And where better than from the top of Mauna Kea.My brother had the best one liner of the day yesterday. He emailed me at the close and said 'yeah, this seems rational to me.' Hysterical.
I was jumping for joy rooting the market on, keep going! Clearly the crisis is over and we should buy them with both hands. Depression? What depression?
Um strike that entire paragraph. Getting happy about an up day is as unproductive as getting upset on a down day.
In the video this weekend I mentioned the possibility of reducing exposure by a stock or two if we had a big feel good rally. I was thinking big would be 20% in a couple of weeks. With the big open I thought that if we got close to 10% I would sell something. As we got 9% with about 30 minutes to go left in the session I sold a widely held name that was not down a lot (a lot is relative these days of course) but also has no must own catalyst to it.
Obviously the day finished with an 11.6% gain. To repeat; yeah, [that] seems rational to me. If we rocket up more I'll look to get a little more defensive one way or another. A reader commented about panicking up not being much better than panicking down. Well in terms of market health I agree but the phone did ring less yesterday.
Funny anecdote; yesterday as dragged my knuckles along the floor away from the stairmaster at the gym I heard a guy just getting on the treadmill let out 'woo-hoo, now that's a recovery' as he looked up at the TV.
A reader left an interesting comment about re-working how to re-equitize given that the SPX is 34%, um make that 22% below the 200 DMA. I was grappling with this some over the weekend but yesterday's massive rally takes that issue off the table some.
It is very difficult for me to believe all the market's problems have been solved. I was never in the depression camp but there is still a long way between here and fundamental health. Yes equities will turn up for real before the economy but not with a bell ringing. Additionally I don't think it should be so easy emotionally at a real bottom. But that's just my opinion.
The other day I mentioned something called hindsight bias which is something becomes obvious after the fact like a big rally coming after a puke down. Was anyone feeling a little hindsight bias yesterday?
For anyone who was fearful last week, you were probably less so during the day on Monday. While I'll save the fear is the wrong reaction speech for another day I would note that you probably still remember exactly what the fear felt like. You will have a chance to confront that feeling again. I don't know if it will happen this week or not until the next cycle. If nothing else the rally on Monday serves as a reminder that stocks can still go up and that they will again either starting yesterday or at some point in the future regardless of anyone's fear.
If you can remember that fear, then see the rally that came (no matter how long it lasts), well hopefully this can help you see why that fear from last week was unnecessary. This is a bear market event. Bear market events come along every few years and then they end.
One thing about crazy markets is that you may not do anything right but you'll be ok as long as you don't do anything wrong--like panicking out.
Hey hey, Barry Obama is going to let us raid our 401ks! Oh yeah, that's what we need.
Thanks for the comments about Pee Wee.
Is it me or are Chip Carey and Buck Martinez the worst MLB announcers you've ever heard? I'm not saying that because the Sox got smoked, I've been griping about those two all summer (they've been doing the Sunday games on TBS).
30 comments:
Roger, in an attempt to see a silver lining to a bear market, it seems like an opportunity to convert from a tax deferred ira to a roth. This assumes that the taxes paid on the conversion would be much less and that the holdings would climb back to their former value. I am 59 and won't need the money any time soon but hate the thought of paying taxes in an uncertain future.
20% hit? 30% hit? now take another 20% or 30% hit (vague number guessing a range of tax rates) converting to a roth?
taxes are so subjective i can't say it makes no sense but not sure i'd want to do that.
Bad as they are, Caray and Martinez are nowhere near as bad as McCarver.
MCcarver less likable for sure. Caray appear unable to judge fly balls.
Is there any chance you would be called up to help in California and is that why you're in training?
By far the worst announcers...save for Scooter the talking baseball. Yes, thank you Scooter, I can now throw a curve ball.
Bill, It made sense to me:-)
Sold my shares of ED in my 401K
when it was down a lot...then
transfered $ to Roth and rebought
ED shares...now it's up a lot.
Only transfered enough to stay
in present tax bracket. JMO
I expect more volatility over the next couple weeks but thinking November-December will be good for stocks. Obviously it's too early to tell if bear is over.
Also, is anyone else struck by the unanimity in the financial media claiming we're in a recession, or will soon be in one? I find it a bit odd that we've yet to see a single quarter of negative growth but so many are cock sure we're heading for something between a deep recession and a depression.
Also, I heard a person-on-the-street interview on NPR last week of two women who were asked about the economy. Their examples of economic hardship were truly laughable. If I recall correctly, one of them said they can't rent as many movies as before. Phil Gramm was attacked by the MSM when he called us a "nation of whiners", but boy, was he right. Expect to hear more excessive pandering by both candidates tomorrow night.
If you like, we could have Joe Morgan work the Sox/Rays series.
Roger,
I have looked over your blog a few times and
I love it. I would like to speak with you about possibly working together to help us both
be more successful and make you more money, without you having to lifting a finger. If you are interested in speaking please give me a call.
We have a lot of great material that I think your readers would
appreciate you introducing to them. I can set you up with a staff
membership of our products first so that you can see what we have to
offer. Best of all this is not costing you a thing in fact every month
you will make extra money other affiliates of INO are making money in the six figures.
Do you work with any strategic partnerships? If you have a chance you
could send me over your ad rates as well as some traffic statistics.
I know you are busy but if you have a chance take a look at our site
www.ino.com and let me know what you think.
I look forward to hearing from you,
Michelle Boswell
Partner Relations
www.ino.com
1800-538-7424 ext-128
This is really not spam
I can picture Scooter but don't remember what he sounded like.
