Stock market in unusual situation

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Phnom Poon
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Re: Stock market in unusual situation

Post by Phnom Poon »

i think there's a lot more excitement to come
i very much doubt we've seen the back of trillion-$ stimulus packages

.

monstra mihi bona!
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Re: Stock market in unusual situation

Post by explorer »

Kammekor wrote: Sat Jul 25, 2020 2:11 pm
Apollo91881 wrote: Sat Jul 25, 2020 1:54 pm So, you're saying its time for me to sell my gold
No, I would hold on to it.
I agree. Hold on to any gold you have already.
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Re: Stock market in unusual situation

Post by armchairlawyer »

I pay a lot of money to get quality info on all this and I also spend a lot of time doing my own research. I did this after losing too much money listening to the so-called experts on TV etc, most of whom are self-serving and/or incompetent. Happy to pass the main points onto my fellow expats. These things are complex so I won't get into discussions unless I see someone has sound knowledge.If you disagree with my suggestions (and most "qualified" financial advisers would disagree) then that's great. I need people to trade against. That said, nobody gets it 100% right all the time, it's about probabilities. Some of highly levered hedge funds get it right 51% of the time and still make a ton of money.

The number one thing to watch in financial markets is the USD.
Right now, the Fed and the Treasury are jointly determined to crush the USD and to stop SPX from falling (Davey Daytrader Portnoy has got this last point very successfully).

SPX, gold and commodities are negatively correlated to USD so:
Be long all commodities, and gold (I see gold as a currency). Be long US treasuries but hedge the USD risk.
Be short USD, long JPY, EUR, CHF, GBP.
Long US tech, utilities, REITS (more upside than SPX generally). Long some EM (inc China tech, Taiwan), avoid most of the rest. Short US financials (low rates kill them).
Gold loves a falling dollar and low or negative real US interest rates. While they persist, gold will go up, it's not too late to buy but buy on pull backs. Silver is much more volatile but as a commodity it will do well, and it will also ride gold's coat tails.

These conditions won't last forever. But that's how it is now. Remember there can be corrections at any time (eg gold could go down $200 in a week at any time, especially if USD pops). But when you know what is a long and what is a short, you can take advantage of those.

EDIT - one more thing, if you own any equities (especially in the USA) then keep an eye on the VIX. When it goes over 30, you may need to sell. The higher it goes, the more you need to exit.
Last edited by armchairlawyer on Sat Jul 25, 2020 3:16 pm, edited 1 time in total.
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Re: Stock market in unusual situation

Post by truffledog »

Buy Swiss Francs (CHF) and sleep well.
work is for people who cant find truffles
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Re: Stock market in unusual situation

Post by explorer »

The thing is to adapt to the ever changing situation. Next month, next year, 10 years time, things will be different. Adapt to what is best at the time.
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Re: Stock market in unusual situation

Post by yongchi »

armchairlawyer wrote: Sat Jul 25, 2020 3:03 pm I pay a lot of money to get quality info on all this and I also spend a lot of time doing my own research. I did this after losing too much money listening to the so-called experts on TV etc, most of whom are self-serving and/or incompetent. Happy to pass the main points onto my fellow expats. These things are complex so I won't get into discussions unless I see someone has sound knowledge.If you disagree with my suggestions (and most "qualified" financial advisers would disagree) then that's great. I need people to trade against. That said, nobody gets it 100% right all the time, it's about probabilities. Some of highly levered hedge funds get it right 51% of the time and still make a ton of money.

The number one thing to watch in financial markets is the USD.
Right now, the Fed and the Treasury are jointly determined to crush the USD and to stop SPX from falling (Davey Daytrader Portnoy has got this last point very successfully).

SPX, gold and commodities are negatively correlated to USD so:
Be long all commodities, and gold (I see gold as a currency). Be long US treasuries but hedge the USD risk.
Be short USD, long JPY, EUR, CHF, GBP.
Long US tech, utilities, REITS (more upside than SPX generally). Long some EM (inc China tech, Taiwan), avoid most of the rest. Short US financials (low rates kill them).
Gold loves a falling dollar and low or negative real US interest rates. While they persist, gold will go up, it's not too late to buy but buy on pull backs. Silver is much more volatile but as a commodity it will do well, and it will also ride gold's coat tails.

These conditions won't last forever. But that's how it is now. Remember there can be corrections at any time (eg gold could go down $200 in a week at any time, especially if USD pops). But when you know what is a long and what is a short, you can take advantage of those.

EDIT - one more thing, if you own any equities (especially in the USA) then keep an eye on the VIX. When it goes over 30, you may need to sell. The higher it goes, the more you need to exit.
Thanks a lot for sharing that.
A lot of food for thought.

Question:
With interest rates that low how much more room do you see for treasuries to go up?
(I understand that declining interest rates means rising prices.)
10-year treasuries currently have a yield of 0.68%.
Buying that asset for interest payments doesn’t get me excited.
So I would only buy to speculate on further declining rates?

