The Official Stock Market Thread

[GeechQuest]

Originally Posted by pcptrade

Sometimes stocks drops to near book value during panic selling which could be due to hedge funds going belly up, margin calls etc. We have seen that before and I would not be surprised if we see that again in some stocks, which is already happening right now. I see that as a rare buying opportunity. I bought GOOGL at $1100 during March 2020 and I bought more yesterday. I will buy more if it drops to 1800-2000. Even though stock buybacks are bullish, I would not pay too much attention to it. I have seen many companies go bankrupt despite stock buybacks and insider buying in the past. I am not saying AAPL and GOOGL fall into that category because I bought both of them in my brokerage account yesterday. I went to 100% cash in my 401k in early Jan and reentered in targeted index funds the past two weeks. I am currently long 70% in my 401K between SP 3900-4100 level and 50% long individual stocks in my brokerage account that I added over the past one week. I still have 30% cash in 401K and 50% cash in my brokerage account just in case if we drop to 3500/3200 levels. I am fine if the market does not drop further because I am still net long from current price levels. However, I think we have more downside left just looking at the charts of Indices and BTC/ETH.

I understand all that, I just think people selling the indexes are ridiculous personally. I get why some over leveraged folks are having their hand forced though.

The top holdings in the S&P are weighted heavier, handing out record cash to shareholders, and producing greater returns by an order of magnitude than they were pre pandemic.

The S&P prior to the Covid boom had a market capitalization of $27T. I’m March of 2022 it was at roughly $43T (obviously a little less now but I don’t want to math). Basically we lose the market caps of the Top-10 holdings and are STILL roughly $10T richer than pre-Covid, and that’s with a good chunk of the S&P taking massive haircuts ALREADY.

If 2021 was the year of reckless overvaluation, 2022 may end up being the year of reckless undervaluation.

[pcptrade]

Originally Posted by GeechQuest

I understand all that, I just think people selling the indexes are ridiculous personally. I get why some over leveraged folks are having their hand forced though.

The top holdings in the S&P are weighted heavier, handing out record cash to shareholders, and producing greater returns by an order of magnitude than they were pre pandemic.

The S&P prior to the Covid boom had a market capitalization of $27T. I’m March of 2022 it was at roughly $43T (obviously a little less now but I don’t want to math). Basically we lose the market caps of the Top-10 holdings and are STILL roughly $10T richer than pre-Covid, and that’s with a good chunk of the S&P taking massive haircuts ALREADY.

If 2021 was the year of reckless overvaluation, 2022 may end up being the year of reckless undervaluation.

What is the historic average P/E of SP500? Overvaluation and undervaluation is all subjective imo. Current PE of SP500 is still above historic average or mean.

[GeechQuest]

Originally Posted by pcptrade

What is the historic average P/E of SP500? Overvaluation and undervaluation is all subjective imo. Current PE of SP500 is still above historic average or mean.

Below 23.16, the last reading I find from 4/01/22.

We were at 24.21 on 12/31/19 (pre pandemic). Our federal funds rate at the time was 1.55%.

Our mega caps are still growing too, albeit that may be slowing.

Maybe I’m missing something…?

[pcptrade]

Originally Posted by GeechQuest

Below 23.16, the last reading I find from 4/01/22.

We were at 24.21 on 12/31/19 (pre pandemic). Our federal funds rate at the time was 1.55%.

Our mega caps are still growing too, albeit that may be slowing.

Maybe I’m missing something…?

Why use only 2019 as reference point when there are many years to calculate the average from? The historic average or mean PE of SP500 is around 15. The market indices (not all individual stocks) has undergone corrections many times in the past to those levels or below. A PE of 15 corresponds to SP500 level of approx 3500.

The forward 12-month P/E ratio of 17.6 on May 5 was below the five-year average of 18.6. However, it was still above the next four most recent historical averages: 10-year (16.9), 15-year (15.5), 20-year (15.5), and 25-year (16.5).


https://insight.factset.com/sp-500-f...-since-q2-2020

[GeechQuest]

Originally Posted by pcptrade

Why use only 2019 as reference point[/url]

Because the range on SPX you gave coincides with Q4 2019 and Q1 2020.

