Market view and possible direction

[The Virginian]

Mod - That has been around for a while ---- I believe it is one of those scare people type of scams - scare you into investing in their product by pretending to be a geniune piece of journalism.

[ModE98]

Mr. V >>> My view is that IF the big boys are dropping stocks, they must "sense" something. It is probably selective selling and repositioning more than anything. Though I do question the nation's debt and the mixed Congress scenario as a problem for which some caution is warranted. Can also see good reason to be dumping certain specialty chain stores in view of the fast increasing on-line shopping.  One has to be alert to ever-changing trends and events that affect them to stay ahead in this game.

[Deleted]

MOD - Ok, very logical thinking. Here is some counter logic and a Question.

The Counter Party to Equities (BONDS) is by any true Measure in a Bubble and extemely Overvalued. Especially, in light of Consistantly improving conditions, Lack of Return in them AND near historical lows in Relation to P/E's and Companies actual strength.
All of which lend every day that passes to a higher and Higher likelyhood of a Counterparty Reversal, which in light of the Fact that there is over $1 Trillion Dollars in the Bond half of the Counterparties - is nothing to be taken lightly..

Now this lends the real posibility that such a Counterparty Reversal could begin to happen this year.
Most would probably tend to agree that Such an event if it were to begin Early in this year would be very Problematic - further most would probably tend to agree that if such an event kicked off in a "holy S***, we have got to get out" Flash Flood Manner, that this could be absolutely devastating..

Now here is the Question -

Do you think that the 15 Richest and Most Influential Private Investors in this country (Whom have Large Stakes in the Bond side of the Counterparties AND got in very early) are so Stupid that they do not see the building set up ? Or that they would sit idlely by and watch Billions of their Dollars vaporize in a Full On Panicked exodus ? Or is it more likely that they will try to quietly tug a string here, a string there, as they make their exit Freeing large portions of their Capital ? And once they have that they will sit by Idely for very long before they throw their weight into Items that have good room and potential to make lots of Money ?

(Ok more like several questions).

Take into consideration when pondering the question(s) that the 15 Richest and Most Influential Investors in this Country Control Roughly HALF A TRILLION (may be a bit more) Dollars, and that Amount of Money allows for some extemely serious leverage ability.
The Greatest Asset/Tool thes Individuals have are in fact the regulations - If they make a Major Move they have to Report it and then it makes the News.. Smaller Moves below the threshhold specified by the regulations, not so much.
So many small Moves, over an Extended Period are the Preferential choice for these Folks - if and when BILLIONS of Dollars are at Stake and the Conditions are right for this choice to play out..

We first heard about the "Bond Bubble" 3 years ago, but then things got strangely quiet about it, a few stories here and there, but mostly quiet..
Now all of a Sudden, there have been some Very Serious large moves and bets placed by a couple of these individuals that have made Big News.. And the Talk about the "Bond Bubble" is back in the News...

Having this "bubble" implode before June, could (and most likely would) be disasterous, Having it Implode during the Summer would be equally problematic - But having it start to deflate in Ernest around September, Beginning of 4th Quarter, that would lead to a very interesting situation...

Folks kabbitz about the Nosebleed Elite, but they play as Vital and Important role as the guy that serves you a Burger in a Roadside Gas and Puke.

[ModE98]

Interesting points and food for thought. Believe every investor should have an "escape plan" in place, just in case of some event that could set off a "panic". Investors could become like the lemmings and start to dive off the cliff into oblivion should some major, unexpected fiscal implosion occured. Thoughtful investors would not want to get mixed up in the freefall of sell-off panic. That is, edge out early, have cash at hand to pick up the valuable, undestroyed values at the bottom. 

The problem is recognizing the true onset of the coming reversal event (is it real, or a mirage?).  Guess some of the answer is, never get out too far on the limb, and get off when it shows signs of cracking.  Follow the old Boy Scout motto:  "Be Prepared"!  Also like the adage, "A fool and his money are soon parted". 

Now, I should have been "investor wise" when the big Chinese RTO's began their sell-off nearly three years ago ... all the signs were there, but too stubborn (or stupid) to believe them.  Just did not pay attention the the red lights blinking brightly.  What a valuable, hard bump lesson. 

[Deleted]

Exactly.

[2kids10horses]

I guess this thread is as  good as any other to post this...

I diversify my investment over stocks, commercial real estate, and residential real estate.

The stocks get split up into different strategies, too.  The vast majority is invested for the long term and is similiar to WXYZ's long term portfolio and the Dividend portfolio.  Some is invested in a sector rotation system.  Some is invested in managed futures and options.  And some, I use for trading.  (4% of the total stocks.  2% of total investments.)  And this is "play money", not "pay the mortgage" money.

Here's a trade I made with my play money this week:

I went short the market for Thursday.  Wednesday night, I entered order to buy SQQQ at the open on Thurday.  SQQQ is a triple leveraged ETF that is the opposite of QQQ.  So, if QQQ goes down 1%, SQQQ will go up 3%.  I must not have been alone on this play, SQQQ gapped up on the open so I didn't get a great entry.  And it proceeded to fall as the market went up during the day.  Until the late afternoon, when the market dropped, and SQQQ rose to where I had a profit of about $500.  Thursday night, I entered orders to Sell the SQQQ and buy TQQQ at the open on Friday. (TQQQ is the Triple leveraged long QQQ ETF).   Friday is the first trading day of the month, and markets usually rise on the first trading day of the month.  All the Italy stuff and Sequester was all over the news, and so the markets gapped down to start the day.  So, my Sell of SQQQ was significantly higher than the closing price on Thursday.  I ended up making a $1450 profit on the SQQQ trade.  Then, TQQQ gapped down, so I got a good entry point.  Sure enough, markets rebounded, and TQQQ rose enough during the day that I got another $1400 profit on it by day's end.

