Down goes the Dow

Pointing Out the Obvious wrote:

You're on

I don't think that's the way to put it. If you keep saying there's going to be an earthquake long enough, you're going to be right (even if you live in upstate New York), or if you're Peter Schiff and you keep saying the market is going to collapse, eventually you're going to hit it (you just don't talk about the fact that your customers lost 70% in the year you were "right").

But, as with Flagpole not selling when market momentum is sailing the other direction, if you keep trying to short the market when market momentum is clearly against you, what is the opportunity cost of being pigheaded? If you started in 2004 saying the S&P was going to hit 700 and you kept saying it, eventually you could go on a message board and claim you were a genius because you "got it right".....but you didn't make any money.

Now if Ghost started being short this year or last summer, that position is defensible, because the market really didn't make any headway against his position. But if you keep tilting at windmills, you end up fighting like hell just trying to get even, and you can't gain the money for retirement that way.

Does the Dow end up at 12,000 again? Maybe, but I'd rather enjoy the ride to 18,000-24,000 first.

POTO>0,

You got it, to be filled if I lose, with your favorite libation, lemonade, wine, beer or something stronger.

Igy

Yeah, I can easily imagine the stock market going low for the next couple years. If nothing else the stock market is on its own for the next couple years. Its just a question of how much the Fed hikes rates. I don't see any significant legislation being passed until the next election. After the election my bet is there is some corporate friendly laws that let American corporations bring profits home at low to zero tax rates. There will also be a major infrastructure spending bill passed. I predict there will be an immigration bill where a wall is built and at the same time immigrants are allowed to cross the border freely. In other words, a win/win for American corporations (I'll leave it for another thread how beneficial that is to the American people at large). But as you say that is two years from now. However, in my last post I was alluding to a generational time frame of up to 20 years or more where the stock market generally drifts downward, despite occasional stimulus and bull markets.

Ghost of Igloi wrote:

Ryan,

The Federal Reserve has played a large part in the last two downturns and they do so today. During the Tech Bubble the high was March 2000 and the low October 2002; the Housing Bubble had a high in October 2007 and a low in March 2009. Using the same averages we may not hit the low until the next presidential election or inaguration.

Igy

Ghost of Igloi wrote:

POTO>0,

You got it, to be filled if I lose, with your favorite libation, lemonade, wine, beer or something stronger.

Igy

Cool. What's our time frame? Previously you had suggested a crash within 2 years. Shall we go with that?

POTO,

Not a crash, or a rapid drop, a trend by early 2017 or before that takes the down below 13,000.

Igy

ryan foreman wrote:

... Its just a question of how much the Fed hikes rates....

It really amazes me that otherwise reasonably-intelligent people continue to say things like this. As if there is still a question about the Fed hiking rates in a meaningful way. They can't, and won't. It's all a big bluff. Have you believed them every time they said a rate hike is "just around the corner"?

Responding would also expose & document the levels of your hypocrisy & dishonesty.

But, I'm SURE that's not a factor in you refusing to answer a simple question. (sarc).

What % of your portfolio goes towards your great 200-day ma system?

checking on the "system" wrote:

agip wrote:

I'm not going to respond to these anymore because it really sounds like you are an a$$hole and not worthy of decent discussion.

Responding would also expose & document the levels of your hypocrisy & dishonesty.

But, I'm SURE that's not a factor in you refusing to answer a simple question. (sarc).

What % of your portfolio goes towards your great 200-day ma system?

OK, K5.

Pretty cool to see you so active again now that there has been a sharp drop. What will it take to get you to reclaim your name (K5)? I'm gonna guess that you will magically reappear as yourself if/when the Dow drops below the starting point of this thread.

Sorry genius but that poster was not K5. I am.

And I am displaying discipline and patience and have been out of the market since the beginning of this thread. I was in for the ride up from @ 9k Dow to just shy of 15k Dow when I got out -- a period of about 4 years.

I will not re-enter to after the next crash/sell-off/bubble burst or whatever you want to call it. And it is coming.

Genie Us wrote:

OK, let's give you a fair trial here. Show me how you produced this: "Why will markets always go up?..." by "copying and pasting my comments.

Ready...go!

"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".

Did you really need me to do that? You cannot recall your own comments?

Clearly you are stating and are of the belief that, given a large enough time interval, markets will always go up. If not, then how would owing shares put you on the winning side.

By the way, you left out a key part of my comment:

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

I never claimed that you said the markets would always go up as in every day. I stated that you believed they would always go up given sufficient time.

You do believe this, no? And if so, why are you now trying to deny you said it?

Which gets us back to my request for a simple explanation as to why markets, over time, will always go up. And flip replies like Econ 101 and read Adam Smith obviously are not an explanation; indeed they indicate that someone does not know why they believe this.....back to my point that you free market believers are religious rather than rational.

Sorry Dude wrote:

Sorry genius but that poster was not K5. I am.

And I am displaying discipline and patience and have been out of the market since the beginning of this thread. I was in for the ride up from @ 9k Dow to just shy of 15k Dow when I got out -- a period of about 4 years.

I will not re-enter to after the next crash/sell-off/bubble burst or whatever you want to call it. And it is coming.

OK, K5.

And again, K5.

You may very well be right. But the critical point I'm making is they are not going to lower rates because they are at zero now. Moreover, for all intents and purposes the Fed is still in engaged in QE. They stopped expanding the Fed balance sheet. But they are still maintaining a $5 trillion balance sheet by buying long term bonds to replace the bonds that expire. In other words, the Fed is still in crisis mode even though we are in a 6 year mature bull market. And I still predict they will raise rates. Many economists are advocating they do so. They have spent so many months preparing the market for an interest rate hike that it is priced in anyway. And its become increasingly clear that lower interest rates is not helping employment. Corporations are just borrowing the money to finance share buybacks and dividends. Not to invest and hire people.

Short memories wrote:

ryan foreman wrote:

... Its just a question of how much the Fed hikes rates....

It really amazes me that otherwise reasonably-intelligent people continue to say things like this. As if there is still a question about the Fed hiking rates in a meaningful way. They can't, and won't. It's all a big bluff. Have you believed them every time they said a rate hike is "just around the corner"?

Given that inflation is essentially nonexistent, if not negative, I don't see the Fed raising rates in September.

Ghost of Igloi wrote:

Steve,

I assume you mean stocks go up, bonds go up, so what the big deal. Bonds just by their nature have less volatilty than stocks. It is correct that low quality bonds or junk bonds are more correlated with the stock market. On the other hand high quality bonds have substantially less volatility than stocks. One current belief is that Treasury bonds are extremely overvalued. The inflation of the late 70s and early 80s distorts the data, and current yields are closer to the norm than many realize. That said, high quality bonds are more correlated to interest rates. The bond world is so much different than the stock world, and many investors miss the nuances.

Igy

But they both go up and down.

Thanks for the insightful explanation as to why markets will always go up given a sufficient time period. Just as I have come to expect.

Hope Versus Realism:

http://www.hussmanfunds.com/wmc/wmc150824.htm

For All You Home Gamers:

http://davidstockmanscontracorner.com/the-market-tumbles-and-the-cramer-clowns-are-back-wheres-out-fed-bailout/

For some perspective:

even after last week's washout, the US stock market is 25.2% higher than when K5 (pbuh), started the thread.

Which happens to be almost exactly 2 years ago - 8/27/13.

6221 posts later, the market has climbed at the annualized rate of 11.91% per year - pretty much in line with historical averages.

That's including dividends. Using VTI as the measuring stick.