Hey biz/tards. I've been browsing this board for about two years now and this is my first post. I'm an American with a healthy inheritance and so far I've done pretty well for myself with long term value investing. I'm not overly concerned with recent stock market activities but I anticipated warning signs and pulled out of the market about 80% in mid December. Obviously, I'm trying to catch the falling knife. Throughout the past few years after sifting through the shitposting I've seen some astute observations about economic conditions on this board and I'm curious if anyone has any analysis backed opinions on what the next few months have to offer in the equities economy. Personally, I anticipate no more than a 30% drop in the S&P 500 and once things hit a 20% correction I will start buying back in weekly. I have enough cash to cost average weekly for about 2 months. Does anyone else have a compelling perpective that might dissuade me from this course of action?
I don't, but I'd be interested in hearing why someone else might. I know there are a lot of bears on here, maybe one of them will have something of interest to say.
Do you expect another 20% on top of what's happened since December or 20-30% including the last two months?
I anticipate 20-30% drop in the S&P, but I am positioned to capitalize, based on cash reserves, on up to a 45% drop in the S&P (I'm a conservative investor). That is on top of what has already occurred. I think that most of the commodity devaluation has already been calculated into the market values we are seeing right now. So, I anticipate an minimum
Overall of 20%, a maximum of 30% but based on my understood ignorance I am prepared to benefit from up to a 45% decrease in the economy.
Disclaimer: I won't pretend to be an expert on macro-economic trends, I am a value investor who heavily researches the specific conditions of any company I invest in. I am just trying to accelerate my returns with some macro-economic insight.
We are in similar situations. I exited the market in June. Almost all of my positions are allocated to short term bonds and their maturity is due soon.
Like you, I plan to DCA once stocks decline by 20%. The only problem is that this could take years to occur. Furthermore, the recovery could take up to a decade or we might not experience a recovery at all.
Out of curiosity, what companies do you plan to invest in?
My story about inheritance is as follows.
My mother, as she got married took a massive loan from my uncle. Also she took a portion of the land as inheritanche, before it was really shared between the siblings.
Now my cousin, 26 years old is asking for all the loan money back, which he knows we cant afford.
Somehow the young bastared started a business of his own, and works very closely with his friend, who also has a business of his own. They use their combined weath to oust the rest of this family out of their inheritance, and are doing mighty good job at it.
>All of us sadly have loaned money from my uncle
My uncle wasnt that pushy, but he wanted what was his, his son however is a nightmare. He wants "his money" now.
Going as far as openly calling my family farm as a spot for his future summerhome.
And he already told us, his cousins, that he will cut down our forests for money, and build cottages for rent in their stead, expanding his business.
Worst part is that I cant do shit, my mother tries to slow his plans, but she is already suffering from alzheimers.
What am I supposed to do? Take on a massive loan from a bank and try to buy him off to no profit?
Inheritance sucks if you're dealt with cards like mine
The only thing I could imagine leading to your strategy failing is if we're entering a deflationary cycle. The last one was almost a century ago and most people assume it's possible and desirable for central banks to avoid deflation altogether.
But we're in a weird situation now where the price of oil is dropping, and as the price of oil goes, so goes the price of everything that uses it for manufacture and transport (i.e. everything). Labour of course has been getting cheaper because of globalization for a while.
If oil and labour both keep getting cheaper for a while, it's -possible- not likely, but possible... that we come to a situation where the best long-term investment is actual cash, because purchasing power of one dollar increases over time. I'm not predicting that will happen, but it's about the only thing I could imagine messing with OP's best laid plans.
That sucks dude. But he's got to know that kicking his family off their ancestral land will just lead to his summer home burning down every winter. Or every summer, depending on how much of a dick he his.
Hypothetical question, if you knew of a corporation or NPO that you could donate your farm to but with stipulations, for example that you and your heirs could live and farm on it so long as the property taxes were paid, would you be interested?
I work at a hedge fund. Our models point to S&P fair value between 2040 and 2100, with US GDP growth of just under 2.6% for 2016.
When we trade into positions we actually scale into them over a certain time frame using a hacked version of dollar cost averaging. That's what I'd recommend for OP to do.
Also, buy into companies that have a solid product pipeline and tech aristocrats (MSFT, INTC, AAPL, AMZN, FB, NFLX, etc.).
You could also just slowly buy calls on the S&P (buy strike price 1900 for July expiration and look to sell them when the market hits 1980-2000). On a small budget I'd buy 5 calls per week (500-800 per week) over the next 3 weeks, which we anticipate to remain between 1880 and 1950.
If OP wants more tips you'll have to pay. $$$$$$$$$$$$$$$$$$