DOW up nearly 300 points today -- hope you all bought more funds or stocks in the last week -- I DID.

Seriously Flagpole. If you really believe in investing for the long haul, as you correctly preach, you wouldn't care what the market does in short periods such as a day, week, month or quarter. Mark your market once a year. Calculate your returns every five years. You're acting like the peeps kid. "The market's up!" "Yeah!" The market's down!" "Buy gold!" "The market's up!" "Oh no!" The market's down!" "Buy guns and ammo!"

"[The markets] will fluctuate." - JP Morgan

malmo wrote:

Seriously Flagpole. If you really believe in investing for the long haul, as you correctly preach, you wouldn't care what the market does in short periods such as a day, week, month or quarter. Mark your market once a year. Calculate your returns every five years. You're acting like the peeps kid. "The market's up!" "Yeah!" The market's down!" "Buy gold!" "The market's up!" "Oh no!" The market's down!" "Buy guns and ammo!"

"[The markets] will fluctuate." - JP Morgan

Malmo,

I don't really care about the market going up or down. Read this quote of mine from within this thread:

"I just started this thread for fun. I'm neither elated nor depressed depending on the market. Not at what it does TODAY anyway. I'm glad that all the money I put in the market when the DOW was at 5,000 or so has gone way up, but other than looking 10+ years ago to today, I don't care one way or the other. It's easy not to get depressed about the markets when you just put money in like clockwork no matter what, make small changes about once a year, buy big blocks when the market appears down and just hold it all for the long haul."

I did make a big purchase in my non-retirement mutual fund last week when I determined the market was low, but that's only the third time I've ever made an unscheduled purchase in almost 19 years of investing.

Hope that clears it up for you.

the market will retest the recent lows within the next several weeks. technically speaking we should see dow eleven two eleven five for a bottom based on correction of 25-35% off the highs. that should put the s and p at about 1250-1300. the problem with the outlook over the next several years relates to the lack of any available asset for expansion to yield another bull market.all recent bull markets have been created by asset bubbles.in the 90s it was the dotcom boom, in the 00s it has been housing followed closely by developing markets.a commodity boom could continue and serve as a vehicle for an asset bubble but barring this will likely seee range bound equities markets for the next 5-10 years.

xlev2 wrote:

the market will retest the recent lows within the next several weeks. technically speaking we should see dow eleven two eleven five for a bottom based on correction of 25-35% off the highs. that should put the s and p at about 1250-1300. the problem with the outlook over the next several years relates to the lack of any available asset for expansion to yield another bull market.all recent bull markets have been created by asset bubbles.in the 90s it was the dotcom boom, in the 00s it has been housing followed closely by developing markets.a commodity boom could continue and serve as a vehicle for an asset bubble but barring this will likely seee range bound equities markets for the next 5-10 years.

While the market could still drop a lot, why should anyone care if they are in it for the long haul as they should be?

If you believe in what you say, then why aren't we headed toward another housing boom? The Fed is lowering rates, mortgage rates are very low, the price of homes are greatly down. Then, with the fact that people haven't been buying homes, that means there's a buildup of people who want to buy homes. The FED had low rates before the last housing boom, and now we're headed toward a similar path. Subprime loans won't be the thing, but people will still buy houses.

Flagpole Willy wrote:Subprime loans won't be the thing, but people will still buy houses.

There's the paradox that Congress has to address; on the one hand, they use the catch-all "sub prime loans" to point fingers at the banks. On the other hand, do they dare say they are for restricting credit access for an entire class of people (mostly lower income)? Tough call, especially for politicians.

Flagpole

People will still buy houses yes but what is the inventory in your neck of the woods? Some areas eg San Diego San Jose formerly "hot" now have housing inventory of 3-5 years. YEARS!! Now there are and always will be homes out there which are desirable and will sell but there are many more which frankly should be bulldozed.

re: subprime take a look at this table

http://bp3.blogger.com/_pMscxxELHEg/RxzD0s_7EYI/AAAAAAAABB4/ljDSXZhMG3o/s1600-h/IMFresets.jpg

I am glad you believe in the Great American Dream Flagpole. You are a staunch midwesterner if i am not mistaken. you and I have debated gold recently. I have accused you of being compliant with the PTB (powers that be) in poopooing gold. here is an interesting article for you from the WSJ.

http://www.wnd.com/news/article.asp?ARTICLE_ID=59876

come check out our company.

http://www.mantraenergy.com

just went public. OTC:BB - MVTG

xlev2 wrote:

Flagpole

People will still buy houses yes but what is the inventory in your neck of the woods? Some areas eg San Diego San Jose formerly "hot" now have housing inventory of 3-5 years. YEARS!! Now there are and always will be homes out there which are desirable and will sell but there are many more which frankly should be bulldozed.

re: subprime take a look at this table

http://bp3.blogger.com/_pMscxxELHEg/RxzD0s_7EYI/AAAAAAAABB4/ljDSXZhMG3o/s1600-h/IMFresets.jpg

I am glad you believe in the Great American Dream Flagpole. You are a staunch midwesterner if i am not mistaken. you and I have debated gold recently. I have accused you of being compliant with the PTB (powers that be) in poopooing gold. here is an interesting article for you from the WSJ.

http://www.wnd.com/news/article.asp?ARTICLE_ID=59876

1) I didn't say that I thought there would be another housing boom. I was using another poster's logic to predict that HE THINKS THERE SHOULD BE another housing boom. Just making a point. I don't think we're in for another housing boom like the one we just saw. Housing will pick up yes, but not like it was just before the bust.

2) Housing inventories are obtained by looking at number of houses on the market along with the current rate of home purchases. An inventory of 3 years only means if the rate of buying stays the same. It is doubtful that the super slow rate of home purchases will continue for 3 more years. In fact, in California especially, some economists have said it is ripe for a mini-boom in housing within the next year or so. Purchasers can now buy a house worth more than $417,000 (up to $625,000) without having to take out a second mortgage right away.

