Down goes the Dow

Hussman might answer this way:

“What investors view as “wealth” is actually just the current price of their future wealth. Except for individual investors who sell into the extreme valuations that are periodically offered by Mr. Market, those prices are just blotches of ink on paper and flashing pixels on a screen. For long-term investors, the wealth is in the cash flows, and those cash flows are in the denominator.“

doc idiot wrote:

SP,

I’m not sure I follow your recent posts so let me ask you a question. Do you think it’s impossible we are in a bubble, and instead that this time it is just different? I may be misreading your tone, but I get the sense you’re nit allowing for the possibility that markets might tank. Which would be just as extreme, but optimistic rather than pessimistic, as the view you get mad at Igy for espousing.

Hi, Mr. I.

Fair question.

I think we must always be ready for a pullback and a prudent investor plans and even expects markets to fluctuate, pull-back on occasion, and even undergo sustained downturns.

What i see lack in the doomsdayer's pontifications is

a) a lack of an effective investment strategy which takes these pull backs into account, and

b) a lack of introspection regarding if one were to follow the obvious implications of their musings, how the downside of unrealized investment opportunities has been in all likelihood, greater than the amount that one would be set-back in a prospective pull-back, and

c)a justification as to why we have sustained for so long a period where valuations were and are stretched, and why markets have not corrected already.

In lieu of that, they just keep doubling down with a 'just you wait' and 'that's just what they said a decade ago, two decades ago, fifty years ago, and almost one-hundred years ago '.

And maybe, just maybe, instead of a massive bubble bursting, we will have more modest corrections, like we have seen every year or two.

What do you think?

danube steak wrote:

This is Igy 8 years ago warning all to exit the market. He missed out as the market has just about tripled since that time.

Klondike5 wrote:

Flagpole.

Enjoy the ride down.

Don't say you weren't warned.

Pretty sure Igy is not the same poster who wrote that.

The post does highlight why I hardly post in this thread anymore though...I was proven right to be consistently in the market a long time ago, and my wealth is assured to the point that I really don't care too much what the market does. I mean, I DO care, but my laser focus on it all those years ago was because I was building up toward a goal. I have now hit that goal and then some, so I don't care to come here and talk about it with any regularity.

Flagpole wrote:

danube steak wrote:

This is Igy 8 years ago warning all to exit the market. He missed out as the market has just about tripled since that time.

Klondike5 wrote:

Flagpole.

Enjoy the ride down.

Don't say you weren't warned.

Pretty sure Igy is not the same poster who wrote that.

The post does highlight why I hardly post in this thread anymore though...I was proven right to be consistently in the market a long time ago, and my wealth is assured to the point that I really don't care too much what the market does. I mean, I DO care, but my laser focus on it all those years ago was because I was building up toward a goal. I have now hit that goal and then some, so I don't care to come here and talk about it with any regularity.

I first posted here March of 2015. I have never advocated exiting the market.

Seattle,

John Hussman addresses all your points. So I will not answer for him, since he is much clearer in his response. Early critics of the 1929 Crash were referred to as “doom and gloomers.” There will be no effective exit strategy when the bubble bursts. Like in the past, people will expect a bounce, or another Fed save, “I’ll get out when we get back to…..” Then another leg down. I am not saying that is your destiny, just investors as a class. This bubble is levitated to a higher more self sustaining level by the recklessness of the Fed and our collective Government officials, both Republican and Democrat. Investors just assume there will always be a dip to buy, and someone to sell to on the other end. It has always been that way in a bubble. Maybe inflation pops this bubble. Or perhaps investors realize that the Fed has not created any real economic good, other than for the 10% that control 90% of the market. Than again, it may collapse simply because the fun is gone. The fever breaks, the mania just ends. Loosing money for even a six month period will do that, let alone an eighteen month period. It’s fake, a mirage, like crypto, meme stocks, SPACs. Everyone just out to turn a buck. Living the dream. Its a dream alright. Likely to turn into a very bad dream.

Igy

Ghost of Igloi wrote:

Flagpole wrote:

Pretty sure Igy is not the same poster who wrote that.

The post does highlight why I hardly post in this thread anymore though...I was proven right to be consistently in the market a long time ago, and my wealth is assured to the point that I really don't care too much what the market does. I mean, I DO care, but my laser focus on it all those years ago was because I was building up toward a goal. I have now hit that goal and then some, so I don't care to come here and talk about it with any regularity.

I first posted here March of 2015. I have never advocated exiting the market.

I believe you said a few years ago that you were advocating something like 15% or 20% stocks relative to fixed investments, CDs, Cash, etc. I recall it was a relatively small stake in stocks.

Is that correct?

Of course stocks are less profitable than a no-risk investment when counting from the onsets of, the great depression for example

seattle prattle wrote:

Ghost of Igloi wrote:

I first posted here March of 2015. I have never advocated exiting the market.

I believe you said a few years ago that you were advocating something like 15% or 20% stocks relative to fixed investments, CDs, Cash, etc. I recall it was a relatively small stake in stocks.

Is that correct?

CDs, cash, etc. are all losing money for you. Inflation is wiping those out year after year after year. A fool and his money are soon parted.

seattle prattle wrote:

Ghost of Igloi wrote:

I first posted here March of 2015. I have never advocated exiting the market.

I believe you said a few years ago that you were advocating something like 15% or 20% stocks relative to fixed investments, CDs, Cash, etc. I recall it was a relatively small stake in stocks.

Is that correct?

