Billionaires and other "smart money" are pulling out of stocks...

Doesn't Buffet also say "Be greedy when others are fearful"? If everyone is calling a stock market crash then by his own maxium it's a good time to buy.

jamin wrote:

Doesn't Buffet also say "Be greedy when others are fearful"? If everyone is calling a stock market crash then by his own maxium it's a good time to buy.

Buffett doubles down in bad times. Which is smart.

His tactic is for Indicies vs individual stocks. Buy the sp500, dont buy a falling knife on individual stocks.

Musk sold stock because he had to exercise his Tesla Options. Burry has been predicting dramatic crashes every other month for the past decade.

That said the market is way overvalued based on PE's. The Fed is ending QE and will start raising rates which is bearish for stocks. There is even a possibility of the FED shrinking the balance sheet. Last time the Fed raised rates and tried to shrink the balance sheet we had the Christmas Eve massacre and the market was less overvalued at that time. So depending on what the FED does there is a very real possibility of them bursting the bubble. In the past 13 years every time a bubble burst they've come in and pumped the bubble back up so the market quickly recovered. But in those cases we had low inflation. With inflation, a major problem it's going to be difficult to predict what they do. There really is no way to fight inflation without crashing the stock market.

My bet is they raise rates a little, the market crashes 30-50%, The Fed immediately does QE and takes rates back to 0 and Biden implements price controls. Once the price controls end inflation explodes to double digits. Let's see how I do.

The market is overvalued "by historical standards". Like it was a year ago. 2 years ago. Like it "was" in 1996, before it doubled, before it crashed. So, you could have sold 2 years ago with the same logic and missed the gains. Where will it go from here? Up or down. Nobody knows.

The current price reflects an equilibrium between equal money thinking that it will go up (and buying) or go down (and selling).

Yes, there's some degree of euphoria from "covid era newcomers", who think the market only goes up - like a checking account, but with great return. They will have the shakiest hands, as always, if things so south. Margin debt is high. So yes, this all adds to risk.

However, we're facing high inflation and you cannot stay in cash forever - you'll be losing every year. What if he crash doesn't happen? How long are you willing to stay in cash waiting for the best entrance opportunity? Are you certain you will recognize it? What if the market drops 20% and then pulls back up? And you were on the sidelines waiting for 30% crash to buy?

The best strategy - determine your best mix of cash/stocks (like, 50/50 or whatever), that you're willing to hold through any crash or rally. And stock to it.

DO NOT TIME THE MARKET.

jamb innnnn wrote:

jamin wrote:

Doesn't Buffet also say "Be greedy when others are fearful"? If everyone is calling a stock market crash then by his own maxium it's a good time to buy.

Buffett doubles down in bad times. Which is smart.

His tactic is for Indicies vs individual stocks. Buy the sp500, dont buy a falling knife on individual stocks.

I believe the expression is 'don't try to catch a falling knife', but yeah.

Musk is probably just pushing bitcoin.

We hear these anecdotes every few months during a bull run. We are nearing one of the longest bull runs ever. Eventually it will come back down. You might miss out on gains if you pull out now.

That said, about 30% of my retirement account is in cash. I also have plenty of cash outside of my retirement.

I’m participating in the market, but I have some dry powder to capitalize on a big dip. I’ll keep contributing the max in my 401K until I retire.

How about treasury bonds?

I don't care , inflation is only at 7%. We'll be fine after Biden gets people back to work.

seattle prattle wrote:

jamb innnnn wrote:

Buffett doubles down in bad times. Which is smart.

His tactic is for Indicies vs individual stocks. Buy the sp500, dont buy a falling knife on individual stocks.

I believe the expression is 'don't try to catch a falling knife', but yeah.

Yep. Dont try to catch a falling knife.

Some things to consider.

A billionaire in the market might be expected to handle their holdings differently than avg. retail investors. They are not in need of increasing net worth, and have much more to lose than avg. retail investors. As such, they may want to be more conservative.,

Second, huge holdings, in a falling market, are more at risk than small investors, who are capable of liquidating positions with little or no effect on the price of the equities involved. Large players don't have that flexibility.

Third, the strategy for savings for retirement perhaps decades off in the future needs to be handled differently than a large portfolio that likely is concerned with wealth preservation to a much larger extent. They have already "arrived" and your avg. investor is looking for stock appreciation to a larger extent, and have much less to lose, for that matter.

Also, since M, Bury made that prediction in mid-Feb. of last year, the S&P 500 has risen 18.5%. That is a lot. To say that the market will drop is one thing, but to know when is really the question.