Since Q1 2020 includes Covid, I just stepped to the quarter prior to Covid having any pull on the markets.

[KhalDrogo]

The S&P trailing P/E hasn’t spent but a few months under 15 since 2000. That came in 2011-12. P/E needs to come down more from where it’s at. Blue chips like AAPL will get compressed too, but I wouldn’t worry about my money being there versus all this other overvalued garbage.

[pcptrade]

Originally Posted by GeechQuest

Because the range on SPX you gave coincides with Q4 2019 and Q1 2020.

Since Q1 2020 includes Covid, I just stepped to the quarter prior to Covid having any pull on the markets.

Don't know why you assumed my range or levels (3500/3200) was based on PE during Q4 2019 and Q1 2020 because I never mentioned anything along those lines. My range or levels (3500/3200) was based on historical average and technicals. A PE of 15 corresponds to approx 3500. Weekly 200 MA is also at ~3500. Average SP500 bear market decline is -35% and lasts 280+ days, so that corresponds to ~3130 level heading into late 2022 or early 2023.

[GeechQuest]

Originally Posted by pcptrade

Looking at the charts of Cryto and Market Indices, there could likely be more downside ahead imo after this oversold rally. BTC and ETH could drop another 30-50%. SP500 could drop to 3500/3200.

Originally Posted by pcptrade

Don't know why you assumed my range was based on PE during Q4 2019 and Q1 2020. I never mentioned anything along those lines. My range was based on historical average and technicals. A PE of 15 corresponds to approx 3500. Weekly 200 MA is also at ~3500. Average SP500 bear market decline is -35% and last 280+ days, so that corresponds to ~3130 level heading into late 2022 or early 2023.

I didn’t assume. I was responding to the “SP500 could drop to 3500/3200” comment.

I think P/E is worth less and less as we deal with growth from trillions vs growth from billions, but that’s a different discussion altogether.

I’m only pulling the data from the SPX levels you had given though.

[pcptrade]

Originally Posted by GeechQuest

I didn’t assume. I was responding to the “SP500 could drop to 3500/3200” comment.

I think P/E is worth less and less as we deal with growth from trillions vs growth from billions, but that’s a different discussion altogether.

I’m only pulling the data from the SPX levels you had given though.

I said looking at the charts of indices, there could be more downside (3500/3200) ahead. 50% to 62% Fib retrace is at 3505 to 3190. 200 MA on weekly is approx at 3500. Will SP 500 hit 3500 level for sure? Maybe, maybe not, which is why I am 70% long at 3900-4100 level. I have 30% cash left in my 401K just in case if we drop to 3500 level.

Originally Posted by pcptrade

Looking at the charts of Cryto and Market Indices, there could likely be more downside ahead imo after this oversold rally. BTC and ETH could drop another 30-50%. SP500 could drop to 3500/3200.

[GeechQuest]

Originally Posted by pcptrade

I said looking at the charts of indices, there could be more downside (3500/3200) ahead. 50% to 62% Fib retrace is at 3505 to 3190. 200 MA on weekly is approx at 3500.

Right. I was just adding color to what that would mean in relation to the underlying held in SPX at those levels vs. the last time SPX was at those levels is all.

If we retraced to those levels I’d personally liquidate a large portion of my holdings and start taking down massive chunks of the indexes.

Are the top holdings weighted heavier since the last time we were at those levels? Yes.

Are the top holdings making more since the last time we were at those levels? Also Yes.

Not arguing or anything, just adding color.

[pcptrade]

Originally Posted by GeechQuest

Right. I was just adding color to what that would mean in relation to the underlying held in SPX at those levels vs. the last time SPX was at those levels is all.

If we retraced to those levels I’d personally liquidate a large portion of my holdings and start taking down massive chunks of the indexes.

Are the top holdings weighted heavier since the last time we were at those levels? Yes.

Are the top holdings making more since the last time we were at those levels? Also Yes.

Not arguing or anything, just adding color.

