Congrats to all those who do well with investing. And I'm 100% about the premise: Investing in businesses, spending less than you make, etc. However, I've been out of the market for a while. People talk about timing the market, but for GenX, especially the tail end of it, like me born in 1980, the timing was kind of done for us and not in a good way.

In 1998 I enter college and tech jobs are tech companies are on fire. 320 kids in my Computing I class. Inflation had been low and deregulation combined with Greenspan's low rates lit stock markets on fire. I love computers anyways so no problem. In 1997 right before I entered college I saw Bill Gates appear on the big screen at Macworld. Apple was virtually bankrupt but I remember putting an Apple stock alert on Yahoo! so I'd get text messages whenever Apple had a big day. I had thought hey if I had any extra money I'd buy Apple stock but I was in college so I had zero dollars. After paying my way through college I learned the first lesson of timing:

Don't be graduating into the tech field in 2002 after the dot com disaster. No one was hiring inexperienced kids with CS degrees like they were four years before. It takes time to make enough to live on your own and save for retirement. By 2004-2005 I finally started making enough to save on my own (having, the years before, taken my passbook savings account down to close to zero). So I got one of those Ameriprise Fee only advisors and put as much away as I could dollar cost averaging into whatever they told me to. And I saved up for a condo because housing was doing awesome! So in 2006 I closed on a condo in an 'up and coming' neighborhood. As you can see, my timing so far is impeccable. Second lesson of timing

Don't buy in neighborhoods that are iffy during a housing bubble. Basically I was instantly upside down, ended up having terrible neighbors, putting my own money into the tiny condo association because the other owners were deadbeats, etc. I needed to sell my investments to keep afloat. By 2009 its obvious that my condo isn't worth half of what I paid. I am debt free other than the condo though, so I hunker down. I build a giant pile of cash and stop investing. Partially because I want the cash if I have to mail the keys to the bank and walk away, so I can get by with awful credit, and partially because no one went to jail after the housing / banking scam. Not exactly trustworthy times. I short-sold in 2011, worked with the bank and got out ONLY shelling out thousands of dollars.

Fast forward. in 2013 I was married and in 2014 we have a kid. I kept piling up cash because I still didn't trust the markets, and also because I have a family and do want a house of ours. We bought this summer. This time, I pick a well established neighborhood and buy a SFH. No associations, etc. (and yes, I'm aware we're likely in yet another housing bubble).

But I've painfully been out of the stock markets. I have been contributing the max up to match in my retirement funds and probably have almost six figures in retirement assets, but its invested in money markets and bonds, because I wasn't sure exactly how much I'd need to put down to get a house. Third rule of timing: I guess always put money in the markets? Six months after closing on the house I have zero desire to put money into a market with crazy high P/E, and a bunch of open frauds out there (IMHO Tesla is a wild fraud, along with maybe a 1/4 of the silicon valley companies out there). I expect a correction because every time interest rates have gone up, it eventually tanks the stock market. So yeah, I'm stuck. It's one thing to dollar cost average in a tall market but its another thing to rebalance into stocks right at the top. Oh and also not trust the markets at all.

Anyways, I'm not the worst off of my age/generation, and I'm a saver at heart and make a good salary. But I know I'm not alone, it seems every milestone I've hit as I get old enough to hit them times with a really shitty time to be investing/buying a house/etc. I guess given my experience I'm just too gun shy at this point about the stock market.

Where did it go during 2008-2009 when bonds and stocks moved in tandem down? Every debt is an asset on someone's balance sheet. When debts are written off it erases the assets, forcing sales to raise collateral/cash. Wheee!

Hey InvestingDad, no disrespect meant of course. But what I was trying to illustrate was that 1973 and 1980 are huge differences. You graduated college, in theory, in 1995. If you were in tech you would have graduated into a much stronger job market and had a leg up on getting financial footing. Hell maybe you worked at a company that gave you stock options and you exercised some for a little profit before the market blew up. You probably would have been buying your first home in 1998-1999, which was a much better time to buy than 2006.

