Here Comes The Herd

One year ago, the first day of 2010 was a fantastic day in the market. I think it was up even more than the first day of 2011. Not only can journalists just pull out old copy, we can also pull out our old posts and recycle them as well.
 
Hey, everything runs in cycles.

Maybe we should start getting ready to get out.
 
LOL! said:
One year ago, the first day of 2010 was a fantastic day in the market. I think it was up even more than the first day of 2011. Not only can journalists just pull out old copy, we can also pull out our old posts and recycle them as well.
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Very likely. Having said that, where are the retailers going to go? Cash yields bupkis. The many financial Pravdas are all spouting the party line on bonds (interest rates rising is bad for bonds). What is left? Equities and commodities. Commodities simply are not a big enough market to take the potential inflows. Add in some confidence-inspiring economic data and a couple of years of trailing strong performance and you have the perfect conditions for retailers to decide the train is leaving the station and they better not miss it.
 
brewer12345 said:
Very likely. Having said that, where are the retailers going to go? Cash yields bupkis. The many financial Pravdas are all spouting the party line on bonds (interest rates rising is bad for bonds). What is left? Equities and commodities. Commodities simply are not a big enough market to take the potential inflows. Add in some confidence-inspiring economic data and a couple of years of trailing strong performance and you have the perfect conditions for retailers to decide the train is leaving the station and they better not miss it.
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Brew, it turns out that you are a speculator. Who'd a thunk it? :)

Ha
 
haha said:
Brew, it turns out that you are a speculator. Who'd a thunk it? :)

Ha
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Nah, not really. I am a long term value investor and willing to be quite patient. My investment theses are rarely based on the presumed actions of others, except for expectations that gross misvaluations will be corrected by the market over time. But if the herd does come charging in, it would add quite a lot of whipped cream and a whole jar of cherries on top of my investment sundae.
 
A small-cap value ETF that we've owned for several years (IJS) is approaching levels not seen since 2007.

Surely the underlying stock's profits are also approaching those levels, right?
 
REITs with fat expense ratios. That will be the flavor of the month. Just sold a bunch of equity index to keep me at 50/50, and I hope I'll be selling more as people pile back in this spring.
 
ah yes, the "healing process" is exceeding expectations and the "new normal" might not be so bad :LOL:

there will be several surprises in 2011 --- all of which will be used to shake the tree

so I am keeping some powder dry at this point --- if I miss some of this January effect --- oh well, such is life
 
Jeesh. I'm having a hard enough time now holding my nose and buying TIPS/Treasuries to keep my bond allocation where it needs to be. Brewer your adding flame to the fire already! Hopefully some classes will be left behind (like EM) and I can pick those up along the way. Oh well when the party is over equities will again be cheap(er) and I'll pony up to the table to fork some into my portfolio again. Its hard to complain though given the last 2 years.

DD

Maybe we can get WR to post a Wheeeeee! and get a market correction :ROFLMAO:.
 
Fellows, we are the herd.:)

Ha
 
brewer12345 said:
Is the retail investor returning to stocks? - Yahoo! Finance=

Looks like we got a stampede here, pardner. Git ready to head these doggies into the corral.
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I guess I would expect this about now, with a decent 2010 after a strong 2009 and then nice strong opening day to the new year.

I had read that just say 3 months ago was the first time in quite a while that retail investors had net redemptions from bond funds.

But I don't think it'll be like in the past - in the 90s and even mid-2000s, because people were really burned badly with the last go around and I think the mentality is more likely the 70s (maybe, I didn't follow markets back then) where people have a very strong distrust of the markets.

Audrey
 
My concern with the market is that it feels like increasing profits are being driven more by cost cutting than by top line revenue growth. That isn't sustainable, as you can only cut costs and reduce payrolls so much -- but as mentioned before, many people feel like there's no other place to put long-term capital as cash yields basically zero and bonds could get smacked by interest rate hikes.
 
ziggy29 said:
My concern with the market is that it feels like increasing profits are being driven more by cost cutting than by top line revenue growth. That isn't sustainable, as you can only cut costs and reduce payrolls so much -- but as mentioned before, many people feel like there's no other place to put long-term capital as cash yields basically zero and bonds could get smacked by interest rate hikes.
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But that's OK. It's when companies realize they can't cut costs anymore to grow revenue is when they become willing to invest for growth and start buying stuff and hiring people. Unless they are happy being a cash cow - and some are - and that's OK too if they pay dividends.

Audrey
 
Gearhead Jim said:
The way you phrased that may suggest that you don't agree?
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I have allowed my bond allocation to dwindle down pretty darn far (close to my min), so take what you like from that. I am simply amazed at how the various financial "news" outlets all find a way to sing from the same hymnal time and time again.
 
Fear may have finally given way to greed... :D

I think the smart move is to stick with the planned approach... for me that is a strategic allocation and rebalancing.

But if I see certain opportunities emerge over the next several year I am not opposed to taking some money and making a Tactical Allocation. :cool:

I am going to be very interested to see what happens with interest rates.


Right now our intermediate bond allocation is low... For the most part intermediate bonds are in the balanced funds we hold.... most of our fixed is in stable value, short-term bond funds and cash.

I have two things that I am watching closely to interest rates.


  1. I am considering a SPIA to round out our base income. Which... if we do it would be using a ladder.
  2. I want to take a portion of our bond allocation and build a ladder with it.

I am hoping we do not experience high inflation. But if we do... I want to have a fixed strategy that will hopefully benefit us... or at a minimum limit the negative impact.


It is interesting. I spent the last 25 years studying the stock market closely. Now I am trying to get up to speed on the bond market because we have a large fixed allocation and income assets that are at its mercy!
 
Stick to your plan and AA. The flavor of the day changes constantly. I'm keeping to an approx 50/50 allocation.
 
2011 is the 3rd year of a presidential term. Since 1939 the average return for those 3rd years was 20.2%. Maybe just coincidence? Well, we can hope for a repeat.

If somebody's interested I could post detailed info but probably most don't care.
 
Is it possible the Feds are successfully blowing the third and final bubble?This could end badly but I sure hope I'm wrong.
 
brewer12345 said:
Commodities simply are not a big enough market to take the potential inflows.
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Sure, in a rational world. But if stocks get a setback, I wouldn't be shocked to see money start moving into commodities, driving prices up and drawing in yet more cash as folks look for growth and follow the upward line. Of course, that way lies madness.
 
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