Stock market

Cardiffdaffs said:
I think you get big VIX calls betting on a market crash every now and again. Think Big Short all over again. Gambling on a market correction, not necessarily a market crash. Wouldn't surprise me if Trump's acolytes are doing it too.

Inevitably at some stage the market will downturn . If Trump keeps this trade war waging it will be sooner than later but I think he's a grifter and will row back as soon as he thinks his wealth will be harmed.
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Calls/Puts aren't just gambles either. They are part of a hedging strategy. You might see those big items but not see the other side of the trade where they've also bought/sold the underlying stock.

Sometimes they are bets. Michael Burry made big bets and was proven to be correct as shown in the Big Short but it is survivorship bias because he was correct that one time. All the other people that predicted it at other times were wrong and all the predictions he has made since has been wrong. The people that make these big bets don't know any more than others in the vast majority of situations and they are just bets and sometimes people get lucky and their bets win. It's really easy to predict that there will be a crash and the bigger timeframe you give yourself the easier it is to get it right but it's very difficult to predict that the market will crash x% in a small number of days and that is where the big payouts happen. Most big bets miss or get eaten up by premiums. It wouldn't have been unreasonable to say that there will be a 10% drop after Trump took over because you were expecting him to cause volatility. If you had made the bet in September though then 10% lower would have missed by a long way because that was before the 20% rise between then and January. The S&P is still 13% up on this time last year.

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How Many Times Has Michael Burry Been Wrong?

In this article, you will read examples of when Michael Burry made false predictions about market crashes.
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Fiscal nerds will be interested in what Germany did yesterday. Basically anything above 1% of defence spending won’t count towards their (very strict) debt rules. Agreed by CDU and SPD (before CDU takes over).
 
Now is the time to invest in stocks when the price has bombed, the inevitable rebound will occur as it has historicaly since the dawn of time
 
Gunslinger said:
Now is the time to invest in stocks when the price has bombed, the inevitable rebound will occur as it has historicaly since the dawn of time
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Market already up 60 points this morning. Trump halts the tariffs again and the market goes up. The Trump acolytes must be making a bomb as he personally moves the market in this way.
 
I’m now working on a theory, that US stocks will continue their slide, until the manchild reverses or reduces his tariffs.
My best guess is mid May’s inflation figures will spike, and he’ll Uturn then.
Obviously, a lot can go wrong, with that theory, but I’m out of most of my US holdings for the foreseeable.
Good luck to all investors. A bumpy ride ahead
DYOR
Slava Ukraini
 
Borotommo said:
I’m now working on a theory, that US stocks will continue their slide, until the manchild reverses or reduces his tariffs.
My best guess is mid May’s inflation figures will spike, and he’ll Uturn then.
Obviously, a lot can go wrong, with that theory, but I’m out of most of my US holdings for the foreseeable.
Good luck to all investors. A bumpy ride ahead
DYOR
Slava Ukraini
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They rallied on Friday.
 
Borotommo said:
They did, a little. As I said, I may well be wrong
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They are only down to October's level. It's not really a huge drop. I think there's as much to lose by not being in the market when it jumps back up as there is being on the market while it slides.

Time in the market beats timing the market.

He's a market manipulator. When his cronies tell him things are cheap enough they'll pile in and it'll fly back up. Ask yourself what makes Trump better off and that's what will happen.
 
Nano said:
They are only down to October's level. It's not really a huge drop. I think there's as much to lose by not being in the market when it jumps back up as there is being on the market while it slides.

Time in the market beats timing the market.

He's a market manipulator. When his cronies tell him things are cheap enough they'll pile in and it'll fly back up. Ask yourself what makes Trump better off and that's what will happen.
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Yes, I agree with that. I’m normally very hands off, but Trump has spooked me. I was slow to get out when Covid hit, and I don’t want to make the same mistake again.
 
The situation has definitely opened my eyes as to how US-linked most of my stocks are. Could be a good time to switch some to more euro-focussed ETFs

Problem is the US stuff I hold is already down 7-10%, so it’s risky to make a move now
 
Most European funds have jumped in the last month. They’re a little expensive, in my view, but I’ve bought some as a @safe haven”. The funds I’ve bought include very solid companies, rather than an ETF
 
I took redunanct in the late summer and being just 51 at the time have ploughed it all into Alice’s portfolio with an investment company .