All good It is tough to time the market, which is why it is better to DCA in 401K. I like to Value Average blue chip stocks in my brokerage account during times of panic selling.

[xbignick]

Looks like BRK sold VZ

[NYBBFAN]

Bring on the low 3000s on SPX so I can load up on long-dated SPX options.

[finfangfan]

It’s falling apart… https://www.foxbusiness.com/technolo...r-purchase.amp


Tesla CEO Elon Musk set a key condition for his pending $44 billion purchase of Twitter to go through: transparency on the number of fake or spam accounts.

Musk tweeted, "20% fake/spam accounts, while 4 times what Twitter claims, could be *much* higher. My offer was based on Twitter’s SEC filings being accurate."

[xbignick]

Didn't expect Elon to actually respond to any of the Project Veritas stuff, wowee.

[KhalDrogo]

Target earnings will probably have the ripple effect on the market that Walmart didn’t yesterday. Wonder how long these companies are going to keep eating higher costs to maintain market share.

[finfangfan]

Originally Posted by KhalDrogo

Target earnings will probably have the ripple effect on the market that Walmart didn’t yesterday. Wonder how long these companies are going to keep eating higher costs to maintain market share.

Wow … that looks bad.

Target shares sink more than 20% after company says high costs, inventory woes hit profits

https://www.cnbc.com/2022/05/18/targ...-earnings.html

[finfangfan]

Keeps falling….

[NeedChapmans]

Originally Posted by finfangfan

Wow … that looks bad.

Target shares sink more than 20% after company says high costs, inventory woes hit profits

https://www.cnbc.com/2022/05/18/targ...-earnings.html

If you're not food or gas ... you're going down in the near future. Consumers are going to get extremely tight. Just the way it is.

[KhalDrogo]

Originally Posted by NeedChapmans

If you're not food or gas ... you're going down in the near future. Consumers are going to get extremely tight. Just the way it is.

True. And it’s going to get way worse. Look at Target and Walmart. They are keeping prices artificially “low” to keep customers coming through the door. So if you think food inflation is bad now, just wait for when prices have to be moved higher. Target’s CEO was on CNBC this morning. He seems to think this inflationary environment is going to be short enough that they don’t need to raise prices. Baffling to me as I haven’t heard anyone talk about seeing a light at the end of the tunnel yet.

[Vintagecollect]

Blood bath, no news and good companies are on sale

Sent from my SM-N950U using Tapatalk

[GeechQuest]

Originally Posted by KhalDrogo

True. And it’s going to get way worse. Look at Target and Walmart. They are keeping prices artificially “low” to keep customers coming through the door. So if you think food inflation is bad now, just wait for when prices have to be moved higher. Target’s CEO was on CNBC this morning. He seems to think this inflationary environment is going to be short enough that they don’t need to raise prices. Baffling to me as I haven’t heard anyone talk about seeing a light at the end of the tunnel yet.

All the futures are lower on WTI. The divergence seems to be in October (at least today).

[mrchipz]

Originally Posted by mrchipz

I have both of you beat sadly.

Down 34% in the past 7 months!!


Been losing about 5-10k a day for the past 2 weeks most of the time.

I stopped the bleeding and went to some bonds and cash and re balanced today.

I still think the market has a lot more room to go down and most likely keeps going down til December.

After the big sell offs multiple times last week i thought we would start this week off good. After i seen today i think its about to be a free fall all week and month.

Inflation, many more rate increases, even many companies posted great q1 earnings and they drop 10-30% off of a GOOD earning report.

Incredible how that much value can just be wiped out so fast.

In just not even 2 weeks since i made this post it is one of the best things i ever did.
If i didnt rebalance the 401k i would be down an additional $12,000 instead since ive made that move i am up about $3,600.

Things are just getting started the real panic hasnt even set in yet i feel.

[KhalDrogo]

A lot of these companies are finally learning that they can’t rely on China. I absolutely believe China instituted these lockdowns as an attack on the West. Choke out supply while all that free money from the last two years is still out there. Drive inflation even higher. Crush the stock market.

[oldgoldy97]

When everyone’s cryin, it’s time to start buyin.