Down goes the Dow

worried guy wrote:

Ghost of Igloi wrote:

BOAML: “For the ten [2/10] inversions back to 1956, the S&P 500 topped out within approximately three months of the inversion six times (1956, 1959, 1965, 1973, 1980, and 2000). The S&P 500 took 11 to 22 months to peak after the other four inversions (1967, 1978, 1989, and 2005).”

Of course the Fed has been influencing the bond market for decades. So I would expect their ability to influence markets is less powerful via the starting point and a bloated balance sheet.

Topped out? Nothing about recessions? I thought inversions meant recessions.

Recessions are identified well after the market tanks so why is that important?

“On December 1, 2008, the National Bureau of Economic Research (NBER) declared that the United States entered a recession in December 2007, citing employment and production figures as well as the third quarter decline in GDP. The Dow Jones Industrial Average lost 679 points that same day.”

Ghost of Igloi wrote:

“On December 1, 2008, the National Bureau of Economic Research (NBER) declared that the United States entered a recession in December 2007, citing employment and production figures as well as the third quarter decline in GDP. The Dow Jones Industrial Average lost 679 points that same day.”

For context the S&P 500 peaked at 1,570 in October 2007 and hit the low of 666 in March 2009. So how was identifying when the economy went in recession important? Certainly not for investors at that time, except as a historical perspective, which Igy has given. There you go, move on.

Ghost of Igloi wrote:

worried guy wrote:

Topped out? Nothing about recessions? I thought inversions meant recessions.

Recessions are identified well after the market tanks so why is that important?

It’s important because I liquidated today after learning of the inversion! Is a recession coming soon, or not?

Ah, you probably should not have done that. Oh well, too late now. Good luck.

Ghost of Igloi wrote:

Ghost of Igloi wrote:

“On December 1, 2008, the National Bureau of Economic Research (NBER) declared that the United States entered a recession in December 2007, citing employment and production figures as well as the third quarter decline in GDP. The Dow Jones Industrial Average lost 679 points that same day.”

For context the S&P 500 peaked at 1,570 in October 2007 and hit the low of 666 in March 2009. So how was identifying when the economy went in recession important? Certainly not for investors at that time, except as a historical perspective, which Igy has given. There you go, move on.

Why are you simultaneously talking to yourself and referring to yourself in the third person?

2P Man wrote:

I just cashed out my S&P 500 Index fund and transferred the money to a money market fund that averages about 2.2% per year. This rally is not sustainable. The S&P 500 is already above the median end of year target of 2960 and is subject to significant fluctuations from random Trump tweets like we saw in May. Earnings this month are expected to be brutal and will likely be disappointing for the next several months. The FED rate cut has already been factored into the current market price. The bond yield curve has been inverted for awhile now. And the results of tariffs are finally going to start showing themselves. A 5% drop is almost a given between now and Dec 2019. A 10% drop is very possible. I cannot the say the same about even a 3% increase from today's levels. Could be wrong though.

I sold at 2994 and bought back in at 2881 for a "gain" (or avoidance of loss) of about 4%. Then I put in another small bit of money today at 2840 after the markets dropped nearly 3% today. I still have a significant amount of money in cash... I don't think it's likely we'll see the S&P500 go above 3050 by the end of the year, but I do think there's a significant possibility it will drop to 2730 or lower. Slowing growth, drop in interest rates already, TRADE WAR, the unpredictability of Trump tweets, etc, makes for a very uncertain picture. It's ironic our master in chief is obsessed with the stock market yet is setting it (and the US economy) for disaster. Truly bizarre.

My best guess at present for end of year 2019 is 2930-3000, but we'll see. I won't sell again any time soon, nor will I put any more cash in for awhile unless it drops another several percentage points. This is one of the few times I do think a drop of 20% or more has significant (though still low) probability. I will say holding out hoping for a drop of 30+ percent is foolish, or rather, CLEARLY very far from optimal strategy. Hoping for a drop of 50% or more is lunacy.

OK, yet I am assuming you don’t think a 30 Year Treasury at 1.970% or $12 Trillion in negative yielding debt is perfectly normal. These facts alone are far worse than Pets.com or Liar Mortgage Loans. Therefore do not think for a moment that a 50% market drop is lunacy.

