Is this rally for real?

Yes, the opinions/comments at the bottom were pretty scathing! But the original article cited facts, which were interesting to me. If
34% of managers surveyed are now overweight stocks, the highest since Oct. 2007
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then I don't think they are just talking through their hat, to their own advantage. Well, at least there's a chance. :LOL:

On the other hand, THEY may not have a clue as to the direction in which the market is heading, either.
 
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When the market crashed from 14000 to under 7000, people said "It's impossible!".

Now, it has been going up, and of course the reaction is still the same: "No way!".
 
NW-Bound said:
....

Now, it has been going up, and of course the reaction is still the same: "No way!".
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How can you tell the difference between "going up" and "fluctuating"? In the short term?

Every thing I own was up yesterday. I'd almost think that people have taken yet another flight to safety for seeing my treasuries at high levels.

Wait till next year.
 
CuppaJoe said:
How can you tell the difference between "going up" and "fluctuating"? In the short term?
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No, I don't know. In my view, the market is always "fluctuating". I try to ignore the daily fluctuations and guesstimate the BIG ones. Ideally, I like to be like Buffett; he rarely sells. But then, he knows what he's doing, while I am just fooling around and have fun.

I own individual equities and in the past have often fallen victim to my own thinking that my stocks are stronger than the rest. At some points in this rally, I will get out some, but not at this point. It depends on how things are unfolding.

I just don't think we are slipping back into the recession. It feels like as time goes by, more and more people think that the worst is over, and this sentiment just feeds on itself. I am talking about the entire world economy, not just the US.
 
This raises the question to me about rebalancing disiplines. I usually do it in April and October. I skipped April this year bit I think I will do it just once on August. Has anyone else changed their rebalancing approach this year?
 
After watching the gyrations, I still think I'll do the majority of my rebalancing in December when I pull cash for next year and do a partial Roth conversion.

I did sell some international this month as it had exceeded by allocation by 5% -- it turned out to be a paper loss, but still good news for the portfolio.

I think if the market continues in the 1-2% range (+/-) for the rest of the year, most of my rebalancing will happen automatically.

-- Rita
 
I own many individual stocks, and buy/sell them according to their fundamentals. If the fundamentals look good and are improving, I do not sell just because the price has doubled or tripled. I will admit that the total market (Dow or S&P500) as a backdrop does affect my trading. So far, I see no reason to sell anything that I have yet.
 
I just updated my portfolio and found that it had increased 15% over the past month. The increase is large enough to cover 2 years worth of living expenses. All in a single month! That's the largest amount and percentage increase for a single month ever. My portfolio has increased 73% since 11/22/2008 (including new contributions). And my net worth has just inched above its long term trend line.

It all sounds too good to be true.
 
Dawg52 said:
Dig deep in into your crystal ball and tell us where we go from here. I want to know when to get out.;)
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My crystal ball says that one option to consider might be to DCA out of the market, and that way you won't have to pick the exact optimal date for doing so. But then, we all know that my crystal ball is full of baloney!
 

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I would be concerned about the next two months but then again what do I know. I choose to play it safe; however, the little I have in JSVAX has done well over the past month.
 
I don't know and shouldn't care being full auto (rebalancing going down and how up). However football preason has started and the hormones are stirring.

Hmmmm - I said hmmmm.

heh heh heh - :whistle: Did I mention the Norwegian widow has a few good stocks on the side? :D. Greed and fear and football and stocks - right?
 
I just heard they decided that the budget deficit was off around 2 trillion dollars and they are wanting to spend another trillion on the healthcare bill. While I agree something needs to be done with healthcare, how much can we spend?

What is this going to do to the value of the dollar? Also, how can we have these deficits without inflation?

I am just wondering since I do not really hear anyone speculating on this. Also, if we are looking at maybe stagflation what does one do with their assets?
 
Back on topic.
Just what definition do the people have that don't think the rally is for 'real' have for the rally being 'real'?
I know a while back sweet(?) predicted the S&P dropping to 750 by the end of October. Still waiting for time to tell.
 
Back on topic.
Just what definition do the people have that don't think the rally is for 'real' have for the rally being 'real'?
I know a while back sweet(?) predicted the S&P dropping to 750 by the end of October. Still waiting for time to tell.
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So for me the definition I have for the rally not being real is that it is going to be reversed in a time frame of similar of slightly shorter duration.


On Monday AM I sold all the stocks in my portfolio (17% of total value). A previously when the S&P500 hit 941 on the way up from Match I sold about an equivalent portion of my portfolio, so this sale represetned the second half of my equity position. I considered the rally very real for the time period I owned them. However, I consider the market to be at a very vunerable point for the following reasons, and recent events have made me extremly negative on the market:

1) Deflation is intensifying, Japan just reported that July 2009 was the worst deflationary month in it's history and had the highest unemployment ever. Social Security receipients will be receiving less money in 2010 after deductions for the COLA reasons.

2) The US government has been unable to bolster the economy despite running a 1.8 trillion dollar deficit for 2009. This is unsustainable and the pullback of this money and the implications of needed taxes from the populace will further deflationary likelihood.

