If you were sure they were gonna tank, why didn't you profit from it? There's a thing called put your money where your mouth is.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.
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how to benefit in times of crises - COVID-19 - Corona
- Thread starter ricomendez
- Start date
To be fair I will answer your question @Martin Everson , since once I read your bond strategy I concluded that you actually DO know stuff you are talking about, at least when it comes to bonds.
If the entire world stock market crumbles then it means we are in deep s**t where even money doesn't matter anymore and nor do stocks. So as long as productivity grows with time (decades) stock market should go up as well. Every 10-15 years there is a recession, a bust, like we have now, that is normal. That is to be expected. I'm talking about longer time horizons here.
Now be so kind and post your calculus to the "overvalued / undervalued" thing. Is it really just PE ratio and one Shiller metric that whole "overvalued / undervalue" argument is based on?
I don't look at S&P500. It is too centralised. If US gets destroyed by poor healthcare in Corona, US might actually lag behind rest of world. I buy the entire world index. All the companies existing in universe in their proportions. That's it. I know I am ignorant in sector picking or geo picking, i know I can't stock pick, so knowing that I don't know I just buy the entire hay stack instead of looking for the needle. And hold it for 30 years, possibly longer. That is my entire strategy.
If the entire world stock market crumbles then it means we are in deep s**t where even money doesn't matter anymore and nor do stocks. So as long as productivity grows with time (decades) stock market should go up as well. Every 10-15 years there is a recession, a bust, like we have now, that is normal. That is to be expected. I'm talking about longer time horizons here.
Now be so kind and post your calculus to the "overvalued / undervalued" thing. Is it really just PE ratio and one Shiller metric that whole "overvalued / undervalue" argument is based on?
Outcome for the next months:
- Company bankruptcies
- Bank bail outs
- Countries defaulting
They are going to print a lot of money and people will change their behaviors to a new live style for this year. Oil going to single digit but telcos and cash rich stocks are going to perform well.
I moved back to HK to support riches that want to protect their money. European 100k deposit protection is not going to hold and some people prefer to hold their money is safe havens while they wait for an opportunity to step in.
- Company bankruptcies
- Bank bail outs
- Countries defaulting
They are going to print a lot of money and people will change their behaviors to a new live style for this year. Oil going to single digit but telcos and cash rich stocks are going to perform well.
I moved back to HK to support riches that want to protect their money. European 100k deposit protection is not going to hold and some people prefer to hold their money is safe havens while they wait for an opportunity to step in.
Thanks I will read that.
Are you saying deposit protection in EU, in Switzerland, in US will fail? All of them or just EU?
Incorrect use of PYMWYMI remark
With a fiat money system, one can never be a hundred percent sure something is going to tank without insider information. Gov + Fed can make the DOW breach 30K by April 1 with radical currency debasement, wiping out the gains of an otherwise perfect short-sell bet.
It's one thing to understand the company and the market, which is completely different from understanding what the big boys atop the money system are thinking. Too many variables to make it a game worth playing.
I'm doing my PYMWYMI by buying 10-17x companies, not the 20x+ balloons.
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You can't be sure of anything 100.0000% except for your own existence. Your words contradict your actions. Hence you're just confused. If you weren't confused, you'd bet against SPY and at least 2x your money. If you were as sure as your words make it out to be you'd bet $1m to make $10m. This forum is weird. All talk, no action
Oh boy, you got me there!
I've been loading up on Chevron all this time. Already packing up my tent to shill for lower DOW and Chevron in some other niece-of-nieces forum which at max has a few hundred stock market participants.For a waterhead like yourself, I should also specify that "overvalued" could simply mean "do not buy". Nowhere I said "it will tank", or suggested anyone to short it imminently.
@iloveyouguys and @Educate
For waterheads such as yourselves, take this B&W example. If you ever buy your first stock, or attempt a short sell of the few stocks you hold on Robinhood, it might come handy.
DOW was badly overvalued already in 2015 (also before that, but let's keep it simple). No question about it.
1. By "taking PYMWYMI action" as you call it, and making recurring short bets since then, I'd have lost a fortune.
2. The short bets would have been reasonable, taking into account the valuation absurdity, but the market just kept getting more ridiculous.
3. The infamous Tesla shorters did not make bad bets. Their judgement good but the market was manipulated and bumped against them.
