Bet it is a loser by Nee Years Day.
Bet it is a loser by Nee Years Day.
When?
Ghost of Igloi wrote:
Bet it is a loser by Nee Years Day.
Specifically why?
Maserati wrote:
For this year, my guess is that the markets will be goosed to achieve the return expected by pension funds, which is around 7-7.5% for their portfolios. I hear that 2 of the bigger ones are on target for just that.
For many years , if was understood that equity markets were a form of gambling. Yes, there were some who bought essentially for posterity, with an eye to dividends for themselves and their heirs—and the only way they avoided the speculative gamble was to not ever sell, to not ever be interested in price changes. It was kind of like a perpetual bond.
This mentality was tested during times of high rates, when a more certain bank account would yield the same, or better. People not totally committed to never selling would sell at these points and put the money in the bank, and leave the markets to the gamblers.
With public involvement and coerced private involvement in the equity markets came a new impression of equity markets as more stable and more certain, especially over longer time-periods. Policy supports this impression, as well as the corresponding reality that makes it easier to sell the markets. The market sensibility has gone from “you put into markets only that money you can afford to lose” to “you put into markets that money that you cannot afford to lose”.
All manner of new realities flows from this seismic shift. While it is true that a “crash” might happen, IMO it will not be manifest in prices, but in the currency in which thise prices are denominated—indeed, some argue that this crash is underway right now, with QE as a leading indicator and the USD as a trailing one. Control systems are not yet so universal so as to be able to, through command, destroy the “law” of supply and demand as relates to a currency.
This level of control is not only sought, but is also being worked on at this very moment, notably by the IMF and the US, each in its own way. As long as there are competitors in this effort, currencies will compete, and there will be some sort of market forces at work, although decreasing ones, to be sure.
The instant there is no competition among those with a real shot, we will be in a dictatorship of value and concomitant pricing. This dictatorship of value will start by dictating the value represented by financial assets, but will no doubt creep into every other area of life where value is assessed, right down to the level of the worth of the individual, as in serious communisms like the USSR and China.
Over time, as happened in the USSR and as is happening in China, the size of the management unit for this system of control will exceed the reach of the control mechanisms available, and there will be another dissolution and subsequent reorganization. History is replete with examples of this sort of “ratcheting mechanism”.
So here we are, with a mediocre real economy, with deepening wealth divide, with the most basic (and critical) needs being met in industrialized societies, with the USD and EUR still strong in the face of some will to drive them down, with the limits of both Chinese and American control being seriously tested, with the first top-level acknowledgements that the debt will never be “paid back”, with the advent of blockchain as the first potentially workable mechanism supporting a global currency, with governments all-in in the markets while watching Japan spearhead the effort, with economic and monetary numbers openly manipulated, and with global population growth rates possibly slowing.
There is not even much attempt to hide current realities anymore. Stat manipulation is public. The impossibility of debt repayment is public. The desire to drive down the dollar is public. Desire to control currency in the face of blockchain is public. Asset price support is public. NIRP is public. Etc. It is all out there in the open, Powell’s plaintive bleat of “not QE” having the effect of only comic relief.
The US election will be a big deal. Drumpf is no visionary, he is a simple and venal adolescent. If he gets in again, it will be 4 more years of the same, imo. If the Democraps get in, there will likely be serious cooperation internationally to implement a global currency and payment system. And if they don’t win in 2020, imo there is a good shot that they will win in 2024.
At that point, the only ones who will prosper will be members of the party, and the openly criminal—often one and the same. It will take a while, and in the meantime there will be fragmentation, attempted movement of capital, a return to real assets and a flight by some to perceived literal safe harbors, etc. We have already seen the beginnings of this movement by those who can afford to plan and prepare early.
Like timing the markets, timing this huge social cycle will be critical. Gain can be maximized if you wait as long as possible to implement, but if you get too greedy you might wait too long and your chance will evaporate. I personally am getting ready, but would appreciate greatly another 4 years of Drumpf to aid in my efforts. Another short-lived drawdown would be welcome. Meantime it is getting real assets in order in different jurisdictions, getting appropriate currency exposure diversification, getting passports to enable easier function in a multiplicity of areas, etc.
In the short term, the markets will continue to rise, and the USD will be relatively stable.
Step back and take a look at the landscape, and make your assessment of who will do best, who would be a worthwhile ally.
Seems like a lot of competing ideas here Mas. Not really clear to me what you're trying to say or what points you're trying to get across.
Just musing about my ideas of the future, based on some current realities that are easily overlooked.
Of course nothing has changed with the nature of human action, but there have been recent changes in degree and speed, which are significant. McLuhan would have enjoyed this algo era, where his musings of decades ago are bearing more fruit than ever.
My aim was to describe why I’m in, why my exposure is limited, when I plan to get out, what my alternatives will be, and how society/currency/markets will be shaped in the future.
FYI my art continues to “out-perform” the markets by a huge measure, especially the impressionist paintings. I still won’t sell, but insurance is always on my asss. There are still people with money, looking for speculative places other than the equity markets. I am also now considering a place on a Mediterranean island, but they all end up being strategic in any time of conflict.
