Is this rally for real?
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TheSweetLife
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"Sometime", meaning I'm not predicting an exact day, just a date range. Okay, S& P at 750 on one of the days between today and October 31, 2009. Isn't this board supposed to be fun, too 
haha
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I get nervous when we start ragging on someone who makes a bearish prediction. Looking back on Q3 2008 in this forum is not an edifying experience.
We rarely razz someone who predicts an up market. I grant that it may be hard to predict markets with anything close to pinpoint accuracy. Still, I am not convinced that we cannot benefit from ballpark guesses. One thing sure, although now may be a good time to be heavily into stocks, I was a lot happier with exposure back in March or Dec 08.
The roughly 6 months Q4 08 well into Q1 09 were not a happy time for me, and I don't want to repeat. I am still meaningfully down from fall 2007, but a lot of my portfolio damage has been repaired. The same disaster is not going to happen to me again.
Ha
We rarely razz someone who predicts an up market. I grant that it may be hard to predict markets with anything close to pinpoint accuracy. Still, I am not convinced that we cannot benefit from ballpark guesses. One thing sure, although now may be a good time to be heavily into stocks, I was a lot happier with exposure back in March or Dec 08.
The roughly 6 months Q4 08 well into Q1 09 were not a happy time for me, and I don't want to repeat. I am still meaningfully down from fall 2007, but a lot of my portfolio damage has been repaired. The same disaster is not going to happen to me again.
Ha
W2R
Moderator Emeritus
Ha, I don't think anybody is ragging on her for making a bearish prediction (at least, I know I'm not).
I would have responded in exactly the same way if she had predicted that the S&P would have increased 20% (from some unknown value) some (unknown) day or other between now and October 31st (of some unknown year, as one poster above pointed out).
To me that is no more a prediction than could be had from a Magic 8 ball. I think that TSL knows that and doesn't mind a little friendly chiding.
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haha
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Ha, I don't think anybody is ragging on him for making a bearish prediction (at least, I know I'm not).
I would have responded in exactly the same way if he had predicted that the S&P would have increased 20% (from some unknown value) some (unknown) day or other between now and October 31st (of some unknown year, as one poster above pointed out).
To me that is no more a prediction than could be had from a Magic 8 ball. I think that TSL knows that and doesn't mind a little friendly chiding.
Sorry for the misunderstanding WTR- I knew it was friendly. I feel sure that what s/he means is that some time between now and 10/31/2009 the market will be 20% lower than today's value. To me, if he happens to be correct, that is plenty specific enough to be helpful. Better to be approximately right than precisely wrong.
Ha
For me, when people are certain something is going to happen in a short time frame in the market, it sets off the red flags.
Sure, something like 'I predict the market will fluctuate' is always going to be right.
But the whole 'the market will be down 10% in 30 days' is speculation at best. And is never something I would base any investments on. I would say the same of someone saying 'the market will be UP 10% in 30 days'
Be diversified and capable of working through the dips (and peaks). Know your own risk tolerance, and research the stocks or funds you choose to invest in.
Sure, something like 'I predict the market will fluctuate' is always going to be right.
But the whole 'the market will be down 10% in 30 days' is speculation at best. And is never something I would base any investments on. I would say the same of someone saying 'the market will be UP 10% in 30 days'
Be diversified and capable of working through the dips (and peaks). Know your own risk tolerance, and research the stocks or funds you choose to invest in.
clifp
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I am thinking that TSL predictions are similar to Louis Rukeyser Elves index which according to Wikipedia was "the worst predictive records of any public index".
As for me I am stuck with the Dow 12,200 by the end of the year. Although, I think my other prediction of Paula Abdul leaving Idol after this season has a good chance of being right and was a fairly bold prediction.
As for me I fall back into the generally safe prediction of us being in a trading range around between 7500-9500
As for me I am stuck with the Dow 12,200 by the end of the year. Although, I think my other prediction of Paula Abdul leaving Idol after this season has a good chance of being right and was a fairly bold prediction.
As for me I fall back into the generally safe prediction of us being in a trading range around between 7500-9500
W2R
Moderator Emeritus
Oh clifp!! You say such sweet things.
Now if you stated any basis for your predictions, I'd appreciate them even more! (also, end of WHAT year?)
NW-Bound
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I never try to predict the percentage of gains and losses of the market. I have only tried to guess if it is going up or down and that is tough enough.
