# US Debt Crisis - Buying Opportunity



## cannew (Jun 19, 2011)

Should the US not increase the debt limit, I wonder how much and for how long the markets (including the TSX) will be down. I'm making a list of stocks to buy and at what price.


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## Toronto.gal (Jan 8, 2010)

Such an event still seems inconceivable to me, but in that case, I would add to my existing holdings as I generally do anyway when markets dip above a certain %, and needless to say, I would also get in on a few missed opportunities.

I'm prepared for whatever comes, but let's hope for everyone's sake that there won't be a default.


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## cannew (Jun 19, 2011)

A great investing book is Charles D Ellis, Winning the Loser's Game. 

My favorite passage is: "Therefore, if you are a saver and a buyer of shares your long term-term interest is, curiously, to have stock prices go down quite a lot and stay there so you can accumulate more shares at lower prices and therefore receive more dividends with the savings you invest."


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## KaeJS (Sep 28, 2010)

It won't happen.

If it does, Financials are going to be on sale like no tomorrow, and I would imagine commodities would be right up there with gold.

In which case, I'd buy falling financials and rising commodities.

But.... cannew;

If investors thought that the US was going to default, wouldn't you think the market would be a tad bit lower right now?


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## Homerhomer (Oct 18, 2010)

It won't happen this time around.

In the future however it's a different story, they will either default or reduce the debt by cutting spending and increasing taxes, either scenario will produce great buying opportunities in the stock market.

Buying on credit can only go so long, after that it's time to pay one way or another.

Another question is what will China do, will the support the US because it's in their best interest as well, or the will say screw you and dump the Tbills taking a loss and becaming the only economy that really matters.


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## Belguy (May 24, 2010)

It's the mere thought that it COULD happen that has me concerned. Should retired folks even have their hard-earned savings in the stock market where they could suddenly lose a substantial portion of their investments at the whims of politicians anywhere in the world? Our savings are currently in jeopardy at the hands of some hard-line, right wing, Tea Partiers who are putting principal ahead of the good of their nation. The current crisis may end up getting resolved--let's hope and pray--but the entire world financial situation will remain in perilous condition and that means that our life savings are in similar shape. It doesn't exactly fill one with a feeling of confidence.


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## Larry6417 (Jan 27, 2010)

Failing to raise the debt ceiling would be irresponsible, reckless, and foolish...but *politicians*-almost by definition not sensible- are handling the negotiations. The "market" didn't price in bankruptcy (or near bankruptcy) for Lehman or Bear Stearns or a host of other financial institutions prior to the last downturn, so the market-as-oracle is a bit overrated. _The Economist_ holds a daily debt ceiling update. The July 21st edition noted that Intrade, a prediction site, showed betting against a deal getting done. See www.economist.com/blogs/freeexchange/2011/07/americas-debt-ceiling-2

I still think it's unlikely both sides will be so irresponsible as to fail, but the outcome is no longer unthinkable. Let's speculate a bit. Some of the newest Republicans are Tea party ideologues opposed to big government. The U.S. has enough tax revenue to continue making interest payments but not enough to make interest payments and continue all its programs. Therefore, to maintain interest payments, the U.S. would have to cut services drastically - exactly what some of the newest Republicans want. I'm not saying I agree with the rationale. I'm saying that some of the politicians don't fear a default.


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## Homerhomer (Oct 18, 2010)

The main job of the republicans is to disagree with democrats (just like it would be for democrats when republicans were in power) and make sure they can't get anything done regardless if it would be good or not, everything else is irrelevant.

Obama is such a convinient scape goat for everything wrong with US right now, the fact the irresponsible spending dates back to WW2 often goes unnoticed, hence the possibility of not extending the debt ceiling is unlikely, but not impossible.


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## larry81 (Nov 22, 2010)

Its not going to happen but I really wish it would !

Buying opportunity+++


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## HaroldCrump (Jun 10, 2009)

cannew said:


> My favorite passage is: "Therefore, if you are a saver and a buyer of shares your long term-term interest is, curiously, to have stock prices go down quite a lot and stay there so you can accumulate more shares at lower prices and therefore receive more dividends with the savings you invest."


With all due respect to Charles Ellis, that statement is bogus, unless you have a magic wand.

So you want markets to be depressed and in recession for 30 years while you are investing, and then the year before you retire, by some divine magic, the market will rise 300% so that you can sell your portfolio and retire a millionaire!


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## fatcat (Nov 11, 2009)

> Should the US not increase the debt limit, I wonder how much and for how long the markets (including the TSX) will be down. I'm making a list of stocks to buy and at what price.


a hell of a lot of other people are too ... it could get very wild .... does anyone really watch the market anymore ? ... i thought we all watched the internet to see what the people that are watching the market are thinking ?


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## Abha (Jun 26, 2011)

fatcat said:


> a hell of a lot of other people are too ... it could get very wild .... does anyone really watch the market anymore ? ... i thought we all watched the internet to see what the people that are watching the market are thinking ?


