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Xianglaw
2022-05-19
Good read but lengthy
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Xianglaw
2022-05-19
Thanks for sharing
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for sharing ","listText":"Thanks for sharing ","text":"Thanks for sharing","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9023459700","repostId":"2236797581","repostType":4,"repost":{"id":"2236797581","kind":"highlight","pubTimestamp":1652932286,"share":"https://ttm.financial/m/news/2236797581?lang=&edition=fundamental","pubTime":"2022-05-19 11:51","market":"us","language":"en","title":"Tesla: Timing Is Everything","url":"https://stock-news.laohu8.com/highlight/detail?id=2236797581","media":"seekingalpha","summary":"SummaryYou hear a lot about timing when it comes to the stock market.“You can’t time the market” is ","content":"<html><head></head><body><p><b>Summary</b></p><ul><li>You hear a lot about timing when it comes to the stock market.</li><li>“You can’t time the market” is one of the most often used maxims I’m sure many of you have heard, and even more adhere to. Nonetheless, I beg to differ.</li><li>You can time the market, albeit not perfectly. That being said, I have just bought back into Tesla after selling based on the recent 25% pullback.</li><li>Even so, I do agree, "time in" the market, not "timing" the market, creates true wealth, as my father would say.</li><li>In the following piece, I will expound on my thoughts regarding market timing and explain why I bought back into Tesla.</li></ul><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/f5a1229b9c7f7f78df1d901d2fde69ea\" tg-width=\"750\" tg-height=\"500\" width=\"100%\" height=\"auto\"/><span>Sjo/iStock Unreleased via Getty Images</span></p><p><b>Why now is an ideal time to buy Tesla</b></p><p>Yes, yes I know you can't time the markets. Yet, you can make an educated determination as to when the best time to buy or sell a position in a stock may be. How else would you be able to buy low and sell high, as they say? Like my father always said, “At some point you have to take profits to make profits.” Meaning, it’s all unrealized paper gains until you actually sell. Now let’s get down to business. The following are the primary reasons I sold Tesla (NASDAQ:TSLA) in the first place and then bought it back recently after a 25% pullback.</p><p><b>First things first</b></p><p>I would like to set the stage regarding what “kind” of stock I believe Tesla is. I see a lot articles and pundits arguing Tesla is a “car” stock. The car stock cadre are always the uber bears. They list off several of Tesla’s incredible, or incredulous (depending on your viewpoint), fundamental statistics. The fact Tesla’s market cap of $764 billion is greater than all the other car company’s stocks combined, the forward P/E ratio of 48.20, P/S ratio of 13, P/B ratio of 23, and last but not least, the P/FCF ratio of 53. I must admit those fundamental statistics appear extremely outlandish.</p><p>The problem is, Tesla is not a car stock, so the entire argument is futile. Furthermore, these statistics are based on present metrics. Tesla’s stock trades on future projected results. Let me explain.</p><p><b>Tesla is not a “car” stock</b></p><p>I submit Tesla is not a car stock. It’s a long duration "story" stock. These types of stock’s occur throughout all sectors. Moreover, their valuations are based in large part on potential cash flows expected in the distant future. They're commonly referred to as "long-duration assets."</p><p>Tesla’s stock definitely fits the bill of a long-duration asset “story” stock. In fact, I surmise it has reached “cult” stock status based on the reverence its shareholders display. When the bulls and bears begin debating the sky-high valuation of Tesla, it's more akin to the rumble between the Greasers and the Socs in the movie "The Outsiders" than anything else. What’s more, the Tesla bulls do have some ammunition when it come to their lofty projections. Here's why.</p><p><b>Tesla revenue 5 year chart</b></p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/ab99bfe7748553a39961171fad2fc738\" tg-width=\"640\" tg-height=\"213\" width=\"100%\" height=\"auto\"/><span>5-year revenue growth (YCharts)</span></p><p><b>Tesla gross profit 5-year chart</b></p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/c7ac0c43a94e2f8a570de132e416f31d\" tg-width=\"640\" tg-height=\"208\" width=\"100%\" height=\"auto\"/><span>5-year Gross profit Growth (YCharts)</span></p><p>Tesla’s revenue and gross profits are increasing by leaps and bounds. On top of this, Tesla’s sales for the recent quarter were up 80% and EPS up a whopping 640% quarter over quarter. Additionally, EPS had growth at a 50% clip for the past five years and is expected to grow by 40% for the next five years. So, as you can see there is a case to be made Tesla deserves an elevated valuation. Now let’s tackle the competition aspect of the equation.</p><p><b>Lots of new competition, yes but…</b></p><p>There's a lot of new EV competitors in the space. There's no disputing this. My second choice is Ford (F) which just introduced the new EV Ford F150 Lightning. Yet, Tesla does have several first mover advantages over the competition. The primary <a href=\"https://laohu8.com/S/AONE.U\">one</a> is Tesla’s charging infrastructure.</p><p><b>Tesla’s vastly superior charging infrastructure</b></p><p>My friend and fellow CNBC compatriot Brian “Sully” Sullivan recently performed a very enlightening experiment where he went on a long-distance road trip across California in a non-Tesla EV. You can watch the short video of the results of the trip here. Needless to say, it was an eye-opener. The bottom line is, the other EV car companies have a long way to go to catch up with Tesla in regards to charging stations. See graphic of Tesla super-charging stations across North America.</p><p><b>Tesla Super charging station map</b></p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/f8250ffd495c652144b8dce9d70a2fc2\" tg-width=\"640\" tg-height=\"374\" width=\"100%\" height=\"auto\"/><span>Tesla North American Supercharging Station Map (Tesla.com)</span></p><p>With 30,000+ Superchargers, Tesla owns and operates the largest global, fast charging network in the world. The charging stations are located on major routes and near convenient amenities. Furthermore, based on Sully’s experiment, the competition is woefully behind the curve. Nonetheless, the Biden administration has allocated billions to get EV charging infrastructure in place. Even so, based on past experience, I don’t have a lot of faith in the government’s execution. Government projects rarely come in on time and almost always over budget. So, I see Tesla’s lead in charging stations as a major competitive advantage.</p><p>The bottom line is, Tesla doesn’t trade on fundamentals or valuation at all. It’s a story stock as I stated earlier. Furthermore, I have held the stock for the past 10 years in a tax advantaged account with substantial unrealized gains in the position. As my father instilled in me, I believe it’s “time in” the market, not “timing” the market, that creates true wealth. At this point in time, I have well over a million-dollar net worth based on this fact.</p><p><b>Tesla 10-year return on investment</b></p><p>I made my initial investment in Tesla back in 2012 and have held through the many highs and lows over the last 10 years.</p><p><b>Tesla 10-year chart</b></p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/4c6f4a069c5d0a8d1c46387167c52d8f\" tg-width=\"640\" tg-height=\"285\" width=\"100%\" height=\"auto\"/><span>Tesla Long-term Chart (Finviz)</span></p><p>A $1,000 investment in Tesla in 2012 would be worth over $150,000 now, that’s more than a 18,000% return. A similar investment in the S&P 500 would have given you an approximate 350% return. One of the primary reasons I sold was the fact I'm 10 years older now. At nearly, 60, my priorities have changed. I'm transitioning from a primarily growth portfolio to an income and dividend retirement portfolio.</p><p>Even so, I'm not dead yet and saw an opportunity to jump back in to Tesla after a 25% drawdown. What’s more, I posit Tesla’s stock trades on the technical, not fundamental status. In fact, the stock just bounced off major support. Let me explain.</p><p><b>Tesla technical analysis</b></p><p>Tesla’s stock fallen 25% since I took profits on my long-term position.</p><p><b>Tesla current chart</b></p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/792ea9bbefed3d777ecfcc34810ab1eb\" tg-width=\"640\" tg-height=\"199\" width=\"100%\" height=\"auto\"/><span>Tesla Current Chart (Finviz)</span></p><p>I sold for several reasons as I have already stated. Yet, none were related to the fact I felt Tesla didn’t still have a solid growth story going forward. The primary reason was I saw Musk’s <a href=\"https://laohu8.com/S/TWTR\">Twitter</a> (TWTR) buy causing a major pullback in the stock. Well, turns out I made the correct call on that. After owning a stock long term you begin to become attuned to what may or may not cause gyrations in the name. Yet, after a 25% drop and subsequent bounce off support which created a double bottom trend reversal signal, I decided to jump back in at 25% of my initial position. This is basically betting with the houses’ money for me at this point. If I hadn’t sold, I would be down 25% on the investment. It’s basically a freeroll on Tesla, that is hard to pass up. Now let’s wrap this up.