Is the stock market going to tank?

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Originally Posted by Brock Landers

So a few thoughts here.

A yield being safe can go a few ways- safe from the market selling off and the yield going higher? Creating a great buying opportunity? Safe from duration/term risk if the Fed were to cut and your yield goes down? Rates/inflation going up and you are term’d out, longer than you should be? - from a credit standpoint, businesses are in good shape. Strong balance sheets. A strong consumer. Strong economy still. But spreads are TIGHT. I think duration-wise, it’s like a 3 year so nothing too long. Much more biased risk-wise to the credit side, which you’d expect. But the yield isn’t what the risk is. It’s the total return in a sell off scenario. The sharpness and duration of a sell off (rates or credit) need to be somewhat offset by the yield. Lose 3% on price gain 7% on coupon net 4% total return (and blackrock can assess what they want to ACTUALLY pay out in the distributions…which is important). For BINC I think looking at the spread duration contribution they get from each sector (corp, mtg, rates) is helpful.

I wouldn’t put too much stock in blackrock or pimco or whoever being big and first in line. There’s big players out there buying big chunks of all the same bonds. And buying/selling more often, doing more business with the sell side. Participating in more new issue (think index funds…they buy everything so issuers will throw them bonds first,generally).

Bonds are great. More predictable to align with your goals and objectives (income). Less upside obviously but that’s the give up.

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Brock, I want to thank you for all that. It was said so my simple mind could grasp it. Much appreciation to you

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Originally Posted by Brock Landers

Spy div yield is no worse than credit spreads, historically speaking. And I’d argue market leadership for the past fifteen years wasn’t driven by dividend yielding stocks. So it matters little.

Bonds have their role. But with inflation sticking around three % and spreads so tight (so the bulk of yield is rate-driven)…outside of a true need for income stability or a degree of portfolio diversification (em HC debt, duration)…I’ll forego a six % yield (three% real return) and stick with equities.

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True. I’d argue that credit spreads are tight in the same way dividends haven’t mattered in recent years. Also. There isn’t as much absolute junk financing anymore since there aren’t that many small cap ipo’s.
Companies stay private longer and source the public debt markets less.

That said. I’ve been reading that private credit is the next time bomb

With the below said, good for bonds?

It “seems almost unavoidable at this point” that the United States is “headed for a deep, deep recession” thanks to the Trump administration’s massive government job cuts and pullback from official contracts, a former Obama-era Department of Labor economist has warned.

Jesse Rothstein, a professor of public policy and economics at the University of California, Berkeley, predicted on BlueSky this week that the employment report for March 2025 will show “bigger job losses than any month ever outside of a few in 2008-9 and 2020.” (I.e. — when America was hit by the 2008 financial crash and then, later, by the coronavirus pandemic).

https://www.huffpost.com/entry/jesse...b05145b9c532f7

A deep recession is basically no good for ANYTHING or anybody. You could always short equities if you really believe it - but... thats really risky.

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Originally Posted by skaredshtles;[emoji[emoji6[emoji640

[emoji638]][emoji640][emoji639]][emoji638][emoji[emoji6[emoji640][emoji638]][emoji640][emoji6[emoji640][emoji638]]][emoji638][emoji6[emoji640][emoji637]][emoji[emoji6[emoji640][emoji638]][emoji640][emoji6[emoji640][emoji638]]][emoji639]]A deep recession is basically no good for ANYTHING or anybody. You could always short equities if you really believe it - but... thats really risky.

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It’s good for young people that don’t own assets.

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Originally Posted by 4matic

It’s good for young people that don’t own assets.

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If they can maintain employment I suppose that could be true...

And if they have enough money to buy assets

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Originally Posted by summit

And if they have enough money to buy assets

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Young people dont have any money. :D

So they don’t have money now. What they don’t own, or rent gets cheaper. Sounds like a win to me.

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Originally Posted by [emoji640

matic;[emoji[emoji6[emoji640][emoji638]][emoji640][emoji639]][emoji638][emoji[emoji6[emoji640][emoji638]][emoji640][emoji6[emoji640][emoji638]]][emoji638][emoji6[emoji640][emoji637]][emoji637][emoji638]]It’s good for young people that don’t own assets.

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IMO so insignificant compared to institutional moves at this point it’s totally misleading to even discuss

It worked out pretty well for the selfish boomers when asset prices tanked in the late seventies and early eighties

Now boomers own 1.5 houses and are overweight tech stocks. Reversion to the mean..

