The Serious Stock Market Crash Thread

[Toro]

The economy is going up on expectations of yet more QE. I'm beginning to fucking hate that term. I can't turn on CNBC without hearing continuously "QE QE QE." Like a crack addict, the market gets its high from monetary stimulus then collapses when it is withdrawn.

Monetary policy in this country has become a joke.

 

[Toro]

However, I did buy a bit of stock today. Some stocks are cheap and I'm just socking those away.

 

[iamwhatiseem]

The economy is going up on expectations of yet more QE. I'm beginning to fucking hate that term. I can't turn on CNBC without hearing continuously "QE QE QE." Like a crack addict, the market gets its high from monetary stimulus then collapses when it is withdrawn.

Monetary policy in this country has become a joke.

It is a simple policy really...your addiction analogy is pretty accurate. In order to sustain the bubble, it needs a "fix" of free cash at strategic intervals. 'Course that cash is the money taken out of our paychecks each week.
We are f*cked. The game masters have everything to their advantage. They have the government fully willing to give them taxpayer money to play with, no one is really talking that much about how over-valued the market is...so they can keep pumping money in...trading it around alot, diversifying as much as possible. If you know what you are doing - there are $billions upon $billions to make in a bubble like this...as long as you don't care that this game's consequences are all being paid by someone else.
It is outrageously FUBAR. And I am beyond sick of it. I am so f*cking tired of trying to do business in a skittish, scarce economy. And neither side of the government is in any way interested in fixing one Goddamn thing other than giving the banks and finance their fix.
Just like I said in another thread - this is like watching a drunk flirting with a man's wife who is a short-tempered 300lb, gorilla who should be walking out of the bathroom at any second.

 

[william the wie]

However, I did buy a bit of stock today. Some stocks are cheap and I'm just socking those away.

Just a question you are aware that Reinhardt pegged the collapse of the Euro for oct of this year? I think she made the prediction late last year but it didn't get a lot of play. If you are aware of that cool, if not I would google for her statement and reconsider your strategy. It may still be a good idea but I would not discount the world's leading expert on sovereign debt lightly.

 

[Toro]

However, I did buy a bit of stock today. Some stocks are cheap and I'm just socking those away.

Just a question you are aware that Reinhardt pegged the collapse of the Euro for oct of this year? I think she made the prediction late last year but it didn't get a lot of play. If you are aware of that cool, if not I would google for her statement and reconsider your strategy. It may still be a good idea but I would not discount the world's leading expert on sovereign debt lightly.

Be very skeptical of prognostications. I have done this for a long, long time, and they are rarely correct with regards to timing.

I am about 75% cash, which means I'm bearish. However, I also recognize that I may be wrong. Thus, I want some exposure. I'm short the Canadian dollar and silver, so my risk exposure is actually 10%. But some stocks are getting silly. I bought Goldman Sachs for the very first time today. It is trading at 0.79x tangible book value. At the depth of the crisis, it traded at 0.67x TBV. There doesn't seem a lot of downside to me. Cisco, another that I bought, trades at 4.25x enterprise value to cash flow. That's ridiculous. ConAgra has a 3.9% dividend yield, higher than their bond. There are all sorts of great American companies that are on sale. I'm buying knowing I'm buying cheap and don't care what happens in the macro economy. If things get worse and valuations get cheaper - which is what I want - I will buy more.

The bear market for the average stock began in 1998. That means we are 14 years into the bear market. The average bear market lasts 10-12 years, with the longest in history lasting ~19 years. I don't know when it ends - I think there is one more big leg down - but we are definitely in the back half of this bear market. As I look around the world, stocks are one of the most attractive asset classes around.

 

[william the wie]

However, I did buy a bit of stock today. Some stocks are cheap and I'm just socking those away.

Just a question you are aware that Reinhardt pegged the collapse of the Euro for oct of this year? I think she made the prediction late last year but it didn't get a lot of play. If you are aware of that cool, if not I would google for her statement and reconsider your strategy. It may still be a good idea but I would not discount the world's leading expert on sovereign debt lightly.

Be very skeptical of prognostications. I have done this for a long, long time, and they are rarely correct with regards to timing.

I am about 75% cash, which means I'm bearish. However, I also recognize that I may be wrong. Thus, I want some exposure. I'm short the Canadian dollar and silver, so my risk exposure is actually 10%. But some stocks are getting silly. I bought Goldman Sachs for the very first time today. It is trading at 0.79x tangible book value. At the depth of the crisis, it traded at 0.67x TBV. There doesn't seem a lot of downside to me. Cisco, another that I bought, trades at 4.25x enterprise value to cash flow. That's ridiculous. ConAgra has a 3.9% dividend yield, higher than their bond. There are all sorts of great American companies that are on sale. I'm buying knowing I'm buying cheap and don't care what happens in the macro economy. If things get worse and valuations get cheaper - which is what I want - I will buy more.

The bear market for the average stock began in 1998. That means we are 14 years into the bear market. The average bear market lasts 10-12 years, with the longest in history lasting ~19 years. I don't know when it ends - I think there is one more big leg down - but we are definitely in the back half of this bear market. As I look around the world, stocks are one of the most attractive asset classes around.

