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Post by steadyeddy on Jan 30, 2021 13:36:53 GMT
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. Good commentary Norbert. The reason bonds have not acted yet is coz this is early innings of turbulence/choppiness... just wait for VIX to go higher and shake some investors out of the market.. |
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Post by uncleharley on Jan 30, 2021 14:21:33 GMT
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. Good commentary Norbert. The reason bonds have not acted yet is coz this is early innings of turbulence/choppiness... just wait for VIX to go higher and shake some investors out of the market.. The daily chart for the $VIX indicates that the run up for the VIX has probably already begun. If one wanted to wait for confirmation, a break above 45 would be a sell signal for most domestic issues. stockcharts.com/h-sc/ui?s=$VIX&p=D&b=3&g=0&id=p56061782140&a=502383866&listNum=86 |
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Post by steadyeddy on Jan 30, 2021 14:46:17 GMT
Good commentary Norbert. The reason bonds have not acted yet is coz this is early innings of turbulence/choppiness... just wait for VIX to go higher and shake some investors out of the market.. The daily chart for the $VIX indicates that the run up for the VIX has probably already begun. If one wanted to wait for confirmation, a break above 45 would be a sell signal for most domestic issues. stockcharts.com/h-sc/ui?s=$VIX&p=D&b=3&g=0&id=p56061782140&a=502383866&listNum=86uh - thanks for the link. Curious who is recommending a sell if over 45? |
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Post by yogibearbull on Jan 30, 2021 15:06:17 GMT
Keep in mind that VIX is annualized from average daily volatility of SP500 by using a factor of 19. So, VIX of 33 now means an average daily volatility of +/- 1.74%.
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Post by Deleted on Jan 30, 2021 15:43:53 GMT
Keep in mind that VIX is annualized from average daily volatility of SP500 by using a factor of 19. So, VIX of 33 now means an average daily volatility of +/- 1.74%. 1.74% is high. Market Summary > S&P 500 INDEXSP: .INX 3,714.24 −73.14 (1.93%) Jan 29, 5:12 PM EST · Disclaimer |
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Post by steadyeddy on Jan 30, 2021 16:08:53 GMT
Keep in mind that VIX is annualized from average daily volatility of SP500 by using a factor of 19. So, VIX of 33 now means an average daily volatility of +/- 1.74%. YBB - You amaze me with the level of intricate knowledge you have on the financial matters. Kudos !! |
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Post by Chahta on Jan 30, 2021 16:21:33 GMT
Keep in mind that VIX is annualized from average daily volatility of SP500 by using a factor of 19. So, VIX of 33 now means an average daily volatility of +/- 1.74%. Investigating what the VIX is, I find it is defined as the "expected stock market volatility based on S&P500 index options". Do you know where the factor of 19 comes from and how does 33 translate into 1.74%? Also it would appear it has nothing to do with the bond market. |
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Post by uncleharley on Jan 30, 2021 16:37:02 GMT
uh - thanks for the link. Curious who is recommending a sell if over 45? A break above 45 is a sell signal, Whether you do sell or what you might sell depends on you and how you run your portfolio. The interpretation of the chart is mine. |
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Post by yogibearbull on Jan 30, 2021 16:50:49 GMT
Keep in mind that VIX is annualized from average daily volatility of SP500 by using a factor of 19. So, VIX of 33 now means an average daily volatility of +/- 1.74%. Investigating what the VIX is, I find it is defined as the "expected stock market volatility based on S&P500 index options". Do you know where the factor of 19 comes from and how does 33 translate into 1.74%? Also it would appear it has nothing to do with the bond market. VIX is based on near-term options for SP500. As such it has nothing to with the bond market. But bonds with credit risk do have correlation to SP500. SDs are involved in the calculation of VIX, and calendar days are used for annualization, and 365^0.5 = 19.10, so factor 19 is close. For many other things based on SD, trading days are used and 252^0.5 = 15.87, so factor 16 is close. |
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Post by Chahta on Jan 30, 2021 17:06:51 GMT
Thanks. Dow 31,000*1.74% translates to 500-600 points. Pretty much what we have seen lately.
