Down goes the Dow

POTO,

No birthday wishes needed and no victory laps taken. A market top is process and not an event. I can easily see new market highs, but that will not change my view that we have tougher markets ahead.

I am off next week so do your best to keep things rolling.

Igy

POTO,

No birthday wishes needed and no victory laps taken. A market top is process and not an event. I can easily see new market highs, but that will not change my view that we have tougher markets ahead.

I am off next week so do your best to keep things rolling.

Igy

So you foresee the market going up and down. Brilliant!

POTO>0,

You a little grumpy after a bad day in the market. Perhaps Mommy will make you a cup of hot chocolate.

Igy

This is interesting wrote:

Flagpole, did you see anything on the "horizon" before the 54% and 59% drops?

If so, what did you see & when?

If not, what makes you think you would see it this time around?

It was clear, especially with the latter number, that something was going to happen. I knew it would be a decent-sized drop, but I did not anticipate 59% (Dow went down 61%); I never put a guess on it, but if pressed I probably would have said ~30-35% drop. The Dot Com drop was a tad more surprising, and I did see something coming, but honestly that might have been due to bias because I worked for a public company at the time that was on very hard times -- stock crashing big time. I don't pretend to be a soothsayer.

The problem with the housing crisis drop was that people as early as 2003 started warning about it, and there were a lot of gains between then and October 2007 when the drop finally started. So, it's pretty hard (impossible) to time it right.

I stand by my stance that a 24% drop this time doesn't seem warranted. Even with the drop we've seen recently, we're not even yet to a 10% drop. The Dow has to get to 16,515 for that to be the case...and then we're still very far away from a 24% drop...that would take the Dow to 13,946. Right now the economy is too good to predict that. BUT, things can change on a dime. But, I'm just a guy with and opinion, and I've been surprised before, so you are right to question me.

I hope we continue to see the market drop. The 10% level (a correction) is a healthy thing long term, and that's probably warranted.

the VIX hit nearly 23 this morning - that is about as high as it has been the last 5 years. It hit 40ish in 2011 - was that the taper tantrum? greece? I don't remmeber.

but if the pattern of the last 5 years holds, we're close to the bottom here.

although of course anything can happen and 5 year patterns can be broken in an instant.

Robert Shiller appeared on CNBC and remarked on the over valuation in the domestic market and how he feels the general direction will be down. He did add that this process could take years.

agip wrote:

Technical term wrote:

[quote]agip wrote:

US stocks now down 4.1% from their highs - just noise.

Is "just noise" a technical term?

At what point does a decline in equity values enter a new category?

Maybe a loss of 5% to 10% is "just a correction?

10% to 20% -- a healthy revaluing?

50% as in 2008-09 -- a bump in the road?

You guys honestly cannot see how you have swallowed this drivel wholesale?

huh? you think 4% is meaningful? the average year has a full 14.2% drop at some point. You make no sense.

You, not surprisingly, miss the obvious point of the comment. Nowhere does the comment say anything about what is and is "meaningful".

The Dow is now off nearly 9% from its peak a short while ago. Is this still "just noise"? Or has it entered a new technical category? Maybe "just a blip" or a "healthy correction"?

16,703 at the moment, down 287 so far on the day.

This is healthy, although it could spasmodically reverse direction.

Guys like ghost think in terms of fundamentals, but we all rely on information that is supposed to be standardized and regulated, but which in reality often is not, nor are we all aware of the rules that apply, or how exactly they are applied.

Bottom line, I think the situation is worse than ghost makes it out to be.

At all price levels, I ask myself what are the alternatives to the US equity and bond markets. I have more than most, due to specialized knowledge and the ability to work that knowledge profitably. Most have no real alternative to the markets. Not even real estate, which takes specialized knowledge and work to turn a decent profit. Futures and commodity trading? Infinitely too sophisticated for most. Again, requires specialized knowledge and the ability to work the knowledge profitably.

Because there is no real alternative, money either sits out when returns are low and perceived risk is high, or it finds other equity and bond markets. When those other market returns are low, the money just sits out--or, if you are a business, you take it from the right pocket and put it into the left pocket, which although it does the business no intrinsic good, it can inflate the compensation of those deciding how to shuffle the money.

Even at a 10% correction, I see many of the numbers as fudged. I won't get into it, we have been through this before IIRC, either here or elsewhere. Getting back in at 10% down would still be risky going forward, IMO. When I do get in, and I hope to do so, I will likely not be looking to the markets for growth so much as for income.

