The Stock Market - A daily diary

On to the markets the last few days... I cannot believe how hard the bounce has been off the (recent) bottom.  Two monster days, and a smaller one yesterday.   I mentioned a few days ago that I though Trump's pivot to re-open business earlier rather than later, AND the stimulus could have some staying power.  Heck, I just thought we could "stop" going down for awhile and start to form a base.  No way did I see a sharp "V recovery."  We are not out of the woods by any stretch, and the news is just going to be really rough IMHO for many , many months, likely stretching into 2021.  Fatalities, Bankruptcy, Unemployed individuals..  Someone please wake me up when we are playing some baseball ! 

Today's action was just downright looney.  On a day that saw Oil fall 5%,  and weekly unemployment claims hit new records, the stock market spiked higher!

Here are a few select stocks again from my Daily Dashboard of Stocks ; 

CVX +10.3%  (Yay.  Lol.)

XOM +4.1% 

DEO +10.2% (People are no doubt hitting the bottle & beer !)

STZ +11.1% (.. and don't forget about the pot !) 

BA + 13.8% (going.. going , gone...  to the upside)

PENN -9%  (that's a concern right there, on an otherwise big day on the market) 

There is no way this country will be ready by Easter. Trump will be forced to flip flop on that impulsive decision. Trump is rushing things back in an attempt to protect his money. He is bleeding roughly $500,000 every day his properties are closed for business. 

This is a nice rally, but we both know it has very little chance of holding up in the short term. I have resisted the temptation to sell thus far but did raise 30k in cash today. I feel like I should have sold a LOT more. 

I agree, Gamble.. The country will not be ready by Easter.  Who the hell am I, but I would have given it 30-days AND clamped down the entire country.    As I've mentioned countless times, what good is this when you have varying measures imposed by States.   We must "assume" everyone in the country has it, nationwide quarantine for 30-days to drop the rates significantly.  The reason why 30-days makes sense is because it is believed the "normal" incubation period for the virus is 15-days... Double it just to include those individuals that might carry it for longer than the normal 15-days. 

And I'm sorry, I don't have the same thinking you do that Trump is doing this for selfish reasons.  What about the American people ?   Should we push the country into a depression, potentially having 30% unemployment (cited by well-respected economist El Arian) , in order to save countless lives ?  This is  not an easy decision, but I believe his decision is being made for the right reasons.  Why should we doubt this ?  His aggressive stance on China and tarriffs has all been for the American Worker.   How is this decision any different ?  

My only beef is that it is a bit TOO aggressive of a timeline, considering we aren't  aggressive enough in containing it 

Trump will flip flop. He will not have a choice unless we see a rapid decline in cases. Take heed of what is happening in Hong Kong right now. They were supposed to be the model to follow, but cases are spiking now after they went back to business. Remember my skipping rocks across the pond analogy. The skips will create waves until the vaccine comes. It's really that simple.

Hong Kong cases have decreased in the past week. China has had like 300 cases in the past week. What are you talking about?

Very interested in what you mean by this?  I don’t own any TSLA and never have.  But you say ‘he lies with ease’ — for example?

Then at the end you say ‘does not see...trustworthy’ — is this just a gut feeling you have?

I have only seen/heard him on a couple of podcasts.  Seemed intelligent and maybe quirky but didn’t get the untrustworthy feeling?

What would you call ‘short-term’?  I’ve been involved in investing for a very long time and I could easily see this holding up—short-term or long-term.  

I just don’t agree with all of the folks that see the market testing the last bottom.  

Difference in philosophy or strategy I guess.  The last few bull markets have been so good for investors it is hard to see how people constantly have pessimism.  It just seems to me some people just see it as too good to be true.  Or, just keep using old, outdated methods to view markets  

I am very rarely short in the market — unless, I just see a drawback coming for some reason.  I still say we were due one, and it was coming — coronavirus or not.  I used to day trade more some time ago and even then preferred being long — even when the value is short.  Sometimes, best just to stay away and wait for a long chance.   

Same when sports gambling.  A lot of soccer I will sit out because I prefer an over opportunity more.  Just conflicts me to wait around for nothing to happen.  Same with investing — can’t be rooting/seeing too much negative in the market and then being opportunistic in the market.  

I know way too many people that missed so badly in this last, extended bull market.  

You absolutely cannot let chances like this get away from you.

