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MillerLiteTime
Alabama Fan
Jacksonville Beach, FL
Member since Aug 2018
580 posts

My case for a bear market L recovery, and that the SP 500 hasn't bottomed yet
People assuming this is a quick V recovery that comes back up just as fast as it went down are making four assumptions that I believe are wrong:

1. The assumption that the economy is like a water faucet that can be turned back on and it quickly work just as well as it did right before you turned it off. Wrong. Only 68% of people paid their rent on April 1. Unemployment is at great depression levels. We have yet to see the actual trickle down effects of a population scarred from the reminder that suddenly they feel poor and need to conserve what limited money they have.

2. The assumption that 2-3 months of non-existent income for a business can somehow be "made up" later. Or even worse, the idea that it doesn't matter if you can "blame it on coronavirus." Those 3 months are gone and are never coming back. A balance sheet showing a net loss for the year is still a net loss even if you shout "but before corona things were going well."

3. The assumption that access to liquidity from the government or banks means few bankruptcies and that surviving companies will quickly return to normal. False. Practically every company that does survive the worst case from this will be saddled with debt that will make operating post-coronavirus even harder.

4. The assumption that the market was fairly valued prior to coronavirus. This market was already irrationally inflated and was screaming for a recession. Coronavirus only took out 2019 gains for most companies. Do you really think many of these stocks are worth buying at March 2019 numbers in the midst of a pandemic that literally does not allow the business to operate?

Having said all of this, I am still buying and selling the hardest hit sectors to profit from the volatility, but I am waiting for the next real crash before buying quality names for the long term. We have not hit bottom yet. The mainstream big name "safe" stocks have barely lost any value. Retail, oil, and travel stocks crashing doesn't mean the actual recession has happened yet. If you want to buy quality names for a long term profit, keep waiting. These companies that have only dropped 10-15% will go down 30-40% or more when the real recession happens after the trickle down effects hit the economy. And this will happen after the social distancing has been lifted, not before.


Eye_Heart_Number_33
LSU Fan
Member since Feb 2012
1338 posts

re: My case for a bear market L recovery, and that the SP 500 hasn't bottomed yet
Good luck with your short covering. Not buying any of your analysis - this disruption was not a technical one, period.


Janky
LSU Fan
Team Primo
Member since Jun 2011
32269 posts

re: My case for a bear market L recovery, and that the SP 500 hasn't bottomed yet
And you are?


Eye_Heart_Number_33
LSU Fan
Member since Feb 2012
1338 posts

re: My case for a bear market L recovery, and that the SP 500 hasn't bottomed yet
quote:

And you are?


Someone with common sense.


bayoubengals88
Wisconsin Fan
LA
Member since Sep 2007
13402 posts

re: My case for a bear market L recovery, and that the SP 500 hasn't bottomed yet
So much common sense that you didn’t realize the poster below you was not replying to you.


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oklahogjr
Arizona State Fan
Gold Membership
Member since Jan 2010
29009 posts

re: My case for a bear market L recovery, and that the SP 500 hasn't bottomed yet
1. why can't we just turn it back on? do people not want to work all the sudden?


2. ok so we gave up all our 2019 gains seems fair for 2-3 months of gains. maybe even too much if that's really it. also it's not like eveyrone made nothing plenty of companies still made money the first quarter probably more than people expect.

3. companies can handle debt. it's not like they're running up the credit cards. interest rates being nonexistant it's not as hard to meet obligations if you can get cash coming in again.

4. the market wasn't really that inflated. it was only in the 20 PEs and honestly we now live in a time of such liquidity through algo trading etfs, etc where people steadily invest in the market through their paychecks regardless of business climate. so a little inflation to historical PE probably is needed to account for the changes to the market.