Interesting times.

What Now Genius wrote:

agip wrote:

huh? you think 4% is meaningful? the average year has a full 14.2% drop at some point. You make no sense.

.

You, not surprisingly, miss the obvious point of the comment. Nowhere does the comment say anything about what is and is "meaningful".

The Dow is now off nearly 9% from its peak a short while ago. Is this still "just noise"? Or has it entered a new technical category? Maybe "just a blip" or a "healthy correction"?

And your point would be?

What Now Genius wrote:

agip wrote:

huh? you think 4% is meaningful? the average year has a full 14.2% drop at some point. You make no sense.

.

You, not surprisingly, miss the obvious point of the comment. Nowhere does the comment say anything about what is and is "meaningful".

The Dow is now off nearly 9% from its peak a short while ago. Is this still "just noise"? Or has it entered a new technical category? Maybe "just a blip" or a "healthy correction"?

your point then is just semantics? You're right - I should have ignored it as pointless.

Ghost of Igloi wrote:

Robert Shiller appeared on CNBC and remarked on the over valuation in the domestic market and how he feels the general direction will be down. He did add that this process could take years.

Jeremy Siegel doesn't think it's over valued much.

Obvious.

When the market goes down, you guys downplay your losses by telling yourself it is "just noise" and "healthy". You know, truly insightful and technical terms. You do not want to consider the probability that at some point in the near future there will be yet another massive sell-off and those in the market will lose their shirts.

All bravado and self congratulation when the market goes up; whistling past the graveyard when it goes down.

Those in the market do not lose their shirts. That only happens when you get out of the market.

The point is wrote:

Obvious.

When the market goes down, you guys downplay your losses by telling yourself it is "just noise" and "healthy". You know, truly insightful and technical terms. You do not want to consider the probability that at some point in the near future there will be yet another massive sell-off and those in the market will lose their shirts.

All bravado and self congratulation when the market goes up; whistling past the graveyard when it goes down.

I see.

However, you are wrong.

I for one avoid the use of such meaningless phrases. And I have no need for bravado and self-congratulation either. The only thing that matters to me is the bottom line. And the bottom line is that businesses are in business to make money...which leads to them making money...which makes it a good thing to be among the owners of said businesses.

Will there be sell-offs (are we allowed to use this particular term?)? Sure. Will some of them be "massive" (allowed term?)? Undoubtedly. But all in all the markets will go up because we live in a capitalist society and capital making more capital is kind of the point. Owning shares puts one on the winning side which is generally preferable (to me at least).

Genie Us wrote:

Will there be sell-offs (are we allowed to use this particular term?)? Sure. Will some of them be "massive" (allowed term?)? Undoubtedly. But all in all the markets will go up because we live in a capitalist society and capital making more capital is kind of the point. Owning shares puts one on the winning side which is generally preferable (to me at least).

.

All in all the markets will go up?

Owning shares put you on the winning side?

Those are articles of faith, not rational analysis.

Why will markets always go up? What time frame is required for this to be true?

CIarification wrote:

Those in the market do not lose their shirts. That only happens when you get out of the market.

.

I rest my case. This guy actually thinks he loses no money when the value of his equity holding tank.

Yet I suspect he believes he makes money when it goes up.

Faith No More Guy wrote:

Genie Us wrote:

Will there be sell-offs (are we allowed to use this particular term?)? Sure. Will some of them be "massive" (allowed term?)? Undoubtedly. But all in all the markets will go up because we live in a capitalist society and capital making more capital is kind of the point. Owning shares puts one on the winning side which is generally preferable (to me at least).

.

All in all the markets will go up?

Owning shares put you on the winning side?

Those are articles of faith, not rational analysis.

Why will markets always go up? What time frame is required for this to be true?

Actually, you are wrong once again (in spite of your change in name).

Articles of faith? That would indicate that you have zero understanding of the stock market. As if you think that it is nothing different than someone throwing dice. That you don't even understand that what is really happening involves the actual ownership of real companies. Companies that are in the business of...wait for it...making money.

Do you seriously have no understanding of capitalism? What in the world are you doing playing around here then? Well, to get you started, try reading Adam Smith. Then try Malkiel. Move on to Lynch and Bogle. Come back when you have at least some small inkling of what this whole thing is about.

Oh yeah, and try to avoid misquoting people. Unless you care to point out where exactly I said markets "will always go up".

Ahhh, intervention has begun, and the tide has reversed...for now...