Is the stock market going to tank?

[Timberridge]

Look at cape

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cod?

[CovertM]

Look at cape

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You are aware that this market has no time for boomer fundamentals, right?

Backward looking metrics are great for predicting what happened in the past.

[dschane]

Investment choices, asset allocation, risk tolerance, financial plan, etc., should all be developed based on personal goals and time horizon of your individual situation. Attempting to create a financial plan tied to world events out of your control and market disruptions is a sure way to be scared into either doing nothing or doing too much while you try and swerve out of the way.

100% agree.

[MultiVerse]

Not sure what you're trying to say, but it's possible that you will lose money over the next 10 years in the us stock market, but probable you'll make money in emerging markets.

One thing to consider is investing in large American companies is akin to investing in emerging markets. US multinationals are better managed than foreign companies and rely less on domestic revenue.

In a sense investing in emerging markets is a bet the world economy will bounce back from the pandemic shock. If that's the bet then emerging markets may well have more upside but I think American companies benefit from that as well.


FWIW, while do agree with everyone that predicting a random walk or timing the market is impossible, it's still worthwhile looking at trends like growth rates prior to a crisis. I don't see a lot of reasons why the US won't return to trend growth other than the Fed screwing things up. I guess Biden could make a mess of things but presidential influence is overrated. Other countries like China, for example, have already returned to trend.

[Brock Landers]

Look at cape

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CAPE is the biggest bozo made up useless crock of shit in the industry. It’s uselessness has no bounds. It’s boundless.

CAPE had claimed the market has been overvalued for 4 years at least. Crazy what happens to cape when earnings grow.

PEG >>> CAPE in terms of one stop shop metrics, if you must use a one stop shop metric and ignore all other relevant information.

[m2711c]

[rod9301]

One thing to consider is investing in large American companies is akin to investing in emerging markets. US multinationals are better managed than foreign companies and rely less on domestic revenue.

In a sense investing in emerging markets is a bet the world economy will bounce back from the pandemic shock. If that's the bet then emerging markets may well have more upside but I think American companies benefit from that as well.


FWIW, while do agree with everyone that predicting a random walk or timing the market is impossible, it's still worthwhile looking at trends like growth rates prior to a crisis. I don't see a lot of reasons why the US won't return to trend growth other than the Fed screwing things up. I guess Biden could make a mess of things but presidential influence is overrated. Other countries like China, for example, have already returned to trend.

You are right as far as companies recovering in the us and the economy recovering worldwide

But, the us stocks are expensive which means lower returns in the future. Even if the companies with be doing well.

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[rod9301]

CAPE is the biggest bozo made up useless crock of shit in the industry. It’s uselessness has no bounds. It’s boundless.

CAPE had claimed the market has been overvalued for 4 years at least. Crazy what happens to cape when earnings grow.

PEG >>> CAPE in terms of one stop shop metrics, if you must use a one stop shop metric and ignore all other relevant information.

Yes and in 1997 cape did the us market was overvalued.
But if in 1997 you should your stocks and invested in bonds, over 10 years or more, you would've been ahead.

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[Hopeless Sinner]

You are right as far as companies recovering in the us and the economy recovering worldwide

But, the us stocks are expensive which means lower returns in the future. Even if the companies with be doing well.

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I'm personally having a hard time putting money into non-US equities and bonds. The diversification I understand and emerging market equities are "cheaper" but despite everything US equities seem to do better and then there is currency valuations in the mix as well.

My wife runs her own retirement portfolio and she's in non US equities and bonds so I feel a bit less pressure to "conform" to the theory.

[CovertM]

I'm personally having a hard time putting money into non-US equities and bonds. The diversification I understand and emerging market equities are "cheaper" but despite everything US equities seem to do better and then there is currency valuations in the mix as well.

My wife runs her own retirement portfolio and she's in non US equities and bonds so I feel a bit less pressure to "conform" to the theory.

It has definitely been a hard sell for a while. I put together a presentation a couple years back for client meetings after getting a lot of similar questions to yours.

I compared 20, 10, 5, and 1 year rolling avg. returns of the S&P 500 vs. A global allocation (30% of equity position in emerging and developed international). As you would expect the 20 year rolling numbers (longer time horizon) the Global allocation outperformed the majority of 20 year periods. As the time frame got shorter it was a little more of a mixed bag, yet Global allocation still out performs a strict domestic allocation the majority. Looking at the most recent (2010-2019) one year returns, as we all know a 100% domestic allocation has outperformed, 3-5 years it behooved you to have a stake in international/emerging.

Conclude what you will, but if you foresee the near and long term future staying the same then stick to 100% domestic equity. But if you think domestic vs. global is more cyclical and looking at historical returns as a reference, having a small allocation of your equity in emerging/international developed has paid off over the long term.

