# Playing The Insanity



## dogcom (May 23, 2009)

How does one play this market insanity like it is normal?

If you stay in cash your cash value may drop significantly due to the printing press.

Stocks look like an easy bet because of money printing but maybe not good valuations.

You own silver and gold but who knows when the rug gets pulled out from under you.

Being bearish gets you nowhere.

Be bullish but to what end?

I can't see how anyone investing over the last number of decades can see anything normal because it really is different this time.

For me it has been all about trading trying to buy low and make the fast money. But now it seems buying low is going to be hard to come by with all the juice being pumped in around the world. Well I guess one needs to be patient and wait for the distortions to play as they come along.


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## Argonaut (Dec 7, 2010)

50 stock/25 metal/25 cash and corp bonds. Plays itself.


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## alexei (Jul 2, 2012)

Argonaut, by saying metal do you mean commodities, that is gold/silver bullion?


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## dogcom (May 23, 2009)

Argonaut is this the new couch potato for the times we are now in?


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## Assetologist (Apr 19, 2009)

- keep a significant portion of cash but convert CAD to USD when favorable. Be content to sit on cash. Be patient.

- swing trade when opportunities appear due to the chaotic, volatile nature of ongoing uncertainty

- secure expanding positions in very select companies, which will exist and sell widgets 20+ years from now, when their share prices are subjected to epidemic fears


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## dogcom (May 23, 2009)

Assetologist these posts are probably the closest thing we are going to get to buy and hold and hopefully be successful in todays world. Going back a few years ago everyone talked like this is all normal and just do what what always has been done, recession comes and goes no need for any gold and always be invested and blah blah. If you talked like we are doing here you would be laughed at called crazy and go wear a tin foil hat.


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## Rusty O'Toole (Feb 1, 2012)

dogcom said:


> Assetologist these posts are probably the closest thing we are going to get to buy and hold and hopefully be successful in todays world. Going back a few years ago everyone talked like this is all normal and just do what what always has been done, recession comes and goes no need for any gold and always be invested and blah blah. If you talked like we are doing here you would be laughed at called crazy and go wear a tin foil hat.


These days your only choice is koolaid or tinfoil.


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## fatcat (Nov 11, 2009)

Rusty O'Toole said:


> These days your only choice is koolaid or tinfoil.


well said ... i would say cover all the bases (equities, bonds, gic, hi-yield, reits, metals) with an emphasis toward equity risk or toward bond safety depending on your age and time horizon ... it seems to me it comes down to the ability of qe to keep the boat afloat versus the diminishing purchasing power of the middle and lower middle class which wants very much to sink the boat


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## Toronto.gal (Jan 8, 2010)

These days, I basically play it having the following: 

- cash [having and raising it, as in not spending it all on anything]
- cool-head [discipline]
- common-sense 
- luck
- learning from the 'insanity'.

I like Assetologists' points, especially the last one.


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## Eder (Feb 16, 2011)

I don't think anything is more insane than normal ...the sky has always been falling, in my case it started when Bre X was proven a scam. Stay the course with an appropriate mix of risk and start reading the funny papers instead of the G&M.


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## Lephturn (Aug 31, 2009)

Things have actually been pretty calm in the equity markets. The VIX cash has been bumping around 13 to 15 and over the summer realized volatility on the Nasdaq actually got into the single digits.

I'm actually hoping it gets more "insane" - I need some more volatility to get decent options premiums.


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## dogcom (May 23, 2009)

I think you said it Lephturn and that is getting more insane to make a buck. This intervention has been smoothing markets out instead of giving us the required corrections for us to make a buck. By having markets move very little to the downside and just going up when they should really be diving makes one nervous as to what will really happen when everyone realizes the economy isn't getting better and that the money printing isn't working.
I would have rather had the Fed keep us guessing on the QE4 after the markets have gone down enough rather then just leave the tap on and let it run on the QE3.


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## Jon_Snow (May 20, 2009)

To describe my feelings about the current market I'm going to steal a line from a past McDonald's marketing campaign: I'm lovin' it. :biggrin:

You would too if you took a big flyer on gold mining stocks in mid-July - I keep meaning to sell these things (G and ABX) but they keep shooting higher. Two months, over 25k profit... things like this don't happen to me. I'm nervous that the other shoe is about to drop. :hopelessness:

A particular quirk of mine is that I need to keep at least 100k in cash at all times. Just makes me feel better.


