Down goes the Dow

agip,

Thanks. Like you I believe I have something to offer.

My wife, whom I will be married to for 41 years has always said "when in doubt throw it out." I think at this point in time it pays to listen to the voices that say "go slow."

I find it very hard to find value today. Perhaps energy and commodities, but they look to be dead for awhile. Cash appears to be an attactive asset clash, that says something.

Be skeptical of conventional thinking. Stay true to yourself. Trust yourself. Similar to Obe Won Konobe training Luke Skywaker. Some truths are universal.

Igy

Judging by my results, I'd say that old school Lynch/Buffett stockpicking is working just fine. Buy companies, not stocks, and stick with them.

Would I buy Netflix at present prices? Well, I just did last week--adding to positions--and I think it's up 22% since then. But I think you'd find it a lot more comfortable to buy for the split-adjusted $5.79 I paid. I'll admit I haven't bought a NEW stock since NVR and RYL in 2012, and my quant screen doesn't really show anything to buy now that's cheap and not getting cheaper.

I do see one stock DRH, which is a REIT, and a couple potentials like Applied Materials and Hewlett Packard, but one of Peter's Principles is that sometimes the best stock to buy is one you already own--and that's true in my case.

I really don't care why the FED is not raising rates (as long as they don't trigger the two steps and a stumble rule) as I'm a trend follower, but I think the macro theme is that both Europe and China are vulnerable. They just can't say this to Congress because saving the world like they did in 1997 is not in their charter. But, frankly, with inflation below their comfort zone, I don't see a pressing need for them to raise rates.

It is good to be long!

coach d,

I opined a few days ago if we were to move higher it would be by the high multiple stocks. As Jeffrey Gundlach says I "have an aversion to things that don't make money. " I am a deep value guy, a different philosophy than your momentum trading style. We will see if we are able to break significantly above that 2131 range. Good luck.

NICE to see that there is some rationality, original thinking, and honesty coming from posters not named Flagpole.

Once again I am handily beating the markets while being essentially all out. Not at all difficult this year.

ghost and agip, I feel for you. Your ability to act and advise is limited by your duties to your clients, which is limited by your knowledge of different investments. You cannot, and do not, advise them on specialized investments that require a great deal of knowledge, and even savvy and salesmanship, yet you sense that these exist, and you wish that you had access to them, either on your own behalf or on that of your clients.

The investments that are yielding at the moment are the ones that you have to work, like coming across soil, you have to clear it, till it, plant it, weed it, maybe fertilize it, and find a market for product. A major key is knowing which soil will be productive in what capacity, and that is what takes background knowledge.

"The markets" do not require that the investor "work" the productive assets; indeed it is impossible to work them, unless you are talking illegal pump-and-dump. In this environment, without work, returns are a crapshoot--and anybody who is diversified will average out to essentially nothing.

I was telling you guys this a long time ago; some understood, some did not want to accept, and some were probably incapable of understanding. Here we are another year later.

Coach d, "buying companies" can work, but like I have just described, to do it properly requires work. The extreme examples of this is, of course, to actually buy a controlling interest and actively manage the business, but in order to do what you are doing, well, also requires work. I assume that you have the time, energy, understanding, and knowledge to make it work for you. The best CFP's should also be able to do this, at least within sectors, but the vast majority do not, because they simply don't have the time and/or ability to drill down far enough. If it's working for you, good stuff.

As for those of you who just do as you are told and hope that things will take care of themselves, good luck. Ever since I have been out, you have missed out on the substantial returns that I have enjoyed. Of course, you have also probably had much more free time than I, and historically that may have been an equitable trade...however, the calculus seems to be inexorably drifting, and not in your favor.

I've seen some good results from you, Coach D - kudos

the problem of course is that most people are terrible stock pickers. Well actually almost everyone is a terrible stock picker. So I'm glad you have success with it, but it's not a general recommendation I would back.

you, M, if that is really you, are a lot of talk. We still don't know anything about your investment strategy so we have no choice but disregard what you say about your $.

Anyway, keep in mind that the dumbest of all investments, a 60%/40% US only stock bond portfolio, is up 8.24%/year for 23 years. Vanguard balanced index. VBINX.

Sure, you can find certain investments that have done better than that, maybe manhattan or london real estate, but for risk adjusted returns in the real world for the real person - that is outstanding.

"for risk adjusted returns in the real world for the real person - that is outstanding"

I agree with but a single caveat, that use of the present tense is incorrect and inconsistent.

"for risk adjusted returns in the real world for the real person - that [has been] outstanding"

Absolutely.

And yes, it is me. I still read other threads on this board.

vix is down 40% in 7 trading days - now it is near 52 week lows, after last week showing the massive fear

the quick fear in this market has to be dealt with in portfolio construction- not sure what it means when teh market falls 3-4% and people get so frightened. What happens when we are down 10%? brokers jumping from windows, etc...

maybe we should all keep some cash on the side to put to use in a real freak out.

