Down goes the Dow

Have you saved this thread somewhere, or printed it out? Because there is no way this epic thread will avoid deletion once the market tanks.

for the record, I am not saying the market will or will not tank. I have no bloody idea.

My point is that no one can consistently forecast when a tank will happen, and since if you just sit fat and happy owning stocks, you will more than likely get 10% per year, although you may need a 15 year horizon to get it.

that said, I do sell some stocks when indices drop below their 200 day moving average, and then buy back when they move back above. That is not based on hunches, greed and fear, it is based on rules.

Klondike5 wrote:

I sold at @ 15k (the Dow)three months ago as was made clear in the original post -- and at least once more since then. It (the Dow) is now up a whole 0.8% since that time. Not 1.9%, 0.8%. My God. What a huge blunder I made. Agip is so right that you should never leave the market.

But, it was higher, so you missed those gains. Add in missed dividends, possible tax implications, and money on the sidelines, and you've suffered significant losses compare to those who stayed in.

To win, you have to guess right twice. So far, you've been shut out.

I live Canadian football wrote:

But, it was higher, so you missed those gains.

wtf?

(master troll or really this stupid?!)

Klondike5 is on record as believing gains and losses are real even if you haven't sold.

i would say so wrote:

wtf?

(master troll or really this stupid?!)

I live Canadian football wrote:

Klondike5 is on record as believing gains and losses are real even if you haven't sold.

wtf? dudes a moron.

i would say so wrote:

I live Canadian football wrote:

Klondike5 is on record as believing gains and losses are real even if you haven't sold.

wtf? dudes a moron.

Loser impersonator. I did not write the above quote. The only moran was the original post I replied to... and the impersonator... who resorts to impersonations every time he feels stupid... usually after losing a debate. lol.

I live Canadian football wrote:

[quote]Klondike5 wrote:

I sold at @ 15k (the Dow)three months ago as was made clear in the original post -- and at least once more since then. It (the Dow) is now up a whole 0.8% since that time. Not 1.9%, 0.8%. My God. What a huge blunder I made. Agip is so right that you should never leave the market.

But, it was higher, so you missed those gains. Add in missed dividends, possible tax implications, and money on the sidelines, and you've suffered significant losses compare to those who stayed in.

WTF? What tax implications? Why do you mention money on the sideline again as if it is additional factor? How does being in CDs and bonds for three month while the Dow went up 0.8% result in "significant" losses? Missed dividends? Three months worth? What's that, a 25% return?

You are on dumb, deluded, Israel loyalist who should remain in hiding instead of constantly displaying your dishonest and treason

Klondike5 wrote:

WTF? What tax implications? Why do you mention money on the sideline again as if it is additional factor? How does being in CDs and bonds for three month while the Dow went up 0.8% result in "significant" losses? Missed dividends? Three months worth? What's that, a 25% return?

He's prolly referring to the fact that the bond market has suffered recently. Also CDs are earning less than the rate of inflation, so your money there is worth less.

i would say so wrote:

Klondike5 wrote:

WTF? What tax implications? Why do you mention money on the sideline again as if it is additional factor? How does being in CDs and bonds for three month while the Dow went up 0.8% result in "significant" losses? Missed dividends? Three months worth? What's that, a 25% return?

He's prolly referring to the fact that the bond market has suffered recently. Also CDs are earning less than the rate of inflation, so your money there is worth less.

The bonds I hold are paying 3.5% to 5% per year and I am not selling them. So I am doing okay there. The CDs are earning less than inflation but a 0.8% increase in the Dow over three months is not much more than inflation. My bailing from the market in June while the Dow was @ 15,000 means I likely have a few dollars less than I otherwise would have. Agip, a treasonous supporter of the genocide of the Palestinians and defender the subordination of human rights and American values to the Colonial settler state, is trying to make it seem as if my move has proved disastrous and so engages in his usual transparent dishonesty in the fulfillment his sociopathic need to think he is right and scream it in a full throated roar as often as possible.

You bought bonds recently that are paying 5%? Junk bonds?

Yes.

Medium term municipal and corporate bonds purchased a few years ago.

I don't think these would be called junk bonds

Oh, I thought we were talking about the money you took from getting out of the market in June. What did you do with that? Holding it as cash?

Waco Taco wrote:

Klondike5 wrote:

This may be the ride down I have been waiting for.

Good luck to all you buy and hold no matter what guys

The market goes up 80% of the time. History is on the side of buy and hold.

Actually 73% of the time (73% of calendar years), but you've got the idea right.

i would say so wrote:

Oh, I thought we were talking about the money you took from getting out of the market in June. What did you do with that? Holding it as cash?

Yep. Short term (six month) CDs paying a whopping 0.30%

The MacArthur Foundation gave out its latest batch of "genius grants" yesterday, recognizing "exceptional creativity in their work and the prospect for still more in the future."

One of the winners is a CalTech economist most famous for calling traders idiots.

In 2010, Dr. Colin Camerer co-authored, "Using Neural Data to Test A Theory of Investor Behavior: An Application to Realization Utility." It is his most downloaded paper, according to the St. Louis Fed.

Camerer and his co-authors found that the "realization utility" model of investing is way more prevalent than it should be.

"Realization utility" describes the phenomenon of a given trader being more prone to taking "realized gains," or immediate profits, than to allow "paper gains" to linger on their theoretical balance sheet.

As they put it:

"[The 'realization utility' trader is] keen to realize capital gains as soon as possible and to postpone realizing capital losses for as long as possible."

