# Economic Slowdown, End of QE2, Sell?



## Banalanal (Mar 28, 2011)

There seems to be a general consensus in the analyst community that the markets will turn bearish in the next few weeks, sustaining that trend indefinitely. The end of QE2 is claimed to be the catalyst. I am investing with a general buy and hold, long term approach, mainly with solid dividend paying and dividend growing companies, so this is not very concerning to me. But given the general expectation of a market correction, are you considering selling, increasing you cash positions to take advantage of the potential buying opportunities coming?


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## Soils4Peace (Mar 14, 2010)

no


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## larry81 (Nov 22, 2010)

the ONLY thing required to predict the market is a crystal ball !


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## andrewf (Mar 1, 2010)

I don't fret about it. I have exit plans for most of my positions, and stay fully invested until I hit them. Second guessing makes you cut profits short.

Other people are saying the TSX is undervalued. It's all just noise.


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## hboy43 (May 10, 2009)

Hi:

I have been reducing margin, and rotating sectors for the last two years to get ready for the next crisis. Is the next down leg imminent? No idea.

hboy43


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## MoreMiles (Apr 20, 2011)

*Brutal day today... 2% drop.*

Between the initial post this morning and the end of day, the NA markets have been down 1.5 - 2%. If you had stayed on the side-line, you can enter at a cheaper level.

Some people's view is to hold regardless of price, even it is 50% less like 2009? If this trend continues... we will lose 50% within one month! Exactly when QE2 ends. 

So why hold? I would cut the loss and buy back later.


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## Jungle (Feb 17, 2010)

The US jobs report this Friday might create some bargins. They were expecting like 180 jobs.. so far ADP reports like 40k..


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## gibor365 (Apr 1, 2011)

MoreMiles said:


> Some people's view is to hold regardless of price, even it is 50% less like 2009? If this trend continues... we will lose 50% within one month! Exactly when QE2 ends.
> 
> So why hold? I would cut the loss and buy back later.


The key word "IF"....who knows up front if trend continues or opposite?


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## gibor365 (Apr 1, 2011)

Jungle said:


> The US jobs report this Friday might create some bargins. They were expecting like 180 jobs.. so far ADP reports like 40k..


I think those numbers are already taken in consideration in today's crush... so if number will e better than ADP report, picture can be different....

Generally, this year is very violatile, and after every crush like today, markets more or less rebounded...so I hope this will happen again


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## KaeJS (Sep 28, 2010)

MoreMiles said:


> Between the initial post this morning and the end of day, the NA markets have been down 1.5 - 2%. If you had stayed on the side-line, you can enter at a cheaper level.
> 
> Some people's view is to hold regardless of price, even it is 50% less like 2009? If this trend continues... we will lose 50% within one month! Exactly when QE2 ends.
> 
> So why hold? I would cut the loss and buy back later.


This is largely dependent upon the number of shares you own in a falling stock and how much the stock falls in a given day.

You are not going to "hold" a stock that drops from $76 to $75 if you own 1000 shares. You'd just piss away $1k. 

If you own 1-200, then holding won't hurt ya. But selling and then buying back even 20 cents cheaper in the previous example with 1000 shares would save you $200.

It is very hard to see trends since nobody knows when they start or where they are going. You have idiots trying to time the market and buy on the dips (ME) and then you have other idiots trying to sell all they've got cause they're seeing red...


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## gibor365 (Apr 1, 2011)

KaeJS said:


> This is largely dependent upon the number of shares you own in a falling stock and how much the stock falls in a given day.
> 
> You are not going to "hold" a stock that drops from $76 to $75 if you own 1000 shares. You'd just piss away $1k.


Why you won't hold? How do you know where to sell? Let say it dropped from $76 to $75 and you sell at $75, but with probability 50/50 it can rebound back to $76 , but you already sold....


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## KaeJS (Sep 28, 2010)

gibor said:


> Why you won't hold? How do you know where to sell? Let say it dropped from $76 to $75 and you sell at $75, but with probability 50/50 it can rebound back to $76 , but you already sold....


Chance you take.

Or at least, that's a chance I would take. 

Because you would be holding quite a substantial amount of shares, even a small decrease in the price could save you some money.

But of course there is always the probability that it will rebound, even within a few hours.


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## MoreMiles (Apr 20, 2011)

gibor said:


> Why you won't hold? How do you know where to sell? Let say it dropped from $76 to $75 and you sell at $75, but with probability 50/50 it can rebound back to $76 , but you already sold....