Not a bad little scalp.

[safeharbor37]

I find it hard to understand the current market situation. It seems that I and some others see all the signs of a pull back, but the market continues to climb. I'm assuming that, as usual, the signs I see are valid indicators, but the timing is premature. I've been in this situation before and more than once gave up, decided that I was wrong and pulled the trigger just in time to see the rug pulled out from under me.
At this point I'm just trying to stand pat, diversifying a little. I sold the speculative stocks I'd bought recently for a small [32%] profit, but missed the opportunity to almost triple that. Both are currently higher than the price at which I sold.......but what the hey! The point is to "not lose money," right? It was just "play money" anyway, not enough to hurt [except my feelings] even if I had lost. It reestablished in my mind that I still know how to pick stock buys ~ although I still haven't gotten the knack of selling at the right time.
That said: I've been calling for a pull back for quite a while and have been wrong thus far  ~ but will eventually be proven right in direction, only wrong in timing. I've found that my biggest mistakes tend to be believing that "things have changed" and the old principles don't apply. Although I'm old, I've got less experience than lots of younger investors and so am not as seasoned as many ~ so I'm prone to rookie mistakes ~ lacking patience and following the lemmings over the cliff.
So my updated prediction is that there will be a pull back before fall, but that the market will recover and end higher that it began the year. One thing I'm not predicting is which sector or market will lead [or lag].
All the "crisis'" we're told are preludes to Armageddon don't seem to have any lasting effect and, imho, are best ignored.

   

[Deleted]

Was listening to CNBC Radio (on Satellite) in the car yesterday and they were talking to a Senior Professor at the Wharton School, he made an interesting point.

That Point Was this -
"Current P/E Multiples on Equties, on average are roughly equal Now to what they were when Interest Rates were around 5%. Further, Now Companies are far leaner, more cost effective and able to do more with less - In an Economic Environment where Interest Rates are Sub 1%."

This would seem to indicate that Based on the aforementioned factors, that many companies are fairly or roughly farily valued at present - even if by Price alone they seem pricey.

In a Pullback Price will fall, but P/E's will also fall in equal manner. Which again based on the aforementioned factors then Equites would look Doubley Cheap, especially in the face of Inflation brought on by Ultra Cheap Rates & the Inevitable backlash of that in the form of rising rates.

Just a thought by the Local Idiot here.

[frankq]

Just a thought by the Local Idiot here.

And a good one. With the quarter plus that we've had, not to mention last year, I've just put my sell orders in. I'll buy back at lower prices (that's the plan anyway) when the market corrects. Seems like all the pundits and guest traders are trying to talk themselves into a correction. Sooner or later they'll do it.....

[safeharbor37]

The markets have been volatile this week for no better reason than that for which it's been rising in the last few weeks. Think maybe it's time for the summer pull-back?
I dumped my speculative stocks and one is lower than I sold and the other higher. I might buy back in if the prices drop enough.
The question, imho, is whether the decreasing value of the dollar will produce artificially high stock market prices or whether it'll cause a bear market. The market is not reflecting economic conditions, but I understand that the market predicts rather than reflects the economy. In any case, I'll be looking for opportunity this summer because I believe that the market will rally later in the year. In the next year or two the market will be due for the beginning of a real bull market [rather than the false bulls we've experienced in the last few years] so it might be a bad idea to pull out of the market altogether, even to go into bonds or gold. Obamanomics is the rule of the day so we'd better get used to it ~ at least for the next few years.

[safeharbor37]

Do you suppose that the government is supporting the stock market the same way it is supporting its deficit spending?

[safeharbor37]

Looks like I missed the whole thing. I've just stood pat for the last few months while the whole bull market thing was going on. The two speculative stocks I sold are higher, but not by a lot ~ still I choose not to get back in as I still feel the market is in a bubble [based largely on the Fed's actions] and will burst ~ BUT ~ It is possible that the scenario I mentioned a few posts ago is occurring ~ that is; inflation [dollar devaluation] simply makes the market look higher [although the dollar is holding up against foreign currencies which may be going through the same thing].
I still have enough in the market although it frustrates me somewhat that I've missed such opportunity, but as a conservative investor I have to be happy that I've not lost a lot over the years and not succumb to the temptation to follow the crowd [over the cliff].
So I must revise my prediction although it still involves a pull-back this summer. The "Dow higher than at the beginning of the year" still holds, but not necessarily higher than now or the immediate future ~ which makes it a pretty worthless prediction and even that is conditioned on the idea that the real value of the dollar is uncertain both now and in the future.
Recent shopping trips to both the grocery store and Home Depot have convinced me that we are already in an inflation although neither the indices nor the cost of imported items support that. 
I'm entertaining the possibility that the recent gains in the markets is the beginning of the next long term bull market, but of course pull-backs occur even in bull markets.
I'm old enough to remember when a $15,000 house jumped to over $60,000 in less than ten years [mainly in the Carter years] so I project that current $250,000 houses may be over a million within the next decade ~ and other prices comparable [$2,000 autos to $20,000 autos to $200,000 autos]. I remember when I achieved a savings account over a thousand dollars and felt pretty satisfied with myself so it concerns me that I might still be around ten years from now with no ability to earn more money and my savings worth less every day.
Anyway, I'm a bit frustrated that I missed the recent surge in most stocks, but I'm also one of those who jumped in too late in the bull market of the 1990's and still wince when I remember that [and I do whenever I see the value of a mutual fund I still own].
It seems that as soon as I learn the rules, they change them.

[ModE98]

It seems that as soon as I learn the rules, they change them.

It seems that can be held as a cardinal truth. Markets are always changing and the best actions "today" just do not work "tomorrow".