WBI closed the day at 159.2. We have backed out of the red alarm range and are now dipping into the yellow warning range.
Friday's recovery saw the WBI return to 164.2. Our portfolio is also up but just barely. Our portfolio is still down about 2% from our February ATH. One of the nice things about distributing companies is they don't take the same hit as growth companies during volatility. The down side is they don't make the gains growth companies do. Long term, you're much better off with growth but we are newly retired and appreciate the stability of having a highly distributing portfolio.
I was hoping to pick up a small amount of stock at a slight discount, as we have had some price volatility, but I notice my stocks have extreme low volume of late. One of my REITs shows zero volume on Friday. Maybe the front runners were conscripted to fight in Ukraine?
China has said they plan to lift the Shanghai lockdown by June 1. They have also said they will lift the lockdown in phases. I assume they mean they will start lifing the lockdown on June 1, as there isn't much time for multiple phases by that date. Here are some speculations: - lockdown starts to lift on June 1 and is sufficiently lifted to allow full restoration of industrial capacity by July 1 - it will take about 4 months for supply chain issues to significantly resolve - the benefit to western economies should hit by roughly November 1 - we will see a small up tick in balance sheets in 22Q4, as reported in 23Q1 - the first strong quarter, assuming demand isn't down due to other problems, will be 23Q1 which will show on ER in (perhaps April or May 2023)
I will add a bit more detail. As best I can tell, we are under a roughly 15 percent demand surge in durable goods while production has taken a hit of about 15%. This is causing car dealers without inventory, etc. Restoring previous production levels will not necessarily solve the problem entirely, although it will undoubtedly help a great deal. If demand continues, manufacturing is going to have to ramp a bit. Buoyant times are likely in our future of about one year.
The WBI is currently at 159.9. Our portfolio has been on a roller coaster, this week. At least, by our standards. It's nothing compared to S&P 500 swings but we are used to having a portfolio that is mostly resistant to market fluctuations. We remain 1.7% down from our ATH in February.
The WBI is now 156. The idea of a reasonable WBI window is somewhat subjective but I think most people would consider 156 to be a market that is sustainable. There have only been three times in the last 15 years in which more than one company has shown value and right now is one of those three. This is a rare and welcome situation. I scooped some shares of one company but the volume has completely dried up. The other company continues to trade at a slightly reduced price point (but now at my value line). These are the times when money is made. At least, for people with my strategy. While I have missed out on 18~24 months of gains with cash on the sidelines, I just bought a company at 2019 prices so it was equitable to wait.
I was just speaking with the widow of a dear friend who passed 7 months ago and it was enlightening. He had 11 cars, including classic Corvettes, a Cobra, classic Volkswagens, etc. He had four boats, too. About 10 years ago, he added 8000 sq*ft to an already massive shop. He was a hoarder. We have been in a sell-down mode for the last four months with two more years to go. I am making a huge effort to simplify my life. There comes a time in a person's financial trajectory when there is little need for fiscal restraint. Whatever you want, you can buy on impulse. It is not a good situation. It doesn't feel good to look around and see a ton of materialism, some of which has barely been used. It's important to have a small quantity of good quality items in your life. The less, the better. Having a bunch of cheap junk when you die is a huge burden on the person/people who have to clean it up. I wish all of you good health and happiness. Please enjoy your Sunday.
If I could like this a million times I would. I like "things", don't get me wrong, but this post just nails it. I always tell my wife that if I was hugely wealthy, I would just go around giving money to people like those who sell roses or fruit on the side of the road or people doing the right thing for strangers. Stuff like that. Once you get to a certain point, the "thrill" is gone and you eye Mars instead of living in the moment. Humans are flawed like that.
I am starting to see some extremely strange things in the market. A couple of companies have gone well below my value line. Odd, since they are doing extremely well and paying a great dividend. Meanwhile, my one semi-growth company that pays a 2.5% dividend is soaring. Perhaps we are shifting into a period of big market gains? It sure doesn't seem like that but that is what seems to be indicated.
Are you hinting at a bear rally or the bottom being in, the market being so forward thinking and all that?
My indicators show heavy bull but I'm inclined to think that is heavy bull. I've never seen such a sharp turn in an indicator, before. I'm going to carry on with very mild offense, in this defensive market. I do not trust my indicators enough to go all-in. Is anyone else seeing strange numbers from their indicators?
Dunno, I can see why we are in a bit of a mess with the logistics and free money shocks, but I am not seeing a huge mess like 2008-2009. I do not really have any reliable indicators or much long term perspective like a few of you, but I am going to throw my vote for the market has priced all the terrible news in already and perhaps those who are not negatively affected by some of what is happening now are getting off the sidelines. What are your indicators?
Okay, I have one very crude indicator that I do not put much trust in, but graphing wise it does have at least some value: It's just something I threw together in Paint, but historically speaking, the bottom has to be close if not here. I am not sure there will be any panic like in early 2020. Definitely no widespread crash like in 2008 and 2009. I just see us following the trend line: periods of excess and periods of value. I could be way off, but unlike the talking heads on TV, nobody will be following me off the proverbial cliff of wrongness
The only thing that jumps out is your line is parabolic... that doesn't seem sustainable in the long term.
If the line was linear then the percent increase in value year over year would decrease. It follows the compounding effect. Here is one for the DOW for the last 100 years: https://www.macrotrends.net/1319/dow-jones-100-year-historical-chart Notice how the y-axis is no longer equal intervals by default. Click on the Log Scale button to see one that looks more like my image. The price action is parabolic.
As RTN has already pointed out, his parabolic line correctly represents the second order equation that is growth. A lot of people draw growth with a ruler. This is wrong, although growth can look linear when the perspective is sufficiently macro, as per calculus theory. RTN's curve would also look flat, if you zoomed right in. If you browse the S&P chart for any era, it will look just like that. Growth is an acceleration. As for sustainability, that is another, highly interesting, discussion that I drilled into a few dozen pages ago.
OK, here is the ultra-abridged version of the growth curve. It isn't sustainable. Value543, your comment is absolutely correct, as far as I understand. Thomas Piketty pointed out in his nobel prize winning book, "r > g", rate of return can exceed growth indefinitely. This seems unsustainable, and is. This curve represents the accumulation of wealth and it historically leads to revolution, a re-levelling of wealth, and subsequent accumulation of wealth by a small group of individuals. In any society, a small group of individuals will always take the majority of the wealth. These days, revolution is going to be a lot more difficult. With government controls and domestic spying, the next revolution is unlikely to look like the last. That is not to say I know what it will look like but I predict it will not be attractive. lol!
