Stock scream room

[dualstow]

Stocks, Gold and LTT’s will finish in the Green today so go and get some sleep

Budd, the voice of calm. These are definitely the End Times.

[Vil]

I told you its gonna be the all down day. Anyone to share something on the bright side ?

[dualstow]

I told you its gonna be the all down day. Anyone to share something on the bright side ?

How about- it's just one day.

[pp4me]

So I read that April is going to turn out to be the best month for stocks since 1974. Sounds good until you remember that March was the worse since some year in the great depression.

What I can't figure is where all the optimism coming from. Do stock investors see something that I don't? Seems to me the economy is suffering from one of the most traumatic events in my lifetime and thoughts of a quick recovery are just wishful thinking.

I mean I just got back from the grocery store and not only were the shelves of paper products empty but now the meat supply is dwindling, especially chicken. My Dad went through the great depression, living on a farm, and I remember him telling me they ate better than they ever had before because there was nowhere to sell the produce. With chickens and cows being euthanized for the same reasons it doesn't give me much reason for optimism right now.

[pmward]

So I read that April is going to turn out to be the best month for stocks since 1974. Sounds good until you remember that March was the worse since some year in the great depression.

What I can't figure is where all the optimism coming from. Do stock investors see something that I don't? Seems to me the economy is suffering from one of the most traumatic events in my lifetime and thoughts of a quick recovery are just wishful thinking.

I mean I just got back from the grocery store and not only were the shelves of paper products empty but now the meat supply is dwindling, especially chicken. My Dad went through the great depression, living on a farm, and I remember him telling me they ate better than they ever had before because there was nowhere to sell the produce. With chickens and cows being euthanized for the same reasons it doesn't give me much reason for optimism right now.

You have to remember that the markets job is to make it difficult for traders and investors alike. If the market does the most obvious thing, everyone would have a free winning lottery ticket. It needs to do the opposite of the obvious thing to keep both the bulls and bears honest. So there's one of three scenarios here:

One is that we really are going to get a V bottom. Do not forget, the market bottoms at the moment of max pessimism. In March 2009 everyone thought the market was crazy for going up, but in hindsight it truly was the bottom both economically and in stock price. So there is a possibility that the market participants in aggregate know something you don't. Most people are still bears. Most people missed this rally.

Two is that this is a bull trap relief rally, and that eventually reality will set back in and the market will have a second wave down (likely not as dramatic as the March leg down, probably a slower grind down over a few months).

Three is that the gains were pulled forward, and now we are just going to chop around sideways in no man's land for awhile. I mean, we've already been trading sideways since Jan 2018. We could continue to stay stuck in this same range for another 2, 3, 4, or even more years.

[Tortoise]

Stock market investors are currently optimistic for the same reason that most people still think that we can all stay locked down for 12-18 months until a vaccine arrives, without utterly crippling the economy:

Delusion, plain and simple.

[Libertarian666]

Stock market investors are currently optimistic for the same reason that most people still think that we can all stay locked down for 12-18 months until a vaccine arrives, without utterly crippling the economy:

Delusion, plain and simple.

Either that, or they believe that the Fed will buy stocks.
That might happen.

[Vil]

I've sold some of my small cap tilts ago and keep the big fat growth market, so a bit exposed on that side. Anyway, keep the markets going till I return, and if you can tilt the market slightly bearish so my ITTs and LTTs (from my VP) start rising a bit today - better.

Today is the 'International Worker's Day' in Europe, so no stock markets are working (Germany, France, Italy) - that has always been tricky to follow different market through instruments traded on a stock market that's closed.

So, happy 1st of May ! (think you celebrate it at some point in September, but still..)

[ochotona]

People who bought in at SPX 2950 are getting kicked in the crotch. More fun today.

[mathjak107]

in effect we all bought in at todays price ... each day we leave money in play we really are buying at that days prices ...if markets fall 50k we are down 50k whether it is new money or old money ....


people make the mistake of thinking buying in is any different THAN STAYING IN . it is not ....losses sustained or gains from that opening are the same in all cases .

[ochotona]

I didn't stay in!

[mathjak107]

I didn't stay in!

you sold all equities ? we are effectively buying in every day in any asset we hold and continue to keep in play . we are up or down each day the same dollars regardless of new money or old money .

[dualstow]

I’m not throwing asset allocation and the pp out the window just because a couple of people on the internet are good at market timing.

[mathjak107]

I’m not throwing asset allocation and the pp out the window just because a couple of people on the internet are good at market timing.

i agree ... but that is not what my posts are referring to ....... i am just saying if we leave our money invested we are no different then someone first buying in as far as loss or gain potential going forward

[pp4me]

Stock market investors are currently optimistic for the same reason that most people still think that we can all stay locked down for 12-18 months until a vaccine arrives, without utterly crippling the economy:

Delusion, plain and simple.

That pretty much sums up what I'm seeing and although it's always a good idea to hope for the best it's prudent to prepare for the worse which is exactly what those of us who follow the PP strategy have been doing with our money. Remarkably, my own portfolio just went slightly into positive territory YTD with the stock market gains. If anyone asked me today how they could duplicate the success I would have to honestly tell them you probably can't and you should refer to the story of the ant and the grasshopper.

