Danger?

[Norbert]

I'm taking the liberty of reposting a comment by richardsok from the "BS & W" thread:

"Got initial technical SELL signals at noon Wednesday. Bought opening position in RWM as a hedge and sold 1/4 my silver position. IF tomorrow's market is down again by noon, I intend to add to RWM and sell PFN and another 1/4 my silver. As my monthly payers go ex-div, I will sell and not replace. Hoping for a quick rally but I suspect traders are getting antsy over the disappointing COVID news and the possibility of mutating and more virulent strains. The Biden hostility toward fossil fuels only augurs increased retail costs and future tax blather is not promising. Insider buying is all but nonexistent. I'm at 25% cash now. An accommodating FED has taken us a long, long way, but near-zero interest rates can't carry us forever if other wheels fall off the cart."

-----

I'm of the same sentiment; have now cut equities from over 50% to 30%, plus opened a hedge using SH yesterday.

I see excessive complacency and don't think the potential issue of the Covid-19 variants is priced into the market. The US has been slow on the vaccination front, but looks like a champion compared to Europe (2%-3% inoculated). As mutations appear, it will challenging to play catch up. That means endless lockdowns and civil unrest like in Holland.

I also fear the Biden administration's energy and tax policies will be bad for business. Deficit spending and low rates have led to an enthusiastic stock rally, which I think may now have peaked.

Hopefully I am wrong and will shortly feel embarrassment about this post.

Are others buying the dip?

N.

[chang]

Jan 28, 2021 7:05:24 GMT Norbert said:

I'm taking the liberty of reposting a comment by richardsok from the "BS & W" thread:

"Got initial technical SELL signals at noon Wednesday. Bought opening position in RWM as a hedge and sold 1/4 my silver position. IF tomorrow's market is down again by noon, I intend to add to RWM and sell PFN and another 1/4 my silver. As my monthly payers go ex-div, I will sell and not replace. Hoping for a quick rally but I suspect traders are getting antsy over the disappointing COVID news and the possibility of mutating and more virulent strains. The Biden hostility toward fossil fuels only augurs increased retail costs and future tax blather is not promising. Insider buying is all but nonexistent. I'm at 25% cash now. An accommodating FED has taken us a long, long way, but near-zero interest rates can't carry us forever if other wheels fall off the cart."

-----

I'm of the same sentiment; have now cut equities from over 50% to 30%, plus opened a hedge using SH yesterday.

I see excessive complacency and don't think the potential issue of the Covid-19 variants is priced into the market. The US has been slow on the vaccination front, but looks like a champion compared to Europe (2%-3% inoculated). As mutations appear, it will challenging to play catch up. That means endless lockdowns and civil unrest like in Holland.

I also fear the Biden administration's energy and tax policies will be bad for business. Deficit spending and low rates have led to an enthusiastic stock rally, which I think may now have peaked.

To what extent does this analysis / action carry over from the US to the entire globe? Are you / would you reduce all equity equally, or might one consider leaving alone (or increasing?) equity in countries that aren't subject to the same threats as described?

[Norbert]

chang

That's a good question.

My first thought is that the new administration's policies might be good for oil & gas. Buying Russia comes to mind. Also, China will agree that green energy is vital, while setting meaningless targets many decades out.

I expect Asia to outperform economically, as it will be less beholden to the administration's politically correct focus and because the virus has been managed more effectively. But, overseas stock movements still tend to correlate positively with US markets. Asia saw huge gains last year and we might get better entry points. Exports may decline.

I still like the prospects for alternative energy, but the sector is overpriced ... as previously discussed. The administration's policies may accelerate the trend.

It's the virus mutations that really worry me. The UK one spreads very easily by airborne transmission; and is more deadly. Israel will know within weeks how well the vaccines work against it. However, the South Africa variant is said to be able to bypass antibody protection more easily, so that's troubling. The prospect of normality may recede into 2022 as we try to play catch up. Is that priced into equities?