I've been using super stock screener online to pick the ridiculously undervalued stocks I buy myself but I am also buying LEAP puts on overvalued stocks, Apple for example was very nice to me.

 

[Trajan]

Biiig misses...

UPDATE: AAPL -6.25% AH

Major misses everywhere, and this for the second quarter in a row - from the Q3 earnings report:

APPLE 3Q REV. $35.02B, EST. $37.25B
APPLE 3Q EPS $9.32, EXP. $10.37
APPLE 3Q NET PROFIT $8.8B
APPLE SEES 4Q REV. ABOUT $34B, EST. $38.01B
AAPLE 3Q GROSS MARGIN 42.8%, EST. 43.8%
APPLE SOLD 17.0 MILLION IPADS DURING QTR, UNIT EST. 15.4M
APPLE 3Q IPOD UNITS SOLD 6.8MLN , DOWN 10%
APPLE SOLD 4.0 MILLION MACS DURING QTR, UNIT EST. 4.3M
APPLE SOLD 6.8 MILLION IPODS IN QTR, UNIT EST. 6.6M

 

[Trajan]

However, I did buy a bit of stock today. Some stocks are cheap and I'm just socking those away.

Just a question you are aware that Reinhardt pegged the collapse of the Euro for oct of this year? I think she made the prediction late last year but it didn't get a lot of play. If you are aware of that cool, if not I would google for her statement and reconsider your strategy. It may still be a good idea but I would not discount the world's leading expert on sovereign debt lightly.

Be very skeptical of prognostications. I have done this for a long, long time, and they are rarely correct with regards to timing.

I am about 75% cash, which means I'm bearish. However, I also recognize that I may be wrong. Thus, I want some exposure. I'm short the Canadian dollar and silver, so my risk exposure is actually 10%. But some stocks are getting silly. I bought Goldman Sachs for the very first time today. It is trading at 0.79x tangible book value. At the depth of the crisis, it traded at 0.67x TBV. There doesn't seem a lot of downside to me. Cisco, another that I bought, trades at 4.25x enterprise value to cash flow. That's ridiculous. ConAgra has a 3.9% dividend yield, higher than their bond. There are all sorts of great American companies that are on sale. I'm buying knowing I'm buying cheap and don't care what happens in the macro economy. If things get worse and valuations get cheaper - which is what I want - I will buy more.

The bear market for the average stock began in 1998. That means we are 14 years into the bear market. The average bear market lasts 10-12 years, with the longest in history lasting ~19 years. I don't know when it ends - I think there is one more big leg down - but we are definitely in the back half of this bear market. As I look around the world, stocks are one of the most attractive asset classes around.

I reshuffled everything on the last dip, we talked about it here if I recall, my largest blocks left are gold ( I am mulling dropping out on the next broach over 1600...) and the dividend Blues I bought on that dip and cash of course.......I finally exited AKP, a Cali muni fund, bought in at 12 and change, I made a killing and I have no faith left in munis here now despite the strong buy reco's, I think I have been lucky enough.

 

[Zander]

However, I did buy a bit of stock today. Some stocks are cheap and I'm just socking those away.

Just a question you are aware that Reinhardt pegged the collapse of the Euro for oct of this year? I think she made the prediction late last year but it didn't get a lot of play. If you are aware of that cool, if not I would google for her statement and reconsider your strategy. It may still be a good idea but I would not discount the world's leading expert on sovereign debt lightly.

Be very skeptical of prognostications. I have done this for a long, long time, and they are rarely correct with regards to timing.

I am about 75% cash, which means I'm bearish. However, I also recognize that I may be wrong. Thus, I want some exposure. I'm short the Canadian dollar and silver, so my risk exposure is actually 10%. But some stocks are getting silly. I bought Goldman Sachs for the very first time today. It is trading at 0.79x tangible book value. At the depth of the crisis, it traded at 0.67x TBV. There doesn't seem a lot of downside to me. Cisco, another that I bought, trades at 4.25x enterprise value to cash flow. That's ridiculous. ConAgra has a 3.9% dividend yield, higher than their bond. There are all sorts of great American companies that are on sale. I'm buying knowing I'm buying cheap and don't care what happens in the macro economy. If things get worse and valuations get cheaper - which is what I want - I will buy more.

The bear market for the average stock began in 1998. That means we are 14 years into the bear market. The average bear market lasts 10-12 years, with the longest in history lasting ~19 years. I don't know when it ends - I think there is one more big leg down - but we are definitely in the back half of this bear market. As I look around the world, stocks are one of the most attractive asset classes around.

Appreciate your opinion. Thanks for taking the time to post it!

Personally, I am bearish as hell- more than I have ever been. I sold my positions in the "long" bond at a considerable profit about 6 weeks ago and I am now 100% CASH. I plan on staying that way for a while. In my opinion, we still have lots of "flation", of the "De" variety to deal with..........wake me up around 2015.

 

[saveliberty]

I'll play for a week or two when the S&P hits 1287.

