Bad behaviour

 

  By Guest Blogger Sinan Terzioglu

.

The large cap US equity market has bounced over 45% from the low set on March 23 and sits 6% off the all-time high set February 19 – about even year-to-date.  Some of the largest components of the S&P 500 index such as Apple, Amazon and Facebook have made new all-time highs in recent days.  This has been the best 50-day stretch ever.  After experiencing the fastest 30%+ drop in history, it’s understandable people worry about another market plunge. But if history’s any indication odds are the recent gains will hold and the market will continue to grind higher.

Looking back at the previous eight best 50-day stretches for the US market since 1957, equities were higher 100% of the time six and 12 months later.  The average 6-month return was over 10% and the average 1-year return over 17%.  So while most believe the biggest risk is to be fully invested during big market drops, the reality is the biggest risk is not being invested for the huge market recoveries, plus the eventual longer term market moves higher.

Following the financial crisis of 2008-2009, I observed many investors doubt the recovery and cash out as the market rebounded.  They sat on the sidelines anticipating another big pullback.  There was volatility, of course, plus declines but none to the degree of the worst days of the crisis period.  As a result, many continued to wait and missed some of the strongest years.  Recently, I’ve seen the same thinking as people significantly trim their equity exposure in anticipation of another big market pull back.  It reminds me of former Fidelity portfolio manager Peter Lynch’s quote, “far more money has been lost by investors preparing for corrections, or trying to anticipate corrections, than has been lost in corrections.”

Over the long term individual investors have underperformed the broad markets by a wide margin. The longer the time period the wider that performance gap gets. Too many investors are tempted to time the market when there are significant market cycles and swings.  The biggest challenge for most is not to find the best performing investments or least risky ones, but rather to prevent being your own worst enemy.

While much uncertainty lies ahead, I’m confident we will get through it.  For the year ahead and beyond, I continue to be constructive on the markets for the following reasons:

  • Short covering: Bearish bets on US markets have been steadily rising through May.  According to Canaccord Genuity strategist Martin Roberge, total short positions on US equity futures hit a record high of US$275 billion at the end of May. Short positions will eventually have to be covered meaning positions must be bought back.  This could help to continue pushing the market higher.
  • Negative inflation-adjusted government bond yields:  Credit Suisse equity strategist Andrew Garthwaite recently put out a note saying stock valuations are set to rise because inflation-adjusted 10-year US Treasury bond yields are currently negative and likely to stay negative.  Price-to-earnings ratios have climbed in proportion to the amount real yields have fallen and Garthwaite expects falling yields and therefore more upside for equities. As my colleague Ryan noted, in relative terms, stocks are very attractive relative to inflation-adjusted government bond yields.  There is still a lot of cash on the side lines and much to be trimmed out of bonds and into equities.
  • Resilient economy: As Garth has been saying over the last few months, the economy did not have a structural issue heading into this health crisis.  The economy was turned off.  Compared to the financial crisis of 2008-2009, the financial system is significantly stronger.  Banks are much better capitalized.  Even after setting aside over $11 billion for loan losses, the big five still have very healthy balance sheets.  The banks are still profitable and dividends are being maintained.  Before the virus came about, US unemployment was at a 50-year low.  Last Friday’s employment numbers showed just how resilient the economy is
  •  Massive liquidity injections: JPMorgan expects global cash balances outside the banking system will likely increase by 17% in the coming year.
  • Virus data improving: While the number of new infections remains high in the US, the outbreak is decelerating
  •  Credit card spending is rebounding: Visa US payments volumes in May was down 5% year over year which was a big improvement from April when volume fell 18%.  Consumer spending makes up 2/3rds of the economy and there is a lot of pent up demand.
  • Trump/Biden: The S&P 500 hasn’t had a down year in a US Presidential election year since 1940.
  • Strong company fundamentals: The largest components of the US equity market continue to grow at above average rates and earn above average returns on invested capital.

Remember that the biggest contributor to your long term results will be time in the market, not timing the market.  What matters most is your long-term risk-adjusted rate of return which is why we are such big proponents of balance and diversification.  It’s natural to want linear progress with any investment but markets have never worked in a linear way and never will.  There will be many bumps in the road on your financial journey but as long as you have set up an all-weather portfolio with the right mix of ETFs that are balanced and not overly exposed to risky sectors, the short term bumps will be bearable and the long term ones hardly noticeable.

In the end, how you behave is much more important than how your investments behave.

Sinan Terzioglu, CFA, CIM, is a financial advisor with Turner Investments, Private Client Group, Raymond James Ltd.   

 

74 comments ↓

#1 Dave on 06.09.20 at 3:28 pm

With the mass protests in USA, do you worry about a huge virus wave slowing down their economy and causing the markets to crash?

#2 Jimmy Zhao on 06.09.20 at 3:33 pm

Invest in companies that make police body cameras

#3 Mick on 06.09.20 at 3:43 pm

We had a huge party here in TO of 10000 young people not social distancing and tens of thousands in the streets the past couple of weekends and we don’t seem to be spiking. Seems to be lots of economic activity here in the Leaside – Don Mills area – every day looks like a busy Saturday afternoon.