[uncleharley]

"Are others buying the dip?" N'yet!!!! stockcharts.com/h-sc/ui?s=$SPX&p=D&b=3&g=0&id=p49984002596&a=412512122&listNum=86 Yesterdays move for the S&P 500 came on trading volume that was well above average. Indications are that a correction has begun so the question is, how low will it go. The volume by price tool indicates that the first level of support comes in at abt 3700 SPX. If the news on the effectivness and supply of the Covid vaccines is positive then that could be a buy point. However if the headlines show questionable results, the SPX could/should drop to 3400. The first FIBO retracement level of support which also joins a volume/price level is at about 3233 which would be a 13% drop from the peak price. Not quite a bear market, but probably an overdue correction.

[Norbert]

Now I'm reading positive statements about the effectiveness of the Pfizer and Moderna vaccines against the known variants. I guess that's what Mr. Market is seeing too.

Should I have bought the dip instead of selling it? Time will tell.

[rhythmmethod]

Good thread. In light of the fact, I raised a good amount of cash earlier, for re-balancing, I was a buyer yesterday. Feel smart today, but who knows about tomorrow. Not with both feet but nibbling around the edge in positions I want to increase. I'm in agreement with N. that China will outperform. May there be better entry...probably. But none-the-less I'm using any drop to add some. My experience in Beijing was that they are already embracing green energy. The coveted license plate for scooters is almost impossible to acquire for a gas scooter but much easier for an electric one. Same with the coveted parking spots. The twists and turns of this virus are too many and too varied to predict. Common sense mandates, at the very least, caution as every day can bring a new headline and accompanying drama. Be safe out there. I look forward to the continuation of thoughts here.

[Chahta]

N, I saw the Moderna CEO on Yahoo News channel. He said his vaccine was effective against the 2 main variants, 2 days ago. I did not BTD either. I am not fast enough. But I do think there is more to come. All I have is feeling to go by. March 2020 will stay in our minds for awhile.

[anitya]

Norbert: "I also fear the Biden administration's energy and tax policies will be bad for business. Deficit spending and low rates have led to an enthusiastic stock rally."

Could you please unpack this for us - it is too cryptic to provide meaning beyond a sound bite. For example, can Biden do more than remove subsidies and not give out new leases for oil and gas industry and whether those aspects are important for oil and gas industry for the next couple of years (until the next mid-term)? Can the Biden administration, without Republican's support in the Senate, increase taxes?

Can Biden get more deficit spending without Republican's support in the Senate?

I am not asking for the above to test you. I do not have any information to contradict or support your statements but without some explanation, it is difficult for a lot of us to just latch on to or chase words.

[yogibearbull]

For budget/stimulus, annual reconciliation process may be used as has been done in the past. It needs simple majorities in House & Senate. But bipartisan efforts may be tried before that.

[Chahta]

Jan 28, 2021 19:03:43 GMT anitya said:

"Norbert: "I also fear the Biden administration's energy and tax policies will be bad for business. Deficit spending and low rates have led to an enthusiastic stock rally."

Pro-energy/business/tax policies are of no use to congress. They are spending so fast taxes will have to go up. They need far more than they earn to live on. Their loyalty lies to the world to prove we are no better than anyone importing 100% of their fuel. They have an expensive agenda.



"Can the Biden administration, without Republican's support in the Senate, increase taxes?"
"Can Biden get more deficit spending without Republican's support in the Senate?"

Yes. They will roll over. Both sides have no use for debt control. The main goal is to revert back to policies of 4 years ago.

This is as political as I will go here.

[retiredat48]

I have recently taken some distinctive paths that are quite different for me, such as:

--my cash is at the highest level ever.  Very little in standard-issue, vanilla bond funds.  Note: Blackrock's Rick Rieder has his firm at 25% cash position currently...see recent cnbc interview.

--I am now doing shorter term trading of mutual funds/etf's, preparing that if a severe down market occurs, my mindset is to be out.  Like, I have been pyramiding up MJ, marijuana company etf.  My seatbelt is fastened, but I can/will eject quickly if I sense the rise is over.  It also keeps my interest up, as I have no need to make more money.  kinda like: putting my experience to work.