What people don't realize is that supply and demand will negate most of the downside if everyone is rushing in to buy stocks.

I think the smart money is already planning for this in a way that will burn a lot of amateurs


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## gibor365 (Apr 1, 2011)

HaroldCrump said:


> With all due respect to Charles Ellis, that statement is bogus, unless you have a magic wand.
> 
> So you want markets to be depressed and in recession for 30 years while you are investing, and then the year before you retire, by some divine magic, the market will rise 300% so that you can sell your portfolio and retire a millionaire!


Exactly ! 

Those who wishes market depression just fooling themselves.
And what if during new recession they lose their job? (last recession unemployment rate jumped almost 3 times in US). During "buying opportunities" they will be buying from their EI?


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## gibor365 (Apr 1, 2011)

"WASHINGTON, July 23 | Sat Jul 23, 2011 12:21pm EDT 

WASHINGTON, July 23 (Reuters) - Debt talks between President Barack Obama and congressional leaders on Saturday have ended, a White House official said.

There was no immediate indication if the White House or lawmakers would make any public statement on what progress, if any, had been made during their discussions toward lifting the U.S. debt ceiling before an Aug. 2 deadline to act.

The meeting ended at 11:58 am (1558 GMT), the official said, less than an hour after it began. (Reporting by Alister Bull and Steve Holland; Editing by Todd Eastham) "

What the hell will be on Monday?


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## gibor365 (Apr 1, 2011)

"Obama said he is willing to go along with a back-up plan proposed by the top Republican in the Senate, Mitch McConnell that would give Obama the power to raise the debt limit while allowing Republicans to vote against the increase. He said this would accomplish the minimum necessary of allowing the U.S. to keep paying its bills. But he said he preferred to also work on solving the problem of the enormous U.S. debt and deficit."

http://www.voanews.com/english/news...ders-After-Debt-Talks-Collapse-126055468.html

Can we call it a progress?


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## cannew (Jun 19, 2011)

During the recent downturn I got BMO dividend yield at 8%. Was not around when the yield hit 11%, but if I was able to get that I wouldn't worry if the market stayed down for years (as long as they held the dividend).


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## Belguy (May 24, 2010)

In less than 24 hours, the Asian markets will be open for business. God bless us every one.


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## Mike59 (May 22, 2010)

cannew said:


> During the recent downturn I got BMO dividend yield at 8%. Was not around when the yield hit 11%, but if I was able to get that I wouldn't worry if the market stayed down for years (as long as they held the dividend).


There are good reasons for getting in at that level, but I think I'm too chicken...If Nortel could be blown to smitherines by a stock crash, who's to say which of these companies or banks would even be around if the market suffers a large 80%+ loss a la 1929-1932 Dow Jones or 2000-2002 Nasdaq 

I think I'll consider waiting till values start to pick up positive momentum, and perhaps eclipse key moving average milestones on the way back up.


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## Argonaut (Dec 7, 2010)

Predictions for Monday? Dow down 400? Gold up 400?

Fiat currency is probably the biggest scam in world history.


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## Abha (Jun 26, 2011)

My prediction is a drop in the opening hours that will probably recover into the closing bell. Essentially a flat to a slightly negative day


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## KaeJS (Sep 28, 2010)

Can I just say that I usually don't get involved with Politics - 

But these Republicans need to chill.

If you can't pay, you increase cashflow and decrease spending. It doesn't mean you have to tax them at 5% more, just tax at 1% more. That will not make or break anything. And cut some spending.

I know the economy in the US isn't all that great, but seriously... Big deal if your iPad 2 costs an extra $5...

Am I missing something?


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## Yudansha (May 14, 2011)

*Sigh* I hate when Friday evening news makes everyone jittery for Monday. Typically it makes for losses early on, as everyone has been stewing over all the negative weekend energy. Should be some good buying opportunities early on this week though until people finally realize there will be no US default.


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## kcowan (Jul 1, 2010)

I don't think the debt ceiling has anything to do with the US economy. The repubs are just trying to renegotiate the existing budget in mid-year. If it causes the world to abandon the yankee $ as a reserve currency, that would be a good thing.

The fact that Obama refuses to raise taxes on the middle class and the repubs refuse to raise taxes on the rich is just posturing. Eventually, they will all have to pay more taxes and get less services for their money. Until this sinks in, there will be no real progress.

As for the markets, well I think uncertainty is already priced in. I mean even the vaporware companies like LinkedIn are settling down to more reasonable prices and that will continue until they post some acceptable returns.


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## Belguy (May 24, 2010)

If there is no political resolution before the markets open, I predict a drop in the Dow of 500 points on the day Monday.


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## Homerhomer (Oct 18, 2010)

Some of you make it sound like Monday will be the end of civilization as we know it, and I thought the end of the world is in 2012


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## humble_pie (Jun 7, 2009)

the ny times has this to say this am:

_Geithner and Daley said it was critical Congress approve a new debt ceiling that gets the country into 2013, past the November 2012 presidential election. _

notice that finely-stitched subjunctive. If the nytimes can maintain its high literary standards despite the national emergency, how can we up here in canada be anything other than cool ...


