Stock Market Predictions

[vee4xu]

Both the Dow and S&P closed at 5 year highs today. Last time the market was this high was December 2007. The S&P is about 80 points from it's pre-crash peak.

Two questions:

-Long or short on the US equity markets and why either way?
-What will the S&P be on March 1, 2013? It closed at 1480 today.

Sequester cuts, debt ceiling, affect of both on retail sales, consumer confidence. Deal or no deal on these issues. On March 1 the US Treasury will be unable to pay all of its bills. What happens then? What do the rating agencies do?

I have followed the issue very carefully since before the November 2012 elections. I am short on the US equity markets. I think that at some point just before March 1 or shortly afterwards, the S&P will be down 25%-30% from today's value.

What say you?

[GoMuskies]

Not sure, but I'm definitely nervouos about it. We just had bonus season, and I am reluctant to put much of that money into the equity markets right now, particularly when I just had a decent sized chunk go in via my 401(k) deductions. However, I have a trip to Vegas planned in March (conference tournament week; the "pro" way to do March in Vegas as opposed to hanging with the rank amateurs that visit the folllowing week), and I plan to invest a nice chunk of cash in craps, pai gow, blackjack and strippers. Projected IRR is very high.

[chico]

(conference tournament week; the "pro" way to do March in Vegas as opposed to hanging with the rank amateurs that visit the folllowing week).

As someone who goes the following week, I resent that remark. Of course, you're right - in a lot of ways it's like New Year's Eve for the sports bettor, but it's easier to win at poker. But 20 years ago when I first started going it was much, much different. I blame Bill Simmons. And George Bush.

[Kahns Krazy]

I'm on the sidelines for the next few months. The end of TAG has corporates looking to put all that cash somewhere. I'd be concerned about all that cash if I were short on equities.

[Kahns Krazy]

I just saw these results of a survey about the S&P 3 months from today:

A - 1600 or Higher 7%
B - 1550 38%
C - 1450 26%
D - 1400 or lower 11%
E - 1500 (more of same) 19%

[DC Muskie]

In my world, companies and people are sitting on a ton of money and not spending it...either on hires, programs or especially philanthropic work.

This could be the new normal. It's frustrating, but I can see why, especially when reading the above.

[vee4xu]

I just saw these results of a survey about the S&P 3 months from today:

A - 1600 or Higher 7%
B - 1550 38%
C - 1450 26%
D - 1400 or lower 11%
E - 1500 (more of same) 19%

Interesting:
45% in the 1450 to 1500 range, which is where it's been for a while.
38% to 1550
11% below1400
7% over 1600

So 83% in a 100 point range 1450 to 1550

I interpret this as a 100 point trading range, which is around 6% either way. Also, it says that the expert thinks there is a 50% higher chance that the bottom can fall out to below 1400 versus going up over 1600.

This seems to make sense given the info I have been following. The group I follow feels like the sequester cut possibility is lessening because no one has the stomach for another fight. I will be listening to a conference call tomorrow to get more details. That said, I think that your numbers are pretty much on point at the moment.

[Kahns Krazy]

It was a survey of around 400 corporates and investment professionals.

I actually think it's amazing that only 50% more people believe that giving up recent gains is likely versus those who believe that there's a chance that the current gains are simply the warm up to crushing all-time highs.

I kind of think the 7% are idiots, and I love an optimist.

Also, those numbers add to 101%. I always think it's dumb when numbers may not sum due to rounding. Round one of them down if they don't sum. You're rounding already. Big whoop.

[GoMuskies]

S&P sits at 1543 a little less than a month out from that survey. The 1600+ people are looking less like idiots now.

Dow obviously hit its record high today. According to the WSJ, when the Dow hits a high, on average it runs another 28% before the bull market ends. That would be okay.

[Kahns Krazy]

I don't think you're seeing a bull market. I think you're seeing the short term impact of economic policies. There is a ton of cash sitting around, and it's being forced into the markets. Dropping federally insured bank accounts for businesses from unlimited back to the FDIC limit is forcing tons of that corporate cash into prime money market funds that are ultimately investing in the markets. If interest rates ever turn back around, that money will flow out quickly.

I've never felt the need to be diversified more than I do now. I'm not sure which leg of this thing is going to break, but I think something will in the next 12-24 months.

http://www.pisymphony.com/toothpick/toothpick13.jpg

[Kahns Krazy]

I just saw these results of a survey about the S&P 3 months from today:

A - 1600 or Higher 7%
B - 1550 38%
C - 1450 26%
D - 1400 or lower 11%
E - 1500 (more of same) 19%

Aaaaaand, the 7% crowd wins with the S&P finishing around 1625 yesterday.

Who is the idiot now?

[blueblob06]

Woohoo! I've put $$$ in burritos over the years, Chipotle to be specific, and it's been great. GOOG has been good too.

Wish I had put all my eggs in the burrito basket. I'd be rich!

[Kahns Krazy]

S&P over 1,680. Up over 13% year to date. Amazing.

[Kahns Krazy]

In the midst of the shut down, debt ceiling, sky is falling conversation, the S&P hit a new all time high of 1733 yesterday.

Meanwhile, short term interest rates continue to hit new record lows. Corporations are continuing to sit on cash despite getting absolutely nothing for it. Stock buybacks have become the new dividend, which does absolutely nothing for improving the velocity of spending, which is what the economy really needs to complete the rebound.

I still think there will be an adjustment in the next 6-18 months, but history shows that I have no idea what I'm talking about.

[vee4xu]

And add to that, the same dude I follow says one of the most under-reported stories is that the deficit is falling precipitously and may actually be a surplus by 2016. He suggests that the Treasury has been raking it in due to higher employment. I haven't fact checked him on this, but plan on doing so soon. One thing I know for sure at this point, Wall Street is now calling bullshit on DC when it comes to all of the shutdown talk. They just keep moving along their merry way, while the politicos are hoping for a huge market downdraft based on the shutdown threat.

[XU-PA]

but history shows that I have no idea what I'm talking about.

If only your were every stock analyst/broker in the world.

[Kahns Krazy]

S&P at 1,818, nearly 23% ahead of where it was when this thread started almost exactly a year ago.

My thought is that this is unsustainable. Short term interest rates are starting to turn, ever so slightly. When those rates start to move, I would think a lot of money would be coming out of equities and back into the bond and cash investment environment. I wouldn't think anything would happen quickly, but a flat to slightly down year in the equity markets would not surprise me. Given what has happened historically, it wouldn't surprise me if it means a market correction in the first half of the year followed by steady progress back to current levels by the end of the year.

I'm not selling anything right now, but I'm not buying either. Building what reserves I can to take advantage of a dip if one comes.

[vee4xu]

I'm with you KK. Though I believe that the reality of QE tapering is already baked into the market, the rise in artificially suppressed interest rates are not. I don't feel that rates will spike as QE is eased, but they will rise providing alternatives to equities. The other wild card for me is employment and inventories. As the jobless rate continues to decrease and spending increases will there be enough inventory to meet the demand? With inventories at current historic lows this aspect will be interesting. I have looked at some pretty sophisticated bond short funds that came out in 2008 and are trading at very low prices to all time highs. But the prospectus for these things is so convoluted that I steered clear. I have some dry powder for a dip and am glad I bought and held an S&P index fund in 2009 and again in 2011.

[X-man]

I teach economics and I am very leery about predicting market moveents. I do agree that the QE taper is likely to be a non-event. But even with the taper, there is so much cash available (over 90% of bank deposits at the Fed, for example, are excess deposits earning only 25 basis points) that when the uncertainty in the business environment begins to disappear (as the economy strengthens, the effects of the ACA become more predictable, and Congress starts to pass more long-term fiscal measures), I think that the market could stay the course rather than retreat in the face of rising interest rates. But I know nothing other than the fact that whenever I refinance my house, rates tend to drop within 3-4 weeks after the re-fi.

[chico]

I'm waiting for the crop report to come out. I have a good feeling about frozen, concentrated orange juice futures.

Or maybe pork bellies, which are used to make bacon - as in a bacon, lettuce and tomato sandwich.

[Kahns Krazy]

Pork belly timing is horrible. The people who own the pork belly contracts are saying, "Hey, we're losing all our damn money, and Christmas is around the corner, and I ain't gonna have no money to buy my son the G.I. Joe with the kung-fu grip! And my wife ain't gonna f... my wife ain't gonna make love to me if I got no money!" So they're panicking right now, they're screaming "SELL! SELL!"

[xeus]

pork bellies, which are used to make bacon - as in a bacon, lettuce and tomato sandwich.

Best line in a movie that is full of great ones.

I am particularly interested in where the housing market is headed this year. Anyone care to prognosticate on that?

[Pablo's Brother]

Best line in a movie that is full of great ones.

I am particularly interested in where the housing market is headed this year. Anyone care to prognosticate on that?

Just announced today: JP Morgan's mortgage business was down 42% quarter over quarter. Wells Fargo was down 37%. Both had dim outlooks on mortgages for 2014. Wells just laid off 6,200 loan originators. Refi trade is done. New housing will just be OK IMO.

[vee4xu]

Keep you eyes on this index. It is the industry standard for housing.

http://us.spindices.com/index-family/real-estate/sp-case-shiller

Also. Blackrock and Starwood both have been making hay in the single family rental market. There are actually funds out there that mirror the CDO's of 2007, but are intended to take advantage of the foreclosure market from a few years ago. IB's started buying, fixing and renting single family homes in the most negatively affected housing markets. Now, they are selling REIT shares or investment interests in these funds. Not really enough to have the same impact as CDO's, but every bit as risky. I would stay away from them.

With interest rates rising over the next 12-24 months, the refi market probably is dead. The housing starts are up, but in a more controlled way and lenders have new federal guidelines that should (I emphasize should) make borrowing more transparent. Caveat: There will always be shysters taking advantage of uninformed idiots, but not universally this time. New housing loans will be there, but jumbos could prove tougher to get.

[xu82]

My future father in law (many years ago) asked a friend of my parents (who was a founder of a large brokerage house) at a party: "so, is the market going up or is it going down?" The answer provided was the sign of a wise man:"yes".

[X-man]

I'm waiting for the crop report to come out. I have a good feeling about frozen, concentrated orange juice futures.

Or maybe pork bellies, which are used to make bacon - as in a bacon, lettuce and tomato sandwich.

Ahhhh, Beaks. I wonder what ever happened to that guy.

[XU-PA]

Keep you eyes on this index. It is the industry standard for housing.

http://us.spindices.com/index-family/real-estate/sp-case-shiller

Also. Blackrock and Starwood both have been making hay in the single family rental market. There are actually funds out there that mirror the CDO's of 2007, but are intended to take advantage of the foreclosure market from a few years ago. IB's started buying, fixing and renting single family homes in the most negatively affected housing markets. Now, they are selling REIT shares or investment interests in these funds. Not really enough to have the same impact as CDO's, but every bit as risky. I would stay away from them.

With interest rates rising over the next 12-24 months, the refi market probably is dead. The housing starts are up, but in a more controlled way and lenders have new federal guidelines that should (I emphasize should) make borrowing more transparent. Caveat: There will always be shysters taking advantage of uninformed idiots, but not universally this time. New housing loans will be there, but jumbos could prove tougher to get.

Careful about that. The big hedge funds getting into that rental market are certainly doing it in a very very big way. But it is uncharted territory fpr them. The do not have scads of experience managing rentals, much different deal than just flipping the houses to another owner. they'll have long term repsonsibility for these houses and need to keep up with tennant relations as well as properly keep up with rent payments in a ton of different markets with different regulations. I work in the field, on the contracting end. The hedge funds were buying up houses in foreclosure and saying they were going to fix them up right, and rent them. Well they were buying, but not doing enough research on the properties. Just over paying by outbidding everyone at auction, often their research on houses was by google earth, so they found houses in much worse condition than they thought. Repairs very often amounted to cosmetic coverups which will come back to haunt them as rentals. Some cities they have amassed huge numbers of houses, and might be artificially raising rental rates.
These are the properties they are packaging and selling in the bond market, you are absolutely right when you say every bit as risky, perhaps even more than the bonds made of packaged risky home loans.
Playing what if,,,, what if one of these funds runs out of money to operate these things? Handling tens of thousands of rental homes and the families in them, are they too big to fail?

[XU-PA]

Reading material on the topic, from both sides of the story,


http://www.bloomberg.com/news/2013-10-23/blackstone-creating-rental-home-bonds-after-buying-spree.html

http://www.motherjones.com/politics/2012/05/carrington-hedge-fund-foreclosure-rental

The thing that scares some people, is that the guy who created the whole sub prime market that then went bad and belly up, has a very big hand in these bonds

[Kahns Krazy]

S&P at 1,818, nearly 23% ahead of where it was when this thread started almost exactly a year ago.

My thought is that this is unsustainable. Short term interest rates are starting to turn, ever so slightly. When those rates start to move, I would think a lot of money would be coming out of equities and back into the bond and cash investment environment. I wouldn't think anything would happen quickly, but a flat to slightly down year in the equity markets would not surprise me. Given what has happened historically, it wouldn't surprise me if it means a market correction in the first half of the year followed by steady progress back to current levels by the end of the year.

I'm not selling anything right now, but I'm not buying either. Building what reserves I can to take advantage of a dip if one comes.


I am a moron. In what world is an annulized 14.5% growth rate a "dip". The dip came, and its name was Kahns.

[vee4xu]

Right with you there on the topic Kahns. The investment world is just dog-ass crazy. We had some investors in today to talk about investing in a real estate related company. I said that artificially low interest rates scare me when construction financing rolls to permanent financing in about three years. The reason I am scared is that in the past, when interest rates increase, the rest of the economic fundamentals follow suit. Vacancies increase, rents decrease, tenants go bankrupt, etc. However, these current rates have been held artificially low now since 2008 and they can easily increase without the same residual domino effects of past interest rate hikes. That scares the be-jeebies out of me. The market long ago priced in higher interest rates, so when the do go up, the rest of the investment world will probably yawn and continue stepping onto the investment escalator. Our group has been factoring higher interest rates into our investment financial modeling for about 4 years now. We have been DEAD WRONG!!! I've been pricing commercial real estate deals for 25 years now and never have I been so confused as now.

