Down goes the Dow

agip wrote:

My experiment with gold went really well for a week and then collapsed. I am now down 0.6%, after being up 2 or 3%.

I'm still thinking this year will be a big nothing - zero percent return, give or take 5%.

I don't invest in gold, but thought it was up something like 13% for the year last I read.

How are you investing in it? Coins/Bullion? ETFs? Miners?...

My Portfolio Grew wrote:

agip wrote:

My experiment with gold went really well for a week and then collapsed. I am now down 0.6%, after being up 2 or 3%.

I'm still thinking this year will be a big nothing - zero percent return, give or take 5%.

I don't invest in gold, but thought it was up something like 13% for the year last I read.

How are you investing in it? Coins/Bullion? ETFs? Miners?...

yeah - gold is up around 11% ytd but I've only owned it for a few weeks. I'm using a 200 day moving average strategy - I'll make the buy/hold/sell decision on the last trading day of each month - on that day if IAU is above its 200 day I will will hold, if it is below, I will sell.

The system is meant to grab the intermediate and long term upward swings of assets while avoiding the sharp downs. but it doesn't work every time.

I bought an etf with the ticker IAU

oranger wrote:

My Portfolio Grew wrote:

I don't invest in gold, but thought it was up something like 13% for the year last I read.

How are you investing in it? Coins/Bullion? ETFs? Miners?...

yeah - gold is up around 11% ytd but I've only owned it for a few weeks. I'm using a 200 day moving average strategy - I'll make the buy/hold/sell decision on the last trading day of each month - on that day if IAU is above its 200 day I will will hold, if it is below, I will sell.

The system is meant to grab the intermediate and long term upward swings of assets while avoiding the sharp downs. but it doesn't work every time.

I bought an etf with the ticker IAU

What are the tax implications of owning gold through an ETF. Are you able to take advantage of long-term capital gain rates or are they treated as collectibles like the metal?

Are the spreads large like they are for the metal?

alcalde de Boston wrote:

The guy is a nasty racist - why coddle him?

How effin Ironic. Actual racists calling the guy who stands for justice and fair play for the victims of the sick, racist colonial settler state a racist

K55 wrote:

How effin Ironic. Actual racists calling the guy who stands for justice and fair play for the victims of the sick, racist colonial settler state a racist

Rise

Another all time high for the sp 500 today

not for other indices

I'm reading about long term cyclically adjusted PE ratios - (CAPE) very worrying - valuations based on 10 years of earnings are very, very high, which every time in the past has meant future stock market returns will be substandard.

I'll use the 200 day strategy for stocks and hope I am brave enough to sell when the sell signal triggers.

K55 wrote:

I cut you guys some slack because I don't think all of you are racists at heart; you are just incapable of seeing beyond the propaganda.

Go to the mirror, boy!

agip wrote:

Another all time high for the sp 500 today

not for other indices

I'm reading about long term cyclically adjusted PE ratios - (CAPE) very worrying - valuations based on 10 years of earnings are very, very high, which every time in the past has meant future stock market returns will be substandard.

I'll use the 200 day strategy for stocks and hope I am brave enough to sell when the sell signal triggers.

There IS going to be a bear market sooner rather than later...perhaps 2015...the problem of course is that we just do not know when.

For me, since I'm still 12 years from retirement, I don't worry about a bear market.

As I remain debt free but for the house and will have that gone in about 3 more years, I will just use a bear market as another buying opportunity. This 5-year bull run has been great for me, but what's really great is all the stocks I bought when the Dow was at 8,000 and 7,000 and 6,500...man, great returns on all that which wouldn't have been possible if I tried to time it (likely would have gotten in and out at the wrong time).

Really, for those wanting to time the market, they should do that with just a small portion of their investments (Mad Money) while keeping the bulk of it in retirement accounts within mutual funds. My personal philosophy doesn't have me buying individual stocks until I am 100% debt free including a paid for house.

IMHO, equities have become a sort of "collector's market", with valuations largely unrelated to earnings (although it appears that there may be a shift going on among investors to favor dividends).

That is to say, collectors (of whatever it is they collect) assemble a portfolio, or collection, which they have for different purposes, one of which is the potential to profit upon sale or trade. Unlike traditional "collections" however, in an equities portfolio the value of the whole is not greater than the value of the sum of the parts. The upside is that there is a ready market for buying and selling, and neither takes particularly long to achieve, nor are the transaction costs particularly high when compared to collecting something like, say, fine art.