[sirbumpsalot]

I haven't done all that well on emerging markets over the long haul, but as the market popped back so fast last summer I was searching for some bargains and did see the various ETFs looked "cheap" relatively so I fired a chunk in there. Up ~50-60% since.

[Hopeless Sinner]

I haven't done all that well on emerging markets over the long haul, but as the market popped back so fast last summer I was searching for some bargains and did see the various ETFs looked "cheap" relatively so I fired a chunk in there. Up ~50-60% since.

It has definitely been a hard sell for a while. I put together a presentation a couple years back for client meetings after getting a lot of similar questions to yours.

I compared 20, 10, 5, and 1 year rolling avg. returns of the S&P 500 vs. A global allocation (30% of equity position in emerging and developed international). As you would expect the 20 year rolling numbers (longer time horizon) the Global allocation outperformed the majority of 20 year periods. As the time frame got shorter it was a little more of a mixed bag, yet Global allocation still out performs a strict domestic allocation the majority. Looking at the most recent (2010-2019) one year returns, as we all know a 100% domestic allocation has outperformed, 3-5 years it behooved you to have a stake in international/emerging.

Conclude what you will, but if you foresee the near and long term future staying the same then stick to 100% domestic equity. But if you think domestic vs. global is more cyclical and looking at historical returns as a reference, having a small allocation of your equity in emerging/international developed has paid off over the long term.

I pulled some money out of the market before I retired in 2019 (I did re-buy some on the covid dip thankfully) but the rest is just sitting there so what the hell may as well put it to work. And the discussion with Danno about DCA or lump sum input has me convinced that it'll prob work out fine over the long term. Thanks - Paul

[CovertM]

I pulled some money out of the market before I retired in 2019 (I did re-buy some on the covid dip thankfully) but the rest is just sitting there so what the hell may as well put it to work. And the discussion with Danno about DCA or lump sum input has me convinced that it'll prob work out fine over the long term. Thanks - Paul

If you're retired and living off of your nest egg/savings, you should have a pretty solid investment strategy, income generating replacement plan, and investment (%) time horizon.

Dipping in and out of the market and worrying about asset allocation should be the last of your worries. Your plan should be in place and able to weather any contingency, especially small market disruptions (Covid). When you say "the rest is just sitting there" I hope you don't mean cash. I don't know your age or time horizon or portfolio balance, but very few people are able to retire at 55-65 and pull all assets to cash and live the life they want to live throughout retirement.

Not knocking your plan or situation, just giving .02

[LeeLau]

Did some reading on crypto companies and came up with this list. All aggressive trades of course. List is in no particular order but useful just to watch and for future research.

[Danno]

Since you people were useless in helping me set up my DCA ....

I decided to go my own route. Was not comfortable just dumping it all in, so I arbitrarily took the money in the income fund, divided by 12, and will put it back in to a Vanguard stock fund once a week for 12 weeks.

I use Vanguard's target retirement fund (usually hate those, but Vanguard has it dialed) so once it's in there, I will forget about it.

[Timberridge]

Perfect. You're practically guaranteed to retire rich doing it that way.

[Danno]

I know, right?

[skaredshtles]

I know, right?

As a congratulations to yourself, you should buy yourself a new bike.

[CovertM]

Did some reading on crypto companies and came up with this list. All aggressive trades of course. List is in no particular order but useful just to watch and for future research.

Funny, I sold atm ($10) CSPs on SOS this morning. Crazy premiums ($230+), shoulda waited until EOD though. Still have plenty of RIOT and CCs are still paying nicely.

Sold CSPs on a few in the EV space as well after everything was blood red today! Sold some $29P on PLTR last week thinking it would bump this week, not yet. If I get assigned I will have entirely too much but just continue to sell CC. Also have a $30CC two weeks out that could get assigned if things bounce back.

Need to get out of this High IV BS and start Theta plays on boring shit, just can't bring myself to do it!

Quick accounting questions: I have started tracking all options trades and logging proceeds along with cost to close and net proceeds. Is it normal to take net proceeds from selling options on an underlying and subtract from original cost basis to get a "real" cost basis? Or is this muddying the waters by combining shares and options plays?

[LeeLau]

Funny, I sold atm ($10) CSPs on SOS this morning. Crazy premiums ($230+), shoulda waited until EOD though. Still have plenty of RIOT and CCs are still paying nicely.

Sold CSPs on a few in the EV space as well after everything was blood red today! Sold some $29P on PLTR last week thinking it would bump this week, not yet. If I get assigned I will have entirely too much but just continue to sell CC. Also have a $30CC two weeks out that could get assigned if things bounce back.

Need to get out of this High IV BS and start Theta plays on boring shit, just can't bring myself to do it!