[vee4xu]

Keep you eyes on this index. It is the industry standard for housing.

http://us.spindices.com/index-family/real-estate/sp-case-shiller

Also. Blackrock and Starwood both have been making hay in the single family rental market. There are actually funds out there that mirror the CDO's of 2007, but are intended to take advantage of the foreclosure market from a few years ago. IB's started buying, fixing and renting single family homes in the most negatively affected housing markets. Now, they are selling REIT shares or investment interests in these funds. Not really enough to have the same impact as CDO's, but every bit as risky. I would stay away from them.

With interest rates rising over the next 12-24 months, the refi market probably is dead. The housing starts are up, but in a more controlled way and lenders have new federal guidelines that should (I emphasize should) make borrowing more transparent. Caveat: There will always be shysters taking advantage of uninformed idiots, but not universally this time. New housing loans will be there, but jumbos could prove tougher to get.

More savvy from the guy who invests for a living.

[GoMuskies]

Pretty interesting to go back and read this thread given the events on the last few days. Even after the pounding the S&P has taken, it still sits at 1850 as I post. That's up 25% from when this thread started.

So there is still plenty of room for the S&P on the downside here.

[vee4xu]

I have my powder dry and ready to pour into the S&P Index and Russell 2000 Index very soon. Already put money into an energy ETF which is down 19% from its July 2014 peak, but still up about 40% from when I first bought it.

[Kahns Krazy]

I'm still nervous. I've shifted a little bit more to defensive positions, but not much. What is going on in the bond markets? An uptick in the corporate bond rates could slow some of the investing and acquisition activity driving growth, and at the same time, would shift demand out of equities.

A serious Ebola outbreak would cause some market trauma too, beyond just dinging airline stocks for one day.

[X-man]

This is actually increasingly a "buy" opportunity. Think orange juice futures like in "Trading Places".

[Kahns Krazy]

As in a Bacon, Lettuce and Tomato sandwich?

[X-man]

Ah, Beaks. I wonder whatever happened to that guy.

[vee4xu]

The 10 year treasury ticked below 2% yesterday before closing back over 2%. The focus in our shop is Germany. They seem to be the engine that makes the rest of Europe go and they are facing a slowdown. The Central European Bank seems to be in fits-and-start mode and that uncertainty is shaking the market. Also, suddenly the US Fed has gone from no more QE to a schedule of when interest rates will start to rise to a concept of QE4. As for Ebola, it hasn't yet had a dramatic impact on the US GDP. In fact, the impact to date on the overall economy is negligible. However, if people quit going out to eat, quit flying and hospitals, schools and other institutions and businesses start taking dramatic defensive actions against Ebola, then it could impact the US economy, even if not one more case is uncovered here.

Bottom line: The federal deficit is now below 2% of GDP. Why isn't DC talking about that? Unemployment is under 6%. Corporate profits have been good. Is the US goin'-and-blowin'? No, but it is the most stable non-emerging market, global economy going and looks good in terms of other alternatives.

We'll see, but I am cautiously optimistic that there will be more correction, but not at levels that signal recession. The US hasn't had any substantial pullback in the equities markets for over two years. It's just time.

[American X]

Sounds to me like vee4xu and Kahns Krazy a couple of bookies.

[vee4xu]

A lot of similarities between the investment markets and sports book, Amex.

[Masterofreality]

Serious question. Is Amazon.com ever going to show a profit? I swear that Bezos is platinum plated. He seems to never be held accountable for that place losing money every quarter. I know that the narrative is that they "always plow revenue back into growing the company" but he's had a bunch of missteps too. The Fire phone is an abject disaster and a dud on the market. They've also bought some questionable startups and they were write-off losses.

At a present price of $280 a share I'm not walking, I'm running the other way. That company doesn't seem to be held to the same standards as others.

[paulxu]

I do like my Kindle though.

[vee4xu]

I dumped a bunch of dough each into an S&P Index ETF, Russell 2000 ETF and an Energy ETF. One week later I'm feeling pretty, pretty, pretty good.

[bourbonman]

I dumped a bunch of dough each into an S&P Index ETF, Russell 2000 ETF and an Energy ETF. One week later I'm feeling pretty, pretty, pretty good.

I've made 7% in the last week on the moves I made last Wednesday. But I still have a major position on the sidelines to pour in when the time is right.

[Masterofreality]

I've made 7% in the last week on the moves I made last Wednesday. But I still have a major position on the sidelines to pour in when the time is right.

Sounds like me at the Blackjack table, B.

I just made $1,000 in the last hour! (Ignores $5,000 lost in previous 3 hours). :biggrin:

[vee4xu]

Ditto here on the dry powder B-man.

[xudash]

Riding a railroad: NSC.

[vee4xu]

All aboard!!!

[paulxu]

But I still have a major position on the sidelines to pour in when the time is right.

It's only right this came from bourbonman.

I also had a major sidelines position (in bourbon) and poured it in...my mouth.

[vee4xu]

It's only right this came from bourbonman.

I also had a major sidelines position (in bourbon) and poured it in...my mouth.


Which allows b-man to sit with a big cash position to pour into the stock market. Surely b-man, Mrs. B-man and their two nearly college age daughters thank you, Paul.

[paulxu]

If b-man has anything to do with Makers (I forget whether he does or not) I may be personally responsible for his daughters' education.

[xu82]

If b-man has anything to do with Makers (I forget whether he does or not) I may be personally responsible for his daughters' education.
Well, keep enjoying.... there's probably a wedding reception in the picture at some point.
(I have to go to a black tie reception tomorrow and I'm already dreading it - but at least I'm not paying for it!)

[sweet16]

Unfreakinbelieveable!!!

[waggy]

I have to assume one or more here are doing some online trading. Wondering if anyone can make any recommedations good or bad? Do you use market analysis software? Is it separate from your broker, or does your broker also include analysis software?

I want good, easy and cheap. But you're lucky if you can get 2 out of 3. So if I had to pick 2 they would be good and cheap.

[Kahns Krazy]

I have used etrade for over 10 years. I do not use any market analysis software. I haven't shopped around, but I assume that while they are inexpensive for my needs, there are probably cheaper options.

[vee4xu]

Being a real estate guy, I am particularly dangerous with stock market info, if left to my own devices. I used to be with E-Trade, but have worked directly with a professional investment advisor for the past 7 or so years. I sleep better at night after making decisions based on he and I bouncing around ideas.

[xudash]

I don't know if I've ever shared this here or not, but I once took the Stern, Stewart Corporate Restructuring Course (i.e. EVA Modeling) from Bennett Stewart himself while I was with Mellon. Two days into the course, someone asked him about his methodology for investing. His response: index funds.

Index funds, coming from one of the Street's titans on valuation.

I never looked back. I never have won or lost big on individual stocks and the idea of timing the market is, well if Warren Buffett thinks it's a bad idea, then so do I. Your investment returns roller coaster isn't as exciting with this approach, but you also sleep better and puke less when you're on this track.

[vee4xu]

I don't know if I've ever shared this here or not, but I once took the Stern, Stewart Corporate Restructuring Course (i.e. EVA Modeling) from Bennett Stewart himself while I was with Mellon. Two days into the course, someone asked him about his methodology for investing. His response: index funds.

Index funds, coming from one of the Street's titans on valuation.

I never looked back. I never have won or lost big on individual stocks and the idea of timing the market is, well if Warren Buffett thinks it's a bad idea, then so do I. Your investment returns roller coaster isn't as exciting with this approach, but you also sleep better and puke less when you're on this track.

Index funds are my friend. Hit them consistently over time and keep enough powder dry to dump into them when the markets tank. Has worked well for me too since 2007. I have an S&P Fund and a Russell 2000 fund that I've ridden like a $20 whore for 7 years.

[xudash]

Index funds are my friend. Hit them consistently over time and keep enough powder dry to dump into them when the markets tank. Has worked well for me too since 2007. I have an S&P Fund and a Russell 2000 fund that I've ridden like a $20 whore for 7 years.

That's great - except you know the guys on the Street don't pay less than $5k and riding is extra. My apologies. Have a great Thanksgiving vee.

[vee4xu]

It's my version of discount brokerage, dash. You have a great Thanksgiving too.

[GoMuskies]

The market ticked up slightly today.

[GoMuskies]

I just saw these results of a survey about the S&P 3 months from today:

A - 1600 or Higher 7%
B - 1550 38%
C - 1450 26%
D - 1400 or lower 11%
E - 1500 (more of same) 19%

This is from 2/7/13. Keep this in mind as people lose their minds on Monday. The S&P will open Monday at 1970.89 (and immediately go sharply lower).

[XMuskieFTW]

Bloodbath!

[XUFan09]

This is from 2/7/13. Keep this in mind as people lose their minds on Monday. The S&P will open Monday at 1970.89 (and immediately go sharply lower).
I don't really follow the stock market, so I wanted to clarify for myself. Are you saying that the market has vastly over-performed in recent months, based off predictions, and is now correcting itself to something more reasonable/stable?

[xu82]

And 92 today. Woot.

....and back to 70

[GoMuskies]

I don't really follow the stock market, so I wanted to clarify for myself. Are you saying that the market has vastly over-performed in recent months, based off predictions, and is now correcting itself to something more reasonable/stable?

I don't know about outperformed, but given where sentiment was 2 and a half years ago, I think it will be a bit silly to be overly concerned if the S&P falls to 1850 today.

[drudy23]

Look on the bright side...we may see $1.50 gas soon.

[Snipe]

Look on the bright side...we may see $1.50 gas soon.

Cheap gas is Freedom! Free the People!

I love Cheap Gas!

Cheap Gas is great for just about every American. May God Bless America!

[GoMuskies]

My largest position in an individual stock is in ADP. It was down $13 at open, and is now down less than $2. It's up something like 17% since the opening of trading 2.5 hours ago. Crazy.

[X-band '01]

Cheap gas is Freedom! Free the People!

I love Cheap Gas!

Cheap Gas is great for just about every American. May God Bless America!

It would be cheaper if not for the refinery outage in Northern Indiana.

[bobbiemcgee]

It would be cheaper if not for the refinery outage in Northern Indiana.
I'm sure BP and others in the know were buying up billions of dollars in gas futures prior to the "glitch". Gas spiked .40 a gallon overnight. Nice trade. I doubt the repairmen were working at a fever pitch to fix it if there even was a problem.

[X-man]

Any time that the stock market becomes the subject of conversation on this board, I view that as a signal to start buying stock.

[Snipe]

I would buy stock if I knew what stock to buy. I can't pick stocks. Index funds for me. I think the whole thing is rigged anyway.

My grandparents had a dollar backed in gold that didn't lose value. They put money in the bank and it earned interest, real interest. They invested in government bonds and bought shares of utility companies. Life was simpler then.

Now days, your money isn't backed by anything. Inflation has gone through the roof since we left the gold standard. If you put your money in the bank, it doesn't get much interest, meanwhile the inflation of the real goods you purchase keeps rising whether the government says so or not. So put your money in the bank and you will be able to buy less with it next year, a losing proposition.

Through all of our 401Ks, we are all forced into the marketplace of stocks and Wall St. I think they have many criminals there, and that the people that prosper tend to have inside information. I don't like being forced into playing in the devils den.

I think things were much simpler for my grandparents. Just looking through all the different health care plans from my employer is an incredible stressful endeavor, and I consider myself smarter than the average bear. I am somewhat of a libertarian, but how is everyone really supposed to master all this stuff? If I can't do it, how can the less able? I have been watching the market for years, and all I have learned is that the "market" is full of criminals and insider trading and people seldom go to jail when they ruin thousands of pensioners financially.

I think many of our choices are made complicated because they don't want you to see exactly how they are screwing you.

So it is index funds for me. Just a bare knuckle index fund. Screw the commissions and the stock picking. Bare naked index funds do better over time than just about anything else, and they spread your risk around to keep you safe.

And it is all a pack of lies.

[XMuskieFTW]

It would be cheaper if not for the refinery outage in Northern Indiana.

Even with that, it should be much lower than it is right now. Some rich people are making a ton of $$$ with this "refinery outage"

[vee4xu]

Well fellow Muskies, I went sale shopping today. Felt like I got that Armani suit at Bergdorf-Goodman at the once in a decade price. This is one of those rare times when the market correction is not technically or fundamentally occurring ahead of recession. I went shopping for long term hold names with great dividend yields. Among them, AT&T, Verizon, Prudential and Intel. All were trading at a fraction to their 52 week high prices and dividends range from 3.1% to 5.9%. That alone is enough to convert from a money market yield, but as a bonus, there will likely be some capital appreciation as well. There are many high grade names on sale at the moment. Well, maybe not as many since the Dow moved out of correction territory today.

There's still time, but you better hurry. These deals won't last forever.

[bobbiemcgee]

Good Luck. This market is nutz.

[GoMuskies]

Well fellow Muskies, I went sale shopping today.

You're three days late! Unfortunately, I was one day early...

[vee4xu]

You're three days late! Unfortunately, I was one day early...

I've made A LOT of money in the market over the years, but do appreciate and thank you for your perspective.

[GoMuskies]

Congrats. Doesn't change the fact that you were three days late...and I one day early. Dammit. A LOT of money is great. What's better than a LOT? More.

[vee4xu]

And I will make more this time, too. Good luck to you sir.

[GoMuskies]

And good luck to you as well.

[vee4xu]

On another note, Go, good luck to the Royals this post season. I don't get on the board much anymore, but they have put together a very good season. If the Royals were a security, I think that they'd be a growth stock with good upside potential. Hope your time rooting for them pays you a good dividend.

[GoMuskies]

I may need the stock market to take off just to pay to take my son to a playoff game this year. Everyone loves a winner.

[vee4xu]

Our sons were at early teens in the late -1990's and early 2000's when the Tribe had some good years. Though the Indians never won a World Series, some of our best family times together were at Jacobs Field, as it was known then. No matter what the Royals do, being able to experience it with your children is very special. Them memories are forever. I hope you guys get to go to a parade in KC this November. Enjoy!

