Maserati wrote:
Hello one and all. I am returning to this thread for this EOY post.
I am flattered that the thread seems to have become more about me than about the markets. I haven't checked in for a long time, and am pleased that there have been posters in "my corner".
Regarding predictions, I had a good year. Yes, I have been out 3 times now, breaking even with the markets once, beating them very well one year, and beating them only by a bit this year (measured against SP500). My gain this year is realized gain, after taxes, so ultimately I did well.
Although, considering the amount of time and effort it required, in hindsight I may have preferred to have stayed in the markets instead, and just continued to do essentially nothing investment-related. Contrary to what some here seem to perceive, I have been "in" the vast majority of the time. This year was the longest absence I have ever had. The marginal benefit that I realized this year over the markets was worth it, considering that I had infinitely more control over my investments than I would have had, had I stayed in the markets. Hindsight is one thing, but degree of certainty going forward is another thing entirely.
Although I did the right thing, I did underestimate the US market gains for 2014. My projections were right on going through Q3, then Q4 exceeded all my expectations--however, I did realize that sometime back at the end of Q3 IIRC (I don't remember exactly when), and revised my projections to 18k by the EOY, and 19k not too long thereafter.
One thing I did get wrong was that there was no real "crash" in 2014. There was that tense "correction", which was rather quickly turned around. It was at that point that I realized, putting that even together with other information, that there was a ratcheting governor on the markets at this point. That was the critical event that is not likely to be repeated for at least a year going forward IMO. The effectiveness of the ratcheting governor was impressive, even though as agip has said, some hedge funds took a beating.
Buybacks continue to concern me, but dividends are looking alright. Obamacare is now essentially entrenched, FATCA is working through its pains, oil is rationalizing, and the turbulence of the elections and holidays are behind us. Winter is still here, but spring isn't too far off. The Republicans don't look like they will be doing anything to seriously rock the boat. Cromnibus is carrying the day. Most QE money didn't actually enter circulation, so the effect is less than expected--both on the good and the bad side. Gold is steady. The USD is ruling the world. Japanese elections are finished. etc.
Sure there will be droughts, food shortages, etc., but those irregularities can continue to be paved-over during the coming year.
My new prediction is that not only will the DJIA get to 19k, but it will get to 20k in 2015. Housing prices in the US will have very good gains in 2015, the best in some time. India will do very well, and is the "emerging" market to be in. Also, I think that REIT's will do well, depending on their portfolio.
In fact, if oil stays low, 2015 will be a KILLER year, unless there is US political turmoil--which I think is unlikely to happen, even if there will be difficulty with Russia. Capacity will be rebuilt in 2015, after years of penny-pinching, shaving, trimming, etc.
It will be an absolutely HUGE year. I will be in, then I will pull out again to some extent, depending on what I own and how dividends are going. The year will be so big that overheating will set in, and there will be some sort of rationalization afterward, but only after the big gain. The market may be "fully valued" at this point, but with earnings growth, there is room for price growth.
Furthermore, I think that emerging markets will also pick up after a lackluster year, as the rocketing success in the US will be contagious. Those who have money have lots of it, often more than they need. I used to be concerned about people cashing out, but those are only the chumps. People are now concerned about their estates, their grandchildren, and what kind of a legacy to leave. Trusts abound, and they are "in" whole hog, and it is much more difficult to wind up a trust than it is to establish one.
Also, 401k's and their inflexibility will act like somewhat of a buffer to market gyrations, so although there will be some swings, I see a generally smooth upward trend, unlike the wind swings some gurus are predicting.
Volatility? Not carrying the day. VIX, for instance, works on a 30-day period. This recent correction was re-corrected in that 30-day period, after which we have had some massive VIX numbers, and big swings. Some guys trade on VIX, I don't.
Finally, a word about Flagpoles. Yes, some people are thin-skinned. We are all dealt particular cards in life, and play them as we do. Flagpoles are a kind of pathetic, narrow-minded fascist who wish to project their inadequacies onto others, and who are so insecure they don't know how to take a compliment, or congratulations. I encourage nobody to be like that. Enjoy your own life, enjoy other's successes with them, be open to new ideas while respecting old ones. If you are an everyman, exalt in it, for you are the bedrock of society on which all else depends--but always remember that there are different kinds of people in the world. Be tolerant, and try to educate rather than to pontificate. Know when to cut some people and ideas off, though, because in a very real sense, life is too short. Choose carefully what fights to get into.
And, if you have found what you consider to be your hill to die on, I congratulate you, whether you fail or succeed in your endeavor.