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Old 05-06-2009, 07:33 PM   #41
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I need an eye exam soon.

At first look at the forum index, I thought I read "Beer Market Rally"...
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Old 05-06-2009, 09:25 PM   #42
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Originally Posted by Oldbabe View Post
I am still learning how to invest so with that caveat I have to say that I don't understand the virulence against market timing. If you look at the market and do your research and see that, for example, munis (or high yield corporate bonds) look like a good deal for your portfolio at this particular time then why would that be a bad thing?

It is not necessarily a bad thing read Crazy Connie's thread on"back in the green ." She thought outside the box and did great . I think the old buy and hold should be buy and monitor which requires more work .
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Old 05-06-2009, 11:11 PM   #43
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It is not necessarily a bad thing read Crazy Connie's thread on"back in the green ." She thought outside the box and did great . I think the old buy and hold should be buy and monitor which requires more work .
Investing is tough. It seems to have the goal of making us feel as stupid as possible as often as possible. Nothing is ever clear- we look back and think it was, but it wasn't. Maybe according to our metric it was a clear buy or sell, and that is the way it turned out. That time. But it didn't have to, and it likely won't the next time around. That doesn't mean that we cannot do well over time with a conservative approach- but during big bulls we might leave a lot on the table. A fair number of early retirees didn't know anything about investing except to buy what was going up in 1994, or '95 or.... And then they retired at 39, and wanting a change or feeling that the market was overpriced or getting cold feet or whatever, sold out and became rich. Their judgment that the market was overporiced was true enough, but it had been overpriced for a very long time! And they would still be workng if they had applied a strict value metric all along.

Right now, I think it is most likely that we have not made the ultimate bottom. I think this because absolute valuations did not reach levels of other huge bottoms like 1932, 1974 or 1982. And after the huge run up and huge credit distortions of the last years, it seems that a durable bottom would need to shake out more people. Yet this March, valuations were better than they were at what proved to be a very profitable bottom in fall of 2002.

Still, although I have cashed in some stuff, I still hold a lot. Why? Because overall the market is not really overpriced yet, and it is going up. Is this smart? Very likely not.

If it keeps going up, I will sell more, except some core holdings that I don't ever plan to sell. Is having core holdings rational? Probably not. Like I said the goal of markets is to make us feel stupid. (Or maybe just to make me feel stupid.)

Ha
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Old 05-07-2009, 12:02 AM   #44
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Perfectly stated. I would argue that the difference between 32, 74, and 82, and 01 and today is that in 32, 74, and 82 the government didn't even come close to as provide as much easy money as they have in 01, and especially today. That is why I am cautiously optimistic about the near future(even amongst high valuations), but downright petrified when this next house of cards collapses(a few years down the road).

The real question is how much does the amount of easy money play against the massive deleveraging. Obviously deleveraging = deflationary, and easy money = inflationary. This is just my theory, but when the level of deflationary pressures = the level of inflationary pressures the result = bottom. But how can any rational person predict how those two line up. Simply you can't all you can do is guess.
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Old 05-07-2009, 07:52 AM   #45
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Still, although I have cashed in some stuff, I still hold a lot. Why? Because overall the market is not really overpriced yet, and it is going up. Is this smart? Very likely not.

If it keeps going up, I will sell more, except some core holdings that I don't ever plan to sell. Is having core holdings rational? Probably not. Like I said the goal of markets is to make us feel stupid. (Or maybe just to make me feel stupid.)

Ha
Just curious, what % of your portfolio is stock core holdings?
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Old 05-07-2009, 08:06 AM   #46
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That is why I am cautiously optimistic about the near future(even amongst high valuations), but downright petrified when this next house of cards collapses(a few years down the road).
I believe you are correct in this line of thinking. We have thrown more resources at this than ever before and it will / already is having a positive effect. I dont think "staggering recovery" would be too strong of a sentiment. Obama will look like a genius (no political reference intended).

