What are we buying today?

Come on team, where’s an investor to pick up some good value here?

These comments are not mechanical—

But I like KMX, DG.
It seems that a very compelling case can be made for MRNA, if you like that sort of thing.

I’m considering writing cash backed puts on QQQE at some point.
(June $65s not perfect, but starting to look OK?)
The premium income is not fantastic, but really I’ve wanted a half way decent long term entry for a long time.
If you write a put, you know what your entry price will be, and it will be materially lower than today’s price.
This is the first time in a while that put writing offers both (a) a net entry price as good as the long run average valuation and (b) offers a high-single-digit rate of return on the put writing.

I estimate an “average” valuation level for an entry would be about $58-63 right now.
Compared to the last 15 years, based on median earnings yield based on trend real earnings.

Jim

12 Likes

Curious whether the capitulation signals will trigger on Thursday, and whether it will be a true bottom or the first step of a cascading bottom.

Elan

4 Likes

Curious whether the capitulation signals will trigger on Thursday…

Seems likely, even though the markets haven’t opened yet.
They were on the edge at close Wednesday, and the news is (ahem) not particularly good.

…and whether it will be a true bottom or the first step of a cascading bottom.

Gut feel—
I think the two most likely outcomes are wild squiggles perhaps for many months, but likely involving some lower lows than later today…or a cascading fall.
Either of those suggest better buying opportunities ahead.

There’s still a ton of air underneath current price levels for a lot of things.
But the market trajectory is probably a question of whether the punters still feel like buying dips, for now.
Markets will keep bouncing so long as there are dip buyers with money.
If/when they get scared, or run out of money, the rebounds will lose their power.

There are some metrics that may have hints of value.
For example, OTC share volumes have already fallen 11 months in a row.
The penny stock brigade has drawn back or switched to something else.
Perhaps that could be seen as being consistent with a slow roll over already underway.

Jim

14 Likes

I think the two most likely outcomes are wild squiggles perhaps for many months, but likely involving some lower lows than later today…or a cascading fall.

What about seeing soon the “bull trap” part of your favorite chart (Jean-Paul Rodriguez)?

1 Like

Come on team, where’s an investor to pick up some good value here?

Not mechanical, but this year I’ve been buying natural resources: mining (RIO), oil (MRO), coal (TECK), lithium (ALB) and natural gas (LNG). Demand for liquified natural gas, for example, should keep growing for many years. The US is now the world’s #1 supplier.

DB2

8 Likes

I’ve been buying some Muni CEFs.
NZF, NVG, NEA.
Pretty good discounts to NAV, paying 5%+ yield federal tax-free.

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At the moment it looks like plenty of people buying the dip.

Elan

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I’ve been doing the same.

The duration and leverage on those funds is pretty high.

Take a look at SBI and MHF.

There’s still a ton of air underneath current price levels for a lot of things.
But the market trajectory is probably a question of whether the punters still feel like buying dips, for now.
Markets will keep bouncing so long as there are dip buyers with money.

It definitely looks like the dip buyers haven’t given up : )

Jim

…yet…

6 Likes