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## Belguy (May 24, 2010)

I do not find investing to be very exciting or even interesting in today's market conditions. Of late, I have even lost interest in participating in this forum. 

I have rekindled my other old interest which is watching cartoons on TV and I am finding that much more satisfying.

All of that said, I am maintaining my asset allocation and avoid trying to time the markets. I am in it for the long haul or at least until I am broke.

In other words, life is too short to concern yourself with money as others have frequently reminded me.

As for the freakin' stock markets, who the heck cares!!!


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## dogcom (May 23, 2009)

I agree with that Jon Snow because I also made good money on ABX and HGU and was lucky enough to play the May/June rally in gold get out and back for the mid-July rally. But something doesn't seem right with this new QE thing and the timing with the election coming up in the US. Not to mention Iran needs to be dealt with after the election or sooner if Iran does something stupid to get it started.

Belguy it just so happens cartoons are on TV at the same time I am writing this.


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## Belguy (May 24, 2010)

Gloomy stock market returns expected to last several years. Markets will move sideways to slightly lower in the years ahead--unless Israel bombs Iran and then all hell will break loose!!

http://www.theglobeandmail.com/glob...stock-market-returns-expected/article4559522/

Oh well, maybe the next generation of retirees will have better timing.


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## andrewf (Mar 1, 2010)

Belguy... it's just noise.


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## Belguy (May 24, 2010)

One idea to lesson the devastating effects of the inevitable 'black swan' events on your portfolio is to divide it in two--one part being a buy-and-hold while the other part is about tactical market timing by adjusting your asset allocation as required:

http://www.thestar.com/business/article/1260481--how-to-avoid-a-black-swan

What do you think of this idea?


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## Square Root (Jan 30, 2010)

Eder said:


> I don't think anything is more insane than normal ...the sky has always been falling, in my case it started when Bre X was proven a scam. Stay the course with an appropriate mix of risk and start reading the funny papers instead of the G&M.


agree. i don't worry too much. My divs are going up. Sometimes I think we get too engrossed in this stuff. Right now I'm more worried about a beaver that has taken a liking to some of the birch trees down by the shore. I will wire some trees but I think I will need to trap him.


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## zylon (Oct 27, 2010)

*Back to the opening post ...*



dogcom said:


> For me it has been all about trading trying to buy low and make the fast money. But now it seems buying low is going to be hard to come by with all the juice being pumped in around the world. Well I guess one needs to be patient and wait for the distortions to play as they come along.


Spent a couple hours looking at the rear view and noticed some high volume going into the close Friday; what does it mean? 
Maybe nothing, but given the time of year, I'm buying small amounts here and there, and expecting better bargains over the next 5 weeks.










Some recognizable names that closed *lower* on Friday, with volume.
http://stockcharts.com/freecharts/c...,REI/UN.TO,BCE.TO,BMO.TO,TRP.TO,SU.TO,TD.TO|B

There were some that closed *higher* on Friday, also with volume.
http://stockcharts.com/freecharts/c...o,bns.to,g.to,abx.to,cnq.to,bam/a.to,enb.to|B

ADDED:
Jim P. interviews technician Ralph Acampora starting 16 minutes into the audio.
These two guys are very optimistic on USA markets; not worried at all about a small correction; if there is one.
http://www.financialsense.com/finan...-market-climbing-the-proverbial-wall-of-worry


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## Sampson (Apr 3, 2009)

Belguy said:


> the devastating effects of the inevitable 'black swan' events


I think you believe 'black swan' events happen more often then they do. Even Taleb uses them to describe unforeseeable events. Tactical asset allocation, by necessity means you are making a call on the direction of the events/market, and not based on random outcomes.

Therefore, by definition, it is impossible for tactical asset allocation to prepare oneself for black swan events. The best method is still diversification, and building portfolios that have uncorrelated assets.

If you argue that the 'black swan' event is that all assets more in unison to equity markets, well then no amount of tactics will help us through that.


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## Rusty O'Toole (Feb 1, 2012)

Stock markets have always been crooked as hell and dedicated to pulling a fast one and swindling the little guy and the uninformed. From the 1930s to the 1980s various governments tried to keep the chicanery under control but now the those laws have been repealed or forgotten and the thieves are free to rip and tear. Wash trading, front running, stock kiting, interference from the exchanges and government agencies, and out and out embezzlement are normal every day occurrences.


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## dogcom (May 23, 2009)

zylon said:


> Spent a couple hours looking at the rear view and noticed some high volume going into the close Friday; what does it mean?
> Maybe nothing, but given the time of year, I'm buying small amounts here and there, and expecting better bargains over the next 5 weeks.
> 
> 
> ...