For a significant number of traders, a part of the brain that should not be given the keys, so to speak, to controlling trading decisions ends up doing so anyway more often than it should.

When that happens, this results:

"... there were a total of 495 occasions in which our subjects realized gains, and that most of these decisions were suboptimal. Given that stocks exhibit short-term price momentum in the experiment, it is generally better to hold on to a stock that has been performing well. This explains why most (77.9%) of subjects’ decisions to hold on to winning stocks were optimal, and why most (67.5%) of subjects’ decisions to sell winning stocks were suboptimal. Similarly, in the experiment, it is generally better to sell a stock that has been performing poorly. This explains why most (79.2%) of subjects’ decisions to sell losing stocks were optimal, while most (80.3%) of their decisions to hold these stocks were suboptimal."

Read more:

http://www.businessinsider.com/colin-camerer-wins-genius-grant-2013-

Even if the Muni is Detroit?

Monkeys beat market cap indices

04 April 2013

Researchers at Cass Business School have found that equity indices constructed randomly by 'monkeys' would have produced higher risk-adjusted returns than an equivalent market capitalisation-weighted index over the last 40 years.

A study based on monthly US share data from 1968 to 2011 found nearly all 10 million indices weighted by chance delivered vastly superior returns to the market cap approach - a discovery likely to come as a blow to investors that have billions of dollars worldwide invested on a market cap-weighted basis.

The finding comes from two papers* published by Cass Business School's Cass Consulting, and sponsored by Aon Hewitt, which investigated alternative methods of constructing equity indices.

Co-author Professor Andrew Clare, explained: "We programmed a computer to randomly pick and weight each of the 1,000 stocks in the sample; we effectively simulated the stock-picking abilities of a monkey. The process was repeated 10 million times over each of the 43 years of the study.

"The results of this experiment showed that many of the monkey fund managers would have generated a superior performance than was produced by some of the alternative indexing techniques. However, perhaps most shockingly we found that nearly every one of the 10 million monkey fund managers beat the performance of the market cap-weighted index."

Professor Clare added: "One of the implications of our work is that we should perhaps be benchmarking our fund managers against monkeys rather than against a cap-weighted index!"

John Belgrove, Senior Partner at Aon Hewitt said: "There has been a glut of so-called 'smart beta' investment products coming to market in recent years and we are keen to see some consistent academic rigour to help investors better understand some of the opportunities and risks available to them in this space. I believe the work Cass has carried out in association with Aon Hewitt will be of considerable interest both to investors and to the fund management community."

Belgrove added: "While market capitalisation weighted benchmarks remain the bedrock to performance assessment and portfolio construction, this work sheds fresh light on the age- old active/passive industry debate.

"Inherent weaknesses in cap-weighted investment strategies are well documented, although they have been an enduring and challenging benchmark for active managers to beat. The long run results of the monkeys are therefore likely to cause some surprise and we welcome further debate. The good news for investors is that there is more implementation choice than ever to consider when selecting a preferred long term portfolio construction and fund manager style."

Out of the alternative indices, the Sales-weighted index performed the best, beating 99 per cent of the monkeys' randomly constructed indices.

* 'An evaluation of alternative equity indices. Part 1: Heuristic and optimised weighting schemes' and 'An evaluation of alternative equity indices. Part 2: Fundamental weighting schemes' by Professor Andrew Clare, Dr Nick Motson and Professor Steve Thomas of Cass Business School. The study was conducted by Cass Consulting for Aon Hewitt.

“The study of money, above all other fields . . .is one in which complexity is used to disguise truth or to evade truth, not to reveal it.” (John Kenneth Galbraith)

One would have thought that the budget crisis and government shutdown would be the ideal time for financially knowledgeable people in the press to explain, at least somewhat, the workings of the financial system and how that relates to the crisis. Alas, that is not the case, at least for the more popular press. I don’t read the Wall Street Journal, so maybe the financial press did.

One would have hoped that at least someone would have brought up Quantitative Easing and how that relates. For those not familiar with the particulars (I’m not all that knowledgeable), QE essentially involves the Fed buying $85 billion in US Treasuries per month with money it creates, then depositing these in the regional banks to act as deposits to be loaned out. That’s right, the main “investor” buying Treasuries is Ben Barnanke using money he has created. In other words, money the Federal Reserve has created turns up as Federal debt to be repaid. That is because the Fed is more or less privately owned and operated. If the Fed was a public utility, the money would simply be injected into the economy with no debt added to the national debt, hence, no debt ceiling problem. Theoretically, the Fed could do what Ron Paul once proposed and simply forgive the debt since it didn’t cost them anything to create the money to buy the bonds. Kind of like a de facto public bank.

Alas, two new problems arise. Since the purchased bonds form a significant part of member bank reserves, forgiving the debt would probably wipe out enough of the banking reserves to through the entire system into default. Actually, that is what Quantitative Easing was designed to prevent. The other problem is the market reaction to the sudden cessation of QE. Even Barnanke’s hint that he might taper off QE sometime soon caused a moderately severe reaction. A cold turkey cut off would cause the mother of all panics.

What to make of all of this? First of all, this created “crisis” is an excuse to further advance a vicious class war and cut citizen benefits while continuing to throw money at Wall Street. Second, if and when Wall Street is ready, it will lay down the law to Congress and the “crisis” will be resolved. Third, Wall Street may not want the crisis to be resolved. Sitting on a mountain of cash, Wall Street may decide that the time is right to intentionally crash the global economy, buy up everything they don’t already own, and transition the planet to global neo-feudalism, the ultimate goal. Why now? Wall Street has their hired lawyer in the White House, what better time?