Is this rally for real?

[FUEGO]

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Originally Posted by FUEGO I'm eagerly awaiting that individual's fourth prediction. Maybe it will be more accurate than the last three. Or maybe we will still see 740 by October's end. Who knows? As far as gut instincts, I would figure we could see a correction at some point since we have been on an upward tear for a while. This thing can't go to the sky forever.

Guys, I just wanted to point out here that I was right back in September 2009. I called it. A sharp sudden correction. SP500 was up to 1150 and now it is below 1090. Stick around for some more hot stock tips.

Just ignore the fact that we are still up 2% from September 21 when I made the last post!

[TheSweetLife]

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Originally Posted by FUEGO I'm eagerly awaiting that individual's fourth prediction. Maybe it will be more accurate than the last three. Or maybe we will still see 740 by October's end. Who knows? As far as gut instincts, I would figure we could see a correction at some point since we have been on an upward tear for a while. This thing can't go to the sky forever.

Since you've been eagerly awaiting my 4th prediction (geez, you're actually keeping track), I don't want to let you down. My 740 never came to pass in the last half of 2009, but I believe this level will be reached in 2010. Actually, I believe 2010 will be pretty dire.

I think I've joked about looking at my crystal ball. I, obviously, do not claim to be an expert. However, based on the current economic conditions, I believe we will retest the previous 666 lows sometime this year. I only make these predictions for fun. Running Man stated in another thread that he's positioned himself with some long-term puts. I continue to be positioned with an inverse ETF for many of the same reasons stated so well by Running Man.

[REWahoo]

0 for 3 and still swinging for the basement.

I do admire your persistence...

[FUEGO]

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Originally Posted by REWahoo 0 for 3 and still swinging for the basement. I do admire your persistence...

Swing batter batter swing.

Even a stopped clock is right 2 times a day (assuming no travel crossing time zones).

Here's some predictions:

Elvis will be found. He and Tupak will be found to have been living as platonic friends next to a wedding chapel in Vegas not far from where Tupak was "killed".

Man will land on the moon. For the first time.

[FUEGO]

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Originally Posted by TheSweetLife Since you've been eagerly awaiting my 4th prediction (geez, you're actually keeping track), I don't want to let you down. My 740 never came to pass in the last half of 2009, but I believe this level will be reached in 2010. Actually, I believe 2010 will be pretty dire. I think I've joked about looking at my crystal ball. I, obviously, do not claim to be an expert. However, based on the current economic conditions, I believe we will retest the previous 666 lows sometime this year. I only make these predictions for fun. Running Man stated in another thread that he's positioned himself with some long-term puts. I continue to be positioned with an inverse ETF for many of the same reasons stated so well by Running Man.

Ok, I've set a calendar reminder to respond to this thread on Jan 1, 2011. We'll see if the SP500 hits 666 before Jan 1, 2011. See you in 11 months!

[ziggy29]

Well, I'll be honest here -- when the Dow hit 10,000, history and sentiment suggested that it would be a good time to implement my planned "safer" rebalanced AA.

Before it all melted down I was at around 72/28 with a 70/30 target, and at the bottom last March it was more like 55/45.

Between a slight rebalance into equities in Feb. 2009 and the recovery, by late 2009 I was back to about 67/33. A little skittish about Dow 10000 (knowing how much trouble the Dow historically has keeping and holding a new digit ever since it went over 100 in the 1920s), I decided to take it down to just about 60/40. I intend for that to be my long-term allocation for a while; when I was fortunate enough to recover 2/3 of what I lost in the collapse I decided I didn't want to take the risk level of 70/30 any more.

No idea where we're headed from here, but in the shorter term the bias has clearly shifted to negative, being that most days have been down and more rallies have been met with selloffs. Who really knows, though...

[haha]

Quote:

Originally Posted by TheSweetLife Since you've been eagerly awaiting my 4th prediction (geez, you're actually keeping track), I don't want to let you down. My 740 never came to pass in the last half of 2009, but I believe this level will be reached in 2010. Actually, I believe 2010 will be pretty dire.

Don't take the puishment to heart, SweetLife, it's just the way it is around here. There is no way to value equities, and retired or not, you should own a good slug of these issues of indeterminate value at all times.

Of course there are very careful books written about why this is very likely not true, especially for retired people or people nearing retirement. But these books are not on this boards approved reading list.

Ha

[FUEGO]

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Originally Posted by haha Don't take the puishment to heart, SweetLife, it's just the way it is around here. There is no way to value equities, and retired or not, you should own a good slug of these issues of indeterminate value at all times.

To be fair, TheSweetLife is making some incredible claims here, such as at least a 38% decline in the SP 500 in the next 11 months. Justification = vague statements like "based on the current economic conditions".

I mean TSL is batting 0 for 3. Then makes a claim predicting 38% declines. Incredible claims require incredible proof.

[ziggy29]

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Originally Posted by FUEGO To be fair, TheSweetLife is making some incredible claims here, such as at least a 38% decline in the SP 500 in the next 11 months. Justification = vague statements like "based on the current economic conditions".

Well, all I'll say is that a few folks here were virtually pilloried for saying the same kind of things in the summer and fall of 2007 -- and the S&P went down by a lot *more* than 38%.

History says that "this time it's different" is *usually* wrong, but not always. Tread carefully when bear-baiting.

[haha]

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Originally Posted by FUEGO To be fair, TheSweetLife is making some incredible claims here, such as at least a 38% decline in the SP 500 in the next 11 months.

True, he or she is out on very small limb and will likely fall to the the ground.