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## Abha (Jun 26, 2011)

Homerhomer said:


> Some of you make it sound like Monday will be the end of civilization as we know it, and I thought the end of the world is in 2012


Yeah no kidding. I don't think I've seen people this panicked since the bear market of 2008.

I'm not a psychic but I am quite confident that Monday will not be as bad as most of you are making it out to be.


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## fatcat (Nov 11, 2009)

this is politics as usual, hardball style ...

all sides loudly speak about armageddon before they capitulate and declare themselves the winner .... 

an announcement will come soon, probably today

alas, i was looking forward to the collapse of western civilization as a buying opportunity ... goldman-sachs for $19 ... stuff like that


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## NorthernRaven (Aug 4, 2010)

fatcat said:


> alas, i was looking forward to the collapse of western civilization as a buying opportunity ... goldman-sachs for $19 ... stuff like that


Of course, recovery time from civilizational collapses can be problematic. I believe there are investors still waiting to see positive returns on Imperial Roman Waterworks Inc. and Gaulish Roman Highways PLC after buying them during Alaric's sacking of Rome...


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## Argonaut (Dec 7, 2010)

NorthernRaven said:


> Of course, recovery time from civilizational collapses can be problematic. I believe there are investors still waiting to see positive returns on Imperial Roman Waterworks Inc. and Gaulish Roman Highways PLC after buying them during Alaric's sacking of Rome...


The only investment that would have held up since then.. gold. Anxious to see the opening spot price in an hour.


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## NorthernRaven (Aug 4, 2010)

Argonaut said:


> The only investment that would have held up since then.. gold. Anxious to see the opening spot price in an hour.


Preferred shares in Vatican, Inc. did fairly well despite forced spin-off of English subsidiary and other market events, but were not publicly available...


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## fatcat (Nov 11, 2009)

oh yeah, i can feel the love in that room .......


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## KaeJS (Sep 28, 2010)

fatcat said:


> oh yeah, i can feel the love in that room


Boehner is an idiot. S'all I gotta say.


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## Belguy (May 24, 2010)

NO DEAL!! Special live coverage of the Asian markets begins at 7:30 EDT this evening on CNBC. All that we can hope is that some of this is already priced into the markets or that the markets believe that there will be a deal before the ultimate deadline of August 2. The next 24 hours could be a nail biter!! Good luck to us all!!!


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## Mike59 (May 22, 2010)

Spot gold trading up $19 immediately on the NY Globex to $1619 (as of 7:08pm), http://www.kitco.com/charts/livegold.html

Silver up to near $41


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## Mockingbird (Apr 29, 2009)

Gold & silver futures only ones active so far. Index futures just gap down and sitting still. Not much reaction on the currencies.

MB


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## KaeJS (Sep 28, 2010)

Belguy,

You need to eat a little less SugarCrisps and drink some more Red*Bull*.

I know that you are closer to retirement, but I still don't believe the US is going to default.

Assume the market does drop. There's no need to worry, a deal will get done, the debt ceiling will be raised, and the market will rally it back up to at least where it is sitting now...

Those are my thoughts, at least.

Have you considered more fixed income if you're always so worried? 

Edit: I think its quite interesting the three of us all posted at 7:10pm.


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## Abha (Jun 26, 2011)

Mike59 said:


> Spot gold trading up $19 immediately on the NY Globex to $1619 (as of 7:08pm), http://www.kitco.com/charts/livegold.html
> 
> Silver up to near $41


Nice! Bought a ton of AGQ going into the close on Friday.


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## Belguy (May 24, 2010)

TThe hids wowp RED Bull, I'm inls herd stufff toonite!!!


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## Abha (Jun 26, 2011)

Belguy said:


> TThe hids wowp RED Bull, I'm inls herd stufff toonite!!!


What?


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## Belguy (May 24, 2010)

Correction: Coverage of the Asian markets is now on www.cnbc.com and not on the CNBC TV channel.


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## Toronto.gal (Jan 8, 2010)

fatcat said:


> oh yeah, i can feel the love in that room .......


lol.


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## HaroldCrump (Jun 10, 2009)

What a travesty...you'd think it's the Cuban missile crisis all over again, this time between the two US political parties.

They are not a bankrupt country (unlike Canada - if you believe Mr. _Iamwhatiam_ )
Who cares even if the US temporarily defaults.
It'll be a great opportunity to take some profits from gold and buy some US stocks.


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## Belguy (May 24, 2010)

Investor sentiment is switching to the unthinkable:

http://www.cnbc.com/id/43867050

We were naive to think that our political leaders where there to protect us. The real reason that they are there is to promote their own selfish agendas. A pox on the whole sad lot of them!!!

