Stock Market vs. Pandemic

[Neal]

You financial experts out there, why is the stock market not following the sentiment of the pandemic (thankfully x 100!!!). I was all gloom and doom, wasn't going to check my portfolio for a year then heard one of my holdings was setting records so I looked. I was pleased. The stock market continues to do very well overall from my little world and is not tanking like some thought. It is also confusing with unemployment so high, businesses closed, why isn't it tanking?

Thoughts?

 

[AbdRahim]

Events generally have a very temporary effect on markets. The market is cyclical, and goes through its cycles regardless of external news events. It was due for a correction (deep). It occurred and we move on. It is likely peaking again in the near future. How high?? Then it will dip again. How low??? And on and on we go. The cycles are shortening with the advent of more and more technology. So will it crash agai? Definitely yes. When??? Likely within 8-15 years (guess, based on the shortening cycles). Then it will likely recover. Will there be extended periods of it going nowhere? Probably. That is why the older we get, the more defensive our approach should be. Enjoy the ride.

 

[Akdare]

The market is a leading indicator. It anticipates what is going to happen. When it tanked so hard earlier this year, it was anticipating massive unemployment, manufacturing disruptions, etc. My own portfolio is recovering slowly...of course it looks worse because I took advantage of a personal line of credit to buy my new coach. Interest rate was a full percentage point less that I could get elsewhere, plus I get a discount to that for being a former employee.

 

[Neal]

Will this potentially be a sign the RV industry won't suffer as much as first anticipated?

 

[Akdare]

Each individual industry will recover differently...I expect the airlines and cruise business will take years. There are arguments on both sides for the recovery of the RV industry. Here’s hoping pent up demand will prop it up. If I’d had any available cash, I’d have bought Disney stock. All JMHO.

 

[AbdRahim]

I would think the high end RV market won't suffer much. Those in a position to really afford a 1/2 million or million dollar coach will likely still be able to, unless they ran a business on a tight margin and could not keep it going. The lower end is where I think the damage might be. Many folks are unemployed, hopefully temporarily, but for too many people an rv will be the last thing on their mind as it will take some years to recover, if they ever do, depending on how long they are out of work.

So overall, there will likely be a substantial effect. The interesting think is that the shape of the RV industry is quite different now with several mega companies owning most of the brands. They will like Kelly do ok in the long r, even if some brands disappear in the process. My 2 cents.

 

[sheridany]

it’s hard to tell. We are seeing trends counter to what we expected. A lot of people expected the real market both commercial and residential to contract. They dipped slightly in California but not 30% like we saw in 2008. We expected the pendulum to shift to a screaming buyers market. Nope. It moved towards it and stopped. What @Akdare and @AbdRahim say the market has already “priced in” the fallout and moved on. Those that were shorting the market betting it would slide further didn’t have a great outcome. Look at today alone. Record unemployment numbers and the market went up 450 pts. When you look at certain sectors like retail,airlines, restaurants etc yes they are hurting hard. To think that United has seen the actual travel miles drop like 90% and they have a $3B gap in payroll by October AFTER a federal bail out forcing them to consider laying off or retiring 30% of the pilots. A lot of things don’t make sense right now. We need to hope for better times soon and hang on. My .02 FWIW. I agree with what @AbdRahim says about the RV market. That is what I would expect.

 

[Billie Bud]

I can tell you we have a company 401K, a private financial advisor with a small amount invested for us, and then our own "fun" stocks. I'm only going to talk about the stocks we picked out. I research and watch the news. I also only buy stocks that are on "sale," but projected to move forward based on events.

Our stocks based on the RV industry and camping have been fabulous this week.

 

[AbdRahim]

I told my wife that .I should have bought Clorox at the beginning of this. Too bad I did not. Just bought MH,. So maybe next time.

 

[TJ&LadyDi]

I had a long phone chat just yesterday with a financial advisor who manages some of our investments. His take is that we will see a "sawtooth" financial performance during the next two years, with DJI peaking near 30K and dipping to around 20K...several times. The end result for those able to wait it out will be a solid recovery.

One complication he saw is the upcoming 2020 presidential election. Not wanting to be political here, you can decide which candidate you think will provide the stability needed to restore the economy and which will prolong the downturn. I have my thoughts, but will not be sharing them.

TJ

 

[RKins]

The market is definitely not doing what I initially thought after the big plunge that took 150k out of my portfolio. My gut feeling was that the market was going to take anything not protected. But the market has given back 2/3 of the initial take, so maybe that was the adjustment talked about. You hear that it was because of this or that and I always wonder how the talking heads could even know this. Seems that algorythms are doing the trading anymore. Anyway, I watch the market every day and it's been pretty flat for the most part when you avg it out.

 

[CaptainGizmo]

Neal,

This market is running on EMOTIONS and anticipation, and has been ever since the Panic of the pandemic. Despite being raised by a Stock Broker for his 45 years, I'm not an "expert" in the market. What I AM and expert in, is "people and panic". I called it at the end of January and was scared outta my pants. All my "expert" friends and advisors "advised" me to "tie myself to the mast". I argued that I feel a "Doom & Gloom" Panic coming on, and feared I'd be looking back WISHING I had gotten out at 5% down!!! I didn't, and yup...I wish I hadn't listened to the "experts" THIS TIME. To see our portfolio take a 25% hit was more than painful, it literally caused me to wear my a$$-kicking machine out!

Now, all the experts are saying..."who knew this would happen?" Sure, looking back, it's easy to say we needed a correction, and THIS was enough to cause it. But, honestly, this was more than a "simple" market correction (which is healthy).

As emotions are calming down, the standard indicators, such as Earnings Reports and Unemployment, are starting to carry more weight. But, you still have a LOT of impulsive stocks that are going NUTS for little to no reason; like Peleton, Zoom, etc.

The WORST prediction I've heard, came from Davis, the CEO of NIRV...yikes, do I hope he's wrong! What he did say about the RV industry, I agree with. I, too, feel it's going to have a resurgence due to SO many people taking to an RV as a safer form of traveling. However, we gotta remember one big factor, a lot of these people may have lost the equivalent to a nice RV and may have to wait for a couple years for a recovery to bring that money back.

My 2 cents worth...oh, wait...it's now worth only 1.75 cents.

 

[CaptainGizmo]

Hey Neal,

I’m not a fan of VOX, but ironically, they just posted a very interesting article on this very topic! It’s actually a good read, and not “too heady”, which most of these investment articles tend to be; at least, for me.

I think you, and others will enjoy it...

The economy is in free fall. So why isn’t the stock market?

The economy is in free fall. So why isn’t the stock market?

Everything is bad, and yet somehow the stock market is good.

www.vox.com