Market Opinions.

[Donzo]

Watch how people feel about it. If nervousness turns into fear, this will keep going until we have full capitulation.[/quote]

What do you guys think full capitulation would be?

 

[Dawg52]

I'm sure most of you received a similar email from your brokerage firm but if not, here is a link to the message I received. Basically just a reminder that market fluctuations are normal. I guess it does make sense for the long term but as an early retiree, you can't help but feel a little uneasy when the market heads south.

Fidelity Investments

 

[theloneranger]

Just glad I did not retire 7/31/07.
Down 9% for the last month.
Still up 15% for the year.

 

[Rustic23]

My guess is if you retired 7/31/07, and you did not have three or four years of you investments in cash short term assits, then you have not been reading this board long.

It seems like most if not all of those who have retired keep a cash fund so they will not have to sell into a down market.

 

[cute fuzzy bunny]

What do you guys think full capitulation would be?

When nobody wants to buy stocks anymore. And thinks its a very bad idea.

 

[Spanky]

Just glad I did not retire 7/31/07.
Down 9% for the last month.
Still up 15% for the year.

What's your new retirement date?

You cannot retire because the portfolio is down by 9% in a month or only up by 15% for the year?

 

[Dawg52]

Still up 15% for the year.

What are you invested in? 15% pretty amazing.

 

[chinaco]

The market seems to be getting a bit volatile. This could be a harbinger of a top. I am not good at predictions. It might just be a short-term correction. I think Sept and Oct are historically bad months for the market. However, it would not surprise me if we have topped or are ready for a short bear in the next 18 - 30 months. It may not happen until after the election. The last bear market started in 2000 and ended in 2002 (I think) And one thing is for sure, there will be another Bear Market. Count on it. The actual things that trigger it can vary. Some of this will depend on interest rates and corporate profits. We need to keep in mind that aside from near term fear, the market is pricing in future expectations.

For now, corporate profits seem to be holding up.

Still, I am sticking with the basic allocation strategy and rebalancing is the key (IMHO).

I am like everyone else, I hate to see the market drop (for obvious reasons). But I have confidence in my approach.

 

[clifp]

The market seems to be getting a bit volatile. This could be a harbinger of a top. I am not good at predictions. It might just be a short-term correction. I think Sept and Oct are historically bad months for the market. ...
Still, I am sticking with the basic allocation strategy and rebalancing is the key (IMHO).

.

OCTOBER: This is one of the peculiarly dangerous months to speculate in stocks in. The other are July, January, September, April, November, May, March, June, December, August, and February. Mark Twain from PuddnHead Wilson one of my favorite Twain books.

 

[Tadpole]

You know, it was a hard decision and one that a person can second guess in retrospect but lives with nevertheless. About 3 days to a week before the first day of the drop, I moved some profits into money markets to attain a 50/50 mix. Perhaps it should have been more, perhaps not. Time will tell. I would not have been this conservative a few years ago but, with my husband's plan to retire in two years, I felt that caution was appropriate. Does anyone else see things like I do. The market will drop substantially and there are precious few to no sectors left to create the next bubble with. I have concluded that the "recovery" (rise back to previous levels) will be a lot slower this time as the top was more speculative than real value. Without something to use to bubble the economy, won't it tend to settle to a better but lower value? Also, don't we have a "China bubble" still looming and ready to pop? Will there be additional consequences to the economy due to the hidden and over-rated pieces of foreign bubbles? You see, I cannot imagine how anyone could consider the current problems to be just the summer/July slowdown/volatility. Reading some of these posts, I get the impression that many of the forum members would disagree with me but I really don't see why.

 

[W2R]

I dunno. I am not very experienced in investing, but "just call me a cockeyed optimist" (as the song goes).

I just don't think this will be a substantial, long term drop, this time.

Now my disclaimer - - my opinion is based on absolutely nothing whatsoever other than gut feelings.

 

[chinaco]

OCTOBER: This is one of the peculiarly dangerous months to speculate in stocks in. The other are July, January, September, April, November, May, March, June, December, August, and February. Mark Twain from PuddnHead Wilson one of my favorite Twain books.

Good point!

 

[al_bundy]

The market seems to be getting a bit volatile. This could be a harbinger of a top. I am not good at predictions. It might just be a short-term correction. I think Sept and Oct are historically bad months for the market. However, it would not surprise me if we have topped or are ready for a short bear in the next 18 - 30 months. It may not happen until after the election. The last bear market started in 2000 and ended in 2002 (I think) And one thing is for sure, there will be another Bear Market. Count on it. The actual things that trigger it can vary. Some of this will depend on interest rates and corporate profits. We need to keep in mind that aside from near term fear, the market is pricing in future expectations.

For now, corporate profits seem to be holding up.

Still, I am sticking with the basic allocation strategy and rebalancing is the key (IMHO).

I am like everyone else, I hate to see the market drop (for obvious reasons). But I have confidence in my approach.

profits are a lagging indicator. back in late 2000 a lot of companies reported stellar profit growth only to see their stock savaged. the market is always 6-12 months ahead of the headlines

 

[chinaco]

profits are a lagging indicator. back in late 2000 a lot of companies reported stellar profit growth only to see their stock savaged. the market is always 6-12 months ahead of the headlines

Agreed. That is what I meant by the market is pricing in future expectations (in the previous statement about corp profits.)

But if corporate profits actually showed a lot of weakness now... the market would likely react even more violently (now) because reality turned out lower than expected. Plus, analyst would likely expect the next qtr to be somewhat similar.

 

[Mach]

For accumulators, what's the verdict?