--I own some PSTIX, a PIMCO reverse, hedge type fund, that moves opposite the market.  This has been a losing position, but offset by many of my stock funds zooming to new highs.  If/when the market turns, PSTIX will increase in NAV price.

I don't ever try to predict markets.  I try to be prepared for both ways.  I have/can make strong arguments for Dow 55,000, but surely bear markets will likely occur along the way. 

R48

[rhythmmethod]

Jan 28, 2021 19:44:30 GMT retiredat48 said:

I have recently taken some distinctive paths that are quite different for me, such as:

--my cash is at the highest level ever.  Very little in standard-issue, vanilla bond funds.  Note: Blackrock's Rick Rieder has his firm at 25% cash position currently...see recent cnbc interview.

--I am now doing shorter term trading of mutual funds/etf's, preparing that if a severe down market occurs, my mindset is to be out.  Like, I have been pyramiding up MJ, marijuana company etf.  My seatbelt is fastened, but I can/will eject quickly if I sense the rise is over.  It also keeps my interest up, as I have no need to make more money.  kinda like: putting my experience to work.

--I own some PSTIX, a PIMCO reverse, hedge type fund, that moves opposite the market.  This has been a losing position, but offset by many of my stock funds zooming to new highs.  If/when the market turns, PSTIX will increase in NAV price.

I don't ever try to predict markets.  I try to be prepared for both ways.  I have/can make strong arguments for Dow 55,000, but surely bear markets will likely occur along the way. 

R48

@r48 Do you have a constant % position in PSTIX (if so, may I ask how much?) or are you adding on up equity days like today? That would seem inconsistent with your momentum strategy, however perhaps it is different for an inverse fund. TIA.

[anitya]

Unfortunately, posters being human beings are not able to set aside their personal affinities (especially political) and provide boring investing information. Like all human problems, this one comes from identification.

I think it may be better to just say what you are doing without telling us why you are doing, unless you are able to set aside completely your personal inclinations - only you can know whether you are able to do it.

I liked R48 post.

Please take extra care (and be conscious) not to instill your posts with your political affinities - I know it is difficult.

[helmut]

Norbert "My first thought is that the new administration's policies might be good for oil & gas"

My thoughts as well.  I have not held any oil related funds or ETFs for 10 years but I'm paying attention now. Much of the new government policy reminds me of the 1970's.  If inflation kicks in holding oil stocks will be a good place to be. 
I don't do hedging using shorts because it is like betting against the market which is counter to my investment psyche.  At the present time I'm at 40% equities, 25% long-term treasuries and the rest in BSV and cash.
Correct me if I am wrong but it appears to me if you go short and lose it is much more difficult to recover your losses.

helmut     

[anitya]

I sold some equities and CEFs both yesterday and today. I have been overweight equities - never rebalanced. The sales are in mostly equities that have not been performing well and I have no explanation for the managers' behavior. It is always a good time to get past mental frictions.

[chang]

Jan 28, 2021 20:34:06 GMT anitya said:

Unfortunately, posters being human beings are not able to set aside their personal affinities (especially political) and provide boring investing information. Like all human problems, this one comes from identification.

I think it may be better to just say what you are doing without telling us why you are doing, unless you are able to set aside completely your personal inclinations - only you can know whether you are able to do it.

I liked R48 post.

Please take extra care (and be conscious) not to instill your posts with your political affinities - I know it is difficult.

A quick clarification on "politics". I requested we keep politics out of the "Off-Topic" board, because it just becomes a sewer. There are other sites that specialize in this, and I am grateful to them for providing that service.

I did not request that politics be excluded from the financial topics boards. Rightly or wrongly (from an "investor actionability" viewpoint), politics matter. I did request that the community keep the discussions mature, cerebral and on-topic, allowing for that necessary component of banter and humor, which I welcome, and leave the political arguments and heat on one of the other sites.

So far, the community is batting 1.000 since inception.

anitya "I think it may be better to just say what you are doing without telling us why you are doing, unless you are able to set aside completely your personal inclinations..." I don't agree with this. That would detract from the value of people's input. I want to know what's behind someone's actions.