I don't know when the other guys made their forecasts, but in terms of Munger and Buffet, those guys are value investors. Not sure they would be my go-to authorities. And Bury, very impressive with the housing bubble projection some 15 years ago, but how valuable has been his forecasts since?

Rainy Day wrote:

We are nearing one of the longest bull runs ever. Eventually it will come back down. You might miss out on gains if you pull out now.

it has been flat as a pancake for 8 months now.

Stay the course.

Be aggressive as you want with your portfolio, but only be aggressive as you can handle if things go south. Aggressive portfolio does not work if you bail when things go down.

Best thing to do is have a plan. Have it set, then best to not mess with it utilizing index funds.

I balance with S&P 500, total world market fund, world bond fund, and 20 year US treasury bills.

But as the market’s water is always choppy. Just turn it off and spend your time in other things.

jamin wrote:

Doesn't Buffet also say "Be greedy when others are fearful"? If everyone is calling a stock market crash then by his own maxium it's a good time to buy.

Everyone is being greedy right now. That's why valuations and margin rates are so high.

Interesting thoughts... The Fed barely did anything in 2018 and the market dropped 20%, though briefly. Rates were higher then too... I don't really see the Fed dropping rates at all for the foreseeable future. Best they can do is hold and raise rates only very slowly. Keeping rates at or near 0% is not sustainable, and we should be moving away from that.

What is kind of scary to me is that we're in the longest bull run in history (minus the short lived dips of 2018 and 2020), and it's largely due to Fed/government intervention continually propping things up and saving the day before things have the chance to right themselves organically... This has been going on essentially since 2008, and the tools and tricks the government/Fed has up their sleeves is just about out. If we see another bad recession, there's not going to be much, if anything, that can be done. Printing more money at this point would be suicide for the USD.

FWIW, I have not pulled anything out of stocks, but I have stopped putting anything into stocks also and have about 25% of my portfolio in cash right now, which is way higher than I usually ride. There've been times when I've had less than 2.5% of my portfolio in cash (when I bought the dip in 2018 for one). Holding cash is always a bit of a gamble and loses on average, but these aren't average times. At best/worst, I see the market climbing only 6% or so this year, and it very well could fall another 5% or more from here, possibly another 10-20% (or more still). Drops of more than 20% are rare, so I wouldn't bank on such a thing, but everything I'm gathering makes me believe a 5% drop is more likely than a 5% gain at this point.

No one, and I mean NO ONE can time the market or knows when it's going to really tank. Yes, because there are a TON of "experts", someone will get something right, but it's just luck...they won't do it again.

Invest, invest, invest. You should not give a crap about how the market is doing until you are within 5 years of retirement, and then not even all that much.

If the market tanks a lot, then that's a BIG buying opportunity. Buy as much as you can. And NO, this is not timing the market, because you are not selling, and you are doing your regular purchases despite how the market is doing...just putting in EXTRA if it goes down a lot. MUTUAL FUNDS only, not individual stocks.

Now, IF you have more than you will ever need in the market, then you can take it all out and put it in the bank for all I care, just don't do that if you aren't ready to retire and you still need/want your money to grow.

Good thoughts here also. Berkshire typically looks for big deals, like billion dollar deals or more, and they're totally fine sitting on a mountain of cash until they find a good deal. It doesn't totally translate to the situation of the average investor.

M Burry has indeed been calling for a collapse for awhile, as has Ray Dalio. While they very well COULD be broken clocks, what they describe makes sense to me, and the reason what they said will happen hasn't happened yet is largely that the underlying situation just keeps getting worse setting the stage for a bigger and bigger collapse. Ray Dalio said back in 2019 I believe that he thought we were in the 7th or 8th inning of the big debt cycle and that 2022-2024 would likely be the 9th. That seems to be playing out pretty accurately. Burry also didn't pull all his stocks out until this past fall, so if it does happen in the next year, he's not extremely early. He was, what, like 2 years early with the housing collapse?

Who knows what is going to happen, but continuing to average 13+ percent per year seems unlikely, especially after a 28% year.

The last time inflation was were it is, some time in 1982, Reagan was bragging and saying, "Morning in America." Seven percent inflation is not high inflation, just relatively high compared to the past fifteen or so years. If we still have inflation at levels higher than recent average, Federal Reserve will not bring OFF and/or Discount Rate near zero as a response to equity market correction. Price control? You are WAY OFF. You are saying as a response to inflation is to take OFF & Discount Rate to zero? NO. Price control for (7 to 8)% inflation? ABSOLUTELY NOT.

The Fed is not raising rates. China just said not to.