Howdy, Stranger!

It looks like you're new here. If you want to get involved, click one of these buttons!

In this Discussion

Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.

    Support MFO

  • Donate through PayPal

Old_Skeet's Market Barometer ... Winter Reporting ... Market Swoon Updates



  • Worst week since the 2008 financial crisis.

    Blame Obama.

  • edited February 2020
    For some reason I hadn't thought about the situation in exactly that way.

    Well, ya. Because you're....... NORMAL? Unlike everything about the Trumpster's administration.

  • And here I thought someone dusted off the PPT (Plunge Protection Team).
  • edited March 2020
    As of market close Friday February 28th, according to the metrics of Old_Skeet's stock market barometer, the S&P 500 Index is now extremely oversold with a reading of 175. This is up 38 points from last weeks close of 137 where the Index was considered to be overbought. A higher barometer reading indicates there is more investment value in the Index over a lower reading. During the week, the average naked short volume moved from a weekly average of 51% to 52%. Not much change there ... however, the VIX (which is a measure of volatility) went from 17 to 29 as the Index's valuation fell 11.5% for the week. From a yield perspective, I'm finding that the US10YrT is now being listed at 1.16% while at the beginning of the year it was listed at 1.92%. With the stock market swoon, this week, the S&P 500 Index is now listed with a dividend yield of 2.05% while at the beginning of the year it was listed at 1.82%. As you can see there is now a good yield advantage for the stock Index over the Ten Year Treasury. With this, I'm now favoring equity income over fixed income due to the yield spread and also I feel that the stock market is grossly oversold and bonds are extremely overbought.

    So what happened? One word: Fear! Investors have now become very concerned that the coronavirus is spreading globally and that many countries (including the US) are not prepared to deal with this. This has caused many investors, mostly those that use leverage, to sell and thus deleverage due to a anticipated decline in forward earnings estimates. And, as a result of this deleveraging process, a stock maket swoon took place. Because of this great selling presure the S&P 500 Index lost 432 points from it's 52 week closing high of 3386. This resulted in a 12.8% decline putting the Index into correction territory.

    I've run some earnings numbers. Using a multiple of 20 which would represent a 5% earnings yield and using a revised earnings number of $159.00 computes to a valuation of 3180. With the Index closing back of this number, on Friday, at 2954 now leaves some room for some upward movement. With this, I'm thinking that a throw back rally will take place because I feel the stock Index is extremely oversold and bonds are extremely overbought. Perhaps, the FOMC will cut rates helping both stock and bond values? It will be interesting to see just what does happen. Knock the earnings number down to $145.00 (from $174.00, as once touted by some) and this computes to 2900 which is not far from the Index's closing number of 2954. Using the $174.00 earnings number computes to a valuation of 3480.

    In review of how my portfolio performed: I am down 4.4%, from my 52 week high, while the Index is down 12.8%. This is about a third of what the Index lost; and, I feel is due, in good part, to my "all weather" asset allocation. Also, since the barometer indicates a stock buying opportunity now exists I did a little equity buying during the week. For the week my three best performing funds were FLAAX, PCOXX & TSIAX. For the month the three best performing were FLAAX, JGIAX & TSIAX. Year to date the three best are FLAAX, CTFAX & JGIAX.

    This concludes the Winter Barometer Report. A new thread will be opened in March to cover the spring period (March, April & May).

    Thanks for stopping by and reading.

    I wish all ... "Good Investing."

  • edited March 2020
    Hi @Anna,

    I waited until Monday to make comment about the PPT (Plundge Protection Team) that you referenced in your recent comment. It seems, for me, with the availability of easy and cheap money the markets were quite leaveraged. And, since a lot of the hot money crowd has now trimmed their stock positions by reducing their leverage the markets will soon start to find some footing.

    S&P list TTM earnings for the S&P 500 Index for March at about $141.00. Applying, Old_Skeet's SWAG (Scientific Wild Ass Guess) multiple of 20 to this earnings number of $141.00 computes to a valuation of 2820 for the Index. I'm thinking the market's price has adjusted downward from what might have been an anticipated price earnings model (FE) to what stocks have actually done pricing model (TTM).

    More will follow on this subject about how I came up with my SWAG under a new thread that I will open towards the end of this week.

    Thanks again for making comment.
  • @Old_Skeet - Thanks for doing this thread and your upcoming SWAG thread, I enjoy your insights.:)
  • edited March 2020

    @Mona said (above): "Worst week since the 2008 financial crisis. Blame Obama."
    It took him a while, but here it is, per The Washington Post:
    On Wednesday, Trump said the Obama administration was responsible for the inability of the federal government to ensure widespread testing for potential coronavirus patients, an unsubstantiated claim that even his own administration officials could not back up.

    “The Obama administration made a decision on testing that turned out to be very detrimental to what we’re doing,” Trump said during a briefing at the White House in which he boasted that he “undid” that decision.

    The unsupported claim, made for the first time publicly by the president, put Trump administration officials in the uncomfortable position of responding to questions about its accuracy.

    Addressing reporters after the briefing, Azar and other officials did not confirm the president’s assertion when asked if it was true.
  • Next, he'll be pushing a new wing of the armed services. oops, he already did that. The Space Cadets.
Sign In or Register to comment.