Stock Market what do you think
Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votesStock Market what do you think
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Rental Property Investor · Woodstock, GA · Member since 2017 · 517 posts · 772 votes
6yI'm still relatively new at RE...so can't give advice there... but I spend a lot of time in the stock market (many hours per day writing about stocks/options/gold etc.)
Right now is NOT a good buying time for stocks for small-time investors. This is a good trading environment because of the high volatility. (options especially)
Currently, we just hit the highest volatility EVER RECORDED...even higher than in 2008. Volatility records the expected movement of stocks. The higher it is, the wider the range. Right now, we're still above 60 on the volatility meter. And today, we saw something major...
Volatility went down...and stocks ended 3% down. That hasn't happened in over 10 years. Usually, volatility has gone down when stocks went up (because we were in a bullish market).
Right now, you're "catching a falling knife" as they say.
Everyone right now says "oh, stocks are cheap, buy now." And some are cheap.
Here's the issue...take Delta Airlines. They're in the hole...down over 70% in over a month. Sounds like a good buy? Well, airlines are highly leveraged industries...even if they do get bailed out...they could still go through bankruptcy (again). If you look at the last time they went bankrupt...their stock went from $20 down to $5 (a 75% drop).
Well...they recovered...but they never hit that $20 price point again until 2013. (4 years later from the drop)
And that came with some heavy stock buybacks which propped their stock price up. (Congress won't let that happen again).
As RE investors, we want a return on our money every year. Well, if history happens again...with some of these industries that need recovery...you could be sitting on dead money for a few years waiting for a return.
***
During a bear market, there's an initial 'shock' drop. Then a rapid advancement back.
Then...there's another drop that goes even deeper. It happened in 2018 (a correction), 2008, 2000...
We are still in the shock drop. We'll see a 10%+ rebound soon. Another drop will follow that's deeper. It's at that last drop you want to buy the companies that will bounce back fast.
Yes, buy the companies in travel and entertainment (like Las Vegas), of course bank stocks, at that time too...invest in the ones that have the solid foundation to continue again. Last time airlines crashed, there was a lot of consolidation. Same with banks.
Watch and wait for that to play out.
We all want to 'get in at the bottom'...the stock market isn't going to pop 100% in a day.
You'll get a sense when the bottom is in once the shock is gone...and you start seeing positive economic signs. You'd rather be 3 months late from the bottom than 12 months early.
Also, you'll want to wait until the VIX is below 35 because then you know the markets have calmed. (You can go to CNBC.com and it's on the very top to see it)
134 Replies
- Real Estate Agent · Sisters, OR · Member since 2014 · 1k+ posts · 1k+ votes6y
I have been talking up the one company I follow. It came down 33% so I bought it. Since then It is down another 25%. Damn it! I'm going down with ship though all the way to the bottom. My cousin just buys guns. Who'd of thunk it guys an investment genius! I've been talking Cap Rates, COC and this he just likes blowing stuff up.
If anybody has a good publicly traded stock in the “prepper industry” let me know. I have a feeling that sucker could sky rocket!
- Visalia and merced · Member since 2018 · 11 posts · 2 votes6y
Right now I m shorting crude oil. Demand for oil is not going up anytime soon esp with Russia and saudi going all out with this oil war. I'm going long on precious metal mining stocks. Anyone listen to macro voice podcast with erik Townsend? I think he is predicting stocks will even go lower and bottoming around late may or early june.
- Investor · Austin, TX · Member since 2013 · 443 posts · 174 votes6y
Now is a good time to start buying. Dollar cost averaging is a great approach. Are we at the bottom? Maybe, who knows but I see more upside over the next 2 years than downside. We are a stimulus package away from things turning around.
Typically the market is ahead of the economy as far as value. Value of market now is based on predicted earnings 3 months from now. During 2008 real estate crash the market went down 40% over 1.5 years. Now we have gone down 30% in a few weeks. My gut tells me this is an overcorrection.
I think we have 10% downside and 30% upside potential. I like that spread. Thats 20% potential gain without the hassle of tenants, repairs, management etc. I will take that all day long.
Best case scenario buy stock now and sell in a year when it has recovered. Then flip that profit into more real estate!
