So far this year, interest rates have been the driver of asset prices - a la the discount rate. (On the way up for the past 13 years we did not acknowledge this relationship and thought it is all our individual prowess.) BBB bonds at 5.7% and S&P 500 at 3,700 indicates both credit and equities are yet to price in all the rise in interest rates - risk assets still refusing to acknowledge the full weight of the interest rates. So, first we may have a mini restoration of historic correlations to fully reprice risk assets vs interest rates. If and when we start to feel the weight of negative economic conditions, then the historic relationships / correlations will return for us to see more clearly. More often than not, many of us are not wrong, we are probably just early - markets are not as efficient as we think. Part of my new practice has been to try to wait a few days / weeks so as to sync with the market.

Guys...what happens if we have a dead decade ahead of us in the markets (Reference Druckenmiller's recent commentary)...who says the CBs/Fed will come to the rescue again with the brrrrrr money printer...I really don't think that is going to happen.
Why take the drawdown in an environment like this? I get it, really tough (impossible) to time the markets, ya might get lucky but likely not repeatable...I could see staying in during more "normal" times but this is some real wacko jacko markets we done got here, no?
I think we are due for a bounce within the next couple weeks, too many Puts have been bought....but....I think many are sanguine, hearing maybe down another 10-15% then markets should turn up as the fed again starts easing....and The Gundlach thinks we are going to overshoot to the downside next year...from the 9% (really more like 14-15%) to mayb even -3, -4%.....and if he is right, I don;t see any way how markets rally...
Hey, like they say, it;s your money. do what you need to do to feel sexy, don't listen to clowns on a chat board especially not me.
Best,
Baseball Fan

@Sven, I got the gist of what you are trying to say. But the problem now is that stocks and bonds have high correlation. It used to be that only stocks and HY had high correlation.
https://twitter.com/charliebilello/status/1573684964465549315?t=v0rNubuT0L9wPJkNO73gzg&s=19

As others have mentioned, the damage in bondland makes it difficult in terms of any repositioning. One example from the people at Dodge & Cox: Their DODLX (Global Bond Fund) has dropped 12% over the past year. Their supposedly more aggressive DODBX (Balanced Fund) has fallen only 8% over the same period. And their even more aggressive DODGX (Stock Fund) is down only 7.4% over that time. Go figure. Normally, in a falling equity market one might consider moving from fixed income into equities. But not here. The world turned upside down.

@orage, you are correct and I have corrected ma earlier post.
@yogibb, I believe this year’s challenge with both stocks and bonds are related to Fed’s quantitive tightening in addition to aggressive rate hikes. The only previous attempt by the Fed was in late 2018 that coincided with an ugly 20% stock market sell-off. And we are far from taming the high inflation.
Others also point to the Fed’s action leading to the situation today.
https://axios.com/2022/09/22/fed-quantitative-tightening-markets
For now I continue to buy treasuries and hold them to maturity.
YTD from Vanguard funds, 9/23/22:
Total bond index, -13.7%
Intermediate term corporate bond index, -15.7%
Short duration bonds sustained less damage:
Short term inflation protection bond, -3.2%
Short term bond index, -6.5%
Foreign bonds:
Total international bond index, -12.2%
Pimco emerging market bond, -19.5%
Pimco emerging market local currency bond, -11.6%
Equities are all down:
S&P 500, -21.6%
Developed market index, -26.4%
Emerging market index, -21.9%

I am surprised the market is not down more, but I think that has to do with earnings only just now starting to drop. A lot of this may be due to the strong job market ( with millions of people still not wanting to work because of covid, disability etc) and the overhang of the large stimulus checks sent out in 2020 and 2021.
I worry that the inflation we are seeing is mainly due to drought, supple chain disruptions and the War, none of which will respond to the Fed, until unemployment hits 5 or 6% or more and we are in a severe recession with crash in earnings.
While the financial system is in much better shape to withstand this than in 2007 back then there was a Fed available solution as they guaranteed everybody except Lehman, and we started out of it relatively quickly ( after dropping 45%)
Maybe if there had not been that third of fourth stimulus pumped into the economy or if they had started raising rates earlier inflation would have started down now, reassuring everybody.
If you believe all of the above, long term treasuries or very highly rated corporate bonds are the place to be, I think.
I think you have to be worried that it will take five years for stocks to recover.

Interesting (but ad filled) article addressing the issue (please ignore ads) The Capitalist
For: “Everyone is telling you not to buy and the news is extremely negative. The media is known to exaggerate issues and cause negative emotions like fear, rage, and hopelessness.”
Against: “Japan also crashed in 1991 and did not recover to this day.”
Here’s an Investopedia article mentioning Warren Buffett and Sir John Templeton’s takes on the issue of contrarian investing: https://www.investopedia.com/articles/financial-theory/08/contrarian-investing.asp
Not intended as investment advice. Posted simply to stimulate thought … Any indicators (technical or otherwise) as to the “right” amount of bloodletting needed to make equities appealing to you again?

@Sven, FOMC meets 8x/year: odd-numbered months, plus June and December.
Jan, Jul: 4th Tues/Weds
Mar, Sep: 3rd Tues/Weds
May, Nov: 1st Tues/Weds
Jun, Dec: 2nd Tues/Weds
Edit: Info above, while it might be typical, is not correct, as 2023 meetings Jan31-Feb1 and Oct31-Nov1 and 2021 meeting Apr27-28 violate what I had noted some time ago. www.federalreserve.gov only indicates 8 scheduled meetings per year, about every 6 weeks, and possibility of additional unscheduled meetings. My apologies.

