RE: Here's hoping you didn't miss the bottom of the market...

I hear many people saying this will get worse before it gets better but nobody wants to stand up and say when the bottom is because nobody here knows exactly where the bottom is. If you believe that there will be a recovery and you have sufficient time to wait then there is nothing wrong with trying to dollar cost average your way in, or you could wait for one of the 'experts' on letsrun to tell you exactly when to buy and never lose a penny.

WARNING! DO NOT LISTEN TO THIS FRAUD, FLAGPOLE. IT'S VERY DANGEROUS AND DAMAGING TO YOUR FINANCIAL HEATH. HE IS A POSER OF THE WORST SORT--A SNAKE OIL PEDDLER. STEER CLEAR OF HIS ADVICE OR YOU'LL BE IN DEEP DO-DO FOR....WELL, FOREVER!

please stand up wrote:

I hear many people saying this will get worse before it gets better but nobody wants to stand up and say when the bottom is because nobody here knows exactly where the bottom is. If you believe that there will be a recovery and you have sufficient time to wait then there is nothing wrong with trying to dollar cost average your way in, or you could wait for one of the 'experts' on letsrun to tell you exactly when to buy and never lose a penny.

No one knows where the bottom is -- that's VERY true. Economists are divided, but more and more are starting to look at 2010 as a recovery year. Who knows if that will be true or not...also, if the recovery starts and people pump money back into stocks, who's to say it isn't premature (kind of pumped up because people just FEEL like it should be time to get back in the market when ecomonic conditions say otherwise) and then 2011 is another big loss year? It's a big crap shoot in the near term for sure.

I hope you are right. I am maxing out my 401k right now since everything is pretty much on sale. I'll take a year or two of buying cheap if it means I am going to get some returns after that. Hopefully it works!!!

Flagpole wrote:

WRONG!

http://money.cnn.com/2009/02/23/news/economy/nabe/index.htm?postversion=2009022300

In addition to that link I posted above, more and more on the evening financial shows are targeting 2010 as a big recovery year. Jeremy Grantham says the next 5-7 years will return bigger than the average market returns.

Flagpole wrote:

No one knows where the bottom is -- that's VERY true. Economists are divided, but more and more are starting to look at 2010 as a recovery year. Who knows if that will be true or not...also, if the recovery starts and people pump money back into stocks, who's to say it isn't premature (kind of pumped up because people just FEEL like it should be time to get back in the market when ecomonic conditions say otherwise) and then 2011 is another big loss year? It's a big crap shoot in the near term for sure.

Are these the same economists and financial press that were consistently overoptimistic during the finance/housing/credit bubble we're now dealing with? The ones that completely failed to predict the crisis?

Answer this: what economic data -- not the number of economists making a prediction, but actual data about the current economic situation -- makes you think we're anywhere near a bottom? What makes you think we'll just resume "normal" historical growth in the next couple of years.

I pulled out of the market at 13k (have kept contributing to 401k, but pulled my existing assets out as a hedge) because I didn't understand how the economy would continue to grow. Still waiting for that data before I jump in.

A caricature of any "financial advisor" on here who would tell you to buy in any climate and who doesn't understand the STRUCTURAL undercurrents, shift to frugality, coming environment of excessive regulation, misguided zombifying of the banking system, and shift to a new risk premium and market multiple that's coming simultaneous with the inane growth-crimping fiscal policy we are running:

http://farm2.static.flickr.com/1084/1308831460_cd698b82b4.jpg

Remember, it takes a 100% return to get to Dow 10,000 from Dow 5,000, and that's assuming that we are going through a period of "irrationality" needed to get back to the "good ole days." Remember, the market is discounting the future, not the past. No talk about the possibility of an initial bounce and then a sideways to downward trend for YEARS. Disconcerting. By the way, weren't the "projections" from analysts about 7.5% for the cap on unemployment mere months ago?

Sagarin wrote:

By the way, weren't the "projections" from analysts about 7.5% for the cap on unemployment mere months ago?

Yep. They could be wrong. As skeptical as you are about prosperity though, I'm as skeptical about doom and gloom which lasts FOREVER. It's a bad time yes. Worst in my lifetime for sure. That doesn't mean though that it will last the rest of my lifetime. There just isn't enough of a change in the way investors look at the stock market even now for me to think equities will never bounce back (famous words from 1978 that equities were done -- well, no they weren't). People have moved money out of stocks to bonds and other hedges, but they generally speaking LOVE the market and will go back in droves when it turns.

The difference between what economists are saying today vs. a few months ago is that there are more of them saying things will turn around in 2010, and among them are Buffett (betting by buying stock other than Berkshire), and Jeremy Grantham. I'm not saying I buy what they're selling, but the louder it gets the more impossible it is to not hear. And, what if they're wrong and 2010 turns into 2011 or 2012? Eh...makes no difference to me. I can wait.

midwest. wrote:

I hope you are right. I am maxing out my 401k right now since everything is pretty much on sale. I'll take a year or two of buying cheap if it means I am going to get some returns after that. Hopefully it works!!!