- Sherman Oaks, CA · Member since 2013 · 3k+ posts · 2k+ votes6y
The only sector I would touch right now as investment would be dollar cost averaging an equally weighted S&P etf and that would be months from today. Individual stocks right now could be the riskiest buy possible. We are in a catching a falling knife phase buying almost all single stocks right now. Disclaimer, I do have a small leveraged short etf on commercial RE but those conditions were in place pre corona. Idk if buffet is buying, he will but not in the middle of this. He will wait til it is good and beaten down, like he did last recession. Good luck!
- Real Estate Agent · San Antonio, TX · Member since 2017 · 814 posts · 466 votes6y
I'm clueless, time will tell. Good luck.
- Investor · Austin, TX · Member since 2013 · 443 posts · 174 votes6y
@Matt R. Agreed individual stocks are too risky for my liking. I like to make investments based on the movement of the market as a whole. I’ve been nibbling on vanguard index funds. This provides less risk but also allows me to take advantage of the 30% market drop we have just witnessed.
- Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes6y
Originally posted by @Matt R.:
The only sector I would touch right now as investment would be dollar cost averaging an equally weighted S&P etf and that would be months from today. Individual stocks right now could be the riskiest buy possible. We are in a catching a falling knife phase buying almost all single stocks right now. Disclaimer, I do have a small leveraged short etf on commercial RE but those conditions were in place pre corona. Idk if buffet is buying, he will but not in the middle of this. He will wait til it is good and beaten down, like he did last recession. Good luck!
well of course i am doing everything wrong.. hope I don't get wiped out like i did during the dot com crash :)
but i bought long standing companies at their 52 week low and can just hold them for years as long as they dont go out of business.
I read up on the EFT guess i will try a few of those 2.. I am playing with less than 1 % of my net worth so not much of a risk taker.
If i was I should have Bought 200 to 300k worth of tesla when it was 170 and I owned Teslas LOL and love them.. but nope just watched it sky rocket.. One of my pilot buddies bought 1 mil worth at the 180. not sure if he margined it or just paid cash but even with the pull back he has made a few million. And of course thats why he has a personal Jet and I dont :)
- Rental Property Investor · Jacksonville, FL · Member since 2008 · 784 posts · 528 votes6y
@Jay Hinrichs you are a braver person than me. This market has yet to see unemployment levels, the Q1 reports are going to be dismal for most. Virus continues to grow, too many negatives now for me unless I wanted to invest in a high quality REIT that pays a solid monthly dividend. The government will stand behind the loans, there is little risk, to me.
I would only buy the boring stocks, consumer staples now, if I had to. But I’d rather get a dividend now and wait it out.
- Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes6y
Originally posted by @Jack Bobeck:
@Jay Hinrichs you are a braver person than me. This market has yet to see unemployment levels, the Q1 reports are going to be dismal for most. Virus continues to grow, too many negatives now for me unless I wanted to invest in a high quality REIT that pays a solid monthly dividend. The government will stand behind the loans, there is little risk, to me.
I would only buy the boring stocks, consumer staples now, if I had to. But I’d rather get a dividend now and wait it out.
Ya i am glad i made this post knowing nothing really about the stock market i am getting a little education here. But in the last 10 minutes yesterday my earnings went from 142.00 to 240.. So not bad first day LOL.. Being an X logger i think i will buy some Weyerhouser though. I know what they own.. and its all backed by real estate and growing timber.. always a need for lumber world wide.
- Member since 2019 · 24 posts · 12 votes6y
@Joe Cassandra Purely my thoughts, but if you wait until the VIX is at 35 you will have likely missed a decent rally....
- Investor · FL · Member since 2017 · 266 posts · 220 votes6y
@Jay Hinrichs
I too am going to gamble a bit spread out but havent jumped in yet .
My big gambles will probably be Norwegian who has a high cash position. I like oxy for oil very low right now. Mgm . I looked at boeing but theyre coming down from such a high price i dont think they areneven worth what its at right now.
Also will def buy some disney, capital one, and the vanguard small cap index fund just because i think itll get hit the hardest and come up the strongest.
Also against everyones advice i love fnma.
- Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes6y
Originally posted by @Joseph Weisenbloom:
@Matt R. Agreed individual stocks are too risky for my liking. I like to make investments based on the movement of the market as a whole. I’ve been nibbling on vanguard index funds. This provides less risk but also allows me to take advantage of the 30% market drop we have just witnessed.
