# Counting on correction



## RParks (Sep 25, 2012)

With what is supposed to be an inescapable correction coming, any thoughts out there on generating more cash so as to buy back stock cheaper? I took profits off the table a few weeks ago and with the market continuing to go up, I am wondering how long this could possibly last and that perhaps I should trim my positions even further... or sell some stocks outright with the goal of buying them back at a 10% discount.

I'm heavily into rails which have all done well and my other holdings such as SBUX, AXP, and DIS have also done very well.


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## dubmac (Jan 9, 2011)

RParks said:


> I am wondering how long this could possibly last .


sounds like market timing to me. 
- No one knows the answer to this question - at least, know one that I know. 
It's like trying to predict an earthquake - there are signs, but no one will know until it happens.


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## cainvest (May 1, 2013)

Just like dubmac says, could be next week, this fall or anytime there after.
I'm currently readjusting most of my portfolio MF -> ETF so now would be a very good time for a sudden fall.


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## RParks (Sep 25, 2012)

I understand that. I'm just thinking that the longer it goes on, the more chance a guy has at being right. And if you're convinced of at least a 10% fall, it seems unlikely that a portfolio would grow more than that in the interim.

But yeah, I know 'you can't time the market'.


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## lonewolf (Jun 12, 2012)

My stock play money is 100% long. Most likely till 16,000 plus in the Dow & or till around July 29 2013.

Then will be looking to go short


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## phrenk (Mar 14, 2011)

I'm still waiting for the 'sell in may and go away' to take effect, in addition to US markets reaching new heights every day now. In my case, i bought a few puts on Chipotle 2 weeks ago to offset losses should there be a market wide correction by end of june, since that stock appears topped up and will surely follow the market. Otherwise, my portfolio still invested with no changes in allocation.

You can always look to sell covered calls to generate some cash.


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## jcgd (Oct 30, 2011)

It's a good time to rebalance IMO. A few stocks have been going crazy, but there are still laggards that are good values. Selling out is risky, risky behavior. A proper correction might not happen for years. By the time you get your 10% correction that might not get the market below where you sold out. Be sure of a market correction all you want, but remember that what does happen has nothing to do with what you think will happen. 

I relate it to the quote "bulls make money, bears make money, but pigs get slaughtered". Someone who sells out is betting the house that they are right and they are being a greedy pig. And they probably aren't right. As soon as you stop thinking you know what will happen and start KNOWING you are right is when you'll get creamed. 

Don't be someone who knows they are right.


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## RParks (Sep 25, 2012)

Great post jcgd.


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## thompsg4416 (Aug 18, 2010)

Well if you have a "feeling" there are always ways to position yourself. You don't need to go all in and try to time the market - I agree with JCGD that is piggish and foolish but you could dangle a toe in the water I assume you already have a cash position but you could increase it by selling one or 2 positions or decreasing the size or taking some profit in a couple of these positions. This would minimize your returns but also your loses in case the correction never happens. Timing/shorting the market is tough and not something I do but moving to a more defensive posture and having a slightly larger cash position isn't that crazy.


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## jcgd (Oct 30, 2011)

RParks said:


> Great post jcgd.


Thanks. My post was a little over the top so OP, I realize you didn't say you sold out completely, only trimmed profits. I'm just generalizing.




thompsg4416 said:


> Well if you have a "feeling" there are always ways to position yourself. You don't need to go all in and try to time the market - I agree with JCGD that is piggish and foolish but you could dangle a toe in the water I assume you already have a cash position but you could increase it by selling one or 2 positions or decreasing the size or taking some profit in a couple of these positions. This would minimize your returns but also your loses in case the correction never happens. Timing/shorting the market is tough and not something I do but moving to a more defensive posture and having a slightly larger cash position isn't that crazy.


I totally agree. I try to treat my investing as a chess game. Thinking a few moves out and having an overall strategy with some defence. I like cash as a defence.


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## sylyconvalley (Apr 22, 2013)

options expiry tomorrow is one reason why the mkt is still up with no signs of correction.