The market should not have gone as low as it did.  So, the buying chance was there before it got so low.  Then when it dipped again, some people got in at an extra discount.  Yet, still I know folks that were selling all the way down — just hard to figure that logic out.  People just get scared too easily. Investing should always, always be looked at on a long-term basis.  

That is what I ask about short-term to you?

Firstly, when I use the term short term, I am speaking of a time period from today to three months out. Maybe 6 months and even up to one year is still short term to me. IMO, this rally has very little chance of following through with upward momentum in the short term. The E component will remain uncertain until the vaccine is delivered to the people. 

Secondly, I would like to address the fact that your opinion is that the markets should not have gone down as low as the -35-38% range off of the highs. To that I disagree. When you have a P/E and the E essentially becomes zero or a negative number (Cheesecake Factory) in the short term, it is IMPOSSIBLE to price the markets fairly. We are currently in a shutdown of an unknown length. NOBODY knows what the E component will be. So, simply put, the market had every reason to go to -38%. 

I have held stocks long term, with a buy and hold philosophy, for over 30 years and have been 100% invested my entire life. I have benefited no doubt about it. But this time feels different. Rates are at ZERO. Russia and SA are intentionally "toying" with our shale industry and I don't see any resolutions on that front. The economic implications of this virus are the wild card. Who will want to be in a large group this fall? Football games with 80,000 in attendance? Concerts with packed arenas? Packed restaurants? Disney? The Olympics are already canceled. How is any sports league getting back to business? Where will it be 100% safe to be? 

So yes, I have little confidence in the short term and will be looking to increase my cash positions if logic defies our markets and they drift higher. I say this now being only 6% in cash. I feel like there is a decent chance I get caught with my pants down, so to speak. 

Sure.  I understand you being cautious.  I’m invested since age 18.  All of your points are valid.  But like you say it is impossible to price them fairly.  Overall the markets absolutely have to be looked at differently then years ago.  Very dynamic.  

Has to be looked at longterm.  So will be interesting to see how your short term view pans out or changes.  

Raiders, he is notorious for inflating his monthly/annual car production figures, and then never coming close to meeting these figures.  As I mentioned,  he is notorious for doing this, and the investment community is well aware of this.   Those that defy this are his investors and could care less.  They are part  of the cult community and believe Musk can do no wrong.  

Also, don't forget Musk was investigated by the SEC  for the shenanigans he pulled a few years ago.  He said he had financing available to take the company private for $420 a share.  ( I think you see the irony in this figure).  He later admitted no wrongdoing,  but did pay a hefty fine to the SEC for his stunt.  Is this the kind of guy you want to invest in ?  The scarier thing is he actually runs a rocket company,  too.  Lol 

It's believed by many (including me) that he pulled this stunt to take direct aim at short sellers.  It worked, because the stock shot up shortly after he made the announcement ( on Twitter of all things) .   He has a thing for making snide remarks against short sellers.  My feedback? Run a solid company and you won't have to worry about the doubters (i.e shortsellers) 

I think to address some of the comments by Raiders and Gamble, the market is trading in a complete vacuum right now.  There is no sense of reality because no one in their right mind knows what earnings will be over the next 12 months ( which is what stock prices are supposed to be based on) .  As a long term,  I'm reasonably confident stock prices will be higher 3+  years from now, even  I have absolutely no idea what they'll do over the next year.  

Dow NASDAQ and S&P bounced back but today could be negative

Gotcha. Yeah. Never even looked into Tesla.  Always been too faddy or startuppy for me. Of course I remember them not meeting the output they predicted.  Remember the crashes etc.  So, I take your word on him doing it for underhanded reasons.  Just figure he going through startup pains to please investors.  

I just thought you said he lied with ease — that he lied just to be lying, about all sorts of things.  Just wasn’t sure what you meant there is all.

Just in interviews I saw he seemed very likable.  But also seemed to have to be prompted.  And when asked a question he seemed to take an extra long time to answer, almost as if to appear he was giving the question serious thought.   

Looks like the FED and the UST liquidity is starting to kick in...if you pull up a chart on the USD vs pretty much anything you will see in the last two days that the USD has been getting killed across the board. The Euro is up 400 pips, the GBP is up almost 1000 pips, even the Aussie is up, the Swiss is up like 300 pips.

So whatever margin issues that existed are starting to be taken care of for now but to me lending more money to a lender who cant make payments seems like a short term solution unless things reverse VERY VERY quickly...businesses are not bustling, the consumer is not spending, tax bases are not expanding. 

