RE: Dow hits milestone 11,000

A bond market "bubble" popping is not good for the stock market because it would be caused by fears of inflation/higher interest rates. (think 1993/94 when the fed surprised the bond market with how aggressively they were raising rates). If/when the economy shows real signs of life we could get an orderly rise in bond yields (similar to last year) which corrseponds with a rising stock market. If we get a "pop" as you describe it that would not be good for the stock market.

Flagpole wrote:

Now with at Dow at about 11,000 with still a ton of money on the sidelines with a Bond market bubble that's about to pop and Gold at an all-time high (meaning that money is already OUT of stocks and will head back there) and Warren Buffett saying to be in stocks and those stocks undervalued, it is of course the time to be in stocks.

Does this mean Sarah will withhold sexual favors from Todd?

Yeah, and when people leave bonds (for whatever reason) they go to stocks for greater gains. A bubble pop in the bond market is GOOD for stocks.

Not necessarily. If the bond market is selling off on fears of inflation than the stock market could very well sell-off. Again - go back to 1994. The bond market got murdered and stocks finished the year with a loss. There are other places for investors to put their money than the stock market or bond market. Oil, gold, cash, high yield bonds (which do not directly track to govn't bonds), etc

Flagpole wrote:

Yeah, and when people leave bonds (for whatever reason) they go to stocks for greater gains. A bubble pop in the bond market is GOOD for stocks.

Rudi Voeller wrote:

A bond market "bubble" popping is not good for the stock market because it would be caused by fears of inflation/higher interest rates. (think 1993/94 when the fed surprised the bond market with how aggressively they were raising rates). If/when the economy shows real signs of life we could get an orderly rise in bond yields (similar to last year) which corrseponds with a rising stock market. If we get a "pop" as you describe it that would not be good for the stock market.

People already have their money in gold (money that will come out and go into stocks).Stocks long term are always preferred, and whenever there's the slightest bit of reason to put money there, investors will. Your example of 1994 doesn't really sit too well because it was in the middle of a HUGE bull run from 2,700 in 1989 to 14,000 by 2007, AND as soon as February 1995, the Dow reached a new HIGH of 4,000. Man, I WISH this market would behave like it did from 1994 again. I'd be retired in about 7 years from now if that happened.

Rudi Voeller wrote:

Not necessarily. If the bond market is selling off on fears of inflation than the stock market could very well sell-off. Again - go back to 1994. The bond market got murdered and stocks finished the year with a loss. There are other places for investors to put their money than the stock market or bond market. Oil, gold, cash, high yield bonds (which do not directly track to govn't bonds), etc

Flagpole wrote:

Yeah, and when people leave bonds (for whatever reason) they go to stocks for greater gains. A bubble pop in the bond market is GOOD for stocks.

Flagpole wrote:

...as it had to eventually on its way to 12,000 by the end of 2010 as I have predicted.

Not a particularly daring prediction...I give it about a 30% chance. We have had a strong Sept. so there may be a bit of a pullback this month - giving it further to rise in a pretty short time frame.

But the real question is what sectors will drive it up? Financials have been dead in the water. Even today with the market up most financials are in decline. Can the market really get to 12K without financials coming back? Tech? It's all over the map, but no real consistent positive trend. Health care reacts rather than leads. Industrials? Maybe, but without housing?

So let's see how good you are. Rather than throw out a broad prediction that anyone can make, give us some specifics...something that will show us you know what you are talking about.

It's not a prediction that anyone can make. You give it just a 30% chance (so how is my prediction something anyone can make when you're not?), and many here are telling me I'm all wet. I say it WILL happen. I've already given the reasons for it...continuing growth in manufacturing for 14 months now, personal income and spending is up, home prices have risen for 5 straight months, an undervalued stock market, a bond market that is about to deflate, Warren Buffett saying that stocks is the place to go (lots of people follow his advice), charts that show a Dow of 12,000-12,500 is in the cards by end of 2010, MANY companies are reporting decent sales, and trending up. Also, I never said it was a daring prediction. I don't predict things to be daring. I predict things when I see them coming. Dow will reach 12,000 before the end of 2010.