</p><p><b>The Wrap Up</b></p><p>I believe Tesla’s first mover advantage will continue to provide a large margin of safety for investors. The massive head start regarding super charging infrastructure will be a key catalyst for the company going forward. Sure, substantial competition is on the way. That's a major reason why I took a portion of my Tesla gains and added to my position in Ford (F), which I have owned for over ten years as well. The fact of the matter is there's plenty of room for some competition with the expansive total addressable EV market.</p><p>The cherry on top for me is Elon Musk. I truly believe he may be one of the smartest men alive (if not the smartest). How can he not be? Musk made the savvy move of transitioning Tesla and SpaceX headquarters to my home sate of Texas from California which will definitely improve profit margins. I could go more into detail as to why the move to Texas was extremely shrewd, but I don’t want to upset the California Tesla shareholders anymore than they already are.</p><p><b>Final Note</b></p><p>The stock market is under pressure again as I wrap up this piece. There's a fine art to catching falling knives. It entails layering into new positions over time to reduce risk. I have only bought back one quarter of my original position, for example. In extremely volatile times such as these, you will want to have plenty of dry powder if the stock continues lower.</p><p>My overriding US Army 10th Mountain Winter Warrior investing motto is “patience equals profits.”</p></body></html>","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Tesla: Timing Is Everything</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nTesla: Timing Is Everything\n</h2>\n\n<h4 class=\"meta\">\n\n\n2022-05-19 11:51 GMT+8 <a href=https://seekingalpha.com/article/4512969-tesla-timing-is-everything><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>SummaryYou hear a lot about timing when it comes to the stock market.“You can’t time the market” is one of the most often used maxims I’m sure many of you have heard, and even more adhere to. ...</p>\n\n<a href=\"https://seekingalpha.com/article/4512969-tesla-timing-is-everything\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"TSLA":"特斯拉"},"source_url":"https://seekingalpha.com/article/4512969-tesla-timing-is-everything","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"2236797581","content_text":"SummaryYou hear a lot about timing when it comes to the stock market.“You can’t time the market” is one of the most often used maxims I’m sure many of you have heard, and even more adhere to. Nonetheless, I beg to differ.You can time the market, albeit not perfectly. That being said, I have just bought back into Tesla after selling based on the recent 25% pullback.Even so, I do agree, \"time in\" the market, not \"timing\" the market, creates true wealth, as my father would say.In the following piece, I will expound on my thoughts regarding market timing and explain why I bought back into Tesla.Sjo/iStock Unreleased via Getty ImagesWhy now is an ideal time to buy TeslaYes, yes I know you can't time the markets. Yet, you can make an educated determination as to when the best time to buy or sell a position in a stock may be. How else would you be able to buy low and sell high, as they say? Like my father always said, “At some point you have to take profits to make profits.” Meaning, it’s all unrealized paper gains until you actually sell. Now let’s get down to business. The following are the primary reasons I sold Tesla (NASDAQ:TSLA) in the first place and then bought it back recently after a 25% pullback.First things firstI would like to set the stage regarding what “kind” of stock I believe Tesla is. I see a lot articles and pundits arguing Tesla is a “car” stock. The car stock cadre are always the uber bears. They list off several of Tesla’s incredible, or incredulous (depending on your viewpoint), fundamental statistics. The fact Tesla’s market cap of $764 billion is greater than all the other car company’s stocks combined, the forward P/E ratio of 48.20, P/S ratio of 13, P/B ratio of 23, and last but not least, the P/FCF ratio of 53. I must admit those fundamental statistics appear extremely outlandish.The problem is, Tesla is not a car stock, so the entire argument is futile. Furthermore, these statistics are based on present metrics. Tesla’s stock trades on future projected results. Let me explain.Tesla is not a “car” stockI submit Tesla is not a car stock. It’s a long duration \"story\" stock. These types of stock’s occur throughout all sectors. Moreover, their valuations are based in large part on potential cash flows expected in the distant future. They're commonly referred to as \"long-duration assets.\"Tesla’s stock definitely fits the bill of a long-duration asset “story” stock. In fact, I surmise it has reached “cult” stock status based on the reverence its shareholders display. When the bulls and bears begin debating the sky-high valuation of Tesla, it's more akin to the rumble between the Greasers and the Socs in the movie \"The Outsiders\" than anything else. What’s more, the Tesla bulls do have some ammunition when it come to their lofty projections. Here's why.Tesla revenue 5 year chart5-year revenue growth (YCharts)Tesla gross profit 5-year chart5-year Gross profit Growth (YCharts)Tesla’s revenue and gross profits are increasing by leaps and bounds. On top of this, Tesla’s sales for the recent quarter were up 80% and EPS up a whopping 640% quarter over quarter. Additionally, EPS had growth at a 50% clip for the past five years and is expected to grow by 40% for the next five years. So, as you can see there is a case to be made Tesla deserves an elevated valuation. Now let’s tackle the competition aspect of the equation.Lots of new competition, yes but…There's a lot of new EV competitors in the space. There's no disputing this. My second choice is Ford (F) which just introduced the new EV Ford F150 Lightning. Yet, Tesla does have several first mover advantages over the competition. The primary one is Tesla’s charging infrastructure.Tesla’s vastly superior charging infrastructureMy friend and fellow CNBC compatriot Brian “Sully” Sullivan recently performed a very enlightening experiment where he went on a long-distance road trip across California in a non-Tesla EV. You can watch the short video of the results of the trip here. Needless to say, it was an eye-opener. The bottom line is, the other EV car companies have a long way to go to catch up with Tesla in regards to charging stations. See graphic of Tesla super-charging stations across North America.Tesla Super charging station mapTesla North American Supercharging Station Map (Tesla.com)With 30,000+ Superchargers, Tesla owns and operates the largest global, fast charging network in the world. The charging stations are located on major routes and near convenient amenities. Furthermore, based on Sully’s experiment, the competition is woefully behind the curve. Nonetheless, the Biden administration has allocated billions to get EV charging infrastructure in place. Even so, based on past experience, I don’t have a lot of faith in the government’s execution. Government projects rarely come in on time and almost always over budget. So, I see Tesla’s lead in charging stations as a major competitive advantage.The bottom line is, Tesla doesn’t trade on fundamentals or valuation at all. It’s a story stock as I stated earlier. Furthermore, I have held the stock for the past 10 years in a tax advantaged account with substantial unrealized gains in the position. As my father instilled in me, I believe it’s “time in” the market, not “timing” the market, that creates true wealth. At this point in time, I have well over a million-dollar net worth based on this fact.Tesla 10-year return on investmentI made my initial investment in Tesla back in 2012 and have held through the many highs and lows over the last 10 years.Tesla 10-year chartTesla Long-term Chart (Finviz)A $1,000 investment in Tesla in 2012 would be worth over $150,000 now, that’s more than a 18,000% return. A similar investment in the S&P 500 would have given you an approximate 350% return. One of the primary reasons I sold was the fact I'm 10 years older now. At nearly, 60, my priorities have changed. I'm transitioning from a primarily growth portfolio to an income and dividend retirement portfolio.Even so, I'm not dead yet and saw an opportunity to jump back in to Tesla after a 25% drawdown. What’s more, I posit Tesla’s stock trades on the technical, not fundamental status. In fact, the stock just bounced off major support. Let me explain.Tesla technical analysisTesla’s stock fallen 25% since I took profits on my long-term position.Tesla current chartTesla Current Chart (Finviz)I sold for several reasons as I have already stated. Yet, none were related to the fact I felt Tesla didn’t still have a solid growth story going forward. The primary reason was I saw