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Flagpole
Sad time for investors 1/17/2013 9:15AM Reply | Return to Index | Report Post
Those of us in it for the long haul are now going to have to make room for all the good-time-only investors, because today the market is on the cusp of a large and sustained BOOM (though not as sustained as I would like it to be).

Nice solid market returns have happened since 2009, but many of the uneducated still have believed the market to be a place to be away from during that whole time. That attitude will now change.

Today's economic news shows that first-time filers for unemployment benefits is the lowest it has been in 5 years, beating estimates. Housing starts have increased 12%. Bank of America had crazy unexpected profits.

Look for a drop in the unemployment rate too.

Why is this a "sad time"? Because, as a long-term investor, it is always better to be in bad or mediocre times while seeing the light at the end of the tunnel rather than entering the light at the end of the tunnel and seeing the next tunnel ahead.

So, what to do? Well, if you have been out of the market since 2009, then too bad for you, and I have no comforting words for you other than you should be back in today. Get ready to see some nice gains for a period of time now. So, keep putting money in and see it grow. Continue to eliminate risk by getting rid of debt and growing your emergency fund to as much as a year even if you are close to retirement. And then continue to put money in when the inevitable drop happens at the end of this bull run.

So, put money in during good times and bad? Yep. Gotta make sure you are out of debt though.

Would have been fun to continue to see nice returns that were still low enough to be under the radar of the average person, but beginning today, that's all over. Big increases to happen for a while.

Flagpole sad.
bigger is better
RE: Sad time for investors 1/17/2013 10:21AM - in reply to Flagpole Reply | Return to Index | Report Post
Why do you say that it would be "fun to continue to see nice returns that were still low enough to be under the radar..."? That is NOT as "fun" as seeing bigger returns, period. Bigger is better. How could a lower return be more "fun"? Just because some folks who weren't invested got 0% while someone who was got 8%? I think it would be better if both parties got 12% (or 20%)
agip
RE: Sad time for investors 1/17/2013 10:27AM - in reply to bigger is better Reply | Return to Index | Report Post

bigger is better wrote:

Why do you say that it would be "fun to continue to see nice returns that were still low enough to be under the radar..."? That is NOT as "fun" as seeing bigger returns, period. Bigger is better. How could a lower return be more "fun"? Just because some folks who weren't invested got 0% while someone who was got 8%? I think it would be better if both parties got 12% (or 20%)


as Buffet says over and over - he WANTS to see lower stock prices, because then he can get bargains.

Put another way, in general you want the market to be low when you are young. So you can buy low. Then you want it to be high when you sell...Which for people means when they are in retirement.

I just wish the biggest foe of the economy weren't the US congress.
bangalangadanga
RE: Sad time for investors 1/17/2013 10:45AM - in reply to Flagpole Reply | Return to Index | Report Post
flagpole, weren't you saying the market was overpriced.

http://www.letsrun.com/forum/flat_read.php?thread=4817929
What??!?!?!
RE: Sad time for investors 1/17/2013 10:50AM - in reply to Flagpole Reply | Return to Index | Report Post
In general I agree with you, but your statement on Bank of America is downright factually wrong. It's results today were a big disappointment (hence the stock dipping).

The profit was down almost 65% from the fourth quarter last year (732 million vs. 1.99 billion), and earnings were down 80 percent (3 cents/share vs. 15 cents per share).

So what are you talking about?

The unemployment and other things, however, you are correct about.
Flagpole
RE: Sad time for investors 1/17/2013 10:52AM - in reply to bigger is better Reply | Return to Index | Report Post

bigger is better wrote:

Why do you say that it would be "fun to continue to see nice returns that were still low enough to be under the radar..."? That is NOT as "fun" as seeing bigger returns, period. Bigger is better. How could a lower return be more "fun"? Just because some folks who weren't invested got 0% while someone who was got 8%? I think it would be better if both parties got 12% (or 20%)


Slow and steady is more predictable going forward...multiple years of slow steady growth would be better in the long run than a huge uptick for a short while and then the inevitable fall; all the normal good-time-only investors will drive the price up fast and furiously. Since 2009, it was a little of best of both worlds though as decent market gains were coupled with the prevailing attitude that stocks and the economy were stuck in the dumper. Good news now though is just too good for the masses to ignore.
Flagpole
RE: Sad time for investors 1/17/2013 11:01AM - in reply to bangalangadanga Reply | Return to Index | Report Post

bangalangadanga wrote:

flagpole, weren't you saying the market was overpriced.

http://www.letsrun.com/forum/flat_read.php?thread=4817929


Well, thanks for pointing that out. When I made that call, on Sept. 20, 2012, the Dow was at 13596.93. I predicted a short-term drop, and it then dropped more than a thousand points to 12542.38 by Nov. 15, 2012.

