Stocks go up, up, up, and then down some, and then up some more

Yeah Faux News definitely is trying to spin this into some Dem vs retail investor weird dynamic.

I’m like, I don’t have any friends on fb, poor or millionaire, that are rooting against reddit investors here.

I guess I need to know some billionaires to see what their opinions are.

WSJ also reporting the SEC has said today that they’re looking into the Robinhood, etc. stuff.

“We will act to protect retail investors when the facts demonstrate abusive or manipulative trading activity that is prohibited by the federal securities laws” - SEC

The best part of the spin is you know they will freak out if this generates market regulations or oversight. It must be easy to “right” the news when you already have the frame of R good D bad and you just drop pieces in and throw out facts that don’t fit.

RH limited buying GME shares today to 5 at open, cut that back to 2 by noon, and then 1 later in the afternoon. If you owned more than that at the time you couldn’t buy.

image

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from wsj (Why Brokers Had to Restrain Trading in GameStop Shares - WSJ)

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It looks like the sp500 is primed to extend past the $4k mark in the near future

My index-fund brokerage is at a 5-year 16.6% rate of return, and 1-year is 37.4%. I like seeing the numbers go up, wonder when they’ll go down.

next stop $5k for the sp500 and $40k for the dow

$100 for NIO

I’d be ok with this…

I just wonder if at some point we’ll have a “lost decade” again if valuations get too high.

only if paper handed bitches start selling

I don’t think I can time the market, but…

The S&P 500 advanced Friday and extended its weekly winning streak to three, its longest since October.

Major indexes hovered around the flatline for much of the trading session before racing higher into the closing bell, with the S&P 500 and Dow Jones Industrial Average hitting fresh highs to end the week.

The broad stock market index rose 31.63 points, or 0.8%, to 4128.80, its 20th record for 2021. The benchmark notched gains for a third straight week for the first time in nearly six months. Its weekly gain of 2.7% was its largest since early February.

The Dow gained 297.03 points, or 0.9%, to 33800.60 on Friday, and the Nasdaq Composite added 70.88 points, or 0.5% to 13900.19. The indexes gained 2% and 3.1%, respectively, for the week.

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Shares of technology giants were among the biggest winners in the stock market this week as investors returned to a trade that had been wildly popular for much of last year. Bond markets calmed, with yields dropping for four straight days before ticking higher on Friday.

Twitter shares added 12% for the week, while Apple gained 8.1%.

Still, the recent rally has been broad-based as investors have bet that economic growth will pick up as Covid-19 vaccines and government support help revitalize social and business activity.

Last week’s jobs report showed that the unemployment rate fell to a pandemic low. Federal Reserve officials reiterated this week that the central bank will continue with policy measures aimed to support the recovery.

The IMF also projected that the world economy will grow 6% this year, the fastest pace of expansion in at least four decades.

Some analysts say they expect the powerful run in the market to continue as more Americans are vaccinated and head out to spend on everything from travel to clothing.

“A lot of people think there’s too much optimism, giddiness,” said Jim Paulsen, chief investment strategist at the Leuthold Group. “I still think that’s going to get even more extreme probably as more people get shots in the arm…However optimistic we feel today, we could feel a heck of a lot more optimistic later this year.”

In bond markets, the yield on the 10-year Treasury note recently ticked up to 1.664%, from 1.632% Thursday. It remains below the 1.749% it hit at the end of last month.

Some investors are cautioning that the pace of Covid-19 vaccinations and rising infection levels in some parts of the world may hobble the global recovery. Fed Chairman Jerome Powell on Thursday also said the sluggish pace of the vaccine-rollout outside the U.S. is a key threat to the outlook.

“We’re going from this period of time where we’re going ‘whoa, everything is getting better’ and we’ve forgotten there will be bumps on the road,” said Lars Skovgaard Andersen, investment strategist at Danske Bank Wealth Management. “We are in for a time when we have much higher volatility.”

The Wall Street sign at the New York Stock exchange, March 9, 2020.

Photo: carlo allegri/Reuters

Guidance on companies’ future profits and sales prospects, which will be forthcoming when the quarterly earnings start next week, are also likely to determine the course of the market in coming weeks.

“We need to now see strong earnings growth to validate this stock rally,” said Anwiti Bahuguna, a portfolio manager at Columbia Threadneedle. “I think it will be validated and we will see stocks higher in the remainder of the year.”

