Is the bottom in? Or is the jury still out?
Your general opinions and impressions of this market?
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It was way overbought. I’ve been expecting some kind of snap back. Back around April I think it was, we had the same thing. It was getting a little to “exuberant” & went into a slide. I was hoping it would advance in a responsible & reasonable manner but heaven forefend.
And finally… it’s Summer. For whatever reasons it happens Sell in May has been a discernible pattern for hundreds of years in markets all over the world. (So, they say…?)
One caveat — herky-jerky volatility ie way up / way down / we’re back / no we’re not, is the kind of volatility that can precede major turnarounds but I don’t think this is one. This is just the ebb & flow of things.
Too many things lately that could have caused panicky reactions that didn’t. Now they want us to believe that slightly higher but still low unemployment and a 1/4 point fed cut that should have happened 60 days ago is the cause?
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What do you see in the fundamentals of AI sales or big oil’s future?
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Thank you for confusing me with someone who might actually know about that stuff. I’m just looking at market action.
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What I noticed over Monday evening and Tuesday, was the media chirping that all was well, don’t panic.
We saw the same sort of coordinated defense campaign in March of 09. Cramer even predicted it. He said words to the effect “just watch, all the first quarter reports will come in better than expected”. Sure enough, everything was hailed, with the exact phrase, “better than expected” by all media outlets. The local Detroit media reporting horrid car sales and even more horrid big three quarterly reports, and, after each horrid number, the news actor proclaimed it “better than expected”. Turned out, that March of 09 was the bottom, for the market. The economy continued to decline, for months, but the markets flew on the “better than expected” hype.
I am watching Microsoft with great interest. Currently trading about $10 above where I sold Monday, but MSFT had been in a downtrend for a month. Fortunately, I have the wash sale rule enforcing discipline, so I don’t chase a dead cat bounce.
Steve
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While we’re on the subject, what do any of you think about interest rates? The reason I ask here on this thread is: If we do happen to be entering some major inflection point, I am in a situation where the current interest rate on my sweep account money market fund is enough. I really don’t neeeeeed to be in the market, I’m just a little greedy still. But, if we’re cresting a hill and going for a slide, I’m fine with 5% going forward.
And for anyone who thinks we’re looking like 2008, I think that’s Steve, how low can / will we go? I am assuming you do not think we’re in as bad a position as 2008 and won’t drop 60%.
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I think interest rates are going to drop. Though I love the idea of savings getting me 4.5% and higher (like when I was in high school), I don’t see this continuing. Shame, I have a large amount of cash just parked in money markets because I see no reason to risk it, even in a balanced fund, when I can get this ROI risk free. (This money is potential retire-early money, so I’m only willing to put it to a small amount of risk).
If rates do fall, I might be forced into Treasury ladders, or forced into that balanced fund.
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How far is the problem. I would not bank on much two to three years from now. We won’t see 1950s rates because we won’t see 1950s higher tax bracket rates.
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I am not looking for a 2008 scenario. In 08, there were people running all over this board, with their hair on fire, and facts to back up their concern. I went 100% cash that July.
What I am seeing now is partly, some of the air coming out of the AI hype, and, partly, the markets unwinding their expectation of very “pro-growth”* government policy going forward, combined with the Fed starting to see the results it wanted to see, when it started increasing rates.
What seemed like a good environment for “pro-growth”* has since turned neutral. A new bias will probably not be apparent for a couple weeks, or more. The market hates uncertainty, and I have never seen the table kicked over like it has in the last couple months.
At this time, I am seeing all the indexes that were nicely green this morning, turning red. Only thing up is oil.
Steve
*if you aren’t sure, that is a euphemism for something more politically charged
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Weren’t the basement level rates of 2008 till 2000 or whenever the inflation started, sort of artificial? I remember hearing someone say about circa 2012 - 2014 that the economy (since 2008) hadn’t really recovered it was just on life support, hence the suspiciously low interest rates. Will we really need that sort of policy again in our lifetimes? If so, we really are in bad shape. I could live with 4% on the MMF. Below that would have to get into stocks and eat multi year losses if necessary.
And that would have been correct since March '09 was the very bottom of the market. If you had bought almost anything at the time, you would have made money. I don’t see a parallel to March '09 at this time. The market would have to lose about 40% or so to be comparable.
Pete
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What do you mean “if”? Rates have fallen and are falling. For example, I bought a 52-week T-bill last October and got 5.488%. I also bought a 52-week T-bill this week and got 4.458%. That a full percentage point lower interest rate.
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Guys! Where we are today is nothing close to 2008. 2008 belongs in the same box with 1929 and nothing else. Maybe the Long Depression of 1893. Nothing else. We are on the cusp of an ordinary, mild, probably not long lasting recession. Maybe it will happen (my view: probably). Maybe it won’t. If it does, the Fed has the easy tools to work it, and while they’ve been late on nearly everything (bringing rates up, and now bringing rates down) they’ve managed to be close enough. I’d prefer “perfect”, but that’s unlikely for anyone.
Yes the market is overbought. Yes, there’s a bear in the woods, and maybe we will hear it growl. Bears are common in these parts; just because we’ve mostly seen Bulls lately doesn’t mean there aren’t Bears about as well.
This too shall pass. If you want to market time, now is a good time to take profits. If you don’t, then don’t. End of story.
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No not synthetic rates in 2008 or whenever.
Instead a ride to the bottom of the velocity of money in the US
To @steve203 point on rates and market values, it has been late to happen but rates now are forcing values down.
We need to remember demand side economics recessions are very shallow but market swings can be wide.
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My bond ladder now reaches to November, 2031. My “target” length is 5 years, which would have it currently be around August, 2029. With investment interest rates “not high”, I don’t really want it to go past 7 years, which would put it around August, 2031 right now.
Right now, I expect to let that bond ladder naturally shrink a bit as bonds mature. There are a few reasons for that:
- I want to get the ladder back into its target range, and letting bonds roll off will help get it there.
- Last time I extended the bond ladder, I got something like 5.9% YTW on an investment grade bond. Right now, the rates closer to 5.2% aren’t enough to entice me to “lock” money away for that long.
- I generally “feed” my bond ladder with the “excess” cash generated from rolling my options investments. Higher volatility and lower stock prices mean that I’m finding it relatively more attractive to instead use that money to seek out other options-based opportunities.
Net — I have no idea if we’re at the bottom yet or not. I did realize, though, that the act of figuring out how to reasonably manage that bond/options combo account put me in a spot of being somewhat fearful back when others were greedy. And now that the market is being a bit more fearful, I’m finding it more reasonable to consider a more “greedy” stance.
Only time will tell just how crazy that is.
Regards,
-Chuck
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This thread was begun on a morning deadcat bounce. Just a bit of food for thought.
This thread was begun on a morning deadcat bounce. Just a bit of food for thought.
Might be starting to look like a DCB eh? I looked at the after hours action on MSFT. It was trading a few cents below where I sold in Monday’s bawoosh.
Steve
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Technically, there were only two initial tentative / weak “bottom signals”, 8/2 and 8/5.
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I do not know if the bottom is in or not. It is an interesting question. It will make no difference to my investing.
