Market Pummelling

[laurence]

So the market is getting rocked:

http://biz.yahoo.com/ap/050415/wall_street.html?.v=25

and next week is earnings, which people are betting will not be fun. S$P has been at this number what, in 1998? So are we looking at a buy opportunity in about a month when things settle down? Or is this the End of Days? Build a bunker?

I have about 20k in MM (which is big for me) I'm thinking of moving into the market....maybe I'll just wait!

 

[Beststash]

I also have been patiently waiting for an oppertunity to go "All In" but not sure of the timing

Any suggestions??

In the meantime I have been getting ready by setting up a spreadsheet with 70% stock and 30% bonds, fixed income - I am only about 28% stocks now and otherwise in bonds and MM. CD's.

My plan is:
LCG  (10%)
SCG (10%) 
Comm/REIT (10%)
LCV (10%)
SCV (10%)
Intl (20%)
Fixed (25%)
Cash (5%)

I know nobobdy encourges market timing but when is a "most excellent" time to jump?? Be Real!!

 

[Michael]

The market often has not done well in post election years, or the summer time.

 

[Eagle43]

Right about the market going south in year after election. If you insist on market timing, jump back in... in October. At least my market guru advised this to me this a.m. I ignore his counsel, but pass it along for what it's worth. Who knows, he could be right.

 

[Mr._johngalt]

Hey Eagle...............Re. your "market guru"............
he doesn't know squat. None of the others do either.

JG

 

[cute fuzzy bunny]

Yeah Laurence, but ELN is at least doing better this week...see, if you had 'doubled down' you'd be making some money.

I should at this time point out that six months ago I called this downturn. 8)

According to my best guesses and many ridiculously unrelated sources of information, it will continue until late July or early August, firm up, and we'll see some upside movement by October.

 

[unclemick]

Th

'Sell in may and go away' - an old saw right often enough to be - welllll l- an old saw.

October - Dec every year if I have some spare cash to invest.

P.S. Yeah you rite! - I remember your call on the market.

 

[Cut-Throat]

I should at this time point out that six months ago I called this downturn. 8)

Yup, and I predicted at the same time that no matter what happens, someone will come out of the woodwork and tell us that they predicted it!

 

[BUM]

I bought some IBM today at 77...felt right

we'll see

BUM

 

[soupcxan]

There was another thread about this a few weeks ago, search for "the market that goes from suck to blow."

The cliffs notes version: testicular fortitude versus perma-bear mentality.

 

[haha]

Yup, and I predicted at the same time that no matter what happens, someone will come out of the woodwork and tell us that they predicted it!

This prediction is the only one sure to be right.

Cut-Throat, in another thread you mentioned that crashes only occur after bubbles. I don't wish to disagree with you, but I think that may depend on one's definition of a crash. I believe the behavior of the Nikkei since 1980 may give a contra-example. A bubble burst in 1990 close to 40,000. It bottomed in 1992 around 15,000 (I can't give exact numbers because I am looking at a Yahoo Chart.) That was followed by an 8 year trading range between about 14,000 and 22,000. Then in 2000 there was another abrupt fall from 20,000 to 7600- a fall of 62%. In my book, whether this is a crash or not, it is sure meaningful to an investor. And it came out of what I would call a trading range. The range was more volatile than the recent DJI range, but I am not sure what that might or might not mean.

Mikey

 

[unclemick]

Hmm

Maybe the Japanese should start paying some decent dividends and lighten up on their 'sweetheart cross holdings' among corporations. ?? Tax structure toward div.'s and cap gains.

A little 'Adam Smith' might go a long way. Of course - I have no knowledge of their markets - just pontificating.

A 62% drop here - well that might get my attention!

Nikkei - about 11,370 or so?

 

[Cut-Throat]

This prediction is the only one sure to be right.

Cut-Throat, in another thread you mentioned that crashes only occur after bubbles. I don't wish to disagree with you, but I think that may depend on one's definition of a crash.  I believe the behavior of the Nikkei since 1980 may give a contra-example. A bubble burst in 1990 close to 40,000. It bottomed in 1992 around 15,000 (I can't give exact numbers because I am looking at a Yahoo Chart.) That was followed by an 8 year trading range between about 14,000 and 22,000. Then in 2000 there was another abrupt fall from 20,000 to 7600- a fall of 62%. In my book, whether this is a crash or not, it is sure meaningful to an investor. And it came out of what I would call a trading range. The range was more volatile than the recent DJI range, but I am not sure what that might or might not mean.

Mikey

Mikey,

This certainly may be true of the Japanese Market, which I know nothing about.

I was only pondering the U.S. Market. And it seems that major corrections (30% or more) happened shortly after bubbles and not after a 4-5 year plateau that we have been in.