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## dogcom (May 23, 2009)

Maybe this will help.

http://moneytalks.net/topics/bonds/...stocks-that-99-of-investors-are-ignoring.html

The bond market will lead the stock market to the bottom. I don't know how long central banks can play their games through intervention but it will end badly. You say it is a conspiracy theory then you haven't seen the direct money printing everywhere.


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## cainvest (May 1, 2013)

dogcom said:


> Maybe this will help.
> 
> http://moneytalks.net/topics/bonds/...stocks-that-99-of-investors-are-ignoring.html
> 
> The bond market will lead the stock market to the bottom. I don't know how long central banks can play their games through intervention but it will end badly. You say it is a conspiracy theory then you haven't seen the direct money printing everywhere.


After reading an article like that you want to start stuffing cash in the mattress, lol.

So who thinks the major indexes will rise again tomorrow?


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## dogcom (May 23, 2009)

cainvest said:


> After reading an article like that you want to start stuffing cash in the mattress, lol.
> 
> So who thinks the major indexes will rise again tomorrow?


They probably will for the time being. It is all about gambling at this point and only the few know how it will all play out. If you hold cash in the mattress maybe hyper inflation screws you over. If you hold gold and silver maybe the manipulation through mouse clicking money wins and you lose there. If you hold stocks and interest rates rise as you still get destroyed. I think gold will win because it can't be printed but then again the Fed has endless mouse clicking to put it down.


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## cainvest (May 1, 2013)

The SMA are still very positive for the major US indexes, from that standpoint it looks like business as usual.


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## lonewolf (Jun 12, 2012)

hi,cainvest

Your on to something, price is the only thing that matters.


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## cainvest (May 1, 2013)

lonewolf said:


> hi,cainvest
> 
> Your on to something, price is the only thing that matters.


I wouldn't say its the only thing that matters but, for me anyways, I won't even raise an eyebrow until the 50 drops below the 200. Even then, that only the first indicator and a rebound would still be likely.


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## dogcom (May 23, 2009)

You are right cainvest it takes time to roll this over so it shouldn't be any panic at this time. Price pays no matter if everything is worth nothing but they buy it anyway until it stops. The very large investors have to pay more attention as it takes time to get out, but for the small investor you just get out when you want to.


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## Four Pillars (Apr 5, 2009)

Some smart people in here. So what are you guys going to do with all your future winnings?


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## Barwelle (Feb 23, 2011)

There have been several mentions lately of a predicted correction coming... so maybe it's time to be contrarian and go all in? Haha... who knows.

I like your post too jcgd. " A proper correction might not happen for years. By the time you get your 10% correction that might not get the market below where you sold out. "


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## cainvest (May 1, 2013)

Four Pillars said:


> Some smart people in here. So what are you guys going to do with all your future winnings?


future winnings = Retirement! 

I realized some profits this week but that had nothing to do with the market, just my shifting from MF to ETF and portfolio % adjustment. I am temporarily sitting on a higher cash balance but that is just from dropping my REIT exposure, no other reason.


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## Eder (Feb 16, 2011)

From Josh Browns blog

"I'll be brief here because I don't have a lot of time for nonsense. I have a few major projects in the works and actual portfolios to manage for people, not theoretical or virtual ones.

Okay - so the 1999 comparisons have begun to surface. They're saying that the market feels or looks like 1999, mainly because stocks are up in an uninterrupted spree and people are starting to feel good about their investments. Today I even participated in a television segment about this premise. I'm not going to post the overlay charts where I show you 1999 vs 2013 because I already said I was done publishing that kind of pornography (see: Lying With Charts)."

http://www.thereformedbroker.com/20...town-josh-brown-destroys-the-1999-comparison/

I dont think doomsayers/goldbugs will enjoy the read though.


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## blin10 (Jun 27, 2011)

as long as people predict correction and say how it's the top, i'll keep holding my stocks... once I see everyone's opinion change, how markets are the best thing ever and everyone should invest, i'll be unloading and shorting some stocks


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## Toronto.gal (Jan 8, 2010)

RParks said:


> 1. With what is supposed to be an inescapable correction coming...
> 2. sell some stocks outright with the goal of buying them back at a 10% discount.


*1.* The way I look at the markets, there is always some type of correction going on, so if you're looking for [new] cheaper opportunities, they are out there.