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Originally Posted by skaredshtles

Young people dont have any money. :D

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Not true, I know youngsters in their 30's with $500k+. So ya, let's see these assets prices tank.

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Perhaps I should have put the sarcasm smiley in there for the Boomers. :rolleyes:

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Originally Posted by 4matic

It worked out pretty well for the selfish boomers when asset prices tanked in the late seventies and early eighties

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You forgot the dot com stock market meltdow, 9/11 (we closed on a home 12 days prior) and Im pretty sure asset prices tanked again in 2008 and 2009. We waited till 2015 to buy a retirement home and prices were still depressed and declining in many places. There were many oppurtunties along the way but lack of cash and confidence kept many on the sidelines.

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Originally Posted by liv2ski

With the below said, good for bonds?

It “seems almost unavoidable at this point” that the United States is “headed for a deep, deep recession” thanks to the Trump administration’s massive government job cuts and pullback from official contracts, a former Obama-era Department of Labor economist has warned.

Jesse Rothstein, a professor of public policy and economics at the University of California, Berkeley, predicted on BlueSky this week that the employment report for March 2025 will show “bigger job losses than any month ever outside of a few in 2008-9 and 2020.” (I.e. — when America was hit by the 2008 financial crash and then, later, by the coronavirus pandemic).

https://www.huffpost.com/entry/jesse...b05145b9c532f7

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If we go into a deep deep recession, at some point (and for a certain period of time) really only us treasuries will perform well. Other bonds have so much performance tied to rates (80% of yield comes from base TSY rate) BUT there’s so far for spreads to go the other way…

It’s the preceding 2 years and the 3 years after this period, whenever it is. You earn return in the preceding and post period.
If you can pinpoint the 8 month period where things really go to shit market-wise (not economy or anything like that, the actual market) put it in govt bonds. Better yet,short stocks. And then get back into risk!

I’m guessing you don’t know the tipping point and for how long. No one does.

Also, economists are terrible terrible market prognosticators. Can’t wait for this jobs report. Jobs down, Fed cuts, MASSIVE run in equities. That’s the playbook.

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Originally Posted by Hopeless Sinner

You forgot the dot com stock market meltdow, 9/11 (we closed on a home 12 days prior) and Im pretty sure asset prices tanked again in 2008 and 2009. We waited till 2015 to buy a retirement home and prices were still depressed and declining in many places. There were many oppurtunties along the way but lack of cash and confidence kept many on the sidelines.

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The SP500 traded 95 in 1985. bRK.a traded 600

^^^ In 1985 I made about 10k working for the USFS and SV Co. I was barely able to survive much less save to invest or buy a house.

Question on selling covered calls. I received some RSUs from a past employer and didn't sell them when I should have during the Covid bubble. Now I keep them to remind me I'm a fucking idiot who can't time the market. I'm wanting to venture into covered calls for the first time and wondering: I've seen that there are often some weird transient price spikes when presumably one algo sells like two shares to another outside of market hours at a screwball price. How likely is it that a call would get exercised as a result of one of those spikes?

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Originally Posted by dan_pdx

Question on selling covered calls. I received some RSUs from a past employer and didn't sell them when I should have during the Covid bubble. Now I keep them to remind me I'm a fucking idiot who can't time the market. I'm wanting to venture into covered calls for the first time and wondering: I've seen that there are often some weird transient price spikes when presumably one algo sells like two shares to another outside of market hours at a screwball price. How likely is it that a call would get exercised as a result of one of those spikes?

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Extremely unlikely

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Originally Posted by LeeLau

Extremely unlikely

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Cool, thank you. If I sell 1-week calls at 20% above market price, I can make beer and pizza money forever.

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Originally Posted by dan_pdx

Question on selling covered calls. I received some RSUs from a past employer and didn't sell them when I should have during the Covid bubble. Now I keep them to remind me I'm a fucking idiot who can't time the market. I'm wanting to venture into covered calls for the first time and wondering: I've seen that there are often some weird transient price spikes when presumably one algo sells like two shares to another outside of market hours at a screwball price. How likely is it that a call would get exercised as a result of one of those spikes?

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Pretty hard to make a living doing this

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Originally Posted by rod9301

Pretty hard to make a living doing this

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No argument, fortunately I'm not trying to. As noted above, it's just beer and pizza money. Back of the napkin math suggests I can make about 30% a year, which would be way better than it's been doing.

