Down goes the Dow

agip wrote:

...I have no idea.

Yup. Just like all of us. Only some of us have no idea that we have no idea.

Strong day so far. Does it continue or are we just looking at a quick rally?

table wrote:

Strong day so far. Does it continue or are we just looking at a quick rally?

I have no idea.

Flagpole wrote:

6% loss on the year so far (Dow down 8.72% on the year before today's uptick)? Meh. That's actually a decent amount of money for me, but it's all just par for the course. Market goes up, market goes down. I wouldn't have the money that I do in my retirement accounts without the overall upward trend of the markets, so you have to embrace both. Fun to see the market go north, because ultimately that is how you end up with a big ol' pile, but when it goes down, you just consider it buying at a discount. It will get all swole later on.

Invest money today that you don't need today so that you will have money when you retire. It's really that simple of an idea.

meh is sort of right - and remember that balanced portfolios are down just 3% ytd - hardly a terrible year.

“… Almost everyone believed that speculation could be now resumed in earnest. A common feature of all these earlier troubles was that having happened they were over. The worst was reasonably recognized as such. The singular feature of the great crash of 1929 was that the worst continued to worsen. What looked one day like the end proved on the next day to have been only the beginning. Nothing could have been more ingeniously designed to maximize the suffering, and also to ensure that as few as possible escaped the common misfortune. The man with the smart money, who was safely out of the market when the first crash came, naturally went back in to pick up bargains. The bargains then suffered a ruinous fall."

J.K. Galbraith, The Great Crash

Carl Icahn a few moments ago on CNBC: "earnings are a complete mirage" in discussing S&P earnings projections of $120 a share.

Ghost of Igloi wrote:

Carl Icahn a few moments ago on CNBC: "earnings are a complete mirage" in discussing S&P earnings projections of $120 a share.

And now we return to our regularly scheduled blowhards.

Ghost of Igloi wrote:

“… Almost everyone believed that speculation could be now resumed in earnest. A common feature of all these earlier troubles was that having happened they were over. The worst was reasonably recognized as such. The singular feature of the great crash of 1929 was that the worst continued to worsen. What looked one day like the end proved on the next day to have been only the beginning. Nothing could have been more ingeniously designed to maximize the suffering, and also to ensure that as few as possible escaped the common misfortune. The man with the smart money, who was safely out of the market when the first crash came, naturally went back in to pick up bargains. The bargains then suffered a ruinous fall."

J.K. Galbraith, The Great Crash

that's correct - the world economy did crash in 1930-1938

Should I point out the probably 100 times since 1938 when the market fell 12% and then rebounded?

get some perspective, man

“Is our profession really so lazy that we would advise people to risk their financial security based on tinker-toy models and pretty pictures that we don't even have the rigor to test historically? Investors appear eager to ‘scoop up’ so-called ‘bargains’ on the belief that stocks are ‘cheap relative to bonds.’ All of this is predicated on the belief that profit margins will remain at record highs, that the Fed Model is correct, and that P/E ratios based on extremely elevated measures of earnings should be evaluated based on norms for much more restrained measures of earnings. Based on daily closing prices, the S&P 500 has not even experienced a 10% correction, yet the recent decline has been characterized as if investors are acting ‘like the world is about to end.’ This is not the pinnacle of human irrationality, but in fact, quite a shallow selloff from a historical standpoint. The fact that Wall Street is branding it otherwise is evidence that investors have completely forgotten how deep the market's losses can periodically become.”

Hussman Weekly Market Comment, August 2007

Long-Term Evidence on the Fed Model and Forward Operating P/E Ratios

Igy, thanks for the reply and sharing your strategy for your clients.

Big Dog,

Sure, glad to do it. Generally, I think with stock and bond valuations at near record level it makes sense to scale back risk in favor of capital preservation.

Igy

Yeah, I've had way worse years than this one. I was down 4.45% on the year as of this morning, and I am crazily diversified, but that's fine. Not a huge deal and still a chance to end positive for the year. But really, doesn't matter much to me if it's positive by end of December or end of March 2016...the calendar year doesn't really mean anything. I've got about 130 months left of working, not that I'm counting.

nice to see buying into the close today

Institutions ginning up the market for the next distribution.

The Flagpoles of the world are incredible.

Their faith that over some long term the markets will rise is akin to the faith that over some long term, Jesus will reappear.

They will die safe in the certitude that even though it may not have happened in their lifetime, it will in fact happen.

And once again I only disagree with their basic mantra insofar as I maximize my gain by being flexible, as far as investments are concerned.

Maserati wrote:

The Flagpoles of the world are incredible.

Their faith that over some long term the markets will rise is akin to the faith that over some long term, Jesus will reappear.

They will die safe in the certitude that even though it may not have happened in their lifetime, it will in fact happen.

And once again I only disagree with their basic mantra insofar as I maximize my gain by being flexible, as far as investments are concerned.

well maser, to be fair, the markets indeed *have* always risen. Just a few months ago they hit an all time high.

While Jesus never rose.

So your metaphor is off, and I'm not sure why you think the now is different from the last hundreds of years.

no, there is no certitude that markets will always rise - see Japan, stock market of - but we're not inventing something that isn't there.

fact is, the markets have always risen.

Ghost of Igloi wrote:

Institutions ginning up the market for the next distribution.

didn't Coach D show the opposite?

agip,

Let me start by qualifying my reliance on technical indicators results in a general tendency to translate them to more earthly factors ( I am respectfully mirroring the philosophical Maserati). What I think I see in the coach d data is mutual fund managers: 1) early in the year protecting their long positions with downside protection; 2) lately selling positions to protect returns (and careers) and buying upside protection; and 3) today buying positions to make the portfolios look "smart" at quarter end. The above makes more sense to me than "smart money" being any smarter than some schelp in Boise.

Igy

Maserati and agip,

In regards to markets coming back from the dead perhaps a little history is in order: from 1929 to 1949 the stock market as measured by the Dow Industrials averaged about 1% a year including dividends; from 2000 to 2015 the S&P averaged 3.5% a year including dividends. It is true that the stock market has delivered high single or low double digit returns over longer time horizons, but it has also delivered below average returns for significant periods. When one exams high points in the domestic market, measured by a variety of metrics, the tendency is to mean revert to lower returns. One can hold to a theory that the market moves higher while revenues are in decline and investor risk preferences have changed, but it is not supported by the data.

Igy