Isn't that the same flawed logic in a casino game? If you have 2 reds in a row, why wouldn't you stay with black, it should open black soon. I think your chance of seeing future results is not affected by previous performance.

Everyday the market closes, investors reorganize and reset their strategies... the next day is brand new game. There are many day-traders. So just as the price can rebound to $76, you also have the chance to go to $74.

By getting out of market, you take a breather and allow you to think clearer before rejoining the casino.

I also don't believe stocks are different from casino. You have stocks with P/E of 10 (eg, Citibank) not increasing... and stocks with P/E of 1000 moving up like LNKD. So it's all manipulated and random.


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## gibor365 (Apr 1, 2011)

MoreMiles said:


> I also don't believe stocks are different from casino. You have stocks with P/E of 10 (eg, Citibank) not increasing... and stocks with P/E of 1000 moving up like LNKD. So it's all manipulated and random.


Finally somebody agreed with me that stockmarket it's like casino.

Usually or you hit the trend or you don't... luck and intuition...
This is why I'm telling that if stock falling as in Kaeja example from 76 to 75, the probability 50/50 that it can continue to go down and can rebound.

Personally, I have pretty bad experience with sells, don't matter I sell on losses or gain, in 80% of cases my timing is bad. I know for sure that if I won't sell anything in last 1.5 years, I'd gain much more. Maybe this is my luck and I should stick stictly to dividend aristocrats , kinda "buy, forget and hold"


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## gibor365 (Apr 1, 2011)

Stock market reminds me mix of rouletta and black jack.  For example tomorrow if reports are bad - like dealer has a first card 10 and whatever you play more chances you gonna lose, if reports are good = dealer has 3 or 4, more chances you gonna win. The problem that on stock market you cannot know what is "the first card" (if you are not an insider, their relative or friend)

and technical analysis it's like cards counting (based on historical data), the problem that dealer in casino or stockmarket, can shuffle cards( stocks) whereeven they want 

You compared C vs LNKD... you're right, but here is another comparisson.... I hold DII.B (losing now about 6-7%), and they have good numbers P/E 7.6, P/S 0.4, 2% dividends and so on ..
and some Clean Diesel CDTI-N with negative EPS and P/E gained almost 100% couple of days ago (more than 5% today)


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## Toronto.gal (Jan 8, 2010)

gibor said:


> stockmarket it's like casino.


I beg to differ! Casino players are gamblers; investors and even most traders, are NOT.

Sure, there is luck as well as risk & probability theory in both, but there are also major differences. Here is a good article:

"There needs to be ways for people to raise money to fund companies and projects. Some products need a lot of money to invest in tools and equipment even before there is even a design. It costs billions to build a semiconductor manufacturing plant. Do you love your smart phone? You wouldn’t have one without someone saying “Hey, that sounds like a good idea! If you give me a percentage of ownership in your company that we can agree on. I’ll give you the money so you can go do that!”

"Gamblers are usually shady characters." LOL 

http://www.letstrend.com/theblog/post/2011/03/17/Gambling-vs-Investing.aspx


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## Financial Cents (Jul 22, 2010)

@Toronto gal - I'm so with you.

Investors, buy, hold and hang on for the ride. Investors know Mr. Market is a weighting machine.

Traders, well, they try and beat the market by buying, selling and get discouraged when Mr. Market takes his profits. Mr. Market is a popularity contest short-term. 

I've never understood how the majority of folks could ever be successful as the latter long-term. If you can, more power to you. I know I'm not that smart.


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## Toronto.gal (Jan 8, 2010)

Thanks for your support; great minds think alike FC!


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## Financial Cents (Jul 22, 2010)

Indeed 

Forever and a day ago, I tried to "trade". Then I thought, what the hell am I doing? I can't possibly outsmart everyone else. 

Like I write on my blog alot, I guess that makes me a dull and boring investor, but then again, I'm seeing progress.


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## Mockingbird (Apr 29, 2009)

Financial Cents said:


> I can't possibly outsmart everyone else.


If 90% of the "traders" fail, then you only need to outsmart those 90%. 

MB


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## gibor365 (Apr 1, 2011)

Toronto.gal said:


> I beg to differ! Casino players are gamblers; investors and even most traders, are NOT.
> 
> Sure, there is luck as well as risk & probability theory in both, but there are also major differences. Here is a good article:


This is only in theory. 
"Hell is paved with good intentions" (C)


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## Jon_Snow (May 20, 2009)

Gonna be a tough day on the markets... the US non farm payroll report was TERRIBLE. I was watching CNBC as the results came in and market futures tanked hard.

