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Markets still falling like whoa

Llano Estacado

By Llano Estacado
in Business and Markets

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Eastwood
Eastwood

That's why I'm out. There is no end game, IMO. This has to be fixed outside of the market and I got too nervous about what that entails for retail investors. They will always be last on the list, if o

Rusty Shackelford
Rusty Shackelford
Eastwood
Eastwood

I'm not a financial advisor. This is not financial advise. I don't work in finance. I do not have a degree in finance. Actually, I have a BA and I'm bad at math past Cal I. I won't apologize for the l

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UTGrad98

UTGrad98 2331

Posted
Posted

I have a question that has been bugging me. Why would I ever allocate any money in my portfolio to bonds? It made next to nothing in the run up from 2020. And that's fine. I wasn't banking on much return. What I was expecting is a hedge against a downturn. And so far my bond fund is down 8% this year. My 401k is my hedge against my stupid self as I don't actively manage it. I'm 80/20 stocks bonds. Why the hell would anyone put money in bonds? And if they are a traditionally good investment what made these last 2 years different? 

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Blotto

Blotto 23974

Posted
Posted (edited)
28 minutes ago, Trey3216 said:

WallyWorld with a huge miss on earnings.    Yikes 

 

Quote

Bottom-line results were unexpected and reflect the unusual environment," McMillion said in a press statement. "U.S. inflation levels, particularly in food and fuel, created more pressure on margin mix and operating costs than we expected. We're adjusting and will balance the needs of our customers for value with the need to deliver profit growth for our future."

Walmart's operating expenses as a percentage of net sales also increased by 45 basis points during the quarter, "primarily due to increased wage costs in Walmart U.S.," the company added.

Walmart also signaled it expected many of these cost pressures would remain a drag on profitability throughout the year. The company cut its profit outlook and now sees a decrease of about 1% in earnings per share for the full year, compared to a prior outlook of an increase by mid-single digits.

That's not an insignificant admission/correction

 

Edited by Blotto
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TwiceHorn

TwiceHorn 31987

Posted
Posted (edited)
22 minutes ago, UTGrad98 said:

I have a question that has been bugging me. Why would I ever allocate any money in my portfolio to bonds? It made next to nothing in the run up from 2020. And that's fine. I wasn't banking on much return. What I was expecting is a hedge against a downturn. And so far my bond fund is down 8% this year. My 401k is my hedge against my stupid self as I don't actively manage it. I'm 80/20 stocks bonds. Why the hell would anyone put money in bonds? And if they are a traditionally good investment what made these last 2 years different? 

Bonds work as an investment if you get decent interest off of them and you don't have to trade them much.  You buy a "ladder" of bonds with maturities spanning the period of interest (say, your retirement), and you just collect the interest and are happy about it.  You don't worry about YTM or the value of the bond.

When you start having to trade bonds is when they start acting like stocks and lose a lot of their appeal to the ordinary investor. Bond funds, by their nature, have to do more trading than an ordinary outright position in bonds, so you experience more volatility and risk than outright ownership.  Bond funds arguably destroy most of the appeal of owning bonds because your return isn't fixed and you are subject to the volatility of trading.

In more normal times, when interest rates are "decent" and fluctuate a couple of percentage points in either direction over a year or two, they're just a low-risk/low-return income investment.  In times like these, where rates have been negligible and start shooting up to not-negligible, bonds kind of suck:  they have shitty rates making you want to trade them for those with better rates, and you eat shit on the trades.

Edited by TwiceHorn
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Cheeseweasel

Cheeseweasel 26439

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25 minutes ago, Blotto said:

Bottom-line results were unexpected and reflect the unusual environment," McMillion said in a press statement. "U.S. inflation levels, particularly in food and fuel, created more pressure on margin mix and operating costs than we expected. We're adjusting and will balance the needs of our customers for value with the need to deliver profit growth for our future."

Walmart's operating expenses as a percentage of net sales also increased by 45 basis points during the quarter, "primarily due to increased wage costs in Walmart U.S.," the company added.

But I was told that companies were taking massive profits and that's what was causing inflation?

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Aqua Buddha

Aqua Buddha 14782

Posted
Posted (edited)
5 hours ago, Blotto said:

 

That's not an insignificant admission/correction

 

They're seemingly carrying too much GM and not enough food.  (They imported a lot to get ahead of the curve while food is almost all domestic.)  They're also seemingly overstaffed even though you can never find anyone.

Their top line was quite good, actually.  They're just blaming inflation for everything else.  Other major retailers aren't having the same problems.

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Trey3216

Trey3216 15450

Posted
Posted
2 hours ago, Aqua Buddha said:

They're seemingly carrying too much GM and not enough food.  (They imported a lot to get ahead of the curve while food is almost all domestic.)  They're also seemingly overstaffed even though you can never find anyone.

Their top line was quite good, actually.  They're just blaming inflation for everything else.  Other major retailers aren't having the same problems.

Yeah, adjusting YoY sales to -1% rather than up 6-8% is high quality top line from a discount retailer, especially when factoring in 8% YoY inflation.  Walmart is telling you right now that we're in a recession.  