Well, remember it is not me saying things will turn in 2010 or me saying the next 5-7 years will bring greater than the market average -- I'm just telling you what some are saying. You should hope THEY are right.

Well, that was implied. Now I know you are intelligent Flagpole, but I never thought you determined the stock market.

Flagpole wrote:

Well, remember it is not me saying things will turn in 2010 or me saying the next 5-7 years will bring greater than the market average -- I'm just telling you what some are saying. You should hope THEY are right.

Nobody's talking about doom and gloom that lasts forever. But there is a massive structural shift underway, a global deleveraging that will undershoot, and an adjustment to a new risk premium. Compound that with Japan-style nationalization, zombification, and a growth-thwarting sovereign balance sheet that just keeps getting bigger when the appetite for the world's reserve currency is falling, and you could easily have a multi, multi-year stagnation. Admittedly, my own 25-year portfolio and 10-year portfolio look drastically different, but there seems to be a one-way mentality on here. And that is that we are close to a bottom, that the rebound will be sharp, and that we will be back to a period of prosperity and historical 8% returns in equities because Obama promises so. And that just ain't gonna be the case.

konami code wrote:

Are these the same economists and financial press that were consistently overoptimistic during the finance/housing/credit bubble we're now dealing with? The ones that completely failed to predict the crisis?

Answer this: what economic data -- not the number of economists making a prediction, but actual data about the current economic situation -- makes you think we're anywhere near a bottom? What makes you think we'll just resume "normal" historical growth in the next couple of years.

I pulled out of the market at 13k (have kept contributing to 401k, but pulled my existing assets out as a hedge) because I didn't understand how the economy would continue to grow. Still waiting for that data before I jump in.

There are tons of indicators to look at -- you just have to determine which ones you believe are real. Economists constantly argue about the validity of P/E ratios, the VIX, job losses, watching 12-month lows, closed-end fund watching, horrible decisions by stockholders (there's a certain LARGE percentage of stockholders that buy and sell at exactly the wrong time, hence Buffett's famous quote of being greedy when others are fearful and fearful when others are greedy), the unemployment rate, consumer confidence, the PPI, and on and on and on.

With Buffet and Grantham bullish of late and job losses mounting (BIG job losses like we've seen are historically indicative of the end of a recession), it seems like the best time in at least 9 months anyway to believe that something good may be on the horizon. Unfortunately all the information in the world can't tell you whether the market will turn around or not. It's not just a fact-driven thing. If it were, all the mathemeticians of the world would have had it figured out and they'd all be rich. There's a LOT of emotion that goes into stock buying. People go on feelings more than logic; not saying YOU do, but in general they do. If you're waiting for a green light, then you'll never get back in. Not telling you to get in, so don't misunderstand. Just saying there are no green lights.

Sagarin wrote:

Nobody's talking about doom and gloom that lasts forever. But there is a massive structural shift underway, a global deleveraging that will undershoot, and an adjustment to a new risk premium. Compound that with Japan-style nationalization, zombification, and a growth-thwarting sovereign balance sheet that just keeps getting bigger when the appetite for the world's reserve currency is falling, and you could easily have a multi, multi-year stagnation. Admittedly, my own 25-year portfolio and 10-year portfolio look drastically different, but there seems to be a one-way mentality on here. And that is that we are close to a bottom, that the rebound will be sharp, and that we will be back to a period of prosperity and historical 8% returns in equities because Obama promises so. And that just ain't gonna be the case.

Not sure where Obama promised 8% annual returns. Besides, before this mess all started, the average was closer to 12%, not 8%. If Jeremy Grantham is to be believed, the next 7 years will see greater than the average. We'll see.

I definitely don't see a one-way mentality here. I'm more optimistic than most and yet I'm willing to see it may take 5 years before the DOW gets even back to just 11,000, and I'm certainly not calling a bottom. Most of the posters here share your doom and gloom Sagarin. It's all very short-sighted if you ask me. Gloomy today. Gloomy perhaps in 2010, and perhaps even further than that. Doesn't mean it needs to be forever, and as far as what's rosy going forward, I certainly don't need the 11.6% annual return I got from 1989 through Dec. 2007. I don't expect it either,a nd I'm happy with that. The returns I got in the early years have put me in the position to not need such huge returns in the future. Still, while I don't need it, I would not be surprised to see 8-9% annual return over the next 20 years.

midwest. wrote:

Well, that was implied. Now I know you are intelligent Flagpole, but I never thought you determined the stock market.

