Down goes the Dow

Say wha? wrote:

Pointing Out the Obvious wrote:

No. How about you?

What makes you think he was replying to you?

Knowledge

Pointing Out the Obvious wrote:

K5.1 wrote:

What's the top?

I am betting just over 20,000

Predicting a top is meaningless without a time frame.

look at the first post in the thread

K5.1 wrote:

Pointing Out the Obvious wrote:

Predicting a top is meaningless without a time frame.

look at the first post in the thread

Well that was a waste of time.

Pointing Out the Obvious wrote:

K5.1 wrote:

look at the first post in the thread

Well that was a waste of time.

Now look at the fifth post in the thread.

K5.2 wrote:

Pointing Out the Obvious wrote:

Well that was a waste of time.

Now look at the fifth post in the thread.

Fool me once, shame on you. Fool me twice, shame on me.

I'll pass. If you want us to read something, quote it in your post.

Pointing Out the Obvious wrote:

K5.2 wrote:

Now look at the fifth post in the thread.

Fool me once, shame on you. Fool me twice, shame on me.

I'll pass. If you want us to read something, quote it in your post.

Also, neener, neener, neener!

Cash is King.

Ghost of Igloi wrote:

Cash is King.

didn't the market go up 10 straight days recently? Like last month?

Anyway, I think it is silly to sell because of rising rates - a strengthening economy will be fine for companies.

it might wash out some hedge funds using cheap borrowed money, but that is temporary.

Hey Biturbo Sucked, how's that Maserati worship working out for you?

My view is that domestic equity prices are stretched based on several valuation methodologies that have proven accurate over time. The Federal Reserve balance sheet has grown from $900 billion to $4.4 Trillion since the recent financial crisis. The net result of this unprecedented stimulus is to drive equity prices to record highs. The CNBC cheerleaders say the Fed "has your back." Now that the Fed appears to be moving to a rate hike the same CNBC cheerleaders cry "the economy is improving." Well, in my opinion you can't have it both ways. There is plenty of evidence that the distortions are plenty. Look at the retirees that are forced from CDs and money market into dividend paying stocks. Think of the risk they have undertaken, and at their age. It really is shamefull. Anyhow, it really doesn't matter what I think. In the end, at the point people prefer cash to equities, and that period goes for more than a few days, well at that point, the game is over. Stocks are no more than an investment that should generate cash flow. No different than buying rental property, you pay too much, the return is simply not there. For example paying 30 to 40 times last year's earnings for a cereal makers or a burrito restaurant makes no sense. I have been at thislong enough to smell a rat.

Retirees have not been forced to do anything. As always, higher rates means more risk. If someone wants a higher return, they have to be willing to accept the risk. If they don't want the risk, stick with CDs or bonds. There's nothing new here.

Ghost of Igloi wrote:

My view is that domestic equity prices are stretched based on several valuation methodologies that have proven accurate over time. The Federal Reserve balance sheet has grown from $900 billion to $4.4 Trillion since the recent financial crisis. The net result of this unprecedented stimulus is to drive equity prices to record highs. The CNBC cheerleaders say the Fed "has your back." Now that the Fed appears to be moving to a rate hike the same CNBC cheerleaders cry "the economy is improving." ...

I agree with much of your post, but I just don't get the part where you believe that the Fed appears to be moving to a rate hike. They have basically been saying "it's just around the corner" since 2009, and yet still no hike.

How many times do they have to lie before you finally start doubting their claims to start hiking "soon"?

Seven years ago a retiree could find a 4% CD generating $4,000 in income from a $100k investment. Where can that retiree find that income today? The Fed has exactly said they want investors to take more risk.

The Fed is using that word patient to describe the timing of any rate hike. The point is, Friday's market sell off came with a rise in the ten year treasury and with the belief the Fed may raise rates in June. Interest rate futures are indicating a raise in the June to September time period.

Ghost of Igloi wrote:

Seven years ago a retiree could find a 4% CD generating $4,000 in income from a $100k investment. Where can that retiree find that income today? The Fed has exactly said they want investors to take more risk.

And thirty years ago they were paying 13%. Should we go back to those days?

The answer to your question is the stock market. Yes, the Fed's plan was to move investors there and those who did move have made a tidy sum. But the choice is yours. Higher returns come with higher risk. This is not a secret.

[quote]Big Dog Investments wrote:

Higher returns come with higher risk. This is not a secret

You don't understand the meaning of risk.

Higher returns MIGHT come when you take higher risks.

So might massive losses.

You really dont get it wrote:

You don't understand the meaning of risk.

Higher returns MIGHT come when you take higher risks.

So might massive losses.

I understand the meaning quite well.

Are suckers actually born every minute?

Or are they created by hype?

hard to argue with much of this -

but

Why can't you have it both ways? The economy had a lot of slack in 2009-2013...so the fed shoved a lot of money out the door. Now the economy has less slack so they will shovel less. Doesn't mean the economy or the stock market will crater. The US economy is an amazingly resilient critter - give it more credit.

you think a few days of fear will move people out of the stock market? We've had lots of a few days of fear - market falls 8%, it seems the game is up, and then it roars back. This is the recent historical pattern.

as for valuations...they are a little high, sure. Nothing scary, but expected returns from these US valuations are not great - mid single digits. which is ok.

you want cheap, go to emerging markets and some european countries. is that a better investment?