Thread: Rod's Account Talk

Originally Posted by Rod

TSP Talk wise, there was a lot of capitulation on Thursday. I noticed a lot of folks IFT'd to (G) @ a loss of 8% - 9%. I bet a a lot of them were kick'n themselves in the rear after Friday's record close. That's why you don't capitulate in this environment. If it's too painful to watch, then it's truly best to turn off the noise... completely.

2300 S&P seems like a realistic floor. I know Cramer is also looking for Mr. Market to at least test the Dec 2018 lows. These folks think the same:

https://seekingalpha.com/article/433...ownside-target

They also write this:

Saw the seekingalpha article too. Doom and gloom for sure but it kind of makes me want to try to time these bounces...just so frigging hard to do with only 2 moves. If this was the old days I think we could make some bank (high risk moves but some plays could be made with a fair amount of confidence) off of these levels of volatility.

Good luck!!!

A warning about buying stocks during this unprecedented time...

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Don't Focus on the Percentage Changes

One warning we leave for investors is to not focus on percentage changes. It's easy to see your favorite stock down 30-40% and assume the pullback can represent a buying opportunity. Two mechanisms can drive equity prices significantly lower and highlight the current market risk which some investors may be underestimating.

Revisions are lower to earnings forecasts.

A contraction in valuations-multiples.

Let's take Apple Inc (AAPL) which is currently trading at $260 and down by 21% from its all-time high at $327 set in early February. Based on current consensus estimates that the company can post $13.54 in EPS for fiscal 2020, the stock is trading at a forward P/E of 19.2x. On the other hand, we highlight that the 10-year average P/E for the stock is 15.5x and the stock traded with a P/E as low as 12x in early 2019.

Let's envision a scenario were the EPS estimate for the current year is revised lower by 10% to $12.20 per share based on the weaker operating environment, slower sales as an all-encompassing impact to the current global coronavirus situation. The actual EPS impact could be more severe in our opinion. In this case, the stock is trading at a forward P/E of 21.5x on our "new" EPS estimate.

Given a more pessimistic outlook and bearish sentiment, we think lower multiples are justified across the market. For APPL let's assign a normalized forward P/E for the stock at 15.0x in our example. With a revised lower 2020 EPS estimate of $12.20, the stock can trade at $190 representing another 25% downside. At that point, a case could still be made that the stock is expensive should the longer-term outlook remain weak. In a more bearish scenario, EPS estimates could be revised even lower, and the stock could trade with an even more depressing forward P/E multiple.

Our point is that this type of valuation analysis can be applied to any stock and highlights the ongoing risks of equities. Don't assume that a 20-30% drop in the market means anything is "cheap". If earnings estimates across S&P 500 companies face a reset lower, lower valuation multiples imply the index still has a downside.

To be clear, it's also possible that the stock maintains its valuation premium essentially trading with a higher multiple even as EPS estimates move lower. In this case, the stock price could be supported at current levels. A faster-than-expected containment of the virus and limited disruptions would represent the upside scenario.
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Source: https://seekingalpha.com/article/433...ownside-target

Originally Posted by Mcqlives

If this was the old days I think we could make some bank (high risk moves but some plays could be made with a fair amount of confidence) off of these levels of volatility.

Good luck!!!

You're right about that! You too!

Perhaps there will be a COVID-19 Baby Boom?

If so, maybe we should invest in Nestle (Gerber) after a bottom is finally put in?

I do know that folks have been buying up baby food lately.

Saw this on CNBC. We've all heard of FANG. Now there is DAWN.

It's always darkest before the DAWN.

(D)omino's
(A)ctivision
(W)almart
(N)etflix

Source: https://www.cnbc.com/2020/03/15/coro...t-netflix.html

DAWN

Ha. How long until we can trade the ETF?

I bought some VIAC thinking this would be a boon to CBS sports, but that isn't panning out.

Been a WMT shareholder for years. It's the only bright spot in my portfolio.

Originally Posted by Rod

Perhaps there will be a COVID-19 Baby Boom?

If so, maybe we should invest in Nestle (Gerber) after a bottom is finally put in?

I do know that folks have been buying up baby food lately.

The Coronials.

I read the content elsewhere but the fact it appears on Yahoo scares me!

https://finance.yahoo.com/news/plumbing-behind-worlds-financial-markets-131618535.html

Originally Posted by Rod

Reminder...

Don't forget to track "Weekend Wall Street" to get a feel for how Monday might shape up:

https://www.ig.com/en/indices/market...nd-wall-street

I noticed it pretty much flatlined in the low 900's down when rumors of the fed buying paper began to circulate. I wonder if the fed fails to make an announcement before opening bell tomorrow if it will be a 2,000+ down day. Or if they do and this turns out to be a buy the rumor sell the news circumstance...

Originally Posted by Happy_Trails

The Coronials.

Originally Posted by Mcqlives

I read the content elsewhere but the fact it appears on Yahoo scares me!

https://finance.yahoo.com/news/plumbing-behind-worlds-financial-markets-131618535.html

Why we likely won't see a bottom anytime soon. One thing that has been sticking in my head is DOW 15,000 ('ish).