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Get out now and beat the debt ceiling crash?
Old 07-01-2011, 01:16 PM   #1
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Get out now and beat the debt ceiling crash?

Over the years, I've learned the hard way that it's really hard to time the market. As a result, I do have the discipline to stay put when things start getting volatile. However, I can't help thinking that the ongoing battle over the debt ceiling offers a unique opportunity to earn some extra trading profits. It's a slam dunk that some time over the next four weeks, the market is going to crash because of the contention in Washington. So my thoughts are... get out now and jump back in during the crash

Thoughts anyone??
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Old 07-01-2011, 01:24 PM   #2
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Originally Posted by ScaredtoQuit View Post
Over the years, I've learned the hard way that it's really hard to time the market....

It's a slam dunk that some time over the next four weeks, the market is going to crash because of the contention in Washington...

Thoughts anyone??
The two statements above don't appear to be compatible.

Often it is you, not the markets, who get "slam dunked".
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Old 07-01-2011, 01:25 PM   #3
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Originally Posted by ScaredtoQuit View Post
Over the years, I've learned the hard way that it's really hard to time the market. As a result, I do have the discipline to stay put when things start getting volatile. However, I can't help thinking that the ongoing battle over the debt ceiling offers a unique opportunity to earn some extra trading profits. It's a slam dunk that some time over the next four weeks, the market is going to crash because of the contention in Washington. So my thoughts are... get out now and jump back in during the crash

Thoughts anyone??
Like you, I can't seem to time the market successfully. My asset allocation is comfortable enough that I did not sell during 2008-2009, so I am pretty sure I can hang on through anything.

I was sure that gas would cost $5.00/gallon during June. Instead, it is down to $3.25.

My thoughts are that I'd better sit tight and wait this out - - and not jump out right now.
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Old 07-01-2011, 02:20 PM   #4
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It's a slam dunk that some time over the next four weeks, the market is going to crash because of the contention in Washington.
If it was a slam dunk, it would already be factored into the price today. No way to profit from it at this point.

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Over the years, I've learned the hard way that it's really hard to time the market....

Thoughts anyone??
Are you sure you learned this? You might need to pay some more 'tuition'.


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Old 07-01-2011, 02:27 PM   #5
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So you are sure the market will crash within the next 4 weeks. Amazing, how did you get this information?
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Old 07-01-2011, 02:28 PM   #6
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I'm gonna guess that your definition of a crash is different from mine. What are you expecting ... maybe a 2% drop or perhaps a 5% drop to get us back to where we were 5 days ago?
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Old 07-01-2011, 02:57 PM   #7
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I'm gonna guess that your definition of a crash is different from mine. What are you expecting ... maybe a 2% drop or perhaps a 5% drop to get us back to where we were 5 days ago?
That's a key. How much do you think it'll go down? And then, how much are you willing to bet? And last, how close can you hit the peak (which was a while past most likely) and trough? A 10% drop and a bet of 10% of your portfolio and you can make 1.1% extra if everything works out OK. Is that worth it?
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Old 07-01-2011, 03:00 PM   #8
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I'm taking heat now and I know I deserve it. Intellectually, I really do know that timing is a no- no and I haven't succumbed to it for more than a decade. (Of course I also knew that timing was a no-no when I was doing it 15 years ago.)

But cashing out now strikes me as a reasonable thing to do at the moment. With all of the enmity between Democrats and Republicans these days, doesn't it seem likely that sooner or later the market is going to react to the possibility of a default? I mean isn't it obvious to everyone?? Don't you guys hear what the opposing sides are saying about each other on MSNBC and CNBC? Really, these guys are in servious opposition to each other.
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Old 07-01-2011, 03:04 PM   #9
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Time for the standard grandma drill: everyone into the cellar.
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Old 07-01-2011, 03:05 PM   #10
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With all of the enmity between Democrats and Republicans these days, ...
How is that different from other days? Oh, I know, they don't shoot each other these days:

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The Burr–Hamilton duel was a duel between two prominent American politicians, the former Secretary of the Treasury Alexander Hamilton and sitting Vice President Aaron Burr, on July 11, 1804.[1] At Weehawken in New Jersey, Burr shot and mortally wounded Hamilton.
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Old 07-01-2011, 03:09 PM   #11
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What's different is that not passing the debt ceiling is the financial equivalent to a nuclear bomb. This standoff is far more polarizing than the one that took place at any time in the past.

