Down goes the Dow

Is anyone else creeped out by Igy's multiple references to "wipping" something out? Ewwww.

Ghost of Igloi wrote:

A hollow victory wrote:

I agree that there is a crash coming. There always is. The problem is that you have been cowering in anticipation for years while those "foolish investors" have been making a killing.

In the end, you will be correct, but at what personal cost to you?

There will be no cost to me, it will come to you.

You have already suffered the costs associated with missing the Bull.

My costs will be in the form of LT capital gains taxes.

Seattle,

Let me answer you with a couple of questions:

1) What was the S&P 500 return from March 2000 through March 2013?

2) What was defining events that fueled the subsequent equity Bull Run that began that spring of 2013?

3) Do you consider either event in question 1 or 2 to be repeatable and which one would you give greater odds to?

Igy

Ghost of Igloi wrote:

We’ll see how well AMZN stands the test of even a short period of time.

Igy

Valuations are a poor indicator of near-term returns.

An educated financial advisor would know the converse is also true.

Ghost of Igloi wrote:

An educated financial advisor would know the converse is also true.

The converse would be “Near-term returns are a poor indicator of valuations.”

Logic 101 wrote:

Ghost of Igloi wrote:

An educated financial advisor would know the converse is also true.

The converse would be “Near-term returns are a poor indicator of valuations.”

I am OK with that.

Ghost of Igloi wrote:

Seattle,

Let me answer you with a couple of questions:

1) What was the S&P 500 return from March 2000 through March 2013?

2) What was defining events that fueled the subsequent equity Bull Run that began that spring of 2013?

3) Do you consider either event in question 1 or 2 to be repeatable and which one would you give greater odds to?

Igy

Pretty simple, really. Governing bodies will intervene as needed (or not). We really don't know what the future holds in this respect, what obstacles and setbacks the economies and markets will face and how they will react or overreact, and how investors/traders will consequently respond. All one can do is to be well-positioned and ready to react and/or take advantage of emergent opportunities. To be significantly out of the market for long stretches of time would probably not be considered to be "well positioned". The cogent point here is, on every brokerage or mutual fund company trading page i have ever seen, there is a sell button. And at some point, there may be reason to use it. I personally wouldn't think that fear of the future to be sufficient reason, at least not at this point. And it certainly turned out that it wasn't sufficient reason in recent years.

Ghost of Igloi wrote:

An educated financial advisor would know the converse is also true.

An educated financial advisor has said that valuations “are rather useless indications of near-term returns.”

Seattle and Investment Advisor,

Let me put this as cogently as I can. The median valuation of stocks has never been higher. Central banks have flooded the market with $21 Trillion in QE. Government, corporate and individual debt has never been higher. Bonds have never been more expensive, especially high yield.

Since every security must be held by someone at each moment in time, “investors” cannot collectively avoid what will be the day of reckoning. Of course perhaps you or a small number of speculators can make the correct or lucky bet to cash out at the optimal time, but almost all cannot.

Now on the near term prospects. QE has become QT in the US. The tax cut has happened. The tech leadership as one analyst described “can move the ball, but they can’t score, and that is a problem.” Certainly the character of the market in 2018 is quite a bit different than 2017.

In my view “investors” are blinded by the moment. This is a common phenomena no different than investors in March of 2000. And in my view it is worse. In 2000 the median valuation of stocks were much more reasonable valuation and the 10 Year Treasury was an attractive 6% yield. Alternative investments are caught between timing, stocks and bonds while sitting on a time bomb. So if I had to make a bet on what will do the best over the next two years I would ladder Treasury Bills in 3 month denominations going out one year = 3-6-9-12.

I have no interest in ill will towards you or others. I only offer a view except when smarty comments are directed my way. Some here put it in my face and then act surprised when I throw it back. Not me sorry. I have a view and that is what you get. We will see who is right over the next two years.

Again collectively “investors” cannot avoid the next downturn since each share of stock must be owned by someone. These securities are in all the mutal funds, all the ETFs, all the brokerage accounts that have sell buttons.

Igy

Winners/losers is not a zero sum game. It is quite possible for winners to outnumber losers.

J. Hardy wrote:

Winners/losers is not a zero sum game. It is quite possible for winners to outnumber losers.

Idiotic statement since each share of stock has to be held by someone each moment in time. Think about it.

Ghost of Igloi wrote:

J. Hardy wrote:

Winners/losers is not a zero sum game. It is quite possible for winners to outnumber losers.

Idiotic statement since each share of stock has to be held by someone each moment in time. Think about it.

Not idiotic at all. There is a difference between the number of shares bought/sold and winners/losers. Think about it.

No thanks. Good luck buddy.

No surprise there.

to what extent are the various drags on the market priced in? You obviously don't think they are sufficiently priced in based on current valuations. But i wouldn't underestimate the extent to which the markets are figuring that in.

Second, you say "Again collectively “investors” cannot avoid the next downturn since each share of stock must be owned by someone. These securities are in all the mutal funds, all the ETFs, all the brokerage accounts that have sell buttons." But you are only looking at one small segment of a much larger picture. We have had major downturns before, and they have set the stage for even greater bull markets. I don't think you can cherry pick segments and from that infer market strategies that all all encompassing. And that is what you are doing unless you also include in your message that an investor should be capable and ready to ride out a major pullback over possibly rather long timeframes. In fairness, your earlier messages did include this, but the shortened versions like here do not.

And by the way, i did look at treasuries since you mentioned them. What i see is a guaranteed 2.7% guaranteed (?) return annually, back by the govt. Correct me if i'm wrong since that's not the kind of thing i dabble in.

Ghost of Igloi wrote:

So if I had to make a bet on what will do the best over the next two years I would ladder Treasury Bills in 3 month denominations going out one year = 3-6-9-12.

10 year notes?!

Financial Advisor wrote:

Ghost of Igloi wrote:

So if I had to make a bet on what will do the best over the next two years I would ladder Treasury Bills in 3 month denominations going out one year = 3-6-9-12.

10 year notes?!

Never mind. I was confused when you mentioned 10 year notes, but I now see that you’re referring to 3 month T bills. Unfortunately, that’s a losing proposition.

Seattle,

T-Bills or CDs sold in 3 month denominations. So the ladder starts for example with a $20,000 investment with $5,000 each at maturities of 3 month, 6 month, 9 month and 12 month durations. When the 3 month matures you buy on the long end, that is a 12 month CD. That way you constantly havemoney maturing, maintain your investment flexibility and is interest rates continue to rise you take advantage of that move.

T-Bills have the full faith and credit of the U.S. CDs have FDIC insurance coverage up to $250,000 per account or tennant for each unique bank institution.

Igy