Still Bullish?
I’m not. At least not longer than a day or two at a time.
Yes, I am. Remember, I posted on this a while back (similar graph that I drew myself freehand). I am for the short term anyway. There is much more money being mindlessly pumped into the market nowadays through 401Ks, IRAs, etc. You didn’t really have that in 1929. There are also a lot more companies out there and a lot more markets. I really don’t think that the graph should be linear, but slightly exponential since we are talking about compounded growth. I think that the 7500-7700 number was meaningful back in October and marks a short term bottom. I think that the mentality of people in 1929 was to leave the stock market and never show their face again. Nowadays, people are “waiting for it to get better” and “buying things at better prices”… This tells me that the market sentiment is that people will rush back in as soon as they feel that the coast is all clear. That might take a couple of years though…
On a side note… Now you can see why I have been preaching doomsday for almost a year now… It could get a LOT worse. But, I see the feds cutting interest rates all the way down to 0%, and Oil dropping to $45 a barrel easy which will provide stimulus for those who can take advantage of it and as things start to “heat up”, I think that the government will be quick to start raising rates to keep things in check. They won’t let the market grow so quickly again (lesson learned). So yes, I think we can get growth back in the next 1.5 years, but I think that in the rear view mirror, this will look more like a big correction.
Oops. Sorry, didn’t catch that it was a linear regression. I’m interpreting this as being exponential growth that is flattened by adjusting the Y value on the left vertical (like it’s flipped around kinda). If that’s the case, it does make a strong mathematical argument, but I just don’t think that Wall Street is ready to face the facts yet. I think that we will eventually trend back down to the line (as I stated in my other thread), but I don’t think Wall Street will just let us plumment. If they shake everyone out of the market, then the game is over for good, so we should get several more bull markets and bear markets before we gradually come back into pace. I expect it to look like the 15 years of sideways volatility in your graph (at least that is what I am playing for).
It’s kind of like Vegas… If everyone lost all of the time, then nobody would play…
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Originally posted by skinneejI expect it to look like the 15 years of sideways volatility in your graph (at least that is what I am playing for).
It’s kind of like Vegas… If everyone lost all of the time, then nobody would play…
Exactly the point I was getting to.
So.
Why in the world would anyone want to sit on a 401k for 15 years of sideways action?
“Average Joe” retirement investing follows the logic that the Dow averages roughly 11%/yr. BUT, what if you get caught in 15 years of sideways churning? Maybe end up with 3-5%/yr in dividends? Pray that your fund manager beats the market? 11% is the bare minimum I consider acceptable for an equity investment return.
So how do you plan on making decent returns in a sideways market?
quote:What else are you going to do with your money, take it to Vegas? If you keep it in cash, you can't even keep up with inflation and you are getting -3% each year.
Originally posted by Post QuartermasterExactly the point I was getting to.
So.
Why in the world would anyone want to sit on a 401k for 15 years of sideways action?
“Average Joe” retirement investing follows the logic that the Dow averages roughly 11%/yr. BUT, what if you get caught in 15 years of sideways churning? Maybe end up with 3-5%/yr in dividends? Pray that your fund manager beats the market? 11% is the bare minimum I consider acceptable for an equity investment return.
So how do you plan on making decent returns in a sideways market?
The best return you can get right now is to pay off any debt that you have as that is a guaranteed return with no risk. But, for retirement money, you really don’t have much of a choice.
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Originally posted by skinneej[quote]Originally posted by Post Quartermaster
But, for retirement money, you really don’t have much of a choice.
C’mon now Skinnee. Your a good republican that knows you always have a choice. Educate yourself. Actively manage your money. You’re a smart guy. Learn how to make money when the market moves up, down or sideways. Being a little guy in the market has distinct advantages over being the big bad fund manager that needs weeks (or months) to scale in or out of a position. It’s not as hard (or time consuming)as they want you to believe as long as you have a good system in place.
By the way, I should probably mention how I am playing with my money if it helps anyone… 100% of my 401K contributions go directly into the money market fund and sits there until I am ready to put it in the “real” market. This is equivalent to “cash”.
In my account, you can go in and out of money markets as much as you want, but certain mutual funds will ding you for round robin activity and may even shut you out alltogether. I found a good S&P index fund that only has a 0.03% management fee and the way my account works is that I get the NAV price at the END of the day as long as I put my order in before 4pm…
I generally take a peek at the market and if I see a BIG move (like the 7% on the 10th and the 10% drop on the 27th, then I put an order in around lunch time. If the market is still heading south (that’s what I want since I want to buy at the absolute cheapest point), then I’ll keep my order in. If it looks like we will reverse and start moving back up, then I just cancel my order and leave it in MM until I get a buying opportunity.
