Stock market is a "fully-fledged epic bubble" and will burst

[Derek Chevalier]

Mr Whippy said:

Just check TLT and NFLX as two diverse assets, almost perfectly aligned with the Nov USA Federal Reserve meeting at their tops and subsequent decline.

Given that Netflix is the worst performer on the S&P 500 YTD

https://www.cnbc.com/2022/04/20/netflix-plunges-tr...

surely that's more of a stock specific issue?

[NowWatchThisDrive]

BobToc said:

NowWatchThisDrive said:

Relative to the man on the street with little/no interest or practical experience in markets, yes. Relative to all the other people in the world trying to do the same thing...less so. Most of them have been career civil servants and/or academics in economics, a field that at best might be described as well-intentioned pseudoscience, and at worst as mathematical astrology.

Broadbent, Pill, Saunders and Haskell were professionals employed by the finance industry.

Hmm. They were cut from the same cloth academically and became* chief economists/strategists at banks, which in my experience is pretty much equivalent in terms of prognostication and inability to think outside their base case

I'm not saying they're all rubbish to a man/woman, I just think a lot of the sort of forecasting they do is either too specific to be reliable, or too vague to be really insightful.

*except Haskel - not sure about him?

[Derek Chevalier]

Derek Chevalier said:

Mr Whippy said:

Just check TLT and NFLX as two diverse assets, almost perfectly aligned with the Nov USA Federal Reserve meeting at their tops and subsequent decline.

Given that Netflix is the worst performer on the S&P 500 YTD

https://www.cnbc.com/2022/04/20/netflix-plunges-tr...

surely that's more of a stock specific issue?

It's interesting to see how some of the household names have taken a hit

https://www.slickcharts.com/sp500/performance

1. 492 Dominoes -40% YTD
2. 472 Starbucks -35% YTD
3. 448 Amazon -31% YTD

Defence and energy feature at the top end of the table. Just goes to show the importance of diversification.

[Jon39]

Derek Chevalier said:

Defence and energy feature at the top end of the table. Just goes to show the importance of diversification.

Some have an opinion that diversification can be taken too far.
I hold 25 companies at present (will be one more when GSK splits) including 12 of the green ones on the chart, but the performance of the portfolio has been almost entirely powered by just a small number of them. The others have proved average, but are contributing to a lesser extent.

Oils were an obvious choice, when we first saw the rise in the oil price gather pace. Was that last autumn?
At the recent Berkshire Hathaway AGM, Warren Buffett mentioned recently taking a stake in Occidental.
I thought the 40% rise this year for Shell was good, but when using the link above, I could see that Occidental has left Shell 'behind in the dust'. Any explanation for such a big difference?

On to the topic subject;
We have rising inflation affecting so many sectors and some huge price rises have not even been fully felt yet.
Rising interest rates.
Shortages of so many commodities, causing problems for many different businesses.
Quite a worry really, that so much is happening all at once.
This surely must lead to some sort of trouble ahead.

[Derek Chevalier]

Jon39 said:

Some have an opinion that diversification can be taken too far.
I hold 25 companies at present (will be one more when GSK splits) including 12 of the green ones on the chart, but the performance of the portfolio has been almost entirely powered by just a small number of them. The others have proved average, but are contributing to a lesser extent.

The problem you can have with that few holdings is that there's a chance that you miss out on the minority of the market that drives the gains

https://www.thinkadvisor.com/2017/08/21/study-show...

[Mr Whippy]

Derek Chevalier said:

Derek Chevalier said:

Mr Whippy said:

Just check TLT and NFLX as two diverse assets, almost perfectly aligned with the Nov USA Federal Reserve meeting at their tops and subsequent decline.

Given that Netflix is the worst performer on the S&P 500 YTD

https://www.cnbc.com/2022/04/20/netflix-plunges-tr...

surely that's more of a stock specific issue?

It's interesting to see how some of the household names have taken a hit

https://www.slickcharts.com/sp500/performance

1. 492 Dominoes -40% YTD
2. 472 Starbucks -35% YTD
3. 448 Amazon -31% YTD

Defence and energy feature at the top end of the table. Just goes to show the importance of diversification.

The point on nflx and tlt is the timing of their moves from ATH in line with Fed going to a tightening stance.

Everything from stocks to bonds reacted to it in one way or another.


Defence and energy.