Overseas, the pan-continental Stoxx Europe 600 edged up 0.1%.

In Asia, most major benchmarks closed lower. The Shanghai Composite Index shed 0.9%, and Hong Kong’s Hang Seng Index declined 1.1%. South Korea’s Kospi edged down 0.4%.

Write to Caitlin Ostroff at caitlin.ostroff@wsj.com and Gunjan Banerji at Gunjan.Banerji@wsj.com

Copyright ©2020 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

Appeared in the April 10, 2021, print edition as ‘Dow, S&P 500 Rally To Set Fresh Records.’

The recent stock market gains seem too good to be true. What’s lurking behind the numbers that “everyone” is ignoring? Is inflation going to come roaring back? Will the fed have to raise interest rates much quicker than anticipated? (Futures markets are currently predicting that the overnight rate will stay below 50 bps until almost all of 2025. (That doesn’t seem possible.)) I feel like I should get out of the market…at least a (sizeable) portion of my portfolio.

I remember the thread from the AO where people were suggesting to get out of the market back in 2014. When the market crashed last year in March a poster or two were basically celebrating, saying what a good decision it was to not be in the market. I’m not very good at timing things, so I just stay in.

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I’m wondering if there is a class of equities that will be less affected by increases in interest rates. My portfolio is still nearly 100% stocks for someone who is almost 50, and I feel I should at least move to more dividend stocks, something less aggressive. But if dividend stocks are also going to get pounded by an increase an interest rates I’m open to something else.

From the wsj, The Economy Is Recovering: How to Invest When Everything Is Expensive - WSJ

The Economy Is Recovering: How to Invest When Everything Is Expensive

Stock valuations have never been so stretched at the beginning of an economic cycle. Savers need to plan for lower future returns.

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April 10, 2021 10:05 am ET

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The good news for your portfolio is that the economic rebound from Covid-19 is looking like a fact. The bad news is that financial assets have never been so expensive at the start of a recovery.

Stock markets have shaken off concerns about rising bond yields and are setting new highs. As of Friday, the S&P 500 index is up 10% this year.

Analysts usually compare share prices to the earnings companies generate, which is what investors ultimately have a claim on. Nobel laureate Robert Shiller uses data stretching back as far as 1871 to calculate price/earnings ratios, averaging profits over a decade, adjusted for inflation, to correct for economic booms and busts—a metric known as the Shiller P/E, or cyclically adjusted P/E ratio (CAPE).

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The S&P Composite 1500 is trading at a CAPE of 37. That is more than twice the historical average, though still less than the dot-com bubble peak of 44. It reached 33 before the 1929 crash.

The problem with an “everything rally” is that, yes, everything is now expensive. Among stocks, even many pandemic-stricken cyclical industries such as airlines aren’t cheap anymore. And with interest rates at record lows and economic growth accelerating, bonds are looking stretched too. Treasurys could offer some value, but 10-year yields are still under 1.7%. As for corporate bonds, the extra return they offer relative to government paper has fallen to near its recent historic low.

Nor is there a dip to buy in real estate. Home prices have risen during the pandemic and are close to 2007 levels relative to rents.

Savers shouldn’t panic yet. Waiting for a bubble to burst based on high valuations has led to terrible investment decisions in recent decades. Prof. Shiller himself has underscored that low rates make equities more attractive. And while there are signs of irrationality—including the proliferation of special-purpose acquisition companies—they aren’t comparable to the mom-and-pop craze for Pets.com in the early 2000s. Today’s market leaders are technology giants that make tons of money. All of this justifies higher valuations.

Also, thanks to activist fiscal and monetary policies, Americans are awash in cash. A strong rebound from the 2020 trough is under way, judging by the latest economic data.

The relevance of high valuations isn’t—as often thought—that they point to a crash. Rather, they are an indication that, over the long run, gains might be lower.

Historical data show that negative returns can happen at almost any level of valuation, but that overall there is still an inverse correlation between CAPE and future 10-year equity returns. Usually, stocks progressively cheapen after economic growth reaches a peak. Once they hit a bottom, they slowly become expensive again. In the 2009-2020 cycle, for example, CAPE started at 16 and ended at 31.

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Do you expect lower returns from your stock investments in the near future? Why or why not? Join the conversation below.

