Headed For A Double Dip Recession?

[novaman]

I'm looking at my portfolio and we've come back a long way quickly from the bottom of last year. I'm also reading a lot of reports that economic indicators don't look so good, there's a lot of inside selling, etc. So- you all think we are headed for a double dip, or prolonged stagnation?

[haha]

Quote:

Originally Posted by novaman I'm looking at my portfolio and we've come back a long way quickly from the bottom of last year. I'm also reading a lot of reports that economic indicators don't look so good, there's a lot of inside selling, etc. So- you all think we are headed for a double dip, or prolonged stagnation?

I don't know. But I do know that every time I have made really good gains with stocks it has been on a backdrop of good insider buying. It is absolutely impossible to guess what will happen; that is why I won't participate in polls like "Where will the Dow be at year end?"

A rational goal is not to guess what will happen, but to assess whether you are buying good enough quality cheaply enough that over time the odds are likely strongly in your favor.

Ha

[audreyh1]

Quote:

Originally Posted by novaman I'm looking at my portfolio and we've come back a long way quickly from the bottom of last year. I'm also reading a lot of reports that economic indicators don't look so good, there's a lot of inside selling, etc. So- you all think we are headed for a double dip, or prolonged stagnation?

I don't know where you are getting reports of economic indicators not looking so good. Most of them have been improving for a while.

Insiders were apparently doing massive buying in March, so I suppose they are taking some profits now. Sounds prudent to me.

According to these guys a double-dip recession is unlikely US Poised For Stronger Recovery Than Expected

Audrey

[novaman]

I bought a bunch of stock on the dip and decided to sell today to lock in the profit-

So you think parking it in a bond fund would be a good move now?

[Lakewood90712]

If interest rates start to climb , bond funds will get beat-up rather quickly.

[FIREdreamer]

Quote:

Originally Posted by Lakewood90712 If interest rates start to climb , bond funds will get beat-up rather quickly.

At the risk of sounding argumentative, I disagree with your statement. At least 2 factors will affect the way a bond fund responds to rising interest rates: the fund's duration and the speed at which interest rates are rising. For example, as the Feds increased interest rates from 1% to 5.25% between 2003 and 2006, many bond funds continued to experience positive total returns, albeit often lower than those experienced in periods of declining interest rates.

[novaman]

Here we go.....(?)

[Bestwifeever]

I also thought economic indicators were improving. There are a lot of talking heads out there getting to do point-counter-point discussions on the financial stations that are confusing.

[novaman]

Quote:

Originally Posted by Bestwifeever I also thought economic indicators were improving. There are a lot of talking heads out there getting to do point-counter-point discussions on the financial stations that are confusing.

I'm not sure what sources you are getting your news from but I've seen a lot of indication that things are not good.

I've also come to realize that the mainstream press is really painting a picture to try and help make this administration look good - so they are putting the positive spin on the economy- like a bunch of cheerleaders on the sidelines of the Detroit lions....or maybe the Washington Redskins.

[ls99]

No financial maven here.

Reading all the reasons/guesses for when and why the market goes up/down reminds me of the long list of excuses reasons fishermen use for why the fish do('nt) bite. Usually in hindsight some are dead on the mark.

I'm letting it ride.

[FIREdreamer]

I don't like what I am seeing in the treasury market. Long term rates have been dropping lately, and that's not exactly bullish. I am glad I took some profits from equities in September, just in case.

[novaman]

Quote:

Originally Posted by FIREdreamer I don't like what I am seeing in the treasury market. Long term rates have been dropping lately, and that's not exactly bullish. I am glad I took some profits from equities in September, just in case.

Yeah I got real antsy a few days after I started this thread so I totally cashed out.

[Aussie Trooper]

Its like beting on the dogs - damned if you do damned if you dont... If the market tanks youll be laughing, if it booms you will be kicking your self.... I used this strategy early on in my investing and got sick of being out of the market on to many up swings.....

Which is why now i only invest in good companies, with low debt, high ROE , below value , with good dividends... that way if the market tanks my dividend stream allows me to buy lots at good value.... Using this the GFC was a god send to me and a double dip would be even better......(but im not wishing for it as I know the pain it inflicts on others).

I do however have around 5% of my portfolio that I try to have invested in a very small fledgling company or two with rediculous growth prospects. At the moment I have that in AusTex Oil and Carnarvon Petrolium. Both have just transitioned from oil explorers to producers. Carnarvon has had its price explosion over the last two years and Austex is primed and ready to go.... Thats the only gambling I do and its well and trully informed gambling, which reduces the risk... I get out of them when the ROE stops climbing by more then 10% p.a. and I look for another one. If im worried they wont continue the run, i get my money back and leave the gains on the table....

