other sites

I did not buy anything with this little extra 6-7% drop over 2 days. Tightened up my puts to provide some cash so I am positioned to buy now but other than that... 

 

If we go down another 4 to 8%, that'll get me out of bed and I'll start thinking about adding something. I just don't see much of an advantage adding without at least a 10% drop in the market, or when the stocks you want to own don't drop at least 15% individually. Are you really going to double down when the stocks you own drop 6-7%? or even 10%? Are you even going to add 50% to your current position? If not, why waste your time? Its not going to make a huge difference... other than for the feel-good psychological benefits of knowing you bought a bit on a down day.

 

 

Link to comment
Share on other sites

Guest misterstockwell

We have a long ways to go to catch up to the bear markets that the rest of world has experienced. We aren't any better off, so I don't really understand why our markets haven't suffered as much(or more!). I am still sitting on ~75% cash and that plan has done very very well for me. Clients are happy too.

Link to comment
Share on other sites

I think the market can turn either way rather quick. The market is full of liquidity and the rate has been so low. You can be happy with cash one day and months later, you find yourself significantly under-perform the market.

 

I see 10-20% cash being right amount here. More than 60% cash with all those cheap and solid stocks around. Now, that's ultra-conservative. I don't see how the ultra-conservative  can out perform in LT.

Link to comment
Share on other sites

I would say that the conservative investor isn't really worried about relative performance.    It's all about the level of risk that you can sleep with.  I've picked up some more MSFT over the past couple of days, but am still sitting at about 40% cash and am also holding SPY puts.  Having my 2 biggest positions be cash and FFH keeps me from worrying about much of anything that happens in the market.    If I miss some 30% runup, oh well, I know my financial plan is working out just fine.

Link to comment
Share on other sites

Guest misterstockwell

I see the risks of holding cash as depreciation of our increasingly worthless currency and money market concerns due to Europe. I was looking at the Everbank asian currency CD's today as an option for some cash. Also saw a new ETF with symbol RMB that is dim sum bonds.

Link to comment
Share on other sites

Actually, the answer is pretty straightforward. Have a body that manages systemic risk through a bailout fund (i.e EFSF) which can stabilise financial markets through bond buybacks and recapitalising banks. The issue is that idiotic europeans finance ministers need a crisis to see that there is a need for such a mechanism. The issue of the Lehman brothers collapse was not the bankruptcy of the bank itself but rather its effects on the CDS markets which were far far larger than the entire world economy. Now, if Greek defaults, this event could be far larger than the Lehman brothers collapse due to the size of the Eurozone and the contagion effect on the bloody PIIGS( Portugal, Ireland,Italy, Greece and Spain). Here is a Soros interview mentioning in more detail

 

http://www.reuters.com/article/2011/09/15/us-eurozone-soros-idUSTRE78E0II20110915?feedType=RSS&feedName=topNews

Link to comment
Share on other sites

Inflation is the absolute least of my concerns right now.

 

What's the easiest to solve sovereign debt problem?

 

I'm guessing you think that it is printing.  I don't think that's such an easy solution.

 

What about default, that's pretty easy, doesn't require any action at all.

Link to comment
Share on other sites

European leaders must now make some decisions as it is apparent that the Greece can has been kicked about as far as it can be. The problem is the choices that they must pick from are all very bad. Politicians will pick one of the very bad options ONLY when a gun is placed to their head. And that is the rational decision if you are a politician.

 

The challenge with this strategy is we have a political crises (future of Euro, inability to make fast decisions), an economic crisis (world falls back into recession) and a bank crisis (Euro banks are insolvent) and if one piece blows up it threatens the other two...

 

Europe may announce something this weekend and markets may applaud next week. I just do not understand how, in the coming months, we do not get more bad news. I know we are supposed to be value investors and not market timers. Sorry, until I see blood in the steets I will remain cautious. There is only a whif of panic in the air right now. People are still complacent (stocks for the long haul).

 

A previous posted commented rightly so that those sitting in cash today will likely still be sitting in cash when the market bottoms and will still likely be in cash during the next bull market run. This is actually something that I think about and struggle with a fair bit. 

Link to comment
Share on other sites

Europe may announce something this weekend and markets may applaud next week. I just do not understand how, in the coming months, we do not get more bad news. I know we are supposed to be value investors and not market timers. Sorry, until I see blood in the steets I will remain cautious. There is only a whif of panic in the air right now. People are still complacent (stocks for the long haul).

 

Agree 100%.  The complacency in the face of bad economic news and potential for serious trouble with the Euro banks is what I find most troubling.  It feels a bit like early 2008 in that regard.  Even so, I like my stocks and think they are all demonstrably cheap, but I'm not inclined to add to them at this point.  I bought some SPY puts on one of the markets previous trips above 1,200 which will offset any serious losses if things blow up this fall.  For now I'm waiting to see if/how the Euro debt issue gets resolved.  If I miss out on some upside as a result of my caution, that's fine; I'll sleep well.