*2.* As per Pat Dorsey's The Little Book That Builds Wealth, selling should be done for the right reasons:

- Did I make a mistake? 
- Has the company changed for the worse?
- Is there a better place for my money?
- Has the stock become too large a portion of my portfolio?

If you can't answer yes to one or more, then don't sell. I try to follow this advice, though it's not always easy.


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## andrewf (Mar 1, 2010)

Isn't this what they call 'climbing the wall of worry'?


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## Belguy (May 24, 2010)

Sell during periods of maximum euphoria and buy during periods of maximum pessimism.

The market bottom was an excellent time to buy but everyone was hiding under their beds at that time. Now, the markets have had a good run and everyone is planning what to purchase with their winnings.

--Some things never change.:rolleyes2::stupid::frown::sour:


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## CanadianCapitalist (Mar 31, 2009)

Belguy said:


> The market bottom was an excellent time to buy but everyone was hiding under their beds at that time. Now, the markets have had a good run and everyone is planning what to purchase with their winnings.


Would that be someone you know Belguy? )


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## lonewolf (Jun 12, 2012)

Winnings, what winnings ( those with winnings how many are going to over stay their welcome?)

Dont kid yourself not everyone has been making money in this rally. There is always a reason to be scared like Andrew points out it is climbing a wall of worry. Everyone has been to scared to be long.


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## cainvest (May 1, 2013)

Belguy said:


> Sell during periods of maximum euphoria and buy during periods of maximum pessimism.


Please let us know when these dates occur!


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## dogcom (May 23, 2009)

Maximum euphoria has already happened with so much margin out there, but with central banks printing money into the stock market we are in a no lose scenario. So we can now take a step above what would have been maximum euphoria and drag everybody that is or was afraid in to take us to dot com levels.


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## Belguy (May 24, 2010)

CanadianCapitalist said:


> Would that be someone you know Belguy? )


I'm not putting any new money in--just rebalancing for the reasons previously provided.


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## kcowan (Jul 1, 2010)

Belguy said:


> I'm not putting any new money in--just rebalancing for the reasons previously provided.


When did you get your rebalancing done for this cycle?


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## cainvest (May 1, 2013)

dogcom said:


> So we can now take a step above what would have been maximum euphoria and drag everybody that is or was afraid in to take us to dot com levels.


Ohhhh, wouldn't that be interesting ... using the dotcom P/E levels I wonder what the major indexes would rise to now?


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## andrewf (Mar 1, 2010)

The late 90's cyclically adjusted P/E (CAPE) was about 45 at peak. The S&P500 is currently running at about 23 CAPE. Thus prices would roughly have to double.


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## rknigh2 (Jun 5, 2012)

blin10 said:


> as long as people predict correction and say how it's the top, i'll keep holding my stocks... once I see everyone's opinion change, how markets are the best thing ever and everyone should invest, i'll be unloading and shorting some stocks


Exactly this. I have been 95-100% long since middle of last summer after the S&P took a 10% haircut and the VIX was coming off of the spike close to 30 (everyone was talking global meltdown while earnings were still healthy???). I too have held long as "the inevitable correction" continues to be preached daily. I think we are beginning to see a slight shift in sentiment. There are a lot of people realizing the valuations across the board are still very cheap, and the longer we go without "the correction", the more bid pressure we're going to see as people don't want to miss the boat.

I believe we still have a ways to run. I will start to pull back the long positions when the commodity prices begin to creep up ($105+ oil, $6 Nat gas, $4.50 copper). Also keeping an eye on canadian oil stocks and miners. When the lagging commodities and producers start seeing good stock price turn arounds, I'll start to get worried that the sentiment is getting stretched. I believe we started to see a change in sentiment when gold came off the 1800 peak, and the recent drop off the cliff is the realization that gold is holding portfolios back compared to the other options. Big cycling of "safe money" into equities etc.


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## GoldStone (Mar 6, 2011)

andrewf said:


> The late 90's cyclically adjusted P/E (CAPE) was about 45 at peak. The S&P500 is currently running at about 23 CAPE. Thus prices would roughly have to double.


