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Wall Street circa 1930

When we look back on the biggest calls of the 2018, no doubt the word “stupid” is going to stand out.

In January, the manager of the biggest hedge fund in the world, Ray Dalio, made some headlines when he declared that investors holding cash were going to “feel pretty stupid” because they would miss out on the “blowoff rally” to come.

The Bridgewater Associates founder took some heat for that call. It was just a couple of days later, on Jan. 26, that the S&P 500 surged all the way to 2,821, and everyone said, “buy into this market now, are you crazy?” But then after a choppy spring, stocks resumed a march higher and the index made it nearly to 3,000, that is until October when things got rough again and generally stayed that way.

MarketWatch
2018 thus far for S&P 500

Dalio is back for our

call of the day, as he says we’ve “squeezed a lot out of U.S. markets,” and investors should get more comfortable expecting less from that cash cow.

Check out: Netflix ‘death cross’ is the third for FAANG stocks, and Nasdaq is next

“I think we’re in an environment where we’re going to have low returns going forward for a very, very long time,” Dalio told Bloomberg in an interview. And in a refrain we’ve heard elsewhere, he says stocks were juiced by a period of lower interest rates and liquidity injections, which has “largely run its course.”

“I think the world by and large is leveraged long,” he said, explaining that low interest rates have fueled buybacks and M&A, boosting stock prices, which also got a lift from the effect of White House tax breaks. “We’ve pushed assets up to levels where it is difficult to see where you can squeeze that.”

His words might be echoing around this morning as investors look down the barrel of another messy day and maybe just wish we could fast-forward to Thursday’s holiday. He’s got some company as Goldman Sachs is also suggesting investors start boosting cash levels.

Dalio, who has just come out with a new book “Principles for Navigating Big Debt Crises,” compared the current era of investing to that of the 1930s. Back then, the U.S. was also in the late stages of a business cycle with populist politics and tons of debt swirling around.

Read: The market doesn’t care right now how fantastic your stocks are

And: Fat lady isn’t singing bull market’s swan song—but she’s ‘warming up’, says strategist

The market

The Dow DJIA, >-2.21% , S&P SPX, >-1.82%  and Nasdaq COMP, >-1.70% are all trading negative for 2018 as a selloff is taking hold for Tuesday.

Crude CLF9, >-6.64%  is down, gold GCZ8, >-0.27%  up just a little and the dollar DXY, >+0.68% is moving up as investors seek shelter from the selling storm.

Check out the Market Snapshot column for the latest action.

Read: Which markets are closed on Thanksgiving

Europe SXXP, >-1.14%  is also having a rough session, and it was ugly in Asia, with China SHCOMP, >-2.13%  techs shares leading the way lower, and Nissan 7201, >-5.45%  tanking after markets got the first chance to react to the arrest of chairman Carlos Ghosn.

Opinion: Ghosn arrest creates peril for investors in not one but three car companies 

The chart

The misery for bitcoin BTCUSD, >-8.82%  investors continues, with the cryptocurrency down by double digits and nearing the $4,500 level. Our

chart of the day is a painful one as it looks at how the cryptocurrency has fallen off a cliff, and just keeps going.

MarketWatch
A painful chart

My grandfather sold bitcoin at 18300 and now he doesn't even remember what bitcoin is. You are still holding in the 4000s wishing you didn't know what bitcoin was. GG outplayed.

— CRYPTOGRAPHY CO฿AIN (@CryptoCobain) November 19, 2018
The quote

“Ivanka Trump pleading ignorance to the rules against using personal [email] after her Dad ran an entire campaign attacking Hillary Clinton for doing that exact thing is proof she is either the most entitled or the dumbest person on the planet.—That was a tweet from Dan Pfeiffer, co-host of the leftist Pod Save America and a former senior adviser to President Obama, commenting on a report in the Washington Post that Trump, an unpaid White House employee, used her personal email for government business. Hillary Clinton has been repeatedly attacked by her dad—POTUS—for the same thing.

The buzz

Apple AAPL, >-4.78%  is on track to open in a bear market as it gets pummeled ahead of the start.

Retail stocks are under pressure after misses from Target TGT, >-10.52% and weak guidance from Best Buy BBY, >+2.14% and no love for Kohl’s KSS, >-9.23%  even on higher profit and revenue forecasts and Lowe’s LOW, >-5.66%  is getting dinged on a same-stores sales miss. Gap GPS, >-3.07%  is due after the close.

In what’s probably not great news for trade wars, regulators in China said they found “massive evidence” of anticompetitive behavior by Samsung 005930, >-1.95% SK Hynix and U. S-based Micron MU, >-1.93% the FT reported.

“Silicon Valley” sitcom tells you everything you need to know about the tech world says MSFT, >-2.78%  co-founder Bill Gates.

Bankrupt Sears SHLDQ, >-4.05%  wants to pay top executives millions of dollars in bonuses.

Spain is providing a fresh Brexit headache for Prime Minister Theresa May, as the country said it would reject the draft deal that she been fighting for unless the proposal makes clear that talks on Gibraltar remain separate. Spain has been hankering to get control of the peninsula since the 1700s.

The quote

“It’s just going to be crazy. We cannot imagine what will happen when all these things happen at he same time.” — That was Camilo Mora, geography and environment researcher at the University of Hawaii whose team has produced a new report on what the world will be like in 2100 when multiple disasters hit at once. It’s a tough read, predicting outbreaks of ugly diseases due to drought and deforestation, though there’s a light at the end of the tunnel it seems.

Random reads

Four dead after shooting at Chicago hospital

Federal judge says White House can’t refuse asylum to immigrants entering the country illegally.

Airbnb will remove all listings in Israeli’s West Bank settlement

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Barbara

Kollmeyer

Barbara Kollmeyer is an editor for MarketWatch in Madrid. Follow her on Twitter @bkollmeyer.

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Source : https://www.marketwatch.com/story/ray-dalio-says-its-just-like-the-1930s-for-investors-right-now-2018-11-20

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