Not this time: Markets rallied last spring in anticipation of a 2009-like rebound as the economy reached a trough, so valuations are at their highest starting point for a recovery ever. Replicating the last cycle’s stellar performance would take them to an unprecedented CAPE of 52, which is hard to imagine.

Earnings will likely rebound much faster from a pandemic than after previous crises: FactSet predicts a 23% year-over-year jump this quarter. But even using optimistic post-Covid-19 profit expectations, markets are pricey.

Paradoxically, it is easier to protect against an immediate crash than to find a solution to investment returns eventually being lower. The irony of a world in which stocks have less of an upside but are protected from calamities by central banks and governments is that it might actually be better to buy more of them. Portfolios with 70% in stocks and 30% in bonds—versus the traditional 60/40 tilt—can squeeze out more of the extra returns equities tend to provide.

Many money managers are recommending discounted cyclical and foreign stocks, but low valuations aren’t an indication that their underperformance over the past decade is at an end. Commodities might offer better upside exposure to global growth: Despite recent gains, they are historically cheap.

So much optimism about the postpandemic recovery bodes well for the economy itself. For savers, however, it means planning for a future with lower returns.

Write to Jon Sindreu at jon.sindreu@wsj.com

I’m starting to sense some irrational exuberance.

Dogecoin, Once a Joke, Moves Mainstream

Traders on online forums are whipping the meme cryptocurrency’s price higher following a meteoric 8,000% rally so far this year

Dogecoin’s rise comes alongside a broader rally in cryptocurrencies that has been driven in part by stimulus checks.

Photo: Jakub Porzycki/NurPhoto/Zuma Press

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A cryptocurrency that was created as a joke exploded into plain view on Wall Street on Monday, with a surge in dogecoin sending its 2021 return above 8,100%—more than double the gains on the S&P 500, including dividends, since 1988.

Dogecoin’s rise from a quirky meme into a widely traded asset worth about $50 billion—more than Marriott International Inc. or Ford Motor Co. —is the latest act of financial alchemy by rapidly moving individual investors who have used access to no-fee trading platforms and a wave of government stimulus money to transform markets over the past year.

The cryptocurrency’s rise is reminiscent of GameStop Corp.’s stunning advance earlier this year, an episode in which traders congregating on Reddit and other social-media platforms made a past-prime mall retailer into a stock-market superpower.

This time, dogecoin’s buyers have gone a step further, turning what was meant as a parody into a real asset, providing some traders who piled in early with unimaginable gains. The latest stage of the frenzy centers on Tuesday having been deemed “Doge Day” in online forums, a loosely organized bid to push the price of the cryptocurrency to $1, from a 5 p.m. ET closing price of nearly 39 cents on Monday and less than a penny in January.

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Both episodes underscore the scale and potency of the current retail-trading environment, in which organized efforts in online communities can make a surprisingly large impact on market prices. They also reflect expectations that prices will continue rising, and as such they embody risks that these sudden fortunes will be wiped out when the winds of the markets shift.

“A lot of people coming in haven’t been around that long, and haven’t seen bitcoin crash,” said Robert Drach, an asset manager at Drach Advisors in Tallahassee, Fla. He oversees investments for individual clients.

For now, the rise and fall of favored assets in online forums has largely been contained. GameStop’s surge peaked in January and fizzled without hitting major indexes. That said, many investors are keeping an eye on these market oddities, reasoning that a precipitous fall in the price of dogecoin or bitcoin could prompt hedge funds and other large investors to reduce risky holdings and contribute to a broader retreat from risk.

Though there is no reason right now to worry that stocks are on the verge of a sharp pullback, dogecoin’s rise “feels to me like a bubble,” said Mr. Drach. “That’s always concerning to me, not just for dogecoin investors, but regular equities investors.”

For now, dogecoin’s sharp rise is vindicating one of the strange but true facts of 2021: The most unconventional trades can sometimes yield outsize gains. Someone who invested $10,000 in dogecoin on Dec. 31 would have amassed more than $821,000 as of Monday, according to data from Kraken. The same money invested in shares of GameStop would have yielded just under $87,250, and in an index fund tracking the S&P 500 nearly $11,150, including dividends.

Should dogecoin go on to hit $1, its value would exceed blue-chip companies including Advanced Micro Devices Inc., CVS Health Corp. and General Motors Co.

