Dow

[Lannis]

Well, at 2 o'clock east coast time the market is up 351pts. 

Aaand at 3:00 EDT it's only up 42 points .... there's a few day traders leaping out of windows, I'm sure ....

Lannis

[oldbike54]

Aaand at 3:00 EDT it's only up 42 points .... there's a few day traders leaping out of windows, I'm sure ....

Lannis

 Could be why modern buildings have non opening windows .

  Dusty

[Robert]

"You can send all your money for this advice to my off shore account.
Thank you." ===

My latest searching shows that foreign banks are not willing to put up with the US paperwork requirements, and are not accepting US citizen accounts.

I'd like to deposit some in Canada (their $). 

Else buy a stack of Swiss Francs (supposed to be possible at my local bank).

Concerned about devaluing of USD.

[Lannis]

"You can send all your money for this advice to my off shore account.
Thank you." ===

My latest searching shows that foreign banks are not willing to put up with the US paperwork requirements, and are not accepting US citizen accounts.

I'd like to deposit some in Canada (their $). 

Else buy a stack of Swiss Francs (supposed to be possible at my local bank).

Concerned about devaluing of USD.

Cayman Islands has a pretty dodgy reputation, they might do it.   Isle of Man makes their living these days on offshore accounts.   Lichtenstein is a quiet little financial haven too ...   

2008, everyone thought the USD was doomed.   By 2013, they said, we wouldn't even be using it as currency anymore, would have some combination of USD, Mexican pesos, and Canadian dollars in its place.    But here we are in 2015, and the USD is still the bulwark of the modern world, strong against most any other currency .... These things don't change quickly ... !

Lannis

[blackcat]

Aaand at 3:00 EDT it's only up 42 points .... there's a few day traders leaping out of windows, I'm sure ....

Lannis

They must have had parachutes because it closed up 369 points.

[Chuck in Indiana]

They must have had parachutes because it closed up 369 points.

Need I say I'm surprised?  Along with a few others. Normally, toppy markets are extremely volatile. Maybe this isn't normal?? Dunno..

[hooah54]

change that Depends...again

[Chuck in Indiana]

change that Depends...again

Er.. ok again. (?)

[canuguzzi]

Could be why modern buildings have non opening windows .

  Dusty

Don't forget to check the elevator shafts.

[Chuck in Indiana]

careful look at it and maybe adjust the exposure down".

Done that. Might be wrong, but.. I'd rather be on the safe side of wrong in this market. Still looks toppy to me. Trading sideways with big moves. <shrug>

[Randown]

"[average] CAPE ratio would put the S&P closer to 1,300 from around 1,988 on Friday, and the Dow at 11,000 from around 16,643."    Ouch!

 

[kevdog3019]

There is talk out there that a bubble is bursting. Not by the CNBC bobble-heads but by the likes of economists working in investment banking & universities.

The broad market like the S&P is easily capable of a 13 year recovery cycle, just look at the Y2K  crash, it took 13 years before it recovered & went on to new highs without retracement. And do you think those 13 year old dollar denominations were of the same value as 13 years earlier? No. So maybe a few more years if you take into account price inflation.

I think the question here for a lot of people is where are YOU with your investment time-frame & what are you REALLY willing to lose over a given period?

A smart money manager / advisor says in his blog that modern portfolio theory tends to lead investors into very stock-heavy portfolios. He points out a 60/40 portfolio is actually more like a 80/20 portfolio b/c most of the permanent loss risk comes from the 60% stock section.
 
Prof Shiller doesn't have a problem with re-balancing / reallocation during this downturn. "If the portfolio is heavily into stocks, this might be the time when one has the emotional energy to take a careful look at it and maybe adjust the exposure down".

He does a survey of individual & institutional investors & notes market confidence has fallen to the lowest level since just before the Y2K crash. It's already lower than the '07 peak.

The idea of "investing" in stocks for the "long-term" has mostly been a statistical success in the past BUT many really have short-term requirements for their savings.

Big losses are possible, "investors" in Brazil & China are feel'in it now.

There is not much I agree with here, sorry. There are lots of bright economists that have differing mindsets. What does that tell you?  People pulling money out of equities when they're down makes little sense. Plan ahead instead and don't make silly moves based on emotion. It will cost you. What goes up will come down. Make decisions before things plummet. When they do it's time to buy if you want more equities, not sell Save your money during good times so you can buy cheap during recessions. How many people do that?  The sky ain't falling here.

[Randown]

There is not much I agree with here, sorry. There are lots of bright economists that have differing mindsets. What does that tell you?  People pulling money out of equities when they're down makes little sense. Plan ahead instead and don't make silly moves based on emotion. It will cost you. What goes up will come down. Make decisions before things plummet. When they do it's time to buy if you want more equities, not sell Save your money during good times so you can buy cheap during recessions. How many people do that?  The sky ain't falling here.

