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This current market....
Old 09-21-2015, 12:28 PM   #1
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This current market....

Upfront:
Yes, I know the current (bear?) market has me frustrated
Yes, I know that the 130 year trend is a steady upward move
Yes, I know that thinking "this time is different" is suicide
Yes, I know the following is more of a cathartic rant than a question.

But. Seems that over the past year or so, there has been a real trend in the market that overlooks any good news and just focuses on anything bad.

"If it were not for..." Greece, China, Russia, Syria, Ukraine, oil up/oil down, Fed up/Fed holding, VW, good/bad weather, on and on, we'd be in good shape.

My view is that the overall economy is improving and that pent-up good news on earnings, performance and other factors would eventually mitigate the bad news.

It just seems that regardless of how strong a positive there is, some very minor negative wipes out what should've been a decent week. Week after week it seems we keep getting nailed by an often insignificant issue.

I keep waiting for the market to look at the results from a wide range of companies and say "let's not worry about that minor snowstorm in Ecuador...things are good".

Does anyone else feel that the market is just looking for 'sell' reasons? Or, as is often the case, I'm just out in the weeds here?

Maybe I just need someone to calm me down..........
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Old 09-21-2015, 12:33 PM   #2
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Don't look. That has worked pretty well for me.
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Old 09-21-2015, 12:50 PM   #3
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I can't figure out the market - so I stopped trying. Like you, I used to expect movement based on certain economic news.... Nope - it's a complete disconnect.

Same with the Fed... I really don't understand a) why the market is so connected to the fed interest rates and b) why the fed is so connected to market gyrations. Seems like all the other indicators provided green lights to raise the interest (lower unemployment, minimal inflation, etc.) But the fed seems afraid to raise the rates because it might trigger selloff... so that in turn, triggers sell off. The market and fed seem to be too tightly coupled in a feedback loop.
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Old 09-21-2015, 01:02 PM   #4
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Originally Posted by marko View Post
... Does anyone else feel that the market is just looking for 'sell' reasons? Or, as is often the case, I'm just out in the weeds here?

Maybe I just need someone to calm me down..........
No, I do not want people to calm down. I want them to go freakin' nuts and sell.

Let's get the market to crash hard to get this over with. I have seen 2 crashes in the last 15 years, what's another one?

This time will be different, I swear. I still have 40% cash, and this time I will go "all in".
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Old 09-21-2015, 01:08 PM   #5
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There's a good case to be made for thinking the market will do just fine, because it is looking to sell all the time. It's when the market is looking to buy all the time that it runs into trouble.
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Old 09-21-2015, 01:15 PM   #6
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This time will be different, I swear. I still have 40% cash, and this time I will go "all in".
That might be my signal to sell....
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Old 09-21-2015, 01:16 PM   #7
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This time will be different, I swear. I still have 40% cash, and this time I will go "all in".
That's exactly what's keeping the market from that third crash.
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Old 09-21-2015, 01:21 PM   #8
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That might be my signal to sell....
I would go all in if the market dropped to 50% from its high, like in late 2002 and early 2009.

Sure, go ahead and sell in that market condition. I guess I would have to go on margin after being "all in". Somebody will have to buy from you to keep up liquidity.
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Old 09-21-2015, 01:22 PM   #9
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That's exactly what's keeping the market from that third crash.
But I am not buying yet. Not enough fear in the market. Need more blood in the streets. Need to see more posters lamenting about cutting back travel, doing OMY, etc...
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Old 09-21-2015, 01:41 PM   #10
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I feel euphoria each time the market, or rather my portfolio, makes a new high. But then I realize that I have not made anything unless I sell. It could all evaporate tomorrow. But I cannot sell, because what would I do then? When would I get back in. So my euphoria evaporates and gives way to fear that it is going to fall.

Then on those days when the market (and my portfolio) are making new lows, I am depressed that I won't have as much to spend next year, but then start feeling good that the market is at a more stable P/E ratio, maybe more stable.

Then I realize. I won't know if I have won the game until the day I die. But then I won't know either, I will be dead.

So I guess until then I will just lie in my hammock and forget the whole thing. I am still alive, still have enough to eat, places to go, things to see, people to talk to. Life is good.
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Old 09-21-2015, 01:50 PM   #11
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I still remember the 25% down day way back when....

I have watched off and on what the financial pundits say... during most of the years I have been watching, there has been negative news... it is not 'new' that the market only looks for negatives... the only time I can remember most things being mostly positive was during the dot com run up...

But somehow the market keeps going up over time... despite all the negatives... so I just keep my investments where they are and reap the rewards...