Thanks for all the analysis Zylon.

I agree with the wait and see what bargains come up in the next month or so approach. One of my biggest weaknesses is sitting on my hands, but that is what I must do at this time. I might try shorting in the short term but not with the Fed waiting to slap me around.


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## Lephturn (Aug 31, 2009)

Belguy said:


> Gloomy stock market returns expected to last several years. Markets will move sideways to slightly lower in the years ahead--unless Israel bombs Iran and then all hell will break loose!!
> 
> http://www.theglobeandmail.com/glob...stock-market-returns-expected/article4559522/
> 
> Oh well, maybe the next generation of retirees will have better timing.


I think you should read less BS opinion articles and pay more attention to prices. You do know what the S&P is up over the last year right? It's up over 20%.

Seriously - stop reading the press - andrewf is right on - it's all just noise.


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## Lephturn (Aug 31, 2009)

Sampson said:


> I think you believe 'black swan' events happen more often then they do. Even Taleb uses them to describe unforeseeable events. Tactical asset allocation, by necessity means you are making a call on the direction of the events/market, and not based on random outcomes.
> 
> Therefore, by definition, it is impossible for tactical asset allocation to prepare oneself for black swan events. The best method is still diversification, and building portfolios that have uncorrelated assets.
> 
> If you argue that the 'black swan' event is that all assets more in unison to equity markets, well then no amount of tactics will help us through that.


Part of Taleb's hypothesis is that "black swan" events DO happen much more frequently than you think. While I agree that tactical asset allocation is a poor way to deal with it (as these events are by definition not predictable), I don't think diversification does the job either. During the last "black swan" many asset classes that had up until that point been uncorrelated suddenly all went down together! That means that when the market is working you under perform, and when there is a major negative event correlation increases and you still get hurt. I used to drink the diversification kool-aid until I watched it perform poorly in 2008/2009. Not as bad as being totally long stocks of course, but it didn't hold up like I thought it should have when I built the portfolio.

If black swan events happen much more frequently than the market thinks - then that risk is often under priced. So I buy insurance. That means buying far out of the money puts. Yes it cost money. But I don't sweat the black swan events - indeed I welcome them because in the case of a >20% down move I'm going to actually make money on the "insurance" AND I'm going to use that cash to load up on solid dividend paying stocks when they are beaten down. This is the lesson I learned in 2008/2009. Yes I will under perform in this case as well in up markets as I will be paying insurance premiums, but when the black swan event does hit, the insurance will mean that I massively out perform the market.

Maybe I'm wrong - we'll see sometime in the next 10 years I"m sure. I just know I'm not going to make the same mistake twice.


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## GoldStone (Mar 6, 2011)

Lephturn said:


> If black swan events happen much more frequently than the market thinks - then that risk is often under priced. So I buy insurance. That means buying far out of the money puts.


How far out you go? And how much out of the money?


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## bayview (Nov 6, 2011)

As Einstein said, "Insanity is doing the same thing over and over again and expecting different results." 
Sounds like the Fed :hopelessness:

(The quote was attributed to Einstein but credit was given to others as well).


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## Rusty O'Toole (Feb 1, 2012)

Taleb's thesis was that unexpected events happen more frequently in the financial markets than normal chance would indicate. In other words, once in a lifetime crashes occur every ten years or less.

I agree, all except the unexpected part. Afterwards it turns out the events were not only predictable, they were inevitable. But only a few oddballs saw them coming. To every normal right thinking person they were impossible to forsee and almost impossible to account for even after they happened.


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## Rusty O'Toole (Feb 1, 2012)

For example no right thinking person can see anything wrong with governments living on borrowed money. Spending all their revenues plus another 50% to 100% in borrowed money is normal. When no one will loan them any more money they get a bailout from some other government that is almost as broke. Or just print whatever they need. In other words the solution to the problem of too much debt, is to go deeper in debt.

This has been going on for years. Everyone is doing it. So far it's working great except for a few minor issues in Ireland, Iceland, Greece, Spain and Italy. What could possibly go wrong?


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## Belguy (May 24, 2010)

Next problem please! That would be the year end fiscal crisis in the U.S. which is drawing closer with no indication that the politicians will stop us from going over the cliff. Only then, will they proceed to take some action but that will not happen until after the New Year.

That said, I have no idea what the effect will be on the stock market.

