Threads in Early Retirement Forums as a Contrary Indicator?

[copyright1997reloaded]

I was thinking (which is a dangerous thing) that maybe the tone in the titles of threads here might be a reasonable contrary indicator. Looking at last July, just before the first peak (I know we had a late year rebound), there are titles like:
WIsconsin estate tax rate?
Need Some Feedback -- About FIRE (Maybe Sooner)
bonds vs money market question
and in today's ... The rich get richer
Redfin real estate- ready to kick the agents out?
Look at Giuliani's mutual fund picks
Roth IRA's: Avoiding withdrawl penalties
Happiness & FIRE
Your First Million is the Toughest" How long did it take you?
(and my favorite) Let's brag about mid-year performance!

Now we see:
Is It Panic If My Broker Tells Me to Get Out? (
FDIC Closes IndyMac Bank
The Lifting of the Veil
OK, I'll say it
Poll: How Low Dow?
Poll: Practicality vs. Dreaming
Saftey of CD's vs. treasury bonds?
Bear market background
Tomorrows market?
yikes June not a good month with Fidelity
(and my new favorite) Wrong decade or what??

Has anyone done any studies that analyze Early Retirement titles (maybe weighted by # of appends) with market tops (and hopefully bottoms?)

[newporttony]

Quote:

Originally Posted by copyright1997reloaded I was thinking (which is a dangerous thing) that maybe the tone in the titles of threads here might be a reasonable contrary indicator. Looking at last July, just before the first peak (I know we had a late year rebound), there are titles like: WIsconsin estate tax rate? Need Some Feedback -- About FIRE (Maybe Sooner) bonds vs money market question and in today's ... The rich get richer Redfin real estate- ready to kick the agents out? Look at Giuliani's mutual fund picks Roth IRA's: Avoiding withdrawl penalties Happiness & FIRE Your First Million is the Toughest" How long did it take you? (and my favorite) Let's brag about mid-year performance! Now we see: Is It Panic If My Broker Tells Me to Get Out? ( FDIC Closes IndyMac Bank The Lifting of the Veil OK, I'll say it Poll: How Low Dow? Poll: Practicality vs. Dreaming Saftey of CD's vs. treasury bonds? Bear market background Tomorrows market? yikes June not a good month with Fidelity (and my new favorite) Wrong decade or what?? Has anyone done any studies that analyze Early Retirement titles (maybe weighted by # of appends) with market tops (and hopefully bottoms?)

I sure hope the posts are a contrary indicator. It is amazing to me how quickly the environment has gone from greed to fear--not just on this forum, but practically everywhere.

[Notmuchlonger]

Quote:

Originally Posted by newporttony I sure hope the posts are a contrary indicator. It is amazing to me how quickly the environment has gone from greed to fear--not just on this forum, but practically everywhere.

From greed to crapping their pants and sucking thumbs? Not here I mean other places..

[cyclone6]

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Originally Posted by Notmuchlonger From greed to crapping their pants and sucking thumbs? Not here I mean other places..

Can I reply here, Notmuchlonger, or is my silence pledge on a thread-by-thread basis?

[ESRBob]

Nice post -- there is a clear and valuable pattern there.

I'm just glad we don't have a lot of posters still extolling the wisdom of 100% equity portfolios for ER. I viewed those as signs of market top, for sure.

There's still plenty of pain to go around. As one of my wiser and better-connected wall st friends (reports to a CEO you've all heard of) said tonight, 'don't worry about timing the market bottom -- there'll be plenty of chances for getting in on the bottom in the months ahead'. He went on to say that there were 4 or 5 'buying opportunities' over the past months during which a lot of the smart money people with cash stepped in and bought, but that they've all been money-losing decisions, and that now it's a bit like catching a falling knife. So stay cool, make sure the AA is in order and then go have a great summer doing something besides worrying about the market. (my advice to myself, who starts to get edgy when stocks have dropped 20%)

[BunsGettingFirm]

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Originally Posted by Notmuchlonger From greed to crapping their pants and sucking thumbs? Not here I mean other places..

Ill, you should at least wash your hands first.

[Bikerdude]

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Originally Posted by copyright1997reloaded I was thinking (which is a dangerous thing) that maybe the tone in the titles of threads here might be a reasonable contrary indicator.

I've been following the ERF indicator for some time. I think you're on to something.

[Notmuchlonger]

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Originally Posted by BunsGettingFirm Ill, you should at least wash your hands first.

Just remember to brush your teeth.

[LOL!]

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Originally Posted by Bikerdude I've been following the ERF indicator for some time. I think you're on to something.

Me too! It really works!

[ziggy29]

This place is a drop in the bucket where that sort of thing is concerned compared to some other places I've seen.

[danm]

Maybe. I was shocked the past few years to stop by and see how foolish^H^H^H bullish everybody was on stocks on these boards. I foresaw the credit crunch two years ago, sold my house and stocks and bought bonds. Today I'm up 25%+ from that point, whereas if I had stayed in I would be down 30% or something on my house, and flat to negative in my stocks. Folks laughed at my thinking - oh well.