#4 NoOneOfConsequence on 06.09.20 at 3:50 pm

Boiled down – this pretty sums it all up right here…

“far more money has been lost by investors preparing for corrections, or trying to anticipate corrections, than has been lost in corrections.”

and…

“Remember that the biggest contributor to your long term results will be time in the market, not timing the market.”

#5 espressobob on 06.09.20 at 3:51 pm

Excellent post Sinan. Mr market is a cruel entity that loves to play on retail investors emotional strings. Fear is on of those things that causes irrational thinking and even worse, the actions many take because they cant see straight.

Learning the discipline of investing isn’t easy. Takes years.

A few of us got to the level of contrarian. For most it would seem that professional management might be a better choice.

Just my two cents worth….

#6 Sail away on 06.09.20 at 4:03 pm

#1 Dave on 06.09.20 at 3:28 pm

With the mass protests in USA, do you worry about a huge virus wave slowing down their economy and causing the markets to crash?

————–

If it doesn’t, and it won’t, can we finally stop blowing our collective brains out over something insignificant? Please?

Shawn Allen, you owe me an apology.

#7 SoggyShorts on 06.09.20 at 4:20 pm

#163 Ronaldo on 06.09.20 at 2:11 pm
#33 SoggyShorts on 06.08.20 at 4:43 pm

As soon as I figure out if I’m keeping my XRE, VWO, XEF I want to go 80/20 with that 20 being IEF or HTB
——————————————————————
Why would you want to dump XTR? Paying almost 6% and is back to its normal trading range, low mer, low to med. risk. Lots of upside. One of the better etfs out there.
********************************
I probably wouldn’t dump XTR, but I’ve never owned it.

It’s
♦ XRE the canadian REIT
♦ XEF developed and
♦ vwo developing

that have been dragging my portfolio with smaller ups in 2019 and bigger downs in 2020.

In what environment do they outperform VOO or IEF?

#8 Sail away on 06.09.20 at 4:23 pm

Tesla- wow.

Hey Tater: man, has Tesla been a great stock for me. Back almost to a 12-bagger PLUS doubling from March purchases.

This thing prints money. Yee-haw!

Oh… it’s going to fail, you say? Catastrophically, you say? Us amateurs don’t understand investing, you say? Hmmm…

#9 Another Deckchair on 06.09.20 at 4:34 pm

Garth – hope you, Dorothy and Bandit are ok.

Back in Jan 2019 out of anguish I wrote to you about the loss of our little Cocker Spaniel, and received a heart-warming, totally unexpected, and humble email back. A total stranger reaching out to another dog-person; you could have ignored the email. But you didn’t.

You give so much to fellow Canadians, and you give without expectation. You are truly a great person, and I am thankful every day for the sanity and graciousness you set forth here.

Thank you.

#10 Faith Goldy on 06.09.20 at 4:34 pm

DELETED

#11 joblo on 06.09.20 at 4:59 pm

Open the border to USA already.
Gotta get outta this Krazy Kommie Kountry.

#12 Ronaldo on 06.09.20 at 5:16 pm

#7 SoggyShorts on 06.09.20 at 4:20 pm

Oops, need to adjust my reading glasses.

#13 Oracle of Ottawa on 06.09.20 at 5:27 pm

I think your right Sinan. I have to admit I’ve been cautious since I started investing just before the dot com bubble burst. For example, I’ve been buying laddered GIC’s for the last 4 years because I thought a correction was just around the corner. Then when it did happen, it was so fast I didn’t get in at the bottom. I’m a bit stubborn but I’m learning.

#14 greyhound on 06.09.20 at 5:28 pm

Who says they don’t ring a bell at the top? https://twitter.com/stoolpresidente/status/1270084893691842566

#15 FreeBird on 06.09.20 at 5:44 pm

Stayed in. Now back up. Thx Sinan.

#16 Brett in Calgary on 06.09.20 at 5:48 pm

This was your best work so far, Sinan.

#17 Zoom Vines TikTok on 06.09.20 at 5:57 pm

#10 Faith Goldy on 06.09.20 at 4:34 pm
DELETED

She looks older than my grandma and I’m 18!

#18 Classical Liberal Millennial on 06.09.20 at 6:12 pm

Here’s what’s happening in my neck of the woods today:
https://www.cbc.ca/news/canada/hamilton/haldimand-norfolk-mayors-haircut-protest-1.5604417

People are freaking the hell out because..reasons.

#19 Vancouver Brit on 06.09.20 at 6:27 pm

#1 Dave on 06.09.20 at 3:28 pm
With the mass protests in USA, do you worry about a huge virus wave slowing down their economy and causing the markets to crash?
_______________________________

There is not going to be some huge spike from people protesting outside. It’s pretty evident now the virus has a very low chance of spreading when people are outside, even in groups. Even the BC Provincial Health Advisor said the chances are “infinitesimally small” of catching Covid-19 outside, and encouraged people to get outside in (small) groups.