Am I weird or am I the only one a little wary about what will happen to equities?
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Old 07-01-2011, 03:12 PM   #12
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I mean isn't it obvious to everyone??
Markets don't always do what you expect them to do, especially when "it's obvious to everyone".

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Don't you guys hear what the opposing sides are saying about each other on MSNBC and CNBC?
Pretty much the same thing they've been saying about each other for the past 100+ years.

Consider this for a second - and yes, I know a 'slam dunk' crash is coming and this won't actually happen. But what will the market do if a last-minute deal is forged (never happen of course) and disaster is averted (yes, I know we're doomed)? Could a huge "relief rally" follow (even though it won't)? Where do you want to be in that (never-in-a-million-years) situation, in or out of the market?

Just askin'...
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Old 07-01-2011, 03:15 PM   #13
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I was certain that Y2K would cause a stock market crash. Even if computers didn't stop working, I was sure that people would worry that they would, and pull their money out of the market.
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Old 07-01-2011, 03:35 PM   #14
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I read an article in Kiplingers some months back and it said, at the beg of 2011, if you knew everything that will happen in 2011, would you still invest or cash out? We had middle east unrest, gas price spiking, Japan earthquake, etc etc can't remember all, but market was still up 7%-10%.

All I'm saying is market's unpredictable and the best course of action is to have a comfortable AA and stay course. Of course you can have some play money but that shouldn't account for majority of your portfolio.
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Old 07-01-2011, 03:39 PM   #15
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Time for the standard grandma drill: everyone into the cellar.
That's where they kept the 'shine...

I'm standing pat, but if the market takes a big dump, I might up my stock allocation. Not that I'm a DMT or anything.
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Old 07-01-2011, 03:42 PM   #16
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I have to agree somewhat with Scared. The market seems to completely discount the possibility the debt ceiling situation doesn't get resolved.

I'd also say that if you were doing rebalancing, July 1 is probably not the worse date to do it...(I am assuming that most people allocation of equities has increased in the last 6 or 12 months.) See this isn't dirty market timing just prudent rebalancing and has nothing to do with a week of big gains in the market
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Old 07-01-2011, 03:43 PM   #17
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Time for the standard grandma drill: everyone into the cellar.
Yep, that clean mountain air enables you to see things much better. That's why they built those NORAD bunkers in Cheyenne Mountain...
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Old 07-01-2011, 03:47 PM   #18
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I'm standing pat, but if the market takes a big dump, I might up my stock allocation rebalance.
Now you can accomplish the same thing and stay clean...
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Old 07-01-2011, 03:49 PM   #19
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Originally Posted by ScaredtoQuit View Post
I'm taking heat now and I know I deserve it. Intellectually, I really do know that timing is a no- no and I haven't succumbed to it for more than a decade. (Of course I also knew that timing was a no-no when I was doing it 15 years ago.)

But cashing out now strikes me as a reasonable thing to do at the moment. With all of the enmity between Democrats and Republicans these days, doesn't it seem likely that sooner or later the market is going to react to the possibility of a default? I mean isn't it obvious to everyone?? Don't you guys hear what the opposing sides are saying about each other on MSNBC and CNBC? Really, these guys are in servious opposition to each other.
Can you point out a time when the Dem and Reps got along famously? It's the same thing over and over.
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Old 07-01-2011, 04:42 PM   #20
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Democrats and Republicans seemed to get along much better during the 70's and even the 80's. Looking back at the 70's, there really didn't seem to be that much of difference between the two parties... for example, affirmative action was spearheaded during the Nixon administration... there was no significant difference in the taxation policies of the two parties... both parties pursued moderate agendas with not that much difference in ideaology.

In the 80's, things seemed to drift apart a bit but at least everyone was still cordial and compromises were possible. Ted Kennedy was good friends with Orin Hatch and there were many other friendships across the aisles. Tip O'Neill worked right alongside Ronald Reagan and developed many compromises.

Flash forward to today and members of the two parties won't even say hello to each other in the hall. It may seem like there haven't been any changes in the way the two parties work with each other, but party enmity hasn't been this bad since the duel between Hamilton and Burr!
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