No need to apologize. Yes - plan ahead is best, and that's one of the points the money mgr makes, but he cautions that MPT will overweight towards long term purchasing power protection, meaning too heavy an allocation into equities which can cause permanent loss when someone finds themselves knee-deep in it & has a new appreciation for risk or realizes they actually need to spend that money w/i 10 years.

No one said specifically anything about selling & going to cash - that would be market timing which these guys don't advocate. The suggestion by Shiller as I read it was reallocation is OK. Ports grow unbalanced, people's time-frame shortens so reallocation from time to time is normal, people forget or put it off, so this is something that you are supposed to do anyway.

Yep, you may be doing it with a new appreciation for risk so the port's allocation may change substantially. Doesn't sound like a "plan" but more of an emotional "reaction" I empathize with that sentiment - BUT OTOH I've seen it work to mitigate damage during the Y2K crash.

[hooah54]

Kev...hindsight is 20/20...curve balls here hard to read

[Randown]

Done that. Might be wrong, but.. I'd rather be on the safe side of wrong in this market. Still looks toppy to me. Trading sideways with big moves. <shrug>

Most people won't be as nimble as you & ST. We are told that markets can't be timed & emotion based decisions are irrational - such is the case for the masses.

I think I know this investing type - you guys read market sentiment & may have developed a consistency & a rule-set that most aren't inclined to do, so to label it as emotional based investing is a mis-characterization. Not that they're immune to risk or the occasional whip saw but capital preservation is in the forefront of their minds. This investor won't stoically follow a crash line down.

As for "keeping what you got" what if it's in the face of new information or evolving circumstance? 

"...when I get more evidence I sometimes change my mind. What do you do?" -John Maynard Keynes

 

[kevdog3019]

I think some are considering a correction to be a crash.  Sideways trending to slight downturn... who gives a flip.  Very few crashes, many corrections.  If I make 15-20% over a few years time annually, I'm willing to risk a little downturn here and there.  It's a law of averages.  I've been in the two major downturns with all equities since well before Y2K and I'm significantly up.  I heard all this rhetoric about "the sky is falling and sell your stocks and they're never coming back, it's different than before"...
Looking to the past is a great way to judge what some economists WILL SAY and also what the market WILL DO.  If you don't have a risk tolerance, you should already be in a plan that reflects that.  If this stuff scares you then it's time to change your mix.  Waffling back and forth is dangerous during good and negative time.

[LowRyter]

15-20% on average.  WOW.

[Lannis]

I think some are considering a correction to be a crash.  Sideways trending to slight downturn... who gives a flip.  Very few crashes, many corrections.  If I make 15-20% over a few years time annually, I'm willing to risk a little downturn here and there.  It's a law of averages.  I've been in the two major downturns with all equities since well before Y2K and I'm significantly up.  I heard all this rhetoric about "the sky is falling and sell your stocks and they're never coming back, it's different than before"...
Looking to the past is a great way to judge what some economists WILL SAY and also what the market WILL DO.  If you don't have a risk tolerance, you should already be in a plan that reflects that.  If this stuff scares you then it's time to change your mix.  Waffling back and forth is dangerous during good and negative time.

I've never known anyone to make 15- 20% in equities over "a few years" unless it's like three maybe.    Over 10 or 15 or 20 years, a "correction/crash/depression/downturn" will make hash of your 20% before you can catch it, and you'll be back down at 6 -11% with the rest of us.

Continuous 15% returns are reserved for folks doing something with a lot more risk and work and investment involved, like running a very profitable manufacturing or real-estate business, I think ....

Lannis

[kevdog3019]

15-20% on average.  WOW.

Yes... past 3 years average.

[kevdog3019]

I've never known anyone to make 15- 20% in equities over "a few years" unless it's like three maybe.    Over 10 or 15 or 20 years, a "correction/crash/depression/downturn" will make hash of your 20% before you can catch it, and you'll be back down at 6 -11% with the rest of us.

Continuous 15% returns are reserved for folks doing something with a lot more risk and work and investment involved, like running a very profitable manufacturing or real-estate business, I think ....

Lannis

Yes, 10% annually over my portfolio's lifetime. It has dipped considerably some years I assure you. but when it comes back it does so with a vengeance and more than makes up. People WANT to be in the market. It is most folks means of retirement. Gone are the pensions of old. When people or money managers pull their money it is only a matter of time before it comes back in the fold. I'm still long(ish) terms so I'll be happy to buy on dips.

[Lannis]

Yes, 10% annually over my portfolio's lifetime. It has dipped considerably some years I assure you. but when it comes back it does so with a vengeance and more than makes up. People WANT to be in the market. It is most folks means of retirement. Gone are the pensions of old. When people or money managers pull their money it is only a matter of time before it comes back in the fold. I'm still long(ish) terms so I'll be happy to buy on dips.

All true in my experience, and people need to be aware of it, because it IS most folks means of retirement.

A few people use the Lottery as a retirement plan.   I think it's pathetic that the State takes advantage of people's weaknesses and addictions to get their money - it's the most regressive tax there is, because no one with any money or sense puts significant amounts into lottery tickets.