But as far as pulling your whole money in and out of the market, its almost impossible to get it right enough times to be ahead.

[oldtrig]

The writing on the wall is pretty clear as I see it. The economy is not so good . As a matter of fact the US is in real trouble.


I wish I knew where to put my money. Bank failures top 100, only part of industry woes - Yahoo! News

I am trying to figure out what move to make next.
oldtrig

[novaman]

Quote:

Originally Posted by oldtrig I am trying to figure out what move to make next. oldtrig

yeah this was sort of discussed on another thread, but it looks like there aren't any good choices to make right now. I'm sitting on a lot of cash. If hyperinflation occurs I'm screwed.

[unclemick]

Lead sled dog is Target Retirement 2015 on full auto - ie a certain amount every year goes to Prime MM to fund my ER.

Double Dip? Not to the point of a certain Boglehead who posts over there - 'Don't know , don't care.'

I may get all gervous and nerky over Mr Market from time to time - but hopefully I can continue to do a Bogle-esque 'hurry up, just stand there'.

And then the Norwegian widow tells herself - a dip is an opportunity to pick up a few good dividend stocks - only as side money/lagniappe mind you.

heh heh heh -

[LARS]

IMHO, we are still very much in a preservation of capital mode. Now is not the time to be reaching for yield. Anyone who thinks the problems associated with the massive credit deleveraging we are experiencing is over is living in a dream world.

The response of the FED/Treasury has only re-postponed the correction and IMHO making the inevitable adjustment that much worse. That having been said, I suspect the idiots calling the shoots on fiscal/monetary policy can keep this insanity going much longer than I think. YMMV.

[. . . Yrs to Go]

Quote:

Originally Posted by LARS Anyone who thinks the problems associated with the massive credit deleveraging we are experiencing is over is living in a dream world.

Maybe not over, but its hard to argue that there haven't been a lot of improvements.

Leverage is coming down in the financial sector (Goldman's leverage is down to 13x in the recent quarter from about 30x), many other financial institutions have issued equity and some have sold assets. And most of the "toxic" residential mortgage securities have been written down at this point (although losses on commercial bank loans still need to be taken). So not only is leverage lower than it was, asset quality is better. Meanwhile banks are making a killing on the steep yield curve which cushions balance sheets against the commercial loan losses that are coming. In the corporate world, leveraged companies are having good success in terming out near-term maturities and bank debt, improving liquidity and stability. Profits are much better than anyone expected these past two quarters. And for individuals, personal savings rates are back in to the mid-single digits.

Risks abound, but things are much better than they were.

[LARS]

Quote:

Originally Posted by . . . Yrs to Go Maybe not over, but its hard to argue that there haven't been a lot of improvements. Leverage is coming down in the financial sector (Goldman's leverage is down to 13x in the recent quarter from about 30x), many other financial institutions have issued equity and some have sold assets. And most of the "toxic" residential mortgage securities have been written down at this point (although losses on commercial bank loans still need to be taken). So not only is leverage lower than it was, asset quality is better. Risks abound, but things are much better than they were.

I disagree.
Leverage has been shifted from the private (business) sector to the government. Second, the consumer is just beginning the process of delevering. Third, the losses on "toxic" loans have not been nearly fully written down. Four, CRE has yet to even begin to raise its ugly head in terms of significant writedowns. Five, at somepoint the massive stimulus being practiced by the Federal Government will have to come to an end (given debt levels).

The only thing that has been achieved in the last year is that the government stepped in and provided massive liquidity at the expense of the taxpayer. I agree they succeeded in stopping the wheels coming off the system, but have not dealt with the underlying problems. Moreover, we have seen only modest improvements to the economy in the face of subsidies measured in the $ trillions. That should give you reason to pause for thought.

The policies to date are only a re-flation of existing issues. We are following in the footsteps of Japan from what I can tell at this point.

Of course, this is only this man's opinion and time will tell...

[. . . Yrs to Go]

Quote:

Originally Posted by LARS The policies to date are only a re-flation of existing issues. We are following in the footsteps of Japan from what I can tell at this point.

Except Japan's bubble was much bigger (it was said at the peak that the value of the Imperial Palace was greater than all of the real estate in California), the policy response was much slower (Japan didn't start easing monetary policy aggressively for 5 years after the bubble burst), it's banks never recognized loan losses, its economy is far more rigid (Japan's unemployment never went above 6% in the past 20 years and was below 3% for several years after the bubble burst), its population is much older (22% of Japanese are 65 or older vs. 13% in the US), is aging faster, and is shrinking while ours is growing.

We're in much better shape than Japan was, or is.

Be of good cheer.