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Post by FD1000 on Jan 30, 2021 17:25:07 GMT
Several good points. I sold my small positions in the 2 stocks I owned BABA,MSFT last week on the 26. SP500( chart) didn't break the 50 days MA and AIA(Asia 50- chart) didn't even break the 20 days MA Rule of thumb for me is...VIX > 30 start watching, VIX>start selling, VIX>40 rapid selling. One day jump doesn't do it. I don't pay attention to politics, covid-19, oil, "experts" and what fund managers do when I invest. I have no idea what they are thinking and is it short or long term thinking. Furthermore, I must see it in the charts+indicators, everything else is usually noise. VIX is elevated lately, it jumped 14 points in one day last week which is unique, maybe the whole thing is related to GME, when the price went really up, the short sellers had to cover and forced to sell their longs and why they sold their liquid gainers. HY bonds didn't break down. Rates went up on Friday while stocks lost about 2%. It means volatility isn't high enough Higher rated bonds are down YTD, vanilla VBILX at -0.7%. They didn't help you YTD, rates were up. What am I doing? Nothing, but when I do, it will be big and quick, there is nothing wrong or new about getting out. Last year I was out twice. I don't use any short positions or options because they can be a drag on performance. Either I'm all in or I use cash for short term to be out which achieve zero loss. |
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Post by rhythmmethod on Jan 30, 2021 19:27:17 GMT
"Growth and Asia stocks were overbought and probably due for a correction."
How did you determine that? I don't disagree. Not Norbert and not a technical observation. MATFX is up over 85% in 12 months and > 6+% YTD. The law of averages might dictate some correction before it can rise again. |
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Post by Chahta on Jan 30, 2021 19:58:36 GMT
Putting MATFX on SharpCharts with Bollinger Bands, it was slightly over the top a week ago, so in my pea-brain TA way it looks overbought. Also the RSI was higher than 70 for a while. Don't trust what I say, but was curious.
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Post by FD1000 on Jan 30, 2021 23:15:50 GMT
"Growth and Asia stocks were overbought and probably due for a correction."
How did you determine that? I don't disagree. Not Norbert and not a technical observation. MATFX is up over 85% in 12 months and > 6+% YTD. The law of averages might dictate some correction before it can rise again. Sure, but you could claim it 20-30% ago too...or...maybe it would go down another 5-10% and make another 30-40% after that. The law of average can be off by a wide range and last for years. |
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Post by rhythmmethod on Jan 31, 2021 1:04:16 GMT
Not Norbert and not a technical observation. MATFX is up over 85% in 12 months and > 6+% YTD. The law of averages might dictate some correction before it can rise again. ..or...maybe it would go down another 5-10% and make another 30-40% after that. The law of average can be off by a wide range and last for years. But I didn’t. I claimed that after an >85% increase in 12 months, it might dictate a correction. I stand by it. Loosely according to Bob Dylan...”you don’t always need a weather man to know which way the wind blows”. I’m long MATFX and will use correction, drop, whatever, to add more. |
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Post by Norbert on Jan 31, 2021 7:41:38 GMT
FD1000 "Sure, but you could claim it 20-30% ago too...or...maybe it would go down another 5-10% and make another 30-40% after that. The law of average can be off by a wide range and last for years." Thank you Captain Obvious. Mr. Market is definitely a moody, capricious guy. That's what makes investing so interesting. This is the "Market Insight" forum. Do you have anything to contribute on that front? The subject is "Danger?" and the arguments in favor have been stated. Do we buy the dip now? Wait? Or, take cover? MATFX has been mentioned (click to enlarge):  This baby has had a fantastic move after the initial Covid-19 panic on the strength of easy money, Asian resilience, and optimism about a recovery. You can hardly see last week's 7% retreat. Does a narrative exist that argues for buying now? Cons: the stocks are no longer cheap, rates have begun to rise (making bonds a bit more interesting), the chart resembles a SpaceX launch and has gone parabolic, the virus is mutating, and the US now has a progressive Democrat as president. Pros: the price trend is intact, Janet Yellen is complacent and central banks are continuing to print, the vaccines appear largely efficacious against the variants, money could move from the US to Asia, and the new president hasn't yet shown his hand. Personally, I took some money off the table. I don't like charts that have gone parabolic, I have enough money, and was taught to not chase pricey stocks. But, I'm still long Asian equities and believe they will be a fine longer-term investment.
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Post by FD1000 on Jan 31, 2021 13:45:30 GMT
Norbert, pretty easy question if you tell me exactly your goals, risk tolerance, style, age and more., after all, I can't make decisions for others.
Obviously for you selling some makes sense, if someone is 24 years old, does it make sense? I don't think so. Others are more buy and hold and don't sell much.
I already told you what I did with mine, I sold all my small positions in BABA and MSFT that I held for several days. The rest as usual is in bond OEFs and they are nicely over 2% YTD with minimal volatility.
Buying MATFX on the deep? It already lost 8%. I never buy any deeps. It's over 20 years now. I wait for the rebound to start buying.
Danger and what to do? I stated my opinion too pretty clearly. Remember my VIX comment + 2 charts I posted about? That applies to certain investors with certain style.