Covid-19 is done, at least in the western world, it’s going to gradually peter out and the world will return to normal slowly but surely. There isn’t going to be a huge second wave, and even if there is the response is not going to be the same. They aren’t going to shut down the economy twice.

#20 Andrewski on 06.09.20 at 6:37 pm

Exactly right Sinan! It’s time in the market, NOT timing the market!!

#21 Nonplused on 06.09.20 at 6:38 pm

“Virus data improving: While the number of new infections remains high in the US, the outbreak is decelerating”

That was before the BLM and Antifa riots. Dr. Fauci and others think the riots might have been a bad idea from a covid point of view. I guess we’ll know in a few weeks.

Seems pretty hypocritical to me that people can’t go to the beach or to church but they can gather in the thousands to burn their own towns down. But it will prove once and for all whether covid was a real concern, a practice exercise, or a hoax. If we don’t get a big spike in deaths as a result of the riots I would say it’s time to come out of the foxholes and open everything back up. On the other hand if we do get a big spike in deaths then expect the lock-downs to continue until at least September, maybe all year.

The experience looking at different US cities and how they responded to the Spanish flu indicates that the riots will cause an even bigger wave than the first one. When the lock-downs started there were relatively few cases so the contact-transmission vector was small. There are a lot more cases out there now so when people gather in large numbers the chances of a contact is higher. And remember these sorts of things rise exponentially until there isn’t anyone left to contract it. It doesn’t go 1,2,3,4,5,6,7,8 it goes 1,2,4,8,16,32,64,128…. Add some zeros to the numbers and the significance of the exponential nature of such things becomes more clear.

And no, they aren’t going to disband the police. The riots are exactly what society will look like all the time if they do that. No society can function beyond the tribal level without some form of law enforcement. If anything the riots have shown that law enforcement is unprepared to manage mass unrest as it is (i.e. there aren’t enough police now). Expect instead to see the national guard start training explicitly for crowd control in many states. Thank Dog the riots haven’t come to Canada yet but we’ve had riots before so we are not immune. Get out of the cities if you can. Distance is the best policy when TSHTF. That is the case for pandemics and riots alike. That and the fact that many people now working from home are not going back to the office anytime soon and the downtown core is no place to live. It’s going to turn into a giant ghetto and probably faster than people think.

#22 Leo Trollstoy on 06.09.20 at 6:40 pm

Amusing when pundits say that the “future is uncertain” during crisis, as if the future isn’t certain during other times

Pro tip: the future is always uncertain. That’s why it’s called the future

#23 Oakville sucks on 06.09.20 at 6:47 pm

Why did the markets go up??? Were the fundamentals strong??? NO…then why? … Government manipulation of stock markets…that’s why!

#24 JacqueShellacque on 06.09.20 at 6:58 pm

Hi Sinan,

Isn’t this a bit naive: “But if history’s any indication..”

Could it be that sometimes history isn’t an indication? The long term includes a lot of data that could be just noise after all. The fact that S&P 500 has been higher in every election year since 1940 doesn’t mean it will be higher this year. What if someone took every 4 years say from 1941 and tried to identify the same pattern?

#25 Nonplused on 06.09.20 at 6:59 pm

#8 Sail away on 06.09.20 at 4:23 pm
Tesla- wow.

Hey Tater: man, has Tesla been a great stock for me. Back almost to a 12-bagger PLUS doubling from March purchases.

This thing prints money. Yee-haw!

——————–

Bre-X made a lot of people rich too. Those that rebalanced their portfolios every 6 months anyway. The key to making money on Bre-X was in the selling. Nortel same story. RIM. But people who had a diversification strategy actually made out like bandits. So the basic strategy is if a stock you own doubles compared to the rest of the portfolio sell half of it and invest in the other holdings. That way you still have your original $ exposure but it is essentially cost free, so if it does crash you aren’t out any actual money, just notional paper gains. With Tesla, I would definitely consider that strategy. Remember, nobody ever went broke taking a profit.

A good story to illustrate this is that of Doug Casey, famous for his economic musings and newsletter. He was a big buyer of Bre-X in the early days but once the stock valuation approached the point where it was reflective of all the gold that was supposedly in the field as if it were already mined and sitting in a warehouse he became extremely skeptical and advised his readers to sell out. Any who did made a lot of money as did he. Yet the stock went to zero.

Almost all stocks eventually go to zero, except maybe railroads and REITs. Very few companies last 100 years. They aren’t designed to. That is why you diversify unless you are really good at predicting say whether a music playing device is going to put RIM in the toilet in a few years time. I thought the iPod was cool, but I didn’t think it was going to snuff out the Blackberry. I liked my Blackberry. I still think the little keyboard was better than a touch screen, although my last Blackberry had both.

