Oil down to $28 and stocks falling with it - it's looking like the market will just trade with oil...(until it doesn't)
Oil down to $28 and stocks falling with it - it's looking like the market will just trade with oil...(until it doesn't)
Ghost of Igloi wrote:
Maserati,
My teammate at Oklahoma State Johnny Halberstadt, a great runner by the way, once told me: "Hell man use your brain that's what its there for."
Today most of Wall Street is sitting on the shoulders of midgets. It is all the same buy stocks regardless of the valuation and deteriorating economic conditions. It is always a buying opportunity. That is just plain bad advice.
Igy
yeah, except if you just bought the SP500 40 years ago and never used your brain through endless crises you would have beaten 99.9999% of investors.
We aren't wired to be investors...we're wired to run for the hills.
i firmly believe the brain is a hindrance to most investors
And I say most, not all. Some obviously are good at this.
f'in russell 2000 down 2% again today
nuts
agip,
I agree with some of your thoughts, but I don't think I will make it to age 105. I believe that most investors are unprepared for a 40-50% drop in the market. Most will sell when it is time to buy.
Igy
Ghost of Igloi wrote:
agip,
I agree with some of your thoughts, but I don't think I will make it to age 105. I believe that most investors are unprepared for a 40-50% drop in the market. Most will sell when it is time to buy.
Igy
ok rephrased:
If you bought a 100% SP500 index stock portfoio until age 40
then each decade took 15% off the stock holdings and put it in a bond index
you would be relatively safe and do really well
For now, your "giant" is your cash. If you're sitting on the sideline white-knuckling your grip... you're a giant. If you're praying that the casino is gonna fly again, you may have one more chance, but the reality is, too many average Joe's have figured out the tricks to Fed/Wall Street game. There isn't much time left. Confidence is dropping, historically and psychologically speaking, when the confidence is gone, the empire crumbles... and we're on the fast track.
It is no wonder why emerging markets are signing trade deals OUT of the dollar. The Russians and Chinese have signed energy trade deals out of the dollar... the Indians and Iranians just signed a energy trade deal out of the dollar, etc etc.
A logical act in illogical times would be to use the 'strength' of your piece of paper, to buy real assets... and right now, you're being given the green light to accumulate A LOT of real assets. The current 'strength' of your piece of paper, is the metaphorical calm before the storm.
agip,
Here is something to contemplate. The power of compounding only works when you don't lose money. After three straight years of a 10% returns, a drawdown of 10% cuts the compound growth rate by 50%. It then requires a 30% return to regain the average return of 10%. Most investors make the mistake of ignoring portfolio risk in their allocation strategies.
Igy
well you're definitely the kind of guy who didn't beat the Sp500 1976-2015
LOLOLOLOLOLOLOL
You have a lot to learn, son.
Jim Rogers Is Short S&P 500 (INX), Dow Jones Industrial Average (DJI)
Jim Rogers, Chairman of Rogers Holdings and bestselling author of a wide range of books focused on business and travel, says he’s short S&P 500(INDEXSP:.INX) and Dow Jones Industrial Average (INDEXDJX:.DJI) because the financial crisis of 2016 will be much worse than 2008.
James West: Jim would you agree that the roughly 8 percent drop in global market indices since the beginning of 2016 is the harbinger of a continuation of the financial crisis that began in 2008?
Jim Rogers: Oh I know it is. There’s no doubt in my mind. China’s been able to support the world through a period of money printing and low interest rates, and that’s now come to an end cause China’s showing signs of slowing down. People say China’s to blame for all this mess, but China’s just a victim like the rest of us. We’re all victims James, we’re all victims, including American citizens. Our central bank has been a disaster.
Ed Milewski: Jim, what are the effects of all this going to be on the bond market, in your opinion. Do you see things get ugly for bonds if confidence in the major currencies begins to evaporate in the face of volatility? And do you think that will mean a flight to safety in the form of USD?
Jim Rogers: Well I know that the bull market in bonds is coming to an end.What I expect to happen Ed is things are going to get difficult in the markets, the market is going to go down – whatever the number is – you pick the number, 13 percent, 17 percent…and the (Fed) central bank is going to panic, and as you know, they’re just bureaucrats and academics – they’re not very smart people. So they will panic, and they’ll lower interest rates or print more money…whatever they do, they’re going to try to come to the rescue of the bond markets, and bonds will rally, but that will probably be the last time, and stocks will rally, but that will probably be the last time, and then Ed, then the bear market in bonds resumes, and after a 35, 36 year hibernation, we’re all going to pay a horrible, horrible price. And the next time around, this is going to be much worse then 2008, because the debt is so, so so much higher.
You remember when Lehman Brothers disappeared? Well Lehman Brothers has been around since the 1850’s. Bear Stearns had been around since the 1920’s.
Ed Milewski: Jim I heard you say in previous interviews that you thought gold was going to some number around $900, $925. Do you think, looking at gold’s performance in the last couple of quarters, that the bottom for gold has been reached, or are you still looking for that 900 number?
