Correction Imminent?

[eytonxav]

I think W2R has shown great restraint, as I thought we would hear the dreaded whee days ago. At least I may shortly get to redeploy some cash.

 

[FinanceDude]

I think it is more likely we will see 13,000 than 14,000 in the near future. I would not mind being wrong, but there is little empirical data to suggest that things are "much better", so I feel the euphoria recently has little basis in fact. An uptick in new and existing home sales has helped, but as some point the Fed will have to allow interest rates to increase to slow the inflation storm, and that does not bode well for the stock market........

 

[bondi688]

Finance Dude
The historical, and to a large extent anomalously low interest rate was introduced after the dot.com bubble bursted and 9/11, and was partly responsible for bringing on the housing bubble. The low rate persisted after the housing market and the general economy collapsed in 2008. With the huge sovereign debt many countries, including the US, face, the Central Banks are acting to keep interest rate artificially low. But somehow this historical anomaly is considered the new normal. The world's economy and the stock markets were functioning perfectly well in the 1990's when interest rate was at historical normal range and you can get a 3+% return interest with your money market account.

 

[Dawg52]

It has been a good run. I reallocated a week ago to more bonds and felt ok about until I read the "get crushed in bonds" thread.

Hard not to find a thread or a TV talking head that won't ruin your day. Of course I'm a full time wuss.......

 

[NW-Bound]

I think the economy is improving, albeit at a slow pace that some people might say it does not justify the stock market rise.

However, assets are priced relative to one another, and equities may rise because people feel they are the lesser of the alternative evils, such as cash, bonds, gold, etc...

 

[Midpack]

I think the economy is improving, albeit at a slow pace that some people might say it does not justify the stock market rise.

However, assets are priced relative to one another, and equities may rise because people feel they are the lesser of the alternative evils, such as cash, bonds, gold, etc...

And P/E ratios help sort things out too. Great thing about the market, always overcorrects at both extremes...

 

[NW-Bound]

Yes, looking back, I can see the P/E at either extreme in the past, and kick myself for not having the audacity to go all in or all out. Yes, hindsight is always great.

The P/E is within reasonable range now, so I feel comfortable holding 70% equities at this point.

 

[bondi688]

Why S&P 1500 May Signal Stock Rally Has Peaked

The market does not go up in a straight line. I fully anticipate a pullback, but the question is for how much and how long would the correction be?

 

[audreyh1]

I think it is more likely we will see 13,000 than 14,000 in the near future. I would not mind being wrong, but there is little empirical data to suggest that things are "much better", so I feel the euphoria recently has little basis in fact. An uptick in new and existing home sales has helped, but as some point the Fed will have to allow interest rates to increase to slow the inflation storm, and that does not bode well for the stock market........

Seriously? It's only 125 points away - not much of a gap for the DOW to fill.

 

[NW-Bound]

As I am not an indexer, and hold much equity in sectors and international markets that have been lagging the S&P the last 2 years, I think they are valued stocks and represent a hedge against the S&P pulling back.

Could very well be that I am fooling myself, but an investor has to believe in something.

Even if a guy holds 100% CD, he is still believing in something, and it just happens that I do not share that belief.

 

[foxfirev5]

I really am a stay the course type person. However that "whee" proclamation has me deeply concerned today. Not quite to my rebalance bands but maybe it's no time to be greedy.

 

[REWahoo]

I really am a stay the course type person. However that "whee" proclamation has me deeply concerned today. Not quite to my rebalance bands but maybe it's no time to be greedy.

Or maybe it's no time to deviate from your AA plan - or why have it?

 

[foxfirev5]

Or maybe it's no time to deviate from your AA plan - or why have it?

Thanks for the voice of reason. You're right, stick to the plan. I guess maybe the boredom of a cold winter day got the best of me.

 

[bondi688]

2 different takes of the market rally

Dow Nears Record, but Is It Just Another Bubble? - Yahoo! Finance

Blankfein: Rally on Despite 'People Under-Invested' - Yahoo! Finance

 

[NW-Bound]

I really am a stay the course type person. However that "whee" proclamation has me deeply concerned today. Not quite to my rebalance bands but maybe it's no time to be greedy.