“Things that can’t go on forever, eventually don’t.”

#26 Do we have all the facts on 06.09.20 at 7:02 pm

I have been watching the increasing number of retailers and restaurant chains in the USA that have filed for Chapter 11 bankruptcy protection. Hundreds of thousands of employees employed by these troubled companies have been furloughed with little prospect of being rehired in the future.

Thousands of bricks and mortar locations are being closed making the future of many large regional shopping centres across the USA more than a bit shaky. As online sales increase the impact on employment is bound to have a negative impact on all forms of consumer spending including the ability to purchase housing.

The belief of that pent up demand will restore profitability for all companies is not being supported by facts. The stock market indexes in the USA are heavily waited through trading on a handful of super companies like Amazon, Apple and Facebook. Thousands of companies not included in an index are fighting for their lives and many will not survive.

I understand that certain stocks may fully recover from the impact of the Covid 19 lockdown but remain concerned that a sizeable reduction in disposable income caused by true unemployment, as opposed to fiddling with the size of the labour force to reduce unemployment rates, will eventually have an impact on profitability for a majority of all companies based in North America.

When consumer spending represents 2/3rds of the North American economies the loss of millions of full time positions is not exactly the foundation I would build such optimistic predictions upon.

I sincerely hope your optimism proves to be correct but a number of facts seem to be pointing to a much different outcome.

#27 Nonplused on 06.09.20 at 7:12 pm

#18 Classical Liberal Millennia

I wonder if Ken Hewitt or maybe Kristal Chopp was the “Cottagers Stay Away” Karen. That commentator seems to have gone away, so maybe she came to realize that cottage country actually needs the revenues from their co-inhabitants. Anyway if I had a cottage that’s where I’d be heading after seeing all the protests march by the base of my condo tower.

#28 Sinan Terzioglu on 06.09.20 at 7:13 pm

#24 [email protected]

Hi Sinan,

Isn’t this a bit naive: “But if history’s any indication..”

Could it be that sometimes history isn’t an indication? The long term includes a lot of data that could be just noise after all. The fact that S&P 500 has been higher in every election year since 1940 doesn’t mean it will be higher this year. What if someone took every 4 years say from 1941 and tried to identify the same pattern?

– Thanks for your comment and question. There is certainly no assurance that the market will be positive at the end of this year just because it has been positive every election year going back to 1940. There certainly wouldn’t be similar patterns every four years. I will note that historical data about the market is not noise but fact. That said, an investor must always think about probabilities and consequences. The probability that the market will continue growing over the long term is high. The consequences of not growing your purchasing power at a rate that at least equals inflation is high as well. As a long term investor your probability of success dramatically increases when you stay focused on the long term and ignore the short term noise – Sinan

#29 Steven Rowlandson on 06.09.20 at 7:18 pm

Plenty of bad behavior these days and some of it is actually protected by the laws.

#30 Rowdie on 06.09.20 at 7:21 pm

We are in ETF’s, and figure with the market and situation we are in it is the best solution for us for now.

It is different for each person, so whatever works for them… good for them.

We are in a turblent period for the market and economy, (Canada), so trend carefully, be patient, and keep in touch on world affairs, especially in the USA which affects Canada’s stability in all areas.

#31 Nonplused on 06.09.20 at 7:25 pm

PS I’ve decided that if long hair was good enough for Jesus it’s good enough for me. I ain’t no Roman soldier! No more money will be spent on silly things like razor blades. Saves money, and time too. More time to read the comments section if I don’t get that hair cut.

#32 DrC on 06.09.20 at 7:27 pm

There’s one single indicator here: it’s the FED. Never go against the institution that can print money out of nothing. If they continue pumping into the market, it will not go down. If they stop, it will start crumbling down again. They won’t stop suddenly pumping money though. I think the market will fluctuate a little, until the rest of the investors decide to go back in. Nobody expected the FED to step in on such a grand scale. But here we are: you do everything you have to, to keep the economy up. Now we know how this works, and what to expect next. The market won’t go down. In fact there’s a bigger probability for the Toronto housing to go down than the market. Although this probability is very small as well.

#33 Sail away on 06.09.20 at 7:28 pm

#25 Nonplused on 06.09.20 at 6:59 pm
#8 Sail away on 06.09.20 at 4:23 pm

Tesla- wow.

—————-

So the basic strategy is if a stock you own doubles compared to the rest of the portfolio sell half of it and invest in the other holdings. to sell out…

Almost all stocks eventually go to zero…

—————-

I took enough profit to buy my Tesla and pay cap gains and the rest stays long. This is a new disruptive technology where no other company is even on the same playing field.

I’ve been a huge believer in Elon since he appeared on the scene. He always succeeds. Wish SpaceX was public. Can’t wait for Starlink.

#34 Ponzius Pilatus on 06.09.20 at 7:34 pm

Whatever happened to “past performance is not indicative
of future performance”?
Statistically, every prediction mirrors a coin toss. 50/50 over the long run.
I admire your guts in these crazy times.
Good luck.