Musk’s Twitter (TWTR) buy causing a major pullback in the stock. Well, turns out I made the correct call on that. After owning a stock long term you begin to become attuned to what may or may not cause gyrations in the name. Yet, after a 25% drop and subsequent bounce off support which created a double bottom trend reversal signal, I decided to jump back in at 25% of my initial position. This is basically betting with the houses’ money for me at this point. If I hadn’t sold, I would be down 25% on the investment. It’s basically a freeroll on Tesla, that is hard to pass up. Now let’s wrap this up.The Wrap UpI believe Tesla’s first mover advantage will continue to provide a large margin of safety for investors. The massive head start regarding super charging infrastructure will be a key catalyst for the company going forward. Sure, substantial competition is on the way. That's a major reason why I took a portion of my Tesla gains and added to my position in Ford (F), which I have owned for over ten years as well. The fact of the matter is there's plenty of room for some competition with the expansive total addressable EV market.The cherry on top for me is Elon Musk. I truly believe he may be one of the smartest men alive (if not the smartest). How can he not be? Musk made the savvy move of transitioning Tesla and SpaceX headquarters to my home sate of Texas from California which will definitely improve profit margins. I could go more into detail as to why the move to Texas was extremely shrewd, but I don’t want to upset the California Tesla shareholders anymore than they already are.Final NoteThe stock market is under pressure again as I wrap up this piece. There's a fine art to catching falling knives. It entails layering into new positions over time to reduce risk. I have only bought back one quarter of my original position, for example. In extremely volatile times such as these, you will want to have plenty of dry powder if the stock continues lower.My overriding US Army 10th Mountain Winter Warrior investing motto is “patience equals profits.”","news_type":1},"isVote":1,"tweetType":1,"viewCount":406,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":9023427755,"gmtCreate":1652951078277,"gmtModify":1676535195123,"author":{"id":"3572828820370779","authorId":"3572828820370779","name":"Xianglaw","avatar":"https://community-static.tradeup.com/news/97601e73933911657a3b84b6d943ce66","crmLevel":3,"crmLevelSwitch":0,"followedFlag":false,"idStr":"3572828820370779","authorIdStr":"3572828820370779"},"themes":[],"htmlText":"Good read but lengthy ","listText":"Good read but lengthy ","text":"Good read but lengthy","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9023427755","repostId":"2236716276","repostType":4,"repost":{"id":"2236716276","kind":"highlight","pubTimestamp":1652939655,"share":"https://ttm.financial/m/news/2236716276?lang=&edition=fundamental","pubTime":"2022-05-19 13:54","market":"us","language":"en","title":"Waterfall Selloff Ahead?","url":"https://stock-news.laohu8.com/highlight/detail?id=2236716276","media":"seekingalpha","summary":"24K-Production/iStock via Getty ImagesHeadwinds Accumulate, Stocks FlounderThe U.S. stock market, re","content":"<html><head></head><body><p></p><p><img src=\"https://static.tigerbbs.com/b768659a68dc2802d02171a50fe351ee\" tg-width=\"750\" tg-height=\"396\" referrerpolicy=\"no-referrer\"/></p><p>24K-Production/iStock via Getty Images</p><p></p><h2>Headwinds Accumulate, Stocks Flounder</h2><p>The U.S. stock market, represented by the S&P 500 index, is down about -16% year-to-date, recording six consecutive weekly losses, despite a two-day bounce on Thursday and Friday last week. While the recent surge has enthused optimistic short-term and day traders, the bounce is likely of the "dead-cat" variety, occurring only after the SPDR S&P 500 <a href=\"https://laohu8.com/S/PSFF\">Pacer Swan SOS Fund of Funds ETF|ETF</a> (SPY) reached a short-term oversold level that established yet another new low for the year.</p><p><b>Chart 1 below</b> shows a <a href=\"https://laohu8.com/S/AONE.U\">one</a>-year, weekly tracking of the S&P 500 index, highlighting the rare occurrences of six consecutive weeks of declines for this index that represents 80% of the capitalization of U.S. equities, featuring the 500 largest U.S. companies.</p><p></p><p><img src=\"https://static.tigerbbs.com/3a8764b5e655e202e411508e5cf91f79\" tg-width=\"640\" tg-height=\"286\" referrerpolicy=\"no-referrer\"/></p><p>Chart 1: The S&P 500 has recorded six consecutive weekly declines for the first time since 2011. (StockCharts)</p><p></p><p>The Nasdaq 100 ETF (QQQ) is in even more dire circumstances, down -26% in 2022, and the Fed's tightening cycle is only beginning. At the end of last week, the S&P 500 recorded its sixth consecutive week of losses. According to Bloomberg's analysis, this was the first time a decline of five weeks or more has occurred in more than a decade – since 2011.</p><p><b>Chart 2 below</b> shows the incidence of more than five consecutive weekly losses for the S&P 500, with a large gap since the last time (2011) we last saw such a persistent downtrend:</p><p></p><p><img src=\"https://static.tigerbbs.com/8a3eafc4fa0bd1ec17b400796b44f591\" tg-width=\"640\" tg-height=\"358\" referrerpolicy=\"no-referrer\"/></p><p>Chart 2: Incidence of consecutive weekly declines of six or more for the S&P 500 Index ($SPX). (Bloomberg Finance.)</p><p></p><p>The world's premier equity index (S&P 500) has now recorded six consecutive weeks of losses, and we may be watching the start of a teeth-gnashing, waterfall selloff—perhaps something like October 2008 (post-Lehman Brothers bankruptcy) or March 2020 (Covid-19 Crash).</p><p>An exceptionally rapid decline in prices characterizes waterfall selloffs. Everyone hits the sell button simultaneously – usually prompted by a surprising/shocking news event, and fund managers get forced by their clients to sell everything. Waterfall selloffs usually occur when investors are pessimistic, and prices have declined significantly. Legitimate buyers are few at these times, and extreme anxiety and emotion rule the day over sound investment logic.</p><p>When confronted with terrible or frightening news that threatens their investments, many stockholders just want to get out — at any price possible — to recover at least something. During waterfall selloffs, people get desperate to get out, will accept any price, and stocks plummet rapidly.</p><p>There are incredible investment opportunities if you have the discipline and wherewithal to take advantage. However, I wouldn't want to call a bottom and try catching the falling knife of a selloff-in-progress. U.S. equities have lost about -$8.2 Trillion of value this year, and the global economy has lost more than $35 Trillion.</p><p>Again, the <i>ETFOptimize Premium Strategies</i> have outperformed the market this year. Some have been profitable, and some have lost a bit this year, but all have outperformed the S&P 500. This two-article series will examine what rules produced profits and what rules lost money.</p><p>Although the S&P 500 has not yet pierced the classic -20% definition of a bear market, the Nasdaq 100 ETF (QQQ), a representative of America's largest technology-based companies (including Apple (AAPL), Facebook/Meta (FB), Google (GOOG) (GOOGL), Amazon (AMZN), and many other well-known names), has lost more than -25% YTD. Since the losses have been relentless this year, we consider both to be in a bear market.</p><p>Most bear markets retrace the run-up of the last bull rally, but the last bull rally from the Covid-19 bottom saw prices increase 115%, and from the pre-Covid high in February 2020, stocks gained about 45%. So, there is still significant room to the downside, about -20% to -80% from current levels, for continuing losses in the coming months.</p><h2>The Selloff Also Includes Risk-Off Bonds</h2><p>Everyone knows that equities have been in a downtrend all year, and most know bonds are falling too. However, many investors don't realize how much bonds have lost this year, because investors rarely watch bond indices like they keep an eye on the S&P 500 (SPY) or Nasdaq 100 (QQQ). Unfortunately for investors, the most reliable risk-off asset we can use when equities are declining – i.e., fixed-income bonds – is also in a bear market in 2022.</p><p><b>Chart 3 below</b> shows that fixed-income bonds, both Corporate and Treasury, are experiencing one of the most prolonged and persistent downturns. For example, the <a href=\"https://laohu8.com/S/EEME\">iShares</a> 20-Year Treasury Bond ETF (TLT), one of the most widely used risk-off assets, has lost more than -21% YTD. Although the S&P 500 has not yet pierced the classic -20% definition, we consider both stocks and bonds to be in a bear market, still with significant room to the downside for continuing losses in the coming months.