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Post by Norbert on Jan 31, 2021 15:47:37 GMT
FD1000"Norbert, pretty easy question if you tell me exactly your goals, risk tolerance, style, age and more., after all, I can't make decisions for others." This thread is focused on market insight; am not looking for investment advice or decisions.
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Post by rhythmmethod on Jan 31, 2021 20:50:31 GMT
My dad was a boxing coach. He trained me from 8 years old. I got to where the kids in the neighborhood would come for matches and I could take all the kids my age and a little older. Needless to say, I got cocky. So, dad brings over the kid about 5 years older than me, who also had boxing lessons. I’m minding his jab and deflecting it very well. Then comes the left hook! Out of nowhere! Man! I’ve never forgotten that. While everyone is watching CV19, higher taxes, gamestop, etc. I’m looking for that left hook. About 10 years ago I was in Baghdad for a Dept. of State tour. DC is starting to look more and more like it. Not a prediction of anything. Just watching that left out of the corner of my eye.
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Post by FD1000 on Jan 31, 2021 21:01:35 GMT
FD1000 "Norbert, pretty easy question if you tell me exactly your goals, risk tolerance, style, age and more., after all, I can't make decisions for others." This thread is focused on market insight; am not looking for investment advice or decisions. Already told you in my first post. Let's look at your OP... 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. FD's explanation: do nothing
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. FD's explanation: do nothingGrowth and Asia stocks were overbought and probably due for a correction. Many still have tasty YTD returns. FD's explanation: stocks are overbought, they are down already some, no way to know what's next.
I don't see that any major trends were broken this week. FD's explanation: do nothingHowever, 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. FD's explanation: do nothing, no clear answer.
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. FD's explanation: according to my own goals I sold some. I have no idea what's your goals and why I can't tell you what to do |
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Post by Norbert on Jan 31, 2021 21:39:58 GMT
For the second time, no one is looking for your advice. Good grief!
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Post by racqueteer on Jan 31, 2021 21:51:13 GMT
At the risk of annoying everyone, it looks to me as if FD doesn’t worry about opinions of what the market will do. The operative question in this thread appears to be what do you think is going to happen based on current conditions. So FD has no opinion; he’s not trying to front run anything. If I‘m misstating someone’s position, it’s only because it hasn’t made clear to me.
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Post by anitya on Jan 31, 2021 22:18:02 GMT
I forgot where we discussed about top asset managers' 10 year equity return projections, but below is a link to Vanguard's detailed chart - sorry I am not able to copy the chart. What was striking to me is the median (?) of the probability of returns (white line) for every category except International (unhedged) equities and US value equities is below 5% and these two categories have a median volatility of nearly 19%. If this is all true, may be now is the time for active equity funds - we will miss the sweet old days of passive equity investing. But active funds provide no solace of success, especially if they are large funds - we know plenty of $50+B AUM funds that just ride their category/benchmark wave.
"https://investor.vanguard.com/ts/images/custom/nurture-08-Fig-3-desktop.svg
Incorporating stock and bond forecasts, we can project the potential behaviors of common portfolio allocations as well. For example, the VCMM suggests that the greatest probability for a 60/40 stock/bond portfolio is for annualized returns in a range of 3.2% to 6.0% (nominal, before costs) over the next decade.
Notes: The forecast corresponds to distribution of 10,000 VCMM simulations for 10-year annualized nominal returns as of September 2020 in USD for asset classes highlighted here. Median volatility is the 50th percentile of an asset class's distribution of annualized standard deviation of returns. Asset class returns do not take into account management fees and expenses, nor do they reflect the effect of taxes. Returns do reflect reinvestment of dividends and capital gains. Indexes are unmanaged; therefore, direct investment is not possible. See the Appendix section of the paper titled "Indexes for VCMM simulations" for further details on asset classes.
Source: Vanguard, as of September 30, 2020."
