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More Bubble Talk
Old 05-07-2007, 07:59 AM   #1
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More Bubble Talk

Pundits continue to kick around the concept of a bubble in the U.S. market. Intellectually, my thoughts on this are that at this point this is being overblown. But since I am planning to get out this year, this is the absolute worse possible time for a crash for me personally. With asset classes becoming more and more correlated, please tell me why I don't have anything to worry about with my slice and dice strategies?

http://www.marketwatch.com/news/stor...5E6A4A2BF6A%7D



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Re: More Bubble Talk
Old 05-07-2007, 08:51 AM   #2
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Re: More Bubble Talk

If you are second guessing market direction, maybe it's time for an allocation review.

How much cash are you hold, and how many years income is it?

IMO if you think you are taking on too much risk, add a year's income to your cash allocation... maybe even 2-3 years worth of cash. When I retire my goal is 7 years cash is part of allocation.
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Re: More Bubble Talk
Old 05-07-2007, 09:18 AM   #3
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Re: More Bubble Talk

Add some non-correlated investments to the mix, like international value or perhaps a commodities or gold fund in small doses...........
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Re: More Bubble Talk
Old 05-07-2007, 09:43 AM   #4
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Re: More Bubble Talk

What a great article. Manages to be sensational, alarmist, bullish, bearish, and utterly useless all at once.

The "chilling explanation" in the Gartman Letter somehow draws the parallel between 10-fold rise in Nikkei in 70s-80s and the recent ~6% run in the Dow?

:

Edit: just out of curiousity I looked up the author http://en.wikipedia.org/wiki/Peter_Brimelow who appears to be a right-wing nut. Ugh
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Re: More Bubble Talk
Old 05-07-2007, 09:52 AM   #5
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Re: More Bubble Talk

Quote:
Originally Posted by fluffy
Edit: just out of curiousity I looked up the author http://en.wikipedia.org/wiki/Peter_Brimelow who appears to be a right-wing nut. Ugh
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Re: More Bubble Talk
Old 05-07-2007, 10:08 AM   #6
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Re: More Bubble Talk

Quote:
Originally Posted by fluffy
What a great article. Manages to be sensational, alarmist, bullish, bearish, and utterly useless all at once.

The "chilling explanation" in the Gartman Letter somehow draws the parallel between 10-fold rise in Nikkei in 70s-80s and the recent ~6% run in the Dow?
Agreed. If you really want to get scared, discount this type of article and look at the mother of all bubbles, the derivatives market.

"The latest estimates judge it to be worth some $236 trillion or about eight times the GDP of the entire planet. In other words, it is a bubble larger than the world itself."

http://www.moneyweek.com/file/18497/...l-bubbles.html
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Re: More Bubble Talk
Old 05-07-2007, 05:16 PM   #7
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Re: More Bubble Talk

back in 2000 most PE ratios were at least twice as high as Google's stock price. except for housing in a few areas of the US, i don't think we are in a bubble
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Re: More Bubble Talk
Old 05-07-2007, 05:25 PM   #8
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Re: More Bubble Talk

A bubble for sure.

S&P Q1 earnings up ~12%
S&P Index up ~6%

Must be a bubble. :
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Re: More Bubble Talk
Old 05-07-2007, 06:52 PM   #9
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Re: More Bubble Talk

Dow has finished up 24 of last 27 days. Last time this happened was 1927.

Que pasa?

Ha
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Re: More Bubble Talk
Old 05-07-2007, 06:59 PM   #10
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Re: More Bubble Talk

Quote:
Originally Posted by HaHa
Dow has finished up 24 of last 27 days. Last time this happened was 1927.
So then, can we infer that the second great depression is only two years away ?
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Re: More Bubble Talk
Old 05-07-2007, 07:02 PM   #11
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Re: More Bubble Talk

Quote:
Originally Posted by HaHa
Dow has finished up 24 of last 27 days. Last time this happened was 1927.

Que pasa?

Ha
Hang in there Mikey. If your comparison is correct, the Dow should just about triple before the Big Crash of 1929! - And I'll go out on a limb here, that if the Dow Triples in the next 2 years We Will have a Crash!

