Down goes the Dow

Happy Monday morning!

Down 62.1 mid-morning to 17,218

Not significant yet. 17,217, that is still impressive, as news of weakness in many areas starts to filter into the market consciousness.

Now down 108 to 17,172

This is an interesting little dip, if not tremendously significant. SP500 is down 18 to 1,992

Why is it interesting? Because all the indexes are down, and because, finally, the smokescreen seems to be clearing, and the not-great news is becoming visible, which means that this could very well be the early days of the significant move I think is coming.

Nobody says that they currently see any really good buying opportunities, myself included.

17,172 is still a significantly high number to me, psychologically. By itself, today's fall doesn't mean anything, it is insignificant--but in the coming days we will get to see how people react.

Maserati wrote:

Flag, I have been thinking about my future allocations for when I get back in, and have been leaning toward your own allocation, even the idea of dumping bonds completely.

I don't think we're alone. Bond yields will just have to rise to be competitive. For some reason there seems to be a pervasive mentality that many bonds/MMA's/etc. come with zero risk.

agip, I used to have a big chunk allocated to euro stocks. Many seemed promising, but never really panned out as I had hoped. Not terrible, just not great, but with seemingly all sorts of intrigue and vulnerability.

I'm not sure bonds do need to rise to be competitive. To be competitive with what? European short term interest rates are also at record lows. I am too busy to go look it up, but I suspect 10 year rates are similar.

Here's the thing about interest rates - we have little inflation, so no need for rates to rise. We have little sign of an overheating economy - so no need for the rates to rise.

If the US economy stays in the 3% range...I'm not sure interest rates do need to rise. Maybe the short term rate sure, but that is artificial and can rise without much harm, I think.

But the intermediate and longer term interest rates...they might be low for a reason - low inflation and low growth.

According to this CNBC article, my mindset is exactly that of the "billionaires" reported:

http://www.cnbc.com/id/102021996

Ok, I'm no billionaire, and didn't miss out on 2013 & 2013.

Notably, the article made no mention of physical assets like metals, jewelry, and art. All of which they have in some abundance--but it must be somewhat difficult to deal with billions--where do you put it all?

A problem I would like to have.

agip--competitive with everything, considering that they offer only the tiniest margin over inflation, and come with risk, understood or not.

Bottom line: lots of money sitting around, nowhere good to put it in an easy investment. It's gotten harder to make a buck.

Sorry, 2012 and 2013.

Maserati wrote:

Bottom line: lots of money sitting around, nowhere good to put it in an easy investment. It's gotten harder to make a buck.

Hardly. People have been making money hand over fist.

POTO--

I said harder, not hard. You have to work more for the same now, or do the same and accept less.

If you had, or made, any money, you would know this.

Down 63 Tuesday mid-morning to 17,110

Still above 17k, which is a big number to me.

Still not yet significant, but somewhat more interesting than yesterday's drop was alone.

Of course, the day is not over and anything can happen, it depends on what the weather is like, I suppose.

I still think the smoke is clearing, especially with Alibaba out of the way. More consecutive drops would be encouraging.

"unexpected rise in the Chinese PMI"

I don't believe any figures about internal China, everything there is controlled and manipulated.

"unexpected"

On the contrary, totally expected. They will, and do, fudge what is needed. Note that the fudge was a very soft one this time, just enough to look like a reversal of fortune.

Beware everything in China. Let me tell you, it is no wonder that well-off Chinese get their money out of there as quickly as they can.

Maserati wrote:

POTO--

I said harder, not hard. You have to work more for the same now, or do the same and accept less.

If you had, or made, any money, you would know this.

I'm doing fine, thank you very much. Making money is not work. It's easy. Your assertion that there are no easy investments is ludicrous. There is risk, of course, but investing is easy. Just because the current returns lag compared to 2013 doesn't mean it's harder to earn a buck.

Really POTO?

the current returns lag compared to 2013 = You do the same and accept less = it's harder to earn a buck

Get a life, POTO.

************************************************

Ignoring POTO, DJIA is rebounding, nothing definitive or sustained, for now. We will see where the end of the day lands us. Hopefully down.

Anybody see the lame documentary about the 1929 crash on public television? One thing I did like about it was the old interviews they pulled out, with guys who were actually involved in the events.

Accepting less, but still making bank. It may be harder, or nearly impossible, to duplicate 2013 returns, but it's not hard to make a buck in the current financial environment.

It's unfortunate that you felt the need to resort to insults to defend your point. Good day.

DJIA finishes the day down 116 to 17,057

Nice to see, I hope we can sustain this type of downward momentum, but I fear it may be coming a bit too early. Timing is everything. This could be just a small blip, which would serve to change market sentiment for the better at a later time, when the big crunch should otherwise hit.

Still nice to see, every day down is a good day. 2 days in a row doesn't mean anything by itself, but it looks like all sectors are down, all indexes are down, and global markets are down, which is a nice unified effect.

DJIA still up about 3% on the year at this level--yes agip, not including dividends. So far my prediction of this year's DJIA performance has been exactly correct, including timing. I have moved the big slide date out from Q4 2014 to maybe now Q1 2015, but I still think it will come in one of the two quarters.

Here's a problem: there is so much cash sitting on the sidelines (including mine), and nobody has found a way to get it off the sidelines, yet many positive incentives have been tried; I fear that the world will have to resort to strong negative incentives to get it into better circulation, namely devaluation of the US dollar. Difficult to achieve, I know, as there are very strong counterforces to be considered. For now I'm not too worried, but I'm sure the possibility has been discussed.

Sp 500 including dividends up 8.7% ytd

but very hard to get that return - if you own any small or midcaps you did worse.

I'm having emotional problems with this dip - it seems relentless - just waves of selling. But globally stocks are down just 3.4% from their 52 weeks highs - nothing much to speak of.

At this rate I'll be crying if we get a full 10% correction

For me the question is whether to abandon europe.

maser I think you're right - there is a lot of cash - it will start coming into the market at some point.

I don't see dollar problems - everything points to a stronger dollar, I think. Namely falling interest rates in europe, but eventually china may have to lower rates too. The US isn't going to lower rates, so people want to own dollars.

By all accounts I've seen, money has been rushing off the sidelines and into mutual funds, ETFs, etc.

Where do you get the idea that there's much money on the sidelines with no incentives to get it into circulation? We're in the midst of a multi year bull market after all.

The Unbridled Idiocy Of "Cash On The Sidelines"

http://www.zerohedge.com/news/2013-12-03/unbridled-idiocy-cash-sidelines

I know people with money on the sidelines.

I know that people with lots of money have a lot on the sidelines.

How much of the multi year bull market has been propelled by buy-backs, which is one thing to do with that sideline money if you are a corp?

In fact, CNBC calls it the "buyback binge":

http://www.cnbc.com/id/102026001

While it is true that many have a negative cash position, it is also true that there is much cash on the sidelines.

http://www.milkeninstitute.org/events/conferences/global-conference/2013/panel-detail/4062

The thing with cash is that if you have enough of it, you can afford to take a yearly loss. It's easy, and frees up a lot of time.