[Kahns Krazy]

I've made A LOT of money in the market over the years, but do appreciate and thank you for your perspective.

I guess someone deleted their post where they asked how you have done in the market over the years. Otherwise, this post would be 100% douchebag.

[vee4xu]

Self admittedly, I absolutely have the capacity and ability to be a douchebag. In fact, I am certain that I have been a DB at points during my life. Actually, very likely I'm being a DB right now. If my post is a DB post, it is neither my first, nor will it be my last in 15 or so years on MM and Hoops. I try pretty hard to avoid DB posts, but sometimes cynicism gets the best of me. In fact, if all of us DBs here just admitted publicly that we are DBs, life could be so much better, don't you agree?

[paulxu]

If none of us DB's posted here, life would be awful lonely for Muskie and Svoboda.

[94GRAD]

Yep, it's crazy, but having good advisors is key. We were told to sell, and sell A LOT, almost all of our stock, which was terrifying, a couple of weeks ago. Now we are rebuying the same stocks at a huge discount. This correction can be a good thing.

Braggart

[Kahns Krazy]

Yep, it's crazy, but having good advisors is key. We were told to sell, and sell A LOT, almost all of our stock, which was terrifying, a couple of weeks ago. Now we are rebuying the same stocks at a huge discount. This correction can be a good thing.

Braggart or not, douchebag comment or not, this is absolutely terrible advice from an advisor. If you have an advisor that is telling you to make drastic, "terrifying" moves to time the market and take advantage of dips, I would seriously suggest looking for a new advisor unless this is money you are treating like a bet on the roulette wheel.

If it's a tiny portion of your retirement savings, by all means play with it like it doesn't matter. Of course, it shouldn't be "terrifying" if that's the case.

[GoMuskies]

Sell in May and go away would have been a fantastic move this year.

[Kahns Krazy]

Why do you even comment on my posts? We never have anything that's worthwhile to say to one another.

You realize you are commenting on my post, right?

Bragging about making money is a douchebaggy thing to do. Just like when vee did it. If you don't want people to comment about how you're being a douchebag, stop being a douchebag. Whining about my replies to your posts is also douchebaggy. Are you going to go crying to the moderators again?

I commented because your post was advocating exceptionally risky behavior with investment savings, and in my opinion that is not the role of a traditional financial advisor. There is a place for risk taking, but not in an advised portfolio.

[Kahns Krazy]

Yeah it is pretty douchebaggy to brag, I knew it. But so is calling people douchebags too. And I'm pretty sure you know that too. And here we are at one of our pissing matches again about who is the bigger douchebag, but we both are still being douchebags.

I have only ever bought stock, I've never sold before. Ever. So that is what makes it "terrifying". As for our advisors, I'll take their advice over any random guy on a message board who obviously doesn't like me. I mean, you have to admit, there really is no overarching rule about stock investing, it's all about what each individual is comfortable with, and what their advisors do with their individual portfolio.

But back to the whining! You have terrible hair!

I was not trying to give you advice. You had already taken the advice of someone. I don't mind at all that you were on the winning end of that advice, I just don't want anyone else following your bad moves because you happened to be lucky. More power to you. The adult thing is to be gracious in your good fortune and move on. The douchebag move is to brag about it on a message board. You have posted in this thread repeatedly about "your" P&G stock while it was increasing. You obviously irritated other posters who put it back in your face when P&G lost 30% from the high, and then you jumped to a new story about how you sold everything right before the market turned.

Nobody wants to hear it. I know you like to single me out, but I'm not the only one pointing out your douchebagness, I'm just the only only one you reply to.

I barely have enough hair left for it to be terrible, so I'm not even sure what that was about.

[GoMuskies]

Can we get back to making baseless, uneducated stock market predictions?

I say the Dow sees a 14 handle at some point in 2015.

[xeus]

We were told to sell, and sell A LOT, almost all of our stock.


It wasn't even close to a big chunk of our portfolio.


Hell yeah I'm bragging about it.

Remember when you asked me to tell you when you were acting like a douche? You're doing it again.

[Kahns Krazy]

https://www.youtube.com/watch?v=_cJO7pkx2jQ

[xudash]

Can we get back to making baseless, uneducated stock market predictions?

I say the Dow sees a 14 handle at some point in 2015.

Based on what events to trigger that (I'm curious)?

[GoMuskies]

Just more general sell-off momentum to counteract the long bull market. Particularly if the Fed decides to tighten in September.

[X-man]

Just more general sell-off momentum to counteract the long bull market. Particularly if the Fed decides to tighten in September.

They won't. I'd bet my house on that. Wait, I have done that before and always been wrong on interest rates (every time I re-financed, rates dropped right afterwards). So as Emily Litella used to say, "Never mind".

[GoMuskies]

Time to bring this thread back up. The S&P, while getting bloodied at present, is still at 1963, or close to 33% higher than it was when this thread started 3 years ago. I still think we have a lot of room to go lower, and perhaps the market will actually follow through on the correction this time. Perhaps my prediction of Dow 14-thousand something in 2015 was just off by a few weeks or months. Maybe I don't know what the hell I'm talking about and should only invest in Chris Mack bobbleheads. Who knows?

[Masterofreality]

Down another 2% today.

When is it time to jump back in with both feet? There seem to be some buy opportunities now.

[vee4xu]

Crap, at this point, who knows? To my thinking there is a gap between market fundamentals and Wall Street rhetoric. That is being caused by Big Red in the far east and commodity pricing free-fall, especially oil. Read a tidbit today from a daily email that I get saying that current gas prices are worth a $400 million tax cut, which is good for the overall economy in terms of consumer purchasing power. The volatility has pretty much stayed in a tight range between 17,000 and 18,000 on the Dow and 2,000 and 2,400 on the S&P. However, it is tough to play the up and down game in such a tight band. That is opposed to a real market correction that falls above bear territory and then steady increases to new highs, adjusted by profit taking. This past summer, I made a couple of energy plays when the issues were 40% off 52 week highs. Unfortunately those plays are now about 45% below my discounted purchase price. I am in the process of deciding when/if to double down, or cut losses. All this to say, who the hell knows!

[paulxu]

Bring $.25/gallon gas prices!

(yes, I know there are only 3 people on this board that actually remember those)

[bobbiemcgee]

I remember filling up my VW Bug for 2 bucks! Price Wars!

[vee4xu]

I think maybe I'll head over to the Powerball thread. Heard today that the odds of winning are 1 in 292 million. Seems like better odds than making money in the investment markets.

[GoMuskies]

The sky is falling!!!!!!

[Xpectations]

FWIW, here is a chart that uses the single-highest correlative valuation measure their organization has found for forecasting 12-year returns for the S&P 500. As you can see (based on the current position of the blue line), going into January of this year, 12-year returns were expected to be near zero. That's right. Zero returns for nearly 12 years. They've sampled many other highly-correlative measures as well--all showing similar results.

http://hussmanfunds.com/wmc/wmc160104b.png

Why is the market (and markets everywhere) so overvalued? Because nearly all of the central banks around the world have FLOODED their economies with excess currency while artificially driving down interest rates to near-zero.

Want to see evidence of that? The charts below comes from the Federal Reserve of St. Louis.

The first chart shows the United States total monetary base from 1998 through mid-2002. I chose these dates because they capture Y2K and 9/11. Why are those dates important? Because, if you recall, the big financial headlines during those two events screamed how the Fed had "flooded" the markets with cash to avoid any panic or ripple effects throughout the economy.

The two peaks on the chart show the Fed's efforts in "flooding" the markets with money and providing the necessary cash cushion to absorb the shock or potential shock of those events to our financial markets.

click on chart to expand:1908

The next chart shows the Fed's efforts (primarily QE1, QE2 and QE3) in FLOODING the markets with cash since the 2008/09 financial crisis. Note that I started the chart just before 2000 so you compare the now virtually indistinguishable blips from what the Fed used to consider "flooding" the markets with money.

click on chart to expand:1909

As you can see, the Fed has essentially QUINTUPLED our money supply over the previous 6+ years. That is unprecedented!

And, they've kept rates at near-zero throughout those years, essentially penalizing anyone who saves while encouraging speculation and a reckless pursuit of yield. We're now entering nearly two decades of a bubble era (from roughly 1998), brought on largely by our Fed (primarily Greenspan and Bernanke). Their moves punish those who make prudent decisions and reward those who do not--at least temporarily.

I would be surprised if we don't see the 1200s or possibly 1100s for the S&P 500, knowing that only takes us to typical, normalized valuations.

GEEK NOTE: If you like tinkering with interactive stat tools, here's a link to the Interactive St. Louis Fed Monetary Base Charting Tool[/URL] I used to create the last two charts above: https://research.stlouisfed.org/fred2/series/BOGMBASE. There are many different data series you can visualize on the site besides monetary base.

[muskiefan82]

This is so much more than a college basketball discussion forum.

[vee4xu]

It's pretty much a dumpster fire at this point.

[xu82]

I remember filling up my VW Bug for 2 bucks! Price Wars!

I remember my older sister (by 8 years) panicking that we were going to run out of gas in her first car, a little Fiat. We pulled into a gas station and she found a quarter under the seat, and we we good to go for the night!

[Xpectations]

Given the S&P 500's intraday bounce Friday to move back above the August lows, that support level should hold for the near-term. If/when it breaks and doesn't bounce back, I'd be surprised if the next trip down doesn't take us into somewhere around the mid to low 1600s from a technical analysis perspective. There's a decent-sized head and shoulders pattern with the left shoulder dating back to May, 2014.

From a quantative perspective, John Hussman posted this chart over the weekend showing that EVERY time Industrial Production (IP) slowed for at least 8 of the previous 12 months since 1919, there has been a recession. That signal is 17 for 17 in signaling a recession (NOTE: recessions starts and ends are often backdated by the NBER--the official committee that and are not simply two or more consecutive quarters of GDP decline)

http://hussmanfunds.com/wmc/wmc160118a.png

The most recent data shows that IP has slowed for 10 of the previous 12 months. So unless this time is different, the odds of a recession are overwhelming. In fact, the odds are very good that it will be backdated to the current quarter (Q1-16), if not earlier.

[Masterofreality]

Sorry man. Cash is KING at this point. Interest rates have been way too low by traditional standards and Obama' s policies- in cahoots with the Fed- have been nothing more than band aids on a gaping wound.

[Xpectations]

Sorry man. Cash is KING at this point. Interest rates have been way too low by traditional standards and Obama' s policies- in cahoots with the Fed- have been nothing more than band aids on a gaping wound.

I agree about your cash position, MOR.

Fiscal policy certainly shares in the blame. I'm neither a fan of Bush nor Obama, and both administrations (and both parties in Congress) have been complicit in the fiscal policies that helped get us here. That said, monetary policy from the Fed is the biggest problem in not only creating, but encouraging the various mega-bubbles over the past decade and a half.

[vee4xu]

Let's make a little checklist over the past 8 years from 2008:

Stock market up? Check. Way up.
Gas prices down? Check. Way down.
Unemployment down? Check. Way down.
Corporate profits up? Check. Way up and trillions in corporate cash accounts.
Deficit down? Check. Way down and record treasury revenues without raising taxes, which comes from lower unemployment.
Consumer confidence up? Check.
401(k)'s up? Check. Way up.
Housing market good? Check. Very strong.
Cap Gains tax untouched? Check. Still 15%.

Not sure what the issue is with President Obama regarding his economic legacy? For those or you who are not sure, check you 401(k), the car your driving, the house you live in and the vacations you've taken since the economy was on the doorstep of collapse in September 2008 and get back with me.

[Xpectations]

Let's make a little checklist over the past 8 years from 2008:

Stock market up? Check. Way up.
Gas prices down? Check. Way down.
Unemployment down? Check. Way down.
Corporate profits up? Check. Way up and trillions in corporate cash accounts.
Deficit down? Check. Way down and record treasury revenues without raising taxes, which comes from lower unemployment.
Consumer confidence up? Check.
401(k)'s up? Check. Way up.
Housing market good? Check. Very strong.
Cap Gains tax untouched? Check. Still 15%.

Not sure what the issue is with President Obama regarding his economic legacy? For those or you who are not sure, check you 401(k), the car your driving, the house you live in and the vacations you've taken since the economy was on the doorstep of collapse in September 2008 and get back with me.

If you confuse outrageous degrees of quantitative easing (literally increasing the money supply by 5x!) with prosperity then I have a bridge to sell you.

Now to be clear. Obama should neither get fault nor blame for QE (for other things, yes). But make no mistake about this temporary prosperity the Fed invented with nothing but a digital printing press.

QE is responsible for the inordinate (and completely unsustainable) amounts of stock market gains, housing recovery, corporate earnings, etc.. You seriously want to debate that? I'm game.

[vee4xu]

I have no desire to debate facts. But, answer just one question for me. Who was responsible for the 2007-08 Great Recession?

[LA Muskie]

If QE is the cause of all this, then it is the mother of all trickle down philosophy. Because salaries have been stagnant for the better part of a decade.

Oh, and our IRAs got absolutely crushed last year. I would have been much better off paying $5/gallon on gas than the $30k I lost on oil and gas securities.


Sent from my iPhone using Tapatalk

[Xpectations]

I have no desire to debate facts. But, answer just one question for me. Who was responsible for the 2007-08 Great Recession?

I'll give you the Top 7 in order:

The Fed - who made money supply cheap.
Congress (primarily Dems, like Frank) - who chastised anyone arguing against Franklin Raines' nonsense about mortgage loans should only require 2% underlying assets when arguing that Freddie and Fannie much higher leverage ratios (i.e., he argued for a 50:1 leverage ratio).
The Bush SEC - when Freddie and Fannie ultimately moved beyond their ridiculous leverage ratios, they chose to encourage investment banks to get into the mortgage loan action by massively increasing their leverage ratios from 8:1 just prior to the housing/credit bubble to 40:1.
The Bush administration for not implementing a policy--such as what is now the Volker rule--that forces banks to separate their investment arm from their traditional banking arm.
Both parties for not allowing the investment banks to fail, creating the moral hazzard we're left with due to "too big to fail."
Greedy bankers for gaming the system created by the above mistakes.
Stupid consumers who believed that home values would continue to rise in value by double digit % every year while interest rates (including short-term ARMs) would continue to decline each year.