The US Gov't will borrow $1.2T this year and push our nation further into the red. It's time the gov't cut welfare, foreign aid, retirement plans for civil servants, and fire 80% of federal payroll and military.

$1.2T wrote:

The US Gov't will borrow $1.2T this year and push our nation further into the red.

I'm aware. Doesn't mean the Dow won't hit 12,000 by end of 2010.

Fine, you've given your rationale for the Dow reaching 12,000 this year. I hope it does. But if we go up 9% in the next quarter there is some money to be made. I'm just trying to figure out where the growth will occur. Broadly, across all sectors or mostly concentrated in just a few. If you are this prescient about where the market is headed you must have some theories about what sectors will drive it up. You've cited various macro forces - home prices, personal income, spending, etc. - but from an investment standpoint what are the practical implications for the next 3 months? Just looking for a little advice here.

It makes no difference whether '94 was in the middle of a bull run or not. The point is that a sharp spike in interest rates in the bond market does not necessarily mean the stock market is going to correspondingly surge. People exiting bonds does not necessarily mean they'll be putting their money in stocks.

Let's make a deal. If the Dow hits 12,000 by 12/31/10, I will declare you the most intelligent and insightful person on these boards. If the Dow doesn't hit 12,000 by 12/31/10, then you can't post on letsrun for the first 6 months of 2011. Deal?

I apologize for being stubborn and stupid.

Well, I've never said I was a genius at picking certain sectors, and the fact of the matter is, pretty much NO ONE IS. That's why Jim Cramer tells people to never be more than 20% in any one sector, even though he may really like a certain sector for a while...you just ALWAYS have to diversify to protect against losing your shirt.So, what's the advice?1) Have no debt other than a mortgage that is ~25% of your take home pay.2) Invest at least 15% into 401k and Roth IRA or equivalents...401k first up to the match and then Roth and then back to the 401k. The funds within these vehicles should be EITHER all in index funds (lots of different ones) OR the STOCK PORTION evenly divided between growth, growth and income, aggressive growth, and international stocks. The rest, depending on your age and closeness to retirement, should be in bonds...no bonds before age 35, and then a greater percentage as you get closer to retirement so that within 5 years you're about 30% bonds to 70% stocks and then in retirement about 40% bonds to 60% stocks...varying slightly (or maybe even a lot) depending on your needs and your age at retirement.3) Do the above 2 things and then you can either pay your house off early OR open a non-retirement mutual fund, OR do both.4) Want now to save for college for kids, then do so, or flip flop #3 and #4 if you want.5) IF you are doing all of the above so that you have NO DEBT including the house (except maybe not the college saving...I'm ok if you want to make your kids work and earn their own way to college), THEN you can buy individual stocks if you want. You should NEVER own fewer than 5, and you should never have more than 20% of your holdings in any one sector. Spend an hour per week per stock on research for that stock so that you know whether to buy more, hold, or sell.That's the advice.

D to the O to the W wrote:

Let's make a deal. If the Dow hits 12,000 by 12/31/10, I will declare you the most intelligent and insightful person on these boards. If the Dow doesn't hit 12,000 by 12/31/10, then you can't post on letsrun for the first 6 months of 2011. Deal?

Nah. I don't claim to be the most intelligent and insightful person on these boards, and I certainly don't long for someone to say so, so that's not a bet I want to make...nothing in it for me. I'm just making a prediction based on what I see in the works. I post this to ease the fears of some of you...not to be proven right (though I WILL be proven right). I'm not always right. The decline in 2008 was way worse than I thought it would be, and I've said so many times over, so while one poster brought back an old thread from 2008 which showed I was not right about the end of 2008, it's not like I haven't said so a thousand times since. BUT, since then I was right that March 2009 was approaching the bottom. I was right that the Dow would NOT take 20 years to get back to 10,000 (as was told to me). I was right that the Dow would NOT drop to 3700 or 1200 or ZERO as was also said here. I was right when I declared the recession over (before it was officially declared) when I did in the middle of 2009, and while I'm not giving Obama credit, I was also right when I said things would look better in his first term than they did in the last 2 years under Bush...well, as bad as things are, they are WORLD'S better than when Obama took office...no recession, a Dow that's back over 11,000, unemployment has dropped a LITTLE, and we are definitely on the SLOW upswing; again, not necessarily his doing, but as I said, it would happen in his first term. I was right when I said 2009 would be a BIG year for stocks (I made 34.7% in 2009).