2P Man wrote:

[quote]2P Man wrote:

Hoping for a drop of 50% or more is lunacy.

Hell, people will be wishing the drop was only 50% when the next one hits.

It's coming.

Ghost of Igloi wrote:

OK, yet I am assuming you don’t think a 30 Year Treasury at 1.970% or $12 Trillion in negative yielding debt is perfectly normal. These facts alone are far worse than Pets.com or Liar Mortgage Loans. Therefore do not think for a moment that a 50% market drop is lunacy.

A 65% sell-off is going to require incredible amounts of panic, not just bearish activity or pessimism. You'd need a severe credit crunch to limit the amount average people can buy and a huge drop in consumer confidence. As long as money remains really cheap and easy then I don't see a crash scenario playing out. I think what's more likely to happen is we just bounce between the range we've been at for like 18 months until inflation catches up. Welcome to Japan

?

Reports: Retails sales up in July. Productivity up 2.3% in Q2.

I hope you bought on the dip.

walmart analysis always drives me nuts

at all time highs right now up 5% today.

if the company is doing well, bears say 'eh, shows you that people have no money and have to shop at the crap store'

if the company is doing poorly bears say 'see? the economy is garbage'

agip wrote:

walmart analysis always drives me nuts

at all time highs right now up 5% today.

if the company is doing well, bears say 'eh, shows you that people have no money and have to shop at the crap store'

if the company is doing poorly bears say 'see? the economy is garbage'

It's just the "perma" narrative and perma-bulls can be equally annoying

Ghost of Igloi wrote:

OK, yet I am assuming you don’t think a 30 Year Treasury at 1.970% or $12 Trillion in negative yielding debt is perfectly normal. These facts alone are far worse than Pets.com or Liar Mortgage Loans. Therefore do not think for a moment that a 50% market drop is lunacy.

I think it will be worst than that. This is going to be a great global recession unlike the one 10 yrs ago which wasn't really that global. The key here is China's economic collapse, which is the 2nd biggest economy. And Trump laying on those tariffs to an already crumbling economy is just exacerbating the problem (you don't kick a man when he's down!). And I don't think the Fed Reserve, EMF, the central banks, etc., can pull out any magic to save this one. That's the trouble with a global economy - you get global collapse in a recession.

The good times are about to end!

Global economic collapse is a coming! ?

All eight indexes on our world watch list posted gains through August 12, 2019. The top performer is our own S&P 500 with a 14.85% gain and in second is China's Shanghai SSE with a gain of 14.18%. In third is France's CAC 40 with a gain of 13.24%. Coming in last is Hong Kong's Hang Seng with a gain of 2.76%.

Racket wrote:

Ghost of Igloi wrote:

OK, yet I am assuming you don’t think a 30 Year Treasury at 1.970% or $12 Trillion in negative yielding debt is perfectly normal. These facts alone are far worse than Pets.com or Liar Mortgage Loans. Therefore do not think for a moment that a 50% market drop is lunacy.

A 65% sell-off is going to require incredible amounts of panic, not just bearish activity or pessimism. You'd need a severe credit crunch to limit the amount average people can buy and a huge drop in consumer confidence. As long as money remains really cheap and easy then I don't see a crash scenario playing out. I think what's more likely to happen is we just bounce between the range we've been at for like 18 months until inflation catches up. Welcome to Japan

That is assuming quite a bit, mostly “what has been, will be.” At the same time you ignore the Nikkei is about 50% below where it was 30 years ago.

Portia wrote:

All eight indexes on our world watch list posted gains through August 12, 2019. The top performer is our own S&P 500 with a 14.85% gain and in second is China's Shanghai SSE with a gain of 14.18%. In third is France's CAC 40 with a gain of 13.24%. Coming in last is Hong Kong's Hang Seng with a gain of 2.76%.

But the doomsayers would have you believe the end is near.

well this is not spectacular but my short term high yield substutute for stocks is working.

US stocks 1 year: +0.8% or so (VTI)

Ticker HYS +3.5% or so

the past 10 years have been zero return markets (except the US) - dividends have been the only returns. So maybe we need to scratch and hunt for dividends and yield now and not rely on capital appreciation.