Down goes the Dow

LGLOI,

I said your brain was small. GDP does reflect an awesome or not so awesome economy. Like a....you think?

Igy

You're talking to yourself.

Ghost of Igloi wrote:

Try,

I am trying to be nice. The S&P 500 3rd quarter 2015 earnings were completed last month, two weeks ago. S&P 500 4th quarter 2015 earnings started Monday 1/11/2016 with Alcoa. Here is the current GDP tracking through the Atlanta Fed GDP NOW.

https://www.frbatlanta.org/cqer/research/gdpnow.aspx

Igy

The market already knows about 3Q earnings, and it doesn't discount what it already knows. The market already expects 4Q earnings to be weak as well, and the trend won't change until oil stops going down.

What the market doesn't know is China and oil, and those things are dominating traders' thinking.

The market also knows that Goldman is cutting sales and fixed income staff by 10%. Things might not be good for fixed income traders for a while.

coach d,

The fall in the price of oil and the slow down in China are interrelated. In my view it is unlikely that there is a light switch the stops the spread to other areas of the economy. It's possible that the infection does not pread, but the longer it lingers the less likely it can be isolated from the general global economy.

In addition to Goldman, Morgan Stanley laid off a large number of bond traders. I interpret this as a slow down in corporate bond issuance. I see this as an indication of slower deal making, leading to future economic malaise.

Igy

coach d,

Japanese government spokesman said the economy was on a firm footing. I guess that is what you do when your market is own 3%.

igy

Serious question. Haven't read the whole thread but I do pop in to read it from time to time. Anyway, I'm getting $30k this week for cashing in some company stock (privately held) as part of a long term plan to diversify. Last few times, I've simply bought mutual funds with the money. I'm a simple investor and will do the same this time. 20-ish years until retirement.

Do I buy tomorrow? If not, how long should I wait to buy into the market? How low do y'all think it's going?

I'm buying, but not in the US. Global power currencies are at super lows, so stay away :p

I lack the ability to foresee any future! Is that more like a couple of months or a couple of years? How about a number? Buy at 15k?

Ghost of lgIoi wrote:

Bullet,

Stuff it into your mattress. The sky is falling and you want to be on the sideline for the foreseeable future. Be patient.

Igy

Which is quite strange when considering that during periods of 'money printing' and low rates, cash is not king. Gold is hedge money... just get it, and put it away. Every once in a while, add to it and re-forget. It is not an investment, but it will always buy oil and gas. If you understand the basics of inflation/deflation and purchasing power... you can hedge well with it.

Ghost of lgIoi wrote:

Bullet,

A time frame is immaterial. Right now cash is king and will be for at least the rest of the year. China and oil are dictating valuation which is king. Ignore gold. The Fed is printing money and keeping rates artificially low.

I hope this helps. Feel free to ask deeper questions

Igy

Lot of discussion about the price of oil being an important factor, which begged the question (in my stupid brain) about how strongly oil and the markets are linked. Here is a plot of TSX and DJIA vs. Brent crude, indexed to 1 in Jan 2000:

Now exact same data, but instead indexed to 1 in Oct 2007 (around pre-2008 DJIA peak) to give a slightly different perspective of the same data:

TSX follows oil (or vice versa) much more strongly than DJIA as expected. One might say there's really no relation between oil and DJIA. I'm not saying that, but ONE might say that... :-)

And sorry the legend formatting got buggered a bit, the brown curves (the old ones without a lebel in the legend) are daily Brent crude.

Also very little obvious direct connect to gold prices for either TSX or DJIA:

It makes sense that oil and the TSX are correlated.

HOLD ON!

Abby Joseph Cohen at GS says we should buy stocks and that the market will rise 11%!!!!

Everyone back in!

The plunge in U.S. stock markets are an “emotional response” obscuring expansion in both the American economy and corporate profits, said Abby Joseph Cohen, president of Goldman Sachs Group Inc.’s Global Markets Institute.

The fair value for Standard & Poor’s 500 Index is 2,100, Cohen said. The benchmark last closed above that level on December 1 and has fallen 10 percent since, after turbulence in China’s stocks and currency spurred a global market rout.

“What is happening is really very much an emotional response,” Cohen told Elliot Gotkine on Bloomberg Television. “We need to put things into perspective. Stocks are probably the best place to be.”

Typical GS double talk.

agip wrote:

Flagpole wrote:

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.

Suffered a bit to get there. Need a bathroom remodel, and when our 13-year-old dog is no longer with us, new flooring in the whole house. And then at some point before we sell the house in the next 10 years, we will need to remodel the kitchen...so some expenses are still tied up in the house.

Down, down, down.

Dow soon to fall below 16k

too much is too much wrote:

Looks like 2016 will be the year Flagpole pays the price for his stupidity over the last decade.

I'll add that to the pile of other like comments that never bore fruit...go even back to the originator of this thread where he was predicting sub 13,000 back in 2013. Nope!

Price for my stupidity? The amount of growth in the last decade for my stuff has been phenomenal, and that includes the bad time from Oct. 2007 to March 2009. I was actually up over 8% for the calendar year 2007 and then down over 30% in 2008 before heading north in 2009...and every year since has been up (though 2015 was BARELY up). Even if 2016 is a down year, so what? I expect down years in there -- 27% of them historically have been.

Flagpole wrote:

I'll add that to the pile of other like comments that never bore fruit...go even back to the originator of this thread where he was predicting sub 13,000 back in 2013. Nope!

Price for my stupidity? The amount of growth in the last decade for my stuff has been phenomenal, and that includes the bad time from Oct. 2007 to March 2009. I was actually up over 8% for the calendar year 2007 and then down over 30% in 2008 before heading north in 2009...and every year since has been up (though 2015 was BARELY up). Even if 2016 is a down year, so what? I expect down years in there -- 27% of them historically have been.

What we are on the precipice of is more than a down year. Liberal mania has a terrible price, and you are about to pay it :)

jghk wrote:

Flagpole wrote:

I'll add that to the pile of other like comments that never bore fruit...go even back to the originator of this thread where he was predicting sub 13,000 back in 2013. Nope!

Price for my stupidity? The amount of growth in the last decade for my stuff has been phenomenal, and that includes the bad time from Oct. 2007 to March 2009. I was actually up over 8% for the calendar year 2007 and then down over 30% in 2008 before heading north in 2009...and every year since has been up (though 2015 was BARELY up). Even if 2016 is a down year, so what? I expect down years in there -- 27% of them historically have been.

What we are on the precipice of is more than a down year. Liberal mania has a terrible price, and you are about to pay it :)

We shall see, and trust me, ultimately you will be wrong. Since I am now within 10 years of retirement, I will watch with interest, but I have enough to retire on right now if I chose to (but I'd have to be more careful with my money than I want to have to be), so a big drop now that takes 3 years to recover is no big deal. You tell me I am about to pay. Klondike told me "Don't say you haven't been warned" in 2013.

What you have to remember is that I don't JUST put money in the stock market. I have about 13% of my stuff in bonds currently, AND I have been aggressively paying down the house so that I now own it outright, 13 years ahead of schedule. A sound fiscal plan includes investing AND getting rid of debt so that if a bad market time comes, you have very LITTLE to pay out each month. Look how much money the average person would have if they bought cars for cash and no longer had a mortgage:

Mortgage - $1,000 (or more)

Car 1 - $350

Car 2 - $400

Car 3 (I own 3 cars, all of which are paid for) - $190

That is $1,940 a month!