Down goes the Dow

agip wrote:

Maserati wrote:

Yep, I still think that your buying the vix was a good call.

I am in meetings all day and have a couple of orders in that won’t be filled if the markets stay in the green. In the coming price recovery, the narrative will be that lower economic numbers have “met expectations” and that everything is therefore good to go.

kudos for your call years ago that the world will face some sort of systematic structural problem. I poo-pood it but this is a good example of the threat I think you were thinking of.

It will be interesting to see how quickly the world can adjust and make supply chains more resilient and redundant.

Can't tell if agip is being sarcastic or not here but a highly connected global economy tends to be susceptible to this kind of thing and think it's been a possibility on everyone's radar for a long time.

Racket wrote:

agip wrote:

kudos for your call years ago that the world will face some sort of systematic structural problem. I poo-pood it but this is a good example of the threat I think you were thinking of.

It will be interesting to see how quickly the world can adjust and make supply chains more resilient and redundant.

Can't tell if agip is being sarcastic or not here but a highly connected global economy tends to be susceptible to this kind of thing and think it's been a possibility on everyone's radar for a long time.

I was not sarcastic

And I disagree with racket's view that this sort of thing has been discussed and worked out.

Probably since the trade war started companies have been reducing dependence on china. I'll agree with that. But that's only a year or two.

agip wrote:

Racket wrote:

Can't tell if agip is being sarcastic or not here but a highly connected global economy tends to be susceptible to this kind of thing and think it's been a possibility on everyone's radar for a long time.

I was not sarcastic

And I disagree with racket's view that this sort of thing has been discussed and worked out.

Probably since the trade war started companies have been reducing dependence on china. I'll agree with that. But that's only a year or two.

Having a hard time believing that's not common sense. If you interconnect the entire world global economy and then one of those players gets a cold (pun intended) then sh!t can go sideways real quick. That was true even back in 1929 when it was a lot less connected than now.

Racket wrote:

agip wrote:

I was not sarcastic

And I disagree with racket's view that this sort of thing has been discussed and worked out.

Probably since the trade war started companies have been reducing dependence on china. I'll agree with that. But that's only a year or two.

Having a hard time believing that's not common sense. If you interconnect the entire world global economy and then one of those players gets a cold (pun intended) then sh!t can go sideways real quick. That was true even back in 1929 when it was a lot less connected than now.

but that's not how the world has worked...in 2000-2010 the US was anemic but emerging markets and europe did fine. in 2010-2020 the US has been strong but europe and EM have been weak....

but broader speaking, the standing view has been that the world has spread out its economic base...that the new asian middle classes would pick up consumption to provide another base of demand when other places go awry. And that's worked pretty well.

in the financial crisis, the emerging markets, to my knowledge, didn't have nearly the problems that the Us and Europe had. That's a good thing.

Not sure I fully understand agip's call on the VIX on Friday. Seemed like he pulled the trigger at a specific point in the day, but the VIX was hovering between low and high 40s all day.

BTW, I just downloaded the VIX and SP500 since 1990 to do some quick stats, and when The VIX is over 41 (since 1990), the average 30-day, 60-day, 90-day, 180-day, 360-day and 720-day changes have been ~ 0, +2%, +3.3%, +12.5%, +27.9% and +43%, compared with overall average for the same look-ahead periods of +0.4%, +1.4%, +2.1%, +4.2%, +8.6% and +18.2%. So on the surface, buying at VIX > 41 seems like it will usually be a (very) good idea.

Europe has has systemic issues and questionable leadership in the ECB during that time. For one, there was Greece. That kind of borderline existential threat was something the US didn't really have to deal with. Then there was Spain and Italy. Really the Great Recession lasted in the EU until about 2015 and then Brexit hit, not to mention an enormous humanitarian crisis of refugees flooding in from African nations and especially Syria.

Emerging Markets were on fire after about 2012 so idk about that thesis but they're also pretty much contingent on foreign investment from the EU, US, and China. When the big players stop spending, they contract.

