Gyroscopic Investing

Moving a bit from cash to stocks tonight.

Markets to really tank next week.

Dieter wrote: ↑Fri Mar 20, 2020 3:36 pm Moving a bit from cash to stocks tonight.

Markets to really tank next week.

I get part 1 because I'm about to do that too (except it'll be a true rebalance).

I don't get part 2 though...you might be right of course, but how do you know?

sophie wrote: ↑Fri Mar 20, 2020 3:39 pm I don't get part 2 though...you might be right of course, but how do you know?

More fear, more states to lock down. Possible....

Dieter wrote: ↑Fri Mar 20, 2020 3:36 pm Moving a bit from cash to stocks tonight.

Markets to really tank next week.

If you think markets are going to tank next week, why not move cash to stocks after the tanking happens?
Why do it now?

MangoMan wrote: ↑Fri Mar 20, 2020 4:05 pm I don't see the markets going up from here yet. IL just ordered a lockdown starting tomorrow. The economy is going to be in ruins. So many small businesses are going to go bankrupt.

New York City is pretty much on lock down ...1929 potential

dualstow wrote: ↑Fri Mar 20, 2020 4:23 pm

Dieter wrote: ↑Fri Mar 20, 2020 3:36 pm Moving a bit from cash to stocks tonight.

Markets to really tank next week.

If you think markets are going to tank next week, why not move cash to stocks after the tanking happens?
Why do it now?

I think he’s just saying that they’ll tank because he just put money in, not because he has a crystal ball and can see into the future.

flyingpylon wrote: ↑Fri Mar 20, 2020 4:40 pm

dualstow wrote: ↑Fri Mar 20, 2020 4:23 pm

Dieter wrote: ↑Fri Mar 20, 2020 3:36 pm Moving a bit from cash to stocks tonight.

Markets to really tank next week.

If you think markets are going to tank next week, why not move cash to stocks after the tanking happens?
Why do it now?

I think he’s just saying that they’ll tank because he just put money in, not because he has a crystal ball and can see into the future.

D'oh! I had a brain freeze on that one.

Oh got it! I missed that one too.

Notwithstanding conversation above about effect of business closures. I suppose that makes us "heartless" according to the Huffington Post, but it is a real concern.

flyingpylon wrote: ↑Fri Mar 20, 2020 4:40 pm

dualstow wrote: ↑Fri Mar 20, 2020 4:23 pm

Dieter wrote: ↑Fri Mar 20, 2020 3:36 pm Moving a bit from cash to stocks tonight.

Markets to really tank next week.

If you think markets are going to tank next week, why not move cash to stocks after the tanking happens?
Why do it now?

I think he’s just saying that they’ll tank because he just put money in, not because he has a crystal ball and can see into the future.

Probably. Sort of like when I announce that I'm selling some gold so it will go straight up.

sophie wrote: ↑Fri Mar 20, 2020 3:39 pm

Dieter wrote: ↑Fri Mar 20, 2020 3:36 pm Moving a bit from cash to stocks tonight.

Markets to really tank next week.

I get part 1 because I'm about to do that too (except it'll be a true rebalance).

I don't get part 2 though...you might be right of course, but how do you know?

The cynic in me. If I waited, stocks would go up.

I am studying some charts this weekend, trying to figure out levels that I would overbalance stocks. I happened to notice that S&P 600 ETF's are below the level they were at in the 2007 peak. SCV has effectively wiped out 13 years of price appreciation and dropped 48% from the peak. WOW did that escalate quickly!

I was never comfortable holding the the s&p 600 ...I found the bad thing was that kind of volatility ain’t your friend when it is down .....I don’t care what historical charts show ....all that counts is the time frame things effect you

pmward wrote: ↑Sat Mar 21, 2020 3:21 pm I am studying some charts this weekend, trying to figure out levels that I would overbalance stocks. I happened to notice that S&P 600 ETF's are below the level they were at in the 2007 peak. SCV has effectively wiped out 13 years of price appreciation and dropped 48% from the peak. WOW did that escalate quickly!

Morningstar star shows slyv returned an average of 4.86% the last 15 years and 5.06% the last 10

Total market fund returned 6.73 over the 15 year and 8.97 the last 10

Yeah, the trends for both small and value have been pretty bad for a long time. To me though, we have just gotten silly in the last couple of weeks. The spreads in both are looking like a blowoff top to me. To show what I'm seeing here is a couple screenshots charting the spreads:


The above the weekly spread between IWM and SPY or the spread between R2K small caps and S&P 500. Large has been dominating since summer 2018. This weeks candle looks like a potential bottoming candle to me. I'm looking to see if we get follow through next week with small cap relative outperformance.