</p><p></p><p><img src=\"https://static.tigerbbs.com/d9b03364f7294cc91536f2131383ce2c\" tg-width=\"640\" tg-height=\"285\" referrerpolicy=\"no-referrer\"/></p><p>Chart 3: Both risk-on Equities (SPY) and normally risk-off Bonds (TLT) are in a very rare, simultaneous bear market in 2022. (StockCharts)</p><p></p><p>That there is no place to hide makes this environment one of the most challenging investment situations I've seen in my 40+ years as a professional. The Fed has repeatedly declared that it will be very aggressive in increasing rates and reducing its balance sheet to arrest the 40-year high in inflation. According to last week's report, the Fed is still increasing its balance sheet and has only raised the Fed Funds Rate (short-term overnight lending from bank to bank) by 75 basis points (0.75%).</p><p>Price stability (controlling inflation) is one of two Fed mandates (with low unemployment), and unless the Fed wants to destroy its reputation (more than it has already), it won't flinch on its aggressive measures to subdue inflation. Increasing the cost of capital in the economy causes it to slow, and the vast majority of corporate America has a business model linked to the economy.</p><p>As the cost of capital increases and ripples through the economy, profits will decline, and stock prices will fall to reflect those lower earnings. That's why it's highly likely that there will be more significant stock price declines in the future. Analysts are lowering estimated earnings at a torrid pace.</p><p>We're not saying that stocks can't continue surging higher for a bit. Stocks are on a bullish bounce higher as they ping-pong within two standard deviations of a declining long-term average. However, in Part 2 of this article, we'll show you a chart that demonstrates why there is more of a likelihood of a waterfall selloff than there is of a V-shaped recovery higher.</p><p><b>One thing is for sure:</b> There is no reason for investors to buy into the teeth of a downtrending market when a sequence of lower highs and lower lows is the dominant theme, and that's precisely the situation today. To reverse higher, stocks will need to decline less than their last low, break the prior short-term high, and set a new higher high. Our Premium Strategies decide for you and remove the time and stress involved in managing your investment portfolio.</p><h2>U.S. Employment</h2><p>According to the U.S. Bureau of Labor Statistics, employment in the U.S. is at a boiling point, with about two jobs available for every person looking for work today. The U.S. Unemployment Rate remained at just 3.6% in April, unchanged from March, and near a 50-year record low.</p><p></p><p><img src=\"https://static.tigerbbs.com/cbce3591f0eab66132e1afea728fb7dd\" tg-width=\"584\" tg-height=\"373\" referrerpolicy=\"no-referrer\"/></p><p>There are about twice as many job opening today as there are jobs. (Labor Department via St. Louis Fed)</p><p></p><p>That statistic would usually be greeted as fantastic news by workers and policymakers alike. However, the downside of that statistic is that the persistently high consumer demand that's created those plentiful jobs has also resulted in significantly higher prices and, as a result, higher wages.</p><p>Higher wages are a non-intuitive villain in the story of today's US economy, particularly after decades of stagnant wages have put the average US worker into the psychologically painful position of being less well-off than their parents. The struggles and frustrations of monthly income shortfalls and dead-end career paths are the primary drivers of the anger and partisanship in modern America.</p><p><b>Chart 4 below</b> shows the Quarter-over-Quarter change in US wages since 1980. Wages steadily declined from the 1980s, 1990s, 2000s, and 2010s as globalization got underway and China steadily took over the manufacturing duties for the world. India became the low-cost provider of (sort of) English-speaking technical support for software, hardware, phone companies, and everything else that required a relatively educated live person on a phone line.</p><p></p><p><img src=\"https://static.tigerbbs.com/9defd7c208199fcf7a05cef176b19f7d\" tg-width=\"640\" tg-height=\"332\" referrerpolicy=\"no-referrer\"/></p><p>Chart 4: Wages fell since 1980 from the forces of globalization but surged sharply higher since the Covid shutdown in 2020. (Bureau of Labor Statistics via TradingEconomics.com)</p><p></p><p>We can see that US wages declined significantly from the 1980s (when globalization got underway), then flatlined and stair-stepped downward from 2000 through the end of 2019. However, after falling off a cliff during the Covid-19 Pandemic shutdowns in early-2020, wages then shot sharply higher, surging by more than 1.5% two quarters ago, declining slightly last quarter to 1% growth, but climbing again in the latest period by 1.2%.</p><p>The increase in wages is welcome news for millions of Americans, but the simultaneously increasing cost of rent, food, and fuel have severely impacted mid-level and hourly wage earners, despite the recent pay increases. While there may have been a 3-4% increase in pay over recent quarters, inflation has increased the cost of living by more than 8% in the last year.</p><p><b>Chart 5 below</b> shows the impact of inflation on US earnings since 1980. Notice that the periods of high inflation during this span (the 1980s and today) significantly impacted earnings, reducing their purchasing power by nearly -8% each period. This dynamic is economically and psychologically devastating for the 40% of Americans who cannot spare $400 for an emergency.</p><p></p><p><img src=\"https://static.tigerbbs.com/81872254d144d9e3c954409dc1aab027\" tg-width=\"640\" tg-height=\"309\" referrerpolicy=\"no-referrer\"/></p><p>Chart 5: Inflation-adjusted earnings. (US Bureau of Labor Statistics, St. Louis Federal Reserve Bank.)</p><p></p><p>Economists estimate that the U.S. government (the U.S. congress and Fed) pumped about five times the amount needed to fill the economic pothole created by business closures during the March-April 2020 Covid-19 Pandemic. Combined, nearly $10 Trillion was created out of thin air by the Federal Reserve and U.S. Congress to fill the $2 Trillion economic hole. That transfer of new money resulted in the U.S. economy increasing by 50% in 2020-2021, and it has continued to multiply through the phenomenon of US capitalism, creating an overheated job market and higher prices for goods of all kinds.</p><p>The hot economy, increased (but now dwindling) savings from the Covid stimulus payments, continuing supply-chain backlogs, and even the war in Ukraine have combined to create an overly competitive market for workers, resulting in increased labor costs. According to the U.S. Bureau of Labor Statistics, the cost for civilian workers increased 1.2% quarter-over-quarter, surging from 1% in the previous quarter. More significantly, the cost of living increased 8.5% year-over-year, near a 50-year record high.</p><p>While the increase in wages was a long-awaited and excellent development for workers after so many decades of slowly sinking deeper into financial hardship, they simultaneously got their knees taken out by higher prices from inflation. This has only added to an accumulating level of anxiety and anger throughout America – fueling partisan bickering.</p><p>Since the U.S. Federal Reserve was the only Central Bank in the world pumping such a spectacular amount of money into the system, the US is the only country experiencing this level of inflation. That's because no other country pumped as much money into their economy as the US did in the last two years.</p><p>The Fed is not the only culprit behind this situation because the politicians in Washington – from both the Republican and Democrat parties – proposed, voted for, and passed the distribution of trillions of Covid-19 stimulation payments. The politicians were doing what they thought would benefit the public because they wanted to win future votes from that public from their largess.</p><h2>Federal Reserve Caused Inflation It's Fighting</h2><p>The Federal Reserve Board had no motive to give away money to win elections and is staffed by supposedly experienced career professionals that should have known better. Yet the Fed continued overstimulating the economy even as the din of public/business criticism reached a roar. We were one of many who published articles in 2021 documenting the overstimulation, but it was all for naught. Moreover, the Fed continues its stimulative effort even today!</p><p>The Fed purchased assets again last week, some eight months after declaring inflation a problem, and reported an increase in its balance sheet of $2.8 Billion on Wednesday, May 11! Granted, that's less than the average it was purchasing beginning in July 2020 – but why is the Fed still purchasing assets to stimulate the economy after it finally declared that inflation was a serious problem? The mind boggles...</p><p>For the last 14 years, the Fed has run an enormous and risky experiment dubbed "Quantitative Easing (QE)" by former Fed Chairman Ben Bernanke. Because of QE’s infusion (and now withdrawal) of massive amounts of money into the economy and investment markets, the Fed is the elephant in the room for every investor today. Perhaps 80-90% of those reading these words have never known an investment world without the bullish influence of the Fed.</p><p>My friend Lance Roberts just published an excellent analysis on Seeking Alpha that identifies the tight correlation of Fed Policy to stock and bond prices. I can't add much to his analysis, so I'll refer you there for the data on this relationship.