A country that produces nothing produces no wealth. The companies within a country are that country's wealth producers. We allow our companies to be snatched up by foreign competitors on the open stock market. Over 16,000 of our best wealth producing companies have been auctioned off and the U.S. has no authoritative government agency prohibiting the Great American Sell-off.

Of course there is the Committee on Foreign Investment in the United States (CFIUS), but it merely serves as a rubber stamp with no actual authority. While CFIUS was created as an interagency committee to oversee national security implications of foreign investments into the U.S. economy, it has only stopped one acquisition since its creation.

We are selling out and no longer own or control our own country and must now live on imports while incurring massive debts that can only be repaid through the sale of our wealth producing companies and assets. Very soon we will not even be able to protect or support ourselves.

Virtually all of our industries are available for sale to the highest bidder, even if that bidder resides in a country like China with a long history of cheating us in commercial competition. We have made almost no effort to restrain other countries from purchasing or bankrupting our industries.

RCA is now a French Company, Zenith is a Korean company, Frigidaire is a Swedish Company, IBM Personal Computer Division - with its 500 patents - is now a Chinese Company, Westinghouse Nuclear Energy's major shareholder is Toshiba - a Japanese Company. Lucent Technology, a former research division of AT&T, along with all the patents acquired from the beginning of the phone system, is now a French company. In 2008, Brazilian-Belgian brewing company InBev purchased the iconic American brewer Anheuser Busch, makers of Budweiser. With the sale of these manufacturing companies the future profit and technologies all belong to foreign entities.

As we produce less with the remaining American owned factories our debts compound. In 2007 our Balance of Trade Deficit (debt) from excessive imports over exports was $731 Billion. Our national debt, as of January 15, 2009 is $12.3 trillion.

As we have become unable to produce enough for ourselves in America, we now outsource our manufacturing to China, Japan and others. This is resignation that we are no longer competitive in the world and can no longer be a productive manufacturing nation. To add another nail to our manufacturing coffin, we send our political leaders to foreign countries to beg foreign manufacturers to produce in America (insource) so we can have labor jobs while they supply us with their technical expertise in their new factories that we helped them build with subsides, tax abatements and other incentives; all at the expense of domestic manufacturers.

America must wake up to the facts - we are losing our nation, our wealth and our jobs to foreign competition. If these trends are not reverses, our way of life may be lost forever.

The other side of the coin wrote:

America must wake up to the facts - we are losing our nation, our wealth and our jobs to foreign competition. If these trends are not reverses, our way of life may be lost forever.

Too late. The good news is that it doesn't much matter, since civilization as we know it will be ending worldwide, as oil production has already peaked and there will be no energy to sustain the system. Easter Island, Easter Island.

Flagpole wrote:

I was right when I declared the recession over (before it was officially declared) when I did in the middle of 2009, and while I'm not giving Obama credit, I was also right when I said things would look better in his first term than they did in the last 2 years under Bush...well, as bad as things are, they are WORLD'S better than when Obama took office...no recession, a Dow that's back over 11,000, unemployment has dropped a LITTLE, and we are definitely on the SLOW upswing...

Someone needs to bitchsmack you with a sock full of silver rounds. This should do it, figuratively at least:

Rudi, why would investor be in cash if they fear inflation? Stocks would be better.

Rudi Voeller wrote:

Not necessarily. If the bond market is selling off on fears of inflation than the stock market could very well sell-off. Again - go back to 1994. The bond market got murdered and stocks finished the year with a loss. There are other places for investors to put their money than the stock market or bond market. Oil, gold, cash, high yield bonds (which do not directly track to govn't bonds), etc

Flagpole wrote:

Yeah, and when people leave bonds (for whatever reason) they go to stocks for greater gains. A bubble pop in the bond market is GOOD for stocks.