4. To win in a short bet you must:
- a) Roughly know the fair value
- b) Predict what the market majority will do next. Also those who watch CNBC and fall victim to bumping of something on a daily basis.
- c) Predict what the CBs and Govs will do in regards to Stimulus and MonPol.
tl;dr Do not ever short sell something just because you think that something is overvalued. This game is far more complex, and only those who are fully dedicated will survive. Back to OPs question "How to benefit in times of crisis?" Stay in cash and gold, then buy up what gets oversold at a bargain.
For waterheads such as yourselves, take this B&W example. If you ever buy your first stock, or attempt a short sell of the few stocks you hold on Robinhood, it might come handy.
DOW was badly overvalued already in 2015 (also before that, but let's keep it simple). No question about it.
1. By "taking PYMWYMI action" as you call it, and making recurring short bets since then, I'd have lost a fortune.
2. The short bets would have been reasonable, taking into account the valuation absurdity, but the market just kept getting more ridiculous.
3. The infamous Tesla shorters did not make bad bets. Their judgement good but the market was manipulated and bumped against them.
4. To win in a short bet you must:
- a) Roughly know the fair value
- b) Predict what the market majority will do next. Also those who watch CNBC and fall victim to bumping of something on a daily basis.
- c) Predict what the CBs and Govs will do in regards to Stimulus and MonPol.
tl;dr Do not ever short sell something just because you think that something is overvalued. This game is far more complex, and only those who are fully dedicated will survive. Back to OPs question "How to benefit in times of crisis?" Stay in cash and gold, then buy up what gets oversold at a bargain.
I just jumped into this conversation. Interesting concept, although I don't completely agree with you investment thesis/idea. Anyway I assume you are buying Vanguard's VTWSX, or sth. else?
Overvalued compared to historical data, such as all the usual ratios (debt to equity, P/E, Shiller PE). Of course this brings the old question - are indexes overvalued when almost everything else is overvalued as well? There is no such thing as "fair value", sure you may calculate Graham fair value or a similar number but it won't say much because it will be high as well.
It is a difficult time, in the past 10-15 years growth outperformed "value" investing. Also U.S. equities outperformed emerging markets. It may be the exact opposite in the near future, or it may not.
It is also possible that even bigger collapse will follow this stock crash - perhaps collapse of the junk bonds, or problems with USD liquidity (eurodollar deposits and USD-denominated debt), or maybe collapse of central banks.
I thought I was pretty well diversified and immune but I wasn't and I think very few people were (should've read @Martin Everson 's posts here hahaha). Basically everything is "deleveraging" and losing value - stocks, bond yields, the euro, soon the dollar, bitcoin...
By the way - all the "deposit protections" from FDIC, from EU banks - they were created for small occasional defaults. A small regional savings bank goes bankrupt and FDIC is ready to cover the losses. However, it isn't prepared for a total collapse.
There are some possible scenarios...
- everything will return to normal, world will reopen and equities reach new highs in 6-12 months thanks to central banks' actions
- deflation and depression will come
- deflation will come followed by hyperinflation
- some crazy scenario such as China or Bitcoin taking over the world
Answering for someone else but... the crash was pretty fast, maybe fastest in stock market history ever. Even those who predicted such thing and those operating hedge funds (e.g. Ray Dalio) got it wrong and weren't prepared.
If you use term "overvalued", then by definition there should be such things as "fair value", since valuation is relative.
By saying "100 degrees" is hot, you can't say "there is no such thing as cold temperature", hot by definition cannot exist without cold, so I'm asking again. If right now we have "overvalued market", when will it be valued fairly or undervalued and why?
Not true, you are using social constructs instead of logic.
If I use the term "overvalued", I do not need a "fair value" to exist. There is an average (or median) value, above that is overvalued, below that is undervalued. Set a timeframe and compare, you can adjust for inflation.
By many definitions, stock indexes were strongly overvalued. You can use e.g. Shiller P/E ratio which takes into account current and historical values, it doesn't need "fair value" to exist at all.
Similarly you do not need "cold" for "hot" to exist. There can be a world where the temperature is either normal or hot, and cold doesn't exist. Same as red is not opposite of green, you can have a world where either green or no-color exists.
You can study e.g. The Coming Problem with Index Funds
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