Here's my quote from the first post in the thread you referenced - "The stock market currently is...over priced. Do with that info what you will, but there's enough bad short-term info out there right now to warrant a big pull back soon."

I would consider a >1000 point pullback within less than 2 months to be a big short-term pullback, just as I predicted.

We've slowly climbed back out, and now today with the Dow at about 13,500, I'm saying it will likely go higher now pretty strongly for a while. Time will tell.
Flagpole
RE: Sad time for investors 1/17/2013 11:08AM - in reply to What??!?!?! Reply | Return to Index | Report Post
No, what are YOU talking about? BofA beat earnings predictions - http://finance.fortune.cnn.com/2013/01/17/bank-of-america-earnings/?iid=HP_LN

Here's a quote - "BofA (BAC) earned $732 million, or 3 cents a share, in the last three months of 2012, beating estimates by a penny. For all of 2012, the company earned just over $4 billion, or 25 cents a share."

ALSO - "Home loans sold by its own brokers rose 42% for the quarter."

AND - "The bank said revenue from fixed income trading and investment banking -- one of Wall Street's most profitable and sought after businesses -- was up 36% in the fourth quarter, and up consistently all year."


What??!?!?! wrote:

In general I agree with you, but your statement on Bank of America is downright factually wrong. It's results today were a big disappointment (hence the stock dipping).

The profit was down almost 65% from the fourth quarter last year (732 million vs. 1.99 billion), and earnings were down 80 percent (3 cents/share vs. 15 cents per share).

So what are you talking about?

The unemployment and other things, however, you are correct about.
PrincessAnne
RE: Sad time for investors 1/17/2013 11:15AM - in reply to Flagpole Reply | Return to Index | Report Post
Sad time? This is a great time! Finally we are getting to a point where the system isn't being manipulated and innocent investors aren't being abused. This is fabulous! The innocent have nothing to fear.
MonkeyMan
RE: Sad time for investors 1/17/2013 11:26AM - in reply to Flagpole Reply | Return to Index | Report Post
Well, there is a flip side to all this. If Congress does nothing, sequestration cuts will start on March 1, the government will lose funding (i.e., the current Continuing Resolution ends)on March 31, and without a debt ceiling raise, the government will be defaulting sometime around late February (I think).

So, those are three very sizable hurdles coming up in the near term which may cause a significant market drop. It's not all sunshine and bunnies.

I agree with the guy who said the biggest enemy of the US economy is the US Congress.
Flagpole
RE: Sad time for investors 1/17/2013 12:16PM - in reply to PrincessAnne Reply | Return to Index | Report Post

PrincessAnne wrote:

Sad time? This is a great time! Finally we are getting to a point where the system isn't being manipulated and innocent investors aren't being abused. This is fabulous! The innocent have nothing to fear.


Yeah, that's the attitude that will prevail now for a while, hence a rapid increase in the stock market, fueled by too much optimism that is misplaced...should have been this level of optimism back in July 2009...that's when I had HUGE optimism. I've enjoyed buying low since end of June 2009, and ultimately the reward is mine, but I wanted the growth to continue sort of unnoticed by the riff raff, but that hope is now out the window. So, Flagpole sad.
Flagpole
RE: Sad time for investors 1/17/2013 12:19PM - in reply to MonkeyMan Reply | Return to Index | Report Post
Unfortunately the doom you mention isn't going to happen, and so there will not be another substantial drop in the near term. So, what you call "sunshine and bunnies" to me is the opposite. When the masses see "sunshine and bunnies", I see a short window of time in which the market will rocket forward, not allowing me to accumulate much and ultimately resulting in an over-bought market which then has a correction at best.


MonkeyMan wrote:

Well, there is a flip side to all this. If Congress does nothing, sequestration cuts will start on March 1, the government will lose funding (i.e., the current Continuing Resolution ends)on March 31, and without a debt ceiling raise, the government will be defaulting sometime around late February (I think).

So, those are three very sizable hurdles coming up in the near term which may cause a significant market drop. It's not all sunshine and bunnies.

I agree with the guy who said the biggest enemy of the US economy is the US Congress.
metabolic uncoupling
RE: Sad time for investors 1/17/2013 12:28PM - in reply to Flagpole Reply | Return to Index | Report Post
So, is it time for me to move my money out of money market funds/bonds and back into mutual funds/stock?
Flagpole
RE: Sad time for investors 1/17/2013 12:41PM - in reply to metabolic uncoupling Reply | Return to Index | Report Post

metabolic uncoupling wrote:

So, is it time for me to move my money out of money market funds/bonds and back into mutual funds/stock?


