Exuberant yet?

[REWahoo]

I am not exuberant at all. I started investing in 2000 and my own experience taught me that what the market giveth, the market taketh away soon enough. So I have a strategy of harvesting gains when the market gets overbought, and this is no exception.

Translation: "I'm a dirty market timer" - not that there is anything wrong with that, of course...

 

[FIREd]

Translation: "I'm a dirty market timer" - not that there is anything wrong with that, of course...

Of course saintly indexers could call it "rebalancing". Then it would be alright.

 

[NW-Bound]

... my own experience taught me that what the market giveth, the market taketh away soon enough...

So, now the market giveth, then you taketh!

Is the market god a vengeful one, such that he will get back at you next time?

 

[Lsbcal]

Interesting Hulbert article on sentiment indicators and current market at: Wall Street is way too bullish - Mark Hulbert - MarketWatch

...the irrational exuberance that is very much in evidence right now tells us little more than that the market is vulnerable to a short-term decline lasting little more than a month — maybe three.

Note carefully that this does not mean that such a pullback couldn’t develop into something more major. When the next bear market does eventually begin, of course, it will start with a short-term decline. My point instead is that, if a bear market does begin, it won’t be because of exorbitant levels of bullish sentiment.

 

[pb4uski]

....imagine your [-]variable mortgage rate[/-] health insurance premiums resetting such that your payment goes from $1,200/month to $1,800/month...yikes! ....

FIFY

 

[NW-Bound]

Interesting Hulbert article on sentiment indicators and current market at: Wall Street is way too bullish - Mark Hulbert - MarketWatch

The author added:

There is no shortage of possible fundamental factors, and I’ve mentioned several of them in recent columns. But fundamentals tell us more about where the market might be in three to five years’ time than it does in a month.

So, yes, current sentiment situation is alarming — if you’re a short-term trader. If you’re a longer term investor, you should be focusing on fundamental factors rather than worrying about current sentiment levels.​

Same as some earlier posters, I expect that a correction may happen anytime now, just as it did happen in the past. But being a long-term investor who looks at fundamentals, I would want to know if I should rebalance into equities again when that correction occurs. I do not follow Hulbert to know what he wrote before, but what else I have read did not have any bad prognostication about the world economy.

 

[2B]

Of course saintly indexers could call it "rebalancing". Then it would be alright.

I've been pulling money out of equities this year to maintain my 40% equity asset allocation. I usually only do it once per year but this year I'm slowly moving my 401k balance to my Vanguard IRA. If figured there's no reason not to rebalance as I do it. My IRAs hold all of my CDs so it works out perfectly.

 

[jollystomper]

Unless you are selling stock into this rise, I cannot see how you can personally benefit from what will soon be seen a bubble like all other bubbles, and soon to be more than reversed.

Ha

Rebalancing a conservative AA in a rising market after rebalancing that conservative AA during the last crisis has personally benefited me. When the bubble pops, those with something and no debt are still going to be relatively better off than those with much less and lots of debt.

 

[W2R]

Yet another all time high net worth yesterday. Simply unbelievable! It is like a dream come true (for the time being! ). What goes up, must come down, but meanwhile this is great daydream fodder.

 

[haha]

Rebalancing a conservative AA in a rising market after rebalancing that conservative AA during the last crisis has personally benefited me. When the bubble pops, those with something and no debt are still going to be relatively better off than those with much less and lots of debt.

Your first statement is selling into this rise. Your second statement is true, but irrelevant to the question.

Ha

 

[unclemick]

I hate it when W2R whees in public...

She did it first!! Not me!

60/40 hands off, full auto, balanced index.

Go you Vanguard computers/ rebalance away. Hum them thar electrons or whatever.



heh heh heh -

 

[NW-Bound]

I have been trimming some of my stocks, and thought of bringing the stock AA from 70% down to 65%. Was at 66.5% yesterday.

But what's goin' on today? Looks like the market is helping me bring that AA down further, without me having to sell anything!

Did someone say "Wh***" or something?

 

[jollystomper]

Your first statement is selling into this rise. Your second statement is true, but irrelevant to the question.

Ha

I am confused at how you are viewing my original statement I never said I wasn't selling into the rise. That is why one maintains asset allocation.

My earlier point was simply that the rise is occurring totally divorced from improving the general economic state of a lot of people, which is not what has happened in the past... and the government stimulus is helping investors much more than traditional middle class workers. One doesn't expect this rise to continue and therefore - in my view - maintaining an asset allocation that allows one to sleep at night and not getting caught up in the market "exuberance" is the best way to deal with future unknowns.

 

[clifp]

We need a few more modest down days, and then a nice 300 point sell off to add some fear back into the market.

There isn't a single stock that I want buy at these levels. Other than ones which will go up...

 

[Lsbcal]

...(snip)...
My earlier point was simply that the rise is occurring totally divorced from improving the general economic state of a lot of people, which is not what has happened in the past...