So, I don't know about Dow 12,200 by the end of 2009 (clifp), or S&P500 at 750 before the year end (TSL). The question to myself is "Is it more likely to go up or down?". And my answer to myself is "more likely to go UP". Note the word "likely", because if I were 100% sure, I would mortgage my 2 houses, then go on margin on top of that to make a hell of a killing.
Why do I think so? What I have seen is that so far in this earnings reporting season, many compamies have beaten their earnings estimates. Freeport-McMoran, a mining company, reported $1.38/share earning for last quarter, compared to the consensus estimate of $0.69.
Yesterday, Goldman Sachs strategists updated the aggregate 2009 earnings of S&P500 to $52, vs. their earlier estimate of $40. Hence, they called for S&P to be at 1060 at 2009 year end. Back early in the year, their estimate was 940 to go with the $40 estimated earnings. The S&P is already at 954.6 at today (7/21/09) close.
Details are here: S&P 500 to Rally Most Since 1982, Goldman Sachs Says (Update4) - Bloomberg.com. A few other investment firms have made similar upward revisions to their prediction.
It is interesting that Gary Shilling also used the S&P $40 earning estimate in this video:
YouTube - Market Outlook: S&P Will Decline This Year
In the above January 2009 video, he said that market would go down in 2009. He was proven right up until recently, as the market tanked badly in March. He was reported to be still bearish in another thread.
About the peril of making predictions, I wonder if anyone else remembers Ed Hyman of the ISI group. I knew of him from his TV appearances back in the Rukeyser days. Hyman was voted the #1 economist by institutional investors for many years, so I was interested in what he had to say. Alas, last year, he maintained that the US economy would still be growing at 1%, hence would not be technically in a recession. Of course, he was wrong. Oh well! A pundit is only as good as his most recent prediction.
One more thing about the US economy in gloom-and-doom. There are signs that other countries may stage a healthier recovery than we do. So, US companies that have a lot of international exposure may not do that bad. Companies such as Caterpillar, 3M, and Cummins have a lot overseas business. I recently learned that the last 2 have more than 60% of their sales abroad.
About politics, I may not agree with the gummint policies, but that does not mean US companies cannot prosper despite the "help".
Still 20% below my personal high watermark on Oct 31, 2007. Equities at 62% AA. I am still looking for a few more good companies to bring my stock AA higher, perhaps to 70%. Got to be careful, you know, with all the talk about the W-shaped recovery out there. I like the bears, even if I may not agree with them. If the whole world turned bullish, I would be selling.
So, I don't know about Dow 12,200 by the end of 2009 (clifp), or S&P500 at 750 before the year end (TSL). The question to myself is "Is it more likely to go up or down?". And my answer to myself is "more likely to go UP". Note the word "likely", because if I were 100% sure, I would mortgage my 2 houses, then go on margin on top of that to make a hell of a killing.
Why do I think so? What I have seen is that so far in this earnings reporting season, many compamies have beaten their earnings estimates. Freeport-McMoran, a mining company, reported $1.38/share earning for last quarter, compared to the consensus estimate of $0.69.
Yesterday, Goldman Sachs strategists updated the aggregate 2009 earnings of S&P500 to $52, vs. their earlier estimate of $40. Hence, they called for S&P to be at 1060 at 2009 year end. Back early in the year, their estimate was 940 to go with the $40 estimated earnings. The S&P is already at 954.6 at today (7/21/09) close.
Details are here: S&P 500 to Rally Most Since 1982, Goldman Sachs Says (Update4) - Bloomberg.com. A few other investment firms have made similar upward revisions to their prediction.
It is interesting that Gary Shilling also used the S&P $40 earning estimate in this video:
YouTube - Market Outlook: S&P Will Decline This Year
In the above January 2009 video, he said that market would go down in 2009. He was proven right up until recently, as the market tanked badly in March. He was reported to be still bearish in another thread.
About the peril of making predictions, I wonder if anyone else remembers Ed Hyman of the ISI group. I knew of him from his TV appearances back in the Rukeyser days. Hyman was voted the #1 economist by institutional investors for many years, so I was interested in what he had to say. Alas, last year, he maintained that the US economy would still be growing at 1%, hence would not be technically in a recession. Of course, he was wrong. Oh well! A pundit is only as good as his most recent prediction.
One more thing about the US economy in gloom-and-doom. There are signs that other countries may stage a healthier recovery than we do. So, US companies that have a lot of international exposure may not do that bad. Companies such as Caterpillar, 3M, and Cummins have a lot overseas business. I recently learned that the last 2 have more than 60% of their sales abroad.