By the way, you seem to be looking for someone to play out the ridiculous "My guy (Bush or Obama) is better than your guy (Obama or Bush) argument." I'm not that guy. Both administrations have proven equally incompetent. We will look back and recognize these past 16 years as being the worst combined administrations from a financial perspective in our nation's history.

[Xpectations]

If QE is the cause of all this, then it is the mother of all trickle down philosophy. Because salaries have been stagnant for the better part of a decade.

Oh, and our IRAs got absolutely crushed last year. I would have been much better off paying $5/gallon on gas than the $30k I lost on oil and gas securities.


Sent from my iPhone using Tapatalk

True, if you are of the belief that all prices, assets, valuations, etc. move equally. That never happens. If that were true, bubbles wouldn't be concentrated in a handful of assets or prices. But that's not what happens.

[vee4xu]

I'll give you the Top 7 in order:

The Fed - who made money supply cheap.
Congress (primarily Dems, like Frank) - who chastised anyone arguing against Franklin Raines' nonsense about mortgage loans should only require 2% underlying assets when arguing that Freddie and Fannie much higher leverage ratios (i.e., he argued for a 50:1 leverage ratio).
The Bush SEC - when Freddie and Fannie ultimately moved beyond their ridiculous leverage ratios, they chose to encourage investment banks to get into the mortgage loan action by massively increasing their leverage ratios from 8:1 just prior to the housing/credit bubble to 40:1.
The Bush administration for not implementing a policy--such as what is now the Voelker rule--that forces banks to separate their investment arm from their traditional banking arm.
Both parties for not allowing the investment banks to fail, creating the moral hazzard we're left with due to "too big to fail."
Greedy bankers for gaming the system created by the above mistakes.
Stupid consumers who believed that home values would continue to rise in value by double digit % every year while interest rates (including short-term ARMs) would continue to decline each year.


By the way, you seem to be looking for someone to play out the ridiculous "My guy (Bush or Obama) is better than your guy (Obama or Bush) argument." I'm not that guy. Both administrations have proven equally incompetent. We will look back and recognize these past 16 years as being the worst combined administrations from a financial perspective in our nation's history.

Very thoughtful answer. We are on the same page. Plenty of blame to go around. Thanks for taking the time to indulge me.

[GoMuskies]

We will look back and recognize these past 16 years as being the worst combined administrations from a financial perspective in our nation's history.


Worse than the Trump administration?!?

[vee4xu]

By the way Xpectations, you sniffed out my reason for the question and didn't take the bait. That is the partisan test. Your answer was very non-partisan. I do agree that for many reasons across the board and across party lines, the last 16 years have been really bad. I am likely a bit older than you and can say that the early 1970's and late 1980's weren't great, but they were stagnation and tax driven downturns, respectively. However, neither was the result of terrible decisions that have a very overarching effect on the economy for so long. One thing that hasn't helped, is that corporations holding so much cash instead of making capital and human resource investments as the economy bettered hasn't helped either. There is a lot that needs done on many fronts to get things going positively for the long term.

[xudash]

I'll give you the Top 7 in order:

The Fed - who made money supply cheap.
Congress (primarily Dems, like Frank) - who chastised anyone arguing against Franklin Raines' nonsense about mortgage loans should only require 2% underlying assets when arguing that Freddie and Fannie much higher leverage ratios (i.e., he argued for a 50:1 leverage ratio).
The Bush SEC - when Freddie and Fannie ultimately moved beyond their ridiculous leverage ratios, they chose to encourage investment banks to get into the mortgage loan action by massively increasing their leverage ratios from 8:1 just prior to the housing/credit bubble to 40:1.
The Bush administration for not implementing a policy--such as what is now the Voelker rule--that forces banks to separate their investment arm from their traditional banking arm.
Both parties for not allowing the investment banks to fail, creating the moral hazzard we're left with due to "too big to fail."
Greedy bankers for gaming the system created by the above mistakes.
Stupid consumers who believed that home values would continue to rise in value by double digit % every year while interest rates (including short-term ARMs) would continue to decline each year.


By the way, you seem to be looking for someone to play out the ridiculous "My guy (Bush or Obama) is better than your guy (Obama or Bush) argument." I'm not that guy. Both administrations have proven equally incompetent. We will look back and recognize these past 16 years as being the worst combined administrations from a financial perspective in our nation's history.

Balanced, but I'll give you one key addition to all this:

Clinton pressured the GSE's (Fannie and Freddie) to expand from their A-Paper securitization when he went bullshit with the Community Reinvestment Act (CRA). That had serious consequences down the road.

Otherwise, GSE's with publicly traded securities probably is a road to hell - limited charters with quarterly earnings pressure is not a stairway to heaven.

[Xpectations]

By the way Xpectations, you sniffed out my reason for the question and didn't take the bait. That is the partisan test. Your answer was very non-partisan. I do agree that for many reasons across the board and across party lines, the last 16 years have been really bad. I am likely a bit older than you and can say that the early 1970's and late 1980's weren't great, but they were stagnation and tax driven downturns, respectively. However, neither was the result of terrible decisions that have a very overarching effect on the economy for so long. One thing that hasn't helped, is that corporations holding so much cash instead of making capital and human resource investments as the economy bettered hasn't helped either. There is a lot that needs done on many fronts to get things going positively for the long term.

Agreed, Vee.

FYI - My two favorite Presidents in my lifetime were Reagan and Clinton. Neither was perfect, but both effective at key financial areas of their job.

Most everyone I know would like to buy me a beer for half of that opinion and beat me for the other half. Clinton with Gingrich was phenomenal.

With Reagan, Paul Volker (my favorite Fed Chief, and a Democrat, by the way) resolved the hyperinflation of the late 70s / early 80s by choking off money supply. That took incredible courage because it ensured we'd suffer one of the deepest recessions of several decades. It created much of the Reagan deficit because of its impact on our economy, but it was EXACTLY what was needed.

Volker's move cut inflation from 14.8% to 2.8% in three short years. Amazing! But painful.

If you look at the deficit during the last portion of Reagan's 8-year term, it was very much trending the right direction. Few people acknowledge that.

Few politicians act with courage these days. As long as they can kick the can down the road, they're happy with people equating them with better times regardless of the underpinnings they left for the next guy.

You can postpone a hangover by simply continuing to drink. But eventually you have to stop or die, and even if you live, you won't like the impact of your actions. Our Fed keeps filling the glass and moving us closer to the tap. We're not going to like the hangover when they stop.

[paulxu]

Couple of overlooked things.

1 - Fannie/Freddie held less than 25% of the crap; it was the investment banks
2- Investment and retail banks were allowed to merge after Glass-Steagall was repealed and new securities (and there were a slew of them) were de-regulated or no regulations required courtesy of Graham Rudman (I think that was the bill's name)
3 - Clinton's mistake was signing it. He chalks it up as the biggest mistake of his presidency. (although if he really thinks about it, that was probably Monica)

[LA Muskie]

My two favorite Presidents in my lifetime were Reagan and Clinton.

I think you'd be pleasantly surprised at how many people agree with you. (Me included.)


Sent from my iPhone using Tapatalk

[chico]

Interesting point about Volker and Reagan, especially seeing how they butted heads early in Reagan's administration. Reagan would try to persuade him at their weekly lunch meetings to loosen the purse strings, but Volker held firm. About the only guy Reagan couldn't charm.

[xudash]

Excellent page of posts.

You can put me in the camp of admiring Reagan and liking Clinton. Clinton is a bright guy, and he was smart enough to slide towards being a somewhat balanced, moderate President, unlike the complete idiot that presently holds the office and is clueless on every relevant front.

I was on a conference call with a Democratic lobbyist today about something. The call went for about 30 minutes. He spent the first 15 of them expressing his contempt for Obama. The lesson that both Reagan and Clinton taught us was to find constructive common ground and then get things done.

[paulxu]

Dash, good points.
But...for you to have any hope of common constructive ground, you need to work on it.
The opposition's plan to Obama was to work against it...against everything. Makes it tough to have common constructive ground.

http://swampland.time.com/2012/08/23/the-party-of-no-new-details-on-the-gop-plot-to-obstruct-obama/

[Xpectations]

If you're bullish right now, you really want the neckline (support) on this S&P 500 head & shoulder pattern to hold from a technical basis. The chart I created must be clicked on to see--though it's still pretty small.
1920

If it doesn't hold, it increases the likelihood of seeing the low 1600s (around 1615, or the inverse of the head below the neckline) during the next leg down.

[GoMuskies]

Is technical analysis real or just voodoo?

[Xpectations]

Is technical analysis real or just voodoo?

I only use it when I'm already planning to shift positions. You'd be surprised at how often it plays out and much of it really does make sense. It tend to be self-fulfilling too. For example, when you see prolonged, parallel trend lines, pennant patterns that keep chipping away against resistance with ever-higher troughs (or the opposite direction against resistance.

Here are two S&P trading channels from 1991 to 2001. The first is more shallow. The second led to the most spectacular stock bubble in our nation's history. You can see in the chart where the trendline broke and we all know what happened after that. The trend is your friend 'til it ends.

1921

I trust quant analysis way more than tech analysis, but have some buddies that are purely TA guys who wouldn't trade any other way. I hate frequent trading. I do think TA is largely a mirror or lens into the psychology of fear & greed, risk & reward shifts, human behavior patterns, etc. So I do think it has value.

[xudash]

Dash, good points.
But...for you to have any hope of common constructive ground, you need to work on it.
The opposition's plan to Obama was to work against it...against everything. Makes it tough to have common constructive ground.

http://swampland.time.com/2012/08/23/the-party-of-no-new-details-on-the-gop-plot-to-obstruct-obama/

Can't argue your point, Paul.

If there is a defense for the Republican Party, it was that they had to follow that strategy due to the severity of Obama's socialist-leaning agenda. Let's at least all agree that Obamacare has been a disaster, as just one example of his extreme views on what is "right" for this country.

There would have been more room for compromise had the Executive Branch and the Legislative Branch resided closer to the middle.

[Xpectations]

For Vee or others who believe the Obama administration is responsible for the rise in stock prices and making everyone's 401(k) look great over the past 6+ years, I had hoped to find a study online to identify any correlations between QE and stock prices. I couldn't find one so I ran my own last night by downloading data from the Fed and S&P, comparing the Fed's unprecedented expansion of our money base remember, a 5x increase in 6 years, which normally takes 2 1/2 or more decades) and the subsequent movement of the S&P 500.

I also wanted to identify any lag between the Fed's printing of money versus any subsequent rise in S&P 500 stock prices. The chart below (click to expand) shows the results of that analysis. Note that I offset changes to the total monetary base by 7 months. In other words, it would appear that it typically takes about 7 months for an increase in money supply to "juice" stock prices.
1923

QE is like steroids for the stock market. Unfortunately, if you want the gains to keep increasing, you have to take bigger and bigger doses.

We haven't policy-ed our way to prosperity. We've printed our way to prosperity. I think Al Gore would call the above chart an Inconvenient Truth.:shocked2:

[ChicagoX]

If there is a defense for the Republican Party, it was that they had to follow that strategy due to the severity of Obama's socialist-leaning agenda.

If you ask actual socialists if Obama is a socialist, they would laugh at you. Obama is nothing more than another in a long line of corporatist presidents that we've had for the past 35 years.

Obamacare was written by private insurance companies. The concept of the individual mandate came about in 1989 by the Heritage Foundation and was proposed by Republican lawmakers in 1993. Even Fox News has covered this: Individual health care insurance mandate has roots two decades long
(http://www.foxnews.com/politics/2012/06/28/individual-health-care-insurance-mandate-has-long-checkered-past.html)

People who call Obama a socialist are either lying or truly don't know what socialism actually is.

[GoMuskies]

15% off the highs on the Dow. Bear approaching.

On socialism, I gotta agree that calling Obama a socialist is amusing. If you want to see socialism, just wait until we feel the Bern.

[GoMuskies]

If you're bullish right now, you really want the neckline (support) on this S&P 500 head & shoulder pattern to hold from a technical basis. The chart I created must be clicked on to see--though it's still pretty small.
1920

If it doesn't hold, it increases the likelihood of seeing the low 1600s (around 1615, or the inverse of the head below the neckline) during the next leg down.

Well, we broke right through that bitch. Let's see if the technicians are right.

[LadyMuskie]

People who call Obama a socialist are either lying or truly don't know what socialism actually is.

People don't know what socialism actually is. Or communism. Or really even democracy versus a democratic republic. People are ignorant.

[Pete Delkus]

If you ask actual socialists if Obama is a socialist, they would laugh at you. Obama is nothing more than another in a long line of corporatist presidents that we've had for the past 35 years.

Obamacare was written by private insurance companies. The concept of the individual mandate came about in 1989 by the Heritage Foundation and was proposed by Republican lawmakers in 1993. Even Fox News has covered this: Individual health care insurance mandate has roots two decades long
(http://www.foxnews.com/politics/2012/06/28/individual-health-care-insurance-mandate-has-long-checkered-past.html)

People who call Obama a socialist are either lying or truly don't know what socialism actually is.


Ha...Summarizing Obamacare by the Individual Mandate is like summarizing the NFL by the term "First Down". I don't think anyone can truly quantify the number of dollars and hours wasted on this bill.

There is no doubt that private insurance companies have taken in more premium, paid indirectly and directly by the middle class. There is also no duubt that they have paid billions in legislation interpretation, compliance technology and man hours.

If the goal was to have the middle class pay for 30 million policies of the class beneath them, it would have been easier to develop an 'adopt a citizen' program and just pay that extra portion. In this case you would at least know the true out of pocket cost....vs. hidden healthcare cost, lost wages and raises and higher out-of-pockets.

[Xpectations]

Well, we broke right through that bitch. Let's see if the technicians are right.

Should be bounces along the way. We're getting pretty oversold on a number of indicators on daily charts, though we're still not at the oversold levels we reached in August where the rate of the drop was higher than we've seen so far in January.