</p><p>In 2022, investors are experiencing the very early stages of the effect of Quantitative Tightening or QT on the U.S. economy. We're likely to get a rude awakening from a waterfall selloff in the coming months, likely accompanied by nasty withdrawal symptoms – just as experienced by anyone addicted to a pleasurable substance (including free money and ever-climbing markets) when that substance is stopped. Unfortunately, there are no similar withdrawal-counteracting or portfolio/life-saving drugs for investors like Buprenorphine/Naloxone for opioids.</p><p>As we’ve discussed before, the U.S. Federal Reserve Bank is both the arsonist and the fireman of the U.S. economy, historically either over-stimulating or over-contracting the money supply long after those efforts were most needed. Historically, the Fed is America's primary cause of economic bubbles and busts, and it seems determined to keep that record intact.</p><h2>Inflation</h2><p>On Wednesday, May 11, the Labor Department reported that the Consumer Price Index (CPI) increased by another 0.3% in April after rising 1.2% in March. For the last 12 months, the pace of inflation fell slightly to 8.3% in April from 8.5% for the 12 months ending in March. However, the primary source of the gradual decline was a slight decrease in gasoline prices, a consumer expense affecting nearly everyone but which has since returned to a new high.</p><p>The most eye-opening inflation data? <b>Airline tickets are up 18% in the last month, and rents have increased 39% in the last year.</b> Short of an outright shooting war, inflation pressures have the most impact on a nation's populace. Inflation is hitting many Americans for the first time because they were not yet breathing when inflation last hit these shores in the late-1970s to early-1980s.</p><p>Initially sparked by product shortages from supply-chain backlogs spurred by the worldwide Covid shutdowns in 2020, inflation has become ingrained in the US economic system. The Federal Reserve and the US Congress exacerbated the price pressures caused by Covid shortages by pumping a combined $9 trillion of newly created money supply into the US economy. That $9 trillion was nearly five times the stimulus needed to fill the economic hole created by business closures from the Covid shutdowns and economic slowdown in 2020.</p><p><b>Chart 6 below</b> shows the US Consumer Price Index (CPI) for the US through the May 11, 2022, release:</p><p></p><p><img src=\"https://static.tigerbbs.com/c219f00e03079172e469810064914c7b\" tg-width=\"640\" tg-height=\"312\" referrerpolicy=\"no-referrer\"/></p><p>Chart 6: CPI has spiked at a pace far worse than anytime in the last 35 years. (St. Louis Federal Reserve)</p><p></p><p>The resulting inflation was predictable, with a massively increased supply of dollars chasing a significantly reduced supply of products. Today, the otherwise temporary effect of the supply-demand imbalance is becoming ingrained in the system through increased inflation expectations.</p><p>An example of inflation becoming ingrained in the system, the Labor Department reported that the price for services rose 0.7% (8.4% annualized) in April over March, the fastest increase since 1990, and services are not affected by the Covid-induced product shortages. Services providers are increasing prices in anticipation of higher personal living expenses, and that anticipation is difficult to eliminate without the pressures of an economic contraction (recession) bringing them down.</p><p>Additionally, wage increases are becoming ingrained in the system, with business and government employers spending 4.5% more on wages, salaries, and benefits in the first quarter compared to the year prior. That's the fastest increase since the early 2000s and a half-percent increase over the 4th quarter of 2021. However, keep in mind that real wages (adjusted for inflation) are down for the 13th consecutive month.</p><h2>ETFOptimize Premium Strategies Outperform the Market in 2022</h2><p><i>ETFOptimize</i> rarely makes forecasts. Instead of making low-probability, swing-for-the-fences predictions about future market developments and making bets on those guesses, our algorithms instead assess <b>more than 50 data sets</b> every weekend. Our <i>Premium Strategies</i> make decisions based on current developments (and their near-term implications) as they occur.</p><p>This "now-cast" approach to investing is far more consistent and provides far higher-probability outcomes than the alternative of forecasting, which has long been the norm in the investment world. Moreover, while now-casting might sound like a recipe for rapid-fire whipsaw trades, our strategies have an average holding time of about three months. Weekly assessment allows our models to respond quickly when conditions change, but they require a substantial deviation from the trend to signal an actual change in positions.</p><p>One of the few analytical articles in which we did make a longer-term forecast was an October 2021 report we published on <i>Seeking Alpha</i> (<i>"</i><i><b>Imminent Decline Ahead</b></i><i>"</i>). In it, we warned investors that our systems had assessed that a significant downturn was likely in 2022. Then, as the calendar page turned to start the New Year, that's precisely what happened. While the S&P 500 set an all-time high on January 3, conditions have been bearish for the S&P 500, Nasdaq, and Corporate/Treasury Bonds throughout 2022.</p><p>The <i>ETFOptimize Premium Strategies</i> have been holding defensive positions since January—either in a cash-proxy ETF, inverse ETF, or commodity-based ETFs, and <b>each of our Premium Strategies has outperformed the S&P 500 in 2022</b>. The charts below show the performance of a sample of our Premium Strategies for the Year-to-Date.</p><p>While our models seek to produce profits every year, more important is avoiding devastating losses that can require months or years from which to recover. For example, buy-and-hold investors in the S&P 500 required more than five years to make the round-trip back to the October 2007 high after losing -56% in the GFC bear market of 2008-2009.</p><p><a href=\"https://laohu8.com/S/TWOA.U\">Two</a> examples of the outperformance achieved by our models in 2022 are shown below. The first chart is of a high-performance, stand-alone, equity-only strategy that holds two ETFs at all times. While the strategy has only gained 4.09% year-to-date (YTD), the S&P 500 has lost -17.05% YTD, resulting in the model outperforming the market by a healthy 21.14%.</p><p>The benefit of a Risk-On/Risk-Off quantitative strategy in a year like we see in 2022 is that it takes the stress of decision-making off your shoulders, avoiding a treacherous bear-market selloff.</p><h4>Adaptive Equity+ (2 ETF) Strategy</h4><p>Our <i>Adaptive Equity+ (2 ETF) Strategy</i> is our highest performance model, with an Annualized Return of 31.54% since July 2007 and a maximum drawdown of -23.31. This model attains the highest return of our six models, but potential subscribers should remember that higher drawdowns accompany it. Self-assessment of risk tolerance is a requirement.</p><p>The <i>Adaptive Equity+ Strategy</i> has a total return since its inception of 5,964.42% compared to 257.44% for the S&P 500. This year, the Equity+ Strategy has a year-to-date return of 6.94%, <b>outperforming the S&P 500 by a whopping +22.20%.</b></p><p></p><p><img src=\"https://static.tigerbbs.com/3837ab9881e18f10c84fdd062d87d18c\" tg-width=\"640\" tg-height=\"230\" referrerpolicy=\"no-referrer\"/></p><p>Adaptive Equity-Plus (2 ETF) Strategy — YTD Performance (ETFOptimize.com)</p><p></p><h4>ULTIMATE 6-Model (5-10 ETF) Combo Strategy</h4><p>Our <i>ULTIMATE 6-Model (5-10 ETF) Strategy</i> is our most popular Premium Strategy, offering investors a turnkey system that combines six different quantitative strategies, each with a different approach. The result is an excellent annual return and minimal drawdowns, at about half the max-drawdown of our Equity-Plus (2 ETF) Strategy discussed above.</p><p></p><p><img src=\"https://static.tigerbbs.com/5cd0e924fa89be7d70e88f76ac5b63c3\" tg-width=\"640\" tg-height=\"230\" referrerpolicy=\"no-referrer\"/></p><p>ULTIMATE 6-Model (5-10 ETF) Combo Strategy — YTD Performance (ETFOptimize.com)</p><p></p><h4>Improvements Coming Soon</h4><p>In 2022, both stocks and usually safe-haven bonds have been in a rare, simultaneous bear-market decline, causing many Risk-On/Risk-Off investment models to be hobbled. The vast majority of systematic, rules-based investment strategies rely on Bonds during risk-off conditions, whether for individual investors or Pros. Three of our models that usually use the 20-Year Treasury Bond ETF (TLT) as a profitable risk-off asset have been relegated to holding cash (through a short-term Treasury, cash-proxy position).</p><p>This change in bonds makes for a significant performance drag, because most rules-based strategies buy TLT (20-Year Treasury Bond ETF) or <a href=\"https://laohu8.com/S/EGRW\">iShares</a> 7-10 Year Treasury Bond ETF (IEF) (10-Year Treasury Bond ETF), assets that usually skyrocket when a risk-off signal occurs. However, our models have all been successful enough to outperform the market this year, so perhaps we should accept that consolation and understand that this is a very unusual circumstance that won't last forever.