A good friend of mine is the pension benefits manager for a company I worked for.   The company no longer manages a "defined benefit" pension plan, but matches employee contributions into a 401K.    He dreads the consequences when people "cash in" the company contributions in a lump sum, because rather than using it as a retirement income stream (say $25,000 annually drawn from a $500,000 principal), they go and buy a boat and a motorhome and pay their children's mortgages with it, and then struggle to live on just Social Security later, not realizing that the interest from their investment was supposed to be part of what they lived on ..... ?

People need to be educated and quit being "scared" of the markets, but when you put a bundle of money into someone's hand, sometimes they just can't help themselves - they'd rather play "Lifestyles of the Rich and Famous" for a year, then eat cat food when they're 80  .... ?

Lannis

[kevdog3019]

Correct Lannis. Something else people don't take into consideration when turning equities to bonds or cash is that they may lose out on some of the downturn but when they jump back in they usually miss out on a good bit of the initial uptick. If you're long on stocks leave them be even though you see some free-fall. Some advise to never go into bonds and stay all equities. I'll see how I feel in 5 years about that. Keeping up with inflation is tough with a big split. Bonds won't get you much.

[Lannis]

Correct Lannis. Something else people don't take into consideration when turning equities to bonds or cash is that they may lose out on some of the downturn but when they jump back in they usually miss out on a good bit of the initial uptick. If you're long on stocks leave them be even though you see some free-fall. Some advise to never go into bonds and stay all equities. I'll see how I feel in 5 years about that. Keeping up with inflation is tough with a big split. Bonds won't get you much.

Yep.   My portfolio when I was 45 was all stocks.   At 50 it was 80% stocks.   At 55 it was 60% stocks. 

Now that I'm retired at 60, it's <30% stocks and they're all conservative ones.    The rest is "hold what you got" or "do good when the stock market dives.....".   

One reason that reasonable investors make money in the markets is because so many people act like .... well, people.    They get scared on a downturn and sell and lose a lot of money, they get exuberant on an upturn and miss the best of the increase - they operate on emotion, not reason.   Although the paranoid all blame "Wall Street" and "Rich CEOs" for stealing all the money in the stock market, the good news is that it's actually you and me and the other people investing with their eyes open that are getting it .... !

Lannis

[Stormtruck2]

The strategy that has worked for me is CAN SLIM, with some contrary theory thrown in.  The best strategy of mine so far?  Started investing at 17 in 1978 when I joined the Navy.  Loan sharking while in also helped. $20 for $25 on payday grows capital quickly. 

[Lannis]

The strategy that has worked for me is CAN SLIM, with some contrary theory thrown in.  The best strategy of mine so far?  Started investing at 17 in 1978 when I joined the Navy.  Loan sharking while in also helped. $20 for $25 on payday grows capital quickly. 

When my Dad had his fellow chiefs over to the house for a poker game, I'd hear about $5 for $6 and $10 for $20.    Good business if you can collect!

I see all those poor batardes getting out of the back of a crew-cab construction pickup truck on Fridays at the store with their newly cashed paychecks, chucking $20 bills across the counter for Lotto tickets, scratching away at some of them, hoping against hope at the evening draw for The Mega Million Moola.....

If they'd stuck that money in a good investment when they started working, and kept it up every week they worked, they'd have some sure-enough money to retire on; instead, they moan about "those rich guys" and how they're getting beat down by "the man" and how a workin' man just can't make it these days.   Lotto tickets and a $150/month smartphone bill will break anyone, much less a workin' man .....

Lannis

[LowRyter]

wise words........... $1800/year compounded...it will get you somewhere, certainly a good supplement to SS + pension.

[Lannis]

wise words........... $1800/year compounded...it will get you somewhere, certainly a good supplement to SS + pension.

My son started putting away 6% of his pay, matched with 3% from the company .... when he was 28.   If he keeps doing that for 25 years, he'll be pickin' and grinnin' on top of a pile of money that .... hey, maybe he can help out his old man then .... !

Lannis

[zedXmick]

I put 16% of my pay,matched with 3% from the company...when I was 20. That was a big reason I was able to retire at 50. The other was a very good pension after 30 years of service. Rode out the "1987 correction", 2000 dot com bust, 911,and the 2007-08 collapse.  Lost a lot of good years,but just kept socking it away. Lived in the same house since 1989 and never fell into the get a bigger ,better house every 5-7 years with the huge mortgage to match. It can be done,(early retirement)but it sure ain't easy.

[Chuck in Indiana]

Farmers have to play the commodities market to sell their crops, unfortunately.  I look at the stock market just like the commodities market, where the idea is to sell in the top third of the marketing year. It moves *much* faster than the stock market, but the technical signals are the same. Right now, the stock market is looking for the forth move in a 5 wave sell signal. Downside target currently is 15, 500 in the dow. <shrug> Doesn't mean it won't change tomorrow, though.

[balvenie]

         With That Chinese market on holiday for a while, I hope you blokes are breathing easier, although at noon ours was actually down a bit.
          Good Luck