You can't hold and never sell, because human life is finite. And when you sell is mostly based on your age, or if you are unlucky, when the SHTF in your life (illness, job loss, divorce, etc). If you were set to retire at 60 in 2010, your prime earning years and therefore prime retirement contributions would have been during the two largest stock bubbles ever. you don't have time to make up the crash of 2008 and you gotta start selling on your way to retirement if your income is gonna stop. It's just so much harder to make money than it is to lose it. And every time you are burned by a big loss in either your investing life or personal life, you end up being that much less risk-tolerant.

They don't normally. But they can. And they did during the 2008 crash.

http://www.wsj.com/articles/time-to-worry-stocks-and-bonds-are-moving-together-1473113278

I believe Tesla to be mostly a fraud; but shorting them has proved highly dangerous. Musk is very good at talking up his stock. It's also a very popular company and people love to talk about it.

The time to short Tesla will be it can't raise money.

IBM is a poorly run, overly large business with multiple quarters of declining revenue. They recently made incredibly poor moves IMHO including forcing their large remote workforce to centralize in high cost areas. This is going to bleed them of talent. I wouldn't invest a cent in them. Read "the decline and fall of IBM"

I don’t understand people getting all crazy on pot stocks. Marijuana is a cultivated crop. Commodities like that typically don’t get sold by just one firm. It’s like going long rice and beans. Those commodities are usually a race to the bottom. Sure, pot is new but the idea that one company is gonna have some magic monopoly instead of it being grown and distributed locally is also crazy. Tobacco and pot are basically the same thing and while Marlboro is a profitable company it ain’t exactly a crazy growth stock

Glad you did well, for sure. But I hope you have been taking profits. A stock with a P/E over 100 ? I guess it could go to a P/E of a 1000. I guess this time its different, and all laws of the stock market can be broken. Or its a speculative bubble.

You probably won’t live until 200. Most people only get a 20 or 30 year investment window. If the time you need your money overlaps with a crash, or the time you buy overlaps with a bubble, it sucks big time. There’s no getting around it. Also, the idea of a large portion of people using the stock market as a retirement account is only 30 years old. Just now people are starting to retire who first contributed to retirement accounts when they became a thing in the early 80s. Before that a large swatch of America had defined benefit pension plans. Almost no one outside of the government has those anymore.

Anyways I am invested in a ridiculously conservative 50% s&p index fund and 50% bonds. It’s just way harder to make money than it is to lose it. I totally get that people want to roll the dice on hot stocks or whatever but that ain’t for me. Some people get rich working a ton of overtime and driving a shitty old car. Some people gamble and get lucky.

It probably will be because July is Australian winter and there’s predicted to be a second wave of infections in the Southern Hemisphere.

I think you can reasonably say that there is going to be massive economic impact by shutting down large swaths of the worlds largest economy. Do I think we’ll all be eating shoeleather and waiting in bread lines? No. But i think it’s fair to say that there could be a *gasp* period of stock market retrenchment. You know, negative economic growth and equities returning negative numbers year over year. Given we’ve had what 10 years of economic expansion is that so crazy to imagine? It’s not like the coronavirus is the only indicator. Auto loan delinquency rates are as high as they were during the last recession again. We could even see the R word again in our lifetimes

I max out my retirement fund and contribute as much as I can to my kids 529. 50/50 stocks bonds which I recognize is ultra conservative. But I’ve never loved this economic expansion. Seems like only 5 or 7 companies are driving all the growth. A ton of pretenders out there that have no real path to profitability.

I learned my lesson selling in 2008 (lesson is that they’ll inflate the economy rather than have retirement account riots). But I have clear eyes that this isn’t the most stable economic situation right now.

Gone nowhere for as long as I've been watching it (15 years). As far as inflation hedges, a friend once told me "the best way to beat inflation is to own things that are inflating in price". Gold moves with stocks-ish mostly now. If you want to own something that moves counter to the market during a down period, I still like bonds better. Lots of bond funds pay dividends.

Haha yeah I mean pinball is less liquid but its certainly inflating along with stocks, real estate, etc. And you can play it!