Mark to market valuations that devestated us on the way down, will come back into play and work just as they had during the last boom. EPS will be grossly inflated due to MtM accounting and boom times will be here again.

As soon as the S&P is at a new all-time high, I will begin taking profits, and squirrelling funds away in anticipation of the big crash I suspect is coming next time. And I dont think our country has the resources to pull us out of the next crash. We are stretching the limits of the Chinese issued credit card this time. Where to go before then? Commodities? I dont know.
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Old 05-07-2009, 08:45 AM   #47
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Originally Posted by haha View Post
Investing is tough. It seems to have the goal of making us feel as stupid as possible as often as possible. Nothing is ever clear- we look back and think it was, but it wasn't. Maybe according to our metric it was a clear buy or sell, and that is the way it turned out. That time. But it didn't have to, and it likely won't the next time around. That doesn't mean that we cannot do well over time with a conservative approach- but during big bulls we might leave a lot on the table. A fair number of early retirees didn't know anything about investing except to buy what was going up in 1994, or '95 or.... And then they retired at 39, and wanting a change or feeling that the market was overpriced or getting cold feet or whatever, sold out and became rich. Their judgment that the market was overporiced was true enough, but it had been overpriced for a very long time! And they would still be workng if they had applied a strict value metric all along.

Right now, I think it is most likely that we have not made the ultimate bottom. I think this because absolute valuations did not reach levels of other huge bottoms like 1932, 1974 or 1982. And after the huge run up and huge credit distortions of the last years, it seems that a durable bottom would need to shake out more people. Yet this March, valuations were better than they were at what proved to be a very profitable bottom in fall of 2002.

Still, although I have cashed in some stuff, I still hold a lot. Why? Because overall the market is not really overpriced yet, and it is going up. Is this smart? Very likely not.

If it keeps going up, I will sell more, except some core holdings that I don't ever plan to sell. Is having core holdings rational? Probably not. Like I said the goal of markets is to make us feel stupid. (Or maybe just to make me feel stupid.)

Ha
Agree.
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Old 05-07-2009, 09:18 AM   #48
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Perfectly stated. I would argue that the difference between 32, 74, and 82, and 01 and today is that in 32, 74, and 82 the government didn't even come close to as provide as much easy money as they have in 01, and especially today. That is why I am cautiously optimistic about the near future(even amongst high valuations), but downright petrified when this next house of cards collapses(a few years down the road).

The real question is how much does the amount of easy money play against the massive deleveraging. Obviously deleveraging = deflationary, and easy money = inflationary. This is just my theory, but when the level of deflationary pressures = the level of inflationary pressures the result = bottom. But how can any rational person predict how those two line up. Simply you can't all you can do is guess.
Could well be. Along with the deleveraging, the sudden spike in savings rates and the hoarding of cash by consumers and institutions has led to a cratering "velocity of money." At some point that velocity will increase again once people are a bit less afraid of Great Depression 2, and when it does the monetary policy and money printing will likely turn inflationary.

But *right now*, the feds can print a lot of money and if it doesn't have any velocity -- that is, if it's not changing hands in commerce -- it won't be inflationary. But watch out down the road.
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Old 05-07-2009, 11:49 AM   #49
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Well said snidely, but I don't think obama will look like a genius with 10%+ inflation and interest rates. I think he will be very much despised at that moment. And all this has absolutely nothing to with Obama, its Bernanke. The fed was behind the problem, they are behind the "solution", and they will be behind the problem when the next one comes. Also, what to watch for isn't a "new all time high", its when the federal reserve starts yanking rates to control the money supply. After the fed raises rates pretty close to the inflation rate there will be a lag time before the inevitable crash happens, but it shouldn't be more than 3 years. Regardless if the market has reached new highs or not, after 1 year run like hell from anything in the market. Buy munis at that standpoint, not commodoties. Commodoties is what you buy now and are out when the fed pulls the plug(yanks rates). Instead you pull a Steve Wozniak who sold out of Apple in the early 80s and bought 30 year munis at 17%. The funny thing is that I wouldn't be like him and hold onto to them until maturity, I'd be the greedy SOB that sold them for one of the biggest bond capital gains in history when interest rates dropped to 4-5 on new ones.