Here's another way to look at the market levels. Previous market peaks and EPS adjusted for inflation. We are closing on the 2007 peak but are not quite there yet.










Source
http://www.businessinsider.com/sp-500-peaks-and-valuations-2013-5


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## My Own Advisor (Sep 24, 2012)

Great chart.


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## lonewolf (Jun 12, 2012)

Iam not A PE ratio guy. I have heard a few well respected market historians (united states) say that the way PE ratio are calculated has changed & the ratio are higher then people realize ???? @ historic market bottom PE ratio & dividend yield are close to the same.


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## Uranium101 (Nov 18, 2011)

lonewolf said:


> Iam not A PE ratio guy. I have heard a few well respected market historians (united states) say that the way PE ratio are calculated has changed & the ratio are higher then people realize ???? @ historic market bottom PE ratio & dividend yield are close to the same.


That is why historians aren't rich people. Let's look at the environment. Where can you put your money?
1) Cash (guaranteed to lose to inflation)
2) Bonds - 5-year treasury is yielding less than 1%, and 10-year treasury is yielding slightly below 2%
3) Real Estate - used to be cheap in the US, it is still cheap now but the upkeep, property taxes, utilities, R&M are eating into the capital appreciation. Besides, under normal circumstances, RE can only keep up with inflation.
4) Gold - wealth preservation at best, it has no utility (doesn't produce anything)
5) Stocks - The earning yield is around 6.50% on average. And you could find companies with earning yield being 10%+

People are just waking up to the reality and shifting their money into stocks.
People who are not in the stock market will try to say anything to make the market drop so they can get in.


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## fatcat (Nov 11, 2009)

Uranium101 said:


> People are just waking up to the reality and shifting their money into stocks.


they may well be shifting into stocks but for the wrong reasons ... you may have just another zombie trade where dumb money follows smart money and the smart money is probably now getting out ... some say the market is fairly valued others say it isn't 

my concern is whether wages are generating enough disposable income to keep the market moving up

i am afraid that companies are making money by changing package sizes and trimming labor and so on 

not by real and sustainable demand for goods and services

but i do agree that there is nowhere to hide, the market looks like the best of a bunch of bad options though with inflation so tame you don't pay a heavy price for holding cash


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## jcgd (Oct 30, 2011)

Of all the great (consistently successful) investors I've read about, who I consider "smart" money, I've never heard of any of them getting out. They've all said explicitly that they do not know what will happen, or when, but they only buy things that are undervalued, or in other words, have a margin of safety. 

Stop buying if you can't find things to buy and sit on your cash. Sell holdings that have become overvalued according to your definition and calculations. Sit on the cash if you have nothing to buy. If a correction comes along, sweet, go shopping. If one doesn't come along it wont matter as you are only buying things that are cheap and you haven't sold out. 

I look at a correction not a a loss of money, but an opportunity to make big money. You already have your buy list. And if there is anything you bought before a crash that you won't buy after, where the facts haven't changed, you should seriously re-evaluate your methods.


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## dogcom (May 23, 2009)

fatcat said:


> they may well be shifting into stocks but for the wrong reasons ... you may have just another zombie trade where dumb money follows smart money and the smart money is probably now getting out ... some say the market is fairly valued others say it isn't
> 
> my concern is whether wages are generating enough disposable income to keep the market moving up
> 
> ...



It is obvious the Fed wants to herd everyone into stocks. There is a wealth effect and it will help pensions which are a big part of unfunded liability. The counter to this is rising commodities and gold and silver. If these take off then inflation will appear and rates with it, ending the game.