BTW, I am negative over the last 12 months.... does not make me feel good, but I am not going to 'get out' due to a correction (which usually comes once a year, not every 5 years)....
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Old 09-21-2015, 02:04 PM   #12
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The problem with the market is that sort term people vote with emotion but over the longer term it follows fundamentals. So if you have a 20 year horizon then you can invest based on what you expect earnings will do but when you have a short term horizon it behaves more like high school popularity contest. And guess what, it is us that feed that beast. For one, I tend to get a lot more anxious when I have a 10% drop that impacts by 6 figures than I did when I had 25K in the market. Starts adding up to real $$, at least to me.


One other reason that good news doesn't show up in market numbers is that today, we have had what 7-8 years of a bull market ? I think I heard this has been the 2nd longest bull in history without a 10% correction, or something like that. we have had a good run since 2008 so if this time isn't any different, then we should be due or overdue for a bear market, mild recession, some period of other than up up up. I think many are looking to avoid a loss that would come with a bear market or a short recession, and see it behind all these events that otherwise may be so significant.
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Old 09-21-2015, 02:09 PM   #13
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Same with the Fed... I really don't understand a) why the market is so connected to the fed interest rates
Not sure if that was a question, but fed interest rates are important since it regulates inflation and most other interest rates.

Higher interest rates in general push up bond rates and lower profits (companies pay more interest on borrowings). This makes bonds more attractive vs. stocks (earnings yield).

At least, that's the theoretical line of thinking. Crowd responses are a mystery to us all.
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Old 09-21-2015, 02:33 PM   #14
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Not sure if that was a question, but fed interest rates are important since it regulates inflation and most other interest rates.

Higher interest rates in general push up bond rates and lower profits (companies pay more interest on borrowings). This makes bonds more attractive vs. stocks (earnings yield).

At least, that's the theoretical line of thinking. Crowd responses are a mystery to us all.
See - that makes sense. But the market sold off when the Fed kept the zero interest rate thing going last week. The market reacts to the Fed - but not always logically.

Crowd response I guess explains it... Since I lean towards INTJ - I guess I don't like crowds.
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Old 09-21-2015, 03:08 PM   #15
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See - that makes sense. But the market sold off when the Fed kept the zero interest rate thing going last week. The market reacts to the Fed - but not always logically.
The market did not "sold off" last week. It simply returned to where it was at the beginning of the week after going up in anticipation of the FOMC meeting. Since the meeting changed nothing, the market went back to where it was before the anticipation gains during the week. That seemed very logical to me.

The market will only go up on very good news. On bad news it goes down. On no news it goes down. The market just gets wound up like a spring waiting for some good news. No good news, the market goes down.

And don't forget that "the market" is really made up of people and computers trading stocks. Can you figure out the psychology of the market by figuring out the comments of people on this forum? I think so.
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Old 09-21-2015, 03:15 PM   #16
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Originally Posted by RetireBy90 View Post
The problem with the market is that sort term people vote with emotion but over the longer term it follows fundamentals. So if you have a 20 year horizon then you can invest based on what you expect earnings will do but when you have a short term horizon it behaves more like high school popularity contest. And guess what, it is us that feed that beast. For one, I tend to get a lot more anxious when I have a 10% drop that impacts by 6 figures than I did when I had 25K in the market. Starts adding up to real $$, at least to me.


One other reason that good news doesn't show up in market numbers is that today, we have had what 7-8 years of a bull market ? I think I heard this has been the 2nd longest bull in history without a 10% correction, or something like that. we have had a good run since 2008 so if this time isn't any different, then we should be due or overdue for a bear market, mild recession, some period of other than up up up. I think many are looking to avoid a loss that would come with a bear market or a short recession, and see it behind all these events that otherwise may be so significant.
Well we did get our >10% correction, so at least that clock restarted.
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Old 09-21-2015, 03:17 PM   #17
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Quote:
Originally Posted by marko View Post
Upfront:
Yes, I know the current (bear?) market has me frustrated
Yes, I know that the 130 year trend is a steady upward move
Yes, I know that thinking "this time is different" is suicide
Yes, I know the following is more of a cathartic rant than a question.

But. Seems that over the past year or so, there has been a real trend in the market that overlooks any good news and just focuses on anything bad.

"If it were not for..." Greece, China, Russia, Syria, Ukraine, oil up/oil down, Fed up/Fed holding, VW, good/bad weather, on and on, we'd be in good shape.

My view is that the overall economy is improving and that pent-up good news on earnings, performance and other factors would eventually mitigate the bad news.