Live coverage of world markets continues at www.cnbc.com


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## Argonaut (Dec 7, 2010)

I am extremely bullish on the Swiss franc. Up 29% on a one year basis.. has almost been as good of an investment as gold. If holding cash didn't bore me so much I would have some francs for sure.

Gold is up more than silver percentage wise right now. That is very bearish for stocks.


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## ddkay (Nov 20, 2010)

It's going to take a sudden interest rate increase to cause any material damage to the US economy...


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## KaeJS (Sep 28, 2010)

Gold is up to $1615 now?

Wow...

I don't even want to look at the stock market tomorrow.


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## Causalien (Apr 4, 2009)

Woo hoo
Apocalypse NOW! Interest rate to go through the roof. Surely, US will be downgraded now.


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## Eric (Oct 20, 2009)

*Impact on interest rates*

If they agree to raise the ceiling or if they do the unthinkable and let the US default for a while, wouldn't both of these events raise the interest rates?

I have been tracking some US high yield ETF last week (in particular HYG). It kept on going up significantly everyday. I was expecting the reverse ??

If now is the time that US rates start going up, what pressure does it put on Canadian rates?


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## ddkay (Nov 20, 2010)

Canadian interest rates get pushed up too.


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## HaroldCrump (Jun 10, 2009)

[Conspiracy theory]
I wonder if any of the GOP politicians involved have made any side bets against the markets (equity and/or debt).
As they stonewall the negotiations, their bets increase in value.
Then, once the goal is achieved, they magically arrive at an agreement.
Of course this will be a serious offense if ever uncovered, but when has that stopped anyone?
Not too long ago, how the bigwigs of the Bush administration had huge interests in arms, surveillance, energy and infrastructure companies.
[/ Conspiracy theory]


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## andrewf (Mar 1, 2010)

^ I'm not sure that is actually an offense. Just highly unethical, and politically disastrous if ever uncovered.


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## andrewf (Mar 1, 2010)

Yields on junk bonds are not strictly driven by the rate for 'risk-free' assets, but more by the spread.


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## Belguy (May 24, 2010)

Well, thankfully, I was WRONG!! I fully expected a very severe drop in world equity markets today after the opposing sides did not come to an agreement over the weekend. In fact, I had predicted a 500 point drop in the Dow but it hasn't happened--at least yet. However, we are not out of the woods yet unless and until they stop playing politics and come to some compromise for the good of the country. Oh, I forgot, the word 'compromise' is not in their vocabulary. In any case, let's hope that we can avoid a huge declines in the markets despite their selfishness and ineptness.

So far, at least, I was wrong in my predictions about today but we are still in dangerous waters until this thing gets resolved.


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## Abha (Jun 26, 2011)

I told you it would be a flat to slightly down day.

You should really worry when they get a deal done. That's when the "sell the news" crowd is going to jump in and drop the markets for a short period of time.

Just tune out the fear mongering going on. You'll be fine and if you really stress out over these kinds of market events, you should keep your money in GIC's and conservative investments


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## fatcat (Nov 11, 2009)

i think abha is right here
they will do a deal before august 2
but it will most likely be a non-deal deal
it will be back ended and have safety valves etc
then i could see the market reacting very negatively to a bad deal

on the other hand, there is a hell of a lot of money sitting around doing nothing
it is looking for a home
anticipation of a new qe3 might well push it back into the market
which could take off again

the bernank has predicted a second-half rebound don't forget


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## HaroldCrump (Jun 10, 2009)

fatcat said:


> the bernank has predicted a second-half rebound don't forget


If I had a dollar every time Bernanke "predicted" something...


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## Homerhomer (Oct 18, 2010)

Belguy said:


> we are still in dangerous waters until this thing gets resolved.


Which will take years not days, in the meantime markets will be very viotile.


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## Causalien (Apr 4, 2009)

Yep, pretty disappointed. I had moved my money into my brokerage account in preparation. 

Supply chain checks for this month is pretty disastrous. I thought things were turning around last month with record orders. Then again, I won't get the full report until the end of month since that's when orders gets really logged.

TLDR: the world economy was about to turn around, now all corporations are watching the fiasco in DC and holding their orders.


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## gibor365 (Apr 1, 2011)

fatcat said:


> i think abha is right here
> they will do a deal before august 2
> but it will most likely be a non-deal deal
> it will be back ended and have safety valves etc
> then i could see the market reacting very negatively to a bad deal


I think if deal will be done, market will jump up (for at least couple of hours) on emotions, than if deal will be like you said (it will most likely be a non-deal ) market will retreat


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## Belguy (May 24, 2010)

It is hard to see the markets performing very well for the next several years given all of the headwinds in the world today. Time to increase one's gold allocation?


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## KaeJS (Sep 28, 2010)

Belguy said:


> It is hard to see the markets performing very well for the next several years given all of the headwinds in the world today. Time to increase one's gold allocation?


I need to increase my gold allocation, and my international exposure.