I think the massive reverse in the markets as usual today means leverage is back on and rates are even cheaper than before so let the gamblers return and try to crush VOL again and go long tech stocks and the SPX futures.

Wall, your dashboard of information is much more complex than mine.  Heck, I only follow a few dozen stocks to give me some idea of what's going on in the equity market.   I do recognize that the amount of spending by our government will have disastrous consequences for out future,  either in the form of higher inflation  and /or higher taxes down the road.    We are certainly in unprecedented times in this country.   I didn't think for a minute that we would experience something similar to the financial crisis in 08 in our lifetime again.  But here we are,  12 years later facing a crisis at least 5x worse ( bases on weekly unemployment claims).  Throw out the playbook on this one.    This is gonna be one helluva recovery for the global economy 

Guys, in regards to containment measures,  I already expressed either in this thread or the general discussion forum that our containment measures look  a lot more like Italy than either s. Korea or China.  China effectively cut out Wuhan from the rest of China,  even resorting to welding people's doors shut ( true story) .  South Korea on the other hand learned their lesson from SARS 2003, and was equipped w numerous testing kits for their population.   We implemented neither policies here in U.S., and are dealing w the consequences.   Many difficult days lie ahead in this country.     I wish we had taken much more forceful action earlier.   I keep beating on a dead horse 

I have a comment on the Wuhan comment. My direct neighbor is from China and she has relatives in Wuhan and Shanghai and we were speaking from a distance about what is going on in China. 

She mentioned to me that China got LUCKY with regards to how this played out. I asked if she thought the government was lying about Shanghai and she said NO that the breakout happened in Wuhan but right then the New Year happened and she said everyone leaves the center city and return home for the long holiday and because of that the quarantine happened before the end of the New Year and so it did not spread to Shanghai. She also told me about the URN issue before it was reported in our news...that the numbers are a lie and the fact proven was by the number of URNs released did not match the totals given by the government. She also thinks that there will be a relapse and that China is not out of the woods with regards to the issue.

I think we have a long way to go before things are going to reverse and stabilize. There might be some false senses of stabilization but that does not mean we are out of the woods in the future.

Wall, thank you for sharing that.  I frankly find it hard to believe anything these days coming from the Chinese Communist government.   They recently kicked out all foreign journalists,  so their country to me is an effective black box.  Some local Chinese journalists have disappeared due to their reporting on the Wuhan virus.  Even before the virus pandemic,  the Wall Street Journal had numerous journalists expelled from their country for making critical comments about China.  IMHO,  They have a hard time coming to grips w the truth in any way shape or form.  That should scare us to the core what the true death tally is in China 

Speaking of China,  with all of the effects of the virus on our society , how is this going to impact a company like Apple, that does virtually all of its production in China.  When the Sh*tstorm eventually passes, they face the prospect of a much different world than today in U.S. - China relations.    To put it bluntly,  the biggest publicly traded company in the world will face massive challenges going forward.   Steve Jobs was able to cozy up to Trump and sidestep sanctions on the iPhone.   I don't they'll be so fortunate after this passes.  I look at it this way.   When this is all said and done,  we will have lost many times over more people than 9.11.  That's  a big deal,  considering China had every opportunity to contain its virus.   

 I'm amazed that futures are up right now.

The markets are not about the state of the economy at all. If they were then we would be under 10k right now. No reason from a financial standpoint that this market is over 10k given the mess we are in.

The FED, the UST all central banks are doing whatever it takes to keep the stock markets from imploding and that is collective collusion. 

A very interesting day on the market for a couple reasons..

First, there was an article recently in WSJ that talked about how Tuesday's are historically the best day for markets.   Why ?  Because usually people sell on Monday's after they've absorbed the weekend news, and on Tuesday people realize it was an overreaction.   Go figure it changes course today.  This doesn't explain today's events, but it is funny.   I'm guessing tomorrow will be a down day.  Lol. 

Some interesting bifurcation taking place today.  Oil continues to plumb new lows, but the majors held in quite well with some gains.  Also, Boeing,  airlines,  and cruise stocks took a drubbing on an otherwise positive day..

I think the takeaway here is that companies with challenged balance sheets are taking a beating.   Stock analysts are quickly becoming credit analysts.   

Does everyone feels we hit bottom or will we test it again in April?? I have a feeling we will have another down trend in April but I believe we will recoup 100% by this time next year JMHO