What do you think?


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## Assetologist (Apr 19, 2009)

There always has been and always will be 'problems' domestically and internationally.

We are all extremely and acutely aware of these 'problems' with the advent of the internet and in-your-face shock marketing by news outlets.

Find an investment strategy that suits your temperament and enjoy life.


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## Sampson (Apr 3, 2009)

Lephturn said:


> Part of Taleb's hypothesis is that "black swan" events DO happen much more frequently than you think.


I would argue that Taleb is actually saying that the impact of the events is more significant than the more typical events. Doesn't matter either way, as you describe, options are probably the only reasonable means of insuring monies in equity markets.

I think your approach may be the best one Lepturn, but I'm not fully convinced about the basis of the ideas within Talebs' arguments.


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## zylon (Oct 27, 2010)

*Finally, an article on risk that I can agree with*

Snip:


> Meanwhile, an investment in cash lost 44% of its real (inflation-adjusted) value during the 18 years from 1934 through 1951. That loss was almost as large as the worst decline for stocks, and it endured much longer. What’s more, after this decline it took another 34 years to recover—in other words, if someone invested in T-bills in 1933, it would have taken until 1985 to break even. I am an advocate for long-term investing, but 52 years is going too far!
> 
> http://lowriefinancial.ca/the-right-way-to-think-about-risk/


Thanks to the CMF member who introduced us to Steve Lowrie;
he writes good essays and will fwd them to your inbox upon request. :rugby:


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## Lephturn (Aug 31, 2009)

GoldStone said:


> How far out you go? And how much out of the money?


I go out somewhere around 3-6 months normally. I will watch the implied volatility environment about 6 months out - but I'm looking at 4, 8, 9 months etc. to see where volatility is sitting - how expensive they are. I only do this to avoid buying a new puts where volatility is high and they are expensive - meaning sometimes I'll have a month or two in my current puts left but we've had a big run up, so I may buy new ones early and sell the old ones, while at the same time adjusting my strike higher (if I can).

As for how much out of the money - well I use Delta as my guide. I look close to 5 delta - between 5 and 10. Somewhere 10-20% out of the money usually. These are very low probability almost worthless options. What an options market maker would call "units". If we have a large down move they will react in a way that the standard options models will not predict. If the S&P dropped a few hundred points in a week or even days, these options will catch a bid and their value will absolutely explode - but most likely they will expire completely worthless. They are perfect for "black swan" insurance.

Let's say you have $ 100,000 in the S&P 500 or a portfolio of stocks that are major components. That's about 690 shares of the SPY ETF. So, let's protect that for 6 months with some units. March SPY Puts at the 110 strike are 6.5 delta and I can get them for probably $ .89 per contract. 7 contracts - so $ 623 + commissions - under $ 650 to protect my portfolio for 6 months. So it will cost me about 1.3% to insure this portfolio against a major loss for the year (assuming in another 6 months I can do a similar deal. Realistically it's between 1 and 2% a year for the insurance. When times are good I will under perform by that amount. When things go down I want them to go down HARD and FAST - I want blood in the streets - because then I'm going to not only be protected, but make good money on those puts I bought. If there is a major drop in the S&P the volatility will skyrocket and those puts will explode in value. If the move is sharp and deep enough I will make more money selling the puts than I lost in the portfolio! I can then take that cash and plow it back into solid dividend payers that I think can weather the storm and wind up with a very good return when things bounce back.

I'll supplement income by selling calls as well depending on the environment. I don't always do it, but the idea is to generate enough extra income to cover those insurance premiums.

For lots of people this may be too complex, too time consuming, etc. Just nobody tell me it's "too risky" - because it's a lot safer than sitting there hoping your portfolio won't get cut in half and take 10 years to recover.


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## Belguy (May 24, 2010)

A global economy in deep do-do and a stock market that sometimes seems to be detached from reality and things aren't getting any better:

http://www.theglobeandmail.com/repo...ncertainty-imfs-lagarde-warns/article4563399/

Is your money safe??


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## blin10 (Jun 27, 2011)

you can also short positions to have protection which is my opinion is better then playing options...