I think it's very likely that the depression is already well underway and that chronic unemployment will be with us for a long time. The idea that businesses can re-open at reduced capacity and stay afloat is just another one of the delusions. A restaurant owner in New York has already said that nothing less than opening at 100% is going to save his business. At 25% capacity, as some are proposing, they won't even be able to re-hire and pay many of their previous employees, let alone make any profit at all.

Thinking about depression politics is even more depressing. Although I'm heartened to see some Americans finally protesting the government overreach and the erosion of civil liberties, the truth is that the polls still show that 75% of the people support the lockdowns. So if the pattern of the great depression is repeated I would expect a leftward lurch. So prepare for president Biden and Dems in charge of both houses of congress.

And I won't even go into the history of how the great depression actually ended.

If I sound overly pessimistic about things all I can say is that this has been a good psychological coping mechanism through the years because Shit happens.

Maybe we should start calling the Permanent Portfolio the Pessimist's portfolio.

[mathjak107]

my guess is that since we all see doom and gloom and maybe even a depression like scenario , markets never play out the way we think ...there is always stuff not even on the radar that alters what we all think is a given, that is both up or down .

[pmward]

my guess is that since we all see doom and gloom and maybe even a depression like scenario , markets never play out the way we think ...there is always stuff not even on the radar that alters what we all think is a given, that is both up or down .

This exactly. I know I've said it here a few times already, but it bears repeating... the markets cannot do the most obvious thing... or else it becomes an easy money printing machine for all. By design, it needs to confuse and confound in the short term to keep the bears and the bulls honest. Logic has NOTHING to do with markets on any timeframe less than a year. Less than a year it's all sentiment and emotion, fear and greed, etc that drive the prices. There is nothing logical about that. Know your timeframe. If you are a buy and hold investor, then buy and hold, follow the rules of your portfolio, and leave the sentiment speculation to the short term traders. If you're a short term trader, trade the current sentiment and ignore the logic or what you *believe* *should* happen. If you're a trend follower, follow the trend that is in front of you. Trade the chart you have, not the one you want. Know your timeframe. If you are a PP investor, then stop worrying, rebalance when the opportunities come, and let the market do whatever it's going to do. I have 0 worries about the 40% of my portfolio that is in a PP.

[mathjak107]

assets would not trade if we all saw the same thing and it played out as we saw it ...

[Tyler]

Maybe we should start calling the Permanent Portfolio the Pessimist's portfolio.

Definitely not! It's true that the PP attracts a certain subset of people with doubts about the stock market, but the portfolio itself isn't inherently optimistic or pessimistic. The whole point is that it maintains a neutral outlook.

[dualstow]

I’m not throwing asset allocation and the pp out the window just because a couple of people on the internet are good at market timing.

i agree ... but that is not what my posts are referring to ....... i am just saying if we leave our money invested we are no different then someone first buying in as far as loss or gain potential going forward

I know that, but as long as these posts are in the pp §, I tend to add that response in case there are new eyes who don't know that.

[mathjak107]

Maybe we should start calling the Permanent Portfolio the Pessimist's portfolio.

Definitely not! It's true that the PP attracts a certain subset of people with doubts about the stock market, but the portfolio itself isn't inherently optimistic or pessimistic. The whole point is that it maintains a neutral outlook.

However it allocates the assets equally into scenarios that tend to not have equal chances of playing out ...so yeah I would say the butterfly is likely better matched as to the likelihood of how assets tend to play out long term ,while the pp has more weight in pessimism for stocks.... prosperity tends to beat the other scenarios as far as amount of time it plays out since markets are up 2/3 the time and only down 1/3

[Tortoise]

The GB assumes future stock market gains will resemble the past (hence overweighting stocks) and can thus be described as an “optimistic” portfolio. Or at least a predictive portfolio.

The PP, by contrast, makes no such assumption or prediction. Thus its equal weighting and its accurate description as a “neutral” portfolio.

[mathjak107]

Equal dollars does not mean equal chance of playing out ....there is a big difference in that fact ...if I remember that was one of Bernstein’s gripes about the pp...in practice equal dollars does not correspond to equal odds

[pp4me]

Maybe we should start calling the Permanent Portfolio the Pessimist's portfolio.

Definitely not! It's true that the PP attracts a certain subset of people with doubts about the stock market, but the portfolio itself isn't inherently optimistic or pessimistic. The whole point is that it maintains a neutral outlook.

Fair enough and maybe "Pessimism" isn't the right word. It's just that if you live long enough you eventually realize that the shit really can and does hit the fan and you need to be prepared.

[Tortoise]

Equal dollars does not mean equal chance of playing out ....there is a big difference in that fact ...if I remember that was one of Bernstein’s gripes about the pp...in practice equal dollars does not correspond to equal odds

Correct. But who claimed that the PP's equal weighting was based on an assumption of equal odds? Nobody did, and it's not.

The PP's equal weighting is based on an agnostic ("neutral") outlook, not a prediction that all economic conditions are equally likely (which we know they typically aren't).