But I wouldn't take the negativity as a contrary indicator today. The credit problems are quite severe and I doubt we'll magically rebound for some time yet.

[ziggy29]

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Originally Posted by danm But I wouldn't take the negativity as a contrary indicator today. The credit problems are quite severe and I doubt we'll magically rebound for some time yet.

Of course, this is really just another way to say "this time it's different," which may well be true, but the long-term track record of that philosophy is pretty terrible.

I've done a little more "doomsday diversification" over the last few months -- mostly defensive positions against deep recession and inflation through decline of the dollar -- but beyond that, the more I hear people say "this one is different," the more I'm inclined to believe it won't be.

[unclemick]

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Originally Posted by ziggy29 Of course, this is really just another way to say "this time it's different," which may well be true, but the long-term track record of that philosophy is pretty terrible. I've done a little more "doomsday diversification" over the last few months -- mostly defensive positions against deep recession and inflation through decline of the dollar -- but beyond that, the more I hear people say "this one is different," the more I'm inclined to believe it won't be.

generic dryer sheets -cut in quarters and reused at least twice!

'God Looks After Drunkards, Fools And The United States of America.'

And lest we forget:

Psst - Wellesley! Which must be be mis-spelled several ways at least!

Right?

heh heh heh -

[danm]

That's a reasonable position, but the problem is what is meant by 'this time', and 'different'. Using the terms generically is meaningless.

What I mean is that this turn is different - from the last 30 years. Specifically it's much like what happened in the 1930's. I'm not saying we'll have a repeat of the GD, but a credit contraction/reversal of irrational exuberance. In fact I'm saying things aren't different - the credit bubble of the past five years eventually had to come to tears, just like it did after the roaring 20's. Most people (at least until recently) didn't look at financial history earlier than 1970's, and so that was the basis for 'this time it's different'.

Take it for what it's worth. When I talked about this here the past two years I was derided for wearing tin foil, maybe now people finally understand what is going on. Sometimes it takes a hit in your wallet to see reality

Quote:

Originally Posted by ziggy29 Of course, this is really just another way to say "this time it's different," which may well be true, but the long-term track record of that philosophy is pretty terrible. I've done a little more "doomsday diversification" over the last few months -- mostly defensive positions against deep recession and inflation through decline of the dollar -- but beyond that, the more I hear people say "this one is different," the more I'm inclined to believe it won't be.

[W2R]

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Originally Posted by unclemick generic dryer sheets -cut in quarters and reused at least twice! 'God Looks After Drunkards, Fools And The United States of America.' And lest we forget: Psst - Wellesley! Which must be be mis-spelled several ways at least! Right? heh heh heh -

Hee hee! Just bought another big chunk of VWIAX Wellesley last night. Love that Wellesley. Still just 30% of my portfolio, since it was new windfall money.

I also bought smaller chunks of VTSAX Total Stock Market and VFWIX All-World Ex-US, consistent with my monthly DCA into these funds. Who know? The market could be experiencing a local minimum or bottom.

[copyright1997reloaded]

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Originally Posted by ESRBob Nice post -- there is a clear and valuable pattern there.

Thanks.

Quote:

Originally Posted by ESRBob There's still plenty of pain to go around. As one of my wiser and better-connected wall st friends (reports to a CEO you've all heard of) said tonight, 'don't worry about timing the market bottom -- there'll be plenty of chances for getting in on the bottom in the months ahead'. He went on to say that there were 4 or 5 'buying opportunities' over the past months during which a lot of the smart money people with cash stepped in and bought, but that they've all been money-losing decisions, and that now it's a bit like catching a falling knife. So stay cool, make sure the AA is in order and then go have a great summer doing something besides worrying about the market. (my advice to myself, who starts to get edgy when stocks have dropped 20%)

That's for sure. I've tried catching a few of those falling knife's, and each of them have hurt a bit as it passed through my bleeding fingers.
GE @ 30+, now 27.66
SNDK @ 21.50, now 16.56
Wachovia calls @ 2.50, now 80 cents (ouch)
BAC @ 39 (at beginning of year), now 21.67 (ouch)

Fortunately, so far I've kept the net-new purchases small, but I need to keep my fingers away from the buy button until we really, really get to the bargin stage.

The question of the day, as it always is, is what will happen from here. There are those saying what a bargin and some saying the day of accounting for the wild credit party is at hand. When you see Fannie and Freddie whacked like they were early Friday, wow.

I certainly believe that people's behaviors are an important market indicator. Maybe we will truly have a good indicator when not only when we see lot's of negative threads, news paper articles, magazine covers, etc but when a lot of "buy the dip investors" have given up due to the dips smacking the floor and have reversed course and cashed in. In my mind this would also be accompanied by a slowing in the volume of threads as people "move on" to other things.