Garth Turner can make fun of those who hold alot of cash all he wants, but I'm very glad I liquidated most of my portfolio back in March... if someone would kindly tell me when we reach the bottom of the current downturn, that would be great, because I do want to get back in at some point. But I'm staying away from this market for a while and enjoy my 1.5% in my High Interest Savings Account.


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## ddkay (Nov 20, 2010)

May non-farm payrolls were off 111K from consensus (54K vs 165K), April non-farm payroll got adjusted down. Unemployment is up 9.1% vs 8.9% expected, the highest rate since December.


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## ddkay (Nov 20, 2010)

ISM non-manufacturing data is due at 10 EST, hold on to your party hats


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## ddkay (Nov 20, 2010)

Every time this happens - is this it? Maybe time to look at inverse ETFs


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## Jungle (Feb 17, 2010)

ddkay said:


> May non-farm payrolls were off 111K from consensus (54K vs 165K), April non-farm payroll got adjusted down. Unemployment is up 9.1% vs 8.9% expected, the highest rate since December.


Hold on to your panties fellas. S&P500 under 1300 now.. 
Go Equity!!!! Buy buy buy.. bye?


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## Jon_Snow (May 20, 2009)

I don't think I'm going out on a limb here... THIS IS IT.


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## smihaila (Apr 6, 2009)

Toronto.gal said:


> I beg to differ! Casino players are gamblers; investors and even most traders, are NOT.


Maybe the hardworking people, who are trying to be investors in healthy, long-term appreciating assets such as equities, are not gamblers. BUT I agree with the poster - I see the stock "market" still as a big casino, controlled by forces that common people like you and me will never be able to control.

I know, I know - the official propaganda from all the books that I've passionately read, says what you're saying. But IN PRACTICE it looks like what's being preached does not happen. When you are on the buying side, a market crash like the one we experienced in 2008, will be a gift/opportunity. When you buy at those moments, you'll say that now you have +xx% of "profits". But what about those who are on the selling side (not due to short-trading or speculations but due to necessities such as old people)? To THEM, what the mutual fund reports and other stock market data, including indices, are showing, is a BIG LIE/a big game.

You may laugh and say that you will never be in such situation (buy low, sell high blablabla the whole official propaganda and brainwashing). Let's say you have a very strict plan i.e. to stick with your stocks for 20 years. Okay, after 20 years you wish to fulfill your strict policy and want to sell. What if another market crash comes exactly then - and which could cut all your "gains" (I use quotes because they aren't considered gains until you crystallize them)?? Don't tell me that you can wait indefinitely, because I will not believe you.

In the long run, I don't expect to see much difference between stocks and bonds...Perhaps on average they will just be a bit over the inflation, if not below it.

I've read some books written by Richard Ney, i.e. "The Wall Street Gang" and I suddenly began to see the whole "game" from a different perspective. Yes, the stock market looks to me like a 2nd mechanism to extort more money from us, the suckers. The first being the monetary system in general (based on the unsustainable credit expansion/reserve system). And the third one eventually being the inflation and taxes.

So, I no longer believe in this official propaganda. I was in fact lucky to be able to observe the 2008 phenomenon, as it provided an opportunity to better understand how the system works, especially in a limit/worse case situation.

P.S. Perhaps there was some good and honest money to be made in the past, when common people was able to invest directly in small/emergent businesses, and in times where the investor and the company were in closer contact. And the company didn't have boards members that are sharing the interests between that company and other companies, including Wall street itself, when those members were not asking for huge amounts of money etc. Right now, the only thing I believe in, is money earned honestly, through your hard work. All the rest is in fact human greed and speculation.


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## dcaron (Jul 23, 2009)

*Fix your money mistakes: Market timing*

http://money.cnn.com/2011/05/19/retirement/mistake-market-timing.moneymag/?iid=H_M_Issue


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## gibor365 (Apr 1, 2011)

> I know, I know - the official propaganda from all the books that I've passionately read, says what you're saying


This is already like separate industry - populization of stock market investing. Huge amount of books, websites, bloqs trying to insert into people's head how bad is fixed-income and how fabulous are stocks. They like also to give numbers (of play with numbers), somebody comparing returns every 10 years, somebody every 20, somebody every 50  All depends what they want to prove


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## Belguy (May 24, 2010)

2008 will happen again, sooner rather than later, because no lessons where learned and the necessary remedies were not taken.


