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Old 02-21-2011, 01:55 PM   #41
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Oh, oh, time to watch out!

‘Buy everything’ sentiment continues | Investing | Financial Post
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Old 02-21-2011, 06:26 PM   #42
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I was just about the post the same kind of thing. These are headlines that I find scariest:

Wall Street: Stocks are overbought so buy, buy! - Business - Stocks & economy - msnbc.com
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Old 02-21-2011, 06:34 PM   #43
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While I think this thread signals the start of a correction, let is step back a bit. The economic data has been trending upward and there are lots of signs that the economy is sufficiently on the mend that the next year or two should see unemployment decline. While the Middle Eastern issues are a bit troubling, I note that Saudi Arabis, Abu Dhabi, and a host of other major oil exporters do not seem to be in deep trouble (via pretty much bribing everyone with petrodollars/petroyuan). So short term fluctuations aside, its not hard to make a case that equity valuations ought to be normalizing (i.e. moving upwards) over the next couple of years.

I'd be happy to see the odious dictators of North Africa chucked out on their ears, FWIW. The fact that it seems to be happening without the US manufacturing a silly pretext for yet another endless war of occupation that gives people a good reason to hate us for generations makes it even better. The people who are going out on the streets and confronting their governments are more courageous than I am ever likely to be.
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Old 02-21-2011, 07:06 PM   #44
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Let's just hope this thread doesn't come to life again

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Old 02-21-2011, 07:33 PM   #45
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While I think this thread signals the start of a correction, let is step back a bit. The economic data has been trending upward and there are lots of signs that the economy is sufficiently on the mend that the next year or two should see unemployment decline. While the Middle Eastern issues are a bit troubling, I note that Saudi Arabis, Abu Dhabi, and a host of other major oil exporters do not seem to be in deep trouble (via pretty much bribing everyone with petrodollars/petroyuan). So short term fluctuations aside, its not hard to make a case that equity valuations ought to be normalizing (i.e. moving upwards) over the next couple of years.
What is troubling to me Brewer is that equity levels are within 15% of all time levels. Economic activity is certainly better than it was 2 years ago, but I dare say it looks much worse than it did back in 2007.

I also think that financial crisis caused structural damage to many institutions, mainly governments but also banks, and the housing industry that are decades away from being repaired. I think it is almost certain that austerity measures that are being enacted at all levels of government both here and in Europe, will cause a short term contraction in income. While I am very happy to see the measures cause I think they are the right thing to do, I am worried that in the short-term they will further depress demand and possibly employment.

So on an absolute basis I much happier purchasing SP @1500 back in 2007
because I think the outlook for 5 year corporate earning from 2007-2012 looks much better than 2011-2016. (Obviously with perfect hindsight, I'd understand that SP500 earning were really a house of cards back then.).

On the other hand on a relative basis with bonds/CD earning 2-3%, cash earning nothing, real estate on life support, stocks look cheap. But I wonder if it is not an illusion.
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Old 02-21-2011, 07:49 PM   #46
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What is troubling to me Brewer is that equity levels are within 15% of all time levels.
Unfortunately no one wants to pay for covered calls that are 16% out of the money...
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Old 02-21-2011, 07:49 PM   #47
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I rebalanced on Friday since my equity proportion had gotten higher than I like. Also, it does seem like time for a correction. On the other hand maybe things are different this time
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Old 02-21-2011, 07:56 PM   #48
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No need to worry as I'm going all cash in the morning so the market is guaranteed to continue going up for many months yet.
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Old 02-21-2011, 08:13 PM   #49
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No need to worry as I'm going all cash in the morning so the market is guaranteed to continue going up for many months yet.
Are you doing this, or is this a joke? If you are serious, can you tell us more about your thought processes?

Ha
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Old 02-22-2011, 03:17 AM   #50
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Can you believe it W2R - I am still 100% in bonds, CDs, and money market equivalent. Last year I should have tried to buy some shares for the first time in my life. However, there has been too much going on at work, and I did not have much time to focus on this unfortunately.