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## Belguy (May 24, 2010)

Feds everywhere have our backs!!! Buy, buy, buy!!!:encouragement::untroubled::cool-new::eagerness:


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## GoldStone (Mar 6, 2011)

From:

Some Perspective on the "Can’t Lose" Market

Here are some wild stats about the current rally in the S&P 500 in 2013 which brings the gains to 17%+:


 Of the twenty weeks this year, just *four* have been negative weeks. 
 Of the four negative weeks just *one* has included a loss over 2%.
 Of the four negative weeks just *two* of them included losses over 1%.
 There have been *zero* 4%+ corrections this year.
 The S&P 500 has gained about 0.18% on average *per day* year to date.
 The S&P 500 has traded above its 50 day moving average for 98% of the year.
 The S&P 500 is 12.8% above its 200 day moving average.
 The S&P 500 trades at 12.8% or higher from its 200 DMA just 8.3% of the time.
 Said differently, the market spends 91.7% of its existence BELOW the current levels.
 *Bonus scary fear mongering unimportant corollary: in 1987 the market shot out of the gates to a 18% gain by May 15. It rallied another 10% before losing more than all of the annual gains in October during the crash.*

1987 annual return was not terrible. A mere 0.9% loss.


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## cainvest (May 1, 2013)

So what these stats are saying is for this 8.3% "anomaly" we should go "ALL IN" and get out when we hit a either a 27% YTD or the end of september. 

Wasn't there also a recent stat on consecutive Tuesdays rallies?


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## jcgd (Oct 30, 2011)

I'm not really sure how to look at these things as perspective. More so just notes. What do you do with this information? Well... not much really. We might infer that because recent gains have been so large that future gains must be small. We could infer that previous losses were so great that recent gains had to be large. 

The only perspective I have is that we are here, we were there, and nobody knows where we are going, but lots of people are going to lose money "knowing" where we are going.

Put your hand up if you sold out before the crash in '87. Anybody? 2001? No? 2009? Hmm...? These people must all be on a private island sipping pina coladas. 'Tis quiet 'round these parts.


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## GoldStone (Mar 6, 2011)

I'm not trying to time anything. Just having some fun with the numbers.


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## cainvest (May 1, 2013)

Like GoldStone said, fun with numbers is all it is. 
2013 might be looked back on as the "year of the rally" or it might create another Black ______ (insert day of the week here), who knows. The downturn could be fast and dramatic or turn into a 3 year bear market slowly sucking our capitol gains away until the next rally.

BTW I do get to raise my hand for 2001!


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## dubmac (Jan 9, 2011)

I don't know what's going to happen, but if a 3 yr bear market does return, then I'll DRIP what have, buy low, and carry on. 
I won't sell. The last time things went down, I sold my a portion of SLF (sunlife) when I should have been buying! My horizon is 13-15 yrs before I'll need the $. May as well diversify, keep costs down and ride out whatever storm comes our way.


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## My Own Advisor (Sep 24, 2012)

@Goldstone, you're a gem with the numbers and facts.

@jcgd, totally agree. The successful investors I've read about and know, they don't get out. When prices dip, they buy. When prices climb, they hold. They rinse and repeat for decades and then eureka, they're wealthy.

I'm trying to do the same thing. Buy, hold and hold some more. 

I have no idea when things are truly overvalued or undervalued. Just not smart enough to figure it out consistently and not afraid to say so. I'm OK with that.


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## lonewolf (Jun 12, 2012)

[*] *Bonus scary fear mongering unimportant corollary: in 1987 the market shot out of the gates to a 18% gain by May 15. It rallied another 10% before losing more than all of the annual gains in October during the crash.*
[/LIST]

1987 annual return was not terrible. A mere 0.9% loss. [/QUOTE]


The market topped in 1987 on the day there was the tightest 5 body conjuction in @ least 800 years. The crash bottomed to the minute when a double grand cross in heliocentric was most exact, which @ that time was highest level of electrons in the ionosphere recorded the week of the crash.


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## mrPPincer (Nov 21, 2011)

lonewolf thanks for bringing it into perspective; your observations, like mz_pie's Alice meanderings.. and just as as incomprehensible, are nonetheless priceless


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## dogcom (May 23, 2009)

http://howestreet.com/2013/05/disconnect-soaring-marketstroubled-economie/

That is a good piece for explaining the bubbles we are in. The Fed can't stop the QE period and rates can't rise so this is a real pickle we are in.


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## lonewolf (Jun 12, 2012)

Humbles post are not based on repeating that which is memorized but based on understanding of the topic.


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## sags (May 15, 2010)

Thanks for the link dogcom................

After reading it, it would be difficult to argue Marc Faber's simple analysis of the situation.......