But who knows This time could be different And then there will be those that remind us that they predicted it!

 

[wildcat]

Oh boy another market timing post...happens every time we see a drop :

 

[KB]

I bought some IBM stock today....through the employee stock purchase program. nice price for a change

 

[sgeeeee]

I knew the market was going to fall. I just knew it.

I have a similar statement I'm waiting to post after the next big rally.

 

[laurence]

Well TH, you are FIRE and I'm not, so you must be doing something right, I'll give you that much! But why you gotta bring up ELN (still holding. by the way)?

I think I'll just DCA my 20k into some Vanguard funds and let it ride. It's just that this is my first serious amount of after tax money, it feels different investing it.

 

[preben]

It looks very similar to 2004, where nothing (slow downtrend) happened all year and then Oct-Dec market(s) jumped 10%+.

I am in for the long term. What I do not like about this drop is that nothing seems to counter the drops even when looking at a well diversified portfolio. Energy have done well but everything else have dropped in tandem.

Will see what the future brings

 

[uncledrz]

I'd rather buy when stocks are on sale than when they are at a premium.
A downturn in the market is not a bad thing for those who have a long term view. This applies, IMHO, to those in 50's and 60's as well as those in their 20's. I just happen to know a few people in their 80's who think the same way-- I love optimists!
That being said, I have no idea which way the market is going Monday, next week, next month; therefore, DCA.

 

[BUM]

Good thoughts Unc. Can't wait to see what happens on Monday's "underpriced rally" attempt. Should be more entertaining than the Young and the Restless!

BUM

 

[preben]

uncle; well I agree partly, but as I am close to FIRE (have initiated part-FIRE through new job) there will be less money coming in from now on, and therefore less cash to buy stocks for. Same for the guys in the 60ties/80ties you mention - are they still working (or have so fat pensions) so they can keep buying stocks at lower prices!?

I DO have an income stream of 3% in div/interest and can live for 2% so in hard times that 1% can and will be directed to new stock purchases I guess but otherwise do not see any advantage in market drops for retired or FIREd people.

Cheers!

I'd rather buy when stocks are on sale than when they are at a premium.
A downturn in the market is not a bad thing for those who have a long term view.  This applies, IMHO, to those in 50's and 60's as well as those in their 20's.  I just happen to know a few people in their 80's who think the same way-- I love optimists!
That being said, I have no idea which way the market is going Monday, next week, next month; therefore, DCA.

 

[unclemick]

I like to shift deck chairs on the Titanic.

Since the bulk(75%) of my retirement portfolio is balanced index requiring no action, I have this side money I play with via DRIP's and quasi DCA and try to put in a little extra on perceived dips.

Right now - don't golf. fish, or even kayak - so putzing in the market is fun. If it gets boring, I'll park the the money in another balanced index - say Wellesley which is managed value so I'll feel like I 'picked' something.

Unfortunately the weather has been good - so the market may lose interest for me until October or later when our version of winter gets here.

 

[Delawaredave]

Hey - this is an ER forum - I thought all of you were "long term" !

Instead there's all kinds of "technical guesses" on where the market is going.

You have S&P PE ratios in the "high teens" at best. Still above average.

Gotta move towards "average" - especially with earnings peaking and interest rates going up.

So even a "rational market" would move 5% below where we are now. If you look at DCF models on market, you see same picture.

If things get "irrational", then you get a market only supporting PE's in mid-teens -- therefore possibly another 20% drop.

We're close but above "fair value". Don't buy now. And don't sell now. This is that time of the storm where you "hunker down" and wait.

But what do I know......

 

[lazyday]

What I do not like about this drop is that nothing seems to counter the drops even when looking at a well diversified portfolio. Energy have done well but everything else have dropped in tandem.

This actually doesn't surprise me. Lots of us have complained that we can't find anything cheap, or even anything that is much cheaper relatively than other things. I think this is because the market is more rational than usual, as a reaction to the silliness around the turn of the century. So, lots of $ are desperately trying to find the best priced assets. Therefore, during a drop, it makes sense for things to drop about equally, unless there's a fundamental reason for one to drop more.

The markets overall may seem expensive, but there may be some rationality to that as well, since very long term money IMO should be in the market, even at today's prices. (That doesn't mean I think a crash can't happen.)

Delawaredave, I agree with you on long-termedness. So far I haven't responded to the drop myself. I might put half my cash back in the market though at some point.
Also, don't forget that most posting are probably just venting, and won't do anything nutty.

 

[Nords]

... but otherwise do not see any advantage in market drops for retired or FIREd people. Cheers!

Shorting MORE stocks.