#35 Faron on 06.09.20 at 7:35 pm

Interesting the VIX was up yesterday despite a nice equity pop… Suggests shorting is winning out as Sinan pointed to.

The problem with froth is no one knows how frothy the froth will get. The froth could keep frothing for a year until the anti froth shows up. Covid just suspended froth for a few months. There was little market capitulation. Given that many analysts are just throwing their hands in the air and that there’s enough twitter noise for me to hear it tells me this is pure bubble. Maybe up a bit more then range bound for a good long while if not a pop. I’d say there’s a lot of instability and a breath of bad news will topple.

#36 Faron on 06.09.20 at 7:39 pm

For the record: I know shorting equities is not the same as buying put options

#37 Linda on 06.09.20 at 7:43 pm

Sinan, the advice has been sit tight & wait for recovery. Very valid advice for those who don’t ‘need’ to draw on their investments for income. I’m waiting myself – the initial portfolio drop in February has almost fully recovered – but others may not have the luxury of waiting for recovery before having to cash in some of their investments to cover their expenses (Covid layoffs, anyone?). CERB is all very well for those that qualify, but the monthly expense sheet may well exceed the CERB income, even presuming such funds are only used for necessities. Hopefully employment will replace government assistance for those whose employment was impacted by Covid sooner rather than later.

#38 crowdedelevatorfartz on 06.09.20 at 7:57 pm

@#28 Sinan
“As a long term investor your probability of success dramatically increases when you stay focused on the long term and ignore the short term noise – Sinan”

+++

No problem.
Can I also ignore Ponzie’s pontificating?

#39 Blog Bunny on 06.09.20 at 8:12 pm

Thank you Sinan for the insights. My portfolio is almost back to pre-covid levels while I ”lost” 7 figures during the dip. It was gut-wrenching. Very tempting to sell and hide. I expect future volatility, but this was way worst than 2008-2009 for me. Back then I was a student, and now I have some real money in the game.

P.S. Anyone in Alberta wants to adopt a Bunny? I am moving !!!

#40 baloney Sandwitch on 06.09.20 at 8:26 pm

The recovery (so far) has happened much faster than I thought (I thought it will take years). But the govts flooded the system with so much cash that much of it has found its way into equities and other risky assets. Of course we have kicked the can (bill) to years ahead when we will be paying for it with taxes and inflation. Also I think this recovery is sucking in a lot of millennials and setting them for a bull trap. High likelihood of a second wave.

#41 not 1st on 06.09.20 at 8:27 pm

Interesting post. Pulls the curtain back on a lot of things.

The shorts may be hating it but the FOMOs are going nuts. I expect the robinhood crowd to out 500 pts back on the S&P by themselves.

#42 Ronaldo on 06.09.20 at 8:37 pm

George had it figured out.

https://www.youtube.com/watch?v=l_L6AS1Huno

#43 SoggyShorts on 06.09.20 at 10:11 pm

#34 Ponzius Pilatus on 06.09.20 at 7:34 pm
Whatever happened to “past performance is not indicative
of future performance”?
Statistically, every prediction mirrors a coin toss. 50/50 over the long run.

***********************
….that’s not true at all.
Most predictions aren’t wild guesses, so why would it be 50/50?

Just because there are 2 possible outcomes doesn’t mean they are equally likely. That’s the same as when someone says that their chance of winning the lottery are 50/50
“Either I win or I don’t, 50/50”

#44 Terry on 06.09.20 at 10:12 pm

Nothing is normal. We have entered a second Great Depression. All markets are broken right now. This Bear market rally is your last chance to get to the safety of cash! The coming next crash will see a re-test of the March lows. Then the markets will break down below that level and will keep falling for the next couple of years. Secondly, there will never be a Corona virus vaccine because there has never been a successful Corona virus vaccine ever created. The second Covid-19 super-wave will surge around November. You are all dreaming if you think everything will be OK. This time it won’t. If you can’t see that then maybe you should all cut down on your Hopi-um pills.

#45 Laser on 06.09.20 at 10:15 pm

Buddy trying to convince me to buy into a retail fueled market rally on a website called greater fool. Now that’s too funny.

#46 C8.R on 06.09.20 at 10:36 pm

#33 Sail away on 06.09.20 at 7:28 pm
“I took enough profit to buy my Tesla and pay cap gains and the rest stays long. This is a new disruptive technology where no other company is even on the same playing field.”

No other company? Yes they had the head start. Yes, Telsa is good for the auto industry. But…
Answer me this, do you think the Telsa Cybertruck thingy will outsell the Hummer EV (by GMC)? Will the Model X be able to outsell the Cadillac Lyriq? These will be proper EVs for their intended markets. Tesla’s dominance will not be long lived. Look the new ‘Stang Mach E, I don’t know what they were thinking calling a Mustang but whatever, it looks capable, and will sell.
Either way, I’d take a C8 Corvette. The sweet sounds from a small block cannot be replaced.