About politics, I may not agree with the gummint policies, but that does not mean US companies cannot prosper despite the "help".
Still 20% below my personal high watermark on Oct 31, 2007. Equities at 62% AA. I am still looking for a few more good companies to bring my stock AA higher, perhaps to 70%. Got to be careful, you know, with all the talk about the W-shaped recovery out there. I like the bears, even if I may not agree with them. If the whole world turned bullish, I would be selling.
HFWR
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More useful info than where the S&P 500 might be is "what to do about it". Cash and equivalents, preferred stock, corporate/gumment/muni bonds, real estate, beever cheese...?
The financial markets consist of more than the S&P 500...
I'm not particularly optimistic, and I still see problems, especially too much debt: gumment, corporate, and consumer. Lots of excess inventory, but mostly in real estate. I think most corporations are lean and mean in that regard. "Structural" unemployment is probably 4-6% (swag), so everything above that is "real"... heh, heh
Edited to add: There's a lot of cash out there looking for yield...
I've been expecting rising inflation for several years, and, by golly, I'm still expecting it. Deflation wasn't even on my radar screen. Fooled me...
So, I've upped my allocation to cash and bonds, though in the longer term, say 3-5 years, I expect bonds and bond funds to take a hit as interest rates rise, so maybe cash is a better answer for that portion of the portfolio. I've reduced my allocations to what I considered more risky assets under the current environs, i.e. REITs and emerging markets.
To add an extra dimension, I've been wanting to gradually up the bond portion anyway, since I'm not getting any younger, and I'd rather end up with too little that none...
Crystal ball is obviously cloudy, so, I'm about 40% stock index funds, 37% bond index funds, 7% REIT, 5% CCF (PCRIX), and 10% cash and equivalents. Let the games continue...
The financial markets consist of more than the S&P 500...
I'm not particularly optimistic, and I still see problems, especially too much debt: gumment, corporate, and consumer. Lots of excess inventory, but mostly in real estate. I think most corporations are lean and mean in that regard. "Structural" unemployment is probably 4-6% (swag), so everything above that is "real"... heh, heh
Edited to add: There's a lot of cash out there looking for yield...
I've been expecting rising inflation for several years, and, by golly, I'm still expecting it. Deflation wasn't even on my radar screen. Fooled me...
So, I've upped my allocation to cash and bonds, though in the longer term, say 3-5 years, I expect bonds and bond funds to take a hit as interest rates rise, so maybe cash is a better answer for that portion of the portfolio. I've reduced my allocations to what I considered more risky assets under the current environs, i.e. REITs and emerging markets.
To add an extra dimension, I've been wanting to gradually up the bond portion anyway, since I'm not getting any younger, and I'd rather end up with too little that none...
Crystal ball is obviously cloudy, so, I'm about 40% stock index funds, 37% bond index funds, 7% REIT, 5% CCF (PCRIX), and 10% cash and equivalents. Let the games continue...
ziggy29
Moderator Emeritus
True, and these two things seem to be competing against each other for investment capital where equities are concerned; the former suggests "sell" and the latter suggests "buy" to some.
I've been noticing in the last few months that more and more people are sick and tired of earning 1% or less in cash and are starting to become more willing to put some at risk in order for higher expected return. I think that's at least some of the bounce in the markets since March -- that and the increasing belief that even if the economy still sucks, we averted the potential meltdown of the entire financial system that looked very possible 6-9 months ago.
But yeah, there are a lot of structural problems, and even though I think a mild recovery (or at least stabilization) is underway I don't see any catalyst for a major upswing in demand for "stuff". Perhaps some people are hoping that even if stocks flatline for a couple of years, dividend yields are higher than returns on cash. So I see no significant catalyst to continue stocks on the upswing, but as I mentioned earlier, even if they thrash and flatline for a while, dividend yields are higher than cash and eventually demand will recover, bringing stocks back with it.
FinanceDude
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I think this has the clear signs of a sucker rally.......
NW-Bound
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Why the sad face? If that's your belief, place your bet accordingly and you would do well.
In a way, FD is right! The S&P first reached the 900 levels in Nov 1997, proceeded to exceed 1500 in Aug 2000, before retreating back to 800 level in Sep 2002. It then climbed back to the 1500 level in Oct 2007, dropped below 700 in March this year, and ended back to the 900 level now.