Equities seem to have developed brand identities, or a particular cache, and I personally know of people who invest in certain things for reasons that are more emotional than anything else. Yes, the big institutional investors and fund managers still control things, but even they are not immune to this phenomenon.

I'm not saying that this is the sole mechanism responsible for over-valuation, if indeed there is any, but I do believe that it plays a part, and I also believe that there is in fact broad-spectrum over-valuation.

My 2 cents.

yeah - we agree on most of this. Lots of research shows that the more you read the financial press...the worse an investor you are.

I have a mad money account and that lets my mistakes stay small. My best investment ever was a big pile o'cash plunked into an index fund 20 years ago and left alone.

agip wrote:

Lots of research shows that the more you read the financial press...the worse an investor you are.

I can see that, because too many of those who read the financial press decide to ACT on what they've heard when really they should just buy and buy and buy and set themselves up to no worry about whether the market does well or not (becoming debt free, investing enough over a career to make it worth it, and having a 2-3 YEAR of expenses in cash or other liquid asset when you retire).

hmmm not sure what to think about your ideas here.

Is this anything new? People have always wanted own hot stocks, or blue chips, or penny stocks...because for some reason those groups of stocks match the investor's views of himself.

For example, youngish tech guys will probably lean toward tech stocks because they see themselves in that milieu.

I dunno - I don't have a firm grasp of what you are saying.You are an unusual thinker.

Certainly people invest emotionally.

In the end valuation always matters - if you pay too much for an asset, your future return will be substandard. Eventually. As FP points out, the timing of those substandard returns is never known until it happens.

Which is why I like the 200 day strategy - it lets you ride the market up as long as it keeps going up...and gets you out when the market points down.

The flaw is that there are many false alarms that cost you money until the big payoff when you miss a chasm.

Tommy wrote:

K55 wrote:

I cut you guys some slack because I don't think all of you are racists at heart; you are just incapable of seeing beyond the propaganda.

Go to the mirror, boy!

The usual fact free response from a dupe

agip wrote:

Another all time high for the sp 500 today

not for other indices

I'm reading about long term cyclically adjusted PE ratios - (CAPE) very worrying - valuations based on 10 years of earnings are very, very high, which every time in the past has meant future stock market returns will be substandard.

I'll use the 200 day strategy for stocks and hope I am brave enough to sell when the sell signal triggers.

The pe10 is skewed because of two outlier peaks over the past decade. Stocks aren't cheap right now but neither are they frothy. And the reason for the outliers wasn't because valuations went through the ceiling like what happened with the Nasdaq 15 years ago or to the Nikkei before that, but because earnings suddenly went through the floor. Those were unusual years.

Buried wrote:

agip wrote:

Another all time high for the sp 500 today

not for other indices

I'm reading about long term cyclically adjusted PE ratios - (CAPE) very worrying - valuations based on 10 years of earnings are very, very high, which every time in the past has meant future stock market returns will be substandard.

I'll use the 200 day strategy for stocks and hope I am brave enough to sell when the sell signal triggers.

The pe10 is skewed because of two outlier peaks over the past decade. Stocks aren't cheap right now but neither are they frothy. And the reason for the outliers wasn't because valuations went through the ceiling like what happened with the Nasdaq 15 years ago or to the Nikkei before that, but because earnings suddenly went through the floor. Those were unusual years.

http://www.multpl.com/

actually Meb Faber has been doing great work on the cape - he has research out now that shows that even if you drop the outlier years and assume 2008 was an average year...it barely moves the needle. The CAPE goes to 23 from 25 or something like that. In other words, 2008 doesn't matter that much in a 10 year span.

He looks at each complaint about CAPE and runs the numbers assuming the complaint is correct...and still the US is very expensive. Pretty much as high as it gets...except 1999.

I'm seriously thinking about heeding Faber and putting a large part of my money in low CAPE countries - the evidence is pretty clear that buying cheap countries increases your expected return.

K55 wrote:

Tommy wrote:

Go to the mirror, boy!

The usual fact free response from a dupe

Hmmm...his response wasn't all that subtle. I'm surprised you didn't catch his drift.

agip wrote:

I'm seriously thinking about heeding Faber and putting a large part of my money in low CAPE countries - the evidence is pretty clear that buying cheap countries increases your expected return.

What countries are you considering? Is there a site that lists side by side capes for the world?

agip wrote:

I'll use the 200 day strategy for stocks and hope I am brave enough to sell when the sell signal triggers.

Ah yes. The magical 200 day strategy.

Just curious. Can you provide the mathematical proof as to why this strategy works?

I've wondered about this as well. Why 200 days, and not 100 or 300?