Ghost of Igloi wrote:
Maserati,
"Igy--when you say that market indexes don't reflect reality, you kind of miss the point: it IS reality; it is its own reality."
I am assuming, you agree that when the Dow was at 6,469 in March of 2009, or even 15,450 last January, it was reality. So I prefer buying at a lower reality.
Igy
lol yes, me too, which is why I'm considering only the 401k.
Regarding the "this time it's different" concept...never before have I been so wary of the markets, as I am now, and as I have been for the last year or two. I never had any problem with them, and bought in and out with little worry.
Markets used to be manipulated by a few market makers and fakers, and that was it, and over a broad spectrum and over time things seemed to even out...but no longer. Market activities these days seem more insidious. They seem to have been well-controlled, but in one sense that is a terrible weakness--for if the control mechanisms ever fail for whatever reason, all hell will break loose.
To my mind it's kind of like being in a submersible...if it's leaky enough it will fill up fast enough that you won't be able to go very deep, as the rate at which you can pump out water will be exceeded at some point due to increasing pressure and therefore increased flow. In a market sense, we have learned to not only pump very quickly, but to quickly and nimbly plug leaks very soon after they appear.
This has permitted us to take the submersible to ever-increasing pressure regimes...however, if one of our control mechanisms ever fails, the end will be catastrophic as the overwhelming pressure crushes the vessel...unlike a less-precise operation that would only permit operation in a much lower pressure environment, where failure would not be catastrophic.
So I worry about the failure of the control mechanisms. I do believe that we could see 23k relatively soon if they remain in place and function well, and things like limit-down's, power failures, and updates continue to play a critical role. If the Fed really starts buying (which is another control mechanism), then the sky is the limit.
Yes there are market forces both up and down, but the situation with public accounts and unfunded liabilities is IMO now the controlling force. This time, it IS different, if for no reason other than the demographic realities. And the agencies responsible for those accounts and liabilities are the same ones that run the dominant control systems.
The only thing that could bring it down, because investiture is internationally diverse, is sabotage, and that sabotage would have to be somewhat sophisticated in order to endure. Disabling failsafes comes to mind as one way to do it, but there are overlapping layers of protection.
What a ride, though. I re-iterate that FOR ME, this time is different. Maybe it's in part because I'm getting older, but I really do think that there has been a fundamental change to market operations, not just in my perceptions thereof. Algo's are powerful, quick, and most of all, predictable.
What is happening in bonds is very interesting. From a "fundamental" perspective, it's the opposite of what is happening in equities: there actually seems to be some "sense" in the bond market. The difference, of course, is that many are short-term. Look for the same control systems to apply to the long-term bond market as are applied to equities.
My 2 cents.