Down goes the Dow

Flagpole what bonds do you invest in?

Real K5 wrote:

Down, down, down.

Dow soon to fall below 16k

Actually it's up today.

TAA wrote:

Flagpole what bonds do you invest in?

I don't get too creative with bonds as I am barely interested in them and MIGHT get out of bonds altogether in retirement (I know that goes against the norm, but if I have 3 YEARS of expenses saved then as I plan to do, I might not keep the bonds...we'll see. I might also just keep the 13% level I have for some diversity).

So, to answer your question, currently ALL of my bonds are in two places:

1) Spartan US Bond Index Fund (FXSTX)

2) A blended fund with Fidelity that includes: Fidelity Series Real Estate Income Fund, Fidelity Series Emerging Markets Debt Fund, Fidelity Series Floating Rate High Income Fund, Fidelity Series High Income Fund, Fidelity Series Inflation-Protected Bond Index Fund, Fidelity Series Investment Grade Bond Fund

I added bonds at age 35 (I'm now 49) and I haven't done much with changing them or caring too much about them. But, again, I'm ok with them.

long time dumba$$ investor wrote:

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: Image:

http://i67.tinypic.com/1iexvk.jpg

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: Image:

http://i66.tinypic.com/15q3fyp.jpg

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... :-)

boy, right now there is a strong correlation betwixt oil and the Dow - major freakout about sub $30 oil. that seems to be a psychological breaking point - that the world as we know it may not work with $25 oil.

according to JPM, the forward PE for the Sp500 ex energy is just 14.5. They say over the last 25 years that number was 17.4.

The point is that energy company earnings are unpredictable since they depend on teh price of oil. So let's exclude energy.

by those numbers, if you think earnings forecasts are even somewhat realistic, then sp500 is cheap compared to the last 25 years.

Increased my European holdings today with the purchase of VEURX. I THINK Europe is on the rebound.

agip wrote:

according to JPM, the forward PE for the Sp500 ex energy is just 14.5. They say over the last 25 years that number was 17.4.

The point is that energy company earnings are unpredictable since they depend on teh price of oil. So let's exclude energy.

by those numbers, if you think earnings forecasts are even somewhat realistic, then sp500 is cheap compared to the last 25 years.

I wonder when the wizards of wall street are going to realize that all that money people are not spending on oil/gas/energy they can spend on other things. The market goes up as soon as oil stabilizes, and managers need to get off this obsession with declining oil being a negative. Yes the market is a little undervalued if oil stabilizes or people stop thinking about it all the time.

agip wrote:

[quote]long time dumba$$ investor wrote:... boy, right now there is a strong correlation betwixt oil and the Dow - major freakout about sub $30 oil. that seems to be a psychological breaking point - that the world as we know it may not work with $25 oil.

Now it seems like you're making stuff up... Do you see a temporal correlation here?

It is funny that low oil is bad for the Dow in 2016 when in 2008 high oil was bad for the Dow.

Igy

Why is that bad? Extremes are often problematic.

long time dumba$$ investor wrote:

agip wrote:

[quote]long time dumba$$ investor wrote:... boy, right now there is a strong correlation betwixt oil and the Dow - major freakout about sub $30 oil. that seems to be a psychological breaking point - that the world as we know it may not work with $25 oil.

Now it seems like you're making stuff up... Do you see a temporal correlation here? Image:

http://i63.tinypic.com/a23y4n.jpg

1. why the heck is the quote function so utterly impossible for people to manage? really. I mean that. Whenever I hit the quote function it works perfecetly Whenever K5 does it, text gets mangles nearly beyond recognition. And now dumba$$ can't do it either.

anyway, yes, as oil has fallen so has the US stock market in recent days. Not sure what more you want me to say.

I listened to the David Kelley (JPM) conf call yesterday. he tried to be reassuring, saying that the US was nowhere near recession, that China was a financial/paper problem, not an economic crisis, that we aren't vulnerable t china slowdown, the chinese eeconomy is decellerating but not falling off a cliff, in teh US we have a new positive in the higher government spending after it had been flat for years, housing is fine, consumer spending is fine...hard to see a place were the US economy will fail. Everything is going along pretty well.

Valuations are fine....

coach d wrote:

agip wrote:

according to JPM, the forward PE for the Sp500 ex energy is just 14.5. They say over the last 25 years that number was 17.4.

The point is that energy company earnings are unpredictable since they depend on teh price of oil. So let's exclude energy.

by those numbers, if you think earnings forecasts are even somewhat realistic, then sp500 is cheap compared to the last 25 years.

I wonder when the wizards of wall street are going to realize that all that money people are not spending on oil/gas/energy they can spend on other things. The market goes up as soon as oil stabilizes, and managers need to get off this obsession with declining oil being a negative. Yes the market is a little undervalued if oil stabilizes or people stop thinking about it all the time.

Spending is fine if it is done voluntarily, and in a free market--neither of which condition applies to medical insurance & expenses, or taxes and fees.

Savings on gas are way more than consumed by increased medical insurance costs, and increased property tax/local fees, or rents.

So you will be on the winning side (relatively) if you invest wisely in health "care", extended/geriatric "care", or if you are a public sector union hack.

TLT +1.2%

SPY -2.13%

i.e. there is no more wealth, what there is, is a forced transfer of wealth, which is always an economically inefficient thing to do.

I guess high quality bonds aren't a bad idea. How did all that conventional thinking workout?

Maybe I should have sold on yesterday's rally?

Sell the rallys, buy the dips.

Gross Bill wrote:

I guess high quality bonds aren't a bad idea. How did all that conventional thinking workout?

Alright, RBS!

However, even among the secured, this time around, very few things will be secure.

I was right and I'll say it again, short the CAD. Still tanking, at .6900 at the moment.

I said I would be surprised if the DJIA went below 16k, and it has just done so. We will see what the close will be, but this was fast. I still think it will oscillate with 16k as a lower floor, but it looks like that might have been too optimistic.

Margin effects are happening! Hopefully.