Down goes the Dow

He's not the only one on this thread that has said the Dow would fall to 13K.

Or is he?

I find the reaction interesting when one presents the thought that global stock markets might just be overvalued. One can present arguments that are rational and supported by data, but many view the process as challenging the existence of a higher power. At the same time Bullish projections backed by flimsy data can be accepted without question. Most people want to believe that everything is "awesome," and we can just keep "living the dream."

I wish life and the markets were that simple.

Deciding whether my postings have any merit may be the most important investment decision one makes over the next couple of years.

Igy

Data is data. Neither side's is any more 'flimsy' than the other. You choose what to believe based on your own understanding and biases.

Big,

Not true and I have provided the data, but believe what you wish.

Igy

There is legitimate data to support virtually any position you want to take. In some cases, the same data can be interpreted as supporting opposite positions. As I said, believe what you want.

Big,

In regards to the stock market one's interpretation of the data is unlikely to be benign.

Igy

Big Dog Investments wrote:

There is legitimate data to support virtually any position you want to take.

+1

If only you believe, it will all be so "awesome."

-1

Ghost of Igloi wrote:

Big,

In regards to the stock market one's interpretation of the data is unlikely to be benign.

Igy

Agreed. Most prognosticators - present company included - are unlikely to correctly forecast the market.

Big Dog Investments wrote:

Ghost of Igloi wrote:

Big,

In regards to the stock market one's interpretation of the data is unlikely to be benign.

Igy

Agreed. Most prognosticators - present company included - are unlikely to correctly forecast the market.

I frequently get the impression that I am the only person here who does NOT know where the market is headed....Wake up, folks, you CANNOT predict the market in advance. This includes such "management" claims as asset allocation, which back testing shows produces lower, not higher returns:

All you can do is respond to the market once the trend becomes known.

Far more money has been lost by investors preparing for corrections, or trying to anticipate corrections, than has been lost in corrections themselves.

--Peter Lynch

coach d,

I agree that you cannot predict the near term direction of the market. That is because the market can become more or less undervalued or overvalued. I do believe you can quantify market value, and those metrics show the market at extreme levels. We have not seen the lows for this cycle, not even close.

Igy

coach d,

I am assuming your asset allocation analysis would have an entirely different result if the sample was taken in October 2002 or March 2009.

Igy

The market goes up. The market goes down. Repeat.

Market goes to a cycle high and the market goes to a cycle low. Repeat.

Igy

coach d wrote:

Big Dog Investments wrote:

Agreed. Most prognosticators - present company included - are unlikely to correctly forecast the market.

I frequently get the impression that I am the only person here who does NOT know where the market is headed....Wake up, folks, you CANNOT predict the market in advance. This includes such "management" claims as asset allocation, which back testing shows produces lower, not higher returns:

http://www.wealthcarecapital.com/wp-content/uploads/2015/01/AllocationMyth.pdf

All you can do is respond to the market once the trend becomes known.

Far more money has been lost by investors preparing for corrections, or trying to anticipate corrections, than has been lost in corrections themselves.

--Peter Lynch

As others here have pointed out, to the contrary of what you say, valuation is a good predictor of future returns. Buy expensive stocks and your returns will suffer.buy cheap and you will have above average returns. But that only works over something like 10 year zones - in the shorter run I'm sure we'd all agree that there is no way to predict the market.

And using charts and momentum indicators may tell you something about short term market moves, but tells you nothing about the market valuation.

SHAK -8.05% Monday 9/14 11:25 am Eastern Time

Returning from travel, I will say it again: I HAVE predicted market directions successfully over what amount to about 2-3 year cycles. I have been mostly in, but have gotten out only a very few times, and every single time I have done so, I have benefited, including this time.

I totally disagree that the direction of the market cannot be predicted. Although precise time-frames and levels are not easy, they are also not required. I got out at the start of 2014, because I felt that the other returns I could realize over the next "while" would beat market returns. The important thing for me is not to have a defined time-frame at the outset, but to be flexible. I do intend to get back in, but I don't know precisely when. I will know it when I see it.

This type of "prediction" has value to me only because I do things outside the markets. If, OTOH, one were trying to make predictions sufficiently precise that one could short successfully, my predictions would have little value.

The value of any particular prediction is therefore defined by its intended use.