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Today is a good example of why you have to be very careful in the market

Thread in 'Finance / Investing' started by rbstern, Apr 20, 2020.

  1. rbstern

    rbstern ODT Junkie! Supporter

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    After the brutal economic beatdown of the last six weeks, it's pretty tempting to look at the market and think..."time to buy low!"

    That's exactly the kind of thinking that wiped out a lot of investors AFTER the 1929 crash. The crash itself, in October of that year, resulted in the Dow losing about 25% of it's value in two days. It then stablized and moved higher for several months, and remained well above that bottom for the better part of a year. But in mid 1930, it started a long, two year slide that cut the Dow from 200 (the price at the bottom of the October 1929 crash) to less than 50 in mid 1932.

    Oil prices crashed overnight last night. West Texas Intermediate crude traded at less than $11/bbl overnight. It's a specific reflection of the deep economic damage of the last two months.

    I hate to say it, but there's a lot more economic carnage to come. Neiman Marcus is filing for bankruptcy. I expect we'll see several major airline, hotel, cruise and vacation destination companies declare bankruptcy. Probably some large restaurant chains. And that's just the really visible stuff. The number of small business wipeouts will be epic. It's going to take years to rebuild the need for those jobs.

    Step carefully with your investment strategies.
     
    hseII, FreedomUSMC, Dirty J and 11 others like this.
  2. Nuke And Juke

    Nuke And Juke AEV Supporter

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    @rbstern
    I see things a bit different. I studied economics. By that, I mean, I just dont have an opinion like everyone has an xxx. I have studied it and can write about it with some conscience that Im not writing out of the wrong end. Truth be told, history has a context but it is not the same now.

    In order for wealth to be eliminated, there has to be a taxable event. Something has to be triggered. A house has to be sold, title has to change hands, stocks has to be liquidated or "margin called," people have to lose their jobs for significant amount of time.

    Those arent happening right now like it did in the 20's and 30's. Call it printing money (fiat), Quantitative Easing, Congressional Stimulus or what have you. People in their homes are still in their homes, and people with stock is just holding the same but of lower value.
    1. No one is jumping out the windown
    2. No one offed themselves in the head
    3. No one left their cars running in the garage (CO)
    I see this as an equalizer of sorts. This is where those with money, just got on the wrong elevator, and it simply dropped. They cant controll it. They are taking a ride down.

    For the young folks out there. This is your chance. This is the once in a lifetime opportunity to get on that elevator at the wrong floor. This is the golden ticket to ride upwards. The people with money have no choice but to ride with you on the way back up. They have to put up with your stenchy clothes and manners and no matter what happens...they have been equalized.

    So get on that elevator and dont miss your chance. The TRUMP economic machine will continue. COVD19 just showed everyone that where something is made is as important to the price it is made. You cant have ventilators and PPE's made outside of USA. Take that and exponentially grow it...you have a booming economy coming!

    If you are young and you put $50k in the market and lose all of it. It just means you retire at 55 1/2. You work 6 months longer. So there is everything to gain for a young person. That wasnt the case in the 20's and 30's
     
  3. Wolfpenhiker

    Wolfpenhiker Panzer Driver

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    Brick and mortar stores will consist of a few specialty shops as more people will be comfortable with home delivery or pick up and find they enjoy not being herded like cattle in checkout lines.

    Corporations will be pressured to bring production back to the USA which will require more AI in order to be profitable which will greatly reduce the amount of unskilled labor needed in factories which in turn will lead to more unemployment and more government handout dependancy.

    America had become a service base industry instead of a production industry. Production requires workers with trade skills not degrees in gender studies. Will people that worked in the hospitality industry be willing to take a job on an assembly line, retrain in a trade skill or will they just be satisfied with living off government “assistance”?
     
  4. HUNTING

    HUNTING ODT Supporter

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    What young person has $50,000 laying around haha
     
    LT5150, Mr. Booshie and Cadcom like this.
  5. 10thmountain

    10thmountain American Warhorse.

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    22.5 MILLION LOST A JOB IN THE LAST 30 DAYS. Lets see what the numbers say Wednesday. I bet 4 Million more. This is UNSUSTAINABLE. OPEN THE MF Economy. Oh and dollar cost average yo 401K.
     
  6. Nuke And Juke

    Nuke And Juke AEV Supporter

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    If there is a will there is a way. It's easy to say we dont have it. It's another to challenge ourselves.

    When I was young, my mentors challenged me to think outside the box. Asked me what is my level of subsistence. I thought real long and hard and then sold off everything I got that was above subsistence. Reshuffled my priorities. Put my chump change together and got myself straight.

    No one has $50K sitting around. They have to look around themselves. I be they can put something together
     
    Lightning8, HUNTING and Wolfpenhiker like this.
  7. Leshaire

    Leshaire ODT Junkie!

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    Not an economics major here, but I agree times are far different. In 1929 and thereafter, the capability of continuing to conduct business almost at full typical capacity but without a brick and motor store was not an option. We don't NEED to be in person to buy much of anything and thanks to existing technology, most companies can oblige without us being in person either. Based on what we know today, I don't see this being as long term as that recession.
     
    Nuke And Juke likes this.
  8. Wolfpenhiker

    Wolfpenhiker Panzer Driver

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    You are an example of why people can get ahead if they are willing to make sacrifices, unfortunately the majority have been indoctrinated to believe it can only be accomplished by a handout from someone else or the government. They are convinced they need a $1500 smartphone, the latest model SUV, subscriptions to every movie site, order out every meal, $6 coffees and vacations to Mexico or Thailand are essential.

    If more would do as you did we wouldn’t see the need for government handouts like we are seeing today.
     
    hseII, Jake D., NewLeaf and 3 others like this.
  9. rbstern

    rbstern ODT Junkie! Supporter

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    That strikes me as a bit near-sighted.

    Some types of things that will lead to what you view as "taxable" events:

    1) Airplanes that would otherwise be flying, parked on tarmacs
    2) Major events (trade shows, conferences) being cancelled
    3) Hotels empty
    4) Ships sitting in ports instead of moving people and cargo
    5) Auto and major hard goods factories idled
    6) Energy companies unable to sell energy at even a gross profit
    7) Lost earnings that remove the ability of businesses and individuals to make spending choices
    8) Housing market slowdown (people without a paycheck can't build / buy houses)
    9) Jobs that will take a long time to recreate, thereby reducing spending power, not just here, but worldwide
    10) Lost income taxes to fed and state treasuries that won't turn into navy ships, airplanes, road maintenance contracts, etc.

    You're assuming those things won't happen. I'm saying there's a real chance another shoe will drop.

    Yes, some things are different. There are winners: Amazon, Walmart, Netflix. The banking system isn't teetering and people, if they had savings or credit, can still use it. That's an important difference vs. 1930. But that was also true in the late 1960s and early 1970s (durable institutions), however we still had a very long economic malaise and a tremendous loss of value in the market.

    I hope you're right. But your way of thinking is familar to the type of thinking that had people ride the market down from April 1930 to June 1932, which was much harsher economic carnage than the October 1929 event.
     
    Psilloh1 likes this.
  10. GeauxLSU

    GeauxLSU Moderator Staff Member

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    And if you bought in one month ago today, you're up 29%.

    Yes, this lunacy will cost us in immeasurable ways including completing wiping out many. But while I'm not putting any cash in the market today, I sure hope to before this year ends.