Near the Bottom?

highest weekly rate ever

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Barron’s Roundtable today attributed much of this to tax loss selling. It can be a good opportunity to buy. Some investments could be hitting new lows and bounce back quickly in the new year.

They mentioned closed end bond funds. I have BLE. Its a closed end bond fund, fed tax free. Its a leveraged bond fund. They borrow against their bonds at short term rates and buy long bonds to supplement yield. Shares are down to 10.32. Yield is down to 0.039/month due to inverted yield curve. In good times can do $0.064/mo. I calculate 7.3% tax free at current prices.

All time high is 16.10 Low in October was 9.40.

Barrons suggested putting in a low limit order. Tax selling could get a fill.

Same buy idea probably applies to others including index funds. But bad time to buy many funds as you can still get caught with capital gains distributions.

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You can’t see bottoms coming, only going.

Also true in the market, you can only see the bottom in hindsight. There was no Santa rally. Maybe the Three Magi will bring gifts. I don’t expect to do anything in the market until January.

The Captain

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From the article:
“Investors shed stocks at the highest weekly rate ever in the week to Wednesday, selling a net $41.9 billion of equities…
Investors also reduced their cash holdings by a net $59.5 billion, the biggest drop since February 2022, and sold the largest quantity of investment grade and high yield bonds in nine weeks…”

If investors reduced stocks, investment grade and high yield bonds and CASH…where did all that money flow to? It had to go somewhere. Not Treasuries, either, since the Treasury yield curve rose, showing that investors were selling Treasuries.

So…where did the money go?
Wendy

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There was no Santa rally.

“Santa rallies” are so named because they occur in the week AFTER Christmas.

https://www.vantagemarkets.com/academy/santa-rally/

“In 1972 Yale Hirsch, creator of the US Stock Traders Almanac came up with the phrase “the Santa Claus rally”. He had noticed that in the seven-day trading period between Christmas Eve and the second day of January stock markets around the world always appeared to rally.”

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Makes no sense at all. Every trade of stock results in the exact same amount of stock before and after, and the exact same amount of money before and after, just held by different people. There’s no such thing as ‘cash on the sidelines’. Every sell has a buy and vice versa.

The idea that ‘investors’ dumped shares on ‘non-investors’ is surreal and bizarre. What is this process of buying stock that these ‘non-investors’ are doing called, if not investing?

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If net margin use is decreasing, it’s possible for cash to be reduced, loans can be cancelled out.

As for ‘reducing stocks and bonds’, the concept doesn’t make sense. They trade hands and the total stays the same except where bonds/stocks are issued or cancelled.

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bjurasz, about what I was thinking, “the wise” urging people to buy.

As to where the money went? My first thought would be to paying down adjustable rate debt.

Steve

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Do wise people have adjustable rate debt?

FTT?

The total shares of stock and the total par values of the bonds stay the same. But the market price of these assets change when sold. I think that’s what the author meant – the “everything asset” popped when the Fed raised interest rates. So many trades will be at lower prices (not to mention the asset values will be lower even if held and not traded).

Wendy

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Saving accounts? Perhaps folks redeployed into a bank account waiting for the market to recover. According to bankrate.com one can gain 3% 4% in a savings account.Best Savings Accounts for December 2022 | Bankrate

Christmas gifts? Coal/oil for the furnace? A new heat pump? A generator?

Certainly NOT towards an upgrade to the Discourse platform. I’m sure of that!!!

'38Packard

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. I think that’s what the author meant

Perhaps, but I’ve met maybe 10x more people in my life that actually think ‘stocks get sold’ somehow without a buyer, vs people who intuitively get that no such thing is possible.