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Re: More Bubble Talk
Old 05-07-2007, 07:06 PM   #12
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Re: More Bubble Talk

What a great time to buy that would be :
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Re: More Bubble Talk
Old 05-07-2007, 07:07 PM   #13
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Re: More Bubble Talk

Quote:
Originally Posted by Cut-Throat
Hang in there Mikey. If your comparison is correct, the Dow should just about triple before the Big Crash of 1929! - And I'll go out on a limb here, that if the Dow Triples in the next 2 years We Will have a Crash!

Edit: removed image of chart
If it doubles in 2 years... I am going to cash! Hope it does. I know what to do!
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Re: More Bubble Talk
Old 05-07-2007, 07:12 PM   #14
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Re: More Bubble Talk

For whatever its worth, I heard Warren Buffett say this morning that he thought the market was not cheap but reasonably priced. He didn't seem to be overly concerned. His main concern was to find a big company to buy.
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Re: More Bubble Talk
Old 05-07-2007, 08:01 PM   #15
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Re: More Bubble Talk

I am not making a prediction, just passing along an observation that I heard on the news on my car radio this afternoon.

I can say though, that this has been an amazing time! I bought a stock in January 2007 that I thought was reasonably priced but not a huge bargain. It has increased 50% since then!

I bought a stock 4 or 5 years ago. It puttered along increasing a bit each year all the while paying high dividends. Then suddenly this year it doubled. I sold it this morning for a 4 bagger.

I've been at this stuff for a long time, and this hasn't happened to me very often I can tell you! (I didn't do techs in the 90s, so I missed that amazing time.)

I am as puzzled as anyone, and maybe more so than most but I am not dumb enough to stand in the way of a runaway train. At least I hope not!

Ha
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Re: More Bubble Talk
Old 05-07-2007, 08:42 PM   #16
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Re: More Bubble Talk

The warnings were loud and clear prior to the tech meltdown and you had to be totally out of touch to not see the writing on the wall as to where the housing boom was headed.
The warnings today are not nearly as loud or obvious for that matter, but they are there.
For the last 4 trading sessions I have slipped into cash ever so slowly and I plan to follow one of two plans for better or worse.
Plan A- Sell equal amounts each day until I reach my max cash position ( 70% )on May 18.
Plan B- If between now and the 18th the SPY MACD gives a clear sell signal I will go to the 70% cash position that day.

Of course I have a plan C if all goes against me, but that simply involves looking stupid.
BTW, I'm looking for a 4 to 6% correction as opposed to the end of the world.
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Re: More Bubble Talk
Old 05-07-2007, 08:45 PM   #17
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Re: More Bubble Talk

Quote:
Originally Posted by JPatrick
BTW, I'm looking for a 4 to 6% correction as opposed to the end of the world.
Why bother to sell in this case? I assume this trading is in a retirement account?

Ha
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Re: More Bubble Talk
Old 05-07-2007, 09:01 PM   #18
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Re: More Bubble Talk

Quote:
Originally Posted by HaHa
Why bother to sell in this case? I assume this trading is in a retirement account?

Ha
Why sell? To buy later 4-6% lower and earn 6.5% while waiting.
Yes most of this is in IRA's.
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Re: More Bubble Talk
Old 05-07-2007, 09:06 PM   #19
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Re: More Bubble Talk

Quote:
Originally Posted by JPatrick
Why sell? To buy later 4-6% lower and earn 6.5% while waiting.
Wow! And they call me a dirty market timer!

Ha
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Re: More Bubble Talk
Old 05-07-2007, 09:18 PM   #20
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Re: More Bubble Talk

Quote:
Originally Posted by HaHa
I can say though, that this has been an amazing time! I bought a stock in January 2007 that I thought was reasonably priced but not a huge bargain. It has increased 50% since then!
Last summer my nephew the Army Ranger directed my attention to Armor Holdings (AH). I started buying at $52/share. They've been scrabbling for contracts, going up nicely, making good soldier tools, meeting their targets, nothing spectacular but up to the low $60s.

This week BAE decided to buy AH. Blam!---> to $86/share.

This is happening way too often. Either we've all become brilliant investors or the tide is really really coming in. I believe valuations aren't crazy but all of our scorched tail feathers are probably starting to twitch uncomfortably again. If this keeps up we'll be up over 17% this year. I'm sitting tight but I'm shaking my head in amazement.

Abby Joseph Cohen raised her 2007 prediction this morning.

Buffett is one to talk--Berkshire stock was up 1.3% in the post-meeting euphoria. I'm sure Borsheim's is still trying to stuff the weekend sales cash in their safe.
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