_Marc Faber warns that “something will break very badly.”
“In the 40 years I’ve been working as an economist and investor, I have never seen such a disconnect between the asset market and the economic reality.”
“Asset markets are in the sky and the economy of the ordinary people is in the dumps, where their real incomes adjusted for inflation are going down and asset markets are going up.”_

The world economy looks surprising like a tin foil conspiracy theory...............but there it is.


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## sags (May 15, 2010)

Somewhat forgotten by Wall Street investors I think........as they feast on the results of stimulus............

The Fed is spending over 85 Billion a month...........almost 1 Trillion dollars a year.......

All of it money they don't have and debt nobody will buy from them.

So they buy it themselves...................from themselves.


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## lonewolf (Jun 12, 2012)

I doubt the bank (fed) would really want to destroy itself by destroying the dollar. Like any other bank the fed is in the bussiness to make money not destroy it.


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## dogcom (May 23, 2009)

Lonewolf it is not about what the Fed wants but what it will get out of this. They are on their last legs as they now must manipulate everything to keep the ship together. Read sags post and tell me how they can exit from that.


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## nakedput (Jan 2, 2013)

sags said:


> Thanks for the link dogcom................
> 
> After reading it, it would be difficult to argue Marc Faber's simple analysis of the situation.......
> 
> ...


I like Faber but he is a perma bear. He has been wrong quite a bit in the last 5 years.


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## humble_pie (Jun 7, 2009)

mrPPincer said:


> lonewolf thanks for bringing it into perspective; your observations, like mz_pie's Alice meanderings.. and just as as incomprehensible, are nonetheless priceless



dear mister pPincer, so sorry u couldn't keep up. The Alice stories - like options trading - were never intended for slow learners.


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## dogcom (May 23, 2009)

Nakedput my comments by no means says the stock market can't manipulate its way up much higher from here. In real time a year or two is a blip and the Fed can print its way forward as long as the market will allow it to. China and Russia are enjoying the discounted gifts in commodities especially gold and silver and don't mind snapping them up with fiat paper US dollars if they continue to be accepted.


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## kcowan (Jul 1, 2010)

humble_pie said:


> dear mister pPincer, so sorry u couldn't keep up. The Alice stories - like options trading - were never intended for slow learners.


:biggrin:


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## PuckiTwo (Oct 26, 2011)

nakedput said:


> I like Faber but he is a perma bear.


Maybe - maybe not.


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## mrPPincer (Nov 21, 2011)

humble_pie said:


> dear mister pPincer, so sorry u couldn't keep up. The Alice stories - like options trading - were never intended for slow learners.


lol you don't seem sorry  you seem a tad vindictive.
pie I don't know why you couldn't take it as a compliment as intended, but that's not my problem.

I'm quite familiar with your habits of letting discussion slide into personal attacks on people all over this forum so I won't let it bother me a bit if it's my turn again now.
Let em fly if that's how you want to play it today, but you might find ammo a little lean.

I'm interested to see what you come up with


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## fatcat (Nov 11, 2009)

i thought this snippet from a marketwatch piece was interesting 
it's aimed straight at any doubts that this is a qe fueled rally

· Materials has had -15.3% earnings-per-share (EPS) growth this year, but the materials ETF XLB -0.12% is up 10% year-to-date YTD.

· Consumer staples has had -4% EPS growth this year, but the consumer staples ETF XLP +0.10% is up 20% YTD.

· Telecom has had -14.17% EPS growth this year, but the telecom ETF IYZ +0.26% is up 13% YTD.

· Energy has had a -5.4% revenue contraction, but the energy ETF XLE -0.20% is up 15% YTD.

if the fed whispers sweet nothings tomorrow (like qe is still on) i suspect we will have this rally until the next round of earnings come in
if they start to look funky, then we will get our correction

ps. my apologies for interrupting the very punchy tit-for-tat between p and p ....


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## cainvest (May 1, 2013)

Looks like the QE program will continue .... markets on the rise again!


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## nakedput (Jan 2, 2013)

The S&P500 is up around 22% this year. There's no way this can keep continuing, can it?


