Stock Market what do you think

[Jay Hinrichs]

well this morning i bought my first set of stocks since 1997 or so  then got wiped out in the dot com bubble LOL

I am up 142.00 dollars for the day..  when i look at all these companies trading at 52 weeks lows and 1.3 of highs

I got to think there is some room to run here over the next few years.. and diversify out of real estate..

And i am talking small money by the way  LOL..

[Joe Cassandra]

I'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)