"But *right now*, the feds can print a lot of money and if it doesn't have any velocity -- that is, if it's not changing hands in commerce -- it won't be inflationary. But watch out down the road."
But thats the downright scary part because for the last 18 months, many institutions/people have been just stockpiling cheap money. The fed could stop easy money today and you would still probably see decent inflation after velocity picked up. I'd also say that I would be willing to bet that helicopter Ben will be late to end the party as well. He was early to show and he'll be late to end it. Inflation will already be above 3% before he even starts taking it seriously and by that time it will be way, way to late.
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Jeremy Grantham Q1 2009 Letter
Old 05-08-2009, 08:58 AM   #50
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Jeremy Grantham Q1 2009 Letter

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I would argue that the difference between 32, 74, and 82, and 01 and today is that in 32, 74, and 82 the government didn't even come close to as provide as much easy money as they have in 01, and especially today. That is why I am cautiously optimistic about the near future(even amongst high valuations), but downright petrified when this next house of cards collapses(a few years down the road).
This is how Jeremy Grantham is seeing it now. He details his outlook in the link. He thinks it is about 50 certain that a good bottom, though not an off-to-the-races-back-to-new-inflation-adjusted-highs-bottom, was made in early March. And he has beenright a lot, including fall 2007.
Jeremy Grantham Q1 2009 Quarterly Letter

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Just curious, what % of your portfolio is stock core holdings?
Probably 40%. I would sell some of these if they seemed very overpriced.

Ha
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Old 05-08-2009, 10:42 AM   #51
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Job losses decline in April, jobless rate at 25-year high - May. 8, 2009

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But the unemployment rate, as bad as it was, doesn't indicate the extent of the pain being felt by job seekers. The report showed 27% of the 13.7 million unemployed Americans have been out of work for more than six months, the highest percentage of long-term unemployed among the overall pool of jobless in the 61 years that reading has been tracked.

Almost one out of six members of the labor force are either unemployed, working part-time when they would prefer to work full-time, or are out of work and have become so discouraged that they did not look for work and thus not counted in the unemployed total
The above is a quote from the "positive" news received on unemployment today. While I still am positive short term on stocks for now, I see storm clouds ever increasing on the horizon.

With the long term treasury rates beginning to make meaningful increases, the long term bull market in 30 year treasuries which dates back to 1981 when yields were in the vicinity of 16 percent probably ended earlier this year with a spike down to 2.5 percent. With a need exceeding 100 billion per month to fund the US government, increases in the long-term rates will become more and more of an issue as the year unfolds and thoughts of 2010 needs become acute. The loss of trillions in housing will not be helped by an increase in mortgage rates. This is simply the key area to keep an eye on, future events are extremely effected by the housing issue.

Increases in taxes to fund these deficits as well as state deficits will sap the economy of needed umph despite the level of government "stimulus". Listening to state politicians on Chicago radio speak of not even addressing the deficits they see for this year, later as the fiscal years come close to an end, the drastic actions needed will become painfully clear to all.

And I am now wary that the rally may not last through the summer as I previously thought. If the 30 year treasury exceeds 5 percent for a yield in the coming months, I will take that point to drastically reduce my stock holdings once again. The key offset for me to watch is whether inflation is imminent as well, and for that I am watching the price of gold and silver. If those prices fall as bond yields rise, I will take that as a sign inflation is not a serious concern medium term and deflation may be much more likely, if however they start another run over $1,000 per ounce on gold then serious inflation may be a near-term issue. I personally just can't see the US running a 3 percent average inflation for the next 10 years with all the extraordinary acts in the last 18 months.