Responsible experts like, Shiller, Smithers or Hussman admit that any sort of precise predicting, as to timing or extent of moves is impossible. (Though Shiller and Smithers had pretty good timing with their strongly bearish books published in 2000. I don't know about Hussman at that time.)

What I remember is that some people who in fall of 2007 expressed nervousness and bearishness (unfortunately I was not one of these bears) got a lot of rotten tomatoes thrown at them. Yet they were correct, and even if they had not been, bearish opinions serve as a check to the natural bullishness that many of us feel.

If one is retired, and has no good sized entitlements, he is on a high wire without a net. Smithers feels that there have only been 2 times during the past century when it was clear that any stock market participant should consider selling- late 1999, and 1929. He also points out that this is only true with a long investment horizon. That is, no withdrawals for 20 or more years.

He feels that retirees need to be much quicker to pull the sell trigger when the market reaches even lesser levels of overvaluation.

I do realize that I have used a naughty word here, "overvaluation". I hope people will not be offended by this lapse from my otherwise perfectly PC record.

Ha

[FUEGO]

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Originally Posted by haha I do realize that I have used a naughty word here, "overvaluation". I hope people will not be offended by this lapse from my otherwise perfectly PC record.

Always the diplomat!

[FIREd]

Hum, I am currently 47% stocks/ 53% bonds and cash and have been shoring up my cash position for months. I am waiting for some bargains.

[W2R]

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Originally Posted by haha I do realize that I have used a naughty word here, "overvaluation". I hope people will not be offended by this lapse from my otherwise perfectly PC record.

Oh Ha, you always use the word "overvaluation" and we still like and appreciate you even so. It's almost part of your identity here, by now. Besides, you could be right and I, for one, don't want to eat crow if that happens.

[ziggy29]

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Originally Posted by FIREdreamer Hum, I am currently 47% stocks/ 53% bonds and cash and have been shoring up my cash position for months. I am waiting for some bargains.

My 401K is on autopilot to buy into a 60/40 mix. My Roth contributions and my taxable brokerage account, on the other hand, are not, and I too have been accumulating cash with each new contribution for the last 4-5 months because I'm feeling, if anything, the market might have been a little overoptimistic.

I've thought about investing the cash each time I put it in, but there's a nagging part of me thinking things will get cheaper fairly soon. If not, the vast majority of my portfolio rises and I'm happy. If it does, at least I have a little "dry powder" to use.

I'm not someone to dart in and out of being invested, but the last decade has taught me that valuations definitely matter, and the only reason I'm not a dirty market timer in the extreme is because "valuation" is an inexact science with a lot of moving parts that people much smarter than me haven't nailed down. But I am more conscious of it and am increasingly more willing to tweak my AA accordingly.

[FIREd]

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Originally Posted by ziggy29 ... I too have been accumulating cash with each new contribution for the last 4-5 months because I'm feeling, if anything, the market might have been a little overoptimistic. I've thought about investing the cash each time I put it in, but there's a nagging part of me thinking things will get cheaper fairly soon. If not, the vast majority of my portfolio rises and I'm happy. If it does, at least I have a little "dry powder" to use. I'm not someone to dart in and out of being invested, but the last decade has taught me that valuations definitely matter, and the only reason I'm not a dirty market timer in the extreme is because "valuation" is an inexact science with a lot of moving parts that people much smarter than me haven't nailed down. But I am more conscious of it and am increasingly more willing to tweak my AA accordingly.

I basically feel the same way you do.

[unclemick]

Pssst - Wellesley. I say again can you hear me?

The Norwegian translation - keep your portfolio yield up to 3%(or whatever your 'hard times' defense is in $) and watch the back door.

Stay balanced - agile, mobile and hostile.

Geaux Saints

heh heh heh - lest we forget Feb 7th is coming. Which reminds me - need to dress up my dividend stock defense - very carefully.

[easysurfer]

Dow ended down 3.5% in Jan '10.

[TheSweetLife]

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Originally Posted by REWahoo 0 for 3 and still swinging for the basement. I do admire your persistence...

Persistence is what got me to where I'm at today So glad I don't take myself, or others, too seriously. It's all good.

[Gone4Good]

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Originally Posted by haha He feels that retirees need to be much quicker to pull the sell trigger when the market reaches even lesser levels of overvaluation.

I don't think anyone would disagree with this, in theory. In practice, though, it has proven to be nigh impossible.

If you can tell me what the magic metric of overvaluation is that will allow me to sell my equities at the right time so that I enhance my risk adjusted returns then I'm with you 100%.

[haha]

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Originally Posted by . . . Yrs to Go I don't think anyone would disagree with this, in theory. In practice, though, it has proven to be nigh impossible. If you can tell me what the magic metric of overvaluation is that will allow me to sell my equities at the right time so that I enhance my risk adjusted returns then I'm with you 100%.

You have changed the question. The question Smithers addresses is whether a person living off his portfolio can afford to "maximize his risk adjusted returns." There is no magic metric, if there were it would cease working 2 weeks after being discovered. But if you believe that US stock markets are mean reverting around a long term value of Q ratio, or of PE10, then there are identifiable risky areas and less risky areas.

Few would dispute that over a very long time, stock markets deliver higher returns than high quality credit assets or cash. The goal is to use equity markets when they are a priori less risky, and to sell when they are overvalued. Smithers only says that a retired person, or a person near retirement should sell at a lower level of overvaluation than someone with 20+ years before he will need to take out funds. Clearly, the person who attempts to use this idea must believe that there is an objective criterion of value. This thinking is similar to card counting at Blackjack. You bet bigger when the deck is rich, and lay back when it is poor.

His books are a good introduction to this way of thinking, They are both very thought provoking. I don't want to debate this idea, he does it far better thanI could.

Ha