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## gibor365 (Apr 1, 2011)

KaeJS said:


> I need to increase my gold allocation, and my international exposure.


what I don't understand....why Gold going up , and miners down  today the biggest loser in my portfolio was Goldcorp 

...and I'm scared now to buy GLD, it's very high.... maybe after deal on US debts GLD will pull back and will be good time to buy?


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## ddkay (Nov 20, 2010)

Deal or no deal, USA is going down the tubes. 

Scenario 1: Straight up default (abrogation) - results in major downgrade, interest rate hike, debt grows & crumples "recovery"
Scenario 2: Miss deadline, divert spending to pay bondholders - results in downgrade, interest rate hike, debt grows & crumples "recovery"
Scenario 3: Deal reached, amounts to less than $4T in savings - results in downgrade, interest rate hike, debt grows & crumples "recovery"
Scenario 4: Deal reached, amounts to more than $4T in savings near-term - results in severe austerity, interest rate hike, debt grows & crumples "recovery"
Scenario 5: Deal reached, amounts to more than $4T in savings long-term - results in lack of credibility (kicking the can), downgrade, interest rate hike, debt grows & crumples "recovery"


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## KaeJS (Sep 28, 2010)

gibor said:


> maybe after deal on US debts GLD will pull back and will be good time to buy?


More than likely. 
Thats when I will buy.

But, if its for long term..... don't even worry. Check the 5year on GLD.


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## Abha (Jun 26, 2011)

What about Scenario 6

Goldman Sachs and their super computers jump in and prop everything up, thereby assuring the public that everything is okay and essentially keeping the status quo in the markets going indefinitely.


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## gibor365 (Apr 1, 2011)

All your scenarios are very gloom Are you playing short?


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## Causalien (Apr 4, 2009)

gibor said:


> what I don't understand....why Gold going up , and miners down  today the biggest loser in my portfolio was Goldcorp
> 
> ...and I'm scared now to buy GLD, it's very high.... maybe after deal on US debts GLD will pull back and will be good time to buy?


Most miners sell futures against their production capacity. So they do not benefit as much if gold goes up. They do benefit if gold stays level or if they dip slightly. 

Some miners sells futures too aggressively and they end up having to produce at a loss when production cost goes up significantly along with gold.... anyway read up on silver's history to learn about how wallstreet squeezed miners.


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## ddkay (Nov 20, 2010)

gibor said:


> All your scenarios are very gloom Are you playing short?


Hah no, for the same reason Abha said. If the robot recovery fools enough people I'll think about a longer term re-entry.


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## Abha (Jun 26, 2011)

Causalien said:


> Most miners sell futures against their production capacity. So they do not benefit as much if gold goes up. They do benefit if gold stays level or if they dip slightly.
> 
> Some miners sells futures too aggressively and they end up having to produce at a loss when production cost goes up significantly along with gold.... anyway read up on silver's history to learn about how wallstreet squeezed miners.


They'll all be up a few quarters from now barring any massive drops in gold prices. 

I'm not too much of an expert on precious metals but I don't think we are ever going to see gold sub $1500 ever again.


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## andrewf (Mar 1, 2010)

Never is a long time. I think it is definitely possible to see gold under $1k an ounce. I would not be surprised to see gold correct by more than 50% when it eventually does.


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## Eder (Feb 16, 2011)

I've seen this gold thing before...I wont be surprised to see gold at $400 in 10 years. It's not different this time.


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## Belguy (May 24, 2010)

Here is my latest take on an actual default. If the U.S. does go into default on August 2, the markets will take a significant dive. This will then present a unique buying opportunity. Then, a few days later, when everybody comes to their senses and a compromise is found, the markets will bounce back to where they were or maybe even higher. In other words, if actual default occurs, it will not last for very long. Buying opportunities like that do not come along very often. Get ready, get set-------

What do you think of that scenario?


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## larry81 (Nov 22, 2010)

Belguy said:


> What do you think of that scenario?


unlikely, but desirable from my perspective...


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## Abha (Jun 26, 2011)

If the market takes a dive, even for a brief period, what stocks are you you ready to capitalize on?

Mine would be Goldman Sachs, Apple & Ford


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## KaeJS (Sep 28, 2010)

larry81 said:


> unlikely, but desirable from my perspective...


^ Agreed.

And to comment on gold,

I agree with andrewf, we may see gold below $1k again.

Eder, I think $400 is way too low. I would call $1k the lowest.


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## KaeJS (Sep 28, 2010)

Abha said:


> If the market takes a dive, even for a brief period, what stocks are you you ready to capitalize on?
> 
> Mine would be Goldman Sachs, Apple & Ford


Count me in on Goldman Sachs and Apple.

Exclude me 100% from Ford.


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## Causalien (Apr 4, 2009)

I would take on all international companies with global footprint. US dollar falling is a positive for them. Service and low raw material based company should be favored over Tech and low margin companies (due to material cost) as imports cost increase while labor cost decrease.

Banks who holds US treasuries should see the most swing, but I have questions on whether they'd get hit with contagion due to capital levels. That part is, again, political. Like EU, the regulators will probably accept US treasuries as AAA even though it's been downgraded. 