However, this has been a very fun rally to be engaged in and I sure hope it doesn't end soon. Not taking any stock profits just yet.
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Old 05-08-2009, 10:53 AM   #52
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Originally Posted by I personally just can't see the US running a 3 percent average inflation for the next 10 years with all the extraordinary acts in the last 18 months.[/quote



However, this has been a very fun rally to be engaged in and I sure hope it doesn't end soon. Not taking any stock profits just yet.
Excellent analysis. Did anyone notice that oil is close to a double off its $35 bottom?

This is not a comfortable "coffee table" way to invest; but IMO it's what we have to look forward to maybe for a good long time. Perhaps all the catechism we have had pounded into our heads over the past 30 years will be as useful in the real world we face as all that other catechism was.

Ha
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Old 05-08-2009, 11:30 AM   #53
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I have recovered about half of my 10/2007-03/2009 losses in the past 2 months so I decided to take some off the table and rebalanced yesterday.
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Old 05-08-2009, 11:50 AM   #54
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I need an eye exam soon.

At first look at the forum index, I thought I read "Beer Market Rally"...
We don't need that. The increasing taxes on beer are bad enough...
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Old 05-08-2009, 03:46 PM   #55
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I've been avoiding reading this thread because I expected it to be worse than CNBC financial porn. But I poked my head in and confirmed my expectations.

Going back to the thread title ... every rally is a bear market rally pretty much by definition.
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Old 05-08-2009, 03:46 PM   #56
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FWIW, Jeremy Grantham believes this rally is probably "real" and is predicting S&P 500 at 1000 - 1100 by year end. He is also predicting a few years of weak growth.

Normally I pay absolutely no attention to the market prognosticators, but I think Grantham is more thoughtful than most and he has been consistently bearish for the past 10 years.
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Old 05-08-2009, 03:59 PM   #57
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I've been avoiding reading this thread because I expected it to be worse than CNBC financial porn. But I poked my head in and confirmed my expectations.
Poor baby. Better hurry on home to Mama before the porn gets into your soul.

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Old 05-08-2009, 08:39 PM   #58
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My retirement portfolio is up 11% since I rebalanced on Jan 15, and up over 25% since the market low of March 9, 2009. I'm getting pretty close to hitting my rebalance triggers on the upside - getting close to 60% equities instead of my 55% target.

Funny thing - my bond funds have rallied since a few days after March 9 as well, although the biggest one (DODIX) hit its low Nov 2008 and had already recovered quite a bit by March 9. Even though both asset classes have rallied, the equities have rallied so much more, leading to asset class imbalance.

(Knock on wood!)
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Old 05-09-2009, 12:41 AM   #59
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However, this has been a very fun rally to be engaged in and I sure hope it doesn't end soon. Not taking any stock profits just yet.

Excellent analysis. Did anyone notice that oil is close to a double off its $35 bottom?

This is not a comfortable "coffee table" way to invest; but IMO it's what we have to look forward to maybe for a good long time. Perhaps all the catechism we have had pounded into our heads over the past 30 years will be as useful in the real world we face as all that other catechism was.

Ha

I still notice its not 147 a barrel. Who knows maybe when things pick up for real we will be talking about 200 a barrel.
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Old 05-09-2009, 07:54 AM   #60
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Also, what to watch for isn't a "new all time high", its when the federal reserve starts yanking rates to control the money supply.
dshibb,

I think we are very much on the same page here. I should have clarified a bit more than I did. I agree with you 100%. I promised myself that at the "next all time high" I would take some off the table, although I like your indicator of the fed beginning to tighten, I think thats the second signal for me too. The bond sale results spooked me this week. I dont know if I have the stomach to wait a year after the fed starts to tighten (personal preference, not a commentary on your strategy). I would be willing to give up some potential gains in order to sleep better at night.
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