</p><p>However, we aren't in the habit of sitting on our laurels when fundamental conditions change, as they have this year. We keep any modification of our strategies to the bare minimum, only changing them when there is a compelling reason. The changes in this cycle are certainly compelling in our estimation.</p><p>We are currently finalizing some new indicators that have proven superior for the modern investment environment, and we are putting together the written text and analytical tables and charts.</p><p>We're also soon announcing a set of new Premium Strategies that will allow our ULTIMATE Strategy (a combination of six different models) to attain greater diversification into assets that can climb higher in any market environment. These alternative strategies won't rely on TLT to provide the only possible risk-off asset.</p><p>Stay tuned for Part 2 of this article, which will show in more detail the most impactful factors affecting stocks in these new conditions.</p></body></html>","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Waterfall Selloff Ahead?</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; 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}\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nWaterfall Selloff Ahead?\n</h2>\n\n<h4 class=\"meta\">\n\n\n2022-05-19 13:54 GMT+8 <a href=https://seekingalpha.com/article/4512998-waterfall-selloff-ahead><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>24K-Production/iStock via Getty ImagesHeadwinds Accumulate, Stocks FlounderThe U.S. stock market, represented by the S&P 500 index, is down about -16% year-to-date, recording six consecutive weekly ...</p>\n\n<a href=\"https://seekingalpha.com/article/4512998-waterfall-selloff-ahead\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"161125":"标普500","SPXU":"三倍做空标普500ETF","BK4573":"虚拟现实","BK4561":"索罗斯持仓","TLT":"20+年以上美国国债ETF-iShares","BK4505":"高瓴资本持仓","BK4512":"苹果概念","BK4504":"桥水持仓","OEF":"标普100指数ETF-iShares","SPY":"标普500ETF","QQQ":"纳指100ETF","BK4548":"巴美列捷福持仓","BK4170":"电脑硬件、储存设备及电脑周边","BK4514":"搜索引擎","IEF":"债券指数ETF-iShares Barclays 7-10年","BK4574":"无人驾驶","BK4554":"元宇宙及AR概念","BK4532":"文艺复兴科技持仓","BK4515":"5G概念","BK4553":"喜马拉雅资本持仓","GOOGL":"谷歌A","BK4571":"数字音乐概念","CPI":"IQ Real Return ETF","BK4507":"流媒体概念","BK4534":"瑞士信贷持仓",".SPX":"S&P 500 Index","BK4576":"AR","BK4533":"AQR资本管理(全球第二大对冲基金)","BK4575":"芯片概念","BK4566":"资本集团","AMZN":"亚马逊","IVV":"标普500指数ETF","SH":"标普500反向ETF","BK4525":"远程办公概念","BK4508":"社交媒体","BK4535":"淡马锡持仓","BK4077":"互动媒体与服务","AAPL":"苹果","BK4527":"明星科技股","BK4538":"云计算","UPRO":"三倍做多标普500ETF","BK4501":"段永平概念","BK4579":"人工智能","BK4550":"红杉资本持仓","BK4503":"景林资产持仓","SSO":"两倍做多标普500ETF","OEX":"标普100","BK4122":"互联网与直销零售"},"source_url":"https://seekingalpha.com/article/4512998-waterfall-selloff-ahead","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"2236716276","content_text":"24K-Production/iStock via Getty ImagesHeadwinds Accumulate, Stocks FlounderThe U.S. stock market, represented by the S&P 500 index, is down about -16% year-to-date, recording six consecutive weekly losses, despite a two-day bounce on Thursday and Friday last week. While the recent surge has enthused optimistic short-term and day traders, the bounce is likely of the \"dead-cat\" variety, occurring only after the SPDR S&P 500 Pacer Swan SOS Fund of Funds ETF|ETF (SPY) reached a short-term oversold level that established yet another new low for the year.Chart 1 below shows a one-year, weekly tracking of the S&P 500 index, highlighting the rare occurrences of six consecutive weeks of declines for this index that represents 80% of the capitalization of U.S. equities, featuring the 500 largest U.S. companies.Chart 1: The S&P 500 has recorded six consecutive weekly declines for the first time since 2011. (StockCharts)The Nasdaq 100 ETF (QQQ) is in even more dire circumstances, down -26% in 2022, and the Fed's tightening cycle is only beginning. At the end of last week, the S&P 500 recorded its sixth consecutive week of losses. According to Bloomberg's analysis, this was the first time a decline of five weeks or more has occurred in more than a decade – since 2011.Chart 2 below shows the incidence of more than five consecutive weekly losses for the S&P 500, with a large gap since the last time (2011) we last saw such a persistent downtrend:Chart 2: Incidence of consecutive weekly declines of six or more for the S&P 500 Index ($SPX). (Bloomberg Finance.)The world's premier equity index (S&P 500) has now recorded six consecutive weeks of losses, and we may be watching the start of a teeth-gnashing, waterfall selloff—perhaps something like October 2008 (post-Lehman Brothers bankruptcy) or March 2020 (Covid-19 Crash).An exceptionally rapid decline in prices characterizes waterfall selloffs. Everyone hits the sell button simultaneously – usually prompted by a surprising/shocking news event, and fund managers get forced by their clients to sell everything. Waterfall selloffs usually occur when investors are pessimistic, and prices have declined significantly. Legitimate buyers are few at these times, and extreme anxiety and emotion rule the day over sound investment logic.When confronted with terrible or frightening news that threatens their investments, many stockholders just want to get out — at any price possible — to recover at least something. During waterfall selloffs, people get desperate to get out, will accept any price, and stocks plummet rapidly.There are incredible investment opportunities if you have the discipline and wherewithal to take advantage. However, I wouldn't want to call a bottom and try catching the falling knife of a selloff-in-progress. U.S. equities have lost about -$8.2 Trillion of value this year, and the global economy has lost more than $35 Trillion.Again, the ETFOptimize Premium Strategies have outperformed the market this year. Some have been profitable, and some have lost a bit this year, but all have outperformed the S&P 500. This two-article series will examine what rules produced profits and what rules lost money.Although the S&P 500 has not yet pierced the classic -20% definition of a bear market, the Nasdaq 100 ETF (QQQ), a representative of America's largest technology-based companies (including Apple (AAPL), Facebook/Meta (FB), Google (GOOG) (GOOGL), Amazon (AMZN), and many other well-known names), has lost more than -25% YTD. Since the losses have been relentless this year, we consider both to be in a bear market.Most bear markets retrace the run-up of the last bull rally, but the last bull rally from the Covid-19 bottom saw prices increase 115%, and from the pre-Covid high in February 2020, stocks gained about 45%. So, there is still significant room to the downside, about -20% to -80% from current levels, for continuing losses in the coming months.The Selloff Also Includes Risk-Off BondsEveryone knows that equities have been in a downtrend all year, and most know bonds are falling too. However, many investors don't realize how much bonds have lost this year, because investors rarely watch bond indices like they keep an eye on the S&P 500 (SPY) or Nasdaq 100 (QQQ). Unfortunately for investors, the most reliable risk-off asset we can use when equities are declining – i.e., fixed-income bonds – is also in a bear market in 2022.Chart 3 below shows that fixed-income bonds, both Corporate and Treasury, are experiencing one of the most prolonged and persistent downturns. For example, the iShares 20-Year Treasury Bond ETF (TLT), one of the most widely used risk-off assets, has lost more than -21% YTD. Although the S&P 500 has not yet pierced the classic -20% definition, we consider both stocks and bonds to be in a bear market, still with significant room to the downside for continuing losses in the coming months.Chart 3: Both risk-on Equities (SPY) and normally risk-off Bonds (TLT) are in a very rare, simultaneous bear market in 2022. (StockCharts)That there is no place to hide makes this environment one of the most challenging investment situations I've seen in my 40+ years as a professional. The Fed has repeatedly declared that it will be very aggressive in increasing rates and reducing its balance sheet to arrest the 40-year high in inflation. According to last week's report, the Fed is still increasing its balance sheet and has only raised the Fed Funds Rate (short-term overnight lending from bank to bank) by 75 basis points (0.75%).Price stability (controlling inflation) is one of two Fed mandates (with low unemployment), and unless the Fed wants to destroy its reputation (more than it has already), it won't flinch on its aggressive measures to subdue inflation. Increasing the cost of capital in the economy causes it to slow, and the vast majority of corporate America has a business model linked to the economy.As the cost of capital increases and ripples through the economy, profits will decline, and stock prices will fall to reflect those lower earnings. That's why it's highly likely that there will be more significant stock price declines