Would seem that the answer to that question is YES, but I never like having to ask myself that question, so I don't try to time the market. I would say that you should NEVER leave the market. So, my answer to you is YES, but only because you aren't in at all, not because I think the timing is perfect.
Precious Roy
RE: Sad time for investors 1/17/2013 1:15PM - in reply to Flagpole Reply | Return to Index | Report Post
There is still a significant governor on growth in the US and the world--natural resources. The resurgence of residential construction, particularly multifamily, has sent the price of lumber skyward. And while there has been good growth in the oil and gas sector, particularly in natural gas, it does not take much to send the price of oil skyward. Also, much of the big shale plays that are currently boosting production are very short lived compared to traditional oil fields. The shale bell curve will look more like a flagpole than a bell (get it?).
4runner
RE: Sad time for investors 1/17/2013 1:16PM - in reply to Flagpole Reply | Return to Index | Report Post
[quote]Flagpole wrote:
Nice solid market returns have happened since 2009, but many of the uneducated still have believed the market to be a place to be away from during that whole time.
[quote]

1) "Solid returns since 2009." The market basically doubled in four years. That's not "solid." That's once-in-a-lifetime phenomenal.

2) I don't know if it is that people are "uneducated."

Rather, I suspect that many of them are simply "poor." Yes-- the unemployment rate is dropping slowly but a lot of people are taking lower-paying jobs/retiring early/going back to school/whatever.

People simply don't have the money to invest. Look at things like 401k drawdowns and mutual fund outflows-- the ways that poorer people typically end up in the market.

We are slowly becoming Brazil.
agip
RE: Sad time for investors 1/17/2013 1:23PM - in reply to 4runner Reply | Return to Index | Report Post

4runner wrote:

[quote]Flagpole wrote:
Nice solid market returns have happened since 2009, but many of the uneducated still have believed the market to be a place to be away from during that whole time.
[quote]

1) "Solid returns since 2009." The market basically doubled in four years. That's not "solid." That's once-in-a-lifetime phenomenal.




you might be surprised to hear that the market doubling in a short period of time is not crazy. Just eyeballing the Sp 500, the market doubled in:

1974-1980
1987-1995
2002-2007
2009-2012

Four years is a short time tho, ja.

The small cap indices are at all time highs - things are starting to rip and roar...or the massive liquidity dykes are starting to leak.
Flagpole
RE: Sad time for investors 1/17/2013 1:53PM - in reply to 4runner Reply | Return to Index | Report Post
Yeah, pretty damn good. Gotta talk it down a LITTLE so that too many of you non-investors don't start investing now, helping cause a bubble that then pops before I am able to acquire too much more at such a low price. So, I'll stick with "solid". 2009 and 2010 were CRAZY GOOD for me and then 2011 just sort of good and then 2012 CRAZY GOOD again.

You make a good point about lots of people right now being too poor to invest. So, poor people and uneducated about the stock market people have been out of the market since 2008, 2009.


4runner wrote:

[quote]Flagpole wrote:
Nice solid market returns have happened since 2009, but many of the uneducated still have believed the market to be a place to be away from during that whole time.
[quote]

1) "Solid returns since 2009." The market basically doubled in four years. That's not "solid." That's once-in-a-lifetime phenomenal.

2) I don't know if it is that people are "uneducated."

Rather, I suspect that many of them are simply "poor." Yes-- the unemployment rate is dropping slowly but a lot of people are taking lower-paying jobs/retiring early/going back to school/whatever.

People simply don't have the money to invest. Look at things like 401k drawdowns and mutual fund outflows-- the ways that poorer people typically end up in the market.

We are slowly becoming Brazil.
IJ(&^%#gycI
RE: Sad time for investors 1/17/2013 2:02PM - in reply to Flagpole Reply | Return to Index | Report Post
Flagpole,
What percentage of your investments do you have in cash right now?
metabolic uncoupling
RE: Sad time for investors 1/17/2013 2:08PM - in reply to Flagpole Reply | Return to Index | Report Post

Flagpole wrote: So, my answer to you is YES, but only because you aren't in at all, not because I think the timing is perfect.


No, don't get me wrong. I'm in the stock market close to 400 K deep. Its just that I moved a chunk of money (close to 300 K) into money market funds toward the end of 2012.
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