 

 

Link to comment
Share on other sites

Europe may announce something this weekend and markets may applaud next week. I just do not understand how, in the coming months, we do not get more bad news. I know we are supposed to be value investors and not market timers. Sorry, until I see blood in the steets I will remain cautious. There is only a whif of panic in the air right now. People are still complacent (stocks for the long haul).

 

Agree 100%.  The complacency in the face of bad economic news...

 

It's difficult to get a quantitative measure of complacency.  However, qualitatively, I don't feel it out there.  Yesterday I linked to an article from yahoo that ran with the headline "The Sum of All Fears...".  The 10 year is at 1.8%.  VIX has been high for a month.  It seems there's a lot of fear already here.  The aftermath of Lehman is burned into a lot of memories.

 

In contrast, back in late 2007, people were loading up on Countrywide stock because they were going to be able to take advantage of all their crap competition going belly up.  Same with FNM, FRE - I still can't believe how many people I saw buying the common all the way down, in size.  Chuck Prince was still dancing while the music was playing.  Who on earth is talking this way now?

 

Agreed there's the potential to go down from here.  Yet at the same time there's stuff that is cheap and has catalysts.  I find it much more difficult to develop a macro thesis with catalysts with worthwhile confidence, because there's so many moving parts.

 

Probably no single right answer here...

Link to comment
Share on other sites

Inflation is the absolute least of my concerns right now.

 

What's the easiest to solve sovereign debt problem?

 

I think default and devaluing their own currency is the easiest way to solve a sovereign debt problem.

 

I normally try to ignore the macro stuff.

 

Agree with above.

 

Good article/summary of a model of what may be going on + what may happen(posted elsewhere):

 

http://www.hedgefundletters.com/wp-content/uploads/2011/03/a-template-for-understanding.pdf

 

"What determines whether deleveragings are deflationary or inflationary is the extent to which central banks

create money to negate the effects of contracting credit."

 

I think we all agree that the current contraction(falling financial asset prices, falling commodity prices recently) is secondary to deleveraging.

 

If governments (as well as people + companies that are over extended) default then I think we will have deflation. It feels like we re having this this week.

 

If government prints money then we will have inflation. I think they will do this (at least try to inflate their way out).

 

I am thinking we should be holding high quality businesses (owner manager types with cash + good balance sheets) and  some cash to put in things that will go on sale  which will protect our purchasing power-hard assets,real estate, great businesses that can raise prices, dividend paying businesses that we can t do without (utilities).

 

Timing is always a problem for me, but I am thinking we should average in slowly, buy cheap, sell dear as Parsad says.

Link to comment
Share on other sites

"It's difficult to get a quantitative measure of complacency.  However, qualitatively, I don't feel it out there."

 

Other then the financial networks + press I have not heard anyone concerned out in the real world, except for the fact that the sports radio show I was listening to on the way home last night were talking about economy + the market fall.

Link to comment
Share on other sites

 

Europe may announce something this weekend and markets may applaud next week. I just do not understand how, in the coming months, we do not get more bad news. I know we are supposed to be value investors and not market timers. Sorry, until I see blood in the steets I will remain cautious. There is only a whif of panic in the air right now. People are still complacent (stocks for the long haul).

 

 

The EURO Stoxx 50 was 7% above the 2009 low today, banks halved in market value and more and the VXO hit 50 in August and is above 40 as we speak. I'd say there is some degree of fear for what is coming and that the market is discounting the coming wave of debt restructuring, lower economic growth, capital rounds for banks,...

 

http://finance.yahoo.com/q?s=^VXO

 

If you click the link (select all) and you put it on the longest timescale you get an idea of what some would call the degree of fear.

 

I have no opinion on where the markets will go from here, I just don't agree with the statement that there isn't any blood in the street. It could very well be that people once again capitulate completely. But it almost feels like we expect others to react this way (some sort of bias) because we just went through the same experience in 08-09. The current fear doesn't seem adequate enough to agressively buy because of our previous trauma.  In reality such occasions of capitulation are very rare. It is possible now, but not a 50/50 chance or anything like that imo.

 

Maybe it's because I live between people who lost 25-40% on European stocks? The US "only" had a 15% drop or something like that?

Link to comment
Share on other sites

It's difficult to get a quantitative measure of complacency.  However, qualitatively, I don't feel it out there.  Yesterday I linked to an article from yahoo that ran with the headline "The Sum of All Fears...".  The 10 year is at 1.8%.  VIX has been high for a month.  It seems there's a lot of fear already here.  The aftermath of Lehman is burned into a lot of memories.

 

Very true that you can't measure complacency. 

 

But, my experience is that things like the debt crisis in Europe seem to get brushed off as solvable if only the Europeans would execute the solution.  Since I don't see many obvious good solutions for the Greece problem (perhaps some sort of Euro-TARP), and I don't know how exposed/leveraged European banks are to the problem, anxiety fills the hole in my own understanding of things.  So, the aftermath of Lehman becomes a template for envisioning how things may play out.

 

The market is down 15% from it's recent peak; that doesn't say fear to me.

 

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
 Share

×
×
  • Create New...