Lephturn said:


> I go out somewhere around 3-6 months normally. I will watch the implied volatility environment about 6 months out - but I'm looking at 4, 8, 9 months etc. to see where volatility is sitting - how expensive they are. I only do this to avoid buying a new puts where volatility is high and they are expensive - meaning sometimes I'll have a month or two in my current puts left but we've had a big run up, so I may buy new ones early and sell the old ones, while at the same time adjusting my strike higher (if I can).
> 
> As for how much out of the money - well I use Delta as my guide. I look close to 5 delta - between 5 and 10. Somewhere 10-20% out of the money usually. These are very low probability almost worthless options. What an options market maker would call "units". If we have a large down move they will react in a way that the standard options models will not predict. If the S&P dropped a few hundred points in a week or even days, these options will catch a bid and their value will absolutely explode - but most likely they will expire completely worthless. They are perfect for "black swan" insurance.
> 
> ...


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## GoldStone (Mar 6, 2011)

Lephturn, thanks for answering my question.


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## humble_pie (Jun 7, 2009)

blin10 said:


> you can also short positions to have protection which is my opinion is better then playing options...



blin i do respectfully disagree with you.

lephturn's overall market SPY put is the classic way to go. One shot cures all.

shorting individual equities would be a nightmare. It's not just the commissions involved. The broker can call any one or all of the shorts.

however the broker cannot end the puts or interfere with the puts in any way.


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## HaroldCrump (Jun 10, 2009)

^ in addition to the above, if you go the short route instead of the put route, you have the foot the dividends as well.
Plus the margin interest
Plus the taxable income from the short sale.


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## Belguy (May 24, 2010)

I am in the process of transferring my money to under my mattress and I am hiding under the bed. There are too many potential 'Black Swan' events!! Is your money safe?

http://www.theglobeandmail.com/glob...l-tsunami-in-next-year-survey/article4569722/


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## ddkay (Nov 20, 2010)

Welcome back Belguy, I was wondering where you went :encouragement:


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## Belguy (May 24, 2010)

I have been hiding under my bed until the European crisis and the fiscal cliff pass but I might be here for a while after hearing someone on BNN say today that the current economic problems will be with us "until infinity and beyond". Does that sound like things aren't going to get back on track for a while yet?


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## gibor365 (Apr 1, 2011)

Belguy said:


> I am in the process of transferring my money to under my mattress and I am hiding under the bed. There are too many potential 'Black Swan' events!! Is your money safe?
> 
> http://www.theglobeandmail.com/glob...l-tsunami-in-next-year-survey/article4569722/


Belguy, if you beleive it would happen, just sell everything and buy TZA  and you'll be billioner


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## sags (May 15, 2010)

Today I read a new business expression for me..............."freckled swan".

I suppose it means events aren't quite of black swan magnitude.........and they aren't great or getting better either.

Somewhere in the middle, I guess.

I think "markets going sideways" may turn out to be wishful thinking though.

The "experts" have consistently underestimated the depth and length of the economic downturn, and are probably overestimating the ability of governments to prevent the harsh realities that lower incomes and increasing debt loads will result in.


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## gibor365 (Apr 1, 2011)

every economic downturn followed by economic upturn and vice versa


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## Sampson (Apr 3, 2009)

Is it just me, or are others bothered by the over- and misuse of the term 'black swan'?

It reminds me of how popular 'grass roots' was a few years ago.


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## Belguy (May 24, 2010)

The central bankers are taking appropriate action but the politicians are doing nothing, zippo, na-na!!

I guess that it is because the central bankers don't have to worry about being re-elected!!


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## dogcom (May 23, 2009)

A friend told me to watch this movie so if you get through it what do you think?
http://www.thrivemovement.com/the_movie

I suppose it might be bad for people like us that like to make money off the consumption. In my opinion this thing probably goes both ways and that is for sure governments and corporations are corrupt but at the same time much of this information is probably an exaggeration and the technology really isn't there yet and economical to administer.


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## Lephturn (Aug 31, 2009)

Sampson said:


> Is it just me, or are others bothered by the over- and misuse of the term 'black swan'?


It only really bugs me when they use it incorrectly. I've red Taleb's book but I doubt most of the TV pundits have cracked it's cover.

Yet one more reason not to watch that junk.

Every time I make the mistake of turning on the "business" news, I come here and Belguy reminds me why I need to stay away. Thanks Belguy.  I only wish you would turn it off as well.


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## kcowan (Jul 1, 2010)

In Istanbul, the local TV talks about their market. Now I will have to add their index to things I worry about!

Funny how the talking heads say the same things, even in Turkish!