I suspect all of those support levels will eventually break too though. I'd be more surprised than not if we didn't see prints in the 1200s on the S&P 500 before it's all over.

[Masterofreality]

Dow Down 2.3% today so far....

[vee4xu]

For Vee or others who believe the Obama administration is responsible for the rise in stock prices and making everyone's 401(k) look great over the past 6+ years, I had hoped to find a study online to identify any correlations between QE and stock prices. I couldn't find one so I ran my own last night by downloading data from the Fed and S&P, comparing the Fed's unprecedented expansion of our money base remember, a 5x increase in 6 years, which normally takes 2 1/2 or more decades) and the subsequent movement of the S&P 500.

I also wanted to identify any lag between the Fed's printing of money versus any subsequent rise in S&P 500 stock prices. The chart below (click to expand) shows the results of that analysis. Note that I offset changes to the total monetary base by 7 months. In other words, it would appear that it typically takes about 7 months for an increase in money supply to "juice" stock prices.
1923

QE is like steroids for the stock market. Unfortunately, if you want the gains to keep increasing, you have to take bigger and bigger doses.

We haven't policy-ed our way to prosperity. We've printed our way to prosperity. I think Al Gore would call the above chart an Inconvenient Truth.:shocked2:

That's a very huge stretch there Xpectations. It was an attempt at sarcasm toward those who believe just because BO, or any other president, is solely responsible for all of the good AND bad things that happen. He is no more responsible for all of what's on my list that Dubya is for the near collapse of the financial system in 2007-08. However, there are partisans among us that make claims using the sitting-in-the-chair metric as the sole measurement of success or failure (e.g. please see the Sooooooo Where's the Warming thread). So, it pretty much was a shot at those who are so partisan that they can't see past partisanship to be objective. Unfortunately, sarcasm doesn't show up simply in type and using an emoji wasn't something I felt like doing.

[Xpectations]

On socialism, I gotta agree that calling Obama a socialist is amusing. If you want to see socialism, just wait until we feel the Bern.

Could be interesting (and not in a good way, IMO) if our next election has the closest-to-a-Socialist major party candidate square off against the closest-to-a-Fascist major party candidate.

Our parties are becoming more dogmatic by the day. My hero, Reagan--although often quoted by Republicans--wouldn't be electable today because he's too left, too soft, and too "politically correct" (translation: not vitriolic enough) for the current Republican party.

[vee4xu]

15% off the highs on the Dow. Bear approaching.

On socialism, I gotta agree that calling Obama a socialist is amusing. If you want to see socialism, just wait until we feel the Bern.

Bear is usually 20% off of a high. Most of what I'm hearing is that most fundamentals are still pretty strong and that what's going on now is a structural response to a fundamental change in oil prices and the oil related industry, which will go on for some time. The fact that the market gelled late this afternoon and recovered with a rally is likely a sign of such a thing. As to your socialism opinion, agree 100%.

[vee4xu]

Also, corporate earnings will start being reported over the next few weeks. This will be the next test of the market. Earnings are not likely to show very much growth, but it the bellwether issues meet or exceed expected results the market should take a break from its decline. However, if there are sone surprises from the big names, fasten your seat belts.

[Masterofreality]

Could be interesting (and not in a good way, IMO) if our next election has the closest-to-a-Socialist major party candidate square off against the closest-to-a-Fascist major party candidate.

Our parties are becoming more dogmatic by the day. My hero, Reagan--although often quoted by Republicans--wouldn't be electable today because he's too left, too soft, and too "politically correct" (translation: not vitriolic enough) for the current Republican party.

And, as opposed to our current "Imperial President" both Reagan and Bill Clinton too, actually embraced working with, cajoling, hob nobbing and jousting with the other side of the aisle.. Reagan with Tip O'Neill/Dan Rostenkowski and Clinton with Newt Gingrich- even though that one was a bit more adversarial- they got things done. The "My way or the highway" tone of this presidency is disappointing at best and debilitating to the country at worst.

[GoMuskies]

And, as opposed to our current "Imperial President" both Reagan and Bill Clinton too, actually embraced working with, cajoling, hob nobbing and jousting with the other side of the aisle..


Well, the "other side of the aisle" that Obama has to contend with is probably the worst group of morons to ever invade D.C. And that's saying something.

[Masterofreality]

Well, the "other side of the aisle" that Obama has to contend with is probably the worst group of morons to ever invade D.C. And that's saying something.

I believe that this is probably the belief of every group of Americans during the term of every Congress. Never heard a session that wasn't raked over the coals by the public.

[X-man]

And, as opposed to our current "Imperial President" both Reagan and Bill Clinton too, actually embraced working with, cajoling, hob nobbing and jousting with the other side of the aisle.. Reagan with Tip O'Neill/Dan Rostenkowski and Clinton with Newt Gingrich- even though that one was a bit more adversarial- they got things done. The "My way or the highway" tone of this presidency is disappointing at best and debilitating to the country at worst.

If you really believe this, you inhabit some alternate universe. Obama, while clearly not a good political operator, bent over backwards to cut deals and compromise with the Republicans on Capitol Hill. Boehner, to his credit, also tried to work with Obama. But with all the Tea Party nut jobs who operated by the "my way or the highway" philosophy you reference, Boehner and Obama couldn't work any compromises. Blame the Tea Party, not Obama for the lack of negotiations in DC under Obama.

[chico]

If you really believe this, you inhabit some alternate universe. Obama, while clearly not a good political operator, bent over backwards to cut deals and compromise with the Republicans on Capitol Hill. Boehner, to his credit, also tried to work with Obama. But with all the Tea Party nut jobs who operated by the "my way or the highway" philosophy you reference, Boehner and Obama couldn't work any compromises. Blame the Tea Party, not Obama for the lack of negotiations in DC under Obama.

Plenty of blame to go around for both the legislative and executive branches.

[Masterofreality]

If you really believe this, you inhabit some alternate universe. Obama, while clearly not a good political operator, bent over backwards to cut deals and compromise with the Republicans on Capitol Hill. Boehner, to his credit, also tried to work with Obama. But with all the Tea Party nut jobs who operated by the "my way or the highway" philosophy you reference, Boehner and Obama couldn't work any compromises. Blame the Tea Party, not Obama for the lack of negotiations in DC under Obama.

The only thing that Obama has "bent over backwards" is the American public with an amorphodite of a Medical coverage bill. That is an abject disgrace. Pray tell where "Obama bent over backwards to cut deals". The guy is the poster child for partisan politics and demeaning the opposition. The American public realized what he was after the first two years. That's why they alarmingly voted in a Republican congress to stop Barry's excesses.

[ChicagoX]

The American public realized what he was after the first two years. That's why they alarmingly voted in a Republican congress to stop Barry's excesses.

Then how do you explain Obama easily defeating Romney to win re-election? Too much stock has been put into midterm election results by the GOP when only about 1/3rd of the electorate showed up to vote. General elections are where the entire country tends to voice the direction they want the country to go and not a minority of the electorate. Midterm elections are where the minority party's electorate shows up because they're angry that they're the minority party. There is nothing alarming about the midterm results since the majority party tends to often take it on the chin in those races. The same thing happened when Bush was president in 2006 when the Democrats took back the House, Senate, and won a majority of the gubernatorial races.

For as much as you hate Obama's policies, he's simply trying accomplish what he was twice elected to do, in spite of unprecedented obstructionism from the opposing party.

[LadyMuskie]

Honestly, both parties suck. Republicans suck. Democrats suck. The administration is lousy. Congress is a joke. Nothing of any worth gets done by anyone. My dream? For every politician in D.C. to be banned from ever holding public office again - including all the idiots running for president - and we start over from scratch and try to find people who are actually interested in doing some work instead of being on television spouting off talking points about the "opposition". All Republicans do is blame the Democrats and all Democrats do is blame Republicans. It's exhausting. We're all Americans. The opposition doesn't hold office here. The opposition is running other countries or living in terrorist cells. It is true that America is being ruined by the people who get their money from the government. It's just that those people all hold office in Washington D.C.

[GoMuskies]

Honestly, both parties suck.


No way. My team...uh, I mean party....rocks. Yours is going to destroy the globe.

[X-band '01]

Then how do you explain Obama easily defeating Romney to win re-election?

Even though Americans are unenamored with both parties, I don't think the voters wanted either party to have all 3 keys to the chariot (President, House, and Senate). Given the way the Senate maps are shaping up this year, I'd expect the Democrats to have the Senate and Presidency again. Question is, will we have a moderate in Hillary or a truer liberal in Bernie?

[LadyMuskie]

No way. My team...uh, I mean party....rocks. Yours is going to destroy the globe.

You know it! And when we do, we shall stand over the ashes and chant "We're Number One!!" Because we are!

[xudash]

Well, the "other side of the aisle" that Obama has to contend with is probably the worst group of morons to ever invade D.C. And that's saying something.

Sure, because Harry Reid and Nancy Pelosi have otherwise been so good for this country.

[GoMuskies]

Sure, because Harry Reid and Nancy Pelosi have otherwise been so good for this country.

They're the second worst group of morons.

Hell, even Boehner couldn't take dealing with the Republicans.

[X-man]

Plenty of blame to go around for both the legislative and executive branches.

Totally agree. Except now we can add the judicial branch as well. But what do you expect from our politicians when given the toxic political climate in this country, you only get elected if you are a "my way or the highway" type of person?

[paulxu]

You know it! And when we do, we shall stand over the ashes and chant "We're Number One!!" Because we are!

You can get T'ed up for hanging on the rim like that.

[xudash]

They're the second worst group of morons.

Hell, even Boehner couldn't take dealing with the Republicans.

Nope. Sorry. We'll just have to agree to disagree on that one.

Their level of ineptitude and poor policy decisions trump the Tea Party crowd any day, and I do believe the Tea Party crowd isn't wrapped all that tightly in some regards. Nonetheless, fundamentally focusing on getting this nation's debt under control isn't a bad thing.

Obama, Reid and Nancy "I didn't read it, but we need to pass it anyway" Pelosi have increased our national debt position to a ridiculous level.

[Masterofreality]

Then how do you explain Obama easily defeating Romney to win re-election?

Nice job by the Dems of loading up the busses on an individual contest and getting some of the shallower thinkers to blame Romney's wealth and his past ties with Bain Capital, although Bain did much more economic good than harm by investing in businesses to help them grow. When it comes to a wide ranging consideration of where the country should be philosophically, the general congressional election is much more indicative of the mood.

By the way Chicago. How's that Rahm Emanuel fellow working out as Mayor? :rolleyes:

[chico]

That and Romney ran of the worst campaigns that I can remember.

[xudash]

That and Romney ran of the worst campaigns that I can remember.

Exactly. And to amplify the realities of that outcome, the Democrats did a fantastic job on the data/social media side, much more so than the Republicans, who somehow forgot or didn't realize they were engaged in 21st Century politics.

It was like not realizing the impact of television on politics in the early 60's. Nixon (v. Kennedy) learned that lesson the hard way.

[vee4xu]

Honestly, both parties suck. Republicans suck. Democrats suck. The administration is lousy. Congress is a joke. Nothing of any worth gets done by anyone. My dream? For every politician in D.C. to be banned from ever holding public office again - including all the idiots running for president - and we start over from scratch and try to find people who are actually interested in doing some work instead of being on television spouting off talking points about the "opposition". All Republicans do is blame the Democrats and all Democrats do is blame Republicans. It's exhausting. We're all Americans. The opposition doesn't hold office here. The opposition is running other countries or living in terrorist cells. It is true that America is being ruined by the people who get their money from the government. It's just that those people all hold office in Washington D.C.

Two words - Citizens United. Check it out and you'll see why both parties suck. which they do.

[vee4xu]

Wow, my stock market thread has been hijacked. I suppose I only have myself to blame by starting it with my sarcastic note. Next time I will use an emoji.

[xudash]

Wow, my stock market thread has been hijacked. I suppose I only have myself to blame by starting it with my sarcastic note. Next time I will use an emoji.

One must be careful around here whilst conveying a thought.

And I do agree with LadyMuskie and you that both sides suck. If we were collectively smart, we would vote virtually all the incumbents out, and then have to newly elected officials fire most of the remaining sitting Congressional staffs.

And if you really want to implode the economy inside the Beltway, make lobbying illegal for a period of forever. From George Soros to the Koch Brothers, it's a mess.

[xeus]

XEUS Investments LLC has rated Dana Gardens (DG) a STRONG BUY, predicting record financial performance this weekend and well into March.

[Masterofreality]

XEUS Investments LLC has rated Dana Gardens (DG) a STRONG BUY, predicting record financial performance this weekend and well into March.

The Consensus of Investor Analysts concurs that Dana Gardens is a Buy, with zero sell ratings. One source- Beer- rated hold.

[X-man]

Nope. Sorry. We'll just have to agree to disagree on that one.

Their level of ineptitude and poor policy decisions trump the Tea Party crowd any day, and I do believe the Tea Party crowd isn't wrapped all that tightly in some regards. Nonetheless, fundamentally focusing on getting this nation's debt under control isn't a bad thing.

Obama, Reid and Nancy "I didn't read it, but we need to pass it anyway" Pelosi have increased our national debt position to a ridiculous level.

It is when the economy is in a recession, no one but the government is borrowing, government securities are considered the safe haven for savers all over the world, and the debt-to-GDP ratio is not at dangerous levels (which it wasn't and still isn't).

[xudash]

It is when the economy is in a recession, no one but the government is borrowing, government securities are considered the safe haven for savers all over the world, and the debt-to-GDP ratio is not at dangerous levels (which it wasn't and still isn't).

Bullshit.

The interest carry on the debt will begin to crowd out other requirements, especially as rates rise.

[Xpectations]

Wow, my stock market thread has been hijacked. I suppose I only have myself to blame by starting it with my sarcastic note. Next time I will use an emoji.

Ha! See, Vee, it's all about the emojis, baby! :spaz::sign-wtf::perfect10::whiteflag: (what's with the 4 emoji limit?)

Anyway, the market is still working hard to maintain that support level from the August lows (and several times prior). It broke intraday midweek but still closed at support.

[X-man]

Bullshit.

