how to benefit in times of crises - COVID-19 - Corona

[Educate]

Yes.....lol. However one can only imagine the government would have stepped in at the 11th hour maybe. However this time around the Fed themselves are offering up to $1trn to cover commercial paper which forms the basis for a lot of US MM deposits. So they have in effect bailed out the MM market.

I am waiting for them now to pledge to effectively bail out the US Bond market. Lot of US companies especially in oil and gas that issued junk bonds. That may mean the US shale industry may vanish if not rescued or oil prices rise back up as those bonds will default. Perhaps its time for a false flag attack on Saudi Arabia oil facilities to raise oil prices . That should fix that problem maybe. Sadly thats the way the world works.

Simple question:

Is market (S&P) overvalued as of today 18.03.2020?

If yes, by how much and why?

If no, by how much and why?

What according to you would be a fair S&P500 value and why?

You KNEW it was overvalued, because you use fundamental analysis and calculations.

So logical conclusion is you know if it is overvalued or undervalued right now.

Or am I not understanding it right?

I mean if you run your computations and end up with conclusion that markets were overvalued then you obviously now at which point they will be fair value, so could you kindly share that to forum just like you have shared the numeous time before how market was overvalued?

Thank you

 

[Educate]

I WISH I studied finance in school because I can't understand how Americans would lose their money in banks, as long as there are no bank runs. FDIC was created to prevent a second great depression (in terms of people losing bank deposits). I can't understand why FDIC would fail at its most basic function.

US still has the geography and military advantage. They can just f**k s**t up to save their a*s. That's what you're saying right? lol

I would also like to know how I can lose money in my US broker and in my US bank account if they are insured by FDIC?

 

[KJK]

Some interesting thoughts from Raoul Pal (Real Vision):

Thread by @RaoulGMI: Just an update from me, in case you are interested... Ive just closed all short positions in equities, oil and HYG and had closed bonds a wh…

Thread by @RaoulGMI: Just an update from me, in case you are interested... Ive just closed all short positions in equities, oil and HYG and hed bonds a while ago. I am now 100% focussed on the on the US dollar, which is a wrecking ball. 1/ I think that t…

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Ive just closed all short positions in equities, oil and HYG and had closed bonds a while ago. I am now 100% focussed on the on the US dollar, which is a wrecking ball.

I think that the authorise have no chance to catch up on what is happening in markets. One by one, they are shutting down. All liquidity has gone as key parts of the global financial architecture have stopped functioning entirely.
The net result is going to be a scramble for dollars unseen in our lifetimes. The 1930's was the last time we saw this as money poured into the US, forcing an eventual devaluation vs gold.

-There are only $3.5 Trillion dollars in existence now. Yet there is over $90 trillion in debt that is owed back in US dollars. That's what he means by mad scramble for dollars. This is how Ponzi's die.

This time the very dollar system is at risk, as I have always said.
And the way it is going to play out is via dollar strength, not weakness. I do not see any mechanism to stop this. Oil falling to $22 in a couple of week is a shock that the global funding markets can not take.

There are simply not enough dollars being generated as the world
shuts down.

There is no funding mechanism to alleviate it.

I don't think swap lines are going to work. There is no way to create the $15trn needed offshore and also provide for the dollar shortage onshore in the US.
This is going to get really, really ugly for EM and global economies and banking systems. The US has its own set of problems post-regulation.

All global regulations post-GFC are going to have to be undone but Im not sure we will have time to change.
At the end of all of this, we will need to create a new system from scratch. The global central banks have been telling us this for a long time now.

It will take time to play out and central bank balance sheets are going to explode to levels never imagined.
We have created the perfect storm.

An unimagined global financial, economic and potentially humanitarian crisis that is going to take everything we've got to stop it.

Im just not sure its possible. Urgh. We have to hope for the best, plan for several unimagined outcomes too...
The Dollar and Bitcoin is all I got right now. Im adding to bitcoin and Im max long dollars (vs EUR,GBP, AUD, BRL, MXN, KRW, CNY, JPY).