Normally this is good advice to buy whole market index, but this situation is completely different. Whole market includes retail, restaurant, travel and entertainment. There is not enough bail out money to save these companies. When you buy everything, you are buying winners and LOSERS. In this case big losers, as in bankruptcy. It would be better to focus on segment index that track a subset of the whole market like technology or healthcare.
- Investor · Boston, MA · Member since 2015 · 1k+ posts · 3k+ votes6y
I think it is a "good" time to invest if your strategy matches your experience/knowledge.
If you have already done a lot of work to invest in individual stocks, like @Russell Brazil, then it is a great time to add to your position since you already understand the fundamentals and will have a pretty good idea of how this will impact their operations.
If you are a trader like @Joe Cassandra, then it is a horrible time to invest, since the volatility can ruin you. If you have more of a medium term (1-5 yrs) view of these investments, you don't care about volatility.
If you want to take a flyer on a sector(Airlines, Hotels, Engery), ETFs are the way to go since you can mitigate the individual risk of stocks, while still getting some focus. Instead of buying Boeing, buy JETS, an EFT that holds the major airlines. This can provide some hedge against getting wiped if some do take a gov bailout and restructure. There are ETFs/REITS that track hospitality, restaurants, theme parks...
As Warren Buffet famously says "Risks comes from not knowing what you are doing"
An aside, I don't get all the hate on stock buybacks. It is the most efficient way to return earnings to share holders and has been going on in the mainstream equities market since the '60s. Those that want to sell their shares can get a "dividend" when they want and those that don't want/need the money see appreciation without paying unwanted taxes.The reason the government doesn't like it is they can't double tax the earnings with any degree of regularity. (Once at the corporate level and once more at the individual level) so this new bipartisan effort to curb buybacks isn't exactly all it is cracked up to be.
Now, when buybacks become a problem for shareholders is 1. when a company issues shares to management at $20/share and goes out onto the open market and buys the same shares back at $40/share so they don't dilute existing shareholders and 2. when they overpay for the stock. However, that isn't not a problem with stock buyback, but with stupid management.
- Rental Property Investor · Jacksonville, FL · Member since 2008 · 784 posts · 528 votes6y
@Jay Hinrichs Buy what you know, buy what you trust. As a former employee of Georgia Pacific, I know Pulp and paper and the Timber side. I would rather own Rayonier, here in NE Florida for the diverse asset classes they have in addition to the real estate, but also the plasma screens they make for monitors and televisions. Weyerhauser is a good company too. GP went private so they are not available.
Still the FED just came out today and said they are giving the US Banks 1 Trillion in capital for all their loans. The Fed Govt just backed all bad loans of the banks. You cannot lose with real estate today, you get to sit at these distressed levels and collect dividend checks from the companies.
- Sherman Oaks, CA · Member since 2013 · 3k+ posts · 2k+ votes6y
Originally posted by @Jay Hinrichs:
Originally posted by @Matt R.:
The only sector I would touch right now as investment would be dollar cost averaging an equally weighted S&P etf and that would be months from today. Individual stocks right now could be the riskiest buy possible. We are in a catching a falling knife phase buying almost all single stocks right now. Disclaimer, I do have a small leveraged short etf on commercial RE but those conditions were in place pre corona. Idk if buffet is buying, he will but not in the middle of this. He will wait til it is good and beaten down, like he did last recession. Good luck!
well of course i am doing everything wrong.. hope I don't get wiped out like i did during the dot com crash :)
but i bought long standing companies at their 52 week low and can just hold them for years as long as they dont go out of business.
I read up on the EFT guess i will try a few of those 2.. I am playing with less than 1 % of my net worth so not much of a risk taker.
If i was I should have Bought 200 to 300k worth of tesla when it was 170 and I owned Teslas LOL and love them.. but nope just watched it sky rocket.. One of my pilot buddies bought 1 mil worth at the 180. not sure if he margined it or just paid cash but even with the pull back he has made a few million. And of course thats why he has a personal Jet and I dont :)
It's ok and everyone has their own risk tolerance. There are the guys who will sell that buy as soon as it reacts to the upside green. But that's like trading vs investing. And if you really like a company like Telsa they might have buy orders in at steep discount, idk $150-$250?. Typically in a recession most stocks are in a lower highs and lowers lows pattern. Not advice, but when this Congress package gets approved the market might swing wild up, that would be a possible window to scram out in the green. Good Luck!