So, surely, recently there was a long "sucker rally" from Nov 97 to Aug 2000, and another one from Sep 2002 to Oct 2007. A 3-yr sucker rally, and another 5-yr long. How long is this sucker rally going to last?
In a way, FD is right! The S&P first reached the 900 levels in Nov 1997, proceeded to exceed 1500 in Aug 2000, before retreating back to 800 level in Sep 2002. It then climbed back to the 1500 level in Oct 2007, dropped below 700 in March this year, and ended back to the 900 level now.
So, surely, recently there was a long "sucker rally" from Nov 97 to Aug 2000, and another one from Sep 2002 to Oct 2007. A 3-yr sucker rally, and another 5-yr long. How long is this sucker rally going to last?
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haha
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I understand the press of your question. However, today's economic, business and geopolitical situation is probably overall quite a bit worse. I at least am not expecting another run to 1500 any time soon.
Ha
By investing aggressively in late 2008 - early 2009, we were able to recoup much of our losses from the past 18 months. But I no longer feel as bullish as I did a few month ago. I like where our portfolio is right now and I have decided to keep our AA around 50/50. I am very ambivalent about the current situation and I think that prudence is probably the best course of action.
CuppaJoe
Moderator Emeritus
I don't usually check the numbers until the end of the month but I checked yesterday's numbers and everything I own was up, both stocks and bonds. The last time I noticed that the DOW was hovering in the mid-13,000s. I'm not saying that hasn't happened other times, I just happened to notice it then and now and for some reason it scared me both times.
Moemg
Gone but not forgotten
I also went pretty aggressive to recoup my losses . I am pretty close to my goal so I'll soon re balance down to 60/40.
W2R
Moderator Emeritus
Wheee!!!! Dow over 9000 at the moment. 
I don't even *care* if it is a sucker's rally. This is so cool!! Recession? WHAT recession? (just kiddin' around)
I don't even *care* if it is a sucker's rally. This is so cool!! Recession? WHAT recession?
(just kiddin' around)
NW-Bound
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Oh my! Here we go again. 
ziggy29
Moderator Emeritus
I'm not normally much of a dirty market timer, but it's really starting to feel like it's time to take a little off the table...
Uh-oh. SELL!!!!!
Wheee!!!! Dow over 9000 at the moment.
Uh-oh. SELL!!!!!
NW-Bound
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Well, I have around 100 stock positions, and they are all up at this moment except 3.
Soooo, which ones do I sell? The ones that W2R holds?
Soooo, which ones do I sell? The ones that W2R holds?
FUEGO
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Everyone is going to do the dow 9000 dance, maybe get a little exuberant and then we'll just be back to TheSweetLife's down 20%. Or is it 25% now?
Seriously, it is kinda scary looking at the chart since July 10. 13 days and we are up 11% already. 9 business days of gains every day. I guess we had similar charts on the way down back in late 2008 and early 2009. Eventually it will level off, maybe go down.
I had to LOL at the dow jones index page at yahoo finance. The two top headlines are "Dow 10,000 by end of year" and "Dow 15,000 here we come!". If that isn't a sell indicator, I don't know what is! Where were these prognosticators on March 6 at dow 6,400?
Seriously, it is kinda scary looking at the chart since July 10. 13 days and we are up 11% already. 9 business days of gains every day. I guess we had similar charts on the way down back in late 2008 and early 2009. Eventually it will level off, maybe go down.
I had to LOL at the dow jones index page at yahoo finance. The two top headlines are "Dow 10,000 by end of year" and "Dow 15,000 here we come!". If that isn't a sell indicator, I don't know what is!
Where were these prognosticators on March 6 at dow 6,400?
ziggy29
Moderator Emeritus
I heard yesterday that the Nasdaq has been up for 11 straight days (working on a 12th now unless we sell off). That hasn't happened since the tech bubble days of 1998, apparently...
NW-Bound
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How about the times the market went down for weeks straight?
Isn't it fair that investors get compensated for that now?
Isn't it fair that investors get compensated for that now?
CuppaJoe
Moderator Emeritus
Don't mind me but if some of us sell now, it again will be the bears and he bulls duking it out, stocks up/down, up/down and on and on. It still looks like a buying opportunity to me, with the DOW under 10,000 and the S&P under 1000.
Yes, I could go ahead and but I'm holding.
Yes, I could go ahead and
but I'm holding.Similar threads