Good luck. This is not a drill.

 

[Educate]

Dollar system at risk?

Dude, Fed will just print any amount of dollar they need.

 

[BlueMist]

I think in all this investment approaches and advices it is important to not hear or read too many people views on current situation. I believe it is important to stick to a long term plan someone has committed to. Even if you bought high, "overpriced", "overvalued" you are a loser only if you sell it now.

Also one should never time the markets. I am not much into following the investments, I usually buy via lump sum once a year. My bank-broker was undergoing some changes which they communicated to the clients, so when I logged in to check early February - I was at shock to see that markets HAVE NOT reacted to what has started to happen, in fact early 2020 was a huge profit. If I were to time the markets, I would immediately press the "SELL" button and wait to see the market crash - I mean it was coming and that was obvious. Why did the markets react so late I have no idea, but as I said, I don't want to time the markets. No panic. Let it roll. Let the panic sellers convert the stocks to stockpile of toilet paper and literally flush it down the drain lol

 

[Tax Cow]

Gold pulling back right now isn't a big surprise. Its time to shine is during the times of inflation.

Unlike market downturns, which the establishment can reverse at will, the only weapon against spiraling inflation are the price controls. Those never worked out too well.

Both, cash and gold are good at the moment. Get out of cash once proper inflation realizes. In 2020, there's a real possibility of a 5-10% inflation in the U.S. as a result of overdone monetary and fiscal stimulus.

@Educate

1) Dow is worth $15,000. Still plenty to go for it to reach it's non-inflated price tag. There are far better manufacturing and industrial companies outside the U.S. that do roughly the same at much better margins, less leverage, with a healthier balance sheet. Needless to say, young Americans have too much ego for basic jobs these days. Labor costs are 2-4x the world average which doesn't go well with tight margins. Not everything can be automated (yet).

2) S&P 500, despite poor earnings, is almost at it's fair value. I'd say 5-10% above fair. The U.S. is and will continue to be the world leader higher up the value chain, without specifying industries - in pretty much anything that requires brain power.

 

[Educate]

1) Dow is worth $15,000. Still plenty to go for it to reach it's non-inflated price tag.

Please tell me at what point DOW is not inflated and what metrics are you basing that conclusion on?
If you know DOW is inflated now by definition you must possess intelligence of which points isn't inflated at?

 

[Educate]

@Educate
2) S&P 500, despite poor earnings, is almost at it's fair value. I'd say 5-10% above fair. The U.S. is and will continue to be the world leader higher up the value chain, without specifying industries - in pretty much anything that requires brain power.

What metris are you basing on the conclusions that S&P is at fair or close to fair value?

 

[Martin Everson]

US still has the geography and military advantage. They can just f**k s**t up to save their a*s. That's what you're saying right? lol

Pretty much. They messed up China with a trade war. Trump said it himself that if he hadn't taken action against China its economy was set to surpass that of the United States and become the worlds number 1 economy. The China trade war, Huawei and 5g battle have not come out of nowhere. The US is at the end of its empire. It has proven it cannot militarily fight and win wars since WW2 i.e it lost in Vietnam, lost against the Taliban in Afghanistan and has lost Iraq to Iran. Now the economic part of its end is unrolling. Yes they will just "f$ck sh$t up to save their a*s". You are witnessing it all happening in real time.

You KNEW it was overvalued, because you use fundamental analysis and calculations.

Yes I am a bond investor. You heard the saying "The bond investor is the smartest guy in the room"? When you buy bonds you don't pay attention to price but to yield and conduct fundamental analysis to see whether interest payments can be sustained by the issuer based on their finances.

Simple question:

Is market (S&P) overvalued as of today 18.03.2020?

If yes, by how much and why?

If no, by how much and why?

What according to you would be a fair S&P500 value and why?