The interest carry on the debt will begin to crowd out other requirements, especially as rates rise.

You have no idea what you are talking about. The interest payments as a percentage of the federal budget are running below typical levels. But thanks for playing.

[Masterofreality]

You have no idea what you are talking about. The interest payments as a percentage of the federal budget are running below typical levels. But thanks for playing.

Well, that's bull crap too since the Federal Budget has grown out of control so much so the percentage vs "typical levels" is irrelevant. And the artificially controlled low interest rates are bull crap too, but thank you for a typical liberal excusatory comment, Paul Krugman Jr.

[X-man]

Well, that's bull crap too since the Federal Budget has grown out of control so much so the percentage vs "typical levels" is irrelevant. And the artificially controlled low interest rates are bull crap too, but thank you for a typical liberal excusatory comment, Paul Krugman Jr.

Please explain what you mean. Tell me (1) why thinking about the size of government debt should NOT be thought about in the context of the size of everything else, (2) why it is not relevant to take into account the size of the government's income in determining how much interest it can afford to pay (hint: could your grandparents afforded the size of your home mortgage?), and (3) what do you mean when you say low interest rates are "bull crap" (are you suggesting that only high interest rates make sense?)?

[Masterofreality]

Please explain what you mean. Tell me (1) why thinking about the size of government debt should NOT be thought about in the context of the size of everything else, (2) why it is not relevant to take into account the size of the government's income in determining how much interest it can afford to pay (hint: could your grandparents afforded the size of your home mortgage?), and (3) what do you mean when you say low interest rates are "bull crap" (are you suggesting that only high interest rates make sense?)?

Just read what you wrote and what I wrote. Do you have a comprehension problem?

[X-man]

Just read what you wrote and what I wrote. Do you have a comprehension problem?

Not that I am aware of. Just answer my questions. They are based entirely upon your assertions. And simply dismissing questions or positions because they are "typically liberal", or calling someone Krugman Jr. is not an argument but more like something a grade school kid might say. Surely you can do better than that.

[vee4xu]

Meanwhile, back at the ranch, the S&P was up 2% today. This after finding its legs during yesterday's downdraft. Hoping that we are at least in a more stable, less volatile position, if not one of continued index growth.

[xudash]

Please explain what you mean. Tell me (1) why thinking about the size of government debt should NOT be thought about in the context of the size of everything else, (2) why it is not relevant to take into account the size of the government's income in determining how much interest it can afford to pay (hint: could your grandparents afforded the size of your home mortgage?), and (3) what do you mean when you say low interest rates are "bull crap" (are you suggesting that only high interest rates make sense?)?

Good God, you are embarrassing yourself.

http://danielamerman.com/va/Conflict.html

If this lump of crap experiences a (+) move of 100 basis points, approx. 29% of the 2015 DOD budget gets crowded out.

Please shut up, for your sake.

Better yet, please run for President on the Democratic Ticket, telling everyone that $19 Trillion AND COUNTING Federal obligation is no problem. Please do that, because I'll be looking forward to you explaining the RISK FREE RATE from here.

[X-man]

Good God, you are embarrassing yourself.

http://danielamerman.com/va/Conflict.html

If this lump of crap experiences a (+) move of 100 basis points, approx. 29% of the 2015 DOD budget gets crowded out.

Please shut up, for your sake.

Better yet, please run for President on the Democratic Ticket, telling everyone that $19 Trillion AND COUNTING Federal obligation is no problem. Please do that, because I'll be looking forward to you explaining the RISK FREE RATE from here.

Hardly. There is so much wrong in that posted link of yours that it clearly is designed to mislead people like you (sadly). But obviously your ears are closed to any view that doesn't conform to your own, and so you tell dissenting people like me to "shut up". Now that's the way to have an intelligent discussion about a complicated and important issue like the federal debt issue is. Sad that it comes out of the mouth of a Xavier graduate.

[Xpectations]

Meanwhile, back at the ranch, the S&P was up 2% today. This after finding its legs during yesterday's downdraft. Hoping that we are at least in a more stable, less volatile position, if not one of continued index growth.

My hunch is that support holds for a while longer, but that we just keep chipping away with lower peaks on each advance.

I still believe we hit 3-year lows (and likely lower) before we hit new highs--even though we are much, much closer to all-time highs.

[xudash]

Hardly. There is so much wrong in that posted link of yours that it clearly is designed to mislead people like you (sadly). But obviously your ears are closed to any view that doesn't conform to your own, and so you tell dissenting people like me to "shut up". Now that's the way to have an intelligent discussion about a complicated and important issue like the federal debt issue is. Sad that it comes out of the mouth of a Xavier graduate.

My apologies for telling you to shut up.

Otherwise, your dismissal of the fundamental points made in that article and your seeming lack of understanding of basic finance is what is sad.

There is no wiggle room with this mess. This isn't about grandpa's mortgage debt ratios or your ratios or any person's ratios. Most people aren't stupid enough to manage their budgets like this. Of course, the inability to print money is one of the things that keep people in check.

Finally, you are hardly in any position to accuse someone of being close minded. You appear to have that award wrapped up.

[X-man]

My apologies for telling you to shut up.

Otherwise, your dismissal of the fundamental points made in that article and your seeming lack of understanding of basic finance is what is sad.

There is no wiggle room with this mess. This isn't about grandpa's mortgage debt ratios or your ratios or any person's ratios. Most people aren't stupid enough to manage their budgets like this. Of course, the inability to print money is one of the things that keep people in check.

Finally, you are hardly in any position to accuse someone of being close minded. You appear to have that award wrapped up.

I teach in the b-school at Xavier and so, contrary to your assertion, I actually do "understand this stuff". And it's because I do that I recognize all the logical errors in the link that you posted. And so even if you don't understand the logical flaws, I can tell you that it involves a misunderstanding about the importance of such things as the importance of the debt-to-GDP or the interest payments-to-tax receipts ratios. It also matters who holds the debt, whether it is internally or externally or publically held, as well. Your link fails to recognize these niceties in its diatribe against current monetary and fiscal policy, and therefore reaches incorrect and misleading conclusions about the real issues involved. You are not alone in falling for such arguments, but they are wrong and likely deliberately so because the author has some philosophical ax to grind. It would be far more helpful if people discussing these issues were at least intellectually honest about them.

[xudash]

I teach in the b-school at Xavier and so, contrary to your assertion, I actually do "understand this stuff". And it's because I do that I recognize all the logical errors in the link that you posted. And so even if you don't understand the logical flaws, I can tell you that it involves a misunderstanding about the importance of such things as the importance of the debt-to-GDP or the interest payments-to-tax receipts ratios. It also matters who holds the debt, whether it is internally or externally or publically held, as well. Your link fails to recognize these niceties in its diatribe against current monetary and fiscal policy, and therefore reaches incorrect and misleading conclusions about the real issues involved. You are not alone in falling for such arguments, but they are wrong and likely deliberately so because the author has some philosophical ax to grind. It would be far more helpful if people discussing these issues were at least intellectually honest about them.

Hey, how about that - - we have something in common. I've had the pleasure and honor of teaching in the Williams College of Business, too. Not that it would increase my credibility on this topic, but I also have my name on one of Smith Hall's classrooms.

Beyond that, my background is in corporate finance and banking, primarily at Mellon Bank (now BNY/Mellon).

Debt:GDP. Let's take a peak at that one. But first, as an editorial aside, the debt will go up millions of dollars as I type this response. Now let's take a peak:

U.S. National Debt = $18.933 Trillion
U.S. 2015 GDP = $17.968 Trillion

Gross Debt: GDP Ratio = 103.98%

By comparison, the National Debt was a little over $9 Trillion in 2008. The GDP in 2008 was about $14.7 Trillion; a 61% ratio.

Interest Payments to Tax Receipts Ratio. That's a good - and important - one. That ratio in the private sector focuses on Interest Expense/EBITDA. Bankers tend to refer to that ratio - a so-called coverage ratio, as you know - as the Number of Times Interest Earned Ratio, except, of course, that the government's "income" is derived from, well, you know.

U.S. Interest Paid = $402 Billion. (Fiscal 2015).
U.S. Federal Tax Revenue = $3.312 Trillion.

# times interest earned: 8.23

I give you that one, as far as current coverage goes. But my point about spiking interest rates as a risk stands. Just looking at the data for interest payments over the last number of years evidences that: 2008 interest paid was $451 Billion (on that $14.7 T "balance"). You would probably argue that the interest coverage ratio has improved since 2008 - 5.5 v. 8.2. You would be technically correct. The problem with that is that it took your precious monetary policy to get us there, with real interest rates floating in the land of the absurd now. Besides, I would simply go back to $19 T versus $14.7 T; I would focus on the dollar denominated elephant in the room.

I don't have current data on who holds the debt, but that is a fair point to make. The last time I looked into that, the Fed and Intra-governmental entities were holding about 47% of it. But I'm sure you still agree that it is still a (contractual) obligation. The bond markets are the bond markets when it comes to this stuff.

Overall, it simply must become a dialogue about sound tax policy and fiscal responsibility in order to protect solid GDP growth while eliminating deficit spending. The Federal Government operates on a 9/30 FYE. The Federal Budget Deficit for FY 2016 is closing in on $445 Billion, and we're not even out of January yet.

Debt per citizen is $58k; debt per taxpayer is $158k. You may not have liked that link, but the data are irrefutable. $19 TRILLION (rounded) IN US DEBT. I am intellectually honest about that. It certainly isn't difficult to be intellectually honest about it. It's real. And it and growth of it is not sustainable, period.

[xu82]

Good enough to scare the crap out of me. The debt of $19 trillion was enough to do that though. It's just out of control, and I don't know where the point of no return is.

[paulxu]

Just think, we had a balanced budget, a small surplus, and could have perhaps starting paying down that big debt in 2001.

A gigantic tax cut, couple of unfunded wars and bingo...twice the national debt before throwing in a recession. Ugh.

[xudash]

Just think, we had a balanced budget, a small surplus, and could have perhaps starting paying down that big debt in 2001.

A gigantic tax cut, couple of unfunded wars and bingo...twice the national debt before throwing in a recession. Ugh.

Totally agree. Bush gets no hall pass in all this.

Of course, Obama has taken it to an art form:

1928

[X-man]

The US government was born in debt, and has been so ever since. The debt-to-GDP ratio has fluctuated immensely over the nearly 250 years of government operation, and rises primarily because of recessions and wars. How high is too high depends on many factors, including who it is owed to (e.g. if it is internally held, the debt is "owed to ourselves" and therefore one taxpayer's future obligation becomes another taxpayer's income), how much is held by the Fed (the Fed typically rebates over 90% of its interest income from its holdings of government securities back to Treasury), and whether it creates budgetary pressure on Treasury when interest-to-tax receipts gets high enough to crowd out other Treasury funded programs. Greg Mankiw, Harvard professor and former macro CEA to Pres. Bush, makes a persuasive argument (at least to me) that the current ratio is too high. His reasoning is based on the fact that (1) it is pretty high already by historic norms, and (2) we need to give ourselves room for an increase in that ratio when the inevitable next war or recession takes place. Of course our economy is still not entirely clear of either of these problems currently, but his reasoning makes sense. The ongoing economic recovery is helping, of course, with falling annual deficits and a GDP growth rate that now exceeds the debt growth rate (deficit/debt). But a more aggressive stance on deficit reduction probably makes sense once we are completely out of the recession.

Monetary policy, characterized by a negative real federal funds rate and three rounds of QE, has not been very successful at righting the economy because no one is borrowing. In fact bank deposits in reserve accounts at the Fed, typically there only to meet the Fed's reserve requirement, are now over 90% excess reserve deposits (earning 25bps, I might add) suggesting that banks are not lending all this extra money created by QE. Amazingly, the M1 money multiplier has been below 1 for over 5 years now (I believe). In other words, the economy is in a classic "liquidity trap" where cash is preferred to bonds or other financial assets. This implies, BTW, that government deficits don't crowd out private sector spending because the private sector isn't borrowing. It is therefore true, ironically given the politics now dominating public policy debate, that fiscal rather monetary policy would best serve the economy to help get out of the latest recession. That would have meant even higher deficits in the short term.

A number of prominent economists are arguing that the economy currently suffers from a phenomenon called "secular stagnation" where the Fed is unable to get real interest rates low enough to get people borrowing (and spending) all the savings and other cash out there because of the ZLB problem with the (nominal) fed funds rate. Two solutions, if this problem persists, would be to either increase government borrowing (and spending) or increase the Fed's targeted inflation rate (currently at 2%). Both solutions are politically unpopular of course and there are potential economic (not political) problems with both of them but if secular stagnation is the new norm, our economy may staring at a permanently depressed condition unless one or the other policy is adopted.

Enough macroeconomics for today. Good to have a real conversation on the topic rather than simply shouting slogans and telling each other to "shut up" (apology accepted, Dash, and thanks for your help to the WCB, both financial and your contribution of your time and expertise).

[xudash]

The US government was born in debt, and has been so ever since. The debt-to-GDP ratio has fluctuated immensely over the nearly 250 years of government operation, and rises primarily because of recessions and wars. How high is too high depends on many factors, including who it is owed to (e.g. if it is internally held, the debt is "owed to ourselves" and therefore one taxpayer's future obligation becomes another taxpayer's income), how much is held by the Fed (the Fed typically rebates over 90% of its interest income from its holdings of government securities back to Treasury), and whether it creates budgetary pressure on Treasury when interest-to-tax receipts gets high enough to crowd out other Treasury funded programs. Greg Mankiw, Harvard professor and former macro CEA to Pres. Bush, makes a persuasive argument (at least to me) that the current ratio is too high. His reasoning is based on the fact that (1) it is pretty high already by historic norms, and (2) we need to give ourselves room for an increase in that ratio when the inevitable next war or recession takes place. Of course our economy is still not entirely clear of either of these problems currently, but his reasoning makes sense. The ongoing economic recovery is helping, of course, with falling annual deficits and a GDP growth rate that now exceeds the debt growth rate (deficit/debt). But a more aggressive stance on deficit reduction probably makes sense once we are completely out of the recession.