#47 Fortune500 on 06.09.20 at 10:37 pm

Great post. You can stick around. My portfolio is above where it was at the high in February. Not saying it will stay that way, but being greedy when others were fearful, and remembering the lessons from 2008 has paid off. That and listening to Garth in general.

A Classical Liberal, Millennial Millionaire Renter

#48 tim123 on 06.09.20 at 10:49 pm

I have taken off some of my upside bets as of Monday this week as it seems like the market was overbought. I noted that the market has exceeded most of the S&P 500 targets for 2020 except for CFRA and JPMorgan Chase who have targets of 3435 and 3400 respectively. The rest of the investment banks are lower than the current levels which agrees with my thesis that the market has gotten ahead of itself.
I figured I might as well go with the probabilities and not push my luck hence the taking of profits and putting on hedges.
I still have money in the markets but have put on some hedges via puts as it was cheap on some stocks that I figured should not be where they were trading at and I also raised cash. I do agree that for most people timing the markets is difficult to do. Anyways, I have a feeling this is going to be a great year for stock and option traders who can go long and short in the markets. Its in stark contrast to what is happening in the real economy but that is what happens when central bankers flood the markets with liquidity.

#49 Westcdn on 06.09.20 at 11:27 pm

I got my hair cut and my teeth cleaned. I was shrugging with the mask at the dentist. I put it upside down. The hygienist said I am going to mother you about masks – she was right.

#50 Don Guillermo on 06.09.20 at 11:32 pm

https://nationalpost.com/news/world/anti-racism-activists-draw-up-hit-list-of-60-statues-they-want-removed-in-london-england?video_autoplay=true

Nice … now we’re like the Taliban

#51 Nonplused on 06.10.20 at 12:25 am

#33 Sail away on 06.09.20 at 7:28 pm
#25 Nonplused on 06.09.20 at 6:59 pm
#8 Sail away on 06.09.20 at 4:23 pm

Tesla- wow.

—————-

So the basic strategy is if a stock you own doubles compared to the rest of the portfolio sell half of it and invest in the other holdings. to sell out…

Almost all stocks eventually go to zero…

—————-

I took enough profit to buy my Tesla and pay cap gains and the rest stays long. This is a new disruptive technology where no other company is even on the same playing field.

————————

If you are cost free then roll the bones I guess. But remember Tesla has no unique technology. Their auto-pilot isn’t even very good. If electric cars do ever become a thing that everybody is buying, BMW can make better ones for cheaper. Right now the majors are sniffing around the auto-pilot technologies trying to see if it can actually be made to work and not crash into tow trucks. They are doing as well as Tesla is in that department, which is to say not well. But in terms of transitioning to electric, there is not a major manufacturer out there that doesn’t know how to do it and Toyota is by far the furthest ahead because they have been building hybrids for 20+ years.

An electric powered car is by no means a new thing. Even GM tried it before Tesla was a thing. The other manufacturers did not go with it because charging was a problem, a big problem. It still is. If Tesla succeeds, it will be because they have more charging stations to power up the Nissan Leaf, not because they sell cars. It is a service station company, not a car manufacturer.

#52 Calvin Mire on 06.10.20 at 12:25 am

#19 Brit. You’re quoting the now wholly discredited and
thoroughly disgraced WHO based cabal of Feb/Mar. The latest from responsible health orgs is that global infections are rising and the riots were a really bad idea. 14-20 days from now we’ll see how many new infections the riots spread in open air.

#53 Genesis II on 06.10.20 at 1:49 am

I think that the probability of the market being higher at year end is basically zero. Should have looked back further in history to get a better illustration of where we’re at: 1929 to 1932. A rapid steep drop (as we’ve had in March), then a powerful rebound (April-June), then a crushing bear market that lasted about 2 years (coming up…).
I’ve been busy increasing my short position aggressively last several days. I don’t think I’ve ever been more bearish in my outlook, in fact! So, with all due respect Sinan, I’m hoping you’re going to be very wrong, or I’m going to be losing a lot of money! I guess that’s what makes a market.

#54 Sail Away on 06.10.20 at 6:08 am

Re: Tesla

My recommendation is to take a small position on the next drop and stay long. You really don’t want to be the person who could’ve bought Apple at $10 but decided not to… for reasons…

Bet on winners. They translate one success to another. Anyone watch the SpaceX astronaut launch? Yep. Winning.

#55 Wrk.dover on 06.10.20 at 6:45 am

Hertz 83 cents Wednesday, $5.53 Monday.

Federal Reserve doing anything but it’s mandate.

Want to get rich with inside knowledge?
Let Hertz put You in the drivers seat!

#56 Wrk.dover on 06.10.20 at 6:57 am

By Guest Blogger Sinan Terzioglu
Trump/Biden: The S&P 500 hasn’t had a down year in a US Presidential election year since 1940.

———————————————————–

2008 was just a bad dream I guess.

