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No fishing going on here. Long ago I had a system that alloted X% more to stocks based on a Y% stock market decline. But no more. Currently a very challenging situation with the Fed set to beginning to raise rates out of necessity as the chance of war in Ukraine increases. An invasion and the resulting sanctions/counter sanctions would further strain our economy as it also further increases inflation. It's all left me wondering if a storm may be brewing. I will just watch for now (and keep my eye on VIX.)
She questioned the possibility of recession. Given the last quarter's GDP of over 4%, it has to get much worse to go negative. She mentioned high inflation but did not elaborate consequences.
As for us, changes were made last year. They are bearing fruits now: rotated from growth to value funds (both US and oversea), added precious metal and commodity funds, moved bond funds to short duration bonds and TIPS, and cash. Otherwise, our portfolio is down modestly. Considering the market condition, it would be down even more.
@davfor, which "VIX"? There are "VIX" for SP500 [VIX], Nasdaq 100 [VXN], small-cap Russell 2000 [RVX], emerging markets [VXEEM], oil [OVX], gold [GVZ]. Precede these tickers with ^ at Yahoo Finance, $ at Stockcharts.
Sonders is smart AND gorgeous. ...I'm glad, particularly now, that I've been overweight in bonds. But not very happy about my timing, initiating a spot in HY TUHYX (TRP.) Yes, my stuff is down, but it could be a lot worse. Bank Loans (PRFRX) are almost at "even-steven." Just below the zero-line, by a fraction. Meanwhile, divs get paid, still. This past Friday, I moved the lion's share of my PRIDX (smid-cap foreign) into PRFRX for protection. (PRIDX = down -13.48% ytd.) I've managed to do very well over the past 5 years in PRIDX. Up over +11% in that time period, annualized. so, ya: the portfolio is down, but if I were invested in a way to directly track the major markets, the bleeding would be much worse.
@hank - do you know what happened to DraftKings. That was quite an owiee they took Friday.
DKNG? I’d averaged in (3rd time) at around $21 early in the month. Became concerned as it began to swing up and down by 5-10% daily. Sold out at $22.33 Monday. On Friday it was down 15% before the market opened. And finished the day off 18-20%.” Current price: $17.29 - No plans to reacquire.(Probably should knock it out of my tracker before end up buying again).
Why did it tumble? The ostensible reason was their earnings report released early Friday. While revenue was OK, new users acquired were lower than anticipated. And the cost of incentives (cash give-always to attract new users) had reached epic amounts as these firms fight for market share. I think it’s deeper than that. (1) Nobody thinks they can be profitable until about 5 years out. So they’re bleeding cash. (2) Firms like this rely on cheap funding to keep growing. With interest rates rising that’s bad news (3)Taxes imposed by states are high already (over 50% in NY) and it’s likely that when states need additional revenue they’ll turn to the online gamers first.
There’s a body of opinion suggesting DKNG is a good takeover candidate. An offer could overnight lift the price by $5 - $10 per share. Suspect that’s true. But I’m not in the merger / arbitrage business.
She questioned the possibility of recession. Given the last quarter's GDP of over 4%, it has to get much worse to go negative. She mentioned high inflation but did not elaborate consequences. As for us, changes were made last year. They are bearing fruits now: rotated from growth to value funds (both US and oversea), added precious metal and commodity funds, moved bond funds to short duration bonds and TIPS, and cash. Otherwise, our portfolio is down modestly. Considering the market condition, it would be down even more.
Thanks for the nice summation. Being “down a bit” comes with the territory if you’re invested for capital appreciation / growth. I don’t mind being down a few % some years. Limiting losses is about the best one can hope for unless you go into cash or some types of fixed income. In 2008 I lost 21%. Hurt a bit. But time horizon was much longer then and made it up in subsequent years. Situation much different today. Age forces some of us to take less risk and protect against double-digit losses.
Comments
“Investors shouldn't 'bottom fish' based on stock declines'”
Not bottom fishing. Very slow gradual move in recent weeks from less aggressive to slightly more aggressive holdings. Baby steps.
What are others doing?
In answer to your comment, yes I too have been doing small adds here and there but mostly sitting on my hands. I should just turn my computer(s) off.
She questioned the possibility of recession. Given the last quarter's GDP of over 4%, it has to get much worse to go negative. She mentioned high inflation but did not elaborate consequences.
As for us, changes were made last year. They are bearing fruits now: rotated from growth to value funds (both US and oversea), added precious metal and commodity funds, moved bond funds to short duration bonds and TIPS, and cash. Otherwise, our portfolio is down modestly. Considering the market condition, it would be down even more.
There are "VIX" for SP500 [VIX], Nasdaq 100 [VXN], small-cap Russell 2000 [RVX], emerging markets [VXEEM], oil [OVX], gold [GVZ].
Precede these tickers with ^ at Yahoo Finance, $ at Stockcharts.
CBOE Volatility Index (VIX)
...I'm glad, particularly now, that I've been overweight in bonds. But not very happy about my timing, initiating a spot in HY TUHYX (TRP.) Yes, my stuff is down, but it could be a lot worse. Bank Loans (PRFRX) are almost at "even-steven." Just below the zero-line, by a fraction. Meanwhile, divs get paid, still. This past Friday, I moved the lion's share of my PRIDX (smid-cap foreign) into PRFRX for protection. (PRIDX = down -13.48% ytd.) I've managed to do very well over the past 5 years in PRIDX. Up over +11% in that time period, annualized. so, ya: the portfolio is down, but if I were invested in a way to directly track the major markets, the bleeding would be much worse.
Why did it tumble? The ostensible reason was their earnings report released early Friday. While revenue was OK, new users acquired were lower than anticipated. And the cost of incentives (cash give-always to attract new users) had reached epic amounts as these firms fight for market share. I think it’s deeper than that. (1) Nobody thinks they can be profitable until about 5 years out. So they’re bleeding cash. (2) Firms like this rely on cheap funding to keep growing. With interest rates rising that’s bad news (3)Taxes imposed by states are high already (over 50% in NY) and it’s likely that when states need additional revenue they’ll turn to the online gamers first.
There’s a body of opinion suggesting DKNG is a good takeover candidate. An offer could overnight lift the price by $5 - $10 per share. Suspect that’s true. But I’m not in the merger / arbitrage business.