Yesterday's post was about the likelihood that my near term thesis for the market would be wrong but after yesterday's rally now that thesis is right! Almost to the point!
That is of course a humor attempt to try to capture the big swings in sentiment, the extent to which market participants live 20-30 SPX points at a time. If that 20-30 points is down then the world is coming to an end (intentional hyperbole) and if it is up then the bottom is in and we should buy the financials with both hands(intentional hyperbole).
I feel as though the fraying of nerves has manifest itself in the comments in the last couple of days which also belies emotion. Emotion after 15 months of market declines is reasonable but it is unproductive. Much like the joke about more money not making things worse, more emotion doesn't make things better.
Short post today, hopping on a plane in a few minutes.
Wikinvest Wire
16 comments:
I'd like to have a decent idea where we'll be in a year, but the ups and downs each month are too worrying to even think about putting more money in to a market where most people have lost half their wealth!
And, apart from a few commodities and a savings account, where do you put your meagre leftovers if you give up on the stock market, all together?
You might as well join the growing list of people choosing to spend their money on canned goods, ammo and water-filtration units - we have to shop as we are all consumers with large, disposable incomes after all! Well, that is the 93% of us (of working age) still in a job.
But will you still be in employment in a year? All these billions of dollars may not amount to much - the 700 for banking don't seem to have improved much. Are we in an uncontrollable deflationary spiral now, where nothing except cash will hold it's value?
"Emotion after 15 months of market declines is reasonable but it is unproductive." Roger, you are beginning to sound more and more like Mr. Spock in his counsels to the emotive Captain Kirk! Still, I suppose this is apt as the market has in fact violated the "Neutral Zone" and we are under heavy attack by an armada of Klingons - I mean Bears. Man the photon torpedoes, warp-factor seven, Mr. Scott!
It's still a roller coaster, but I'm taking solace in the facts that the swings are nearly as big. Even without looking at VIX you can see that volatility is much lower.
I will respond with only positive thougths from now on. Negativity breeds negativity.
The US has the strong currency - UUP - and we can take advantage of this situation to sell the $780 billion in bonds for the stimulus plan. That's a pretty good situation to be in.
The markets are half price now. It might seem that there are bargains in the right places for people who have distant time horizons for investment maturation. I am buying stocks today, partly because I have an asset manager (C.F.A.) who hand picks and trades as needed but mostly because I believe that no one can really time the market. Remember, buy low and sell high. Also the market has two gears: Greed and Fear. Right now the market is extremely fearful.
Assuming you are not already filled to the gills with real estate and you have extra cash to park but still a bit fearful, wouldn't real estate make sense? The headline today is that real estate is also now at a 12 year low. So take your pick, stocks or RE? One of my buddies said "real estate doesn't go to 0". Mind you, an index probably doesn't either, but there is always intrinsic value in property, right? I own some commercial property, but I've got my eye on some residential property for a long term hold with positive cash flow.
The only thing keeping me out of real estate is the unknown. Not real excited at the prospect of becoming a landlord. I have two left hands and really big thumbs, at least my hammer seems to think so.
Do you think real estate has hit a bottom? I guess you could assume you're buying low, but my neighborhood seems to be telling me there's a way to go.
I don't know the future. All I know is that prices are low and that the asset won't go to 0 and that I'm holding for the long term. Is it the perfect time with the perfect asset? Dunno that either.
I wish that real estate would drop 20% and the S&P would go to 660 already. This seems to be the "expert" consensus (Shiller, Grantham, etc). Unfortunately if this happens, itl will likely drag our for the rest of the year if not into 2010...
I hate blogspot and how it constantly screws up on submitting posts.
Anyway. Shiller/Shilling (can never remember which he is) is a good point of reference for that Money magazine article that Roger or someone mentioned here last week.
He touts the market crash with no qualifications, no "ok there's another possibility", no "however."
How about another scenario....
In 10 years we are all standing in the daily bread line, the cities are in shambles, the national guard has quelled most of the rioting and now just patrol empty streets....
eerily reminiscent of Russia in the 40's and 50's.
China has evolved into the world leader.
It seems funny that we were talking about stocks ten years ago.
Of course, the bankers and CEO's of ten years ago are protected by their own security forces.
Are market prices low?
Current Dow yield is around 4.5% I believe.
http://en.wikipedia.org/wiki/Dividend_yield suggests Dow yield flucations between 3.2% at highs and 8% at lows (with greatest extremes of 15% (1932) and 1.4% (2000)). On a stochastic measure we're not even at fair value yet. And typically the yield swings don't stop at the mid point, but carry on towards the opposite extreme.
Perhaps expectations of a "rebound" are being based on too short of a rear view period.
[ducking]
Uh oh, sounds like we someone from the marketwatch crowd in here.
[/ducking]
"flucations" - just invented a new and perhaps appropriate word!
I actually meant to type fluctuations.
I just edited that Wikipedia document to change the high yield number from "8%" to "69%".
Ok, just kidding. But you probably see my point.
Simple another Bernake taxpayer rally, putting you future tax dollars to work.
No real gains at all. Great time to sell and buy more gold.
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