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Rod's Account Talk
- Thread starter Rod
- Start date
Rod
Well-known member
After today's action, some of you might be positive again YTD. If we seem to be rallying hard by noon on Monday, you might want to consider counting your blessings and then hibernate in (G) for awhile. But, one thing to consider before you do that is this- will that rally continue into Tuesday? At that point, it would be a 50/50 crap shoot. But if it was me, and I was down as much as 8% to 9%, I would certainly take advantage of today and IFT to (G) if Monday is rallying hard by noon. But, that's just me. 
Rod
Well-known member
Wherever it'll be, it's a ways off from here.
blueroadster
Member
Items I have not heard discussed lately is margin debt and any calls made after the recent plunge...Makes me wonder what might be lurking around the corner.
Rod
Well-known member
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/markets-indices/weekend-wall-street
Don't forget to track "Weekend Wall Street" to get a feel for how Monday might shape up:
https://www.ig.com/en/indices/markets-indices/weekend-wall-street
Mcqlives
Active member
Finally had time to do some long reading this morning....not a pretty picture gets painted. Some analysts (even Barron's write ups) are now looking at 2300 (SnP) as a floor and express concern about that holding. Now I have to figure out how much of the market goes contrarian to the doom and gloom versus how much capitulates and goes with the flow.
Rod
Well-known member
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/4331607-sell-rips-december-2018-market-low-is-next-downside-target
They also write this:
Last edited:
Mcqlives
Active member
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!!!
Rod
Well-known member
A warning about buying stocks during this unprecedented time...
_______________________________________________________________________________
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.
____________________________________________________________________
Source: https://seekingalpha.com/article/4331607-sell-rips-december-2018-market-low-is-next-downside-target
_______________________________________________________________________________
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.
____________________________________________________________________
Source: https://seekingalpha.com/article/4331607-sell-rips-december-2018-market-low-is-next-downside-target
Rod
Well-known member
You're right about that! You too!
Rod
Well-known member
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/coronavirus-stocks-dominos-activision-walmart-netflix.html
It's always darkest before the DAWN.
(D)omino's
(A)ctivision
(W)almart
(N)etflix
Source: https://www.cnbc.com/2020/03/15/coronavirus-stocks-dominos-activision-walmart-netflix.html
Happy_Trails
Active member
Mcqlives
Active member
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...
Rod
Well-known member
:lmao:
Rod
Well-known member
Why we likely won't see a bottom anytime soon. One thing that has been sticking in my head is DOW 15,000 ('ish).
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