Next is Muni, but the biggest swing play should be made on muni insurers. These are considered risk play since the amount of contagion is inversely proportional to how much these politicians needs their egos stroked.


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## Argonaut (Dec 7, 2010)

$400 gold is the most ridiculous thing I've ever heard. 

The only way you'd see sub-$1000 gold is if central banks dumped their reserves on the market. If so I would be parked outside Fort Knox with a dump truck.


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## Abha (Jun 26, 2011)

I think it would be funny if a new user called himself Gold to $400 by 20XX

Then he should face off in a thread with Gold to $1600 by 2011.


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## ddkay (Nov 20, 2010)

KaeJS said:


> Count me in on Goldman Sachs and Apple.
> 
> Exclude me 100% from Ford.


If the market dives because the government can't debt finance (worst case scenario), the Federal Reserve can't backstop US financials. If you thought Lehman was bad.. imagine the whole system fail. 

Even if there's a moderate dive, the Fed is still constrained in a banking crisis (because of austerity), they would need to raise the debt ceiling multiple more times to keep financials afloat.

Best case scenario: I would rather buy JP Morgan. Jamie Dimon is on the NY Fed, and he thinks quite poorly of Blankfein.


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## Abha (Jun 26, 2011)

I will never bet against Goldman Sachs. These guys know how to recover. 

- Remember when AIG was getting bailed out and they were turning over the funds to Goldman Sachs. 

- Remember when Goldman Sachs said they weren't boring TARP funds. More than two years later, guess who borrowed the most?

I know the stock's been languishing in the last little while but they really are the smartest people in the industry and I'd rather be on their side than to bet against them.


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## ddkay (Nov 20, 2010)

This is an era of austerity, they are looking for ways to cut spending, not increase it. If The American Recovery and Reinvestment Act of 2009 shows no signs of coming back, municipal and state governments are on their own.

US centric infrastructure companies are screwed. For example New Flyer Industries (NFI.UN) had a billion dollar backlog at the beginning of the "recovery", but now payments are trickling in, the City of Chicago cancelled a huge public transportation bus order in March because they couldn't come up with the money.

The chances of the Fed surviving another banking/credit crisis are pretty small and I think bailing out financials again would bring out crazy Tea Party people to burn down the White House. (It was TARP that caused the most serious animosity towards Wall Street)


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## ddkay (Nov 20, 2010)

The $1 Billion Armageddon Trade Placed Against the United States



> Someone dropped a bomb on the bond market Thursday - a $1 billion Armageddon trade betting the United States will lose its AAA credit rating.
> 
> In one moment, an invisible trader placed a single trade that moved the most liquid debt market in the world.
> 
> ...


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## gibor365 (Apr 1, 2011)

I'd buy AAPL on a dip... sold it last week , last portion at 391....


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## Abha (Jun 26, 2011)

gibor said:


> I'd buy AAPL on a dip... sold it last week , last portion at 391....


I'm curious as to why you sold at $391?


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## gibor365 (Apr 1, 2011)

Belguy said:


> Here is my latest take on an actual default. If the U.S. does go into default on August 2, the markets will take a significant dive. This will then present a unique buying opportunity. Then, a few days later, when everybody comes to their senses and a compromise is found, the markets will bounce back to where they were or maybe even higher. In other words, if actual default occurs, it will not last for very long. Buying opportunities like that do not come along very often. Get ready, get set-------
> 
> What do you think of that scenario?


In theory it's a nice scenario, only :
- I don't beleive in default on Aug 2
- if default will happen and stock will be sinking 300-400 points, I will find very difficult to pull the trigger and to buy  , as I'm bad in timing market....

P.S. Now, Asian markets are up, commodities and futures are up. Usually this is mean positive next day for our markets.


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## gibor365 (Apr 1, 2011)

Abha said:


> I'm curious as to why you sold at $391?


I bought it at $329...when 3 last quather AAPL reported excellent number, stock jumped 6-8% and reteat back, so i was expecting the same story now... 
when it jumped to $398, I set stop sell limit at $391...hoping it won't get there, but it got


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## Abha (Jun 26, 2011)

gibor said:


> I bought it at $329...when 3 last quather AAPL reported excellent number, stock jumped 6-8% and reteat back, so i was expecting the same story now...
> when it jumped to $398, I set stop sell limit at $391...hoping it won't get there, but it got


Damn. That's unfortunate. I was also hoping these debt theatrics would tank Apple so I could add more, but now it's flirting with that $400 level. I know the second it passes that resistance it's going to shoot up.

At least you made money. That's the most important thing.


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## gibor365 (Apr 1, 2011)

Abha said:


> Damn. That's unfortunate. I was also hoping these debt theatrics would tank Apple so I could add more, but now it's flirting with that $400 level. I know the second it passes that resistance it's going to shoot up.
> 
> At least you made money. That's the most important thing.