I should add that when I compare results when VIX > 41 with all trading days since 1990, the 1-year and 2-year changes have always been higher than average, usually by a very wide margin, but short term 90 day or less) changes are a few percent worse about half the time. So if one were to buy today, they should have a strong expectation of big 1 and 2 year gains, but maybe after a rocky 1-3 months ahead.

Following agip’s lead, I’ve started putting cash back in. Not everything, mind you...

And one last thing... with VIX >41 there is still some (statistical) chance of a loss over 1-2 years, but only 1% chance of a few percent loss, whereas on any random day, VIX value unknown, there is 20% chance of a loss over 1-2 years, with 1% chance of a very big loss (40%), but median gains of 10-20%.

Good stuff idiot.

I'd add that vix at these levels is a small number of samples.

Now we're up 5.5% from the panic low on Friday.

In dow points terms, we're up 1,235 in less than a day's trading.

You just know that many many people threw good stuff over the side on Friday.

meaning, I'd *caution* that there is a small number of samples in vix numbers this high.

would be more interesting to use all the data points for VIX over 28 or something like that.

agip wrote:

Good stuff idiot.

I'd add that vix at these levels is a small number of samples.

Now we're up 5.5% from the panic low on Friday.

In dow points terms, we're up 1,235 in less than a day's trading.

You just know that many many people threw good stuff over the side on Friday.

People are just banking on the Fed lowering the rate again which is the only thing that has mattered in the past 10 years

Racket wrote:

agip wrote:

Good stuff idiot.

I'd add that vix at these levels is a small number of samples.

Now we're up 5.5% from the panic low on Friday.

In dow points terms, we're up 1,235 in less than a day's trading.

You just know that many many people threw good stuff over the side on Friday.

People are just banking on the Fed lowering the rate again which is the only thing that has mattered in the past 10 years

That's a factor, but maybe more to the point, stocks were 20% off in many instances and if the world goes by china's lead...we'll be done with this virus in a month or two.

For what this is worth :

https://www.marketwatch.com/story/this-chart-shows-the-market-isnt-rewarding-financial-engineering-as-buyback-heavy-companies-underperform-2020-03-02

Buyback heavy companies are getting hit harder than others according to this source. If this is actually true then it paints a rosier picture than previously thought regarding investors still placing actual value, innovation, and quality of the company and the service/product ahead of just fancy financial engineering.

Racket wrote:

For what this is worth :

https://www.marketwatch.com/story/this-chart-shows-the-market-isnt-rewarding-financial-engineering-as-buyback-heavy-companies-underperform-2020-03-02

Buyback heavy companies are getting hit harder than others according to this source. If this is actually true then it paints a rosier picture than previously thought regarding investors still placing actual value, innovation, and quality of the company and the service/product ahead of just fancy financial engineering.

I've never bought this insistence that buybacks were a major factor in the 10 year bull market. Sure, they are a factor, but one of a dozen.

JFC.

Now we're up 1500 dow points in around a day of trading. from Friday's lows.

Wow.

cowabunga.

insane algos

now we are up a full 6.5% from the Friday lows on the SPX.

TECH STOCKS ARE UP 8.9% FROM THE FRIDAY LOWS.

8.9%!!!!!!!!!

using VGT as a proxy

and spx is within half a percent of the 200 day.

this has been the normal pattern...on the way down pucture the 200 day pretty hard, scaring people to selll...then a quick rebound back above.

agip wrote:

and spx is within half a percent of the 200 day.

this has been the normal pattern...on the way down pucture the 200 day pretty hard, scaring people to selll...then a quick rebound back above.

And the Hussman Strategic Growth Fund is down as usual. Its philosophy is "capital appreciation" but it should be "capital depreciation." The fund is down like 8% over the last 10 years. Just terrible.

Describer of Demss wrote:

agip wrote:

and spx is within half a percent of the 200 day.

this has been the normal pattern...on the way down pucture the 200 day pretty hard, scaring people to selll...then a quick rebound back above.

And the Hussman Strategic Growth Fund is down as usual. Its philosophy is "capital appreciation" but it should be "capital depreciation." The fund is down like 8% over the last 10 years. Just terrible.

That is down annually 8%. Just a joke of a fund.