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Cheeseweasel

Cheeseweasel 26439

Posted
Posted
55 minutes ago, Trey3216 said:

Yeah, adjusting YoY sales to -1% rather than up 6-8% is high quality top line from a discount retailer, especially when factoring in 8% YoY inflation.  Walmart is telling you right now that we're in a recession.  

"It's product mix" - Me, trying to explain it to the Board of Directors.

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Aqua Buddha

Aqua Buddha 14782

Posted
Posted
19 hours ago, Trey3216 said:

Yeah, adjusting YoY sales to -1% rather than up 6-8% is high quality top line from a discount retailer, especially when factoring in 8% YoY inflation.  Walmart is telling you right now that we're in a recession.  

On the surface, yes, but they're running a 9% two year stack and last year's number was strong as well.  They did very well all throughout covid.  Also, in an inflationary/recession environment, they have historically done well with their price position.  Sure, their core customers get squeezed but there are middle class types that trade down.

As for Target today, like WMT, I've never seen companies report good sales numbers and get blown out.  TGT down 25%?  What the fuck?  TV and bike sales are down because everyone bought one last year.  They said their luggage, beauty, and food are all up.  Traffic up, too.

 

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Aqua Buddha

Aqua Buddha 14782

Posted
Posted
12 hours ago, TonyTexas said:

Any explanation why airline stocks have been holding up so well? Jet fuel prices have skyrocketed. 

President of United said the other day that there is basically no resistance to the high fares.  The major are charging around $1K for just basic routes now and the planes are all full.

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Blotto

Blotto 23974

Posted
Posted
19 hours ago, Trey3216 said:

Yeah, adjusting YoY sales to -1% rather than up 6-8% is high quality top line from a discount retailer, especially when factoring in 8% YoY inflation.  Walmart is telling you right now that we're in a recession.  

They still project net sales to increase, its the EPS that they projected at -1%. In fact they adjusted the sales figure UP from their last guidance. I'm not arguing the point about recessions, but the top line looks better than the bottom line. 

image.thumb.png.e436c3bbc385d6921f37a4bf45490548.png

I gotta be honest, with WMT now down about 25% in the last month, I'm considering picking up some shares. Never owned it before, but history shows its a stock that does better than most in recessions (for instance in the 2008-09 recession, SPY down 25%, WMT up 12%). 

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Trey3216

Trey3216 15450

Posted
Posted
45 minutes ago, Blotto said:

They still project net sales to increase, its the EPS that they projected at -1%. In fact they adjusted the sales figure UP from their last guidance. I'm not arguing the point about recessions, but the top line looks better than the bottom line. 

image.thumb.png.e436c3bbc385d6921f37a4bf45490548.png

I gotta be honest, with WMT now down about 25% in the last month, I'm considering picking up some shares. Never owned it before, but history shows its a stock that does better than most in recessions (for instance in the 2008-09 recession, SPY down 25%, WMT up 12%). 

No doubt.   I’d scale into it as I think there’s some more bleed to come but not as much as other spots.  

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Blotto

Blotto 23974

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3 minutes ago, Trey3216 said:

No doubt.   I’d scale into it as I think there’s some more bleed to come but not as much as other spots.  

Yeah, I don't think the carnage is close to over yet, so I would likely allocate some total amount and then pick up shares every month or two in 20% or 25% blocks. I'm way heavy in cash currently as a correction seemed like a certainty to me, but now I have to put that cash somewhere now with inflation spiking. WMT seems like a decent place to park some of it. 

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TonyTexas

TonyTexas 10683

Posted
Posted
12 hours ago, fattyflattie said:

So have ticket prices. Big time. 

 

2 hours ago, Aqua Buddha said:

President of United said the other day that there is basically no resistance to the high fares.  The major are charging around $1K for just basic routes now and the planes are all full.

I guess the question is how long can this go on until you get consumer resistance. 

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Muny_Tex

Muny_Tex 315

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I’ve mentioned this before, but it’s still a *long* way down when you consider the disastrous macro environment + supply chain that is nowhere close to repair.

Nasdaq is still roughly 35% above the Covid trough, and damn near double where it began the 2017 bull run.

What exactly is the case for optimism in stocks right now? Abandonment of rate hikes + QE5 (and corresponding crash of USD)?

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LTtxfan

LTtxfan 49909

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1 minute ago, TonyTexas said:

 

I guess the question is how long can this go on until you get consumer resistance. 

Weiss bought Delta a few weeks back and planned to hold for awhile.  Said he sold yesterday because it was already up over 10% in such a short time... 

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LTtxfan

LTtxfan 49909

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4 minutes ago, Muny_Tex said:

I’ve mentioned this before, but it’s still a *long* way down when you consider the disastrous macro environment + supply chain that is nowhere close to repair.

Nasdaq is still roughly 35% above the Covid trough, and damn near double where it began the 2017 bull run.

What exactly is the case for optimism in stocks right now? Abandonment of rate hikes + QE5 (and corresponding crash of USD)?

Some think supply chain problem won't be as bad in the fall, plus controlled 50pt rate hikes for awhile... May be optimistic that China will be getting better soon too ??

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