(And hope that foreign governments that hold large amounts of treasuries don’t get fed up with the U.S. printing press.)
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Re: Stock market in unusual situation

Post by armchairlawyer »

yongchi wrote: Sat Jul 25, 2020 9:18 pm Question:
With interest rates that low how much more room do you see for treasuries to go up?
(I understand that declining interest rates means rising prices.)
10-year treasuries currently have a yield of 0.68%.
Buying that asset for interest payments doesn’t get me excited.
So I would only buy to speculate on further declining rates?

(And hope that foreign governments that hold large amounts of treasuries don’t get fed up with the U.S. printing press.)
No, the 10 year is at 0.589%.
I expect it to go lower. Happy with short- dated through to 20 year but not the extended duration or zeros.
TIPS are good of course now, I forgot to mention them.
In my view, the low yields are not the problem with treasuries, the declining USD is the problem.

EDIT - If you want more yield then buy Utes or REITS, but watch the VIX.
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Re: Stock market in unusual situation

Post by yongchi »

armchairlawyer wrote: Sat Jul 25, 2020 9:51 pm
yongchi wrote: Sat Jul 25, 2020 9:18 pm Question:
With interest rates that low how much more room do you see for treasuries to go up?
(I understand that declining interest rates means rising prices.)
10-year treasuries currently have a yield of 0.68%.
Buying that asset for interest payments doesn’t get me excited.
So I would only buy to speculate on further declining rates?

(And hope that foreign governments that hold large amounts of treasuries don’t get fed up with the U.S. printing press.)
No, the 10 year is at 0.589%.
I expect it to go lower. Happy with short- dated through to 20 year but not the extended duration or zeros.
TIPS are good of course now, I forgot to mention them.
In my view, the low yields are not the problem with treasuries, the declining USD is the problem.

EDIT - If you want more yield then buy Utes or REITS, but watch the VIX.
You are right, 0.589%. Even worse.

Re declining USD:
Isn’t the declining USD related to the declining rates?
I would say there is certainly an element of “declining confidence in the U.S.”
But if the FED prints money (e.g., purchases financial assets) they drive down rates. Other market participants including foreigners sell those USD denominated financial assets.
Where does the liquidity go?
Part goes into the U.S. stock market (perhaps also real estate) and part goes into non USD assets?
So net outflow?
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Re: Stock market in unusual situation

Post by Teddy1 »

armchairlawyer wrote: Sat Jul 25, 2020 3:03 pm I pay a lot of money to get quality info on all this and I also spend a lot of time doing my own research. I did this after losing too much money listening to the so-called experts on TV etc, most of whom are self-serving and/or incompetent. Happy to pass the main points onto my fellow expats. These things are complex so I won't get into discussions unless I see someone has sound knowledge.If you disagree with my suggestions (and most "qualified" financial advisers would disagree) then that's great. I need people to trade against. That said, nobody gets it 100% right all the time, it's about probabilities. Some of highly levered hedge funds get it right 51% of the time and still make a ton of money.

The number one thing to watch in financial markets is the USD.
Right now, the Fed and the Treasury are jointly determined to crush the USD and to stop SPX from falling (Davey Daytrader Portnoy has got this last point very successfully).

SPX, gold and commodities are negatively correlated to USD so:
Be long all commodities, and gold (I see gold as a currency). Be long US treasuries but hedge the USD risk.
Be short USD, long JPY, EUR, CHF, GBP.
Long US tech, utilities, REITS (more upside than SPX generally). Long some EM (inc China tech, Taiwan), avoid most of the rest. Short US financials (low rates kill them).
Gold loves a falling dollar and low or negative real US interest rates. While they persist, gold will go up, it's not too late to buy but buy on pull backs. Silver is much more volatile but as a commodity it will do well, and it will also ride gold's coat tails.

These conditions won't last forever. But that's how it is now. Remember there can be corrections at any time (eg gold could go down $200 in a week at any time, especially if USD pops). But when you know what is a long and what is a short, you can take advantage of those.

EDIT - one more thing, if you own any equities (especially in the USA) then keep an eye on the VIX. When it goes over 30, you may need to sell. The higher it goes, the more you need to exit.
WHAT ABOUT PLATINUM??? My Jeweller said its going to jump up. Any thoughts??
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armchairlawyer
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Re: Stock market in unusual situation

Post by armchairlawyer »

yongchi wrote: Sat Jul 25, 2020 10:56 pm
You are right, 0.589%. Even worse.

Re declining USD:
Isn’t the declining USD related to the declining rates?
I would say there is certainly an element of “declining confidence in the U.S.”
But if the FED prints money (e.g., purchases financial assets) they drive down rates. Other market participants including foreigners sell those USD denominated financial assets.
Where does the liquidity go?
Part goes into the U.S. stock market (perhaps also real estate) and part goes into non USD assets?
So net outflow?
The process I use is fairly simple. It has been rigorously back-tested so I know it works. I leave all the theorizing about things beyond that process to people more clever than I. A lot of them ran hedge funds that have closed in the last decade.
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