in the future. Analysts are lowering estimated earnings at a torrid pace.We're not saying that stocks can't continue surging higher for a bit. Stocks are on a bullish bounce higher as they ping-pong within two standard deviations of a declining long-term average. However, in Part 2 of this article, we'll show you a chart that demonstrates why there is more of a likelihood of a waterfall selloff than there is of a V-shaped recovery higher.One thing is for sure: There is no reason for investors to buy into the teeth of a downtrending market when a sequence of lower highs and lower lows is the dominant theme, and that's precisely the situation today. To reverse higher, stocks will need to decline less than their last low, break the prior short-term high, and set a new higher high. Our Premium Strategies decide for you and remove the time and stress involved in managing your investment portfolio.U.S. EmploymentAccording to the U.S. Bureau of Labor Statistics, employment in the U.S. is at a boiling point, with about two jobs available for every person looking for work today. The U.S. Unemployment Rate remained at just 3.6% in April, unchanged from March, and near a 50-year record low.There are about twice as many job opening today as there are jobs. (Labor Department via St. Louis Fed)That statistic would usually be greeted as fantastic news by workers and policymakers alike. However, the downside of that statistic is that the persistently high consumer demand that's created those plentiful jobs has also resulted in significantly higher prices and, as a result, higher wages.Higher wages are a non-intuitive villain in the story of today's US economy, particularly after decades of stagnant wages have put the average US worker into the psychologically painful position of being less well-off than their parents. The struggles and frustrations of monthly income shortfalls and dead-end career paths are the primary drivers of the anger and partisanship in modern America.Chart 4 below shows the Quarter-over-Quarter change in US wages since 1980. Wages steadily declined from the 1980s, 1990s, 2000s, and 2010s as globalization got underway and China steadily took over the manufacturing duties for the world. India became the low-cost provider of (sort of) English-speaking technical support for software, hardware, phone companies, and everything else that required a relatively educated live person on a phone line.Chart 4: Wages fell since 1980 from the forces of globalization but surged sharply higher since the Covid shutdown in 2020. (Bureau of Labor Statistics via TradingEconomics.com)We can see that US wages declined significantly from the 1980s (when globalization got underway), then flatlined and stair-stepped downward from 2000 through the end of 2019. However, after falling off a cliff during the Covid-19 Pandemic shutdowns in early-2020, wages then shot sharply higher, surging by more than 1.5% two quarters ago, declining slightly last quarter to 1% growth, but climbing again in the latest period by 1.2%.The increase in wages is welcome news for millions of Americans, but the simultaneously increasing cost of rent, food, and fuel have severely impacted mid-level and hourly wage earners, despite the recent pay increases. While there may have been a 3-4% increase in pay over recent quarters, inflation has increased the cost of living by more than 8% in the last year.Chart 5 below shows the impact of inflation on US earnings since 1980. Notice that the periods of high inflation during this span (the 1980s and today) significantly impacted earnings, reducing their purchasing power by nearly -8% each period. This dynamic is economically and psychologically devastating for the 40% of Americans who cannot spare $400 for an emergency.Chart 5: Inflation-adjusted earnings. (US Bureau of Labor Statistics, St. Louis Federal Reserve Bank.)Economists estimate that the U.S. government (the U.S. congress and Fed) pumped about five times the amount needed to fill the economic pothole created by business closures during the March-April 2020 Covid-19 Pandemic. Combined, nearly $10 Trillion was created out of thin air by the Federal Reserve and U.S. Congress to fill the $2 Trillion economic hole. That transfer of new money resulted in the U.S. economy increasing by 50% in 2020-2021, and it has continued to multiply through the phenomenon of US capitalism, creating an overheated job market and higher prices for goods of all kinds.The hot economy, increased (but now dwindling) savings from the Covid stimulus payments, continuing supply-chain backlogs, and even the war in Ukraine have combined to create an overly competitive market for workers, resulting in increased labor costs. According to the U.S. Bureau of Labor Statistics, the cost for civilian workers increased 1.2% quarter-over-quarter, surging from 1% in the previous quarter. More significantly, the cost of living increased 8.5% year-over-year, near a 50-year record high.While the increase in wages was a long-awaited and excellent development for workers after so many decades of slowly sinking deeper into financial hardship, they simultaneously got their knees taken out by higher prices from inflation. This has only added to an accumulating level of anxiety and anger throughout America – fueling partisan bickering.Since the U.S. Federal Reserve was the only Central Bank in the world pumping such a spectacular amount of money into the system, the US is the only country experiencing this level of inflation. That's because no other country pumped as much money into their economy as the US did in the last two years.The Fed is not the only culprit behind this situation because the politicians in Washington – from both the Republican and Democrat parties – proposed, voted for, and passed the distribution of trillions of Covid-19 stimulation payments. The politicians were doing what they thought would benefit the public because they wanted to win future votes from that public from their largess.Federal Reserve Caused Inflation It's FightingThe Federal Reserve Board had no motive to give away money to win elections and is staffed by supposedly experienced career professionals that should have known better. Yet the Fed continued overstimulating the economy even as the din of public/business criticism reached a roar. We were one of many who published articles in 2021 documenting the overstimulation, but it was all for naught. Moreover, the Fed continues its stimulative effort even today!The Fed purchased assets again last week, some eight months after declaring inflation a problem, and reported an increase in its balance sheet of $2.8 Billion on Wednesday, May 11! Granted, that's less than the average it was purchasing beginning in July 2020 – but why is the Fed still purchasing assets to stimulate the economy after it finally declared that inflation was a serious problem? The mind boggles...For the last 14 years, the Fed has run an enormous and risky experiment dubbed \"Quantitative Easing (QE)\" by former Fed Chairman Ben Bernanke. Because of QE’s infusion (and now withdrawal) of massive amounts of money into the economy and investment markets, the Fed is the elephant in the room for every investor today. Perhaps 80-90% of those reading these words have never known an investment world without the bullish influence of the Fed.My friend Lance Roberts just published an excellent analysis on Seeking Alpha that identifies the tight correlation of Fed Policy to stock and bond prices. I can't add much to his analysis, so I'll refer you there for the data on this relationship.In 2022, investors are experiencing the very early stages of the effect of Quantitative Tightening or QT on the U.S. economy. We're likely to get a rude awakening from a waterfall selloff in the coming months, likely accompanied by nasty withdrawal symptoms – just as experienced by anyone addicted to a pleasurable substance (including free money and ever-climbing markets) when that substance is stopped. Unfortunately, there are no similar withdrawal-counteracting or portfolio/life-saving drugs for investors like Buprenorphine/Naloxone for opioids.As we’ve discussed before, the U.S. Federal Reserve Bank is both the arsonist and the fireman of the U.S. economy, historically either over-stimulating or over-contracting the money supply long after those efforts were most needed. Historically, the Fed is America's primary cause of economic bubbles and busts, and it seems determined to keep that record intact.InflationOn Wednesday, May 11, the Labor Department reported that the Consumer Price Index (CPI) increased by another 0.3% in April after rising 1.2% in March. For the last 12 months, the pace of inflation fell slightly to 8.3% in April from 8.5% for the 12 months ending in March. However, the primary source of the gradual decline was a slight decrease in gasoline prices, a consumer expense affecting nearly everyone but which has since returned to a new high.The most eye-opening inflation data? Airline tickets are up 18% in the last month, and rents have increased 39% in the last year. Short of an outright shooting war, inflation pressures have the most impact on a nation's populace. Inflation is hitting many Americans for the first