Over the course of the sideways movement, my goal is to feel out the bottom and buy at small increments. Earlier this year, I set my sights on 35-45% of the S&P and I started buying in that range. Now that I have seen it go down to 47%, I won’t push any money in until we hit a new low. The idea is that I am just trying to get it for the best price that I can. I’m not DCA’ing directly into the market like most people are.
I may try to do a little market timing (like if we get a 20% move), but that’s not my main goal, so I am not disappointed if I miss out on a move up. I just want to get in as low as possible.
I’ve still got about 25% of my 401K in Money Market and will wait until we see new lows on the S&P before I committ anymore. If we get a solid rally, I’ll likely cut my equity positions back to 30-40%. I’m not trying to get “tops” or “bottoms”. I’m just trying to find prices that I am comfortable with.
quote:Again, I'm in a 401k. You can't roll money into an IRA without a tax penalty. I can't pick individual stocks with my retirement.
Originally posted by Post QuartermasterC’mon now Skinnee. Your a good republican that knows you always have a choice. Educate yourself. Actively manage your money. You’re a smart guy. Learn how to make money when the market moves up, down or sideways. Being a little guy in the market has distinct advantages over being the big bad fund manager that needs weeks (or months) to scale in or out of a position. It’s not as hard (or time consuming)as they want you to believe as long as you have a good system in place.
I am managing though (see my other post)… But what you are saying sounds a lot easier than it actually is. And again, if anyone has any debt, that’s a much better way to make money right now than trying to play trader in this market. If you are paying down your 8% boat loan instead of trying to capture a 6% return in the market, you will make more money that way with 0 risk.
What is your return this year so far?
Over the past few days, the company I represent has been meeting with suppliers. These suppliers ran prices up 25-75% from May to September this year, based on oil.
Interestingly enough, though their orders have come to a standstill, and though oil has dropped, they are holding on to their price structure, expecting a quick turnaround. In other words, they are begging for business, but they aren’t going to cut prices. Yet!!!
It’s going to take a realization from these guys that this is a new world before any turnaround. China has dried up as a market for them to fall back on. One of the products that I sell requires about 450,000 lbs of raw materials each month. We have enough finished product in inventory to meet our orders for November and December, and don’t expect to order any additional raw materials this year.
Any of these companies that don’t have cash to get through these tough times are not going to make it. I also expect to see more competitive pricing after the results of their dismal 4th quarter results are published in late January.
I haven’t speculated much lately, but I have some good positions that I’m going to sit on for a while. I still think there are some good deals out there (Yahoo not being one of them, what a fool!)
quote:Mandopickr, I always enjoy your insight into these topics!
Originally posted by MandopickrOver the past few days, the company I represent has been meeting with suppliers. These suppliers ran prices up 25-75% from May to September this year, based on oil.
Interestingly enough, though their orders have come to a standstill, and though oil has dropped, they are holding on to their price structure, expecting a quick turnaround. In other words, they are begging for business, but they aren’t going to cut prices. Yet!!!
It’s going to take a realization from these guys that this is a new world before any turnaround. China has dried up as a market for them to fall back on. One of the products that I sell requires about 450,000 lbs of raw materials each month. We have enough finished product in inventory to meet our orders for November and December, and don’t expect to order any additional raw materials this year.
Any of these companies that don’t have cash to get through these tough times are not going to make it. I also expect to see more competitive pricing after the results of their dismal 4th quarter results are published in late January.
I haven’t speculated much lately, but I have some good positions that I’m going to sit on for a while. I still think there are some good deals out there (Yahoo not being one of them, what a fool!)
You bring up fantastic points. A lot of the people haven’t really accepted the fact that what they are selling is not worth what people are willing to pay nowadays. But they will figure it out real quick or go belly up as you pointed out. That’s another reason why I expect some kind of decent rally which I don’t think has come yet. The good thing about Wall Street is that it supposedly looks 6 months into the future, and this guy will likely either topple over
PS I’m trying to run my own personal life like this too right now. I’m trying to refrain from buying any toys that are not on sale. I did buy a mispriced bottom fishing combo though that was marked 20% less than it was supposed to be. I put out the signal to my wife too. I told her that if she bought anything and it wasn’t on sale then she would kick herself in the ass two months from now. Not sure my warning overcame the urge to buy, but at least I’ve been saving right now…
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Originally posted by skinneejquote:Again, I'm in a 401k. You can't roll money into an IRA without a tax penalty. I can't pick individual stocks with my retirement.