This has been the M.O. of a lot of companies during the last 10 years of ultra low rates. There’s no good organic investment opportunities and CEOs are compensated in stock. So they do the thing that raises the stock price, aka buybacks and/or increasing dividend. All this money sloshing around the economy and yet there’s so little real productive things to spend it on for a lot of companies.

Why not 1932? The stock market crash of 1928 recovered a bit in 1932 only to test new lows that year. I believe 2008 was 1928 and 2020 could be 1932. Did we really fix any of the structural issues that caused 2008? Or just paper over it with cheap money?

Central Banks use monetary policy to "fix" demand issues. When an economy slows, they lower interest rates making borrowing cheaper, which is supposed to encourage borrowing to invest in business opportunities which is supposed to then cause growth in the economy. One can argue the borrowing has mostly gone into stock buybacks and asset inflation, not exactly productive economic activity IMHO.

This is a supply issue. China has shut down big parts of their economy and we won't be able to get the manufactured goods or components we need. There is somewhat of a demand issue, sure, with flying and discretionary travel purchases, but no amount of cheap money will make people risk getting sick. Central bank is powerless against this with its tool kit. Things will be better when a vaccine comes out, but until then, supply shortages will happen, people will quarantine, economic pain will be real, and layoffs are coming.

My prediction: today was probably close to the worst single market day. The market will bump lower until summer. As the political matchup is solidified it should help markets. Warm weather will reduce the virus transmission. Markets will rally and retrace 50% of the spring losses.

However come November fear will come back. We will have actual economic data about what is going on right now, and we might officially be in recession by the late summer/early fall. Infections will tick up again and we’ll get hit hard again by the virus. We will go lower than the spring lows. wild ass guess but total retrenchment will be 30-40% of the highest high.

Next year will be a recovery after the election is done an a vaccine is available, probably. Recession will be over and things will climb slowly up. Markets in 2021 will probably close level to their start or maybe a little gain.

However this discounts a bigger swan than this virus has already been; imagine if one of the two presidential candidates or another world leader succumbs to the virus. Or if the oil price pressure turns into a proxy shooting war between Russia and Saudi Arabia. Or if the USA attacks Iran after they get hit absurdly hard by the virus. All within the realm of possibility IMHO

It's not like this is a once in a lifetime opportunity today to buy low and tomorrow the ramp will continue. Realistically this will cause a recession. We won't even know that we are officially in recession until the end of summer.

Eventually, the economy will recover. But making spot bets now I don't think will be helpful.

The recession was going to happen anyways. You can't shut down major industries and put millions of people out of work, even temporarily, and not see a recession. Regardless of the value of equities, real economic activity (the thing equities used to be a proxy for, before the central banks decided to inflate everything forever) is going to crater. Most of us here on pinside are probably working professionals. Imagine all the people juggling part time jobs while their childcare and kids food mostly comes from public schools. Now the schools are closed and people have to choose between caring for their kids or going to work, if they're lucky enough to even still have a job. And then probably 10% of people are going to have medical bills.

Why would a cash rich company buy a company hemorrhaging cash and with no real plan for profitability?

It would be cheaper for Apple to wait for Tesla to file bankruptcy and buy any assets it wanted out of bankruptcy. Then start it’s own car company. But they won’t do that. Apple and others have very little interest in selling big, expensive, long lasting hardware. They’d rather sell small, high margin gadgets like phones and computers; then sell those users ecosystem dependent services like apple’s streaming service, iOS app purchases, software, etc.

Remember, there has been really no economic data yet because it lags by months.

Some people apparently had the foresight to sell before the rest of us

https://www.thedailybeast.com/sen-kelly-loeffler-dumped-millions-in-stock-after-coronavirus-briefing

https://www.axios.com/richard-burr-coronavirus-stock-7bd10426-de87-43d7-9939-8241d2ab08db.html

Except how many tires are you going to sell when no one is driving anywhere?

Low oil prices crush oil producers. High oil prices crush consumers. And when oil companies go bankrupt all that commercial paper used to fund operations will be marked to zero and nuke the banks holding it. The shale boom that benefited so much of the middle of America will move full speed in reverse.