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## Belguy (May 24, 2010)

How are things over in Turkey Land anyway? I hear that it is booming--unlike the rest of Europe.

http://uk.ishares.com/en/rc/products/ITKY/performance


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## Belguy (May 24, 2010)

It could all end tomorrow says the greatest investment advisor of all time!!

http://www.theglobeandmail.com/glob...ne-gretzky-investment-adviser/article4584746/

Is your money safe?


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## ddkay (Nov 20, 2010)

I caught some quotes from Wayne gretzkys talk yesterday, he only invests in muni bonds and local real estate. No stocks. That was a good gut check lol.


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## Belguy (May 24, 2010)

Of course, when you've already got tons of money, you don't need to bend over backwards to try to make it grow so that you can enjoy a decent retirement. On the other hand, the more money that you have the more you often need. The Great One would probably not appreciate my lifestyle.


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## HaroldCrump (Jun 10, 2009)

ddkay said:


> he only invests in muni bonds


He is a US resident, isn't he?
Those muni bonds are tax-free for him.


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## zylon (Oct 27, 2010)

*Nothing to see here ...*

*I posted this on Sept 22:*
http://canadianmoneyforum.com/showt...g-The-Insanity?p=145739&viewfull=1#post145739










*Same chart updated:*


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## Young&Ambitious (Aug 11, 2010)

Thanks for posting Zylon. Maybe I'm a pessimist, but I'm wondering about some Sandy fall-outs. There is a lot of money getting printed by the US to pay for the billions in damages done.


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## thenegotiator (May 23, 2012)

nice.
i like FIBO a lot.
just don't like charts without gaps filled but it happens right?
by the way i also think that after the next leg up we have another correction.
same with spx .
Sandy will distort everything though.
all data will get distortions.


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## zylon (Oct 27, 2010)

Haha! - people, please note ... I'm only calling an end to the Oct correction because October is over.
I find it much easier to make predictions when the event is in the past. LOL

However, here's something that may be good news, or bad; depending on one's point of view.



> But I'll go out on a limb again and say that I'm reasonably certain the economic house of cards that the US and other governments have been propping up since 2007 will collapse not just within the next four years, but likely in 2013 and 2014. It's happening in Europe now - they really have reached the end of their rope. It'll happen shortly in Japan as well, the most indebted society in the world. It''s going to happen in China. And that's going to bring down the resource-oriented countries - Brazil, Australia, South Africa, Canada, Russia. It's going to be a worldwide cataclysm. *~Doug Casey*
> 
> http://www.caseyresearch.com/cdd/doug-casey-election-2012


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## thenegotiator (May 23, 2012)

not really zylon
i was short silver at or around 35 bux and exited my shorts at the 
38.25 retracement.
it could have gone to the 61.8% retracement but why risk it?
i would be a buyer at that full retracement for sure.
nevertheless 32 bux is holding pretty well which may warrant an entry.
cheers


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## Belguy (May 24, 2010)

These are difficult and uncertain times for all investors but, over the long run, things will likely work themselves out and the markets will climb to new highs.

However, that is small comfort for older, already retired investors who are trying to preserve their capital while, at the same time, trying to make it grow a bit to keep ahead of inflation and to try to provide for a better quality retirement before time runs out.


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## thenegotiator (May 23, 2012)

Belguy said:


> These are difficult and uncertain times for all investors but, over the long run, things will likely work themselves out and the markets will climb to new highs.
> 
> However, that is small comfort for older, already retired investors who are trying to preserve their capital while, at the same time, trying to make it grow a bit to keep ahead of inflation and to try to provide for a better quality retirement before time runs out.


i am on ur side Belguy.
for retired people like u the mkts are very tough atm.
i actually believe that everyone is having a tough time to move their hard earned money around.


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## Belguy (May 24, 2010)

Somehow, the magic of compounding does not seem so magical anymore.:upset::frown::frown-new::grumpy:


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## Jaberwock (Aug 22, 2012)

This is normal 

What you saw in 2002 with the dot.com boom and crash fueled by pure speculation was abnormal. What we had in 2006/07 with markets racing ahead fueled by excessive borrowing based on bubble property prices was abnormal.

1 or 2% GDP growth in developed countries is a sustainable normal

Buy good companies that make products or perform services that everybody needs, and companies that return a reasonable portion of their earnings to the shareholders in dividends.


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## thenegotiator (May 23, 2012)

by the way
with china's PMI release above 50 for the first time in 3 months and a good non farm payroll number we may witness a year end rally.
the unfortunate event of Sandy will distort everything though.
i am definitely bullish from here on.
providing all that falls in place right?
lets see how the US dollar index plays out.
treasuries are seeing an easing already which may show more risk appetite.
tighten ur seat belts and be grredy boys and gals

lets give it a target?
1480 area on the spx 500.