Originally posted by Post QuartermasterC’mon now Skinnee. Your a good republican that knows you always have a choice. Educate yourself. Actively manage your money. You’re a smart guy. Learn how to make money when the market moves up, down or sideways. Being a little guy in the market has distinct advantages over being the big bad fund manager that needs weeks (or months) to scale in or out of a position. It’s not as hard (or time consuming)as they want you to believe as long as you have a good system in place.
I am managing though (see my other post)… But what you are saying sounds a lot easier than it actually is. And again, if anyone has any debt, that’s a much better way to make money right now than trying to play trader in this market. If you are paying down your 8% boat loan instead of trying to capture a 6% return in the market, you will make more money that way with 0 risk.
What is your return this year so far?
It’s not that hard. The key is having a little bit of knowledge and a system that works for what you want to do. I’m fairly new to the whole thing, took the time to educate myself back in the spring, but never got around to doing anything until september. My regular IRA that I don’t pay alot of attention to is down probably a third or so like everyone else. My self directed IRA is up roughly 50% as of market close today. And its only up 50% b/c I got greedy and started trading on emotion couple of weeks
You have to keep in mind though that I could go to Vegas and get a 200% return next week. That doesn’t mean I could do it week after week and year after year. If it was that easy and required just a little knowledge, then we would all have it figured out and be rich from it. None of the great investors believe in this philosophy, even Warrent Buffet, Peter Lynch, etc. They all stick to the mantra of finding good companies with durable competitive advantages at good prices. Heck, there are guys that had 300% returns in the CF.com stock trader game, but it’s different when you start playing with real money. I doubt those guys will quit their day job this year. Most people can’t sleep at night having capital at risk like that.
I’m sure that there are people out that could do it and make a lot of money, but it’s tough and as you say, it requires a LOT of discipline to not get emotionally involved. If you are one of those people, then great, but I am not one. Most people are not.
And in reality, there isn’t as much transparency in companies as we would like. Wall Street analysts are paid millions of dollars each year and follow only a few companies and still are way off sometimes. If those guys can’t do it right, what chance do I have?
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Originally posted by skinneejYou have to keep in mind though that I could go to Vegas and get a 200% return next week. That doesn’t mean I could do it week after week and year after year. If it was that easy and required just a little knowledge, then we would all have it figured out and be rich from it.
</font id=“quote”></blockquote id=“quote”>Investing involves balancing risk and opportunity. Gamblers do not have the ability to control balance. From a statistical standpoint, in gambling, over the long run, the rules of the game dictate that the house will win. With investing, there is a collective perceived mutual benefit.
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None of the great investors believe in this philosophy, even Warrent Buffet, Peter Lynch, etc. They all stick to the mantra of finding good companies with durable competitive advantages at good prices.
OK. If you believe that Warrens Buffets strategy will work for you, go for it. There are alot of different ways to invest, that is one that works for some people. But most of the people on that list are playing on a different level than you and I. There are specific advantages and disadvantages of each.
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Heck, there are guys that had 300% returns in the CF.com stock trader game, but it's different when you start playing with real money. I doubt those guys will quit their day job this year. Most people can't sleep at night having capital at risk like that.
I don’t plan on quitting my day job a
But that is what I keep trying to tell you… The only money that I am investing right now is 401K money. I’m not putting any personal money in the market right now because I am using it to pay down debt (which guarantees me a return). I’m not a trader. The market really doesn’t make sense to me from day to day, only over longer term intervals. I don’t know what the newspaper will report tomorrow or how the hedge fund managers will react. I’m not sure what’s priced in already and what’s not. It’s really not an excuse. The only thing that you could possibly know about a company is information that is already public and that Wall Street knows about. I’ve tried trading and it didn’t quite work out for me.
If you are truly doing what you are doing, then I will tell you that you’ve probably just been “lucky” so far. Stop loss orders can be pretty nasty too. If the target bounces down to you limit and back up, then great, you just locked in 20% of your losses. If the market gaps lower in the morning, your loss may or may not have executed at a price you didn’t want. It’s really not failsafe and you keep making it out to be easy, but it doesn’t work that way. I’m just saying that if it was that easy, then everyone would be doing it. You may have a good month or two, but eventually the house will win. There are very few traders who beat investors over a long period.
Like I said before, the S&P probably will move sideways for the next 15 years, but I will be okay, because I will be selling high and buying low in my 401K. And as I mentioned earlier. I am using index funds with only a 0.03% expense fee. That’s virtually nothing…
And again… I said that I was bullish, because I think we are nearing a bottom and there were a ton of bullish indicators over the past few weeks like the VIX hitting an all time high, several margin calls, worst week for the DOW in history, a low of around 7700 mid-day, more than half of the S&P hitting 52-week lows (i.e. washout), etc. Remember, my call was at the