This has been a very difficult environment for the bond market. It is being called a bond crash and one has to go back to 1931 or 1949 to find similar times for bonds (see image link below from Twitter Link1). While equities are also suffering, there is nothing historic about this typical run-of-the-mill equity bear market (so far). https://pbs.twimg.com/media/FdbXoeMWQAEXAeh?format=png&name=small
What is indeed unusual is that both stock and bond drawdowns are now happening simultaneously and this is seen in hybrid portfolios (see image link below from Twitter Link2).
https://pbs.twimg.com/media/FdbYT--WAAEJYUb?format=png&name=small
But this is not the time to panic. It is the time to rationally analyze what you hold (OEFs, ETFs, CEFs), assess portfolio risks and your own risk tolerance, make appropriate portfolio adjustments and trade/invest wisely.

Hi sir Mr @Catch22 /Dr Moran
Generally statement likely
Start investing keep buying since 2007 did not back down and did not know what was buying keep buying mutual funds vanguard total market and vangard 2040... Total return 5.7% annually since, 9.5% returns annually before crash
Think saw sp500 chart returns of 12% annually right before recent carnage from 2010 -2021
Sp500 Price and P/E maybe good now
Current Sp500 P:E ratio records low 17 18 past 20 yrs, and it is so hard to get ratio lower (dotcom crash and housing 2008 crash ratio was larger 22 or 26) w these current market conditions.
https://www.macrotrends.net/2577/sp-500-pe-ratio-price-to-earnings-chart
Have lots patience with long term investing, maybe good entry prices imho, but you are right may get 20% lowered in 6 9 months. long terms could be very good to slowly buy more every few months and don't empty your barrell now if have dry powder.
You maybe screwed now but in March 2024 you maybe laughing your ways to the banks ( or near break even points lol) .. Wifey says too late to sale now so we are staying the courses.
It's extremely difficult to invest without emotions and see recent carnage and losses.
Maybe don't even open acct or look at daily basis, turn off MSNBC market news and Bloomberg.
Go play w wifey kiddos family every weekend w free time
Don't open vanguard acct until winter 2024 lol

@carew388, during 2008 the Fed was cutting rates aggressively, but Fed is hiking rates instead. Think the YTD 13% loss of VWINX will worsen by year end. Remember, we still two rounds of rate hike this year.
Investment grade bond index Is down 15.7% YTD. Until it turns around, bonds are struggling this year, except for treasuries (not treasury funds/ETFs).

>> Friend say 10 trading days from now look very bad but 10 yrs from appears extremely rosy
Safe to say often in general

While it provides a good read for two key parts of the economy, it also serves as reliable indicator of what may be coming down the road. FedEx's earnings contracted in a similar way during the last three recessions — in 2020, 2009, and 2001, according to analysts at Barclays.

That could be a serious problem. Higher fuel cost must contributed to increased operation cost. Shipping demand should be falling when people are returning to office.

I chat with our regular UPS driver who told me during the worst of Covid how many new hires the company had authorized. I think it was between 100 and 200K. I asked him if their union had a two-tier wage system similar to the UAW, but he assured me these were full-time positions, and all would be union members. I hope these drivers are still working. FedEx drivers are not organized, so I expect their employment prospects may be very dim about now. FWIIW, when I have a choice, I direct my business to unionized employees. Chewy uses FedEx, exclusively.

@johnN

Friend say 10 trading days from now look very bad but 10 yrs from appears extremely rosy

That's one helluva forecast.
What's he/she smok'in these days???
I can't back any of that forecast, because when I bought my magic 8 ball years ago, it had only a 30 year forecast calendar; and that ran out of time last week. I'm screwed, investing wise/related.
ADD: that doesn't read properly.......screwed meaning; only relative to using an 8 ball for investing.

Expect recession ceased ~mid oct2023 - feb2024
Inflation halt -slows late March 2023- spring 2023, feds may overshoot by next spring if severe crashes and unemployment rolled over clift
Housing + regress stagnation-slow down 3-9 months
Stocks bottom consolidation processes next few months (1-4 months) likely
Like ...said before market bottom 1/3 to 1/2 through recession but we don't know we are in recessions until 7 9 months later.
We are probably in one recession now
Spy chart past 12 months show severe low Rsi, Stochastic Oscillation at low points, Macd histogram near crosses over points (near oversold conditions).... Prob good entry if you are willing to wait few months. For long term maybe very good entry points also. Another friend bought 3millions $ spy last Fri expect bounces to sp500 3900s 4000s next few wks
Friend say 10 trading days from now look very bad but 10 yrs from appears extremely rosy
We may get many bumps next few months lots pundits say sp500 may go 3100-3450

Evidently, a section of retail investors are protecting themselves well (far greater than at anytime before), notwithstanding the buy the dip behavior from others -
https://twitter.com/jasongoepfert/status/1573656248842698757/photo/1
This may also explain the high equity allocation (ICI), even though we are down 20+% YTD.

@Observant1 and everyone:
Odd Lots:
https://www.bloomberg.com/oddlots-podcast

yes, i've seen rattner on there before. cards close to his vest. my own portfolio pain is due to an overweight in equities. somebody please point me in the direction of the light at the end of the tunnel. until then, i'll enjoy watching my stuff grow. serrano peppers, okra.