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Move Aside for Fiscal Cliff
Old 09-16-2012, 09:29 PM   #1
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Move Aside for Fiscal Cliff

I am dollar cost averager/passive investor at heart....BUT, you have to be blind to see that over the next few months there is going to be an all-out political/retorical battle concerning US tax policy and the debt ceiling.

My predictions:
1. whatever can be kicked down the road to avoid making a decision...will
2. both sides are going to talk non-stom about the doom and gloom that will ensue if the other side does not compromise
3. US credit will be derated again
4. big time political rails (home mortgage deductions, SS, capital gains, medicare, etc) will be grabbed ahold of and threatened to any special interest group which votes can be gathered

QE3 has been announced and we are seeing the markets surge ahead on this news.

My Question - why is this NOT a good time to pull $ out of the market and wait for the inevitable market pullback?
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Old 09-16-2012, 10:14 PM   #2
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Of course Congress is pretty much useless. But are you really that confident in your crystal ball that you are willing to toss aside your asset allocation discipline? Most people adhere to such strategies to keep them from making foolish, emotional decisions.
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Old 09-16-2012, 10:15 PM   #3
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DMT alert!!!!!
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Old 09-16-2012, 10:28 PM   #4
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Quote:
Originally Posted by UnderTheRadar View Post
My Question - why is this NOT a good time to pull $ out of the market and wait for the inevitable market pullback?
Because you could be wrong?

From Peter Lynch:

Quote:
Far more money has been lost by investors preparing for corrections or trying to anticipate corrections than has been lost in corrections themselves.
Just for the record - I have no idea where the markets will be at year end or at any other future time.
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Old 09-16-2012, 10:43 PM   #5
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Basically the question on the US credit rating is compared to what other country? Europe even Germany is questionable, Japan is a wreck, so you have Switzerland, which is not big enough to absorb the amount required.
Since it appears the ratings agencies do not grade on a curve but appear to have absolute standards what happens when there is insufficient AAA capacity to meet demand? Of course on the US credit rating is that in dollars or Swiss Francs? For US dollars as many have pointed out they can be generated as needed. Perhaps no value but there will likley never be a default. Soverign defaults always involve foreign currency.
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Old 09-16-2012, 10:44 PM   #6
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Originally Posted by UnderTheRadar View Post

My Question - why is this NOT a good time to pull $ out of the market and wait for the inevitable market pullback?
Because the market could continue going up for many more months?
Because the 'inevitable pullback' could be of limited size and duration?
Because once you are out it's tough to know when to get back in?
Because the market rarely does what you think it will when you think it will?

Shall I go on?
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Old 09-17-2012, 12:44 AM   #7
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And because this is a known, it is already priced into the market.
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Old 09-17-2012, 05:10 AM   #8
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What will the correction be? If we synchronize all of our crystal balls, will they be more accurate?

Seriously, it is true that the market will retreat given the recent upward momentum. We just did a mini-re balance and moved 1% of certain stock mutual funds into guaranteed interest. Allocation was getting too astray, so we acted.
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Old 09-17-2012, 06:24 AM   #9
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I posed a similar question on the debt ceiling last February or so. I wondered whether, when, if we should make a market timing temporary move toward cash in anticipation of a reaction to the pseudo crisis. In the event I did nothing, the market dropped and then it recovered. This time I expect something similar. We will likely go over the falls at the end of the year because a new Congress is on the way and we won't go completely to hell before they can pass some temporary fixes. The likelihood is some big swings but then, who knows. Electoral changes may motivate action in the final weeks of the year leading to a jubilant bull.
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Old 09-17-2012, 10:57 AM   #10
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I"m wondering if there is someone who keeps track of all these 'end-of-the-world-as-we-know-it' predictions.
Y2K, Global cooling (c 1970), Fiscal Cliff, Prop 13, 2 1/2, Overpopulation, AIDS, SARS, etc etc etc (yes, AIDS was supposed to modify itself and eventually be contracted through sneezing; like a cold)

Look, we just got out of the worse financial crash in (most of) our lifetimes and NOBODY SAW IT COMING.
It was bad, but we're all still here, most of us still chugging along, going on vacation, eating out, buying stuff. If we survived that, we can manage anything.

With 60 years under my belt, I'm getting too old to worry about the next big disaster that never comes.

Go make a martini and chill.
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Old 09-17-2012, 11:18 AM   #11
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What if one is not in at all ..........YET?
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Old 09-17-2012, 12:11 PM   #12
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All the more reason to DCA as a way to tune out all the "what ifs?"

Not only that but to be satisfied with the psychology of DCAing in that if the market goes up, fewer shares are bought. If the market goes down, more shares are bought.
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Old 09-17-2012, 01:04 PM   #13
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I'm surprised the market hasn't reacted (negatively) yet. I suppose it was too busy waiting/hoping for QE3. September is supposed to be the "worst month" - yet not so far this year! It's only 7 weeks to election day, yet the markets aren't showing any apparent anxiety about fiscal outcomes. I suppose "rescue" is built in at the moment? Then again, do all the fireworks happen AFTER the elections?

Maybe I'm not the only one who is boycotting the news......

Regardless, there is no way to know how it will all work out until we get there.
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Old 09-17-2012, 01:13 PM   #14
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the end is near !

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Old 09-17-2012, 01:26 PM   #15
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the end is near !


It's time for his M & M's (meds and martini)

Make mine a double

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Old 09-17-2012, 02:46 PM   #16
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the end is near !

Looks like a young Mel Brooks...
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