time because they were not yet breathing when inflation last hit these shores in the late-1970s to early-1980s.Initially sparked by product shortages from supply-chain backlogs spurred by the worldwide Covid shutdowns in 2020, inflation has become ingrained in the US economic system. The Federal Reserve and the US Congress exacerbated the price pressures caused by Covid shortages by pumping a combined $9 trillion of newly created money supply into the US economy. That $9 trillion was nearly five times the stimulus needed to fill the economic hole created by business closures from the Covid shutdowns and economic slowdown in 2020.Chart 6 below shows the US Consumer Price Index (CPI) for the US through the May 11, 2022, release:Chart 6: CPI has spiked at a pace far worse than anytime in the last 35 years. (St. Louis Federal Reserve)The resulting inflation was predictable, with a massively increased supply of dollars chasing a significantly reduced supply of products. Today, the otherwise temporary effect of the supply-demand imbalance is becoming ingrained in the system through increased inflation expectations.An example of inflation becoming ingrained in the system, the Labor Department reported that the price for services rose 0.7% (8.4% annualized) in April over March, the fastest increase since 1990, and services are not affected by the Covid-induced product shortages. Services providers are increasing prices in anticipation of higher personal living expenses, and that anticipation is difficult to eliminate without the pressures of an economic contraction (recession) bringing them down.Additionally, wage increases are becoming ingrained in the system, with business and government employers spending 4.5% more on wages, salaries, and benefits in the first quarter compared to the year prior. That's the fastest increase since the early 2000s and a half-percent increase over the 4th quarter of 2021. However, keep in mind that real wages (adjusted for inflation) are down for the 13th consecutive month.ETFOptimize Premium Strategies Outperform the Market in 2022ETFOptimize rarely makes forecasts. Instead of making low-probability, swing-for-the-fences predictions about future market developments and making bets on those guesses, our algorithms instead assess more than 50 data sets every weekend. Our Premium Strategies make decisions based on current developments (and their near-term implications) as they occur.This \"now-cast\" approach to investing is far more consistent and provides far higher-probability outcomes than the alternative of forecasting, which has long been the norm in the investment world. Moreover, while now-casting might sound like a recipe for rapid-fire whipsaw trades, our strategies have an average holding time of about three months. Weekly assessment allows our models to respond quickly when conditions change, but they require a substantial deviation from the trend to signal an actual change in positions.One of the few analytical articles in which we did make a longer-term forecast was an October 2021 report we published on Seeking Alpha (\"Imminent Decline Ahead\"). In it, we warned investors that our systems had assessed that a significant downturn was likely in 2022. Then, as the calendar page turned to start the New Year, that's precisely what happened. While the S&P 500 set an all-time high on January 3, conditions have been bearish for the S&P 500, Nasdaq, and Corporate/Treasury Bonds throughout 2022.The ETFOptimize Premium Strategies have been holding defensive positions since January—either in a cash-proxy ETF, inverse ETF, or commodity-based ETFs, and each of our Premium Strategies has outperformed the S&P 500 in 2022. The charts below show the performance of a sample of our Premium Strategies for the Year-to-Date.While our models seek to produce profits every year, more important is avoiding devastating losses that can require months or years from which to recover. For example, buy-and-hold investors in the S&P 500 required more than five years to make the round-trip back to the October 2007 high after losing -56% in the GFC bear market of 2008-2009.Two examples of the outperformance achieved by our models in 2022 are shown below. The first chart is of a high-performance, stand-alone, equity-only strategy that holds two ETFs at all times. While the strategy has only gained 4.09% year-to-date (YTD), the S&P 500 has lost -17.05% YTD, resulting in the model outperforming the market by a healthy 21.14%.The benefit of a Risk-On/Risk-Off quantitative strategy in a year like we see in 2022 is that it takes the stress of decision-making off your shoulders, avoiding a treacherous bear-market selloff.Adaptive Equity+ (2 ETF) StrategyOur Adaptive Equity+ (2 ETF) Strategy is our highest performance model, with an Annualized Return of 31.54% since July 2007 and a maximum drawdown of -23.31. This model attains the highest return of our six models, but potential subscribers should remember that higher drawdowns accompany it. Self-assessment of risk tolerance is a requirement.The Adaptive Equity+ Strategy has a total return since its inception of 5,964.42% compared to 257.44% for the S&P 500. This year, the Equity+ Strategy has a year-to-date return of 6.94%, outperforming the S&P 500 by a whopping +22.20%.Adaptive Equity-Plus (2 ETF) Strategy — YTD Performance (ETFOptimize.com)ULTIMATE 6-Model (5-10 ETF) Combo StrategyOur ULTIMATE 6-Model (5-10 ETF) Strategy is our most popular Premium Strategy, offering investors a turnkey system that combines six different quantitative strategies, each with a different approach. The result is an excellent annual return and minimal drawdowns, at about half the max-drawdown of our Equity-Plus (2 ETF) Strategy discussed above.ULTIMATE 6-Model (5-10 ETF) Combo Strategy — YTD Performance (ETFOptimize.com)Improvements Coming SoonIn 2022, both stocks and usually safe-haven bonds have been in a rare, simultaneous bear-market decline, causing many Risk-On/Risk-Off investment models to be hobbled. The vast majority of systematic, rules-based investment strategies rely on Bonds during risk-off conditions, whether for individual investors or Pros. Three of our models that usually use the 20-Year Treasury Bond ETF (TLT) as a profitable risk-off asset have been relegated to holding cash (through a short-term Treasury, cash-proxy position).This change in bonds makes for a significant performance drag, because most rules-based strategies buy TLT (20-Year Treasury Bond ETF) or iShares 7-10 Year Treasury Bond ETF (IEF) (10-Year Treasury Bond ETF), assets that usually skyrocket when a risk-off signal occurs. However, our models have all been successful enough to outperform the market this year, so perhaps we should accept that consolation and understand that this is a very unusual circumstance that won't last forever.However, we aren't in the habit of sitting on our laurels when fundamental conditions change, as they have this year. We keep any modification of our strategies to the bare minimum, only changing them when there is a compelling reason. The changes in this cycle are certainly compelling in our estimation.We are currently finalizing some new indicators that have proven superior for the modern investment environment, and we are putting together the written text and analytical tables and charts.We're also soon announcing a set of new Premium Strategies that will allow our ULTIMATE Strategy (a combination of six different models) to attain greater diversification into assets that can climb higher in any market environment. These alternative strategies won't rely on TLT to provide the only possible risk-off asset.Stay tuned for Part 2 of this article, which will show in more detail the most impactful factors affecting stocks in these new conditions.","news_type":1},"isVote":1,"tweetType":1,"viewCount":240,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0}],"hots":[{"id":9023427755,"gmtCreate":1652951078277,"gmtModify":1676535195123,"author":{"id":"3572828820370779","authorId":"3572828820370779","name":"Xianglaw","avatar":"https://community-static.tradeup.com/news/97601e73933911657a3b84b6d943ce66","crmLevel":3,"crmLevelSwitch":0,"followedFlag":false,"idStr":"3572828820370779","authorIdStr":"3572828820370779"},"themes":[],"htmlText":"Good read but lengthy ","listText":"Good read but lengthy ","text":"Good read but lengthy","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9023427755","repostId":"2236716276","repostType":4,"isVote":1,"tweetType":1,"viewCount":240,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":9023459700,"gmtCreate":1652951426300,"gmtModify":1676535195134,"author":{"id":"3572828820370779","authorId":"3572828820370779","name":"Xianglaw","avatar":"https://community-static.tradeup.com/news/97601e73933911657a3b84b6d943ce66","crmLevel":3,"crmLevelSwitch":0,"followedFlag":false,"idStr":"3572828820370779","authorIdStr":"3572828820370779"},"themes":[],"htmlText":"Thanks for sharing ","listText":"Thanks for sharing ","text":"Thanks for sharing","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9023459700","repostId":"2236797581","repostType":4,"isVote":1,"tweetType":1,"viewCount":406,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0}],"lives":[]}