Another Stock Market Forum Post
Hope everyone is doing well, and enjoying seeing their portfolios return to "normal".
The Dow has jumped another 500 points today, and things seem to be trending very well. Airlines, cruise ships, etc....are sure to keep going up as orders begin to be fulfilled at a high rate. Manufacturing establishments running one shift will move to two shifts, those running two shifts will move to three shifts....good things are coming!
Biggest wins for me since the Corona Virus hit: Penn Gaming, Boeing and Royal Caribbean
Biggest risk: Luckin Coffee(bought today, we shall see)
How's everyone doing out there in?
I can't tell if this an attempt to distract everyone or just the Grand Bull Moose Winner of the "Poorly Timed Posts" prize.
Your snarky post is equally intriguing... if not more so...
*rolling eyes*
I need a distraction. The news cycle has been at 120 dB for way too long!
In answer to the OP, my company stock has been strong, so that part of the portfolio has stayed positive. A major mutual fund is lower than its high, but above the starting point. 401k is still down from its high, but climbing lately.
Hope you all are seeing some positives in your portfolio.
Very strange. This market doesn’t make a lot of sense. The only “good news” is the Fed pumping and maybe another round of stimulus. Most of the earnings are going to be terrible, unemployment is going to be terrible for several months or longer, and people are saving/not spending or investing what little they have. I guess all that adds up to being bullish?
3 big reasons (there are others)
1) Fed is committed to propping it up.
2) Markets are forward looking and project that Covid-19 is not going to be anywhere near as dire as projected.
3) People have to invest somewhere and for all of the issues that the US markets have, it appears to beat the alternatives.
I agree with all your points. Another point that I have been seeing lately is the participation of sovereign wealth funds and foreign central banks (specifically Switzerland).
With negative interest rates, they are able to print their own currency, and are exchanging them for dollars to purchase US equities.
Now we are starting to see rallys if foreign equities, so in the short term it will be interesting to see if this rally holds as there is a rotation out of the US and into their own markets.
In the long run, we are all dead.
https://www.politico.com/news/2020/05/26/2020-election-democrats-281470
I found this article interesting. A former Obama economic advisor talks about how the economy bounce back from COVID can be very dramatically positive. He compared it to more of an economic response after a natural disaster, as opposed to an actual depression.
It doesn’t mean he’s right, but it’ll be interesting to see if that thought/potential lowering of COVID worries is driving positive trends
It will be interesting to see. I just don’t see how the market can be back to where it was prior to the entire world being shut down for 2 months. Has to correct at bit at some point. Just have to see how long the gov can prop it up I guess.
It will take some time, but I believe we are going to see a manufacturing boom in the US because of the pandemic. Companies and organizations realized we relied too much on China and the supply chain got all sorts of effed up. I think we are going to see a ton of manufacturing jobs open up in the US once all pandemic restrictions have been dropped. That is a major reason for optimism in the markets.
Pass me some of what you're smoking, please!
Companies will diversify their supply chains out of China, right to other low wage countries in Asia.
Americans can't afford to buy American made goods anymore. Hell, we pay minimum wage to whole classes of workers who we just figured out were essential.
I would love more than anything to see a US manufacturing boom, but we're way too dependent on cheap labor now.
I remember my mom spending like $400 on a VCR in the early 80's. That's well over a grand in today's money.
Who's going to spend $1,500 on an xbox or bluray player?
Mexico is adding manufacturing previously done in China.
This has been going on over the last 3-5 years but may get accelerated due to COVID.
It is not just the security and self-sufficiency aspect -- the rising economy in China also is playing a big role.
It may not seem like a big deal when you see "daily wages in China have risen by X dollar (or cents) but given the social setup in China this is a big deal --- First the increase must be looked at as a % increase rather than on it's face. Second - as there aren't much in the way of government retirement supports, companies often provide this by means of lifetime employment - worker housing etc.. When our company was looking to expand to China over a decade ago the consultant noted that a similar factory in China would have over 5x the employees we had in the US. These factors are making Latin American labor markets much more competitive with China.
You are correct. In my previous job, I had to do cost models for a global project. What we discovered is that China has some established wage rate increases for all employees. While these would seem still nominal compared to US wages, it had a huge impact when you have to considered import taxes and transportation.
We discovered that going to Mexico was the best option. This was several years ago and still had NAFTA involved. I do not know what the impact is today with NAFTA being torn up.
Point being is there is more to a cost model than just wages when looking at a product. I would venture to guess that low price high volume commodity products will remain in Asia as they are still conducive to that cost model, but there will be a trend for more specialized products that will be pulled out of China. That does not necessarily mean to the US.
