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Old 03-17-2012, 10:26 AM   #21
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In my accumulation years, I was happy to see the market go up, yet understood the idea of "buying cheap".

Now (in retirement), I'm glad that any year shows a positive return and I'm able to "harvest my gains".

The OP asks a question (from a young person's POV) that I understand.

However, let them advance to retirement age (whatever that is) and ask the same question. I would bet that the desired result would be 100% opposite of the stated opinion.

We all get to share the same challanges in life - assuming we live long enough ...
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Old 03-17-2012, 10:49 AM   #22
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What Brewer said, plus...

I just did my first re-balancing act, ever, inside my TSP account. The re-balancing was trivial - lowered Stocks by 10%, raised G Fund by same proportion - but it's a milestone for me. It is what I told myself I would do if the Dow went above 13000, regardless of what might happen next.



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Old 03-17-2012, 01:00 PM   #23
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Stock market aside, I am thrilled that the economy finally seems to be showing signs of recovery. I will take what I can out of the trend, but much more important is some lessening of the large human toll that the crash caused.
I"m glad we had some recovery from the lows to at least restore a little confidence into the financial markets. And I'm at the point in my life (46) where I expect to get as much (if not more) annual portfolio gain from average appreciation than from new contributions, so I'm probably not as enthusiastic about a long period of depressed stock prices as a 20-something or 30-something might (and perhaps *should*) be.

Having said that, it wouldn't have bothered me if the rebound from the March 2009 lows wasn't as sharp as it was. Wouldn't have minded buying equities at those prices for a couple more years. But in reality I'm perfectly fine with with the market coming back enough to recover most of my losses -- and heck, it's still lower than 1999 prices...
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Old 03-17-2012, 02:32 PM   #24
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Sad that the market is going up? Nope, not this semi-geezer who may just stop working any day now. As others have said, how can it be bad if the economic conditions improve, not just here in the US but also worldwide?

The younger folks get better paying jobs, which then enable them to save and to accumulate equities, which then allows this old man to unload pass on these wonderful stocks. They may even get to do the work that I enjoy now. Don't you like a plan when everybody wins?

Of course it can all get derailed with a few "Wh***" outbursts, but hope springs eternal.
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Old 03-19-2012, 01:06 PM   #25
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Yeah, I was kicking myself when I did not have any money to invest in 2008! I just have to believe in the slow and steady method of investing.
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Old 03-20-2012, 12:42 PM   #26
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I'm ready for some growth. Having been through a bubble and crash, I'm looking forward to the next one. Just about the time everyone is feeling invincible and wealthy, shift to cash and BOOM. Buy some more cheap indices near the bottom. Whee!

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Old 03-20-2012, 10:45 PM   #27
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I like it a little better when the stock fund prices are high when the bond fund prices are low, and vice versa. Makes it a lot easier and more profitable to rebalance.
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Old 03-21-2012, 10:45 AM   #28
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I like it a little better when the stock fund prices are high when the bond fund prices are low, and vice versa. Makes it a lot easier and more profitable to rebalance.
That is one silver lining in this bull market for me - I want to move some money into bonds (away from my 100% equities allocation), but can't pull the trigger today when dividend yields are similar to bond yields. Maybe in a few years the stock/bond value proposition will have flip flopped and bonds will make more sense to me.
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Old 03-21-2012, 02:54 PM   #29
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Our economy is based on the premise that only a few people can do well. So when you start hearing about how everyone is making money in the market, it's time to bail. This is a Fed driven rally just as was the real estate " boom".
When it comes to 2ndary markets like the stock exchange, this isn't just a premise but necessary condition imposed by reality. How can the market grow faster than corporate profits? Only by increasing PE. And this must have limits- all the more when one is starting from supposedly average long term trailing PE levels.

How might corporate profits grow faster than the economy, which is at best a 2-3% (real)grower? Only by increasing the share of sales that go to profits at the expense of wages. It may be that this is close to its limits also. Certainly so if all the hullabaloo about the 1% reflects anything other than helpless rage of the 99ers.

Ha
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Old 03-21-2012, 02:56 PM   #30
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That is one silver lining in this bull market for me - I want to move some money into bonds (away from my 100% equities allocation), but can't pull the trigger today when dividend yields are similar to bond yields. Maybe in a few years the stock/bond value proposition will have flip flopped and bonds will make more sense to me.
Interesting. Nice to see I'm not the only one questioning whether I should substitute some bond allocation for dividend stocks given similar yields on both and the likelihood for long-term growth in the stock.
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Old 03-21-2012, 05:22 PM   #31
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When it comes to 2ndary markets like the stock exchange, this isn't just a premise but necessary condition imposed by reality. How can the market grow faster than corporate profits? Only by increasing PE. And this must have limits- all the more when one is starting from supposedly average long term trailing PE levels.

How might corporate profits grow faster than the economy, which is at best a 2-3% (real)grower? Only by increasing the share of sales that go to profits at the expense of wages. It may be that this is close to its limits also. Certainly so if all the hullabaloo about the 1% reflects anything other than helpless rage of the 99ers.

Ha

I think this is a rather US centric view. You analysis is correct with respect to US, Europe and Japan. However the 2nd largest economy is growing around 8-10% a year and India, (#3 or #4), Brazil (#7) are growing at similar rates.

One doesn't even need to invest in emerging market funds to capture this. GM sales in China were up 8.3% last year and the company now sales more cars in China than the US. Yum Brand sales have been growing at 12-15% for many years despite flat US growth because KFC is the biggest restaurant chain in China. And then there is a Apple which sells roughly 80% of its iPhones overseas with absurd profit margins.

