Is this rally for real?

[Steve O]

Here's a little look at what I think is really going on

Ellen Brown: JPMorgan vs. Goldman Sachs: Why the Market Was Down for 7 Days in a Row

[ziggy29]

Quote:

Originally Posted by Steve O Here's a little look at what I think is really going on Ellen Brown: JPMorgan vs. Goldman Sachs: Why the Market Was Down for 7 Days in a Row

Unreadable, IMO. She needs to learn how to use paragraphs.

[Gone4Good]

Quote:

Originally Posted by Steve O Here's a little look at what I think is really going on Ellen Brown: JPMorgan vs. Goldman Sachs: Why the Market Was Down for 7 Days in a Row

Quote:

A split has occurred between the paper forces of Goldman Sachs and JP Morgan Chase. Mr. Volcker represents Morgan interests. Both sides are Illuminists . . .

So the markets are down because there is a rift among the Illuminati?

Oh boy.

[Gone4Good]

Quote:

Originally Posted by haha 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.

I agree. However the "long run" is very long indeed. By those measures the market has been at least 33% overvalued since 1992.

Just for kicks, here are the statistics regarding the ending balance (as of Dec 2009) of a $1MM portfolio on a 4% withdrawal rate for a retirement starting in each of those years (1992-2009).

Stock/Bond . . . .. 75/25% .. . . . .. 50/50% .. . . . . 25/75%
Mean . . . . . .. . 1,086,917 . . . . .. .1,037,101 . . . . .964,243
Median . . . . . . . . 854,526 . . . . . .. . 888,757 .. . . .909,818
Min . . . . . . .. . . . . 532,342 . . . .. . . .657,455 . . . . .774,381
Max . . . . . . .. .. 1,899,128 . . . . . . 1,561,032 . . . 1,215,082

Seems pretty balanced, notwithstanding that 10 of those years had valuations (26+ PE-10) at least 33% above current levels.

[haha]

You pays your money, and you take your choice.

Ha

[NW-Bound]

The return numbers all look good. They include the good years from 1992 to 2000, however. Will we get something like that again? It is anyone's guess.

[ziggy29]

Quote:

Originally Posted by NW-Bound The return numbers all look good. They include the good years from 1992 to 2000, however. Will we get something like that again? It is anyone's guess.

Of course, they also include the (collectively) unusually bad years of 2000-2008.

[Gone4Good]

Quote:

Originally Posted by NW-Bound The return numbers all look good. They include the good years from 1992 to 2000, however. Will we get something like that again? It is anyone's guess.

Yeah, but anything that includes 1992-2000 also includes 2000-2009. Meanwhile you also have numbers for periods from 2000-2009 and 2007-2009.

To replicate the 2000-2009 decline from a valuation perspective we'll need to see the PE-10 drop to 8.6x.

[Gone4Good]

Quote:

Originally Posted by ziggy29 Of course, they also include the (collectively) unusually bad years of 2000-2008.

Yeah, what he said.

[NW-Bound]

Yes, but I looked at the period of 2000 to 2009 as a "break even" period. Good periods interspersed with break-even ones I can take.

[NW-Bound]

Yes, it depends on where one starts his or her retirement.

"Some guys have all the luck
Some guys have all the pain
Some guys get all the breaks" - Rod Stewart

YouTube - Rod Stewart - Live (HQ) Some Guys have all the Luck

[Gone4Good]

In case anyone is keeping score . . .

Q4 GDP 5.7% - better than expected
Q4 GDP inventory contribution - smaller than expected
S&P Q4 Earnings - 77% beating expectations (so far)
S&P Q4 Revenues - 68% beating expectations (so far)
January ISM Manufacturing Report 58.4% - better than the highest estimate and best reading since 2004

[ziggy29]

Yeah, it's hard to misinterpret the numbers of the second half of 2009 -- technically, the recovery is well underway.

But if the jobs don't follow -- and I mean private sector job, not temporary stimulus make-work jobs -- it won't last long.

And watch state and municipal budgets in the year to come. Many of them are teetering on the brink and if the recovery doesn't take hold in the form of increased tax revenues, more shoes will drop.

[NW-Bound]

Quote:

Originally Posted by . . . Yrs to Go In case anyone is keeping score . . . Q4 GDP 5.7% - better than expected Q4 GDP inventory contribution - smaller than expected S&P Q4 Earnings - 77% beating expectations (so far) S&P Q4 Revenues - 68% beating expectations (so far) January ISM Manufacturing Report 58.4% - better than the highest estimate and best reading since 2004

Yeah, tell me about it, someone who has 71% in equities. I am taking a bit more risk than other people, willing to bet that the global economy, not just the US, is recovering. But the market has been down (correcting?) the last couple of weeks, and that bothered me. What if I am wrong? What if the "all-knowing" and "efficient" market knows something I don't?

Still not selling anything. Have not for quite a while, and in fact I have been adding to my position in an electronic passive component maker (well-known to EEs), which has been beaten down really bad in 2008-2009.

[CCdaCE]

Quote:

Originally Posted by easysurfer Dow ended down 3.5% in Jan '10.

So much for the January effect. Hehe.

-CC

[Notmuchlonger]

Quote:

Originally Posted by CCdaCE So much for the January effect. Hehe. -CC

What happened in 2009?

[CCdaCE]

'09 sucked too. Have to go back to '07 to get a positive return in Jan for the DOW (and it wasn't much).

2009 -6.0

2008 -4.66

2007 +1.17

2006 +0.33

Might be a day off, here or there, but you get the idea.

-CC

[NW-Bound]

Would anyone volunteer to look even further back to see if this January effect was ever true? Could it be that once too many knew about it, it stopped working.

I notice that in 2009 and this year, the market rallied the first week or two, then faded. So it is now only the "first-half of January effect".

Soon, it will be just the first two days of January, then only the first hour of trading!

[audreyh1]

From what I have read, it's true 2 out of 3 times. That's better than 50% which is considered good enough.......

Audrey

[CCdaCE]

I think you're exactly right NW-Bound. It was true at one point, then it stopped working. I recall seeing something on M*/Diehards/Bogleheads that it was true in the ... 80's?.

Here's a link.

-CC