I think it's OK to be afraid. See below.

If you think THIS was bad, just wait....

Evil Laugh Sound Effect - Novaction SoundFX © 2013 - YouTube

Even if a guy holds 100% CD, he is still believing in something, and it just happens that I do not share that belief.

Talk about beliefs, a friend of mine was fond of saying "I believe I will have another beer".

And he always held true to that belief.


PS. Seriously, we may have different reasons for holding, but I am not selling nor buying nor rebalancing anything at this point.

 

[frayne]

I think we are all exposed to way too much financial porn and some get bit by the analysis paralysis bug. Yea we may be hitting new highs but look at the trend since 1929, and we are always going to be hitting new highs. Isn't that the direction we should be going over the long term ? Barring an major international event I see slow steady growth at least for the short term. The big unknown is how the US government is going to address the growing debt issue. Just my two cents and I am a died in the wool indexer and after getting a 11% return last year, I'd be happy for a repeat.

 

[RonBoyd]

I think we are all exposed to way too much financial porn and some get bit by the analysis paralysis bug. Yea we may be hitting new highs but look at the trend since 1929, and we are always going to be hitting new highs. Isn't that the direction we should be going over the long term ? Barring an major international event I see slow steady growth at least for the short term. The big unknown is how the US government is going to address the growing debt issue. Just my two cents and I am a died in the wool indexer and after getting a 11% return last year, I'd be happy for a repeat.

+1 (And I might add that dips --read "bubble bursts" -- are also the "norm." At least it has been in my lifetime. If you are down to your final five years* and there is only a $25,000 balance in your Portfolio, then you may (repeat, may) have cause for some concern. Otherwise, just think of it as "business as usual."

*Say, for instance, you are 90-95 years old and no longer feel like you are in your fifties.

 

[HighRoller]

I think the economy is improving, albeit at a slow pace that some people might say it does not justify the stock market rise.

That's my feeling......

 

[audreyh1]

A great deal of uncertainty was removed from the US economy and market on Jan 1 and again this past week. The global macro outlook seems to be less uncertain as well. Don't underestimate the power of less uncertainty. Don't be surprised if animal spirits continue for a while. Animal spirits are rarely justified, yet they happen all the same.

Doesn't anyone remember how black things looked just a few weeks ago?

 

[rembrandt]

Here we go again. Another pump and dump scheme, and the sheeple will get slaughtered.

 

[jollystomper]

My guess (and only a guess) is that the next likely time of market turmoil will come when the sequestration issue needs to be addressed (or, more likely, kicked further down the road).

I'm enjoying my gains but don't expect them to grow like this for the rest of the year. I simply maintain my AA and have enough invested that I'm willing to continue to weather short term moves for long term gains.

 

[audreyh1]

IMO people (and investors) were really depressed and expecting the worst last year - especially late in the year. We got past the end of the world, and things aren't looking quite so dark. IMO it'll take a while for investors to get used to this newer rosier outlook. Some folks are probably just now getting their 401K statements and realizing 2012 was actually a good year! That tends to turn people bullish. Once the good news and expectations are completely baked in, then you run out of ammo to move markets higher.

Not that we might not see the 2013 highs in Jan, but I think it takes longer for these kinds of collective emotions to shake out.

 

[REWahoo]

Not that we might not see the 2013 highs in Jan, but I think it takes longer for these kinds of collective emotions to shake out.

My experience is an upward market can continue to climb for many, many months beyond what you would expect - and the same holds true for a declining market.

Wouldn't surprise me to see an upward tend continue into 2014 or beyond* - not that there won't be some bumps along the way.

*My market predictions are 98.4% inaccurate.

 

[Major Tom]

I still remember my early days as an "investor" (for want of a better description) when I thought that markets continued going up, and never corrected.

I'm glad I learned that lesson early on

 

[bondi688]

My experience is an upward market can continue to climb for many, many months beyond what you would expect - and the same holds true for a declining market.

Wouldn't surprise me to see an upward tend continue into 2014 or beyond* - not that there won't be some bumps along the way.

*My market predictions are 98.4% inaccurate.

That bull started its run in March, 2009. Let's hope it is not thinking about ER anytime soon.