Jim Rogers: Look guys….I want to remind you that I’m the single worst market timer in the world. I’m the single worst short term trader in the world. So asking me is a waste of all of our time. I don’t think we’ve hit the bottom. I’m still looking for a bottom under 1,000. Who knows if it will get there, but if it does, I hope I’m smart enough to buy a lot of gold. In the end, gold’s going to turn into a bubble, and it’s going to go much, much higher. I just don’t know when. But I’m not buying gold yet.
What I do expect to happen, is that as the turmoil spreads, I expect more people will flee toward the U.S. dollar – I own a lot of U.S. dollars – but because of that, people think it’s a safe haven. It is not a safe haven, as you well know, but people think it is. So the dollar will go higher, it will get overpriced, it may turn into a bubble. Gold will go down in a time like that, because often – not always, but often – gold goes down when the dollar goes up. So I will sell my dollars at that point, and put it into something else – perhaps gold. If that scenario works – the dollar gets overpriced, gold gets beaten down because of the panic, then I hope I’m smart enough to buy gold or renminbi or whatever it happens to be at that point.
James West: Jim you’re close to China there, and I’ve been reading since July that China has been selling as much as $100 billion in US bonds per month, and buying a lot of gold bullion to shore up reserves. Is that something that you see from where you sit in Singapore?
Jim Rogers: Well I read that too. I have no clue whether that’s what China’s doing or not. I don’t know if they’re selling the bonds or just letting the bonds run off. But part of it is, if I hear right, is that people are saying their foreign reserve currencies are down, but that’s partly because a lot of their foreign reserves are in other currencies, such as the Australian dollar, the Canadian dollar. Those currencies are down. So I don’t know if they’re just taking losses or they’re losing money because these other currencies are down, or whether because they are actually selling – I have no clue.
Ed Milewski: Jim, will central banks continue to print money at this historic rate?
Jim Rogers: And I expect it to get worse. When the next turmoil comes, they’re all going to print money to save us, they’re going to get calls from all over the world saying civilization is coming to an end, and you must save us. There comes a time when nobody’s going to pay attention. That’s what I expect to happen. They’re going to try something new next time around, and it’s not going to work…I mean they work for a while, but it’s not going to work. And then, they’re all going to do their best, but their best is going to lead to ruination because the rest of us or going to say ‘we don’t want your garbage any more, we don’t want to place this game any more.
James West: Jim isn’t it quite the case that, really at the end of the day, they don’t have any other tools at their disposal except capital fabrication, and zero interest rate policy (ZIRP) – that’s all they can do?
Jim Rogers: That’s all they can do. They can talk and they can just print money. That’s all they can do. They can drive interest rates lower by buying assets, which is what they’ve been doing, but none of that is good for any of us, cause it’s all just going to lead to a worse disaster.
James West: You bet. So where should an investor be, going into a 2016 that is so volatile and so fraught with the risk of another major market correction?
Jim Rogers: Well, who knows. What I have done is I’m short in the U.S. stock market – the nine or ten stocks that never go down – Amazon, Netflix…those things. I am short junk bonds in the U.S., I am long in China – mainly because I have to be long somewhere. So I’m short junk bonds, I’m short the U.S. stock market, I own a lot of U.S. dollars for the reasons I mentioned. That’s mainly where my money is. But who knows if I’ve got it right. I own some other stocks too that I’ve owned for decades.
James West: Sure. I saw that you were also becoming bullish on agricultural stocks during the last year. How has that worked out for you?
Jim Rogers: Well agricultural products themselves are not doing terribly well, but that’s because not much is doing terribly well. I own a few agricultural stocks, but mainly I own the commodities themselves. You know, sugar’s down 80 percent almost from its all time high. So some of these things are very very cheap. It doesn’t mean they can’t get cheaper as they have, cause everybody’s panicked about everything these days.
Ed Milewski: Jim when gold starts to make its move – and I tend to agree that it’s going to be an exponential move – do you see other commodities following it?
Jim Rogers: Well silver, I certainly expect silver to follow gold higher…
Ed Milewski: I mean outside of precious metals, do you think any of the other commodities will be driven higher as we enter a hyper-inflationary period?
Jim Rogers: Well yes…that’s what I was leading to. I do expect the precious metals to get a lift but other commodities too because people will be desperate for real assets. Agricultural commodities will be in great demand at that point. But oil too. I mean, oil is bound to be making a bottom some time in the next few months. It’s a complicated bottom obviously…but if oil goes to – you pick the number – then of course, oil’s going to make a bottom too, and when people start to look for places to put their money, they’re going to be looking for real assets and getting out of their dollars. They’re going to be looking for real assets because they know the banks are just totally debasing the currencies all over the world.
tl/dr but Jim Rogers has been so utterly and catastrophically wrong about commodities for 8 years that he has lost all credibility.