Yes, 20% for someone like myself who was going to retire. Think back to that time period, and the 30% drop of 2020 six months before I retired. Saved for the moment by how many $Trillions?

danube steak wrote:

seattle prattle wrote:

I believe you said a few years ago that you were advocating something like 15% or 20% stocks relative to fixed investments, CDs, Cash, etc. I recall it was a relatively small stake in stocks.

Is that correct?

CDs, cash, etc. are all losing money for you. Inflation is wiping those out year after year after year. A fool and his money are soon parted.

At historical returns you are doubling your portfolio every 6 years if fully invested in equities in the market. Doubling every 6 or 7 years. With CDs and cash you are losing money year after year after year.

JohnCubed wrote:

Of course stocks are less profitable than a no-risk investment when counting from the onsets of, the great depression for example

Sure, and stocks are clearly less profitable say from a market top like March 2000. Keep in mind the S&P 500 did not reach a new durable high for over 13 years. I think this period will end up far worse. At least that is what asset valuations tell you. Add that to all the wild eyed things individuals have done and the government has encouraged.

danube steak wrote:

seattle prattle wrote:

I believe you said a few years ago that you were advocating something like 15% or 20% stocks relative to fixed investments, CDs, Cash, etc. I recall it was a relatively small stake in stocks.

Is that correct?

CDs, cash, etc. are all losing money for you. Inflation is wiping those out year after year after year. A fool and his money are soon parted.

The only asset class likely to lose 50% or more right now are stocks. You can argue that is not true, but it runs counter to domestic market history going back 130 years.

Ghost of Igloi wrote:

danube steak wrote:

CDs, cash, etc. are all losing money for you. Inflation is wiping those out year after year after year. A fool and his money are soon parted.

The only asset class likely to lose 50% or more right now are stocks. You can argue that is not true, but it runs counter to domestic market history going back 130 years.

To use your exact words "domestic market history going back 130 years" is seeing the Dow/Stock market provide an annualized return (on average) of 10 to 12% each and every year over 130 years. Think about it - every year (on average) you were provided an annual return of 10 to 12% year in and year out. Name any other investment that is even close to that. Just amazing what the stock market has done.

2000-13 represents one of the worst financial times in the countries history. There was a tech bubble and a housing crisis. 2020 is a short term suspension of business with no underlying failure. Compared to 2008 alone, which was an instance of enormous fraud, I do not believe 2020 could be considered similar. The government is already tapering assistance and the market is adjusting, but I do not believe there will be another collapse from covid.

JohnCubed wrote:

2000-13 represents one of the worst financial times in the countries history. There was a tech bubble and a housing crisis. 2020 is a short term suspension of business with no underlying failure. Compared to 2008 alone, which was an instance of enormous fraud, I do not believe 2020 could be considered similar. The government is already tapering assistance and the market is adjusting, but I do not believe there will be another collapse from covid.

We had a collapse from Covid last March or April. The market went down to 18500 and has since almost doubled. The market rebounds quite nicely.

danube steak wrote:

Ghost of Igloi wrote:

The only asset class likely to lose 50% or more right now are stocks. You can argue that is not true, but it runs counter to domestic market history going back 130 years.

To use your exact words "domestic market history going back 130 years" is seeing the Dow/Stock market provide an annualized return (on average) of 10 to 12% each and every year over 130 years. Think about it - every year (on average) you were provided an annual return of 10 to 12% year in and year out. Name any other investment that is even close to that. Just amazing what the stock market has done.

Of course that ignores a couple of points. First, you will unlikely live 130 years. Second, your financial plan’s success will be determined by your asset allocation, and market performance during the first years of retirement. Third, you will unlikely achieve 10-12% returns throughout a full market cycle.

Ghost of Igloi wrote:

danube steak wrote:

To use your exact words "domestic market history going back 130 years" is seeing the Dow/Stock market provide an annualized return (on average) of 10 to 12% each and every year over 130 years. Think about it - every year (on average) you were provided an annual return of 10 to 12% year in and year out. Name any other investment that is even close to that. Just amazing what the stock market has done.

Of course that ignores a couple of points. First, you will unlikely live 130 years. Second, your financial plan’s success will be determined by your asset allocation, and market performance during the first years of retirement. Third, you will unlikely achieve 10-12% returns throughout a full market cycle.

I don't need to live 130 years. I have made a killing since 2009 just buying and buying and buying. I can appreciate you are close to retirement and are wanting assets less likely to take a big loss. I am just advocating equities for those much younger than the two of us.

JohnCubed wrote:

2000-13 represents one of the worst financial times in the countries history. There was a tech bubble and a housing crisis. 2020 is a short term suspension of business with no underlying failure. Compared to 2008 alone, which was an instance of enormous fraud, I do not believe 2020 could be considered similar. The government is already tapering assistance and the market is adjusting, but I do not believe there will be another collapse from covid.

Well I suppose you can argue there have been no large scale business failures because the Government has spent $Trillions to make it so. At the same time you must have noticed inflation in almost every thing you buy on a regular basis. Of course that makes sense as cause and effect. I think it is a little too early to claim victory on tapering of government assistance.

danube steak wrote:

Ghost of Igloi wrote:

Of course that ignores a couple of points. First, you will unlikely live 130 years. Second, your financial plan’s success will be determined by your asset allocation, and market performance during the first years of retirement. Third, you will unlikely achieve 10-12% returns throughout a full market cycle.

I don't need to live 130 years. I have made a killing since 2009 just buying and buying and buying. I can appreciate you are close to retirement and are wanting assets less likely to take a big loss. I am just advocating equities for those much younger than the two of us.

OK, fair point. If your 30 with $20,000 retirement, fine. On the other hand, 65 with $200,000 in life savings, no.