Question - is there an index fund for the European Defense sector?
I think this is a good time to reduce investment in US equities and under the circumstances euro defense would seem to have a lot of potential.
TIA

Euro defense stocks jumped in December

Brock

It’s called pin risk. Always buy them to close when they get to be Pennie’s. The owner has u til midnight, Saturday, to exercise. A lot can happen.

10% wealthiest account for 50% of consumer discretionary. Those 10% wealthiest are overweight tech stocks. Decline is nothing so far. Could get to SP 5600 this week.

Just at a party after golf Sunday. Young guy telling me he’s an alt coin trader to avoid ETH. Old boomer telling me BTC was a store of value and that he was having a blast selling calls against NVDA paying for dinners with the gf.

What happens if NVDA drops fifty? Collectively, that can’t happen

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Originally Posted by 4matic

Just at a party after golf Sunday. Young guy telling me he’s an alt coin trader to avoid ETH. Old boomer telling me BTC was a store of value and that he was having a blast selling calls against NVDA paying for dinners with the gf.

What happens if NVDA drops fifty? Collectively, that can’t happen

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What happens if BTC drops back to 60? Unpossible

What happens if there's a US Civil War? Unpossible

You can make some decent $ selling calls on nvda I’d assume??

I'm not a former nvda guy, sadly, but I did randomly sell a covered nvda call yesterday morning. The expiration date is after earnings, but the way things are going, I can't imagine it would print. Can't decide if it's free money or picking up nickels in front of a bulldozer, but if I did get assigned, I would be up like thirty five percent, which would be just fine

I guess I was on to something thinking to short TSLA awhile ago. Oh well, worth the losses in my S&P funds to watch that one drop. Hopefully down below $100 and gets kicked out of the S&P :-)

If it gets below a certain price, does Elon need to repay loans he took out against the stock? I still can't comprehend how that all works.

I should let someone who knows what they're talking about answer, but wheres the fun in that? Yeah, I think if prices drop enough then he has to sell stock to pay back loans secured by the stock. That further depresses the stock and he has to pay capital gains on the sale proceeds: a win/win for the American people.

I've been thinking I should just buy cheap way out of the money puts on TSLA with any spare couch change. Probably a better use of my money/more effective than donating to the Dems

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Originally Posted by 406

I guess I was on to something thinking to short TSLA awhile ago. Oh well, worth the losses in my S&P funds to watch that one drop. Hopefully down below $100 and gets kicked out of the S&P :-)

If it gets below a certain price, does Elon need to repay loans he took out against the stock? I still can't comprehend how that all works.

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[peaks his head in] And at what point does the board come to their senses? Pretty soon, me thinks. [Leaves quietly]

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Rev, if you mean the board of directors for Tesla coming to their senses?? never.. all the directors were chosen by Musk and are total asskissers and enablers.. and 2 of the directors are family.

@406

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If it gets below a certain price, does Elon need to repay loans he took out against the stock? I still can't comprehend how that all works.

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If the value of his pledged shares falls below the loan amount (or some multiple thereof), the lenders will require he pledge more shares, pledge other assets or pay down some of the loans with cash.

Which can lead to crazy behavior if the stock price is falling fast.

Tesla is up ~50% from where it was 4 months ago. What are we talking about here.

wishful thinking

TSLA has the same p/e as GME: fundamentals don't apply to either. Having said that, I think TSLA holders are less likely to HODL in the face of continued bad news than the GME crowd. It will take a lot to dent the optimism, but we might be seeing the start of that.

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Rev, if you mean the board of directors for Tesla coming to their senses?? never.. all the directors were chosen by Musk and are total asskissers and enablers.. and 2 of the directors are family.

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Yes. It's the financial management equivalent of Tesla "Autopilot" (fire engine blocking the lane with flashing red lights? full speed ahead!) I'm assuming that if any of them (including family) does anything that Musk doesn't want, they're off the board instantly.

Another thing to keep in mind about Tesla's stock price is that, as of its last earnings release, numbers are being propped up by the company's Bitcoin holdings, as a hedge against the fact that Tesla's sales of actual products for actual money keep going down. Not going to say anything about what BTC's doing lately, because who the fuck knows where it goes next, but it's something to keep in mind. Of course, Cult Of Elon is sure that he's going to end up batting 1-for-10 on his autonomous driving predictions, any month now, so who cares about anything else.