Nerdy right now 
+10% make it stop Nerdy! I can’t watch! I cannot possible take another cent of being right!
My 2x ETFs are officially in positive territory (well, QLD and ROM are. SSO still has a little bit to go).
I still have more money to add but hate buying on up days (and weeks). Don’t think we’e hit a bottom so I’ll just sit and wait.
I’m always hesitant to call bottom, but when you have a record jobless result that outpaces forecasts and is multiples of an all-time record and the market rallies, that’s a compelling response. So, I put a large chunk to work over the past two weeks I laddered about half into SPY and then on Monday binge bought the other half in beat up names like DRI, NTR, etc. I waffled back and forth on possibly adding levered index exposure instead of the SPY position but just wasn’t able to stomach going 2 or 3x in that volatility. Shoulda listened to Ohai.
how much liquid cash/net of debt cash do you guys have left? like dollar and as a percent of net worth?
Why would the volatility bug you so much? Seems like you are getting similar volatility in Delta?
Yeah, in hindsight I should have gone in more but there were two factors. Firstly, the SPY positions were bought over the proceeding 1-2 weeks before Monday so I felt less comfortable with the situation given the pace of news flow and 10% moves daily and also at that stage had less information given it was earlier in the development. I knew I wanted to start getting invested and I wanted the first half to be broad market exposure but wasn’t as sure how the Fed and Congress would react. At this point Trump was still calling it a flu. By the time I pulled the trigger on DAL, DRI, etc I had visibility into the Fed action and felt comfortable that the fiscal bill was imminent and had enough insight into the details to feel comfortable with the risk. The DAL and DRI for example valuations were more stressed than the broader market, leaving me to think there was less room for downside and I felt comfortable with the bottom up analysis I could do on each but did not feel as comfortable with the market. Also as a relative size, DAL and DRI were about 10% of that lot of investment each whereas the SPY exposure was about 50%. Ultimately I went to 125% invested so did achieve some leverage albeit less efficiently than a levered ETF would have been. Hindsight’s 50/50 as they say.
I’m pretty much fully in at this point with some invested on margin.
I think being 125% invested at this point is very premature. No one knows how this will play out in the US. All the factors that affect a society’s reaction to the virus are very different in the US from what we’ve seen in Europe/ Asia so far. If I had to bet the farm on the market being at higher levels today than in 9 months, there’s no way I’d make that bet. We’ll be a lot wiser by December but IMO the outlook is pretty gruesome. The ■■■■ is yet to hit the fan for real in the US.
sidenote: I hope I’m wrong. My job is kind of dependent on the US trucking along! #MAGA
You are correct. Bottom didn’t hit until after the bailout.
https://seekingalpha.com/article/4334374-you-one-week-to-decide
Anyone have thoughts on this? A fellow charterholder, eh?
I disagree, clearly by my positioning. I’m very close to the breakout here in MA, talking to people in the UMass system, the problem is no joke, but NYC is not the country’s experience and and people are conflating failure to contain the breakout which was never the plan with successfully flattening the curve. The big factor routinely overlooked is the shift to widespread testing that will roll out in the coming weeks alongside ramping ventilator production and change the approach to a more targeted format. The other factor is that in reality in these breakout zones, infection rates are already extremely high, while not fun it is also slowing the future spread by interpolating people with immunity among the population which has a social distancing effect on models. It’s not over by a long shot but like every crisis there’s a substantive gap between looking for the worst headlines and forming a nuanced base case.
Ok. I see where you’re coming from. But let’s assume everything goes back to 01/2020 or 12/2019. We’d still be facing the same problems as before, but at a magnified scale (debt, unfit corporates, QE, etc) that existed before corona. Say we invented a 110% vaccine tomorrow and everyone got injected by saturday, and the markets rebounded back to pre-corona levels. Is the pre-corona situation really a place where you want to find yourself 125% in?
Whoa swan. Stay in your lane. I’m managing director of the superior gains committee… NOT YOU
You completely failed to mention valuation once. How does market valuation stack up against the periods you referenced? Failure to think in terms of valuation is the common theme I get from people focusing too closely on the bear case. Having managed a HY portfolio through several of these meltdowns they all start to look very similar if you tune out the circumstantial facts and just focus on the investors you encounter and their psychology. For a large class of investors each time they encounter these they act as if it is the first time and can only see the tail risk to the point it becomes their base case. A helpful exercise is to go back in history and pick an equal weighted basket of 20 of the worst impacted securities that you think had a mediocre chance of survival and seeing how that basket plays out in a year. If a quarter failed to 0 and the rest doubled (assume in most cases down 50%) then your portfolio ends up 50%. The reality in any reasonably managed portfolio you’re more likely to see a much lower default rate than that (think <10% if you limit yourself to IG entering it) and tripling is more likely.
Lastly, stimulus, pent up demand, the Fed’s position and valuations are not the same as they were in late 2019. The reality is in times like this, retail investors will find a dozen reasons to avoid buying at distressed valuations just to plow money in near the top when it feels good.
Ok so all this aside, you’re OK going all-in with the pre-corona situation? I’m not talking about a 2yr quick gain but a long term hold outlook. If you’re going all-in with a 10-15yr horizon, I say you’re looking too much into the nitty gritty small stuff and not seeing the big picture.
I have quite a bit of cash to make moves before this is over. Not going to be a ‘I told you so ■■■■■’ so I’ll spell out my outlook before the fact. I’ll wait til US gets hit bigtime with corona, and by every 5% drop I’ll buy more and more. If we hit -55% from the ATH, I’ll go all-in.
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Yea I just don’t buy that we hit rock bottom in prices in a bear market with a global recession within a month. I am fully invested like 97 percent too. But there is definitely still pain ahead. So there is no way I am going in margin and going for cyclicals. If this does turn out to be a historic event then I missed out. But just like Pokémon you can’t really catch them all.
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I love the pokemon reference. Go Nery!
Who said 10 year horizon? But anyhow, yes at these valuations generally this is an add risk level and then probably around year end I’ll start closing things out. To be fair, depending on tomorrow if things are even mildly green for the day I’ll probably dump DRI and DAL and a few others that are up ~50% in 3 days and conserve some powder assuming this thing isn’t linear.
Yeah, I mean you need to adjust from time frames right? Just like bull markets don’t die of old age, neither do down drafts. The reality is we broke all sorts of records given the pace and magnitude of the move on the way down.