Since go live in mid October I’ve been down about 2% , up about 2% and currently down again . I’m in it for 6-8 years and as someone who promised myself I wouldn’t look often , I find myself looking daily and getting a high or a low .

Im making the mistake of comparing the up or downside to what I would have got in interest which is stupid given then longevity I’m in for .

It’s quite stressful mind as I’ve chosen early retirement so no earned cash coming in ….
 
As James Shack points out, people need to be invested in a global fund, not a country specific fund like the S&P 500 or FTSE 100.
It's not about short term gains. Funds, stock markets and stocks that perform the best over say 5 years often go on to be the worse performing in the next five years due to mean reversion (see Cathie Woods Ark funds)
A global tracker acts like a league table, so if American stocks have a few bad years the amount allocated to those stocks becomes less, and vice-versa.

If retired, or close to retirement you have to be aware of sequencing, where a few bad years when the markets are down whilst you are taking money out can wreck your plans.
Personally I do not take money out of the market in years when the markets are down.

As Einstein once said: Compounding is the 8th wonder of the world. It's all about the long term.
Selling a stock for a quick profit is just stupid. It gets you nowhere over the long term.

 
VladKinder said:
As James Shack points out, people need to be invested in a global fund, not a country specific fund like the S&P 500 or FTSE 100.
It's not about short term gains. Funds, stock markets and stocks that perform the best over say 5 years often go on to be the worse performing in the next five years due to mean reversion (see Cathie Woods Ark funds)
A global tracker acts like a league table, so if American stocks have a few bad years the amount allocated to those stocks becomes less, and vice-versa.

If retired, or close to retirement you have to be aware of sequencing, where a few bad years when the markets are down whilst you are taking money out can wreck your plans.
Personally I do not take money out of the market in years when the markets are down.

As Einstein once said: Compounding is the 8th wonder of the world. It's all about the long term.
Selling a stock for a quick profit is just stupid. It gets you nowhere over the long term.

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He's very good James, albeit I wish he would put together some early retirement examples for people who don't have 500k or 1m etc. Maybe there is no answer for people with less than that.

Most of my holdings are in all world ETF's, problem with those is they're ~70% S&P 500, that wasn't a problem until this clown got elected, but now it's looking like one. It was due a correction, but not like this.

One thing to keep in mind though is many of these country funds are still effectively world funds, as the companies are multinational. The top 10 companies in the S&P 500 have 1/3rd of the value of the entire S&P 500, so even an all world fund is ~25% into the top 10 S&P 500 stocks.

Good idea not withdrawing much/ anything when the markets are down, that will greatly effect how long your money will last.
 
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Holding a global fund will do most people who want set and forget long term way to invest.
But for those who want to dig deeper you can look into factor investing or using "tilts"

For example small cap value stocks although having a rough time of it the last decade historically outperform large caps.
So you may want a 10% tilt to small caps. That percentage would be enough to probably add value over the long term, but not enough to damage your portfolio if they underperform in the short term.


His portfolio suggestion is:

42% U.S. Stock Market
24% International (ex-US) Developed Markets
12% Emerging Markets
14% U.S. Small Cap Value
8% International (ex-US) Small Cap Value

It doesn't actually outperform just holding a global market index fund, but it does have less U.S stocks in at 56% and he reckons over a very long term frame should outperform and be less volatile.
But obviously no one knows the future.
 
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...but this is about being in uncharted territory isn't it? Nobody knows how far the US slide will go, and with that, the potential impact to the suggested portfolio above. A quick glance at some of the US companies I follow on the iphone Stocks app suggests it certainly continues today.

Hindsight, of course, is a wonderful thing. You can bet that, should I sell today, they'll be up tomorrow!
 
Bad day today - but remember what Buffet said when others are fearful be greedy.

It is a bit over the top as a piece of advice, but I tend to consider big general market sell offs as buying opportunities when a business/fund has good fundamentals.
 
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