 

[Moonglow]

The other thread has turned into the usual mindless political hack garbage. This thread is to discuss the stock market crash without blaming everything on Republicans or Democrats by people who barely know the difference between a stock and livestock.

The UK has fallen 12% in 5 days. Switzerland has fallen 17% in 2 weeks.

Yes indeed, they will fall as long as interest rates for loans to countries are high, or hard to get.

 

[iamwhatiseem]

The final destination for Europe is now just ahead folks...

 

[saveliberty]

Even Germany is starting to enter the cross hairs of Moody's and S&P.

 

[uscitizen]

Even Germany is starting to enter the cross hairs of Moody's and S&P.

Those 2 companys that rated the junk mortgage packages AAA?

 

[saveliberty]

Even Germany is starting to enter the cross hairs of Moody's and S&P.

Those 2 companys that rated the junk mortgage packages AAA?

Yes, Germany's ratings are probably too high still.

 

[Toro]

This has been by far the hardest environment of my career. I am down over the past 18 months, something that has never happened before. I have realized that I am trading all wrong, so I've stopped, or at least cut back, and am instead buying stocks when they get cheap and just waiting.

Money is being withdrawn from the stock market at an astonishing rate, so much so that the market has become stupid. Bond yields for many companies are now lower than dividend yields. It makes no sense, except when you realize that hundreds of billions of dollars have flowed into bond funds and billions have flowed out of stock funds. Since 1996, we now have net withdrawals out of the stock market whereas we've had $800 billion flowing into bond markets. That's ridiculous. Never in my career have corporations been as strong as they are now. I have made a lot of money over the years investing where capital has withdrawn from the market. I have always applied that to industries, whether that's hotels or semiconductors or gold. I've never applied that to the broad market. Now I am.

I am still sitting on a mountain of cash. I still expect one big swoosh down. But capital markets have become so distorted, and equity markets so hated, anyone investing in stocks will do very well over the next decade IMHO, better than almost every other asset class, though I expect a fair amount of choppiness between now and then.

 

[Valerie]

Hold onto your hats!

 

[saveliberty]

I have been buying on major down days and exiting as quickly as possible with a 2-3% upswing. Limited exposure seems to work pretty well at the moment. Long term though, I agree, I have to be in the market. I think that will be reasonable in 2014.

 

[Toro]

One trade I am considering is shorting the 10 year Treasury and using the proceeds to invest in high quality, high quality, high dividend paying stocks. I haven't done it yet, but the idea is to short an amount of Treasuries then go long 60%-75% of that amount in stocks. I was thinking of shorting $100k in Treasuries and going long $70k in stocks.

High yielding US stocks I currently own are JNJ and CAG. I also own MET, which I expect to hike it's dividend soon. Other potential stocks include CPB, GE, HNZ, JPM, K, KMB and PG. I would also throw UL into that mix too. I am a buyer when the dividend yield hits 4%, which is generally 6%-10% down from here.

Such a trade would generate a positive carry of about 1%, i.e. if you pay the Treasury yield of 1.45% and receive the dividends from the stocks, your net return is ~$1000.

The risk, of course, is a negative move in stocks and a positive move in bonds. If the yield on the 10Y falls to 0.1%, the bond price rises 12%. If it falls to -0.5%, it rises 25%. The stocks listed above are low beta stocks that are unlikely to fall more than 20%-30% in the event of a cataclysm. What does give me pause, however, is that in 1973-74, stock PEs were lower than their concurrent dividend yields. Anything can happen in financial markets, so one must prepare for all possibilities, no matter how remote.

 

[Zander]

One trade I am considering is shorting the 10 year Treasury and using the proceeds to invest in high quality, high quality, high dividend paying stocks. I haven't done it yet, but the idea is to short an amount of Treasuries then go long 60%-75% of that amount in stocks. I was thinking of shorting $100k in Treasuries and going long $70k in stocks.

High yielding US stocks I currently own are JNJ and CAG. I also own MET, which I expect to hike it's dividend soon. Other potential stocks include CPB, GE, HNZ, JPM, K, KMB and PG. I would also throw UL into that mix too. I am a buyer when the dividend yield hits 4%, which is generally 6%-10% down from here.

Such a trade would generate a positive carry of about 1%, i.e. if you pay the Treasury yield of 1.45% and receive the dividends from the stocks, your net return is ~$1000.

The risk, of course, is a negative move in stocks and a positive move in bonds. If the yield on the 10Y falls to 0.1%, the bond price rises 12%. If it falls to -0.5%, it rises 25%. The stocks listed above are low beta stocks that are unlikely to fall more than 20%-30% in the event of a cataclysm. What does give me pause, however, is that in 1973-74, stock PEs were lower than their concurrent dividend yields. Anything can happen in financial markets, so one must prepare for all possibilities, no matter how remote.

I'd be careful with that trade. it seems so reasonable and logical that it is sure to fail. After all, how much lower can Treasury yields go?

I'd do the exact opposite. Short stocks, especially high quality, low beta, stocks with good dividend yields, and go long treasuries and cash.