About 1/2 the world population lives in the BRIC countries roughly 1 billion folks have moved into the (lower) middle classes in the last decade and there are another 1 billion or so right behind them. This growth allows multinational companies to make very nice profits and benefits shareholders. I agree that there are many downsides to this trend as the wages of developed country's workers fall. But I don't see any need for P/E ratio to increase, where there is so much potential for overseas earnings growth.
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Old 03-21-2012, 05:49 PM   #32
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The stock market is very scary right now. Just when you think things are going good and people have confidence again is when it will go boom. There is nothing out there to make me thing anything other than all this is false information. I would warn anyone who needs the money in retirement to move out of the market now. You have been warned. But then again who am I to be telling you this other than I have that strange feeling about it. My feeling have usually been correct. I wish it were the other way and the economy was beginning to come back but it is not. Just wait and you will see what I am talking about. oldtrig
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Old 03-21-2012, 06:05 PM   #33
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You will know the bull is about done when the retail rubes pile in and tell all their friends (and everyone else) they are doing so. Then it will be time to bail and buy puts. Until then, I am happy to sit tight.
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Old 03-21-2012, 06:25 PM   #34
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You will know the bull is about done when the retail rubes pile in and tell all their friends (and everyone else) they are doing so. Then it will be time to bail and buy puts. Until then, I am happy to sit tight.
Probably a good metric. Last I saw, equity mutual funds and etfs were seeing net outflows or tiny inflows. Most net buyers of equities have been institutional during the current multi year rally. Good news for those hoping for a bull - retail investors haven't even started buying on margin and going long!
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Old 03-21-2012, 06:29 PM   #35
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When it comes to 2ndary markets like the stock exchange, this isn't just a premise but necessary condition imposed by reality. How can the market grow faster than corporate profits? Only by increasing PE. And this must have limits- all the more when one is starting from supposedly average long term trailing PE levels.

How might corporate profits grow faster than the economy, which is at best a 2-3% (real)grower? Only by increasing the share of sales that go to profits at the expense of wages. It may be that this is close to its limits also. Certainly so if all the hullabaloo about the 1% reflects anything other than helpless rage of the 99ers.

Ha
Interesting point. Not all businesses are traded publicly. Many small businesses are no longer in the game, so corporations benefit the most from all the money printing, bailouts, extended unemployment benefits, etc. Thus their earnings increase while overall growth stalls.
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Old 03-21-2012, 06:32 PM   #36
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You will know the bull is about done when the retail rubes pile in and tell all their friends (and everyone else) they are doing so. Then it will be time to bail and buy puts. Until then, I am happy to sit tight.
Yup and we are a long way from that now.
Here is some data from morningstar.

Quote:

Investors Shun Actively Managed U.S. Stock Funds
Despite stronger domestic equity markets in January and February, with the S&P 500 Index up 9% on a total return basis through the end of last month, investors continued to shun actively managed U.S. stock funds, pulling out more than $10 billion during the first two months of 2012. The outflows from actively managed U.S. stock funds weren't as bad as in the third and fourth quarters of last year (when investors pulled out $49 billion and $46 billion, respectively), but still a far cry from the more than $15 billion that flowed into these funds during the first quarter of 2011. Meanwhile, flows into U.S. stock index funds and exchange-traded funds look to be on par with what we were seeing in the year-ago period, with $7 billion and $14 billion, respectively, flowing into these passive investment vehicles.

...
Taxable Bonds Continue to Dominate Fund Flows
From the start of 2009 until the end of 2011, more than $550 billion flowed into actively managed taxable bond funds, with another $190 billion being dedicated to passively managed products (45% index funds/55% ETFs). Based on results seen through the first two months of this year, with $20 billion flowing into actively managed taxable bond funds during January and another $24 billion coming through in February, it looks like 2012 could end up being the fourth straight year when flows into the taxable bond category far outstrip those for any other category tracked by Morningstar Direct.
More analysis here and the gory details here.

More than 1.2 billion left US stocks in Feb (despite the market gain). Right now retail folks continue to stick money in bonds, cause bonds had a positive return last year, and most investor chase returns. When people see that they actually lost money in bonds in Q1, I think we will see a turn around. The bond money has to go somewhere and the choices are CDs, Money Markets or Stock Market. I don't think all of it will go into stock but enough to sustain the rally.
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Old 03-21-2012, 06:49 PM   #37
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No one can determine the value of a stock except by extrapolating historical data and praying it holds for the future. There is no science to it. Some have tried and even won accolades for their efforts but the mathematical formulas miss by over 10 per cent over the history of the market. Hardly worthy of the Nobel Prize. Good luck gambling.
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Old 03-21-2012, 07:17 PM   #38
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Yeah, I was kicking myself when I did not have any money to invest in 2008! I just have to believe in the slow and steady method of investing.
We lost about 250k a co-worker lost over 500k. I told my wife, I would rather with drawl all, and put it in savings.
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Old 03-23-2012, 08:41 PM   #39
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Well my sentiment is that regardless of who wins the election - that the size of government is going to shrink. they are already down sizing the military. but there pretty much needs to be cuts across the board. It's just that this is an election year and they want to keep the economy pumped up. anyway I see that there is a potential for a mini recession as this happens. Most companies are lean and mean, but putting people on the street is going to cut back on spending. and that is going to slow down the economy.
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Old 03-23-2012, 11:25 PM   #40
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I'm at another point where I may have to buy mutual funds in a taxable account, so if the funds decline significantly later, I should be able to do some tax loss harvesting. I still have about five years' worth of capital loss carryovers from the last time I did that.
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