Monetary policy, characterized by a negative real federal funds rate and three rounds of QE, has not been very successful at righting the economy because no one is borrowing. In fact bank deposits in reserve accounts at the Fed, typically there only to meet the Fed's reserve requirement, are now over 90% excess reserve deposits (earning 25bps, I might add) suggesting that banks are not lending all this extra money created by QE. Amazingly, the M1 money multiplier has been below 1 for over 5 years now (I believe). In other words, the economy is in a classic "liquidity trap" where cash is preferred to bonds or other financial assets. This implies, BTW, that government deficits don't crowd out private sector spending because the private sector isn't borrowing. It is therefore true, ironically given the politics now dominating public policy debate, that fiscal rather monetary policy would best serve the economy to help get out of the latest recession. That would have meant even higher deficits in the short term.

A number of prominent economists are arguing that the economy currently suffers from a phenomenon called "secular stagnation" where the Fed is unable to get real interest rates low enough to get people borrowing (and spending) all the savings and other cash out there because of the ZLB problem with the (nominal) fed funds rate. Two solutions, if this problem persists, would be to either increase government borrowing (and spending) or increase the Fed's targeted inflation rate (currently at 2%). Both solutions are politically unpopular of course and there are potential economic (not political) problems with both of them but if secular stagnation is the new norm, our economy may staring at a permanently depressed condition unless one or the other policy is adopted.

Enough macroeconomics for today. Good to have a real conversation on the topic rather than simply shouting slogans and telling each other to "shut up" (apology accepted, Dash, and thanks for your help to the WCB, both financial and your contribution of your time and expertise).

Great response X-MAN.

As is already obvious, I'm siding with your friend from Harvard: the ratio is too high, especially when compared to most of our history.

Otherwise, no "helicopter drops" please.

And, as a last aside, a number of Wall Street IB's should be serving prison terms, but I digress.

[X-man]

Great response X-MAN.

As is already obvious, I'm siding with your friend from Harvard: the ratio is too high, especially when compared to most of our history.

Otherwise, no "helicopter drops" please.

And, as a last aside, a number of Wall Street IB's should be serving prison terms, but I digress.

Totally agree.

[Strange Brew]

The US government was born in debt, and has been so ever since. The debt-to-GDP ratio has fluctuated immensely over the nearly 250 years of government operation, and rises primarily because of recessions and wars. How high is too high depends on many factors, including who it is owed to (e.g. if it is internally held, the debt is "owed to ourselves" and therefore one taxpayer's future obligation becomes another taxpayer's income), how much is held by the Fed (the Fed typically rebates over 90% of its interest income from its holdings of government securities back to Treasury), and whether it creates budgetary pressure on Treasury when interest-to-tax receipts gets high enough to crowd out other Treasury funded programs. Greg Mankiw, Harvard professor and former macro CEA to Pres. Bush, makes a persuasive argument (at least to me) that the current ratio is too high. His reasoning is based on the fact that (1) it is pretty high already by historic norms, and (2) we need to give ourselves room for an increase in that ratio when the inevitable next war or recession takes place. Of course our economy is still not entirely clear of either of these problems currently, but his reasoning makes sense. The ongoing economic recovery is helping, of course, with falling annual deficits and a GDP growth rate that now exceeds the debt growth rate (deficit/debt). But a more aggressive stance on deficit reduction probably makes sense once we are completely out of the recession.

Monetary policy, characterized by a negative real federal funds rate and three rounds of QE, has not been very successful at righting the economy because no one is borrowing. In fact bank deposits in reserve accounts at the Fed, typically there only to meet the Fed's reserve requirement, are now over 90% excess reserve deposits (earning 25bps, I might add) suggesting that banks are not lending all this extra money created by QE. Amazingly, the M1 money multiplier has been below 1 for over 5 years now (I believe). In other words, the economy is in a classic "liquidity trap" where cash is preferred to bonds or other financial assets. This implies, BTW, that government deficits don't crowd out private sector spending because the private sector isn't borrowing. It is therefore true, ironically given the politics now dominating public policy debate, that fiscal rather monetary policy would best serve the economy to help get out of the latest recession. That would have meant even higher deficits in the short term.

A number of prominent economists are arguing that the economy currently suffers from a phenomenon called "secular stagnation" where the Fed is unable to get real interest rates low enough to get people borrowing (and spending) all the savings and other cash out there because of the ZLB problem with the (nominal) fed funds rate. Two solutions, if this problem persists, would be to either increase government borrowing (and spending) or increase the Fed's targeted inflation rate (currently at 2%). Both solutions are politically unpopular of course and there are potential economic (not political) problems with both of them but if secular stagnation is the new norm, our economy may staring at a permanently depressed condition unless one or the other policy is adopted.

Enough macroeconomics for today. Good to have a real conversation on the topic rather than simply shouting slogans and telling each other to "shut up" (apology accepted, Dash, and thanks for your help to the WCB, both financial and your contribution of your time and expertise).

I agree (shocking I know) and the reason for the liquidity crisis is individuals are protecting themselves from a political system constantly wanting more from those holding the capital. Lower the Corp and Cap Gains taxes and you'll see things move. Advocate for more taxes/regs and the hoarding will continue. Incentives are funny that way, they get people to take risks.

[LA Muskie]

Honestly I think the national debt is something that, even at this level, matters only for political purposes. I'd love for the government to be debt free. But it ain't ever going to happen. At the same time, it's also rarely (if ever) affected the life of the average citizen.


Sent from my iPhone using Tapatalk

[X-man]

I agree (shocking I know) and the reason for the liquidity crisis is individuals are protecting themselves from a political system constantly wanting more from those holding the capital. Lower the Corp and Cap Gains taxes and you'll see things move. Advocate for more taxes/regs and the hoarding will continue. Incentives are funny that way, they get people to take risks.

Odd comment given the fact that this liquidity trap didn't exist until recently, even when tax rates were higher. Get off your damn soapbox, and make some sense.

[vee4xu]

Back to he original topic, the S&P was down 1.56% today and some talking head on CNBC said he now regrets his Twitter buy rating and that the Dow will fall to 11,500. There was a picture of a bridge in the background behind him as he spoke. My hunch is that dude made his way over to that bridge and took a dive after his interview. Wow, talk about a downer!!

[Xpectations]

Back to he original topic, the S&P was down 1.56% today and some talking head on CNBC said he now regrets his Twitter buy rating and that the Dow will fall to 11,500. There was a picture of a bridge in the background behind him as he spoke. My hunch is that dude made his way over to that bridge and took a dive after his interview. Wow, talk about a downer!!

Gotta admit, I don't follow the Dow 30 nearly as closely as the S&P 500, but would you be surprised if the Dow went below 12,000 over the next year or so? I wouldn't. I'd be more suprised if we don't get there.

Again, that wouldn't even take valuations (stripping out the outrageously juiced earnings from QE) back to historic norms. I think people are fooling themselves if they believe the markets are anywhere close to be fairly valued.

[Xpectations]

The chart below was posted on Twitter by Bill Hester (@billhester), who does a lot of quantitative analysis on the markets and the economy.

Note that the top points at every period over the past 65 years when Industrial Production (IP) was lower than it was 12 months prior. There are 19 occurrences, and just over half of them (10 of 19) coincided with a recession.

The bottom chart points at every period when IP was lower than the year prior AND the S&P 500 was also lower than it was 12 months prior, which has just happened again for the 11th time during that period. EACH of the 10 times prior coincided with a recession. Will this time be different? Doubtful, but you never know.

https://pbs.twimg.com/media/CZkvikoWEAYj81x.jpg:large

I should note, I'm clearly bearish and positioned as such. I'm not bearish simply because it appears a recession is all but baked in at this point. I'm bearish because a Recession + Wicked Overvaluation (fueled by our Fed) = Disaster (IMO).

[vee4xu]

I too follow the S&P more closely than the Dow, but the metric that Mr. Suicidal Talking Head used today was the Dow. The one point made later was that the market is clearly tied to the Fed and the price of oil. And, that until the market decouples itself from both and latches onto another element to pull it in a positive direction, it will continue to fall. They went on to say the the Fed is currently an nonentity without any bullets left in the chamber and that the price of oil could be functionally at this price for a long time to come. So, the market is looking for a bright spot be they corporate earning or corporate profits to be potential decoupling mechanisms. Problem is, if corporate profits don't rise, it will be the third straight quarter for that and the first time since 2009. Also, there are no guarantees that earnings season will be a boost to the equity markets. If the corporate profits and earnings disappoint, then there is a very high likelihood of another downdraft. Also, transpiration index is sucking and that too has historically been a recession indicator. However, other elements of the economy have been solid, so we are in limbo.

[paulxu]

Also, transpiration index is sucking and that too has historically been a recession indicator.

Is that the marijuana index? If it is, I would expect some suckage factor.

[bobbiemcgee]

Is that the marijuana index? If it is, I would expect some suckage factor.

New highs everyday here.

[Xpectations]

I too follow the S&P more closely than the Dow, but the metric that Mr. Suicidal Talking Head used today was the Dow. The one point made later was that the market is clearly tied to the Fed and the price of oil. And, that until the market decouples itself from both and latches onto another element to pull it in a positive direction, it will continue to fall. They went on to say the the Fed is currently an nonentity without any bullets left in the chamber and that the price of oil could be functionally at this price for a long time to come. So, the market is looking for a bright spot be they corporate earning or corporate profits to be potential decoupling mechanisms. Problem is, if corporate profits don't rise, it will be the third straight quarter for that and the first time since 2009. Also, there are no guarantees that earnings season will be a boost to the equity markets. If the corporate profits and earnings disappoint, then there is a very high likelihood of another downdraft. Also, transpiration index is sucking and that too has historically been a recession indicator. However, other elements of the economy have been solid, so we are in limbo.

Earnings are much more rear-view mirror than the rapidly rising inventory levels with minimum sell-through.

Most of the market commentary on the financial networks (oil, China, even current rises in earnings) ignore valuations and the impact of QE. THAT'S what will ultimately determine where the markets fall--and I believe they will fall to at least average valuations. Sure, some of those factors may be the catalyst for the momentum shift because overvalued markets fueled by QE can (and did) continue to rise.

But let's not pretend that stocks were recently anywhere close to sustainable valuations--especially with central banks realizing that QE inflated some asset prices, but didn't fundamentally fix anything.

[vee4xu]

Agree that earning are rearview mirror, but missed earnings by certain companies isn't backward looking. So, if they fall short of expectations, there could be an impact on the markets. Also, saw an after hours note on Bloomberg that Apple is reporting lower sales for the first time since 2003 as a result of slower iPhone sales. That is the kind of news that will affect both Apple's stock and the tech issues in addition to the broader market. As we all well know, the market doesn't take well to bad surprises. Hopefully, there won't be many this earnings season.

[Xpectations]

The recovery off the recent lows has been pretty weak, to say the least. Thinking this could be the week that support on the H&S pattern breaks, which would mean a very likely trip into at least the 1600s on the S&P 500. Holding onto that support band is key.

[Xpectations]

S&P 500 has hit new closing lows the past couple days but still hasn't taken out the intraday lows. Makes me think investors are waiting for Yellen's comments tomorrow before choosing the market's next direction. Tomorrow will be an interesting day in that Yellen could trigger some near-term optimism for a bounce. That said, I'm still sitting out and waiting.

[GoMuskies]

I predict that my 401(k) is getting its ass kicked of late. S&P at 1818. 1480 when vee started this thread in January '13.

[Xpectations]

Sorry man. Cash is KING at this point. Interest rates have been way too low by traditional standards and Obama' s policies- in cahoots with the Fed- have been nothing more than band aids on a gaping wound.

I severely underestimated two variables coming out of the 2009 recovery.


The incredible levels of money supply expansion the Fed would resort to, increasing it by 5x (click on chart below
1909
The degree to which investors would respond to the subsequent--and unprecedented--growth rate in profits, and the belief those new levels would be permanently sustainable with or without the Fed's help



I still believe the incredible steps by central banks around the world are going to be crippling. I still believe profit margins are among the most mean-reverting metrics in finance. And I still believe it's much easier to predict where the market will be 10 years from now versus 10 months from now.

[Xpectations]

So the European Central Bank (ECB) now joins others in moving interest rates to negative values (-0.4%), while ratcheting up their own QE program. And they're now going to start using that extra currency their printing to purchase corporate bonds rather than just financials--bonds no one else wants (sound familiar?).

The questions are these ... If the data is still relatively tame, why are the world's leading central banks moving to negative interest rate policy (NIRP)? ... Why print even more currency after an overwhelming flood of currency over the past 7 years? ... Why are central bankers continuing to bail out corporations by providing them with liquidity and financing their debt? ... Why is gold rising so quickly against inflation data?

The headline data doesn't seem to support there being a massively dire emergency, yet central banks are throwing everything at the economy at unprecedented levels--tools they've been exploiting that have only fueled bubbles while not putting more income into the pockets of citizens.

Normally, you'd expect a huge rise in equity prices based on behavior following other massive stimulus moves during recent years.

Things aren't adding up here--at least on the surface.

[GoMuskies]

New S&P 500 record yesterday. Up again today.

[SemajParlor]

New S&P 500 record yesterday. Up again today.

Thanks Obama.

[NY44]

Thanks Obama.

Remember when I said "buy buy buy.." after Brexit and you mocked me? Free money kid.

[SemajParlor]

Remember when I said "buy buy buy.." after Brexit and you mocked me? Free money kid.


https://www.youtube.com/watch?v=up_eQUuiDN0

[NY44]

The Economy Is Again Under the Sway of Asset Prices - WSJ (http://www.wsj.com/articles/the-economy-is-again-under-the-sway-of-asset-prices-1469638984)

Good read

[NY44]

Is Passive Investing Really Worse Than Marxism? - Barron's (http://www.barrons.com/articles/is-passive-investing-really-worse-than-marxism-1472273124)

I've heard a lot about this idea in the past few days. It's definitely a shot at the ETF industry from a research firm, but it's an interesting thing to ponder.