- Rental Property Investor · TN · Member since 2018 · 2k+ posts · 2k+ votes6y
I have a variety of investment: rental property, stocks, ETFs, some bonds, and laddered CDs. I think that having a variety of investments lets you hold the ones that have 'issues' at any time and let them recover from their 'issue'. For the current situation with stocks, I am holding them. I invested in companies that I believe in, and know that stocks go up and down. The important thing to me is that when they are down I can hold them until they recover.
I invest in companies like Adobe, Amgen, Apple, Auto Data Processing, Home Depot and Boeing. For ETF, I invest in ones like ALPS, iShares, Biotech.
BTW, some of my friends ask if I regret adding rentals to my investments with the situation with no evictions, courts closed and will be backlogged when opened again, etc. Also they see the houses/apartment as hard to sell now, risk of getting rent, but taxes and insurance and some utilities still due and payable.
In the end it all about what risk a person is willing to take and for what benefit. I have 'lost' a lot of money during the past month, but I also expect that in 6 to 12 months all will be back again. Might be hopeful, but, well at least Proctor and Gamble should fly high!
- Real Estate Agent · Memphis, TN · Member since 2019 · 261 posts · 253 votes6y
It's something I've always wanted to try so now is a great chance and I will take it, somewhat cautiously of course, but I'm still jumping in. There's a lot to learn and the curve is steep, but research into companies you have in mind can be a great clarity. We'll see if there's another drop and if so, we'll throw more on the pile!
- Specialist · Cleveland, OH · Member since 2018 · 1k+ posts · 666 votes6y
@Jay Hinrichs same here, not touched stocks in 20 years or more . However opened an acct last week, up, 15% in less then a week, Norwigen cruise and American Airlines,,,,,,
- Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes6y
Originally posted by @Bob Prisco:
@Jay Hinrichs same here, not touched stocks in 20 years or more . However opened an acct last week, up, 15% in less then a week, Norwigen cruise and American Airlines,,,,,,
You know what they say when the door man is giving stock or real estate advice time to get out.
same thing with us life long real estate junkies once we get in time to get out.
LOL I am long term though.. I figure I buy this stuff at the lows hold 3 to 5 years and see what happens..
- Specialist · Cleveland, OH · Member since 2018 · 1k+ posts · 666 votes6y
@Jay Hinrichs there are big bargains. I forgot to buy Delta last week at 22ish, now 28, PENN, at 6 now 14,, American Air doing well also,,,,, We will never see a buying op like this again, . One that has me confused is Dave and Busters , it doubled in the last few days, UP 6 TODAY1!! never would have thought that
- Architect · Wenatchee, WA · Member since 2018 · 843 posts · 907 votes6y
I wish I had the cash to invest in stocks atm. Maybe if we ever get some of that relief cash that the Feds keep talking about I will dump that into stocks since I'm not hurting for cash....just dont have extra to gamble on.
Will still have to figure out the best place to buy though. Guess thats some good reading material now that WA has gone into lock down.
- Investor · Willow Spring, NC · Member since 2009 · 5k+ posts · 3k+ votes6y
Invesco Mortgage Capital (IVR) failed to make a margin call today, so blindly hopping into REITs without a good understanding of their collateral could cost people a lot. I am a CAN-SLIM type investor so I try not to catch the falling knife.
- Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes6y
Originally posted by @Chris Martin:
Invesco Mortgage Capital (IVR) failed to make a margin call today, so blindly hopping into REITs without a good understanding of their collateral could cost people a lot. I am a CAN-SLIM type investor so I try not to catch the falling knife.
Chris i just bought companies i use and like and expect to make it through.. Like Alaska air lines been flying them 28 years and just about to million miler status and lifetime premier status :) so I sure hope they continue on .
- Real Estate Agent · Chicago, IL · Member since 2017 · 2k+ posts · 2k+ votes6y
I added to many positions yesterday and have auto investment set until 7/1. With interactive brokerage you can borrow at 3% off your account similar to a heloc if want cash for a real estate project. Margin call at 25 ltv I would never take out more then 75 ltv at a time to stay very conservative. Have had clients do this strategy in past for rehab costs.
Recent position increases AKREX, FBSOX, BEP, BIP, WNS.
Italy has now shown a decrease in new cases for second day in a row. I expect this downturn to be quicker then 08 and the run up afterwards to be much more rapid. I dont expect a significant reduction (maybe 10-20% in C areas and flat in A/B areas) in regards to real estate prices largely due to mortgage lenders allowing payments to be deferred.
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