Exactly this
don't want to get into a lecture on Ricardian comparative advantage, but with the exception of certain countries (e.g. a source of recent disease) who tacitly support under costing the build process, we can compete on price point for goods much more than people realize. Take out the supply chain costs of transport, and we can deliver competitively and faster. I do cringe at rampant protectionism, bt there are certain capabilities that are strategic that we need to prop up. The bby-product of that will be manufacturing capability that might not be profitable else-wise
A good friend of mine sells a technology product to Walmart for their stores. Last fall he told me their company would not exist if it wasn’t for cheap manufacturing in China. Given what was going on last year, they were starting up a new factory...in Vietnam. Walmart bludgeons them on price at every contract purchase. No way they will pay a penny more unless they magically decide that they can pass on higher costs to consumers or their stock holders will accept lower returns. I doubt Wall Street will reward that.
And at the end of the day, the American consumer generally cares about price (all else equal). Everyone talks a big game about buying American and American-made, but I don't think most of us are really interested in paying for expensive American wages. It's an unfortunate reality
The same idiots paying a grand for an iphone.
My guess is some industries will on-shore parts of their supply chain but if anything I think this pandemic pointed to the need to diversify your supply chain even more. There has already been moves away from China as a manufacturing base due to rising costs, but there are (sadly) many more nations that rich ones will exploit for cheap labor. And companies still are expected to make massive profits every quarter and US labor is still way too expensive on low-margin goods that it's unlikely they'd come back to the shores.
I agree that there will be some re-evaluation of reliance on China as a base of operations; I'm more dubious on that leading to a return to the states.
I would be happy if all we saw come back here was things important for our survival. Masks and other PPE. Prescription drugs. Electrical transformers. Stuff like that.
And can someone explain to me why a fish caught in Alaska is sent to China for processing before it's sent right back here? Can gutting a fish really be that damn expensive?
God forbid we get into a war with them again, conventional or otherwise, because we would be fucked.
Only 10% of the loss of manufacturing jobs was due to them chasing cheap labor. 90% of the loss was due to automation and, in that regard, you ain't seen nothing yet. Industry 4.0 is going to take care of most of the rest. Most every robot out there will be replaced in the next three years with far more capable versions.
This is why I think everyone born in this country should be issued a diversified blue chip stock portfolio, valued at something like one million dollars, when they're born.
If the robots really are going to do all the work, everyone should benefit from that.
That's why I really liked Yang. I really didn't know much about a lot of his other policy points, but he seemed to be the only guy (or girl) out there willing to talk about this. There's going to be an AI / automation revolution at some point that changes how we work permanently. It worries me and I think it should worry all of us
This trend will hurt the entry level worker more than anyone else. This is a hidden danger in the raise the minimum wage argument. For years it was just a s convenient to pay a horde of cheap teenagers to sling burgers across the counter. Jack the price of that labor, and for a short period of time you have that horde making more money. Then automation kicks in when it becomes more feasible to pay for things like order kiosks, eliminating the need for cashiers. Inshort order you are now staffing a restautrant with a total workforce of maybe 50 people to cover all shifts versus 150 that were required before. This is the not so hidden problem that is hurting the low end of our workforce.
I think companies will realize they rely too much on China, but that just means the manufacturing moves to another low-wage country, not that it's going to come back to the US. I'm sure individual industries (like maybe PPE and other things) may seem a slight revival in the US, but broadly I think it probably means more shifts to SE Asia and India rather than the US. It's hard for the American worker to compete with the wages offered in developing countries
One can hope...manufacturing and agriculture are two areas the country would be well served investing in in my opinion.
It already did correct massively- before the inevitable poor employment and GDP numbers came in. Again, that was forward looking. Doesn't mean we won't get another big downturn- we may or may not. If I knew, I could sell you a book for the low price of $19.95.
If it doesn't though, all of those people who went to cash, might regret it a bit.
That's a goofy article for a number of reasons, and is premised on a V-shaped economic recovery that is unlikely given that it seemingly all pre-supposes a more dramatic drop in COVID-19 cases and no uptick in the fall when kids return to school, to say nothing of businesses returning to earlier hiring trends. Those may all happen, but analogizing that same recovery to that after a natural disaster is ignoring the numerous differences between an acute event (a one-time Act of God natural disaster) and a more prolonged one (a pandemic and global economic downturn). Obviously I want people to be able to get back to work but, for example, here in Boston some major tech companies laid off over a thousand employees and they are unlikely to hire them all back (due to the shifting nature of the markets, companies that provided services to restaurants and corporate offices were significantly hit). Lots of small businesses shut down and are unlikely to re-open, and even starting up new places to replace those businesses takes time. So while my guess is Q3 GDP growth and unemployment will look better, in absolute scale it will still likely be double-digit unemployment and small-ish GDP growth. Of course, the WH deciding not to release their projected economic view for the summer could hurt them as well because it'll be harder to see where the depths were.
The market sharply recovered after the crash of 2008 and it took another eight months before it revisited the lows.
Not saying we'll revisit the lows but the sugar high is going to wear off.