I think everyone here knows what I mean. I don't want anyone to feel like they're walking on eggshells here. If a bad actor shows up, I'm sure he or she will stand out like a sore thumb and can be dealt with. Personally, I could not be more pleased with the quality of input I've seen in this site's short (39 day) lifetime.

[Chahta]

Jan 28, 2021 20:34:06 GMT anitya said:

Unfortunately, posters being human beings are not able to set aside their personal affinities (especially political) and provide boring investing information. Like all human problems, this one comes from identification.

I think it may be better to just say what you are doing without telling us why you are doing, unless you are able to set aside completely your personal inclinations - only you can know whether you are able to do it.

I liked R48 post.

Please take extra care (and be conscious) not to instill your posts with your political affinities - I know it is difficult.

I answered 3 questions posed. I did not mention any party in particular and did not indicate an affinity. I belong to neither side. You posed the 2 question if it could be done without "republican support". I too like all R48's posts.

"I think everyone here knows what I mean. I don't want anyone to feel like they're walking on eggshells here. If a bad actor shows up, I'm sure he or she will stand out like a sore thumb and can be dealt with. Personally, I could not be more pleased with the quality of input I've seen in this site's short (39 day) lifetime."

The above paragraph is the reason I added: "This is as political as I will go here." to the end of my post.

[uncleharley]

Silver and the Silver miners had a very nice bullish day today on strong trading volume. Is this the end of the precious metals consolidation or was today just a one off day? I am not sure right now.

[chang]

Jan 28, 2021 22:14:02 GMT uncleharley said:

Silver and the Silver miners had a very nice bullish day today on strong trading volume. Is this the end of the precious metals consolidation or was today just a one off day? I am not sure right now.

Amazing how uncorrelated silver and gold seem to be (!).

[chang]

Jan 28, 2021 21:28:37 GMT anitya said:

I sold some equities and CEFs both yesterday and today. I have been overweight equities - never rebalanced. The sales are in mostly equities that have not been performing well and I have no explanation for the managers' behavior. It is always a good time to get past mental frictions.

Same here. I sold off my remaining shares in VDIGX today (noted on BSW thread); perhaps the largest one-day sale I have ever made. I admit to being influenced a little by the various "the sky is about to fall" articles (Grantham, etc.), plus more importantly the warnings shared by other members on this board. I've been letting it ride since my mid-2020 buys, and my equity got to 57% which was much higher than I wanted. I want to get it under 50% ASAP and maybe under 45%. I'll need to run X-Ray this weekend to see where I've got to now.

Nothing against VGIDX personally; it just happened to percolate to the top of the list to sell. I figure a concentrated, actively managed fund needs to demonstrate occasional if not sustained periods of brilliance, but compared to the likes of VDADX/VIG (its benchmark), SCHD and DSEEX, it hadn't done so. (Conventional wisdom says that VDIGX shines during bear markets, not bull markets. I don't find that argument very comforting. I like to play offense, not defense. Cash shines even better during bear markets. The long-term direction of the stock market is up, so "lose less" doesn't strike me as a good, top-level strategy. (Maybe I'm off-track here; doesn't matter: I own SCHD and VIG [taxable] and DSEEX [IRA] so I really didn't need VDIGX.)

[Norbert]

Jan 28, 2021 19:03:43 GMT anitya said:

Norbert: "I also fear the Biden administration's energy and tax policies will be bad for business. Deficit spending and low rates have led to an enthusiastic stock rally."

Could you please unpack this for us - it is too cryptic to provide meaning beyond a sound bite. For example, can Biden do more than remove subsidies and not give out new leases for oil and gas industry and whether those aspects are important for oil and gas industry for the next couple of years (until the next mid-term)? Can the Biden administration, without Republican's support in the Senate, increase taxes?

Can Biden get more deficit spending without Republican's support in the Senate?

I am not asking for the above to test you. I do not have any information to contradict or support your statements but without some explanation, it is difficult for a lot of us to just latch on to or chase words.

