Maserati wrote:Long-time
Not sure what your interest is in correlating TSX and Shanghai.
Initially it was strictly out of selfish interest, wondering whether I should worry about the crazy Chinese markets early this year. When I posed a question to Igy about correlations and saw his reponse, I decided to look at actual data.
I suspect I can attempt to correlate any pair of markets and will get essentially the same results as what I've shown for TSX vs Shanghai.
Maserati wrote:
Igy,
BTW the response was not meaningless, it just didn't fit your narrative. You need to open your mind to other possibilities instead of immediately rejecting them. It's called education.
You need not agree, but you should listen to alternate viewpoints. There are some smart people here that we can all learn from.
Igy this also wasn't my post.
Flag, if you've paid off your house, it's time to sell it and upgrade to a nicer house and a new mortgage.
From Bloomberg: "Markets have been thrown into turmoil"
This is the kind of b.s. I can't stand. To my mind, this has so far been an orderly, entirely sensible withdrawal from extremely high prices. Turmoil? Hardly, unless you are in the industry and your take-home is down.
Even the "disastrous" earnings season that is being projected seems to me to be entirely sensible, and orderly. I find it hard to believe that most of the obvious things are not already priced-in, things like the high USD, possible interest rate hikes, oil prices. Even the conversion to cash has seemed to me to have been rather orderly.
This withdrawal does not smell of panic. Turmoil? Hardly. Rational and even sensible? Absolutely.
Turmoil. At this point, it looks as though some vested interests are trying to foment a quick crash. Looks like some things are coming due.
BTW, if that suspicion is true, it likely will happen. Maybe one of those attempts to just get it over with, because it is seen as inevitable. Position yourself for a particular timing, and do everything possible to make it happen at that time, and you win, and nobody is hurt, because it was inevitable.
Then the recovery can start sooner, right? Oh, the machinations.
Ghost of Igloi wrote:
Too many down days lately for me to take that bet....
Igy
ya'll should have taken that bet
Maserati wrote:
Agreed about the massive increase in debt, and that demand has been sapped from the future.
The debt story has been around forever and told a variety of ways, most of them are inaccurate.
Take Japan as an example. The debt is in Yen and held in-country. If you borrow money from yourself, how motivated are you to pay yourself back? The U.S. is in a similar situation.
Eurozone is a different story. Belgian's owe Euros as do the Greeks and all the rest to "someone else."
agip,
I was going to post the same.
On my screen I have the FANG stocks in one corner. It is interesting to see the price movements both on the up and down side and the correlation to market generally. The same can be said for oil. I find it fascinating.
Igy
Maserati Faker,
I listened to CNBC all day long, most of what I hear is the other side.
Igy
Good thing nobody anted up....
Dow near 16,200 and falling.
Off about 11.7% from its high of 18,351 on May 19, 2015.
Still above where I sold out 2.5 years ago (just under 15,000).
All things considered, I do believe that in the long run getting out (albeit a bit too soon as it turns out) and having the patience to stay out until the next plunge should pay off for me.
Even now I am somewhere around break even when you consider all the stocks I did not buy when the Dow was 17k and 18k for all that time.
Funny listening to the excuses of why the market is performing poorly.
FANG Scorecard For Today:
FM -3.95%
AMZN -5.84%
NFLX -8.59%
GOOG -3.51%
Igy
Maserati wrote:
Flagpole, good move paying off your mortgage, and congratulations.
"there are many things that make me believe we actually could see a bigger drop than that even"
Such as?
Let's talk about recovery period. You suggest 3 years historically, with which I agree, but this next time will be different IMO. I don't think the drop will be quite so violent as it was in 2000 or 2008, which will draw out the time-frame for recovery.
Plus, it is amazing just how much depends on market valuations at the moment. All sorts of funds that have regular beneficiaries absolutely rely on the markets doing well in order to remain solvent over some time-frame, which time-frame has been getting shorter in many instances. If and when these funds are no longer able to successfully meet their obligations/projections, it will be up to the taxpayer to make up the difference, either directly or indirectly, even if the funds are private (actually, quasi-private), through things like the PBGC, etc.