It just seems that regardless of how strong a positive there is, some very minor negative wipes out what should've been a decent week. Week after week it seems we keep getting nailed by an often insignificant issue.

I keep waiting for the market to look at the results from a wide range of companies and say "let's not worry about that minor snowstorm in Ecuador...things are good".

Does anyone else feel that the market is just looking for 'sell' reasons? Or, as is often the case, I'm just out in the weeds here?

Maybe I just need someone to calm me down..........
I think the market got ahead of itself after the big run up in 2013, so from here I don't expect much as the good economic news is already baked in IMO.

At least we got past the 10% correction, not that there won't be a retest.
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Old 09-21-2015, 04:24 PM   #18
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Yes, the market has gone up quite a bit the last few years, and is currently fully valued. That's how I have cut back my stock AA from 80% in 2010 down to 60% now. A big move up is highly unlikely, but a crash is not likely either. Whichever it moves is fine with me. I will buy or sell as I see fit.

Quote:
Originally Posted by CaliforniaMan View Post
I feel euphoria each time the market, or rather my portfolio, makes a new high. But then I realize that I have not made anything unless I sell. It could all evaporate tomorrow. But I cannot sell, because what would I do then? When would I get back in. So my euphoria evaporates and gives way to fear that it is going to fall.
So, we should sell some. But we don't, because greed is still stronger than fear.

Quote:
Then on those days when the market (and my portfolio) are making new lows, I am depressed that I won't have as much to spend next year, but then start feeling good that the market is at a more stable P/E ratio, maybe more stable.
And we should buy. But we don't, because we have no cash, or we are afraid the market will drop more. Our fear at this point is stronger than greed.

Quote:
Then I realize. I won't know if I have won the game until the day I die. But then I won't know either, I will be dead.
Even before I die, unless it's a sudden death, I will be bedridden and in misery for a while (hopefully not for long). I doubt I care about the market at that point.

But until then, I still find the market interesting, and follow it. I no longer watch the financial TV, but reading the threads here is enough. When it's time to buy, hopefully I will not miss it.

Quote:
So I guess until then I will just lie in my hammock and forget the whole thing. I am still alive, still have enough to eat, places to go, things to see, people to talk to. Life is good.
I just came back from TotalWine. I went there to look at some bottles that I reseached online, and just ordered a few cases for my daughter's wedding. I am going to sample them to make sure there are no surprises. And I even picked up a bottle of Cognac and one aņejo Tequila for myself.

Now, I surfed the forum and looked at the market again. Life's indeed good.
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Old 09-21-2015, 04:26 PM   #19
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Originally Posted by RetireBy90 View Post
The problem with the market is that sort term people vote with emotion but over the longer term it follows fundamentals. So if you have a 20 year horizon then you can invest based on what you expect earnings will do but when you have a short term horizon it behaves more like high school popularity contest. And guess what, it is us that feed that beast. For one, I tend to get a lot more anxious when I have a 10% drop that impacts by 6 figures than I did when I had 25K in the market. Starts adding up to real $$, at least to me.


One other reason that good news doesn't show up in market numbers is that today, we have had what 7-8 years of a bull market ? I think I heard this has been the 2nd longest bull in history without a 10% correction, or something like that. we have had a good run since 2008 so if this time isn't any different, then we should be due or overdue for a bear market, mild recession, some period of other than up up up. I think many are looking to avoid a loss that would come with a bear market or a short recession, and see it behind all these events that otherwise may be so significant.
Good input. And thanks!

One reason I wonder about an overdue bear market is the current unusual circumstance where so much cash remains on the sidelines since 2008.
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Old 09-21-2015, 04:34 PM   #20
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Once I started focusing on building income instead of capital gains, I was able to see steady progress every year since then. Even during the scariest parts of the last recession.

Once I started focusing on income I no longer dreaded down/flat markets. On the contrary those are the easiest times to find opportunities. My biggest issue is finding reasonable investments during bull runs, but even then I can find good deals if I am willing to go deeper (sectors, and then individual companies).

It's only during down markets that broad indexes are worth buying. The lower the market goes the more broad my investments can become. When its a bull market I get forced into smaller and smaller pockets until I'm finally left looking only at individual companies, as there is always a crisis somewhere that I can use to buy at a reasonable price.

The recent downturn in oil has allowed me to go long on the MLP index (AMLP). If the market as a whole would tank I could start putting money into VYM (vanguard high div yield index). If it really tanks hard then I buy VIG (vanguard div appreciation index).

There's always something out there to buy if you are flexible.
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