Down goes the Dow

Now that Gross is no longer with PIMCO, he's become an anachronism.

He needs to step through the looking-glass.

BTW the guy I know shorting commodities continues to do very well. On my advice a while back, he also shorted the CAD, and has made a pile of money doing so. He's been my friend since childhood, and so sent me a gift for my excellent advice...a gift card to Tim Horton's, in CAD!! LMAO What a dick!

(Tim Horton's is a Canadian coffee shop chain that merged with Burger King)

agip,

One thing to keep in mind is that many Wall Street analysts simply mark-up a multiple to S&P projected earnings to come up with their market projection. Many of those same analyst rarely stick their neck out, or really have anything substantive to say. I find most analyst to be clones and of little value. At least Bill Gross has a little more thought to both his market projections and the rationale behind it. I doubt there are many investors that can match Mr. Gross' record. I think he has the correct view of the market.

Igy

Ghost of Igloi wrote:

agip,

One thing to keep in mind is that many Wall Street analysts simply mark-up a multiple to S&P projected earnings to come up with their market projection. Many of those same analyst rarely stick their neck out, or really have anything substantive to say. I find most analyst to be clones and of little value. At least Bill Gross has a little more thought to both his market projections and the rationale behind it. I doubt there are many investors that can match Mr. Gross' record. I think he has the correct view of the market.

Igy

well he's been a stopped clock for many years - always bearish and until this year always wrong, so I don't listen much to him. Grantham is my favorite bear.

As for Gross' performance - I thought by the time he left Pimco his advantage on the market had evaporated. I can't swear to that but I think so. but for a long time he had a terrific record.

agip,

I have a sense before this cycle is complete Gross will be right and many others will have been very wrong in their market views. The distortions are great and most people are blinded to it. Oh yes this time is different and like Gross my clock has stopped for years.

Igy

Ghost of Igloi wrote:

agip,

I have a sense before this cycle is complete Gross will be right and many others will have been very wrong in their market views. The distortions are great and most people are blinded to it. Oh yes this time is different and like Gross my clock has stopped for years.

Igy

the last laugh can cost a heck of a lot

[quote]agip wrote:

Bill Gross, predicting 2016: When the year is done, there will be minus signs in front of returns for many asset classes," Gross, 70, wrote in the outlook. "The good times are over."

I have to give Bill credit for being right on this one. Almost everything is down this year. Not much down, but definitely most have negative signs.

Holy Cow. Is it the end of 2016 already? Or is agip predicting what 2016 will bring and passing it off as fact.

agip,

My first post was 3/2/2015:

"The risk in the stock market is under appreciated. QE has distorted equity prices and the next big move is down rather than up. The Schiller PE is 27 and valuations are stretched when measured against other valuation models. Remember, the stock market has had two 50% down markets in the past fifteen years. The fifteen year average compounded return on the S&P is only 4.3%, which is inferior to treasuries. Treasuries are overvalued as well. Cash is the superior asset class when risk returns to the market."

Read more:

http://www.letsrun.com/forum/flat_read.php?thread=5369837&page=231#ixzz3ubd4wHtj

I have not been net short the market until 4/9/2015. Since my first post the S&P is down 3%. As you know my view has not changed. I have made and not lost money.

Igy

Ghost of Igloi wrote:

agip,

My first post was 3/2/2015:

"The risk in the stock market is under appreciated. QE has distorted equity prices and the next big move is down rather than up. The Schiller PE is 27 and valuations are stretched when measured against other valuation models. Remember, the stock market has had two 50% down markets in the past fifteen years. The fifteen year average compounded return on the S&P is only 4.3%, which is inferior to treasuries. Treasuries are overvalued as well. Cash is the superior asset class when risk returns to the market."

Read more:

http://www.letsrun.com/forum/flat_read.php?thread=5369837&page=231#ixzz3ubd4wHtj

I have not been net short the market until 4/9/2015. Since my first post the S&P is down 3%. As you know my view has not changed. I have made and not lost money.

Igy

ok

I suppose I was remembering a previous job where the boss was bearish in 2003,2004,2005,2006,2007 until he was finally right in 2008. it was hell being an employee and losing year after year waiting.

agip,

From a personal investment perspective, I am neither typically Bearish or overly conservative. I see distortions in asset classes that cause me concern. I have a hard time seeing how we will get out unscathed. From an domestic equity standpoint multiples will either get a markup or economic growth expands dramatically. I see both as unlikely.

Igy

Igy, I have always asked, for the everyman, what the alternative is, and have said that there is none.

If there is negative growth, an alternative is, of course, to stay in cash and cash vehicles, and maybe treasuries. You won't make anything, and on cash you will even lose to inflation, only not as much as if you were in equities.

Somewhere there has to be a stable muni bond fund of well-managed jurisdictions, that yields 5%...

Maserati wrote:

Igy, I have always asked, for the everyman, what the alternative is, and have said that there is none.

If there is negative growth, an alternative is, of course, to stay in cash and cash vehicles, and maybe treasuries. You won't make anything, and on cash you will even lose to inflation, only not as much as if you were in equities.

Somewhere there has to be a stable muni bond fund of well-managed jurisdictions, that yields 5%...

buy a laddered set of muni bonds, hold til maturity and hope there is no inflation.

Maserati,

Muni funds are not a bad choice, but the net asset value can go down in a rising rate environment. There are few alternatives, but it is very easy to lose 10% principal when reaching for yield, we have seen that in the junk bonds. Investors said "hey I can get 5% yield on this Barclays High Yield Bond Fund" (JNK). A short time later they lost 11% in principal. The same thing can happen to a municipal bond fund. the principal can be affected by rising defaults or just a rise in interest rates. Cash and short term bonds may lose to inflation, but you generally have a return of principal. What was it that humorist Will Rogers said during the Depression: "I am more concerned about the return of my money than the return on my money."

Igy

Why has the market continued to struggle? My answer is "it is all about valuation." Here is another discussion of stock market valuation:

http://seekingalpha.com/article/3761046-s-and-p-earnings-now-vs-2007-prior-to-the-collapse-of-stocks

Igy

Do not bond values only fluctuate on the open market? I thought that if you held a bond to maturity, you would get back 100% of your principal. Are you saying this is not the case?

well boys I am going to vacate the premises until Sunday - I'm sure some lrc trolls will be throwing Star Wars spoilers out left and right, and I don't want none of that nonsense.

I still remember being 10 years old and seeing Star Wars - best feeling in the world. We would compare among each other who had seen the movie the most times. I was stuck on 6 I think. Even then a moderate.

That first scene with the blockade runner then the Imperial cruiser - not sure I'll ever be as awestruck as that moment.

Say,

Yes, that is not the case. I can give you several examples of bondholders that did not get 100% of their principal returned. In the last business cycle to name a few: Delphi Automotive, Winn-Dixie Stores, William Lyon Homes, Residential Capital Trust, General Motors, Fannie Mae, and Freddie Mac.The high yield bond market currently projects about 22 defaults over the next five years.

Igy

Star wars the most boring movie of all time

What's that? The day after the Fed, the dollar is down against the Yen, Euro, and CHF?

I knew it would happen, but that's too soon IMO to signal the actual shift, and is probably a response to particular events rather than to systemic factors.

Heck, even the hapless CAD is up, for now.

IMO today is only a blip.

BTW that CHF, we bought gold with it, which for us has remained neutral, preserving the gains from the original trade to which I was opposed.

Gold is also up, on the slide of the USD. With Yellen indicating that the Fed was going to drive the dollar down at some point (IMO during the coming year), that looks like a signal to buy gold. Yes there are many other factors that go into the gold price, but the USD is a significant one.