Gyroscopic Investing

pmward wrote: ↑Tue Oct 13, 2020 12:26 pm It's all about stimulus. If congress can pull their heads out of their collective arses and can actually get a stimulus deal through at some point, markets will continue to go up to dizzying heights. If they fail to do so, stocks will fall until they eventually force their hands similar to how they forced Powells hand to flip dovish in Q4 2018. Back in March after a 30% drop in the S&P congress was willing to do whatever it took in the form of stimulus. This same scenario will play out again if they continue to do nothing. The market will force their hands if they have to. Either way, the stimulus will inevitably come and the market will go up to substantial new all-time highs afterward just like it did following Q4 2018, imo. It may be a bumpy road though, at this point in the cycle volatility should be assumed to continue until the secular bull market finally ends.

The economy has nothing to do with stock prices these days. The only thing the election matters for is how much stimulus and how fast it will come. I actually think a Biden win will be better for stocks than a Trump win because of this, especially if the senate also flips blue, because then the real spending will begin, and in turn the true 1998-2000 like melt-up to end the bull market from the 2009 lows can truly begin in earnest. When we inevitably get fiscal stimulus fully on board permanently like we got monetary stimulus fully on board permanently coming out of the 08 crisis, there will be nothing stopping the market from going to 5,000+ before the bull market finally tops and starts the next true secular bear market. There is a lot of risks at this point, but there is also a lot of potential rewards. Selling stock now could look very silly in a year or two. Fiscal is necessary to keep the economy afloat at this point, and as such the fiscal will come, it's not a matter of if, it's only a matter of when. At least this is another angle worth considering before actively selling stocks on the assumption that they have to go down in the near to mid term. Remember Corto we had a similar discussion in this thread back in March that you can scroll back to, where I said they would do whatever it took to have the market back at all time highs by the election, and you didn't see how it was possible then either. So maybe once again this other angle is one worth looking at and at least considering before selling stocks. Eventually, sure every bull market dies some day, but if the whole country being under Corona lockdown couldn't kill the bull, it means the bull is still strong enough to keep going, and that in turn means the bull has a much higher destination in mind before it's willing to give up the ghost. That's my current take on things at least.

Now, this is really important to understand when you’re trying to understand why the stock market has reacted and also why the coming couple of years could actually be very good for the economy. In short, the stock market is front-running the probability of a vaccine. And in the case of a vaccine life essentially returns to some semblance of normalcy reflecting where we were in 2019. So, let’s say we get a vaccine in mid-2021. In that case the economy will begin to aggressively soak up all that excess labor to meet all that pent up demand. You’ll go to dinner more, movies more, take two vacations next year. Etc. As that pent up demand soaks the economy in 2021/2022 the labor market snaps back aggressively and by the end of 2022 the economy looks more or less like it did in 2019. The end result will be this weird “recession” that wasn’t really a cyclical recession at all. Instead, it will look more like a continuation of the 2019 expansion with 2-3 year pause within it. link

dualstow wrote: ↑Mon Nov 09, 2020 7:06 am Market is set to surge 5% — that’s more than 1400 points for the Dow — on Pfizer’s 90% effective vaccine.

doodle wrote: ↑Mon Nov 16, 2020 7:02 pm This market is getting insane. Cramer is attributing it to younger inexperienced investors who have only seen stock gains for the last decade. To them the party can go on forever. I'm starting to slowly divest. We hitting some pretty lofty numbers here. Id be surprised if we see 4k on the SP before we see 3k or less. Anyone else getting that feeling?

pmward wrote: ↑Tue Nov 17, 2020 11:00 am Obsessing over fundamentals/price/value is a good way to be on the wrong side of the trade 90% of the time.

Kbg wrote: ↑Tue Nov 24, 2020 5:29 pm I think the most important thing I learned from HB was the difficulty of predicting...this lesson is so well ingrained now that all I really look for is some indication that what I'm holding is not performing according to historical data. If the data says whatever I'm holding should be getting trashed for the given conditions we are in...don't really care anymore. I actually get more "weirded out" when something is performing well that shouldn't be...my radar warning receiver is on high when this happens.

For me the "inability to predict thing" sinking in and its ramifications has changed everything including my bottom line in a big way.

Kbg wrote: ↑Tue Nov 24, 2020 5:29 pm I think the most important thing I learned from HB was the difficulty of predicting...this lesson is so well ingrained now that all I really look for is some indication that what I'm holding is not performing according to historical data. If the data says whatever I'm holding should be getting trashed for the given conditions we are in...don't really care anymore. I actually get more "weirded out" when something is performing well that shouldn't be...my radar warning receiver is on high when this happens.

For me the "inability to predict thing" sinking in and its ramifications has changed everything including my bottom line in a big way.

pmward wrote: ↑Wed Nov 25, 2020 10:56 am
Yeah, I love intermarket analysis. It's not fool-proof by any means, but there's a lot of info

Vil wrote: ↑Fri Nov 27, 2020 2:28 am

pmward wrote: ↑Wed Nov 25, 2020 10:56 am
Yeah, I love intermarket analysis. It's not fool-proof by any means, but there's a lot of info

I can recall you making a lot of such comparisons in your analysis. Oddly enough, I can see that it's not extremely popular approach on market reading. Just handful (of the hundreds) of books are putting some significance on relative strength and sector strength - one of those being the 'ancient' (published sometime in 1980-ties) Stein Weinstein's "Secrets for Profiting in Bull and Bear Markets". Beside the obvious reason for stock/sector selection and possibly hedging positions for what else do you use this - for your quant strategy ?

dualstow wrote: ↑Mon Sep 20, 2021 2:10 pm I bought a bit more Total Stock Market.