Hi Anita,

I'm a permanent resident of France (and therefore the EU) and am sensitive to the impact of high taxes and government overreach on innovation and prosperity. In addition to high taxes, I'm concerned about regulatory complexity on the oil & gas and other sectors. It was quite an achievement to achieve energy independence and reduce the leverage of certain unfriendly players.

In terms of personal bias, I'll disclose that I made a career with a US oil major.

Sometimes government-led initiatives can be very successful. France was successful many years ago in building its nuclear power industry. France was able to supply 75% of its electricity from nuclear power generators. Thanks to this France has a low CO2 footprint.

However, France has lost competitiveness and innovative ability during the past decades. It probably started with the election of François Mitterrand, who served France at the same time that Maggie Thatcher was the UK prime minister; she led the UK out of a socialist quagmire at the same time that Mitterrand created one. She and Ronald Reagan were close friends.

Men and women like Elon Musk consciously avoid France / EU and prefer to work in the US. I want it to stay that way.

I'll add that I think climate change really is a pressing issue. However, I think the issue is best addressed by commercial and industrial innovation; not by new regulation and taxation.

Hope that helps.

[anitya]

Hi Norbert,

I did not sell any O&G widgets and own about 4% of PV.  May be I will have to write them off one day but I will give 2021 before pressing the exit button.  I am reminded often about the opportunity cost. 

As to issues arising from US politicians, I suspect they are not going to get better before they get worse.  I appreciate your concern for the trend - I understand you care.  As to our investments, we have to stay agile and keep finding what works.  I have always appreciated your insights in this regard, going back to the time when I joined M*. 

If somebody asks for help, I will lend a hand; otherwise, I will have to keep focus - I am closer to the end of my life than to the beginning.  I am going to let God do his job!

P.S.: two of my maternal uncles (both PhDs) worked for US integrated oil companies but they did not influence my O&G investments.

A

[retiredat48]

Jan 28, 2021 20:27:28 GMT rhythmmethod said:

Jan 28, 2021 19:44:30 GMT retiredat48 said:

I have recently taken some distinctive paths that are quite different for me, such as:

--my cash is at the highest level ever.  Very little in standard-issue, vanilla bond funds.  Note: Blackrock's Rick Rieder has his firm at 25% cash position currently...see recent cnbc interview.

--I am now doing shorter term trading of mutual funds/etf's, preparing that if a severe down market occurs, my mindset is to be out.  Like, I have been pyramiding up MJ, marijuana company etf.  My seatbelt is fastened, but I can/will eject quickly if I sense the rise is over.  It also keeps my interest up, as I have no need to make more money.  kinda like: putting my experience to work.

--I own some PSTIX, a PIMCO reverse, hedge type fund, that moves opposite the market.  This has been a losing position, but offset by many of my stock funds zooming to new highs.  If/when the market turns, PSTIX will increase in NAV price.

I don't ever try to predict markets.  I try to be prepared for both ways.  I have/can make strong arguments for Dow 55,000, but surely bear markets will likely occur along the way. 

R48

@r48 Do you have a constant % position in PSTIX (if so, may I ask how much?) or are you adding on up equity days like today? That would seem inconsistent with your momentum strategy, however perhaps it is different for an inverse fund. TIA.

Hi rhythm...

I bought PSTIX, pyramiding the market down (PSTIX going up), during the March 2020 selloff.  The goal was to "neutralize" a percentage of my equity side of portfolio.  Like, if you sell 2% of a stock fund, you lowered your allocation by 2%.  If you use the proceeds to buy PSTIX, you are effectively removing another 2% equity.  I used PSTIX to remove about 3+ percent.

After the bear market bottom, I considered stocks would most likely test the previous lows, so I continued to hold this hedge.  Didn't happen.  While I redeemed a little of PSTIX, I still hold it today.  However, I never added to it either since.  

The posture is this:  I don't care, and would really like , the stock market to double from here.  Yes, PSTIX will lose, but my stock allocation will have huge gains.  That is basically what has happened since April 2020.  I always have the option of adding to PSTIX if I consider the market is making a large fall.  But so far I have not felt this way.  I'm keeping the option open that the next big money to be made, may be in avoiding a huge stock market collapse.  But I have no crystal ball...just trying to be prepared.

