Royal Bank of Scotland Says "Sell Everything"

[M Paquette]

So, will RBS make a "Buy everything!" announcement? At a price lower than the ones when they said "Sell everything!" Somehow I have my doubts.

If one wants to play market timer, one needs to reasonably predict both exit and entry points, AND act on them. We all know people who sold in late 2008/early 2009 and who are STILL out of the market.


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[sansha]

All these predictions are self-fulfilling prophecies. If you and everyone else believe them, then everyone will turn their stocks to cash. Yeah, everyone will sell their stocks for cash. Everyone will be selling and selling. And their prophecy will be fulfilled. If you don't follow them, and do the opposite, the bull market will be back. It's all market psychology. "The end is near .. it's doomsday .. everything in the world will crash." Let everyone repeat that mantra, and then you have a self-fulfilling prophecy. And they will be buying and buying cheap. Then, they will begin to preach "Buy now, everything is cheap", but they have already bought in cheaper.

The thing is - the market already tanked by 15%. Yeah, it might tank another 5-10%. And after all the Fear is gone, the deep discount buying starts and the price jumps up. And you're left holding cash as prices have recovered. . The question is - can you time the market ?

I don't imagine many people here in the market for the long term selling out in a market panic now. This doesn't seem like a doomsday scenario, at least not yet. But if you have some cash, a correction like this seems like a time to consider what to buy. If you don't time it at it's lowest, if you think the market is going to rebound, you'll stiill be that much ahead when it does.

 

[Chuckanut]

This correction is an opportunity to buy stocks at a price that will increase the chances of higher returns many retired people need to have a successful safe withdrawal strategy that will finance their lives.

The least risky way I know of doing that is to re-balance to the safety of my AA that I have tested over and over again using Firecalc and a few other calculators.

 

[NW-Bound]

Unfortunately I developed a taste of fine wine when we entertained customers back in the days. We don't do it often but every once in a while we splurge on a nice Filet Mignon and a Jordan at the Capital Grille.

Who knows if this may be our last for a while especially if the market drops another 20% before our next dinner....

We have been to Ruth's Chris and Morton steakhouses a few times, but just now see that there are a couple of Capital Grille in town. I should try that next. But is there really any difference in the prime cuts offered by these different steakhouses?

 

[shotgunner]

This correction is an opportunity to buy stocks at a price that will increase the chances of higher returns many retired people need to have a successful safe withdrawal strategy that will finance their lives.

The least risky way I know of doing that is to re-balance to the safety of my AA that I have tested over and over again using Firecalc and a few other calculators.

But what if it's different this time?

 

[Corporateburnout]

We have been to Ruth's Chris and Morton steakhouses a few times, but just now see that there are a couple of Capital Grille in town. I should try that next. But is there really any difference in the prime cuts offered by these different steakhouses?

To me Ruth's Chris, Fleming's, Morton and Capital grille are about the same in their prime cuts and prices but we just like the ambiance of the Capital Grille near where we are.

 

[marko]

We have been to Ruth's Chris and Morton steakhouses a few times, but just now see that there are a couple of Capital Grille in town. I should try that next. But is there really any difference in the prime cuts offered by these different steakhouses?

We frequent them all but my favorite his Ruth's Chris. Just something about the way it comes onto the plate.

Oddly, THE best steak I ever had was 20 years ago at Ruths' Chris in Taipei; and yes, I've gone the Kobe route in Tokyo as well but that one steak was just unbelievable!

 

[marko]

Unfortunately I developed a taste of fine wine when we entertained customers back in the days. We don't do it often but every once in a while we splurge on a nice Filet Mignon and a Jordan at the Capital Grille.

Who knows if this may be our last for a while especially if the market drops another 20% before our next dinner....

Had a fairly wealthy/stingy great-uncle who's last meal was at a Chinese hole in the wall...we saw him sitting on a folding chair eating out of a carton; heart attack later that night. (no, it wasn't the food that killed him!!)

My dad always said: "I wonder if he knew it would be his last meal if he'd have gone to a much better place..."

 

[Car-Guy]

My dad always said: "I wonder if he knew it would be his last meal if he'd have gone to a much better place..."

He might have lost his appetite if he knew it was going to be his last meal. Not sure what I'd do if I knew I only had hours to live, but eating probably wouldn't be high on my list.

 

[ls99]

I highly doubt that as one's lights are going out any consideration of the last meal's quality is considered.

One case up close and personal I know by having been present, is opening the fridge door, and the person being dead before hitting the floor.

 

[marko]

He might have lost his appetite if he knew it was going to be his last meal. Not sure what I'd do if I knew I only had hours to live, but eating probably wouldn't be high on my list.

I highly doubt that as one's lights are going out any consideration of the last meal's quality is considered.

Dad's point was that you should live as well as you can each day.

As the 80's band Shooting Star once wrote: "Today could be your last chance to be good to yourself..."

Uncle was a miser who could've afforded a great meal every day...his last meal on earth was a crappy Chop Suey sandwich and a can of Coke. What a sad way to leave.

 

[eytonxav]

So, will RBS make a "Buy everything!" announcement? At a price lower than the ones when they said "Sell everything!" Somehow I have my doubts.




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When I see this type of volatility, it makes me suspect institutional traders are playing a role in driving the market down to get the weak hands to sell, so they can buy back at lower levels. At least the US economy does not yet smack of recession, so I am not ready to panic from this correction. It would only take OPEC cutting output or another form of disruption in the oil supply chain to make things take off again, although that sounds almost counter-intuitive.