While the rate of adding jobs is not wildly robust, something like 140K jobs per month is decent. There are so many variables in the economy and how that ties into sales and earnings, I wouldn't even attempt to model that with an eye towards equity pricing. If it were easy to do, all those institutions would have great equity models.

What we do know is that equities are a leading indicator ... in general. Not saying that they are always right about the next set of future news events, they just anticipate given the known information in the moment. New news begets new pricing.

 

[haha]

I am confused at how you are viewing my original statement I never said I wasn't selling into the rise. That is why one maintains asset allocation.

My earlier point was simply that the rise is occurring totally divorced from improving the general economic state of a lot of people, which is not what has happened in the past... and the government stimulus is helping investors much more than traditional middle class workers. One doesn't expect this rise to continue and therefore - in my view - maintaining an asset allocation that allows one to sleep at night and not getting caught up in the market "exuberance" is the best way to deal with future unknowns.

I agree completely with your analysis. I look at rebalancing as "market timing light".

Ha

 

[jollystomper]

While the rate of adding jobs is not wildly robust, something like 140K jobs per month is decent. There are so many variables in the economy and how that ties into sales and earnings, I wouldn't even attempt to model that with an eye towards equity pricing. If it were easy to do, all those institutions would have great equity models.

What we do know is that equities are a leading indicator ... in general. Not saying that they are always right about the next set of future news events, they just anticipate given the known information in the moment. New news begets new pricing.

Good point. My hope is that the jobs added are decent. I imagine McFast Food Taco Chicken King hiring 500 new part time workers at minimum wage is not the same as Engineering Megacorp hiring 500 new workers at 80K each with benefits. But in both cases 500 new jobs are created. I'm sure there is a breakdown somewhere, I just have not investigated.

 

[jollystomper]

I agree completely with your analysis. I look at rebalancing as "market timing light".

Ha

I can see that point, no argument here. My investing philosophy has evolved to eking out a string of singles rather than swinging for the fences, so I prefer a "light" touch.

 

[NW-Bound]

The Dow dropped 153 today. S&P down 1.32%. Looks like that "Wh***" finally took effect after 1 week delay.

Brace yourself. More is to come.

 

[W2R]

The Dow dropped 153 today. S&P down 1.32%. Looks like that "Wh***" finally took effect after 1 week delay.

Brace yourself. More is to come.

The Wh*** earlier in this thread, was uttered on Saturday, October 26th. The Dow had closed the previous day at 15570.

Today, the Dow closed at 15594, which is 24 points higher!!!! The missing information is that it went up, then down (but more up than down).

What a roller coaster. November has been a bust, to a minor extent, I agree. But overall, the market is still thriving IMO.

 

[NW-Bound]

OK. Sorry my timing was a bit off.

Next time I will buy on "Wh***", then sell 10 days later.

 

[W2R]

OK. Sorry my timing was a bit off.

Next time I will buy on "Wh***", then sell 10 days later.

I guess the best thing to do on "Wh***", is to pour yourself a drink of your choice, smile, do nothing financial, and enjoy life. That's what I do, anyway.

 

[NW-Bound]

But, but, but the "Wh***" in the past has demonstrated powerful predictive power, in more than one occasion as I recall.

Is it just like mutual funds' performance now, that "past performance is no guarantee of future results"? Noooo....

 

[NW-Bound]

Anyway, I woke up at about 4AM my time, checked the news on the Web and saw that ECB unexpectedly cut interest rate from 0.5% to 0.25% due to fear of deflation. What the heck? I thought everyone was saying Europe was recovering, and indeed their stock market was not doing too badly lately. I also saw that the US stock future was rising in response to the news.

I went back to sleep and woke up after the market opened. What was going on here? Something about consumer sentiment... And as we needed to do grocery shopping for a couple of parties this weekend, I did not check the market again until later. It had been dropping through the day.

It is difficult to tell when the market will turn. People have been expecting a correction, and this may be it. Well, I've got some cash that earns next to nothing that I might use... Heh heh heh...

 

[gowgow]

I am not exuberant at all. I started investing in 2000 and my own experience taught me that what the market giveth, the market taketh away soon enough. So I have a strategy of harvesting gains when the market gets overbought, and this is no exception.

Hello, Can I ask what you use to determine when the market is overbought?
Do you have any hard and fast rules that you follow? I ask because I've tried to do the same at times with mixed results. It's so easy to be wrong about such things.

What do you folks think about using the Moving Average as a guide for getting out? What's nice about it is that it's so simple and it did a great job of exiting the market in both the dot com meltdown in 2000 and the drop in 2008. Of course in the future it may not perform as well but if these 50%+ drops start to recur every few years, it may very well help avoid the steep losses once again.

The long term (S&P 500 - VFINX) graph demonstrates how well this has worked over the last 20 years. The short term graph shows how 4 times this year the S&P has been bouncing against the long average, but has continued to rise. Given this pattern, it sure looks like we could be heading back down to that long average. The question is, will we get another bounce?

And am I correct to assume you are the creator of FireCalc? I love it. I may eat it.

Steve