Quick accounting questions: I have started tracking all options trades and logging proceeds along with cost to close and net proceeds. Is it normal to take net proceeds from selling options on an underlying and subtract from original cost basis to get a "real" cost basis? Or is this muddying the waters by combining shares and options plays?

I'm not a big fan of SOS because I smell China stock scam fwiw. No real reason other than scamdar.

Accountingwise I use premiums to subtract from cost-base. It's entirely possible to get a costbase for an underlying that's actually negative ie someone paid you money to own the stock. Eg MSFT I am into the negative 120 on it due to a decade of selling calls. Tax-wise Im not sure how the US treats that but that's not really your question.

I sold some RIOT 75Cs today trying to actually take a few profits. Also trying to open a bear spread on RIOT - already long 50P, Trying to short 40P

[CaliBrit]

Bought a good chunk of GME today. Only individual stock I hold outside of broad passive index funds. APES TOGETHER STRONG.

[Hopeless Sinner]

If you're retired and living off of your nest egg/savings, you should have a pretty solid investment strategy, income generating replacement plan, and investment (%) time horizon.

Dipping in and out of the market and worrying about asset allocation should be the last of your worries. Your plan should be in place and able to weather any contingency, especially small market disruptions (Covid). When you say "the rest is just sitting there" I hope you don't mean cash. I don't know your age or time horizon or portfolio balance, but very few people are able to retire at 55-65 and pull all assets to cash and live the life they want to live throughout retirement.

Not knocking your plan or situation, just giving .02

I appreciate the feedback. My actions were based on those that retired in 2008-2009 having to sell into that market and were severely punished. I sold stocks down to a 50/45/5 split btwn stocks/bonds/cash, basically holding the cash for living expenses the first few years of retirement. I put a chunk of that cash in emerging markets today. I am in the market for the long term and not a market timer at all.

[LeeLau]

Bought a good chunk of GME today. Only individual stock I hold outside of broad passive index funds. APES TOGETHER STRONG.

LoL. Sold March covered calls 60C on the Congress testimony spike. Long some kamikaze 70C today. Great minds think

[CovertM]

I'm not a big fan of SOS because I smell China stock scam fwiw. No real reason other than scamdar.

Accountingwise I use premiums to subtract from cost-base. It's entirely possible to get a costbase for an underlying that's actually negative ie someone paid you money to own the stock. Eg MSFT I am into the negative 120 on it due to a decade of selling calls. Tax-wise Im not sure how the US treats that but that's not really your question.

I sold some RIOT 75Cs today trying to actually take a few profits. Also trying to open a bear spread on RIOT - already long 50P, Trying to short 40P

Thanks for the tip on SOS, a lot of those tickers seem suspect. Some people find the entire sector triggering their scamdar.

So total premium received, assuming you adjust if you pay to close early and total proceeds adjust? I'm tracking total proceeds from premiums collected after taking out any early closure and trade costs. Wanting to see if this style of selling options generates meaningful income and better returns than buy&hold. All of this is in Roth accounts at the moment, so not even thinking about taxes, wash sale, etc...

I have a few RIOT 40P from last week to go with my 90CC. (Strangle?) I sold everything that wasn't tied up in CC on Friday at $72, taking into account premiums received and profit from shares sold this is all house money at this point. Wouldn't mind getting assigned on the $90CC, we'll see.

On another note...Got my GameStonk Certificate today! Thanks Dood, will look great in a frame on the wall in the office and a great conversation starter for client meetings

[CovertM]

I appreciate the feedback. My actions were based on those that retired in 2008-2009 having to sell into that market and were severely punished. I sold stocks down to a 50/45/5 split btwn stocks/bonds/cash, basically holding the cash for living expenses the first few years of retirement. I put a chunk of that cash in emerging markets today. I am in the market for the long term and not a market timer at all.

Totally understood, retirees those years had quite the headache to reevaluate all options, including not retiring. Did you make those portfolio changes in 2019 based on the risk of something similar to 2008/09 happening? Or just padding your cash balance for living expenses? Are you still at the 55/45/5 split?

With out going into too much detail and boring the masses...My strategy for retired clients who need to stay in the market for most of their retirement years is to hold a robust cash reserve (2-3years) and keep the rest of the portfolio invested more aggressively (60/40 or 70/30 based on specifics) than typical 50/50 (or even less equity exposure) conservative split you see with retirees. I've found this to mitigate some sequence of returns risk (how the 4% withdrawal "Safe" strategy can get annihilated) and save you from having to sell into a downturn or disruption to get grocery money. Last year was a great example of how this strategy works and brings piece of mind to all involved. All clients had started 2020 with full cash reserves, so when the Rona dip hit not a single client called me concerned about their portfolio. By having the rest of the portfolio invested, we were able to rebalance into that dip and had amazing returns in some boomer portfolios by year end.

*My .02, not financial advice, off the clock and drinking a beer