I'm sitting at 50% cash right now and have been very fortunate with my tech and biotech investments: DOCU, TDOC DDOG, TDOC, QDEL, REGN, NVDA, LITE, IIVI, PI, TSM, NVDA, QRVO, SWKS, TMUS, and AAPL. Am also up about 40% on BYND in the last month. I'll add to a lot of those names if they correct.
On the flip side, I'll never buy another oil stock in my life. Have had mixed results over years but always felt I needed some exposure there. Too many forces beyond the individual companies' control. I am a tech guy and undestand it -- you can have energy -- I'm out for good!
June 5. This is just one day and one set of results, but wow!
I just invested heavily in blogging software, I've heard some websites have really bad software for running blogs.
Hot tip from your nephew's friend's cousin?
*evil snicker*
Glad to see things appear to be stabilizing, but it doesn't necessarily mean we're out of the woods yet. If COVID makes another comeback during flu season or we have to go through any further kind of lockdown, we may end up going right back to where we were in the March-April timeframe.
I'm no market expert. I'm just not celebrating yet.
Cautious optimism... I like it.
I can definitely understand that, which is why I intend on selling off if that seems to be the case and buying again when I think it is close to the bottom again.
We will never have another lockdown. There is no way. Michigan has a better shot of beating OSU 69-0 this year then there being another lockdown. I would bet all my money and your money and start spending it now as if I had already won the bet. It damaged the economy way too hard and I just don’t believe people would be able to handle it. Stranger things have happened but I think it’s pretty safe to say we will not have another lockdown like we just had. Continuing wearing masks and social distancing will be the norm. I hope all stay safe and healthy during these times. I also hope that Michigan can beat OSU 69-0 this year. Good luck to all of you with your investments and hopefully we can get back to some sort of normalcy sooner than later.
Go Blue!!
If you mean with as large geographic coverage, I’d agree. If you mean at all, I think you are being oveoptimstic. I suspect you’ll see at least a handful of targetted areas that require more aggressive social distancing.
There won’t be another lockdown but 15% of the population won’t be traveling, going to restaurants, movies, etc. because of their health conditions. No room for growth there
A lot of that population doesn’t travel anyway. While vacationing can be relaxing, traveling is stressful.
I'm into the passive investments. I generally only use Vanguard ETFs and bonds, but they have been doing quite well in the last month once we got through that initial downfall in February/March. The best performers have been their Information Technology ETF, Healthcare ETF, and S&P 500 ETF. But, I'm not confident enough in my knowledge or comfortable with the risk of investing in individual stocks.
I'm not confident enough in my knowledge or comfortable with the risk of investing in individual stocks.
No one should be confident, especially money managers. Actively managed funds are only good at generating fees, not returns that consistently beat the market.
I think the research shows this is true over long periods, but I recall seeing that during highly volatile times that actively managed funds tend to outperform etfs. I can’t remember where I saw that though, I may have been high and made it up.
I wouldn't foreclose the possibility that the research exists AND you could have been high.
The downturn always seemed like it was going to be "V" shaped. I am up for the year, mainly because I was at about 40% bonds. I sold all of those in late March and bought actively managed mutual funds to ride on the way back up.
If stimulus round 2 dies watch the last days of July and first days of August. It will be very telling. Several people across the country are working on more weekly income than ever before now. Sites like Robinhood have been flooded with new money. Once more of these quarterly reports come out and that money dries up it will be interesting to see. Imagine 10 million new investors cashing out simultaneously to cover living expenses. There will be a reckoning to all this and a 15 day panic drop was not it.
The financial news cycle can spin a reason for any movement at any time. This last 60 days has been a real head scratcher. I feel like the market is trying to shake out non believers and as soon as all of us mom and pop investors are back in —BAAM—-
TVIX is a fun ETF to watch. It tracks volatility futures. DO NOT INVEST. But check it out. If you bought $2.5million in shares 5 years ago youd have $130 in your account (split adjusted). YIKES
of course it would be. Volatility is not a buy and hold instrument, nor meant to be a long term play. It is a trader's asset, not an investors.
Yeah if anybody bought this and held for more than a couple days then they had no idea what they were buying...
Rice, I think you are right. But there are two more things. PPP loans are over June 30, unemployment ends in August, schools will very likely be virtual for at least the first semester next year meaning parents will have to pick who stays home. Lots of people will not venture out because of pre-existing conditions. There could be a bloodbath this fall.
Carnival Cruise Lines (CCL) is on its way to doubling in value since it's low of $12/share on May 12. It's now at close to $18/share.
I bought it back in March at $17/share. I should've waited another couple months, but eh, you never know when it's truly going to bottom out. Can't wait to see it continue to rise over the next year. It was hovering around $50/share over the past couple years. Time to quadruple that money!
And.... I booked a cruise for October. So cheap right now! If it gets cancelled, I'll get a credit to use later, so no big deal. Hoping to do my part to jump start the cruise industry lol.