This takes money out of the US consumer's pocket, and that spells gloom, because the US consumer drives a lot of economic activity. That, combined with the rising USD vs basket making foreign earnings worth less, makes US equity performance wane, and exacerbates the circular cycle. Making matters worse, to fight that effect, the fed will raise interest rates and thereby slow things further, because margin and leverage are insanely huge at the moment. Only a handful have successfully deleveraged.
The upshot IMO is that other places in the world MUST successfully develop internal consumer markets. Europe has done the best job of this IMO; China, India, Korea, and the rest of Asia need to do it. Just think if consumers in China, India, and Indonesia actually had some money to spend. Contrary to popular opinion, they don't, on average they are still dirt poor. The rich in those countries have abandoned their people altogether. I hold out no hope for development of those internal consumer markets in the next 15 years.
While South America, including Brazil, showed some promise, they are too chaotic to matter, and those that are decent like Chile and maybe Peru are too small to matter. Brazil leads the way in that region, and the game is up, and it will take a very long time to recover. Those people are too independent to consolidate good economies.
Which is why a great deal of attention has turned to Africa. Sure the richest send their kids to school in europe, but there is more local development there, than anywhere. They actually have resources and arable land, and a huge, young population. People are trying to develop their markets, and actually having some degree of success, especially some euro telecom concerns. It will still take some time, but already businesses like Coke are making inroads.
The upshot is that I don't see any replacement for the US consumer in the next 15 years, meaning that a recovery within a 3-year time period will either require a huge resurgence of the basic US economy, or it will require monkey-business like cheap money, subprime loans, etc. that kick the can yet further down the road. Activity can be stimulated through the easing of restrictions on trade and development, and if Trump gets elected, some of that is likely to happen. If the dems get elected, forget about it.
I think that this will be a rather long malaise, with "investors" resting on their laurels bestowed by rising asset prices. There will continue to be consolidation in many areas, and M&A will be how businesses raise their share price and valuation, but on the whole, it will be tough going, maybe just enough to offset inflation. Call it stagflation if you wish to be trite. We need to look at the Japanese experience and find out how not to fall into the trap, even though we have followed them down the QE road.
Here's the thing: I think that it will be unavoidable. Unavoidable. It is something that needs to happen. Countries and economies have seasons. The newest expectation has been ratcheted down to "capital preservation" from "capital gain", meaning roughly that household wealth, household buying power, will not rise going forward, and could very well decrease due to inflation and increases in taxation.
You, and everybody who thinks as you do, in terms of defined milestones in a personal economic trajectory, need to take these things into account. Those defined milestones only have meaning insofar as the existing context, or something roughly like it, prevails. I don't believe it will. You and I might get lucky with timing, but we are still interested in what happens after 15 or 20 years. That's a L-O-N-G time, Flagpole. I am already effectively retired, and I still worry about it.
I worry most about US capital levies. I have already taken steps to protect against this. You will see tax creep continue. HRC has already suggested lowering the estate tax exemption by around $2M. The next thing you will see, especially if the dems win, will be increases in CG, and more restrictions on what qualifies and at what level.
My advice to you is to have more than 3 years available, and in a form in which you control it and have access to it as you wish.
I will admit, I didn't get through all of your post, but I will give you some answers to things I read:
1) First of all, things are pretty cloudy right now, so I am not predicting a big drop, just stating that it wouldn't surprise me if we had one. Slow downs in Europe and Asia are main reasons, and the branching out of terrorism is another (terrorism can cause a big very temporary drop). I do think that generally speaking, things seem to be looking ok, especially US companies right now.
2) 3 years of expenses saved will be enough for me. When combined with Social Security (which i do believe will still be there), that can easily take me 5-6 or even more years into retirement without having to touch my investment pile at all. Even if it's just flat at that point, that's that many fewer years I will have to take from it, and I won't live forever.