If I am still holding on new year’s day, I will have taken Igy’s bet. Things are a bit tense, all that is really going now is QE, and my projections are running out of good key events.
Maserati wrote:
FYI my art continues to “out-perform” the markets by a huge measure, especially the impressionist paintings.
You know those sectors are always the first to go in a recession right? And they get absolutely wrecked too. Art, collector cars, all those rich people collection item markets (including alpacas even!) can get crushed by like 50% or more once money starts getting tight.
Maserati wrote:
Ghost of Igloi wrote:
Bet it is a loser by Nee Years Day.
Specifically why?
The Fed has cut interest rates and re-started QE for a reason. The economic cycle has peaked. I believe this is a rally that will be sold by year end.
Ghost of Igloi wrote:
Maserati wrote:
Specifically why?
The Fed has cut interest rates and re-started QE for a reason. The economic cycle has peaked. I believe this is a rally that will be sold by year end.
Or it could just keep going up. There's really not much for bears to be excited about. Trump will make a deal with China or at least string the market along enough to keep things as strong as possible into next year's election. Consumer spending around the holiday's will probably break records (like it always does). Maybe, maybe, next Spring we'll see some tension in the markets but right now seasonal employment and spending is about to go way up.
Ghost of Igloi wrote:
The economic cycle has peaked. I believe this is a rally that will be sold by year end.
WOW! We've never heard that before.
Racket wrote:
Maserati wrote:
FYI my art continues to “out-perform” the markets by a huge measure, especially the impressionist paintings.
You know those sectors are always the first to go in a recession right? And they get absolutely wrecked too. Art, collector cars, all those rich people collection item markets (including alpacas even!) can get crushed by like 50% or more once money starts getting tight.
That is not universally true. It depends on what you have, and if someone specific wants it. There is a huge private marketplace for certain artists and certain histories. It is about networks. The irony is that although I will always be fine with the art, it would be the very last thing I would sell, along with jewelry. And no, I don’t have some hundred-million-dollar pieces, although I do hold out hope for the authentication of a small dutch master that remains a mystery?
The SPIVA scorecards continue to provide powerful evidence of the persistent failure of active management’s ability to generate alpha (risk-adjusted outperformance). In particular, they serve to highlight the canard that active management is successful in inefficient markets like small-cap stocks and emerging markets.
We continue to see a persistent flow of assets from actively to passively managed funds. As the scorecards and countless academic studies have documented, the odds of identifying an actively managed fund that will outperform an appropriate benchmark are exceedingly small.
Ghost of Igloi wrote:
Maserati wrote:
Specifically why?
The Fed has cut interest rates and re-started QE for a reason. The economic cycle has peaked. I believe this is a rally that will be sold by year end.
The old economic cycle has peaked, yes—which now bears very little relation to financial asset prices, as you know. If you believe that QE works, markets should continue to rise.
In your opinion, what will change by new year’s?
purple martin wrote:
Ghost of Igloi wrote:
The economic cycle has peaked. I believe this is a rally that will be sold by year end.
WOW! We've never heard that before.
How about this chart bird man? Have you seen it before?
https://www.zerohedge.com/s3/files/inline-images/2-4_1.png?itok=4ob_4BN7Yes Igy, that is why I have always left profits on the table by getting out early. Worked for me, ymmv
HD continues to sink, lol
Maserati wrote:
Ghost of Igloi wrote:
The Fed has cut interest rates and re-started QE for a reason. The economic cycle has peaked. I believe this is a rally that will be sold by year end.
The old economic cycle has peaked, yes—which now bears very little relation to financial asset prices, as you know. If you believe that QE works, markets should continue to rise.
In your opinion, what will change by new year’s?
Fundamentals argue for lower asset prices. So a continued market rise is dependent upon speculators. Monday when the NASDAQ was hitting new highs 100 stocks in the index were hitting new 52 week lows. Largest market cap companies used to drive the index. Certainly more reasons to believe it will continue. I just would not bet on it, but hope it works out for you.
If anybody is interested, I did some quick looking and founf the price box/trailing loss trading system I was asking about:
https://www.investopedia.com/articles/trading/07/darvas-box.asp
It is true that he made most of his money during a year-and-a-half period during which markets rose over 50%, and that he benefitted from stock splits, but his system had some similarities to my former one, so I remembered it, as the required environment for mine to work has shown some breakdown.
I notice that his worked only in bull markets but hey, we’re still there for a bit. I might give it a bit of a shot, using my own estimation of sectors and stocks in place of his. Sounds like fun, I am always willing to try to find the right tool for the right situation.
Ghost of Igloi wrote:
https://www.zerohedge.com/s3/files/inline-images/2-4_1.png?itok=4ob_4BN7
Someone needs to teach those Russian trolls how to spell.
BTW thanks Racket, your mention of the 3-day rule triggered my memory of the Darvas box.
From 12/20/2018:
Ghost of Igloi wrote:
Buy low, sell high wrote:
Smart investors welcome this.
No, smart investors know this is not a buy on the dip opportunity.