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04
MSTiger33
LSU Fan
New York City
Member since Oct 2007
15919 posts

re: My case for a bear market L recovery, and that the SP 500 hasn't bottomed yet
Check historical data of the 250 days after large pullbacks if the equity market with a recession recession. You will significant returns in the market.


crazycubes
Member since Jan 2016
5225 posts

re: My case for a bear market L recovery, and that the SP 500 hasn't bottomed yet
This market scares me just on the Fed money printer . Fundamentals are out the window. Everything about a company can look good , we invest, and then, “Breaking News, Fed decides to end unlimited QE “ , BOOM , stock now down 20%.


rocket31
Toledo Fan
Member since Jan 2008
34399 posts

re: My case for a bear market L recovery, and that the SP 500 hasn't bottomed yet
record-breaking unemployment numbers week after week but everything is okay??

lol and we have no path to get ppl back to work.

yeah, i know which side I'm on
This post was edited on 4/8 at 6:54 pm


MillerLiteTime
Alabama Fan
Jacksonville Beach, FL
Member since Aug 2018
580 posts

re: My case for a bear market L recovery, and that the SP 500 hasn't bottomed yet
quote:

Check historical data of the 250 days after large pullbacks if the equity market with a recession recession. You will significant returns in the market.



If people have a long term outlook, then sure, buy long at today's levels and of course you will eventually make money. Nothing wrong with that. But most of the people putting tons of cash in right now thinking they will quickly double it are the same types who will panic in 3 months and sell when they realize they are down 20% and might need the money to live on if this is an actual recession.
This post was edited on 4/8 at 6:56 pm


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Janky
LSU Fan
Team Primo
Member since Jun 2011
32269 posts

re: My case for a bear market L recovery, and that the SP 500 hasn't bottomed yet
So you're short?


rocket31
Toledo Fan
Member since Jan 2008
34399 posts

re: My case for a bear market L recovery, and that the SP 500 hasn't bottomed yet
we will probably see a 10 mm unemployment claim tomorrow

beyond that this isn't even just an American problem, this is a global problem which will affect world wide spending


Eye_Heart_Number_33
LSU Fan
Member since Feb 2012
1338 posts

re: My case for a bear market L recovery, and that the SP 500 hasn't bottomed yet
quote:

But most of the people putting tons of cash in right now thinking they will quickly double it are the same types who will panic in 3 months and sell when they realize they are down 20%


Why do you give a damn about these people? Just focus on your short covering.


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Janky
LSU Fan
Team Primo
Member since Jun 2011
32269 posts

re: My case for a bear market L recovery, and that the SP 500 hasn't bottomed yet
quote:

we will probably see a 10 mm unemployment claim tomorrow




So, you're short?

BTW, where is the market since the last two terrible jobs numbers?


MillerLiteTime
Alabama Fan
Jacksonville Beach, FL
Member since Aug 2018
580 posts

re: My case for a bear market L recovery, and that the SP 500 hasn't bottomed yet
quote:

Not buying any of your analysis - this disruption was not a technical one, period.




Maybe I should have made this the #5 false assumption. That if some deep flaw in the economy didn't cause the recession, then the recession doesn't actually count. The bottom line is it doesn't matter what caused the recession. If people aren't working, employers are scared to hire, people aren't spending money, rent and mortgages aren't being paid, and energy companies can't make a profit, then you have a long, tough recession like pretty much all the other one's have been. Mortgage backed securities in 2008 was a tiny part of the economy, but it took down all of it. A virus can do the same and it doesn't mean the economy bounces all the way back in a month once the virus is gone.


thatguy777
LSU Fan
br
Member since Feb 2007
2034 posts

re: My case for a bear market L recovery, and that the SP 500 hasn't bottomed yet
IMO the question isn’t if we test lows again it is when. Could be the end of the year or two weeks from now. I bet it will be when everyone stops talking about retesting lows and is back to thinking things are all good though


Janky
LSU Fan
Team Primo
Member since Jun 2011
32269 posts

re: My case for a bear market L recovery, and that the SP 500 hasn't bottomed yet
I hope it happens tomorrow.


Eye_Heart_Number_33
LSU Fan
Member since Feb 2012
1338 posts

re: My case for a bear market L recovery, and that the SP 500 hasn't bottomed yet
As Santelli said, this is the Great Cessation. So, if a restaurant owner was at 60% capacity prior to shutdown, could it be possible that 100% capacity in the future can make up that shortfall? Duh.

Cover those shorts!


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rocket31
Toledo Fan
Member since Jan 2008
34399 posts

re: My case for a bear market L recovery, and that the SP 500 hasn't bottomed yet
im trading both short and long

but yea, that is hard to explain, the market is decoupling from the real world imo


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thatguy777
LSU Fan
br
Member since Feb 2007
2034 posts

re: My case for a bear market L recovery, and that the SP 500 hasn't bottomed yet
It’d be nice to get it over with but that’s not how things work around here haha. You know it just as good as I do


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