3) And as far as your comment about it being "different this time", that's what everyone says every time (I was told that in 1989 when I started investing, in 1991, 1992 when Clinton was elected, 2000 when Bush was elected, 2003, 2008, 2009, and every year since; I'm glad I didn't listen to that noise and kept my money in). And to some degree it's true that it will be different, because it's never the same circumstances that cause a market drop, but the market is a resilient thing, and I don't see anything that says a drop this time will be different in a way that it can't come back, and come back in typical fashion.
Flagpole,
American companies are not OK. Average share S&P Reported Earnings Last Twelve Months for 3rd Quarter 2015 $90.66, previous year LTM 3rd Quarter 2014 $105.98. That is over 14% lower reported earning. There are those who will use the argument will ex-energy it is this. Well how about all the companies that benefited from lower energy prices like airlines and transportation companies? So far of 23 companies that have reported for Q4 2015, 19 have had lower revenues. The S&P earnings are what they are, and they are going down.
Igy
Ghost of Igloi wrote:
Flagpole,
American companies are not OK. Average share S&P Reported Earnings Last Twelve Months for 3rd Quarter 2015 $90.66, previous year LTM 3rd Quarter 2014 $105.98. That is over 14% lower reported earning. There are those who will use the argument will ex-energy it is this. Well how about all the companies that benefited from lower energy prices like airlines and transportation companies? So far of 23 companies that have reported for Q4 2015, 19 have had lower revenues. The S&P earnings are what they are, and they are going down.
Igy
unless we are entering a recession as we speak, earnings will start rising in the 2Q.
Ghost of Igloi wrote:
Well, I posted some information with content and the response was meaningless.
It was hardly meaningless. I thought the meaning was obvious, but apparently not to everyone.
Ghost of Igloi wrote:
Flagpole,
American companies are not OK. Average share S&P Reported Earnings Last Twelve Months for 3rd Quarter 2015 $90.66, previous year LTM 3rd Quarter 2014 $105.98. That is over 14% lower reported earning. There are those who will use the argument will ex-energy it is this. Well how about all the companies that benefited from lower energy prices like airlines and transportation companies? So far of 23 companies that have reported for Q4 2015, 19 have had lower revenues. The S&P earnings are what they are, and they are going down.
Igy
US companies are OK compared to Europe and Asia. I still buy everything, but if I were to put more in the market than my standard amount right now, I would lean more heavily on US stocks. No matter for now though as I don't have a truck load of cash available as I just paid my house off 6 months early (well, 6 months earlier than I thought I would -- in effect, I have paid it off 13 years early). I may regret that if the market really tanks (because I do enjoy putting in a lot when the market has dropped a ton, something I have only done a handful of times).
agip,
If you are right I will be wrong, but I think it is a big stretch.
Igy
Flagpole wrote:
Ghost of Igloi wrote:Flagpole,
American companies are not OK. Average share S&P Reported Earnings Last Twelve Months for 3rd Quarter 2015 $90.66, previous year LTM 3rd Quarter 2014 $105.98. That is over 14% lower reported earning. There are those who will use the argument will ex-energy it is this. Well how about all the companies that benefited from lower energy prices like airlines and transportation companies? So far of 23 companies that have reported for Q4 2015, 19 have had lower revenues. The S&P earnings are what they are, and they are going down.
Igy
US companies are OK compared to Europe and Asia. I still buy everything, but if I were to put more in the market than my standard amount right now, I would lean more heavily on US stocks. No matter for now though as I don't have a truck load of cash available as I just paid my house off 6 months early (well, 6 months earlier than I thought I would -- in effect, I have paid it off 13 years early). I may regret that if the market really tanks (because I do enjoy putting in a lot when the market has dropped a ton, something I have only done a handful of times).
congratulations on being mortgage free, FP - I can't wait to be able to say that.
Ghost of Igloi wrote:
agip,
If you are right I will be wrong, but I think it is a big stretch.
Igy
it's in the calendar d'Agip for late July - we shall see