Cash out of any heavy finance/debt funds/stocks, take the loss (and not pay short term gains if less than a year in), and re-invest later at the bottom, or hold in savings (5%+) until the upswing?

Get half-way out of lowest performers, take any tax hits from <1 year investments, and move them to savings that get 5+%?

If >5 years to retirement, wait it out anyway? By 2010 this will be just a bad memory, right?

really it's a combined math game of optimized earnings, coupled with optimized time/effort of optimizing the earnings (calculating it, pulling the trigger, the tax implications, etc., all may factor in).

Personally since I'm not retiring in at least the next 3 years, I'd be inclined to ignore it, since I don't actively trade right now. If I were actively trading, I'd probably already have moved things around. I did invest an extra chunk in as things dipped, assuming better to buy low than wait until it climbs. But of course it's dipped even lower...

-Mach

 

[brewer12345]

Been buying the crap out of banks, insurers, shipping companies. Best entry prices on these I have seen in years.

For all the hand-wringers about ARM resets, bear in mind that about ~$2 trillion a year in mortgage originations is done every year, so a slight uptick in ARM resets is a drop in the bucket.

 

[al_bundy]

i think the i banks are dropping like a rock for a reason. investors don't believe what they say and won't buy anything they sell. Bear Stearns CFO said that June was profitable, July should be profitable, but nothing on August.

i think it's something to worry about when there are questions about the ibanks profitablity instead of growth. and the latest figures i read were that 20% to 30% of buyers of the last few years are now locked out of the mortgage market due to the new standards

in the case of insurers, i've been reading rumors for years now that they bought a bunch of the credit default swaps on mortgages and will now have to pay up for all the foreclosures

 

[brewer12345]

i think the i banks are dropping like a rock for a reason. investors don't believe what they say and won't buy anything they sell. Bear Stearns CFO said that June was profitable, July should be profitable, but nothing on August.

i think it's something to worry about when there are questions about the ibanks profitablity instead of growth. and the latest figures i read were that 20% to 30% of buyers of the last few years are now locked out of the mortgage market due to the new standards

in the case of insurers, i've been reading rumors for years now that they bought a bunch of the credit default swaps on mortgages and will now have to pay up for all the foreclosures

Heh, is that what passes for your analysis?

Its a pleasure to take your money.

 

[al_bundy]

actually i took your money late last month before the big drop

my wife knows people who work on wall street, i'll have to ask her how they are doing

 

[CybrMike]

Bought 20 S&P 500 index call options before the big run up today. They expire in DEC. Up about $2K so far. Time will tell whether my gamble was right or not

Also bought some AAPL options as they are announcing some new products tomorrow, figure they'll get a pop. Again, time will tell.

Wait, this isn't the Stock Pickers Forum....

 

[yona]

I lost about 10% from the peak. Just love these opportunities, and I bought more cheap RE stocks in HK that trade below 1/3 of NAT.
Who the hell is so stupid to sell 1 dollar for 30 cents

 

[teejayevans]

in the case of insurers, i've been reading rumors for years now that they bought a bunch of the credit default swaps on mortgages and will now have to pay up for all the foreclosures

Why did my insurance co. (State Farm) sent me a dividend check last
month, is that all part of the illusion too?
TJ

 

[al_bundy]

when they buy credit swaps they get paid depending on the amount they insure so there is cash flow and foreclosures have been pretty low lately. they are higher than the models predicted which is the reason for the volatility, but the big ARM resets don't start till October and foreclosures probably won't pick up until next year

they could have sold the swaps, they could have never bought them. no one really knows for sure. but someone owns them now and in the end someone is going to come calling to get paid on a defaulted loan

these credit things happen almost on cue every decade and every single time it's a surprise to people because they thought they hedged against it or some new computer model said it would never happen. in the end investors get mad, withhold money, rates go north, prices go south, some time passes and investors need returns again so they come back to wall street and the people that ripped them off in the first place, the first ones make money in some new investment, people copy it, leverage themselves, and after a few years it comes apart again and the cycle repeats

this time over $2 trillion in mortgage debt is going to reset and most of the people who took it out put nothing or very little down and in a lot of cases walked away from the closing with cash in hand. does anyone really believe they are going to pay 75% of their earnings to their mortgage once it resets? they will probably walk away, rent for half the price and keep on buying nice cars, ipods, $80 Juicy sweatpants and whatever and leave investors with the house. you can find plenty of stories of people walking away from $40,000 deposits on florida condos with no second thoughts. pretty sure people will walk away from their no down payment loans with no second thoughts either

go visit creditboards.com and read the mortgage forum for the last few years to see what kind of people were getting mortgages and what the standards were for privately funded mortgages. my only regret is that i stuck with this IT thing instead of making $30,000 a month as a LO writing loans. not like i would have cared if they went bad

 

[FIRE'd@51]

From Mauldin's latest newsletter:

"Pay attention to the numbers I highlight in red for January through June of 2008. The largest portion of mortgage resets is not until next year.

​

We have just seen $197 billion of mortgage resets so far this year. That is less than we will see in two months (February and March) of next year."

I find this table somewhat encouraging. By the time we hit the period of heavy mortgage resets, the Fed will likely have cut rates a time or two. Since most of the resets are tied to short rates, this will probably help many borrowers with ARMs.

 

[al_bundy]

why do you think the fed is going to cut rates just because people lose their homes? 1987 and 1998 the Fed cut .25% just to avoid a meltdown at two minutes to midnight and then went on to raise rates after that.

a lot of people foreclosed last decade and the Fed's official policy is that if people bite off more than they can chew, let them choke. i wouldn't be expecting the Fed to come to the rescue

.25% cut will mean .25% less LIBOR and instead of paying 8%, ARM people will pay 7.75%