I am a bond investor so I don't involve myself with the equity markets at all. You will know from my posts going back years. Any commentary I give is purely from my own analysis and out of fleeting interest. I don't own shares.

Have you looked at the individual companies that make up the S&P 500? Can you please tell me what their balances sheets and earnings look like as of 18.03.2020? After you complete this fundamental analysis and look at their P/E ratio then you have your answer. I am not here to do your homework for you as I don't buy shares. Your the one interested in the S&P 500 and equites so I will wait for your analysis to be presented?

 

[iloveyouguys]

Pretty much. They messed up China with a trade war. Trump said it himself that if he hadn't taken action against China its economy was set to surpass that of the United States and become the worlds number 1 economy. The China trade war, Huawei and 5g battle have not come out of nowhere. The US is at the end of its empire. It has proven it cannot militarily fight and win wars since WW2 i.e it lost in Vietnam, lost against the Taliban in Afghanistan and has lost Iraq to Iran. Now the economic part of its end is unrolling. Yes they will just "f$ck sh$t up to save their a*s". You are witnessing it all happening in real time.

Where will they attack next?

 

[Nicholas Van Orton]

Public Service Announcement:

April Fool's Day has been cancelled this year as no made up prank could possibly match the unbelievable s**t show going on in the world right now.

 

[Educate]

I am a bond investor so I don't involve myself with the equity markets at all. You will know from my posts going back years. Any commentary I give is purely from my own analysis and out of fleeting interest. I don't own shares.

Alright, in that case, if you "aren't involved with equities" at all how can you claim equities are overvalued, undervalued or valued fairly? Obviously you have to conduct some sort of analysis which would let you determine that equities are "overvalued". So if you conducted this analysis you could easily tell right now if they are still overvalued or undervalued and why.

Your the one interested in the S&P 500 and equites so I will wait for your analysis to be presented?

Because you claimed the S&P500 is "overvalued", so please tell what price it will be valued fairly. It will take literally less than 10 seconds from you since you have already conducted your research.

 

[Tax Cow]

@Educate

Are you getting cooked in the U.S. market as we speak? He told you, it's about price to earnings ratio. Personally, I use Shiller P/E more often.

Here's a simple indicator that I use when investing outside the U.S. stock market, and you may find it useful in the U.S. too.

If a company trades at 20x or more of it's avg. earnings over the last 5 years, and if the company has no strategic (monopolistic) advantage that prevents the competition from catching up, then it's overvalued. All sectors. All business plans. All jurisdictions and all companies. End of discussion.

S&P 500 P/E is at 18.X something as I write this post. For S&P 500, 17x is about fair based on my own judgment. This corresponds to another 5-10% drop from the current price point.

 

[Martin Everson]

@Educate lol...I am still waiting for you to answer my questions below I asked above? . Where is your answers please?

Have you looked at the individual companies that make up the S&P 500? Can you please tell me what their balances sheets and earnings look like as of 18.03.2020? After you complete this fundamental analysis and look at their P/E ratio then you have your answer. I am not here to do your homework for you as I don't buy shares. Your the one interested in the S&P 500 and equites so I will wait for your analysis to be presented?

@xzars Thank you so much but Educate needs to do his own homework and stop being lazy. Don't do anything for him until he at least does some basic analysis. He not even answering my questions probably because he can't. And if he can't he should not be investing in equites period as that would then be just speculating like with bitcoin price.

 

[Tax Cow]

Never mind an enlightening chat. I could be wrong too, so in that case, others can correct me

Regarding my call that DOW 30 is fair at 15,000, I'd sum it up as follows:

While the market correctly prices it's member Catepillar, a company engaging in basic barbarian work with wrenches and hammers at P/E 9.3, they completely overestimate the value of some other members of the DOW.

A few examples...
1) Walmart is still @ 23.89 P/E - are you kidding me? Is this a highly profitable nano-tech company? It's a SUPERMARKET!
2) Chevron is still @ 35.35 P/E - very generous for an oil and gas company. Who bumped this? Let's have a glass of koolaid and completely ignore that oil is at historic lows while Russia and Saudis engage in price wars? Or maybe I missed the moment they received free money from the stimulus package?