Deflation wins because years of low interest rates, really a generation of interest rates that were too low, caused everyone to get into huge amounts of debt. This is why the fed has opened swap lines with all major central banks with basically unlimited funding. There quite frankly isn’t enough dollars to fill the massive chasm of debt we’ve built and as economic conditions deteriorate the dollar rises in value because incomes to pay those debts dry up.

The fed can and will print and swap and loan money but it won’t make it into the hands of consumers and small businesses so those people go broke adding to the pile of uncollected debt. Even when/if congress gives away money, it will go to existing payments or debt repayment. When shit looks this dicey no one will spend or invest, they’ll save or pay down, because their paychecks might be in jeopardy in the near future. So even though the fed can magic money into existence, the transmission mechanism for that money to affect the economy is broken.

People like to imagine runaway inflation. Last time it happened to a modern, big economy was Weirmar Germany. The problem there is they owed external balance of payments due in hard currency equivalents, so they inflated local currency to attempt to keep their transactional economy going while paying real value to France and England. The disparity lead to runaway inflation.

That’s not going to happen in the USA. With no external payments due we have inflation when the economy is running hot. We’ve already had our inflation; it is visible in home prices, college tuition prices, healthcare prices... more fed action isn’t going to help those but it won’t rapidly turn our dollars into toilet paper.

This happened during the housing bubble. TARP (the bailout of banks) originally didn’t pass the first vote, and the market threw a huge hissy fit and spooked the holdouts (who were principled about the reasons not to vote, because the banks didn’t have to give up shit)

The markets will fall until it’s clear someone’s doing something to help (even if that something is shortsighted or bound to fail)

I mean, because it is? Nothing has been fixed in the economy so any movement up is just people getting out before the next wave down. The stock market can’t recover from the bear market until the overall economy heals and that won’t happen until the virus is kept at bay and a vaccine is available.

THIS IS NOT THE FLU

Unlike the flu, which has built in immunity and a vaccine, no one has immunity to covid19. Everyone gets it. And it’s more contagious than the flu. So it has the capability to overrun our hospitals as everyone gets sick at once. Not counted in the “death toll” is the amount of people who die from other medical issues like accidents, heart attacks, etc because the hospitals are full and overwhelmed or all the doctors are sick.

This is a real problem. In NYC hospitals are going to need refrigerated semi trucks for all the bodies. That’s sobering and sad and shouldn’t happen in America.

I mean with TARP banks were forced to take it so the stigma was removed. But even having the money and not using it might be enough. People will lend to Boeing if they know they have a lifeline. Otherwise capital markets would shut them out.

None of this is a "bailout", you see. Just temporary liquidity. Look over there!
https://www.businessinsider.com/airlines-coronavirus-bailout-senate-stock-buybacks-2020-3

Boeing isn't mentioned in the bill but
https://www.nytimes.com/2020/03/25/us/politics/virus-fineprint-stimulus-bill.html
"The deal specifically sets aside $17 billion for “businesses critical to maintaining national security” — a category seen as intended at least partly for Boeing, the troubled aircraft manufacturer and Pentagon contractor, whose name appears nowhere in the bill." So they'll bail them out for national defense reasons.

The treasury secretary knows this is massively unpopular. Which is why there's spin on it. Boeing and the airlines are getting bailed out. Saying they won't spend the money is just a way to sugarcoat it.

Talked with my advisor today. My thoughts are the floor of this is 50%. Even so, put a limit order to rotate 50% of my bond holdings to stocks when the market hits 40% down from peak. bonds will be sold anyways so worst case scenario the money sits as cash and the order never hits. even if market overshoots 10% I'd only be down 20% on the buy. I know its a while before things will be normal, and it will likely be 18 + months before the recovery actually takes hold, but I think I'm safe buying at 40% down. Still have plenty of bond exposure otherwise.

the market is up because that’s how bear markets work. They have quick periods of huge losses. Then they bounce around for a long time until real economic activity takes hold and people actually believe the hype. This period right now is purely trading and technicals. It will be for a long time.