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## Toronto.gal (Jan 8, 2010)

smihaila said:


> Maybe the hardworking people, who are trying to be investors in healthy, long-term appreciating assets such as equities, are not gamblers. BUT I agree with the poster - I see the stock "market" still as a big casino, controlled by forces that common people like you and me will never be able to control.


You're certainly entitled to your view smihaila and I respect it. I was however, not arguing with gibor [he's my friend]  - I was simply stating my own opinion.

Prior to the 2008 crash, I held the traditional, if not mythical investment beliefs, but 2008 changed all of that as it was a wake-up call and a huge learning experience for me. 

What I know/learned for sure after reading for many months thereafter, is that there isn't a single investment strategy that is 100% perfect/safe, be it long, short, etc., hence the risk element, but IMHO, calculated risk does not always translate into gambling, but that is just my personal experience/opinion. 

Also, not all investing methods suit and/or work well for all and that is perfectly logical.

Ultimately, it all boils down to one's personal expectations, goals, knowledge, time horizon and to what one can tolerate/be comfortable with.

*@Belguy:* your comment is exactly what Mr. Mobius said recently; I just wish all these experts had issued similar warnings and not been 'asleep at the wheel' in 2008. 

http://www.bloomberg.com/news/2011-...-around-corner-amid-volatile-derivatives.html


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## Jeebs (Jun 1, 2011)

Is it really market timing when you've been reading in the news for several months that two political parties are in a stand off, with one side displaying zero inclination to deal with the other side and whose members have stated that they have no problem causing their government to default?

I don't know what the result of that default would be but there are many who believe it could cause another global financial crisis.

If the worst case scenario plays out, who can really say they didn't see it coming from a mile away?

I don't see increasing you cash position at this time as market timing. Might be a good time to lock in some profits.


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## Belguy (May 24, 2010)

And so, if we can be quite sure that history will repeat itself as a result of the greedy U.S. banks, then how do we invest going forward?

Also, it seems to many that the world markets are tied together now like never before. For example, if there is political unrest in just about any part of the world or negative news from anywhere, it seems to adversely affect all stock markets. How do you invest in such an environment?

I am not surprised that the markets are taking a breather these days. After all, they are up something like 70 percent in the months prior to the start of this hiatus which is now in it's sixth week. That is quite astounding and we all knew that it couldn't keep going at that pace forever.

These days, it seems that an investor has to be prepared to accept volatility along with fairly anemic long term gains.

In the past, the bond portion of our portfolios provided some relief whenever equities tanked but, in a rising interest rate environment, we will not likely even be able to count on that.

Those with a long time horizon can perhaps just shrug much of this off with the knowledge that time in the market will look after them. However, as one's timeline decreases, it becomes more of a concern and more of a dilemma about what to do.

If only the world's leaders could solve this European debt crisis, beginning with the situation in Greece, I think that investors would breathe a sigh of relief.

Anyway, good luck to us all.


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## Sampson (Apr 3, 2009)

Belguy said:


> 2008 will happen again, sooner rather than later, because no lessons where learned and the necessary remedies were not taken.


I don't believe so. 2008 was pending armageddon.

While derivative products still exist, I don't believe financial institutions are hiding complex products backed on shaky, defaulting loans.

If you look at the balance sheets and latest financial statements from the American banks, they don't look great at all, there is no source of revenue that appear to be coming from the types of products that caused 2008.

Are World economies, governments and private firms over leveraged still? yes. But I don't think there is any drive to cause another collapse.

Prolonged recession, and period of no growth? yes. 15-25% further decline in world equity markets? possible. But I doubt we will see 2008/09 repeat anytime soon.


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## andrewf (Mar 1, 2010)

Market timing is not a dirty word--no need to hide from it. A few markets have broken their 200 day SMA. Things are not looking all that bullish. We get to wait and see.


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## Cal (Jun 17, 2009)

Sampson said:


> I don't believe so. 2008 was pending armageddon.
> 
> While derivative products still exist, I don't believe financial institutions are hiding complex products backed on shaky, defaulting loans.
> 
> ...


Even if 2008 repeated. I will not get caught up in the media as I did the first time. This is what I learned. Life will go on. People will continue to do business. There willl eventually be a turnaround. As I did not own Manulife, all of my dividend payers continued to do exactly that.

Obvioulsy a retired person would have a great deal of anxiety, but with balanced holdings, the extent of worry would be reduced, and with any luck the duration of the downturn would be short term.

Greece is not the US market. 

Any correction is a buying opportunity.


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