[vee4xu]

1/18/13 day thread started:
S&P 1,802
Dow 16,040

12/19/16
S&P 2,262 +25.5%
Dow 19,833 +23.6%

For all of the movement in the market since The Donald won the election, it's surprised me that over almost three years bot the S&P and Dow indexes are up about 8% annually. Now, that's better by a bunch versus fixed income over that time, but a bunch of the increase is since Nov. 8th. Also, it seems that the Feds increase was baked into the the market, since there was really no retreat last week when the increase was announced. To me, the biggest risk is how quickly the Fed announces future increases and if they do so too steeply, which can impact inflation and wages.

Gonna be an interesting 2017.

[xu82]

Hindsight often makes me ill.

[GoMuskies]

Is today the day for Dow 20k?

[GoMuskies]

1/18/13 day thread started:
S&P 1,802
Dow 16,040

12/19/16
S&P 2,262 +25.5%
Dow 19,833 +23.6%


The S&P closed at 1485.98 on 1/18/13. It's up 52.2%

The Dow closed at 13,649.70 on 1/18/13. It's up 45.3%.

[Caf]

Is today the day for Dow 20k?

As of now it looks like it. I'm impressed how the markets have shrugged off a day with multiple terror attacks so well.

[vee4xu]

The S&P closed at 1485.98 on 1/18/13. It's up 52.2%

The Dow closed at 13,649.70 on 1/18/13. It's up 45.3%.

You are correct. No wonder I'm losing so much money when the market is going up so much.

[vee4xu]

Now 82 is really going to be ill.

Dow's inching closer. Closed today at 19,974.62.

My eye is on Yellen at the moment. She waited pretty long to implement this second rate hike. My hope is that she isn't late and that faster rate hikes are on too steep of a curve and run afoul of the natural price and wage increases.

[Smooth]

Now 82 is really going to be ill.

My eye is on Yellen at the moment. My hope is that she isn't late

We're all gonna be ill.

[xu82]

When Citi was below a buck a share I knew some money had to go there......but I was a chicken shit. I didn't think they'd go down. Anyone recognize "if you don't stand up, you don't stand a chance"? A mere $20k at .50/share, and now about $60/share? OUCH! That would be helpful, and not really a huge gamble. Several times that? But no......I'm a chicken shit.

[Caf]

Hot take: Carl Icahn's appointment is enough to guarantee us DOW 20K tomorrow.

[American X]

By the way, if you like to invest based on round numbers, the Dow Jones Industrial Average passed 20,000.

[GoMuskies]

How many newly minted Bitcoin millionaires do we have here?

[Masterofreality]

How many newly minted Bitcoin millionaires do we have here?

None....other than you?

[GoMuskies]

None....other than you?

I wish. I looked into buying a bitcoin once when I was having trouble funding an online sportsbook account with a credit card. That's as close as I ever got to that roller coaster.

[vee4xu]

How many newly minted Bitcoin millionaires do we have here?

Not here. I don't even know how that shit works and I have enough trouble trying to make money on shit I think I know how it works.

[xu82]

How many newly minted Bitcoin millionaires do we have here?

Today? Or tomorrow? That could be two very different answers.

It feels like Musical Chairs, and you want to get out before you have to find a chair...because there are none.

At least a house in Las Vegas or SW FL during the boom was still a house after the bust, and you could wait it out.

But what do I know?

[GoMuskies]

I feel like maybe the stock market thread should be merged with the WTF?!? thread. I've thought about getting out about 15 times, but luckily I've sold very little over the last several years. This has to end soon, right? Right? I mean, that Dow 30,000 bullshit from the dot com era is going to happen THIS YEAR if things don't cool off soon.

EDIT: I guess my memory sux, because the stupid book from 1999 was Dow 36,000. So we might have to wait until next year. :)

[GoMuskies]

FWIW, here is a chart that uses the single-highest correlative valuation measure their organization has found for forecasting 12-year returns for the S&P 500. As you can see (based on the current position of the blue line), going into January of this year, 12-year returns were expected to be near zero. That's right. Zero returns for nearly 12 years. They've sampled many other highly-correlative measures as well--all showing similar results.

http://hussmanfunds.com/wmc/wmc160104b.png

Why is the market (and markets everywhere) so overvalued? Because nearly all of the central banks around the world have FLOODED their economies with excess currency while artificially driving down interest rates to near-zero.

Want to see evidence of that? The charts below comes from the Federal Reserve of St. Louis.

The first chart shows the United States total monetary base from 1998 through mid-2002. I chose these dates because they capture Y2K and 9/11. Why are those dates important? Because, if you recall, the big financial headlines during those two events screamed how the Fed had "flooded" the markets with cash to avoid any panic or ripple effects throughout the economy.

The two peaks on the chart show the Fed's efforts in "flooding" the markets with money and providing the necessary cash cushion to absorb the shock or potential shock of those events to our financial markets.

click on chart to expand:1908

The next chart shows the Fed's efforts (primarily QE1, QE2 and QE3) in FLOODING the markets with cash since the 2008/09 financial crisis. Note that I started the chart just before 2000 so you compare the now virtually indistinguishable blips from what the Fed used to consider "flooding" the markets with money.

click on chart to expand:1909

As you can see, the Fed has essentially QUINTUPLED our money supply over the previous 6+ years. That is unprecedented!

And, they've kept rates at near-zero throughout those years, essentially penalizing anyone who saves while encouraging speculation and a reckless pursuit of yield. We're now entering nearly two decades of a bubble era (from roughly 1998), brought on largely by our Fed (primarily Greenspan and Bernanke). Their moves punish those who make prudent decisions and reward those who do not--at least temporarily.

I would be surprised if we don't see the 1200s or possibly 1100s for the S&P 500, knowing that only takes us to typical, normalized valuations.

GEEK NOTE: If you like tinkering with interactive stat tools, here's a link to the Interactive St. Louis Fed Monetary Base Charting Tool[/URL] I used to create the last two charts above: https://research.stlouisfed.org/fred2/series/BOGMBASE. There are many different data series you can visualize on the site besides monetary base.

Was just reading this entertaining thread again, and saw this one. I hope Xpectations isn't homeless!

[vee4xu]

Been a heck of a 9 year run. I am still pretty much all in, but have a wary eye on things, for sure.

[BENWAR]

Was just reading this entertaining thread again, and saw this one. I hope Xpectations isn't homeless!

Ha! It’s funny how they disappear when they are wrong!

[Caf]

I feel like maybe the stock market thread should be merged with the WTF?!? thread. I've thought about getting out about 15 times, but luckily I've sold very little over the last several years. This has to end soon, right? Right? I mean, that Dow 30,000 bullshit from the dot com era is going to happen THIS YEAR if things don't cool off soon.

EDIT: I guess my memory sux, because the stupid book from 1999 was Dow 36,000. So we might have to wait until next year. :)

The only explanation for this tide is that boomers are looking to make up for losses or years of limited gains since '08. I'd imagine the next down trend will begin when they begin pulling out of the market en masse. There's definitely no sign of that happening right now though. The demand for stocks is just nuts.

[GoMuskies]

Ha! It’s funny how they disappear when they are wrong!

Honestly, I don't think anyone has actually been right in this thread. Xpectations just had the most dire outlook of the group, so I had to pick on him a bit. I've definitely cost myself some money with poorly timed sales, but some of the things I've considered over the term of this thread would have been much, much worse. Thank God for inertia!

[GoMuskies]

Dow 26,000....

[vee4xu]

Dow 26,000....

What will be interesting, now that there's officially a government shutdown, is if the market, which is heretofore acted like Icarus flying unabated toward the sun and ignoring talk of a shutdown, will hold firm on Monday, or reach the sun. Good news is, the overall economic metrics are good, which makes the case for the market continuing to ignore the insanity amongst politicos in DC. Problem is, the market is emotional, too. We'll just have to see what happens this weekend in DC with the shutdown and whether the pragmatic investors or the emotional investors show up on Monday. Stay tuned!

[Caf]

Don't want to add anything to the panic, but I have to ask if anyone is smelling recession?

Flattening in the yield curve today with the 10 yr going up. Wages flying up, and a weak dollar, will finally spur the missing inflation and force the Fed's hand to raise rates. Should really flatten or even invert the curve.

[GoMuskies]

Didn't we just have 2.9% growth last quarter reported today? That's a long way to go to get to the negative growth necessary for a recession.

Now I see that it was 2.6% reported last week, with 2.9% wage growth. Still a long way from negative GDP.

[Caf]

Not saying it's going to happen in the short term. Estimating a timeline is above my pay grade, but I think the pieces are there.

[Masterofreality]

No. 200,000 jobs were created last month. The market is simply reacting to an anticipated Fed interest rate bump to put a damper on inflation because wages are rapidly growing too. Quite frankly the fact that the Obama years only saw very small economic growth and a hugely increased Federal deficit despite the benefit of almost zero interest rates is an indication of how bad the past President's economic policies were and how the business community had no confidence in the Administration. This is a correction that is probably needed, but certainly no indication of a recession.

[letskeepitreal]

Not time to panic as the market has been on a torrid run. In spite of this weeks carnage, market is still up substantially this year. Economies seem robust so no sign of recession but inflation may be ticking up a bit but not yet worrisome levels. The wild card is that the market has been used to almost a decade of extremely low interest rates and what will happen if this increases?

[Caf]

No. 200,000 jobs were created last month. The market is simply reacting to an anticipated Fed interest rate bump to put a damper on inflation because wages are rapidly growing too. Quite frankly the fact that the Obama years only saw very small economic growth and a hugely increased Federal deficit despite the benefit of almost zero interest rates is an indication of how bad the past President's economic policies were and how the business community had no confidence in the Administration. This is a correction that is probably needed, but certainly no indication of a recession.

I agree that a correction was desperately needed. We've just moved back within the channel of last year, so I'm far from worried about the stock market. It had gotten silly since the start of the new year. However my point is simply about rates and inflation. The wage increase was more of a spike, that plus a weaker dollar could really get inflation cooking. We'll see if that's the reality. My main concern is that Yellen has been trying to schedule and control this all perfectly. She was just so reactive and supportive to the markets and now we have this strange mutant economy where the fed and corporations were guaranteed buyers. Normally I would say this is just part of the cycle but this isn't a normal economy.


Not time to panic as the market has been on a torrid run. In spite of this weeks carnage, market is still up substantially this year. Economies seem robust so no sign of recession but inflation may be ticking up a bit but not yet worrisome levels. The wild card is that the market has been used to almost a decade of extremely low interest rates and what will happen if this increases?

At least for corporations, my concern is that they've taken on more debt than normal and a lot of them did it just for share buybacks. A rise in rates will definitely make them more reluctant and less able to take on more. As always, time will tell.

[GoMuskies]

Dow 25k and 26k were so much fun that we may get to do both of them again!!!!

During this bull market, it seems like the selloffs have all been super steep. Like we get them out of the way in a day or two. That seems a lot different than how it tended to work before. It doesn't present large windows to take advantage of buying opportunities. If you tend to put your money in at the same time every month, you may have missed every selloff buying opportunity in this bull market.

[Kahns Krazy]

Not time to panic as the market has been on a torrid run. In spite of this weeks carnage, market is still up substantially this year. Economies seem robust so no sign of recession but inflation may be ticking up a bit but not yet worrisome levels. The wild card is that the market has been used to almost a decade of extremely low interest rates and what will happen if this increases?

Anyone have an eraser?

[GoMuskies]

Dow 24k was fun, too, I guess?

[GoMuskies]

So the market was down 600 when I looked in premarket, opened slightly down, shot up 300 points, and is now jumping from up 100 to up 175 in a flash. Good time to own the VIX!!!!

Since this is the stock market prediction thread, I'll predict the Dow gets as low as 21.5k in this selloff.

[GoMuskies]

Another ass kicking today, but 2000 more points need to get shaved off the Dow to hit my prediction from two months ago.

[bobbiemcgee]

Trump criticizing Bezos for not paying taxes? Hilarious.

[Masterofreality]

Trump criticizing Bezos for not paying taxes? Hilarious.

Bezos is the biggest charlatan in business. For a company it's size it's reported profits are, as Reuters says are "modest". For years they reported zero profit, ostensibly because they were always "reinvesting". A very convenient way to minimize taxes, or not pay them at all. Amazingly, they are now a huge beneficiary of the US tax law changes. 45% of their most recent quarter profit came from the benefits from US Tax law changes implemented by Trump, Bezos' favorite punching bag in his now tabloid newspaper, that used to be the gold standard under Katharine Graham, the Washington Post.

How has Trump avoided paying taxes, except as dictated under the loopholes that the previous Adminstration either failed to address or ignored altogether?
Bezos is the master at deception and screwing the Government, and also his employess, some of which are on food stamps because of his lousy pay scale. By the way. Has anyone seen any $1,000 bonuses or pay scale increases at Amazon since the tax law change like there has been at other companies? I sure haven't seen anything from Mizer Bezos.

[Masterofreality]

Another ass kicking today, but 2000 more points need to get shaved off the Dow to hit my prediction from two months ago.

Oh well rebound later this week. This is strictly a roller coaster now. Hold on to your hats.

[Lloyd Braun]

Bezos is the biggest charlatan in business. For a company it's size it's reported profits are, as Reuters says are "modest". For years they reported zero profit, ostensibly because they were always "reinvesting". A very convenient way to minimize taxes, or not pay them at all. Amazingly, they are now a huge beneficiary of the US tax law changes. 45% of their most recent quarter profit came from the benefits from US Tax law changes implemented by Trump, Bezos' favorite punching bag in his now tabloid newspaper, that used to be the gold standard under Katharine Graham, the Washington Post.

How has Trump avoided paying taxes, except as dictated under the loopholes that the previous Adminstration either failed to address or ignored altogether?
Bezos is the master at deception and screwing the Government, and also his employess, some of which are on food stamps because of his lousy pay scale. By the way. Has anyone seen any $1,000 bonuses or pay scale increases at Amazon since the tax law change like there has been at other companies? I sure haven't seen anything from Mizer Bezos.

Who would have thought that giant corporations would be greedy?? Those ungrateful corporations should know they are at minimum supposed to contrive a token gesture of a $1000 raise. Don’t tell me those employees don’t appreciate an extra thousand bucks in their pockets!