3) Not sure that I ever said I believe in the Great American Dream. That's an ambiguous ideal anyway. Not sure what you mean by me being a "staunch midwesterner" either. I've lived in the SF Bay Area and also Maryland, and I plan to retire in the south (no further north than Tennessee). I have no loyalty to the Midwest. I mean the midwest farmers' daughters really make you feel alright, but I'm married and can do without that.

4) Regarding gold, dude, buy it if you want to. It's too risky for me, but if you want to take the risk, go ahead. I hope it makes you tons of money -- seriously. I don't need to put all my eggs in one basket and cross my fingers. I've been planting the seeds for a long time now, and they've taken root. If you're going to go the precious metals route, many are predicting silver to be a better buy than gold. I won't do either, just like I won't buy individual stocks, but if you want to, go right ahead.

Yes, you get things half right.

I am not going to spend a lot of time trying to write something out that might help you understand but I'll write this up quickly.

1. You had a thread about the press incorrectly using the term recession. Recession has more than one definition. Read reports from economists in your state and see how the evaluate what a recession is for your state.

2. You said someone pegged inflation under 2% for 2007. I don't think you got that right.

3. This thread.

Three variables largely explain the change in stock returns over the long term:

1. The dividend yield at the time of initial investment

2. The subsequent rate of growth in earnings over time

3. The change in the price-earnings ratio during the period of investment.

Ideally, you would like to see a bull market late in the life of your portfolio and stock share prices staying low in terms of price earnings during the early years of accumulating them. This is beyond our control but that is the ideal situation.

The ideal situation is that earning continue at a steady rate while share prices move much slower on the uptick to historical price earning ratio averages until just before you start rebalancing your asset allocation into a more balanced portfolio.

Compound interest is a wonder. However, you are not applying it correctly here.

Create a spreadsheet and compare a bull market vs a bear market for a long term investor. A bull market is not nearly as beneficial as many people think. A bull market raises the asset value, but delivers a proportionate reduction in the prospective real yields that the portfolio can deliver from that point forward.

In the short run, the stock market is a voting machine; in the long run, it is a weighing machine - Warren Buffett

1) The way that I define recession is the most long-standing way to define it. That some other groups have decided to look at other factors (rightly or wrongly) doesn't mean the original definition should be thrown away.

2) Yes, I said that someone pegged inflation for 2007 at 2%. That is true. Someone did.

3) Your point number three teaches me nothing.

4) You are incorrect that I am not applying the principles of compound interest correctly. I am doing so ABSOLUTELY correctly. "Interest" isn't the right term, but the compounding idea is the same. If I have $100 and it earns 10%, then I have $110. Now, if that earns 10% again in the second year, I have $121 because I get to include the whole of the first year's earnings. This is not incorrect brother. My figuring and my math is always correct.

Sorry brother. I remain 100% correct. Guess you are half correct.

Okay, I quickly created a rough and dirty overly simplfied spreadsheet that you can test for yourself in one of your spreadsheets.

Option 1: Suppose the price for a share of a stock is $28 at the end of year one and earnings are $2 a share. If you keep the p/e ratio constant at 14* and assume 9% earning increase each year. This would mean the share price would also increase 9% each year.

Assume you have $10000 to invest at the end of each year and you buy as many shares at the end of each year that you can. At the end of 20 years, you will have 3553.62 shares and the price would be $143.97 per share. Thus, you will have an asset worth about $511,601.20 at the end of the 20 years.

*It seems like you would to see higher returns today and wouldn't mind seeing higher p/e ratios now, but I'll give you the benefit of the doubt and say you would prefer constant p/e of 14.

---------------------------------------

Now lets look at option 2 correctly. Assume that earnings grow at the same 9% rate. However, the share price only goes up 5% the first 15 years. You use your same $10,000 at the end of each year to buy as many shares as you can. Then the last five years the share price catches up so the the p/e ratio is 13.98 at the end.

This would mean that the share price would go up 21% in the last 5 years. At the end of 20 years, I would own 4420.16 shares and the price of each share at the end of 20 years would be $143.79. The total assets would be about $635,584.86.

I don't know about you, but I would prefer $635,584.86

over $511,601.20.

Nah. Those aren't equivalent to the scenarios I gave.

You can hope for flat growth for 30 years if you want and then a flurry of gains at the end if you want. That is wishful thinking and very unlikely.

Flagpole Willy wrote:

Bob Brinker pegged inflation in 2007 at under 2%

and later

Headline Inflation

I'll give you the benefit of the doubt and assume you were talking about core inflation even though you typed headline inflation.

Headline inflation (seasonaly adjusted) for 2007 was 4.1%

Core Inflation as measured by CPI was 2.4%

We don't have all of 2007 numbers yet but....

The Fed's preferred gauge of consumer prices rose 2.2 percent in November from a year before, the most since March. The three-month annualized rate for the personal consumption expenditures price index, minus food and energy, was 2.6 percent.

It looks like Bob Brinker's prediction about inflation if it was based on the core index measured by personal consumption expenditures index(not headline as you stated) may be off. We will have to see.

It also looks like he was off when he told listeners that he thought the market was attractive for purchase on any weakness in the area of the mid-1400s range for the S&P and otherwise dollar cost average into the market.

I like listening to Money Talk. Bob Brinker sometimes has great guests. But just because he says something doesn't make it true.

Nah. Those aren't equivalent to the scenarios I gave.

That is because your scenario was flawed if it was an attempt to address what I wrote.

headline inflation under 2% for 2007....that sounds like something Ron Paul's inversely retard brother might say.