Agip,
Here is the reality of what you're saying
Warren Buffett has observed that between 1969 and 1984, the Dow went nowhere. But that's not the only time:
SP500 annualized return including dividends and inflation:
1969-1984: 0.36%
1984-1999: 14.31%
1999-2016 2.69%
So the real return is about half what people have been indoctrinated to expect by the mutual fund industry. The truth is that the 1984-2000 period is the highest growth period in the entire history of the market. There are people (and managers) who considered themselves geniuses in the 1990's, but they were just being bailed out by a rising tide that lifts all boats. High growth periods occur only 1/3 of the time, and there is really more time when you may lose to inflation.
If you go back to 1991 when I bought MSFT and INTC, then sold half to buy ORCL and CISCO, if I never sold MSFT, it would be up 4666% now, a 16% annualized return. If you bought the Vanguard Index 500 at the same time, it would be up 7.35%, and you would have almost 10 times less money (4666% gain compared to 589% gain). That's why almost my whole generation cannot afford to retire.
D, come on.
it's all about when you start your time series.
Any time series started in 1999 or 2000 is going to be absurdly bad because that was the peak of the greatest stock bubble of our geneartion.
I won't even discuss any return numbers starting in those years.
and yes I understand you have owned stocks that go up 1000s of %s and you think everyone should hey just buy stocks that go up 1000s of percents.
hey great. I'll do that. Thanks for the tip.
Here's some fun. A back and forth between bearish bill gross and bullish abby joseph cohen. in the beginning of 2013. Cohen was insisting that Sp500 earnings would rise 15% and Gross insulted her to her face - saying her estimate was farcical.
Guess what? earnings rose 15% that year - Cohen was dead right and Gross was an boorish idiot. Again.
http://www.businessinsider.com/bill-gross-abby-cohen-barrons-roundtable-2013-1
Cohen: Consensus estimates for earnings growth are on the order of 12% to 13% this year and next. Corporate performance has diverged from the economy's performance for many years, and that could continue. Companies in the S&P 500 are increasing their exposure to other parts of the world, not just for production purposes, but more important, in terms of end demand.
...
Gross: Time out, people. Let's try to analyze why earnings have done so well in recent years. Corporate profits have come at the expense of labor. Wages as a percentage of GDP have declined to 54% from 59% in the past 10 years. That trend would have to continue for earnings to keep going up. Also, 30% to 35% of earnings growth in the past five years has come from lower interest expense. Most of you probably would agree that is coming to an end, as well. Corporations have to sell their products to somebody. They can't benefit when that somebody has depressed wages and high leverage. At some point the game begins to change. A forecast of 12%-to-13% earnings growth under such circumstances is not only extreme but almost farcical.
Maserati wrote:
I'm almost on the verge of buying physical gold. Almost, but not quite.
Precious metals are interesting yes - they've been beat down for so long that just thinking about them is a little embarassing. especially with a rising dollar.
but
I read a study somewhere that one way to do well is to look at the Morningstar category returns page and buy whatever sector has done the worst for the last five years. Right now it is equity precious metals, down 23% per year for five years.
Timing the bottom is the problem of course, but probably you could do worst than buying precious metals at this point.
http://news.morningstar.com/fund-category-returns/You cannot claim with a straight face that all you have to do is hold an index like the SP500 for 40-50 years, because the numbers are not there.
If the mutual fund industry was in medicine and they lied about the results of their practice in an equivalent fashion, they'd all be sued for malpractice.
My view about this is to do exactly what I did between 1987-1991--learn how to invest. The best 2 books on investing ever written are considered to be:
"The Intelligent Investor" by Ben Graham
"One Up On Wall Street" by Peter Lynch
Also, "The Warren Buffett Way" belongs up there somewhere. I believe that if someone reads one of these and does what they say, that someone will be better off than with passive investing with index funds.
coach d wrote:
You cannot claim with a straight face that all you have to do is hold an index like the SP500 for 40-50 years, because the numbers are not there..
what does this mean?
Ghost of Igloi wrote:
Here is something to contemplate. The power of compounding only works when you don't lose money. After three straight years of a 10% returns, a drawdown of 10% cuts the compound growth rate by 50%. It then requires a 30% return to regain the average return of 10%. Most investors make the mistake of ignoring portfolio risk in their allocation strategies.
You're still ahead 20% from where you started. Not too shabby.
agip wrote:
coach d wrote:You cannot claim with a straight face that all you have to do is hold an index like the SP500 for 40-50 years, because the numbers are not there..
what does this mean?
The CAGR of the SP500 since 1/1/1970 in 5.96%, not the 10% the mutual fund industry has indoctrinated people to believe. The difference over 45 years is 31 times less money. And that's why we have the situation as Fortune demonstrated last year that of the 13 million 401k accounts at Fidelity, the odds of someone making less than $150K getting $1 million in their 401K is about 3 times less than being struck by lightning.
http://www.moneychimp.com/features/market_cagr.htm