#57 crowdedelevatorfartz on 06.10.20 at 7:51 am

@#54 Sail Away
” Anyone watch the SpaceX astronaut launch? Yep. Winning.”
++++

They havent landed yet.

#58 crowdedelevatorfartz on 06.10.20 at 7:55 am

@350 Don G.
“Nice … now we’re like the Taliban”
++++

Yep.
Lets rewrite history in the eyes of the politically correct and take down all signs, statues, flags, colors, posters, etc etc etc ….that offend even one person.
A black and white ( my apologies) monocromatic world of slogans telling you how to think, feel and speak.

Orwell was right.

#59 not 1st on 06.10.20 at 8:44 am

The pyramids were built with slave labour. So were hundreds of other landmarks.

We need to tear those symbols of oppression down.

#60 TurnerNation on 06.10.20 at 8:45 am

I’d say get ready for some structural changes around demand. Some facts:
– In 2008 they crashed the system by killing of Supply (of credit)
– in 2020 they crashed the system by killing off Demand using the Communist playbook of ordering business closed, closing borders, banning travel and assembly forcing people onto handouts (CERB); nationalizing things – starting with Old Age Care homes where they are wiping out “non productive” people.

Next up: removing people from the workforce. But how?
Read this and notice every area of USA has the same plan and script: making school for kids so bad, so prison- like that one parent will stay home or work part time that the kids may learn online at home:
https://abc7.com/when-will-ca-schools-reopen-opening-california-phase-3-reopening/6237342/

Guess what there’s a solution and plan for that. As we know the handful of large tech companies and A.I. rule the world now. Apps like Google Classroom mean the kid will be at home, isolated from other kids, plugged into State propaganda teaching.
In their down time? They will be plugged in again, this time to Netflix, Disney, Youtube programming – and video games and social media.

To what end, and why is this New System so focused on the kids? Get ’em young – the smiling front man for the new global order:

en.wikipedia.org › wiki › Neuralink
… Neuralink Corporation is an American neurotechnology company founded by Elon Musk and others, developing implantable brain–machine interfaces (BMIs).

— by the way one more point of communism being rolled out, a national militarized police force. Any evidence? Police in USA and even a motion at Toronto city council to wholly or partially defund the local police.
But this is all “temporary” keep telling yourself.
Nope it’s all planned out and displayed here for you:

https://www.weforum.org/agenda/2020/06/now-is-the-time-for-a-great-reset/

#61 Dharma Bum on 06.10.20 at 8:47 am

Re: Electric Cars

Until they improve significantly (estimate: 10 years), they are nothing but glorified golf carts.

#62 NoName on 06.10.20 at 8:50 am

Interesting read

kind of different angle on automation and jobs…

http://www.overcomingbias.com/2020/06/no-recent-automation-revolution.html

#63 NoName on 06.10.20 at 8:56 am

#58 crowdedelevatorfartz on 06.10.20 at 7:55 am
@350 Don G.
“Nice … now we’re like the Taliban”
++++

Yep.
Lets rewrite history in the eyes of the politically correct and take down all signs, statues, flags, colors, posters, etc etc etc ….that offend even one person.
A black and white ( my apologies) monocromatic world of slogans telling you how to think, feel and speak.

Orwell was right.

i dont remember comunist monuments being taken down, some maybedefinetly red stars went down but anything of historical value is up maybe neglected with cellphone antennas on it but steel standing. Some street name changes, but majority street manes and art is steel up there.

left in here is looing it…

https://balkaninsight.com/2017/04/03/anti-fascist-monuments-croatia-s-unwanted-heritage-03-31-2017/

#64 TurnerNation on 06.10.20 at 9:05 am

Per my link above, same script in Canada. They are getting the kids young, indoctrinated. I also hear universities are planning online classes into 2022.
No sports, no pub or Frosh week. Just locked at home plugged into the new global order Tech companies.

Schools imposing masks, testing, temperature checks – removing art, music, library, recess and all fun. Welcome to communism

https://www.theglobeandmail.com/canada/article-saskatchewan-students-return-to-classroom-in-september/

#65 Keyboard Smasher on 06.10.20 at 9:49 am

I hate TESLA so goddamn much…

Just IMAGINE paying a multiple of over 200 for a CAR MAKER, a company whose main business is punching and folding sheet steel and assembling hub caps onto axles, because you thought it’s the “future” since the car’s console has a larger screen in it as opposed to buttons and a smaller screen.

The absolute STATE of drooling retail “investors”…

#66 IHCTD9 on 06.10.20 at 9:52 am

Going to be a slow summer. Contracts delayed or not proceeded with over the last couple months are going to affect us starting this month in a delayed reaction. Getting slower and slower as contracts existing prior to April finish up and ship, and nothing is there to replace them.

We should have indicated a couple months ago that our industrial activities were actually a Social Justice protest / riot of some kind. We could throw some broken glass out in the parking lot, and burn some old equipment out front to show just how important our work is. Perhaps then we would have been allowed to carry on with business as usual without the Liberal geniuses in Ottawa screwing everything up. Maybe Trudeau would have showed up to our shop in person to offer support?