War stuff is a bit squiffy from an ESG point of view. But fair play if you want to profit from it.

Energy is up. Yay. But for how long? When do you get out?

[speedy_thrills]

Why is pizza down? I thought people consumed more junk food, drank more, smoked more and purchased more firearms when the economy slumped.

Back below four standard deviations now, still you'll be able to tell you children you lived through it:

Edited by speedy_thrills on Monday 9th May 19:30

[Phooey]

Goldman Trader: "The Set Up For An Equity Market Crash Is As High As I Have Seen It"

https://www.zerohedge.com/markets/goldman-trader-s...

[Mr Whippy]

Phooey said:

Goldman Trader: "The Set Up For An Equity Market Crash Is As High As I Have Seen It"

https://www.zerohedge.com/markets/goldman-trader-s...

Lol, the set up?

It’s already crashed across plenty of sectors.

It’s been crashing for almost 6 months.

Bonds
Crypto/btc
Nasdaq
SSE composite Index
Nifty 50 is getting a bit volatile
Etc


ALL hit silly ATHs through pandemic and seemed to peak right into Nov ‘21.

Since USA Federal Reserve said tighten, things have been going south.

And as time passes the Federal Reserve are being more hawkish.


In 3 weeks QT starts and they’ll stop renewing bonds, and let MBS that are renewed, roll of their balance sheet too.
And then 2 weeks later they’ll raise rates 50% further to 1.5%

AND this is the Federal Reserve that, despite seeing what has happened for the last 5 months, tightened and committed to QT just a week ago.


They’re throwing assets under the bus to control inflation.

Is cash king yet, or are people still worried about inflation?

[Derek Chevalier]

Phooey said:

Goldman Trader: "The Set Up For An Equity Market Crash Is As High As I Have Seen It"

https://www.zerohedge.com/markets/goldman-trader-s...

You sure he's a trader and not in Equity Sales?

[Tye Green]

no-one knows what will happen - not anyone on here, not anyone, anywhere.

generally, all the information you hear regarding what the market will do is worthless because as soon as that information is disseminated there is a market reaction and whatever you do is too late because the price of the investment has changed reflecting that information.

clever people with computers and algorithms get it wrong but those with knowledge can, occasionally, get it right.

if you are not the first to hear that information and react to it you are gambling not investing.

unless you have a crystal ball or have information others don't have and also have the ability to react based upon that information QUICKLY before it becomes common knowledge, just invest in a cheap global tracker on a cheap platform and get on with your life - you cant beat the market.

[Jon39]

Mr Whippy said:

It’s already crashed across plenty of sectors.

Bonds
Crypto/Bitcoin
Nasdaq

You have reminded me of a Tommy Cooper joke.
Patient - "Doctor, I have broken my arm in three places."
Doctor - "Well, don't go to those places."

It's crashed across plenty of sectors.
Well, don't get involved with those sectors.

You could try one of my favourite sectors, non-cyclicals. Quite boring, but often steady and fewer downward movements.
Today, FTSE 100 ........................ down 2.32%.
My main non-cyclical holding ........ up 0.06%
Another non-cyclical holding ......... up 1.51%

Many took a bashing of course, oils especially, but having risers on a down day, often occurs with non-cyclicals.

[Mr Whippy]

So list all the times the Federal Reserve tightened to control inflation and didn’t cause a recession and attendant stock market correction.

I think it’s one time in ten.

Yes it’s a gamble, and yes past no indication of future, blah blah, but it’s not crazy odds is it?

And markets aren’t rational. They’re driven by greed and fear.

They don’t react perfectly to ‘news’ as it comes in.
Just look at Q1 2020.
Covid spreading. Spreading. China in lockdowns. Spreading. Cases in UK, more in UK. More in UK.
Stocks bobbing around doing not much.
Then bang.
Why? Why no linear drop from mid January to April?
Fear. Who’d sell out when no one else was?

So yes you’re gambling, but not against news and reality, but to the perception of reality which is tinted by greed and fear in the participants.

[bmwmike]

Does everyone think the world is caving in or something? If more than a 10 Yr horizon just keep buying more for your money and don't worry.

[leef44]

Mr Whippy said:

So list all the times the Federal Reserve tightened to control inflation and didn’t cause a recession and attendant stock market correction.

I think it’s one time in ten.

Yes it’s a gamble, and yes past no indication of future, blah blah, but it’s not crazy odds is it?