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## thenegotiator (May 23, 2012)

Belguy said:


> These are difficult and uncertain times for all investors but, over the long run, things will likely work themselves out and the markets will climb to new highs.
> 
> However, that is small comfort for older, already retired investors who are trying to preserve their capital while, at the same time, trying to make it grow a bit to keep ahead of inflation and to try to provide for a better quality retirement before time runs out.


belguy.
lets say that i am right on my prediction on the next rally up to 1480 area on the spx 500.
what are u going to do with ur gains?
and i am counting on this next leg up by all means.
would it not be the time to deleverage a bit?
let me know.
disclosure i am long commoditties


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## Belguy (May 24, 2010)

My first priority is to get my target asset allocation right in the first place considering my overall circumstances and risk tolerance. Currently, the allocation in my RRSP acount is 10 per cent cash in a HISA, 40 per cent fixed income primarily in the PH&N Bond Fund but also scattered in various Bond ETF's including high yield and emerging markets debt (EDD), and 50 per cent in broad-based equity ETF's. I am currently 69 and so with have to convert to a RRIF in two years and then start taking likely the minimum mandatory withdrawals. Somewhere along the way, I will also likely continue to reduce my equity exposure, in 10 per cent increments, during my advancing age.

My greatest dilemma now is how to handle the 40 per cent fixed income component given that bond funds may provide negative returns in the relative short term going forward and equities will likely provide modest single digit returns. This leads me to the concern that the negative returns on my bonds will pretty much negate the modest returns on my equities pretty much leaving me with a sum zero overall return on my overall portfolio.

Given all of this, I would appreciate any input from the experts out there on how I might adjust my target asset allocation going forward.


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## Four Pillars (Apr 5, 2009)

Belguy said:


> I am currently 69 and so with have to convert to a RRIF in two years and then start taking likely the minimum mandatory withdrawals.


I thought you were already retired? What is your current income source?


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## Belguy (May 24, 2010)

Four Pillars said:


> I thought you were already retired? What is your current income source?


I also have an open account and so have been making withdrawals from it since my retirement. After those withdrawals, I have 23 per cent of the original amount left which, along with my CPP and OAS, should allow me to get by comfortably until I need to start making withdrawals from my RRIF.

That said, very few would want to live my very frugal lifestyle and I would have tapped into my RRSP much earlier except out of concern that I have no other public or private pension and so I need to be careful in case I need this money should I need to move to a retirement home in the future. Leaving a legacy to relatives is not a big concern.

It is interesting that, when I first went to my financial advisor, before I fired him, he suggested that I should be able to make a 10 per cent annual withdrawal from my open account without depleting it's principal. Well, needless to say, that plan didn't pan out so well. I remember my bank manager at the time suggesting that I should have insisted on getting that promise in writing!!

Any thoughts or suggestions would be appreciated.


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## bayview (Nov 6, 2011)

Im suspicious with the improvement in recent USA & China data eg latest PMI, BOTH close to their respective Elections. The higher the markets go the more painful it will be later on, imho. The key economic problems remain. Rosenberg is probably right - cash is no longer King nowadays, but cash flows.


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## Square Root (Jan 30, 2010)

I hope I don't sound smug here, but it seems fairly simple to me, especially if you have a decent pension(big if, I know). Load up on blue chip dividend payors, including lots of banks, then watch you divs grow. If you are lucky enough to be able to live on the div stream this seems like a relatively low risk retirement stategy to me. Div growth will cover inflation, tax efficient too. Agree the fixed income component of your portfolio is the issue. Could put some pref shares in there if your pension isn't significant. Will still need some true FI and you will just have to bite he bullet on that.


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## Toronto.gal (Jan 8, 2010)

Belguy said:


> Somehow, the magic of compounding does not seem so magical anymore.:upset::frown::frown-new:


I recall that you were once asked how much money you had, and I clearly remember you giving a nice 6 figure number [I actually recall the exact amount], which, in dividend paying stocks, would have given you $30K+ income, so not sure what all the fear/frugal talk is all about.

You also said recently that you made over 6% the last 2 years, so why sorry so much. :confused2:


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## Sampson (Apr 3, 2009)

Toronto.gal said:


> I recall that you were once asked how much money you had, and I clearly remember you giving a nice 6 figure number [I actually recall the exact amount]


I thought it was 7. Certainly near that amount.