Oh well, hopefully they keep the CERB rolling, those who depend on slow moving heavy industry (what’s left of it) are probably going to be very short of work for the rest of the year.

#67 Paterfamilias on 06.10.20 at 9:54 am

# 59 not 1st

”We need to tear those symbols of oppression down.”

There are plenty of people ready to take your words seriously. ”Live quietly among the masses.” is good advice.

#68 Sail Away on 06.10.20 at 10:20 am

#66 IHCTD9 on 06.10.20 at 9:52 am

Going to be a slow summer. Contracts delayed or not proceeded with over the last couple months are going to affect us starting this month in a delayed reaction. Getting slower and slower as contracts existing prior to April finish up and ship, and nothing is there to replace them.

——————-

Sounds like a good time to get your own corp logistics in place. ‘IHC Group’?

#69 IHCTD9 on 06.10.20 at 10:54 am

#68 Sail Away on 06.10.20 at 10:20 am
#66 IHCTD9 on 06.10.20 at 9:52 am

Going to be a slow summer. Contracts delayed or not proceeded with over the last couple months are going to affect us starting this month in a delayed reaction. Getting slower and slower as contracts existing prior to April finish up and ship, and nothing is there to replace them.

——————-

Sounds like a good time to get your own corp logistics in place. ‘IHC Group’?

—- –

All I know is a dying Canadian heavy industry, been going south slowly but surely since I entered it at 23 years old. No way would I dip my toe into that business! Too much damage being done by government. Hard to win in a business targeted by Ottawa for extinction.

If IHC Corp were to ever be registered, it would be a small biz aimed at property maintenance for the GTA escapees who are piling up out here. No brainer as I’ve got the equipment and (admittedly dated) experience already thanks to my youth employment, heavy yellow iron hobby, and fondness for 3/4 ton trucks! I could work deadly cheap and still make a few bucks.

I think I’d love it too. I’d do anything from building a deck or putting in a new driveway, to cleaning out eaves trough and mowing lawns.

#70 Sail away on 06.10.20 at 11:20 am

#69 IHCTD9 on 06.10.20 at 10:54 am
#68 Sail Away on 06.10.20 at 10:20 am

Sounds like a good time to get your own corp logistics in place. ‘IHC Group’?

————–

All I know is a dying Canadian heavy industry, been going south slowly but surely since I entered it at 23 years old. No way would I dip my toe into that business! Too much damage being done by government. Hard to win in a business targeted by Ottawa for extinction.

If IHC Corp were to ever be registered, it would be a small biz aimed at property maintenance for the GTA escapees who are piling up out here. No brainer as I’ve got the equipment and (admittedly dated) experience already thanks to my youth employment, heavy yellow iron hobby, and fondness for 3/4 ton trucks! I could work deadly cheap and still make a few bucks.

I think I’d love it too. I’d do anything from building a deck or putting in a new driveway, to cleaning out eaves trough and mowing lawns.

————–

Do it. Find the niches and exploit them.

One of the most successful businessmen in our area went out with his brother 15 years ago.

And there are no rules. Your company can try anything.

#71 Ronaldo on 06.10.20 at 11:31 am

#44 Terry on 06.09.20 at 10:12 pm
Nothing is normal. We have entered a second Great Depression. All markets are broken right now. This Bear market rally is your last chance to get to the safety of cash! The coming next crash will see a re-test of the March lows. Then the markets will break down below that level and will keep falling for the next couple of years. Secondly, there will never be a Corona virus vaccine because there has never been a successful Corona virus vaccine ever created. The second Covid-19 super-wave will surge around November. You are all dreaming if you think everything will be OK. This time it won’t. If you can’t see that then maybe you should all cut down on your Hopi-um pills.
—————————————————————–
Terry, I think you need to get out and get some fresh air. You are overdosing on CNN (Corona News Network). If the 2nd wave you talk about is anything like the 1st wave, it will be a mere trickle. In BC since the beginning of the year, we have had just over 1 death per day supposedly from the Corona virus but more likely from someone with other underlying conditions and mostly in care homes. Hardly a pandemic.

#72 Ronaldo on 06.10.20 at 11:40 am

#51 Nonpulsed

https://auto.howstuffworks.com/fuel-efficiency/hybrid-technology/history-of-electric-cars1.htm
——————————————————————
Seems electric cars were around many years ago.

#73 Don Guillermo on 06.10.20 at 12:14 pm

#59 not 1st on 06.10.20 at 8:44 am
The pyramids were built with slave labour. So were hundreds of other landmarks.
We need to tear those symbols of oppression down.
**************************************

Once we get those nasty pyramids out of the way we can go after the Roman ruins. Most Romans were a$$hol3s!

#74 short horses on 06.10.20 at 7:24 pm

Great article, Sinan. Thanks for the additional perspective!