 

[Educate]

@Educate lol...I am still waiting for you to answer my questions below I asked above? . Where is your answers please?

I asked you first, I will repeat.

Martin Everson said:
I am a bond investor so I don't involve myself with the equity markets at all. You will know from my posts going back years. Any commentary I give is purely from my own analysis and out of fleeting interest. I don't own shares.

Alright, in that case, if you "aren't involved with equities" at all how can you claim equities are overvalued, undervalued or valued fairly? Obviously you have to conduct some sort of analysis which would let you determine that equities are "overvalued". So if you conducted this analysis you could easily tell right now if they are still overvalued or undervalued and why.

Martin Everson said:
Your the one interested in the S&P 500 and equites so I will wait for your analysis to be presented?

Because you claimed the S&P500 is "overvalued", so please tell what price it will be valued fairly. It will take literally less than 10 seconds from you since you have already conducted your research.

Thanks

 

[iloveyouguys]

@Educate

Are you getting cooked in the U.S. market as we speak? He told you, it's about price to earnings ratio. Personally, I use Shiller P/E more often.

Here's a simple indicator that I use when investing outside the U.S. stock market, and you may find it useful in the U.S. too.

If a company trades at 20x or more of it's avg. earnings over the last 5 years, and if the company has no strategic (monopolistic) advantage that prevents the competition from catching up, then it's overvalued. All sectors. All business plans. All jurisdictions and all companies. End of discussion.

S&P 500 P/E is at 18.X something as I write this post. For S&P 500, 17x is about fair based on my own judgment. This corresponds to another 5-10% drop from the current price point.

Did you bet against S&P500?

 

[Martin Everson]

2) Chevron is still @ 35.35 P/E - very generous for an oil and gas company.

Yeah that's madness right now....lol. Talking about oil and gas I have my eye on a play of putting $800k into Nigerian sovereign Eurobonds. At end of December 2019 the 7.625% 2047 Nigerian sovereign bond were trading around the 99% mark or close to par. The government there had budgeted for $57 a barrel in their national budget. Since the price crash the bond has gone down to 52% mark as their national budget has a large percentage of oil as its revenue and it is unlikely they will be able to make interest payments in near term. I am 50/50 as to whether to buy this now distressed bond with the intention to go through the default process with the expectation of being made whole again in 2-3 years time.

The Saudi's also need $82 a barrel oil to balance their budget or they will have to dip into their dollar reserves which is not sustainable. The US also need high oil prices to support their shale producers who will soon be out of business without a bailout. America will have to support what the Saudi's want after all how are they gonna pay for Trumps $350bn arms deal over next 10 years...lol. So there is a second factor that some event will be needed to raise oil prices back up rapidly . This makes for an interesting bond play.

@Educate as in past debates on this forum I think we have to agree to differ again. I gain nothing from helping you sadly . If however you answer my questions I will help you freely as I do everyone who asks.

 

[Tax Cow]

Did you bet against S&P500?

I buy my equities in the LSE, SGX (just REITs here) and BvC Col. Guess it means that I have no right to weigh in on the U.S. market

Also, my buying strategy is a little different. I'm not involved enough to pick up on best short-selling opportunities. When the company I like seems at fair value to me, I buy for cash, and hold for at least 5 years without any fail safes.

 

[Educate]

@Educate as in past debates on this forum I think we have to agree to differ again. I gain nothing from helping you sadly

That doesn't make sense. So you gained something from helping others with previous posts and suddenly you aren't gaining anything for answering a question that would take you about 30 seconds to answer. Again, it is pure logic. You said thing X is overvalued. I asked - ok, when will it be valued fairly?

For you to have capacity to tell its overvalued by default means you also have capacity to tell when its valued fairly.

It can't get any more simple than that, can it now?