This was my hope too , but even today APPL was about 1.5% up.... 
Earlier this months I sold about 40% of AAPL at 376 (bought 340) and now as mentioned sold 392 (bought 329). Yes, I had some gain, but problem that when I bought FX rate (CAD to USD) was lower than when I sold, so profit is not great 

Anyway, it's some profit, to tell you the truth , I'm greedy and usually sell at a wrong time....could've get nice profit 10-15% on CCO, DII, PBN, DAY, but was keeping them, as a result sold first 3 with losses , still hold DAY because of the dividends


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## Toronto.gal (Jan 8, 2010)

gibor said:


> when it jumped to $398, I set stop sell limit at $391...hoping it won't get there, but it got


I was also going to ask you why you sold, that was really unfortunate. 

I bought AAPL under $200 and my target had been to sell in a couple of years at $300 [not knowing at the time how fast the stock would rise]. I had never expected the shares to double in just 1.5 years, but that is exactly what happened. Prices dipped no more than a handful of times since early 2010, have added to my position accordingly & raised my selling target to $400, today it's at $401+, but needless to say I am not selling.

According to earnings, it is still a cheap stock, but not affordable any longer, but as there is every indication the company will continue to grow for the next couple of years at the very least, I'm definitely not selling my shares anytime soon. This had been the easiest stock to pick!


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## Abha (Jun 26, 2011)

Toronto.gal said:


> I was also going to ask you why you sold, that was really unfortunate.
> 
> I bought AAPL under $200 and my target had been to sell in a couple of years at $300 [not knowing at the time how fast the stock would rise]. I had never expected the shares to double in just 1.5 years, but that is exactly what happened. Prices dipped no more than a handful of times since early 2010, have added to my position accordingly & raised my selling target to $400, today it's at $401+, but needless to say I am not selling.
> 
> According to earnings, it is still a cheap stock, but not affordable any longer, but as there is every indication the company will continue to grow for the next couple of years at the very least, I'm definitely not selling my shares anytime soon. This had been the easiest stock to pick!


Sell it at $500 or NEVER. 

This company has more money than they can dream of and they are executing on all cylinders. The next inevitable step is dominating the TV space.


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## Toronto.gal (Jan 8, 2010)

Abha said:


> Sell it at $500 or NEVER.


I have given up on revising my ST. 

Did any of you watch Obama's televised speech last night? He was practically begging for public support. He talked about the need to increase taxes for those earning over $250K, however, Boehner was adamant that they will not vote for any such plan. More and more, it sounds like political idiocy.

I had not thought of option 3 before. 

"There is no sign of panic yet and investors are probably assuming three things. 

- Option 1 is that a deal will be done at 11.59 on August 1st, even if it is only a stopgap. 

- Option 2 is that August 2nd is not the hard-and-fast date it has been made out to be. 

- Some analysts are suggesting that, since tax revenues have been higher than forecast, the government can pay its bills until August 10th, or even September. Option 3 is that the government puts workers on temporary lay-offs or stops payments to suppliers before it defaults on its debts."

http://www.economist.com/blogs/buttonwood/2011/07/us-debt-ceiling


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## andrewf (Mar 1, 2010)

Abha said:


> Sell it at $500 or NEVER.
> 
> This company has more money than they can dream of and they are executing on all cylinders. The next inevitable step is dominating the TV space.


I have a feeling that eventually a lot of people are going to lose money on AAPL. People will still be bidding it up once it passes $2 trillion in market cap, no doubt. What could go wrong?


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## Abha (Jun 26, 2011)

andrewf said:


> I have a feeling that eventually a lot of people are going to lose money on AAPL. People will still be bidding it up once it passes $2 trillion in market cap, no doubt. What could go wrong?


I won't be losing money on this anytime soon. Barring some catastrophic event akin to Enron.

But I more than welcome anyone to prop this company to a 2 trillion market cap.

I've been in it since 2005 when they had they had to revise their earnings because of employee stock options.

Anyways I don't want to take away from the purpose of this thread so my apologies.


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## fatcat (Nov 11, 2009)

> I have a feeling that eventually a lot of people are going to lose money on AAPL. People will still be bidding it up once it passes $2 trillion in market cap, no doubt. What could go wrong?


agreed, investors have short memories, there was a time when everything microsoft farted on tuned to gold dust and look at them today, going sideways ... 

technology is moving too quickly to think that any company will sit at the top forever ... i would say that a lot more money could be made by looking for opportunities to short apple


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## Abha (Jun 26, 2011)

Please don't short Apple anytime soon. You will lose your money.


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## kcowan (Jul 1, 2010)

There is a time to short many companies. But don't expect the markets to act rationally. That can cost you a lot of money!


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## ddkay (Nov 20, 2010)

(Reuters) - The White House said on Tuesday that the 14th Amendment of the U.S. Constitution was "not available" to President Barack Obama to avoid the August 2 deadline to raise the U.S. debt ceiling.