So, I’m not a doctor, but the more we know about it the more we can make educated decisions. If we devise an antibody test, and people can prove they’ve recovered or had it but never showed; we can allow some opening up. Peak infection stays peak for a while if we maintain distancing... which means our hospitals are running at full tilt for a long time, which ain’t great.

Best case scenario: we develop an antibody test and rules around it and slowly open back up in 3-6 months. Worst case scenario: vaccine candidates reveal flaws and get pushed back another 12 months, head of state of a g-7 nation dies of Covid; oil tensions or trade tensions lead to an embargo on selling medical equipment to the USA ... plenty of unknowns

TINA (There is no alternative). When you create retirement vehicles that are designed to invest in the stock market, politically it becomes impossible for the stock market to fall. Which is why we have so many zombie companies that wouldn't exist other than for the crazy low interest rates created to try to levitate the stock market in the first place.

This is contrary to what I'm hearing. That a lot of deaths are undercounted because the victim wasn't diagnosed with CoViD-19... if you die in your home they aren't testing necessarily. What about ancillary deaths due to full ERs?

We may hit peak infection *rate*. That means new cases won't be increasing... but it does mean a steady stream of sick people jamming up hospitals which isn't good. And that's with lockdown. If you lift lockdown, you could accelerate cases again. In order for us to open things back up, we need a breakthrough on our understanding of the disease, or a treatment, or a vaccine. Otherwise it's lockdown for months and the economy won't fare well obviously.

I love that you think the market must “know something we don’t know”.

Markets don’t move in straight lines. Right now there’s technical limits that markets will test. Remember the market is made up of high frequency computers, institutional buyers who only are on the buy side (pensions, etc), and 401k contributors. Things can go up when the trend is still down long term

This rally is impressive, mostly because the key stock market driver over the last few years has been stock buybacks. Those are dead now. So it’s all the fed for the time being.

Every country is in the same boat. “How we pay for it” is the same way we paid for it during the last crisis. Higher debt to GDP. The entire world is basically Japan now. It sucks because this means we won’t see investment in infrastructure or anything that really adds value... just a more fragile economy in more debt at the end of the day.

It’s still so early in the ballgame. But even so, 10,000 dead Americans and 16 million having filed for unemployment over the last four weeks is BAD. LOTS of businesses will have closed and there won’t just be 16 million people rehired once we have a solution. This is a slog; it’s going to be at least a year before the stock market is not in a bear market minimum.

Yes, if we did nothing 2 million deaths. We shut the economy down, so we are going to see less deaths. But I think 230k dead is still in play.

Dude is 4-6 years from retirement. Should probably go to cash/bonds anyways.

Almost no one goes broke with the levels of wealth Buffet has. He loses money too but at some point you’re so damn rich it’s a rounding error.

In the time buffet has been investing (late 70s onward) we have had a regime of deregulation, lower interest rates (except for the volker inflation crush) and in general a bigger stock market. He rode the wave long like everyone else. The stock market was, when he started investing, not something mom and pop invested in; most had defined benefit pensions through their employers. Then 401ks come along and a big wave of money gradually makes it into all assets.

This is not a comment on his politics but look at Trump. Started with a few million dollars from his dad put into real estate, now has probably 2 billion. Once you are that rich you can afford all the tricks rich people do to make money. You keep your winnings and declare BK and let others take the loss. Companies you own lobby for bailouts. Government policy to close public housing projects, deregulation of rent control in major metros, it’s just hard to lose.

Doubt it was half a billion. But if you invested in real estate during an era of declining interest rates, hard to lose.