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This market is taking my breath away and still seems to be headed up, up, up.
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Old 02-22-2011, 07:43 AM   #51
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Originally Posted by clifp View Post
What is troubling to me Brewer is that equity levels are within 15% of all time levels. Economic activity is certainly better than it was 2 years ago, but I dare say it looks much worse than it did back in 2007.

I also think that financial crisis caused structural damage to many institutions, mainly governments but also banks, and the housing industry that are decades away from being repaired. I think it is almost certain that austerity measures that are being enacted at all levels of government both here and in Europe, will cause a short term contraction in income. While I am very happy to see the measures cause I think they are the right thing to do, I am worried that in the short-term they will further depress demand and possibly employment.

So on an absolute basis I much happier purchasing SP @1500 back in 2007
because I think the outlook for 5 year corporate earning from 2007-2012 looks much better than 2011-2016. (Obviously with perfect hindsight, I'd understand that SP500 earning were really a house of cards back then.).

On the other hand on a relative basis with bonds/CD earning 2-3%, cash earning nothing, real estate on life support, stocks look cheap. But I wonder if it is not an illusion.
Well, will not belabor the point, but vs. 2007 a lot of the leverage has come out of the system and the economy seems to be doing a better job of allocating capital to the "real" economy. Total US GDP is (IIRC) at an all time high, and without many of the imbalances of a few years ago. Could we hit an air pocket? Sure. But I think the downside is lowe given the clearout we had.
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Old 02-22-2011, 07:58 AM   #52
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Futures down this morning. Middle east problems and oil the topic of discussion this morning on the networks. More of the same.............

Better load up on meds.
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Old 02-22-2011, 08:52 AM   #53
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It's to be expected that stocks will drop with this amount of bad news on TV from a major oil-producer. The Dow is off 1% in an hour. But then why did it rise 0.6% yesterday, when not much was different? It could be that there is absolutely no relationship between the two. The market is more complex than that, and we were overdue for some profit-taking after the last 3-4 weeks.
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Old 02-22-2011, 09:14 AM   #54
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I love these threads . The last two I took as hints to rebalance and so far it has worked out great .
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Old 02-22-2011, 09:25 AM   #55
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Originally Posted by obgyn65 View Post
Can you believe it W2R - I am still 100% in bonds, CDs, and money market equivalent. Last year I should have tried to buy some shares for the first time in my life. However, there has been too much going on at work, and I did not have much time to focus on this unfortunately.
Some folks don't need the stress of equities..........however, there's always....pppppssssssssssstttttttttt......Wellsley ..........
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Old 02-22-2011, 02:33 PM   #56
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I cannot believe my good fortune. The ER forum now has two sure-FIRE leading indicators for when to buy (Dex) and when to sell (W2R). Thanks everbody!
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Old 02-22-2011, 02:47 PM   #57
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I was smiling to myself when I read this last night - mostly because I was thinking the exact same thing W2R was posting - recent market performance seemed too good to be true and I was topping my previous high liquid net worth by quite a margin.

Of course, today we're reminded of what happens to things that seem too good to be true...
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Old 02-22-2011, 02:56 PM   #58
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OK, now don't trip over each other as you rush out to sell...
Too late now... you are the most reliable contrarian indicator I've ever come across.
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Old 02-22-2011, 03:38 PM   #59
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Too late now... you are the most reliable contrarian indicator I've ever come across.
Thank you. Maybe I should start writing a subscription newsletter to make some money off my "Wheee!" moments. If successful it could provide a nice little ESR income supplement.
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Old 02-22-2011, 03:52 PM   #60
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I saw a chart showing the Obama runup versus the Bush runup. It was a scary graph. Obama has outperformed Bush by 3 years. Time for the tinfoil hat!
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