3) Virtually every company I owned reported better than "expected" results due to primarily cost cutting. This is not a recipe for growth.

4) The BDI index has been imploding coincident with the Chinese stock market entering another bear market, as the amount of bad loans in China is about to become a real problem. This is a reflection of activity that is actually occuring, if the BDI had managed to hold over 5000 I would have viewed that as an economic positive. Instead it remains more than 75% below it's peak.

5) State governments are giving furlough days unpaid to make ends meet, this further declines available monies to spend. Increasing taxes and declining income will result in less economic activity further stressing loans which is continuing to happen.

I am as bearish or maybe even more so than I was in October of 2007. Certainly I was bullish in March of '09 but the government has taken the backbone of the economy, the banks and housing and borrowed to prop them up. However the real owners of these enterprises have no equity remaining. This government policy is unsustainable and will fall from the weight of trying to hold the these industries together.

Ironically, as this becomes obvious I believe anyone holding real dollars, not debt or stock instruments, will be holders of the most value as there will be a real bull market demand for US dollars.
 
Just a couple of thoughts for those with a market-timing bent:

1. Looks like we may have topped at the end of August;

2. September is historically the worst month in the U.S. stock market by a considerable margin. September is the only month which, since 1929, has had a *negative* average return. (Maybe this is why #1 is true -- people selling before the September/October "Bermuda Triangle" of buy-and-hold investing?)
 
Dawg52 said:
Dig deep in into your crystal ball and tell us where we go from here. I want to know when to get out.;)
Click to expand...

There's no crystal ball involved, but a common sense look at the past can provide insight into the likeliest probabilities for the future.

Birinyi states it much more eloquently than I can......

Video - CNBC.com

Two additional points I would add.....

(1) It's always "different this time", and always has been in the past.

(2) Never underestimate the greed factor or the desire of Americans to consume.

Advances and corrections in the market will inevitably occur, but over the next few years we will see the index' make new all-time highs.
 
Im going to go out on a limb here.

The market will go up and down over the next few years.
 
Running_Man said:
So for me the definition I have for the rally not being real is that it is going to be reversed in a time frame of similar of slightly shorter duration.


On Monday AM I sold all the stocks in my portfolio (17% of total value). A previously when the S&P500 hit 941 on the way up from Match I sold about an equivalent portion of my portfolio, so this sale represetned the second half of my equity position. I considered the rally very real for the time period I owned them. However, I consider the market to be at a very vunerable point for the following reasons, and recent events have made me extremly negative on the market:

1) Deflation is intensifying, Japan just reported that July 2009 was the worst deflationary month in it's history and had the highest unemployment ever. Social Security receipients will be receiving less money in 2010 after deductions for the COLA reasons.

2) The US government has been unable to bolster the economy despite running a 1.8 trillion dollar deficit for 2009. This is unsustainable and the pullback of this money and the implications of needed taxes from the populace will further deflationary likelihood.

3) Virtually every company I owned reported better than "expected" results due to primarily cost cutting. This is not a recipe for growth.

4) The BDI index has been imploding coincident with the Chinese stock market entering another bear market, as the amount of bad loans in China is about to become a real problem. This is a reflection of activity that is actually occuring, if the BDI had managed to hold over 5000 I would have viewed that as an economic positive. Instead it remains more than 75% below it's peak.

5) State governments are giving furlough days unpaid to make ends meet, this further declines available monies to spend. Increasing taxes and declining income will result in less economic activity further stressing loans which is continuing to happen.

I am as bearish or maybe even more so than I was in October of 2007. Certainly I was bullish in March of '09 but the government has taken the backbone of the economy, the banks and housing and borrowed to prop them up. However the real owners of these enterprises have no equity remaining. This government policy is unsustainable and will fall from the weight of trying to hold the these industries together.

Ironically, as this becomes obvious I believe anyone holding real dollars, not debt or stock instruments, will be holders of the most value as there will be a real bull market demand for US dollars.
Click to expand...

Thanks for going out on this limb, Running Man. I pretty much agree with your analysis. I know one thing- "He who panics first, panics best." When the market is going up it is easy to be brave, or "skeptical of bearish prognostications". But if the market goes down hard from here, many already-retired people who need their nest egg for living are going to have a hard time staying calm. The first crash is bad enough, but if it then goes back up and you feel like you have been granted a stay of execution, look for some pretty squirrely emotions if it heads down hard once more, especially if it should break the March low. A good exercise is to imagine a 50% loss from here, imagine your self after this loss; imagine our new net worth. Imagine talking to your spouse, especially if s/he is not actively involved in investment decision making. Check how you feel.

Getting back to your situation, Running Man, unless the stock you sold was in an IRA/401k you must have incurred some pretty steep ST capital gains? I would enjoy it if you would run through some of your thought processes. You have high credibility because of your excellent preformance in the early rounds.