Don't think you're right. Presidents and markets are loosely correlated. For the most part, where you are in the business cycle, and past interest rate / fed policies, have determined whether a president's tenure is 'good' for markets or not. For instance, W Bush's presidency saw a net loss in the markets; however for most of his presidency markets were rising (due to a long period of low rates) and subsequently low rates to repair the .com bust lead to yield chasing and bad bank behavior which crashed the economy on his way out.

presidents and markets (resized).png

Auto manufacturers cannot currently make money on electric cars. The margins just aren’t there. Battery is too expensive relative to the rest of the car, still. Most consumers have less purchasing power than they did 10 or 20 years ago. So why would Ford, GM, others go up market on an electric car when the market for it is still tiny compared to gas cars? ford isn’t even making cars anymore just trucks, that’s how lousy the car market is.

Tesla isn’t making money on electric cars either. Any profits they have reported have been accounting tricks and tax credits (literally, ford and others who sell gas cars are required to buy credits from Tesla to offset their pollution.)

Well if you follow advice here, you should invest at the top of the market, like now, buying stocks whose P/E is wildly inflated

Dude, we are in a depression. A huge portion of the economy, travel, tourism, dine in restaurants, all a shadow of their former business output.

Apple certainly has been a good business, and it’s doing smart things, but smartphone saturation is here and people are keeping their devices longer. And I have to imagine that lots of people are holding back on computers and other tech purchases due to job loss or other issues. Even the best names can get pummeled due to larger economic forces.

I have one. The Apple Watch and really the entire wearable segment is for fitness buffs. If you are trying to be more active, or exercise regularly already, the heart rate monitor and access to app data like running or cycling data right on the watch is the main draw. If you aren’t a fitness person or aren’t trying to lose weight then yeah it’s just another screen.

https://twitter.com/lessin/status/1306404733700116481?s=20

What’s the point of investing and “making money” if you aren’t spending some of it? Enjoy the car, dude. I think crypto is a giant casino and or scam but if you’ve cashed out profits, absolutely spend some of it. We only have so much time on earth. Also buying real things puts money to work in the economy and is a net positive; someone had to sell it to you, to make it, to move it across country, etc.

I see that and am scared out of my mind. I recently inherited a mid six figures amount of money from my mother. Some is in an IRA so withdrawals are taxed. I’ve invested about half of it for longer term goals (my sons education) in relatively moderate risk. I’m investing into the same market where redditors are YOLOing into individual stocks. It’s just… I feel a tremendous amount of responsibility to make this money so good, and last. How can someone take an inheritance and be so cavalier with it?

The rest of the money is in cash. We’ve spent a small amount (put central air in the house, might renovate some other things). It’s hard, I thought a gift like this would radically change my life. It didn’t. I actually feel worse, like I can only really screw it up. I had up until that point saved $250k of my own retirement for me and my wife, owned a home with decent equity and had made regular 529 contributions. We felt like we were going to roll into retirement doing ok.

I am also holding some of this money for my brothers due to the way my mom left things. It’s really hard to know what to invest in. My friends who know laugh at me, expecting me to buy 20 mint pinball machines. Don’t get me wrong, I love pinball. But it would be crazy to blow through half this in renovations and pinball and other midlife crises.

In the end I am keeping a nontrivial amount in cash for spending and giving to my brothers, and the rest is going into a moderate portfolio, so my son can go to any college he wants. My gambling days, in the market or otherwise, are over.

When Bill Gates appeared at Macworld in 97 was the time to buy. But of course that would have required a big set of brass ones given it looked like Mac as a hardware platform was going away.

Why don't you want a 529? IMHO it's a much more flexible vehicle than a retirement account. If my kid doesn't go to college that's fine then I just pay taxes on the earnings and a 10% penalty on earnings. NBD. Pretty sure that's the same rules as the Roth IRA's early distribution. Except the 529 doesn't have a max annual contribution (although there are lifetime total contributions, between $300k and $500k depending).

I have $31K in my son's 529; we contribute $350 a month to it, plus I've been drawing down an inherited IRA and funneling the money into the 529 for him (best gift my mom could have ever given, my son will get to go to college for free).

As far as my son's actual retirement, well, I mean, if I plan my retirement right, he will probably inherit my retirement accounts at some point. Hopefully he has good financial luck and we teach him the right lessons about money. I think by taking care of his college he'll have a clean slate to be able to buy a home and start a family earlier than a lot of others who are burdened with loans.