 

[audreyh1]

When I see this type of volatility, it makes me suspect institutional traders are playing a role in driving the market down to get the weak hands to sell, so they can buy back at lower levels. At least the US economy does not yet smack of recession, so I am not ready to panic from this correction. It would only take OPEC cutting output or another form of disruption in the oil supply chain to make things take off again, although that sounds almost counter-intuitive.

Actually, I think the institutional traders drove the markets way up with the "Fed put" of QE and low rates. Now that the party is over, some of the hot air is coming out of the balloon. Oil price crash helped spur this on, as has China representing slowing global growth. To me the current action just says the US equity markets got way ahead of themselves.

 

[eytonxav]

Actually, I think the institutional traders drove the markets way up with the "Fed put" of QE and low rates. Now that the party is over, some of the hot air is coming out of the balloon. Oil price crash helped spur this on, as has China representing slowing global growth. To me the current action just says the US equity markets got way ahead of themselves.

Yes, but they work it both up and down, which can lead the average joe investor to make bad decisions and certainly the Fed is culpable as well.

 

[Looking4Ward]

When I see this type of volatility, it makes me suspect institutional traders are playing a role in driving the market down to get the weak hands to sell, so they can buy back at lower levels....

I've often wondered the same thing. Nobody makes money in a stagnant market and the heavyweights are certainly in a position where they can influence a rise or fall. I'm just hoping the fund managers for the Vanguard funds I have are players on the field rather than observers in the stadium and are snatching up the good deals right now.

 

[RAE]

Actually, I think the institutional traders drove the markets way up with the "Fed put" of QE and low rates. Now that the party is over, some of the hot air is coming out of the balloon. Oil price crash helped spur this on, as has China representing slowing global growth. To me the current action just says the US equity markets got way ahead of themselves.

+1. Totally agree with you, Audrey. Everyone is talking about China and oil as the cause for this, but in my view they merely acted as catalysts.......the real driving force behind this drop is that the markets got way ahead of themselves because of the actions of the FED these last 7-8 years.

 

[audreyh1]

Institutional traders are just as likely to be caught leaning the wrong way. When they get out of their bad positions, it often causes a lot of market turmoil.

 

[NW-Bound]

... To me the current action just says the US equity markets got way ahead of themselves.

+1. Totally agree with you, Audrey. Everyone is talking about China and oil as the cause for this, but in my view they merely acted as catalysts.......the real driving force behind this drop is that the markets got way ahead of themselves because of the actions of the FED these last 7-8 years.

So, are we now agreeing with Shiller when he said the US market was (is still?) overvalued?

 

[audreyh1]

So, are we now agreeing with Shiller when he said the US market was (is still?) overvalued?

He probably thinks it's way more overvalued than I do. He probably thinks early 2009 levels were fairly valued, but all of the recovery was overvalued, just like the entire period from 1990.

 

[NW-Bound]

But early 2009 was at the bottom of the market. Besides, Shiller was either selling stocks or buying put options as he hinted in an interview I shared a month or two ago. So, he must have held stock or bought since 2009 to have something to sell.

PS. It is true that the market is always overvalued at the top of the market, and undervalued at the bottom of the market. The problem is if one tries to talk about it, the ardent followers of the EMH will cry out "dirty market timing". They sneer at anyone who even expresses an opinion on market valuation. It's a religion, and the act of talking about P/E is considered blasphemy. And recently, when even Bogle said that the future market return will be subdued (which has nothing to do with market timing), they even revolted and called him names.

 

[MichaelB]

So, are we now agreeing with Shiller when he said the US market was (is still?) overvalued?

He probably thinks it's way more overvalued than I do. He probably thinks early 2009 levels were fairly valued, but all of the recovery was overvalued, just like the entire period from 1990.

GMO uses Shiller PE in it's valuation methodology, their projections show US markets still richly valued but international developed with some potential for real growth and EM with lots of upside - if you can stomach the volatility.

 

[eytonxav]

Institutional traders are just as likely to be caught leaning the wrong way. When they get out of their bad positions, it often causes a lot of market turmoil.

Alls I am saying is that despite the oil glut and China, Institutional Investors are contributing to the volatility and wild swings and are taking advantage at everyone elses expense, but certainly are not the main cause for the balloon getting filled and deflated.

 

[audreyh1]

Alls I am saying is that despite the oil glut and China, Institutional Investors are contributing to the volatility and wild swings and are taking advantage at everyone elses expense, but certainly are not the main cause for the balloon getting filled and deflated.

I think they are the main cause for the balloon getting filled and deflated.

 

[NW-Bound]

GMO uses Shiller PE in it's valuation methodology, their projections show US markets still richly valued but international developed with some potential for real growth and EM with lots of upside - if you can stomach the volatility.

I had plenty of international and EM stocks. That was one of the contributors to my portfolio underperforming the S&P in 2014 and 2015. I lightened up quite a bit a few months ago, and they still dropped worse than the S&P. I am watching to rebuy the same at a lower price.

 

[MichaelB]

I had plenty of international and EM stocks. That was one of the contributors to my portfolio underperforming the S&P in 2014 and 2015. I lightened up quite a bit a few months ago, and they still dropped worse than the S&P. I am watching to rebuy the same at a lower price.

Same here. I'm beefing up nonetheless, thought that will probably lead to more underperformance in 2016.