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## none (Jan 15, 2013)

nakedput said:


> The S&P500 is up around 22% this year. There's no way this can keep continuing, can it?


That's what I thought... and I missed out. Bought in today. Lesson learned (I think).


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## jcgd (Oct 30, 2011)

none said:


> That's what I thought... and I missed out. Bought in today. Lesson learned (I think).


Just consider... You just did with the stock market what you think is suicidal with the housing market.


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## andrewf (Mar 1, 2010)

jcgd said:


> Just consider... You just did with the stock market what you think is suicidal with the housing market.


The expected real return on the S&P 500 is still positive (given low single digits). Expected real return on housing is negative. I see nothing inconsistent.


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## Ihatetaxes (May 5, 2010)

jcgd said:


> Just consider... You just did with the stock market what you think is suicidal with the housing market.


:chuncky:


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## cainvest (May 1, 2013)

nakedput said:


> The S&P500 is up around 22% this year. There's no way this can keep continuing, can it?


As long as something doesn't come along to pinch it and wake it from this dream rally ....


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## jcgd (Oct 30, 2011)

andrewf said:


> The expected real return on the S&P 500 is still positive (given low single digits). Expected real return on housing is negative. I see nothing inconsistent.


My point is, we don't know what the real returns will be. When you buy high, chances are better you are buying at the peak, but you won't know until later. Forecasts aren't correct very often. Just look at the forum polls for the last few years. The calls were pretty random.


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## cainvest (May 1, 2013)

Oh, oh .. did the feds pinch it or just poke it without waking it up ....


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## none (Jan 15, 2013)

Indeed, looks like I jumped in at the days high -- ouch. Oh well - that's annoying but you never know I guess.

Houses are much different from the stock market. One can easily determine that Canadian RE is over-valued by many measures.

On the plus side I exchanged all of my US allocation when the Can $ was around 0.99 - so there's that....


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## andrewf (Mar 1, 2010)

jcgd said:


> My point is, we don't know what the real returns will be. When you buy high, chances are better you are buying at the peak, but you won't know until later. Forecasts aren't correct very often. Just look at the forum polls for the last few years. The calls were pretty random.


We don't know anything with certainty. You can use statistical models to make reasonable predictions. The US market is on the high end of normal valuation. The expected 10 year real return is about 3% (+/- wide error bars). Housing expected real return is negative, at least in my opinion.


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## CanadianCapitalist (Mar 31, 2009)

none said:


> Houses are much different from the stock market. One can easily determine that Canadian RE is over-valued by many measures.


Housing is exactly like any other market. Forecasting is tricky business whether it is housing market or stock market or economy.


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## none (Jan 15, 2013)

CanadianCapitalist said:


> Housing is exactly like any other market. Forecasting is tricky business whether it is housing market or stock market or economy.


If you mean any other market with an average real return of zero I would agree. Anyway, buying RE in Canada now is like buying the NASDAQ at 4500 in '99 - extremely high risk with potential little returns. 

I don't want to highjack this into a RE thread. I'll end that here.


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## lonewolf (Jun 12, 2012)

CanadianCapitalist said:


> Housing is exactly like any other market. Forecasting is tricky business whether it is housing market or stock market or economy.


 Hi, CC

In the stock market if prices are rising investors buy more & sell as prices become cheaper. In markets for goods & services rising prices people buy less & buy more when on sale.


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## mrPPincer (Nov 21, 2011)

hey lonewolf, could you please explain for the slow learners here like moi, how there can be more buyers than sellers, or vice versa? 
Just kidding, the question was rhetorical, but you sometimes hear things like that, 'sellers dominated the market today', when in actuality, the buyers and sellers must be roughly equal, right?


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## BlackThursday (Apr 25, 2011)

mrPPincer said:


> ...when in actuality, the buyers and sellers must be roughly equal, right?


A rare insight for this web-site.


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## mrPPincer (Nov 21, 2011)

BlackThursday said:


> A rare insight for this web-site.


I have to admit I borrowed it from Fama and French's website


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## GoldStone (Mar 6, 2011)

Japan dropped 7% on Thursday. The rest of Asia and Europe dropped 2% - 2.5%.