R48

[steadyeddy]

Jan 29, 2021 6:19:41 GMT anitya said:

Hi Norbert,

I did not sell any O&G widgets and own about 4% of PV.  May be I will have to write them off one day but I will give 2021 before pressing the exit button.  I am reminded often about the opportunity cost. 

As to issues arising from US politicians, I suspect they are not going to get better before they get worse.  I appreciate your concern for the trend - I understand you care.  As to our investments, we have to stay agile and keep finding what works.  I have always appreciated your insights in this regard, going back to the time when I joined M*. 

If somebody asks for help, I will lend a hand; otherwise, I will have to keep focus - I am closer to the end of my life than to the beginning.  I am going to let God do his job!

P.S.: two of my maternal uncles (both PhDs) worked for US integrated oil companies but they did not influence my O&G investments.

A

Off topic Anitya, but is your profile picture inverted?

[rhythmmethod]

retiredat48, thanks for a detailed answer. You must be a happy PSTIX holder today!

[anitya]

Steadyeddy, Good eye. Yes, it is and I can not figure out how to straighten it. I thought nobody would notice it. Admin preferred something other than the "creepy" default picture, which I did not know how to delete. I use this forum without profile pictures for anybody - I changed it in edit profile - so the threads are more compressed and there is more white space in the margins but not below the small posts. A

[steadyeddy]

Jan 30, 2021 2:54:53 GMT anitya said:

Steadyeddy, Good eye. Yes, it is and I can not figure out how to straighten it. I thought nobody would notice it. Admin preferred something other than the "creepy" default picture, which I did not know how to delete. I use this forum without profile pictures for anybody - I changed it in edit profile - so the threads are more compressed and there is more white space in the margins but not below the small posts. A

Anitya - I rotated the picture and made it my profile picture. What you can do is right click and save the image on your desktop... go to Profile.. and upload this picture. It will over-write the upsidedown picture.

Thanks.

Once you fix yours, I will change mine 

[anitya]

Jan 30, 2021 3:12:00 GMT steadyeddy said:

Jan 30, 2021 2:54:53 GMT anitya said:

Steadyeddy, Good eye. Yes, it is and I can not figure out how to straighten it. I thought nobody would notice it. Admin preferred something other than the "creepy" default picture, which I did not know how to delete. I use this forum without profile pictures for anybody - I changed it in edit profile - so the threads are more compressed and there is more white space in the margins but not below the small posts. A

Anitya - I rotated the picture and made it my profile picture. What you can do is right click and save the image on your desktop... go to Profile.. and upload this picture. It will over-write the upsidedown picture.

Thanks.

Once you fix yours, I will change mine 

That is very generous of you.  Done.  The world owes you one!

[Norbert]

Observations ...

Stocks declined sharply on Friday, but T-Bonds rates recovered from 1% mid week to 1.07% on Friday. So, the bond market did not confirm the anxiety exhibited by stocks.

Despite the mutations, new Covid-19 cases are on the decline in the UK, US, and Israel. This may be thanks to progress in vaccinations. Europe is mostly in lockdown and is not yet seeing the virus retreat. Europe is making poor progress on vaccinations. In Greece you need to be 80 to be eligible for the jab.

Growth and Asia stocks were overbought and probably due for a correction. Many still have tasty YTD returns.

I don't see that any major trends were broken this week.

However, future equity gains may require greater clarity about Covid-19 and a return to normalcy. Bond yields are rising and may slowly become attractive; equities are not cheap; the political leadership is leaning progressive, but it's early days.

I took profits and am positioned near the bottom of my equity target range. Am content to let things settle out and maybe see lower prices before increasing risk again. I don't expect another panic like in last March, but don't expect the market to soar away from me either.

FWIW.

[Chahta]

"Growth and Asia stocks were overbought and probably due for a correction."

How did you determine that? I don't disagree.