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## Belguy (May 24, 2010)

Sampson said:


> I thought it was 7. Certainly near that amount.


Not quite! In fact, far from it. That was once my target but reality caught up to me.


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## thenegotiator (May 23, 2012)

Toronto.gal said:


> I recall that you were once asked how much money you had, and I clearly remember you giving a nice 6 figure number [I actually recall the exact amount], which, in dividend paying stocks, would have given you $30K+ income, so not sure what all the fear/frugal talk is all about.
> 
> You also said recently that you made over 6% the last 2 years, so why sorry so much. :confused2:



if i have a six figure amount when I retire at age 69 i deffinittely do not need to do anything else but trade my money.
wether it is rrsps or a regular acct.
sorry belguy . u really have no reason to cry .
i really dunno what advice u need.
no pun intended


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## Belguy (May 24, 2010)

:sorrow::sorrow::sorrow::sorrow:


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## zylon (Oct 27, 2010)

zylon said:


>


*Now we're getting somewhere:*
11611 will fill both gaps from early August
11714 is the Fib 61.8% retrace










http://scharts.co/XcODWU


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## zylon (Oct 27, 2010)

*U.S. Stock Market*

I find it interesting to keep track of various proclamations,
then review them 6 months later to see what actually happened.
I don't necessarily take this as actionable advice.



> It would come as no surprise that last Friday ends up marking an important low and in this seasonally favorable week of trading, the “Don’t Worry, Be Happy’ crowd ramp up their yearly “Santa Claus Rally” talk (It helps that Santa Claus will be in the White House for four more years).
> 
> http://www.grandich.com/2012/11/update-50/


My take on this chart:
If the Fib 61.8% retrace is tested and doesn't hold ... look out below.










http://scharts.co/10g2zx5


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## dogcom (May 23, 2009)

I don't play Fib. numbers but since everyone believes it they do come true a lot of times. Thanks for your insight Zylon and reminding me to look at the Fib. thing again.

Last Thurs. and Fri. I was in buy mode especially in the gold and silver area picking up items for what should be a stronger finish to the end of November. With all the tax loss selling out there this may not come to pass but with prices down there is no better time to make a bet then now.

After November we get the fiscal cliff, recession talk and debt ceiling so there is no end to the wall of worry going forward that could send us violently in any direction. This will be a traders market from here until the end of 2013 and beyond. I almost forgot to mention the wars and rumor of wars going forward and Obama doesn't have an election to worry about so anything goes.


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## zylon (Oct 27, 2010)

A common mistake I see in charting is that someone finds an indicator or pattern they like, and then try to apply it to every stock or etf.

Most of the time I can't see anything obvious at all, however in the case of *$SPX* it's a “clean” chart with clear low and high on the daily chart. 

If 1,346 doesn't hold, then I look for some other clue such as a support zone from 1,293 to 1,266.

Jim S. calls all these free programs “_default computer server hog wash_” which is likely a good description. For anyone serious about TA, the last few days he's been posting quite a bit on algebraic formulae.

http://www.jsmineset.com/


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## thenegotiator (May 23, 2012)

zylon said:


> I find it interesting to keep track of various proclamations,
> then review them 6 months later to see what actually happened.
> I don't necessarily take this as actionable advice.
> 
> ...



well 
i do luv technicals.
i like to discuss things like that.
zylon if u really pay attn ur 61.8% retracement from the high of 1474.5 and the June low of 1266.45 falls pretty well within the bottom that we MAY HAVE SEEN of 1343.35.
a possible strong inflection point that NEEDS CONFIRMATION.
things will get interesting if we really saw the bottom and the next leg up is in the making which should take us to the 1430 area.
if the rally is based on strong volume and good fundamentals they will try and take out this year's high.
cheers

IT SURELY WILL BE A WILD RIDE


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## zylon (Oct 27, 2010)

*Market top ?*

*They might not ring a bell;
a red flag may not pop up;
but there are front page headlines!*


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## 1.5M (Apr 21, 2012)

zylon said:


> They might not ring a bell;
> a red flag may not pop up;
> but there are front page headlines!


That's a red flag. However, I was hoping to get a healthy drop for Feb-Apr timeline due to the US policy uncertainty, but so far no luck. It may take longer or maybe the headlines will be true for once.
Funny how they make the case for getting back into the market *after* a 120% bull run (in SP500 form the march 2009 low). I think the time to get back was then, not now. Now's the time to be cautious.


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