[RockOn]

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Originally Posted by danm That's a reasonable position, but the problem is what is meant by 'this time', and 'different'. Using the terms generically is meaningless. What I mean is that this turn is different - from the last 30 years. Specifically it's much like what happened in the 1930's. I'm not saying we'll have a repeat of the GD, but a credit contraction/reversal of irrational exuberance. In fact I'm saying things aren't different - the credit bubble of the past five years eventually had to come to tears, just like it did after the roaring 20's. Most people (at least until recently) didn't look at financial history earlier than 1970's, and so that was the basis for 'this time it's different'. Take it for what it's worth. When I talked about this here the past two years I was derided for wearing tin foil, maybe now people finally understand what is going on. Sometimes it takes a hit in your wallet to see reality

You did a great job getting out. It was pretty obvious in retrospect wasn't it. Now let us know when it's time to get back in. The bad is news is mostly out there now, don't you think?

[danm]

Thanks - I appreciate the comment. The problem with telling people is the response is either 1) Your wearing tin foil (when predicting a big change - I hate this one) 2) You may be wrong (always a strong possibility) 3) Your a dirty market timer (or some variation) or 4) 'I just diversify and forget about it why are you bothering me?' (a popular one). I like to discuss it though, entertaining and I usually learn something.

At any rate I think you're right, the bad news is somewhat mostly out there, but still there is probably more to come. However this stock market is weird, it's taking a sledgehammer to get it to lose ground. Thirty years ago a fraction of the news we've gotten so far would have sunk it. The level of optimism is still amazingly high.

But regardless of where stocks end up (lower than today I think), I really doubt there's going to be a quick rebound. I think we're in for a nice long funk. Oh except for housing, that's pretty clear. I'm going to buy probably in 2010 when they're down 50% in California. May be lower, markets often overshoot on the downside as much as they do on the upside.

But I'm not so sure about stocks, at least I'm pretty sure they're still not a great opportunity, which has been my position for the last two years. I sat out the 2006 rise, recognizing it as the dying pop of the credit bubble. To my mind we've just shaved off the irrational exuberance excess valuation, I don't think we're yet at a 'true' valuation given the economic realities.

Quote:

Originally Posted by RockOn You did a great job getting out. It was pretty obvious in retrospect wasn't it. Now let us know when it's time to get back in. The bad is news is mostly out there now, don't you think?

[newporttony]

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Originally Posted by danm Thanks - I appreciate the comment. The problem with telling people is the response is either 1) Your wearing tin foil (when predicting a big change - I hate this one) 2) You may be wrong (always a strong possibility) 3) Your a dirty market timer (or some variation) or 4) 'I just diversify and forget about it why are you bothering me?' (a popular one). I like to discuss it though, entertaining and I usually learn something. At any rate I think you're right, the bad news is somewhat mostly out there, but still there is probably more to come. However this stock market is weird, it's taking a sledgehammer to get it to lose ground. Thirty years ago a fraction of the news we've gotten so far would have sunk it. The level of optimism is still amazingly high. But regardless of where stocks end up (lower than today I think), I really doubt there's going to be a quick rebound. I think we're in for a nice long funk. Oh except for housing, that's pretty clear. I'm going to buy probably in 2010 when they're down 50% in California. May be lower, markets often overshoot on the downside as much as they do on the upside. But I'm not so sure about stocks, at least I'm pretty sure they're still not a great opportunity, which has been my position for the last two years. I sat out the 2006 rise, recognizing it as the dying pop of the credit bubble. To my mind we've just shaved off the irrational exuberance excess valuation, I don't think we're yet at a 'true' valuation given the economic realities.

I don't know about that 50% decline in California housing. There's a good article in this week's Barrons that indicates the housing market has bottomed (and that the media has ignore the positive news). FWIW, the market in my part of SoCal has--surprisingly--picked up a bit. It appears that sellers have been more willing to reduce prices and the result has been multiple offers on some homes. Local prices are off 10 - 15% YOY.

I suppose there could be a further decline in some of the more speculative parts of Calif.

[RockOn]

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Originally Posted by newporttony I don't know about that 50% decline in California housing. There's a good article in this week's Barrons that indicates the housing market has bottomed (and that the media has ignore the positive news). FWIW, the market in my part of SoCal has--surprisingly--picked up a bit. It appears that sellers have been more willing to reduce prices and the result has been multiple offers on some homes. Local prices are off 10 - 15% YOY. I suppose there could be a further decline in some of the more speculative parts of Calif.

Now that's optimism. Where I live nobody shows up at open houses with prices 15% below what Zillow is currently listing. One is even throwing in a new car with the purchase. According to the media, (and Zillow) prices have fallen about 10 or 15%. I'm wondering what the true market price is if houses were sold "at the best bid" by the banks and the banks do own quite a few of them here. I hope the decline stops also, but I doubt it is has bottomed or will anytime soon. Mortgages money is really not available except at the mid to lower end of the market and even that may be a problem soon with Freddie and Fannie. If the upper end is in decline, everything will adjust down with it. I'd sell mine for 10% below what Zillow has (Zillow looks reasonable compared to what the media has for our area), which is $100k less than I have into it. Want a good deal, buy low sell high!