I just wanted to make sure you didn't think I was necessarily agreeing with them. I think it's possible that they might be right, and I certainly hope as you do that they are, but I don't have enough faith in any financial expert to say I'll follow their advice to the letter. I do believe it will get better...LOTS better. Just might take a while yet.

Some things are going to help workers big time down the road -- retiring Baby Boomers. Frees up jobs and allows for promotions and more wealth for the working. Cheaper housing. When people are allowed to buy homes for cheap, it gives them more disposable income. This disposable income props up the economy. Not happening yet, but it will.

Flagpole wrote:

I just wanted to make sure you didn't think I was necessarily agreeing with them. I think it's possible that they might be right, and I certainly hope as you do that they are, but I don't have enough faith in any financial expert to say I'll follow their advice to the letter. I do believe it will get better...LOTS better. Just might take a while yet.

Some things are going to help workers big time down the road -- retiring Baby Boomers. Frees up jobs and allows for promotions and more wealth for the working. Cheaper housing. When people are allowed to buy homes for cheap, it gives them more disposable income. This disposable income props up the economy. Not happening yet, but it will.

Just a few questions from a dumbass with a third-grade edumacation. What happens when the market caves when and BECAUSE boomers capitulate, vomit, and attempt to salvage what's left of their meager portfolios at the same time their house has fallen 30-40% in value? Think they will be retiring on schedule?

What happens when, because we will be "forced" to run the very type of fiscal policy that thwarts investment and encourages capital flight, and our syphon of a public education system is producing kids that can't produce with the rest of the globalizing world, we can't grow industry? Just who in the hell would start a company and create jobs in that kind of environment? We're more concerned about splitting up a dwindling pie, gay marriage, and who America's Next Great Talent is going to be than we are about competing.

What happens when homes continue to be artifically propped up and inhabited by a less productive class that doesn't deserve to occupy them, by pegging rates and further distorting the credit markets? All at a time when would-be pent-up demand from people who, like my brother, can't afford a home YET but will be taxed to subsidize those who shouldn't be in them to begin with, keeping it further out of reach?

The first clue to bottoming of market will be when the foodbanks are full of food again instead of full hungry people.

Breadlines? I am not saying everyone but yes in many urban and rural areas across the nation we will see existing foodbanks overwhelmed.

SoCal,Flalala,Nevada Arizona will be the sites of a govt run homeless camps by spring 2011.

It is going to be pretty ugly for a lot of folks.

Sounds to me like you have no understanding of the underlying economic conditions -- or even any interest in acquiring that knowledge -- and are simply betting that the future will be much like the past and we'll soon return to 8% average returns. Why do you think that? What makes you think these big job losses are a good sign? Where's the new employment coming from?

I'm not waiting for a green light, just some decent rational analysis. You haven't provided any, here or on any other thread.

The main problem I have is that brokers and anylists tell you to buy no matter what. I foolishly got out of my safe treasury money market and into the stock market (with a big broker) three years ago. If I had stayed, I would have double my money right now. Instead, I'm licking my wounds. But brokers and anylists say stupid things like "the market will come back, it always does" or "you have to be in the market to out-pace inflation".

Well, we are now going to need 8-9 percent returns for the next 10-12 years in a row to "out-pace inflation". And who knows if this market will come back...we are in a whole new ballgame, so history may not matter.

When the Roman Empire was falling, did the last survivors sit around telling each other "don't worry, the empire will be strong again...it's always been strong"?

In the end, the matress is the best way to go. Cash is about to be king...nothing else. Stocks and real estate won't be worth spit. Whoever has stockpiled cash will be the only ones worth anything in the next 10-12 years.

fearandinvesting wrote:

In the end, the matress is the best way to go. Cash is about to be king...nothing else. Stocks and real estate won't be worth spit. Whoever has stockpiled cash will be the only ones worth anything in the next 10-12 years.

I'm afraid you might be right. But I'm not sure the dollar is the right hedge.

red tickertaped to death wrote:

The first clue to bottoming of market will be when the foodbanks are full of food again instead of full hungry people.

Breadlines? I am not saying everyone but yes in many urban and rural areas across the nation we will see existing foodbanks overwhelmed.

SoCal,Flalala,Nevada Arizona will be the sites of a govt run homeless camps by spring 2011.

It is going to be pretty ugly for a lot of folks.

The Stock market has nothing to do with food shortages.

People are poor because they spent all of their money. If they are poor because they invested, then they invested way way way too much in the market.

Market=casino. Until I see something on the horizon indicating prolonged economic growth- worldwide, I will be negative. Until I see asset values in line with available credit, I will be negative.

stocks have halved, but how much harder is money to get? Twice as hard? Three times? Much more than that. Then asset values have further to fall. Its simple really.

If you want to put money in the market, be prepared to lose every penny.