Yesterday's mid-day big reversal was a very bearish sign.
http://allstarcharts.com/about-wednesdays-candle/

I think we may finally get a correction.


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## cainvest (May 1, 2013)

GoldStone said:


> I think we may finally get a correction.


Might be GoldStone, the fed might have poked the bear.


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## kcowan (Jul 1, 2010)

The market is down today because of
a) Profit-taking
b) More sellers than buyers
c) Nervous about 1) Europe, 2) Japan 3) China 4) PEs et al
d) Concern about the ballooning Fed balance sheet
e) Trade imbalances.

Just pick one, or make one up, and move on. No one really knows so there is no reason to think about it.


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## fatcat (Nov 11, 2009)

jobless claims however are down last week and this was a surprise ...
correction, breather or letting off steam ????


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## cainvest (May 1, 2013)

kcowan said:


> The market is down today because of
> a) Profit-taking
> b) More sellers than buyers
> c) Nervous about 1) Europe, 2) Japan 3) China 4) PEs et al
> ...


Well it is a long weekend in the US and a full moon to boot! :chuncky:


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## mrPPincer (Nov 21, 2011)

Can I pick two?
More sellers than buyers and full moon are neck and neck


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## andrewf (Mar 1, 2010)

Is it the dawning of the age of Aquarius?


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## kcowan (Jul 1, 2010)

Yes I think the long weekend rule is that trades go up on Friday before regressing on Tuesday (unless they don't). Of course sometimes Friday and Tuesday have to be replaced by Thursday and Monday. The important thing is to deliver the message with conviction so that even Belguy will take note.

(When in business, I always had to have a reason, understandable by executives with short attention spans, for why things happened. I could write a book about it. But Dilbert beat me too it.)


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## mrPPincer (Nov 21, 2011)

andrewf said:


> Is it the dawning of the age of Aquarius?


Loved that album. Hair, listened to it on vinyl over and over again back in the day.

Back on topic, pretty tiny correction so far, Nikkei is only back where it was a month ago, and NA markets have bounced back from this morning somewhat.


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## cainvest (May 1, 2013)

Well that's it for me, I sold off everything US index related today!


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## lonewolf (Jun 12, 2012)

mrPPincer said:


> hey lonewolf, could you please explain for the slow learners here like moi, how there can be more buyers than sellers, or vice versa?
> Just kidding, the question was rhetorical, but you sometimes hear things like that, 'sellers dominated the market today', when in actuality, the buyers and sellers must be roughly equal, right?


Hi, mrpprincer

Market makers provide liquidity when there are trade imbalances


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## Causalien (Apr 4, 2009)

lonewolf said:


> Hi, mrpprincer
> 
> Market makers provide liquidity when there are trade imbalances


don't forget to mention hedging and widening the spread to make back what they lose on the imbalance.


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## lonewolf (Jun 12, 2012)

Wide spreads between bid & ask are sean @ market bottoms. The spreads are so tight as of late, which could be a warning of an important historic top in the making.


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## lonewolf (Jun 12, 2012)

384.4 billion NYSE margin debt end of April is @ an all time high. Wont be staying @ this party past the Grand Trine in July. Iam really looking forward to selling the world. Corrections are getting smaller & smaller as investors have now become programed to buy corrections when the market is streached further above the 200 day moving average then it has in the last 3 decades. Beware if you dont buy top tick in July (maybe) that your not suckered into buying the worst correction of all the correction with the failed rally.


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## cainvest (May 1, 2013)

Looks like the S&P500 is closing in on the SMA50, first time since april.
So will it bounce off for another rally or start to close in the the SMA200 .... stay tuned!


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## jcgd (Oct 30, 2011)

But I want to know now! Will it bounce or will it keep falling?

I would put money on it either going up or going down from here. Or staying flat. It's definitely going to be one of those three. :chuncky:


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## cainvest (May 1, 2013)

I'm going to go with .... grabs coin from pocket [flip] .... keeps falling to the 200SMA.


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## jcgd (Oct 30, 2011)

Haha, so true. I could use a decent correction soon.


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## Jon_Snow (May 20, 2009)

Forget "decent" correction, I want it to be deep and bloody. :biggrin:


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