“This is absurd,” said Billy Markus, the co-creator of dogecoin. “I haven’t seen anything like it. It’s one of those things that once it starts going up, it might keep going up.”

Dogecoin serves no purpose, and unlike bitcoin, faces no limit on the number of coins that can exist. Each day, computers solve mathematical puzzles to unlock new coins. About 129.2 billion dogecoin were in circulation Monday, according to CoinDesk.

Dogecoin’s rise comes alongside a broader rally in cryptocurrencies—and at a time when investor sentiment, even outside of cryptocurrencies, appears by some metrics to be stretched. The so-called everything rally in financial markets this year has also lifted the prices on a range of things from “meme stocks” like GameStop to nonfungible tokens that verify the authenticity of artworks and sports highlights.

Cryptocurrencies tend to be especially volatile, prone to double-digit percentage swings in a single day. The listing of exchange operator Coinbase Global Inc. sent prices of bitcoin and ether to records last week. On Sunday, bitcoin fell more than 10% on speculation that the Treasury Department was weighing taking action against some institutions over money laundering using cryptocurrencies.

Stimulus checks and low borrowing costs that have sent stocks soaring over the past year likely have contributed to the rise in dogecoin as well, Mr. Drach said.

“I don’t think you can sit there and be making a ton of money in your S&P 500 [exchange-traded fund] and then look at the dogecoin people and laugh, because it’s all the same liquidity pumping it up.” he said.

Traders said they started promoting “Doge Day” after seeing a new advertising campaign on Twitter from Conagra Brands Inc.’s Slim Jim account. The snack-food brand, which frequently uses memes to draw attention online, said it planned to launch something called DogeSlimJim on Tuesday and exhorted the “DogeArmy” to spread the word. Its account was plastered with memes of the Shiba Inu dog that inspired the creation of dogecoin.

Lanie Friedman, a spokeswoman for Conagra, said the brand planned to launch a doge-inspired digital product. She declined to provide further details and said Slim Jim’s campaign was unrelated to the value of dogecoin.

Shaun Becker, who lives in Phoenix, began promoting “Doge Day” on his Twitter account after seeing tweets from Slim Jim. The 36-year-old risk-and-compliance analyst said he first bought dogecoin on Feb. 8, as celebrities including Tesla Chief Executive Elon Musk and rapper Snoop Dogg promoted it. Mr. Becker’s $1,179.42 investment in dogecoin was worth $4,477 Monday, when dogecoin traded near 39 cents.

“I’m very confident that on Tuesday, it’s probably going to hit at least $1,” Mr. Becker said in an interview. “Even if you throw in $100, you can double your money. I don’t want anyone to make a risky investment. I just want everyone to get a piece of the pie.”

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Dogecoin: Elon Musk, Snoop Dogg Tweets Fuel Crypto Price Rally

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Dogecoin: Elon Musk, Snoop Dogg Tweets Fuel Crypto Price Rally

After tweets from Elon Musk and Snoop Dogg, dogecoin topped $10 billion in market value. WSJ looks at why online investors are pouring money into the virtual currency. (Video from 2/9/21)

Newcomers piled into dogecoin to such a degree last week that investors on Robinhood Markets Inc.’s popular trading app had trouble executing trades.

Robinhood said that a surge in interest for the token last Thursday put “extreme pressure on crypto trading systems,” bringing down its order system for cryptocurrencies. Operations were back to normal within two hours, the company said, but traders encountered trouble again on Friday, the day that dogecoin notched an intraday record of 45 cents. That led to sporadic crypto order failures and delayed notifications for some customers, the company said.

Robinhood, as well as other popular retail trading platforms, have experienced outages and other technical glitches throughout the last year amid heightened investor demand. Robinhood also came under fire earlier this year when it halted and then limited customers’ purchases for a handful of stocks including GameStop that had suddenly soared in popularity.

Between Thursday and Friday, Payward Inc.’s exchange, Kraken, registered volumes for dogecoin at 71 times their 30-day average.

Write to Caitlin Ostroff at caitlin.ostroff@wsj.com and Caitlin McCabe at caitlin.mccabe@wsj.com

Copyright ©2020 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

Appeared in the April 20, 2021, print edition as ‘Dogecoin Rides Online Frenzy.’

It might have started out as a meme, but I think everyone knows about it at this point.

did it finally happen? are we getting the correction?