"There are no easy ways out here. There are no tricks, there is no citing of the Constitution that suddenly allow us to borrow," White House press secretary Jay Carney told reporters. "It's not available."


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## Calgary_Girl (Apr 20, 2011)

I am tempted to buy something today but I have a feeling that the market will fall even further as the days go by and no debt agreement is reached. Therefore, I'm sitting on my hands and trying not to hit the "buy" button today in my brokerage account


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## Belguy (May 24, 2010)

They could get this done if both sides decided to compromise for the sake of the country and the world's economy. The problem is that some have taken the 'my way or the highway' approach and the word 'compromise' is just not in their vocabulary.

Can you imagine some of the folks in those authoritarian countries and looking at the predicament that the U.S. finds itself in and wanting to aspire to be just like them? I think not! And this is supposed to be the greatest nation in the world? Maybe at one time but those times are gone. 

They're playing Russian roulette with our retirement savings! 

A pox on the whole sad lot of them!!!


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## Causalien (Apr 4, 2009)

Steve job's cancer is a big problem. Pancreatic survival rate is 25% over 5 years. There's not enough risk of that priced into AAPL stock.


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## ddkay (Nov 20, 2010)

Wall Street Helps Boehner Boost Fundraising as House Speaker

Who says Paulson can't mega-profit from collapsing the US, twice in a row?


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## Abha (Jun 26, 2011)

Causalien said:


> Steve job's cancer is a big problem. Pancreatic survival rate is 25% over 5 years. There's not enough risk of that priced into AAPL stock.


That's what the 70+ billion is for in my opinion.

When Steve Jobs passes away (and I hope he lives a long time) management will rush in and buy back the stock at depressed levels. 

It's a much better strategy than issuing a useless dividend.


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## fatcat (Nov 11, 2009)

i have been following and using apple for a long time and agree that jobs is the linchpin

one of the reasons microsoft has languished (at least on the trail blazing consumer/home products front) is that they don't have a steve jobs

he's an authoritarian genius of the first order and his vision is stamped on all the products they make

if he dies, all bets are off

and yes, i know they have a great leadership team and a great culture, it just isn't enough ... you need a visionary with the power to make anything happen


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## gibor365 (Apr 1, 2011)

Not Arab terrorists will destroy America, but retarded right wing politicians. Those animals are ready to destroy their own country, in order not to see half-black President! Morons!


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## Abha (Jun 26, 2011)

fatcat said:


> i have been following and using apple for a long time and agree that jobs is the linchpin
> 
> one of the reasons microsoft has languished (at least on the trail blazing consumer/home products front) is that they don't have a steve jobs
> 
> ...


Perhaps you should look into an individual by the name of Jonathan Ive


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## andrewf (Mar 1, 2010)

Abha said:


> That's what the 70+ billion is for in my opinion.
> 
> When Steve Jobs passes away (and I hope he lives a long time) management will rush in and buy back the stock at depressed levels.
> 
> It's a much better strategy than issuing a useless dividend.


I don't this would even be permitted by the exchange.


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## Abha (Jun 26, 2011)

andrewf said:


> I don't this would even be permitted by the exchange.


I don't expect them to do this in a few minutes. But I assure you that the team is very strong at Apple. If you read any of the books about Apple and Steve Jobs he has spent more time working on instilling principles in all the employees and a philosophy than he has on product design and marketing.


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## blin10 (Jun 27, 2011)

Abha said:


> That's what the 70+ billion is for in my opinion.
> 
> When Steve Jobs passes away (and I hope he lives a long time) management will rush in and buy back the stock at depressed levels.
> 
> *It's a much better strategy than issuing a useless dividend*.


it's useless to a regular guy with 50 shares, most of apple shares are help by the big boys with millions of shares, so it's beneficial they get some type of cash flow while holding it.... buying back stock is the worst thing they can do


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## kcowan (Jul 1, 2010)

Buying back shares usually helps management who are compensated by EPS performance.


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## Abha (Jun 26, 2011)

I'm not here to argue but I don't buy the argument that buying back shares is a bad strategy.

I have kept companies who regularly buy back shares in my parents portfolio and they have been rewarded immensely over many years.

Maybe not the best strategy for a big cap tech but it's a lot better than buying crap (HP buying Compaq)


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## Homerhomer (Oct 18, 2010)

Abha said:


> It's a much better strategy than issuing a useless dividend.


I like useless dividends, ;-) I make them usefull once in my account


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## Toronto.gal (Jan 8, 2010)

I like your humour homerhomer, lol. 

Abha meant to say lamentable/pitiable dividends.  He must have been thinking of CSCO's.


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## andrewf (Mar 1, 2010)

Let's not lose sight than 100% of the value of a stock is the present value of future dividends.


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## larry81 (Nov 22, 2010)

A cow for her milk,. A hen for her eggs,. And a stock, by heck, for her dividends !


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## Assetologist (Apr 19, 2009)

Compile a watch list with email or text alerts when your favorite US hens and cows go on sale then fill the barn


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