I think it is probably an epic trading environment if you have a formula that works, like chemical reagent seemed to have.

Why? Because I still think that there are controls and safety valves on the market. Coincidental that an exchange goes down when China and Greece are going down? Not a chance. No not all markets were down, because of a rule of minimum effective intervention.

What has been released to the press about Chinese intervention makes sense, in a rational way. And we are doing the same things. Also, we are doing the same things that do not get released to the press.

What administrators are doing is applying smoothing functions to the markets, and it is working. While there is more apparent volatility as measured by the VIX, the manifestations of that volatility are restricted in practice to a small envelope--hence the stable trading environment.

Actually, it's very interesting. It almost makes me want to buy back in next time it hits 17,750--almost. If I didn't have other uses for my money, it would be a very, very tough call, even at current valuation levels.

Maserati wrote:

I think it is probably an epic trading environment if you have a formula that works, like chemical reagent seemed to have...

CR had a "formula that works"? Maybe. Maybe not.

Seems like there are other explanations.

Maserati seems to be a delicious oxymoron: reasonably paranoid.

A friend of mine told me on the weekend that he thought everything would be business as usual unless and until a republican got elected president, at which point the country would fall apart.

I don't often wish I were rich, but if I had the means, I would definitely set up a fallback living situation somewhere outside the USA. Unfortunately I don't have that luxury.

I remained unconvinced about the sustainability of this market; the market breadth is poor. High multiple story stocks are goosing the averages higher. The insanity will last until it doesn't, and when it doesn't the carnage will be history making.

Thank-you Mr. Gente. I understand the local vs USD returns, but I guess I'm asking if that is factored into the NAV (?) of the ETF, and if that even matters.

Speaking of which, do these ETF's pay dividends, and are those dividends paid in USD vary according to these currency fluctuations?

So is it both a good and a bad time to buy ETF's that concentrate on developed euro countries? Are the ETF's actually cheaper, or do they "get a purchaser more", because they are paid for in USD but hold things that are denominated in euros?

Sorry for the ignorance, I am learning.

OK ghost, so what specifically are you doing about it? Hoarding gold and buying farmland? Sitting on a pile of cash and food in mason jars? Stockpiling fresh water and bullets?

Seriously, what specifically are you doing?

Also, it's easy enough to predict an historic crash, but that's not the interesting part--the interesting part is what comes after, and if you can actually position yourself to take advantage of it, without becoming a nutjob.

So what do you think will happen after, what do you think the likely timeframe will be, and what have you done to position yourself?

Where are all the "Chicken Littles" now? It's been the same old wailing and gnashing of teeth for months around year, yet the market pushes on.

Sally V wrote:

Where are all the "Chicken Littles" now? It's been the same old wailing and gnashing of teeth for months around year, yet the market pushes on.

What do you mean, where are they? They're still here. See Ghost and maser...

It's the end of the world...run for your lives!!!

Let me answer your questions this way.

In a speculative market investors get the feeling they are falling behind. On Thursday it was NFLX with and outsized gain, followed by GOOG on Friday. The market is unhinged from reasonable valuations. Of course you can get lucky enough to win the game of musical chairs. Over time most players become losers since someone has to own the stocks at these lofty valuations. It makes more sense to me to that a speculative market insures a lottery ticket outcome.

We have had some discussion on this thread concerning market valuation visa vis the buy and hold strategy. I have no argument against a buy and hold strategy. However, portfolio construction should be representative of cash flow both short and long term. Mutual fund industry statistics support a belief on my part that many who espouse the buy and hold strategy acutally buy at a trending top and sell in a panic frenzy bottom. The industry has more to gain by supporting the buy and hold point of view and encouraging every last penny to go into the market.

I expect low single digit stock and bond market returns over the next decade. It makes more sense to me that one should have a higher than normal allocation to cash, short term bonds, managed futures and hedge funds.

In regards to timing, that depends on investors willingness to continue to buy stocks with weakening fundamentals. It is my view that poor returns are baked in the cake, and any general market move higher only matters if one cashes in by selling financial assets.

Lastly, the consequences of a third market drop of 50% in a fifteen year period could have lasting effects that would be hard to predict. One could see an end to the bizzare monetary policy of central banks. Another could be an end to the casino trading mentality that has become Wall Street. Governments that are already indebted at record levels may be less able to stem the tide as it goes out. As always, the prudent and patient investor will have the means and the willingness to pick up the pieces.

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Keep in mind, all of those who have gotten out, trying to time the market, and all of those articles trying to convince people we're in for a big correction, would like nothing more than everybody to get out so it would drive the market down.

Hang tight, and reap the rewards that are about to come or you're going to miss it.[/quote]

Like K5, I'm still here. Standing by my so-called ridiculous post (above) of 2 years ago.