The above is the weekly spread between IWY and IWN or the spread between R2K growth and R2K value. Growth has been dominating since the start of 2017.

You can see in both of these cases, we have broken out of the trend line explosively. To me, this screams of blowoff top. I expect some mean reversion at some point, with both value and small catching a bid vs growth and large. Now, whether or not that will be a new trend, or just a pullback in the current trend, I'm not sure yet. But I do expect to see some life coming in small and value spaces, as the current spread is not sustainable.

FWIW I think this is a classic bear market (sucker's) rally. Also known as a dead cat bounce. Until we have some idea of how long this is going to last, I don't expect much in the form of a sustainable rally. And that isn't going to happen until we get a vaccine and or some kind of effective treatment.

Ad Orientem wrote: ↑Tue Mar 24, 2020 7:10 pm FWIW I think this is a classic bear market (sucker's) rally. Also known as a dead cat bounce. Until we have some idea of how long this is going to last, I don't expect much in the form of a sustainable rally. And that isn't going to happen until we get a vaccine and or some kind of effective treatment.

Probably everyone and their brother was short with leverage. You get a little reversal on better news, and it whips back with a vengeance, because they have to cover their shorts. It doesn't mean things are "better". It's just traders. My wife wants out if we get a substantial bounce.

I've never seen a bear market with only 1 leg down. Most have 3-5 down legs, with periodic multi-week 15-30% rallies in between. I'm looking to buy stocks around 1900. That's my speculation as to where this will eventually land us. I still see too many bullish people calling the bottom. They are still intoxicated from the blowoff top that was shockingly only 4 weeks ago. I think we need at least a bull trap rally to get them in and another slow drop down. Even the Q1 and Q4 2018 corrections both had 2 legs down with a rally in between.

pmward wrote: ↑Tue Mar 24, 2020 7:48 pm I've never seen a bear market with only 1 leg down. Most have 3-5 down legs, with periodic multi-week 15-30% rallies in between.

Just playing devil's advocate: if this is in fact a return to the bull market, then what happened won't be considered a bear marked, and so your observation will still remain true, while not being predictive.

Xan wrote: ↑Tue Mar 24, 2020 7:54 pm

pmward wrote: ↑Tue Mar 24, 2020 7:48 pm I've never seen a bear market with only 1 leg down. Most have 3-5 down legs, with periodic multi-week 15-30% rallies in between.

Just playing devil's advocate: if this is in fact a return to the bull market, then what happened won't be considered a bear marked, and so your observation will still remain true, while not being predictive.

You're right, depending on the definition. The media's arbitrary definition of 20% down definitely leaves a lot to be desired. I do personally think that a bear market needs to be a down trend, and the only way you have a confirmed trend would be to see the chart registering a series of lower highs and lower lows. So yes, by this definition you would be totally correct that it would not even be a bear market if we just V shaped back to all-time highs. And this scenario isn't out of the realm of possibility, though it is a low probability. The stock market is a leading indicator, so I do expect it to turn up when the news flow is still really bad. But it still seems a bit soonish for that to me. But crazier things have happened.

Ad Orientem wrote: ↑Tue Mar 24, 2020 7:10 pm FWIW I think this is a classic bear market (sucker's) rally. Also known as a dead cat bounce. Until we have some idea of how long this is going to last, I don't expect much in the form of a sustainable rally. And that isn't going to happen until we get a vaccine and or some kind of effective treatment.

Right.

So futures are down now -0.79% for SPX.

Ad Orientem wrote: ↑Tue Mar 24, 2020 7:10 pm FWIW I think this is a classic bear market (sucker's) rally. Also known as a dead cat bounce. Until we have some idea of how long this is going to last, I don't expect much in the form of a sustainable rally. And that isn't going to happen until we get a vaccine and or some kind of effective treatment.

I think tech used the term “bull trap” in another thread, probably the gold screamatorium.

dualstow wrote: ↑Tue Mar 24, 2020 8:26 pm

Ad Orientem wrote: ↑Tue Mar 24, 2020 7:10 pm FWIW I think this is a classic bear market (sucker's) rally. Also known as a dead cat bounce. Until we have some idea of how long this is going to last, I don't expect much in the form of a sustainable rally. And that isn't going to happen until we get a vaccine and or some kind of effective treatment.

I think tech used the term “bull trap” in another thread, probably the gold screamatorium.

I thought it was here, but maybe not.

Gold scream, bottom of p229. You were talking about getting out of a speculation, a call option.

dualstow wrote: ↑Wed Mar 25, 2020 6:57 am Gold scream, bottom of p229. You were talking about getting out of a speculation, a call option.

Ok, thanks.