And markets aren’t rational. They’re driven by greed and fear.

They don’t react perfectly to ‘news’ as it comes in.
Just look at Q1 2020.
Covid spreading. Spreading. China in lockdowns. Spreading. Cases in UK, more in UK. More in UK.
Stocks bobbing around doing not much.
Then bang.
Why? Why no linear drop from mid January to April?
Fear. Who’d sell out when no one else was?

So yes you’re gambling, but not against news and reality, but to the perception of reality which is tinted by greed and fear in the participants.

All the indicators point to a downward trend but then we keep getting unexpected news.

Who knows? Maybe Putin packs it in and calls his whole fiasco a success and the war is over. Everyone piles back in to equity, FOMO drives the markets up to even more unrealistic levels then you wait for the next dip because you missed out after having cashed out.

As others have said, it's so unpredictable, there's not much you can do but drip feed.

[Tye Green]

leef44 said:

, it's so unpredictable, there's not much you can do but drip feed.

don't drip feed!

drip- feeding suggests the drip feeder has a crystal ball.

what should the drip feeder do with his cash when its not yet dripped in? put it into premium bonds?

whats the point of drip feeding?

[NowWatchThisDrive]

Tye Green said:

no-one knows what will happen - not anyone on here, not anyone, anywhere.

generally, all the information you hear regarding what the market will do is worthless because as soon as that information is disseminated there is a market reaction and whatever you do is too late because the price of the investment has changed reflecting that information.

clever people with computers and algorithms get it wrong but those with knowledge can, occasionally, get it right.

if you are not the first to hear that information and react to it you are gambling not investing.

unless you have a crystal ball or have information others don't have and also have the ability to react based upon that information QUICKLY before it becomes common knowledge, just invest in a cheap global tracker on a cheap platform and get on with your life - you cant beat the market.

"You can't beat the market" requires a bit of qualification. Venture down the size and liquidity spectrum in equities, and you'll find structural factors and meaningful inefficiencies that make it quite possible for a studious, even-tempered stock picker to earn superior returns. If you're talking about ≈efficient large cap equities it's substantially harder especially in the short-medium term, but in the long run and when markets are distressed is when the scope to really outperform emerges, because it's not solely governed by the information you have but also what you do (and crucially, don't do) with it, and you don't face the same constraints as people who manage money for a living.

[DaveA8]

ooid said:

Massive increase on company insolvencies, especially on construction and property sector on last quarter.

https://www.gov.uk/government/statistics/company-i...

Before anyone dismisses this as Covid chancers or bounce back loans, we have 2 projects which I could dearly do with but neither customer can raise the cash nor are willing to go through a Wholesaler ( no cost to them and a long tradition in our industry) and got quite tetchy when we offered to punt it around, the last time I saw this on a regular basis was 2008-10.
The other warning sign is where a customer asks for the price to be sent not to the Wholesaler they've used for years but another one, the stock reason is because the first one is failing on service ( or they're on stop)
These things are coming back with a vengeance
On our purchasing side, we are squeezed as our suppliers have tightened not only limits but not request amounts upfront and citing supply issues as a reason for cost increases.
We are only the tiniest cog in a wheel but we cannot be unique and this must be happening elsewhere, if credit ceases, this creates its own issues

[BobToc]

Tye Green said:

clever people with computers and algorithms get it wrong but those with knowledge can, occasionally, get it right.

Indeed. Success in this business is getting it right 51% of the time.

[Mr Whippy]

bmwmike said:

Does everyone think the world is caving in or something? If more than a 10 Yr horizon just keep buying more for your money and don't worry.

So BTFD?

Just buy because in 10 years the global economy will be bigger?

This in a finite world, with slowing pop growth, almost negative in the west (need more immigration to fuel our economies!), record debt to GDP, ESG taking a grip, and very serious sanctions driving divides creating a new Cold War?

I mean yeah I’m positive for the future. But it doesn’t mean the whole world can be awash in cash ‘just because’ in 10 years.

Just look at Japan. What happens when that hits the entire world?

The west has been able to export its debt for decades, their money printing having no consequences… for now.

The wealth inequality at all time highs.


To just throw your money in without looking out of the window ahead is like driving a car looking in the rear view mirror and saying “I got this far ok”


Parts of the world are caving in. We can clearly see it happening.