SD, Joe Morgan is a HoF'er with rings so obvious credibility to say anything. I like the Red Sox announcers (very very funny), the Padres guys are funny too, I like Kuiper and Krukow in SF, the D-backs guys are pretty good once you get used to them and Rod Allen who does the analysis for Tigers games is good.
I am probably leaving a couple of other good ones out but many of them are boring, god help me I can't listen to Vin Scully, oh by Charley Steiner (Dodger away games is a hoot).
Yes I get the baseball package.
Every bear has a silver lining. Look for it inside the bear that eats you.
So far today the biggest noise from the credit markets is the sound of one hand clapping but at least the TED spread was slightly reduced even if it remains stratospheric. Economic downturns connected to credit or real estate contractions tend to be deeper and longer than most and this time we have both so a workout will probably be slow and rather ragged in effect.
Personally I suspect the NBER will declare a recession actually started in December 2007 -- AFAIK they have never used the popularly cited 2-successive quarters of negative growth as a criterion or, for that matter, any other single or fixed criterion (e.g., http://tinyurl.com/2puxq ) -- but that will mostly be rear-view mirror in any case, we'll likely be through the worst by then and maybe even on the upswing, at least I certainly hope so; this is not just market stuff that can be played either way, up or down, it's hitting my neighbors and family.
RE baseball I played it up through the time I couldn't hit a hard breaking ball if it was going over 60 MPH, about my second year of college I think, but used to enjoy going to Chavez Ravine and watching the Dodgers up until the 1981 baseball strike during which something broke inside and I stopped; I gave the players and teams a buy after the '72 strike, just couldn't do it again, no explanation, just the way it was (but do still enjoy listening to devotees' comments for some reason even though I no longer know the players).
"Joe Morgan is a HoF'er with rings so obvious credibility to say anything."
Man, have you listened to him? He's HORRIBLE.
1. He claims credit for things that anyone with web access can show he didn't do
2. He'll talk for 5m about how anyone in any situation who knows anything about baseball will do X in order to get the next out. The pitchers then throws Y and gets a groundout.
3. His unnatural dislike for other good 2nd basemen
etc. etc.
And then to pair him up with whatshisname. John something. Who knows a ton of baseball people and history, but will spend 20m talking about the color of his sweater or something....
Anyway. Sorry to digress. He's just horrible.
Roger, could (I) we have your thoughts about the spoken about inflation resulting from all thes large sums artificially injected into the market? The image that springs to mind is a cow being manually inseminated but some of readers of the alternate persuasion may be offended. Mind you, I agree with you about not yet being out of the black bear market forest, but, will there not be phase overlap and a more or less long stage of stagflation? And, how would one deal with that in terms of cas, equities, etc.?
Willy
Sorry to break up the chat about rounders (joke!!), Bespoke has some stats on Bull/Bear markets since 1900 which puts things in a bit of a Bigger Picture perspective. Up until 1942 the average bear was 39%, up until 2008 (assuming the bear ended this weekend) the average has been 35%. Post WWII only the average has been 30%.
And the Bull to 1929 went up almost 500%. Usually the Bulls are greater than the proceeding (or previous?) Bears of course, although during the Depression this wasn't the case.
asset deflation versus price inflation. which one wins out?
my take has been asset deflation now price inflation later.
I don't think hyperinflation. stagflation overlap? have we sort of had that? Food and fuel prices higher in the last couple of years home values and (probably) brokerage accounts lower.
as far as what to do, save for portfolio tweaks if demand for equities remains unhealthy i will have some sort of defensive posture. by definition that means more cash. if yields were to some how go to the upper end of the historical norms I'd want to own more. 8% for ten years sounds pretty good if we ever get it.
Chip Carry did Orlando Magic games for 10 years - the guy they replaced him with is worse - but we do not miss Chip
http://tinyurl.com/4lwwft
thought maybe you would like
a little dark humor...
Roger:
I am wondering what asset classes my company should offer in our 401k to protect our members should we experience a rising interest rate rising inflation environment. I would hate to see everyone get killed on their bonds.
We currently have a real estate fund- that might help. Should we add TIPS, the PIMCO commodity fund, gold funds?
well the more choices the better, so to the extent you have influence ask for the moon.
a TIPs product and a couple of hard asset choices would also be suitable, i think ur right.
and foreign bonds
Thanks for the reply Roger: we do currently have a foreign bond fund, but I am wondering how well this will work as this monetary stimulus is not just a US phenomenon-it is worldwide.
a little perspective:
After the market crashed in ’29 prices gained 18.8% over the next two days.
foreign bonds good for diversification if nothing else. if US=secular and other parts of the world=cyclical then foreign bonds would make a lot of sense.
Jim Freemon--nice ray of sunshine, lol
Addendum: After a visit to Accrued Interest (@ accruedint.blogspot.com/ and who certainly knows more about the bond markets than I ever will) and checking some of the indicators he points to it's pretty clear that a number of credit markets are clapping with both hands now. That's good, can't get through a recession if money doesn't move, might take awhile to really work its way into equities again though (assuming economic contraction doesn't become worse before it becomes better but better chance of better when money moves ...that was easier to type than say aloud btw).
yewhatnow?
We did not get follow-thru today and futures are down quite a bit. this is not like riding a bike. It's going to now be a long choppy L market I am afraid. Too many problems - Auto, airlines, fear of oil prices rising, credit card debt, real estate market, credit freeze, municipalities going bankrupt, Obama next president (have asset will tax), Obama, and oh yes the worst Congress in 100 years.
BWJR
8% for ten years?
If we ever get that, the Dow will be at 3,000. No reason to own stocks if you can get 8%, no risk. Wait, I might be willing to go 80% in the 8%, 20% in stocks, just in case. HeHe.
Post a Comment