Right now, I don't own any crap. My equities are all well financed dividend paying and dividend growing companies. Still, they represent 50% of my portfolio (down from about 98%). I know I will not be stampeded out on a drop, but I would not like it much. The only thing that holds me back from further trimming is fear of taxes, and income concerns. Still, if I save $300K in losses not suffered, I can go along for a long time even on zero interest rates.

All equities already have been sold from my IRA, and I have no capital loss carryovers or stocks carried at a loss currently. So any sales will incur ST Capital gain taxes, and also all the nasty side effects of higher AGI.

My mind is still open as to what would be best for me right now. I reasoned this same way in fall of 2007, and I believe I was dead wrong then. I should have sold out and just paid the tax. At that time much of it would have been long term. Valuations were worse then, but the economy appeared better.

Philosophically I reject the idea that anytime is a good time to own stocks. That is only a slogan, made conventional by repetition and a fairly benign experience over the past 30 years.

Ha
 
Haha...

Reading your post concerning people already retired... and what would happen if the market went down 50%... well, I am not retired, but if I were I would be making sure I have enough set aside for the next few years expenses in one of those low yielding MM accounts... this run up is a good time to sell out of equities and have enough...

For me, I still have a job and so I do not need the savings set aside... so I am in the market.. my thought is that their might (and I say might) be a correction from this level, but that things will start to go back up in a few years... all we have to do is get by this Obama mania right now and get into the 2010 elections to fix a lot of what is wrong today...

OH, and the Fed has to reduce the huge amount of cash without a big backlash...
 
Snidely Whiplash said:
There's no crystal ball involved, but a common sense look at the past can provide insight into the likeliest probabilities for the future.

Birinyi states it much more eloquently than I can......

Video - CNBC.com

Two additional points I would add.....

(1) It's always "different this time", and always has been in the past.

(2) Never underestimate the greed factor or the desire of Americans to consume.

Advances and corrections in the market will inevitably occur, but over the next few years we will see the index' make new all-time highs.
Click to expand...

Birinyi's typical "analysis" is always to look at price action and describe what that means typically bullish to become a client and buy stocks through his firm's reccomendations.

And what about his reccomendation?


In November 2007
We have noticed some recent analysis pointing to comparisons between current market conditions and that of the first part of 2003. We note that this is also the first 10% correction since the decline that occurred between 11/27/02 and 3/11/03. Below we show the S&P 500 50-day spread throughout the current bull market. It would be prudent to point out that the 11/27/02 correction preceded the strongest rally since 1990, taking the market up 95.47%
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In December of 2008 he stated that investors should buy as it would be the last time they would never see 750 on the S&P500 Moneynews - Birinyi: Stock Market Has Bottomed

But the market did decline to 666 in March of 2009 so what did he advise in April of 2009 --he called the market "certain to decline"Birinyi Says U.S. Stock Market Is `Overbought,’ Certain to Resume Decline - RevolutionRadio.org



Birinyi does not believe in analysis he believes in business of bull markets and trend following, which in the 1990's was a very good position to take, actually from 1981 it is pretty much the best position to take. But to blindly say the consumer will come up with money to fund purchases is ignoring the fact that the consumer in his life has never seen his home price decline 20 percent or more. Purchases of goods do not occur just because stocks go up and there is an "unseen force". This is the same logic Jim Cramer used in October of 2007 to defend bank stocks - if they were so bad as some feared their prices would be lower,not at all time highs and since the future was so bright for them they actually were bargains.

From 1981 - 2003 inflation meant most people had an asset that rose in value and allowed at will borrowing to buy things when desired from the equity of their home, so consumers were king. By the exact same logic a decline in prices of homes means that money is not there to be borrowed and finance purchases. The government is being forced to step in and do the same thing, but that is a road to ruin. In the next 3 years the federal goverment additional deficit would be equal to the total deficit accrued from 1776 - 2000. To be unable to connect these dots to the inabiliy to continue growth in the face of the figures for expected sales for consumer companies to me is astounding.

If price trends were reversing and inflation mounting I'd would reevaluate my thesis. But there is little to indicate inflation at all. In 1981 you had 14 percent 10 year bond interest rates, 1990 8.55; 2000 6.03, in 2009 you have 4 percent. Of course that reversal of interest rates also allowed for less interest paid and more cash for purchases. Interest rates are falling and not indicating any inflation pressures either.

If I am totally off base it will be quickly apparent for I do not think the smoke and mirrors will hold beyond the next couple of months.
 
Snidely Whiplash said:
There's no crystal ball involved, but a common sense look at the past can provide insight into the likeliest probabilities for the future.

Birinyi states it much more eloquently than I can......

Video - CNBC.com

Two additional points I would add.....

(1) It's always "different this time", and always has been in the past.

(2) Never underestimate the greed factor or the desire of Americans to consume.

Advances and corrections in the market will inevitably occur, but over the next few years we will see the index' make new all-time highs.
Click to expand...

Thanks for the link. I've always enjoyed listening to Laszlo. He sure is bullish for the next couple of years. I hope he is right. But I have my doubts.
 
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