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Post by yogibearbull on Jan 31, 2021 22:22:58 GMT
I forgot where we discussed about top asset managers' 10 year equity return projections, but below is a link to Vanguard's detailed chart - sorry I am not able to copy the chart. What was striking to me is the median (?) of the probability of returns (white line) for every category except International (unhedged) equities and US value equities is below 5% and these two categories have a median volatility of nearly 19%. If this is all true, may be now is the time for active equity funds - we will miss the sweet old days of passive equity investing. But active funds provide no solace of success, especially if they are large funds - we know plenty of $50+B AUM funds that just ride their category/benchmark wave. "https://investor.vanguard.com/ts/images/custom/nurture-08-Fig-3-desktop.svg Incorporating stock and bond forecasts, we can project the potential behaviors of common portfolio allocations as well. For example, the VCMM suggests that the greatest probability for a 60/40 stock/bond portfolio is for annualized returns in a range of 3.2% to 6.0% (nominal, before costs) over the next decade. Notes: The forecast corresponds to distribution of 10,000 VCMM simulations for 10-year annualized nominal returns as of September 2020 in USD for asset classes highlighted here. Median volatility is the 50th percentile of an asset class's distribution of annualized standard deviation of returns. Asset class returns do not take into account management fees and expenses, nor do they reflect the effect of taxes. Returns do reflect reinvestment of dividends and capital gains. Indexes are unmanaged; therefore, direct investment is not possible. See the Appendix section of the paper titled "Indexes for VCMM simulations" for further details on asset classes.
Source: Vanguard, as of September 30, 2020."
Using Insert Image tool, 7th from right in the icon menu row.  |
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Post by anitya on Jan 31, 2021 22:37:48 GMT
By my previous post, I am not suggesting one can not draw more conclusions than what I mentioned. You guys are free to draw and discuss other conclusions. For example, over the next ten years, as interest rates rise from the current levels (or we will be screwed!), P/Es have to compress - so, may be every time P/Es go into enthusiastic sphere, it can be seen as a red flag more now than when interest rates were going down over the past thirty years. That is just an example - you can draw your own conclusions and feel free to discuss.
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Post by anitya on Jan 31, 2021 22:43:52 GMT
Thanks, Yogi, for inserting the picture. I hope to remember the instructions for next time.
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Post by Karen on Jan 31, 2021 23:09:54 GMT
For the second time, no one is looking for your advice. Good grief! I hope that other poster does not frustrate you or cause you to limit or stop your postings here. You have already taught me a lot in the short time I've read your posts. The way I saw that last post of his was he dissected five different comments of yours, gave you advice on them, then on the sixth item ended by saying, "I have no idea what's your goals and why I can't tell you what to do." Maybe I'm missing something there but that makes no sense to me. I do wish he would stop acting like a know-it-all but I am more concerned about the impact he might have on posters like you and others who are helping me fill in the gaps that my husband is struggling to be able to communicate to me. I apologize to you and the chang if this is out-of-line but I just had to say it. I hope the Adm will feel free to delete my post or slap me on the wrist if I am speaking out of turn here. |
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Post by uncleharley on Jan 31, 2021 23:18:55 GMT
For the second time, no one is looking for your advice. Good grief! I hope that other poster does not frustrate you or cause you to limit or stop your postings here. You have already taught me a lot in the short time I've read your posts. The way I saw that last post of his was he dissected five different comments of yours, gave you advice on them, then on the sixth item ended by saying, "I have no idea what's your goals and why I can't tell you what to do." Maybe I'm missing something there but that makes no sense to me. I do wish he would stop acting like a know-it-all but I am more concerned about the impact he might have on posters like you and others who are helping me fill in the gaps that my husband is struggling to be able to communicate to me. I apologize to you and the chang if this is out-of-line but I just had to say it. I hope the Adm will feel free to delete my post or slap me on the wrist if I am speaking out of turn here. Plus 1 |
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Post by steadyeddy on Feb 1, 2021 0:02:47 GMT
For the second time, no one is looking for your advice. Good grief! I hope that other poster does not frustrate you or cause you to limit or stop your postings here. You have already taught me a lot in the short time I've read your posts. The way I saw that last post of his was he dissected five different comments of yours, gave you advice on them, then on the sixth item ended by saying, "I have no idea what's your goals and why I can't tell you what to do." Maybe I'm missing something there but that makes no sense to me. I do wish he would stop acting like a know-it-all but I am more concerned about the impact he might have on posters like you and others who are helping me fill in the gaps that my husband is struggling to be able to communicate to me. I apologize to you and the chang if this is out-of-line but I just had to say it. I hope the Adm will feel free to delete my post or slap me on the wrist if I am speaking out of turn here. Karen - Your points are on the money. For those that like bond OEFs I believe FD's analysis is very valuable and "original" in many ways - so I respect him for that. Beyond that, his persistent desire to one-up others is not a favorite thing for me. You learn by getting along, not by proving that you know more than others even if it is true. I know it is discourteous to say this but I wish there is a "dislike" button for each post just like a "like" button - that would be a way to provide community feedback to posters. |
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Post by Chahta on Feb 1, 2021 0:57:04 GMT
........ I hope the Adm will feel free to delete my post or slap me on the wrist if I am speaking out of turn here. We all have the right express our thoughts. No reason to delete your post. |
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