Finally, the market is getting back to normal

[kyounge1956]

My cheap version of this is to go down to the local recycling center and chuck glass bottles into the bins really hard. 'Course, you gotta make sure you don't miss!

LOL! Obviously you have me completely outclassed in the frugality department.

 

[NW-Bound]

In case you had any doubt in the accuracy of my new theory that down is the new up, just look at today's returns. +500k jobs lost last month but we're up 250 points. That's change you can believe in.

Yes, I hope more people will appreciate this movement.

Earlier this week, the NBER has declared that we entered into a recession in Dec 07. It's been a year. Stock market probably is already at the bottom, although unemployment will continue to rise well into next year. In all previous recessions, the stock market always leaded the unemployment. I do not see why it should be different this time.

 

[Midpack]

Earlier this week, the NBER has declared that we entered into a recession in Dec 07. It's been a year. Stock market probably is already at the bottom, although unemployment will continue to rise well into next year. In all previous recessions, the stock market always leaded the unemployment. I do not see why it should be different this time.

Is the NBER also the governing body for economic expansions?

If so, does this mean when the recovery happens, we won't know it until a year later?

Dang!!!! I guess I'll stay invested since we're not going to know things have turned around until long after it happens. I'll be FI and not even know it...

 

[NW-Bound]

You have not been selling recently, have you?

Investing takes a strong stomach. We all think we are tough, until the bullets start whizzing above our heads.

I still got some cash, being below my usual 70% equity AA. But I will restrain myself from buying until next year. If the economy has really bottomed and truly picks up, I will look into sectors that usually lag in the recovery.

If things get worse, well, I can always share the "head banging" emoticon with Dawg.

 

[freebird5825]

Green is such a lovely color...
Indexes, Barometer and Sector Delta

 

[ziggy29]

I still got some cash, being below my usual 70% equity AA. But I will restrain myself from buying until next year. If the economy has really bottomed and truly picks up, I will look into sectors that usually lag in the recovery.

Same here. I know I should be rebalancing, but I'm going to wait until the start of January. For one thing, that's when I usually rebalance. For another, I smell the potential for a lot of tax-loss selling and hedgies and institutions trying to finalize the leverage off their books before years end.

For that reason I just don't feel like this month will end well, today's rally notwithstanding. Still, if we get the tax loss selling and the hedge fund selling out of the way, it could set up for one heck of a January effect as long as Q4 earnings aren't much worse than the current pathetic revisions expect.

 

[Gone4Good]

In case you had any doubt in the accuracy of my new theory that down is the new up, just look at today's returns. +500k jobs lost last month but we're up 250 points. That's change you can believe in.

It's always a good sign when stocks can rise on bad news. It means a lot of pessimism is already priced in to the market. Not only is a 500K job loss a huge number in and of it self, it was almost 200k more than "street" expectations. By any standard, this was a huge miss . . . but somehow stocks were better on the day. Although I'm afraid we're still closer to the "end of the beginning" than the beginning of the end of this crisis, I like today's stock action better than any of the much larger one day gainers we've had recently.

 

[NW-Bound]

Not only is a 500K job loss a huge number in and of it self, it was almost 200k more than "street" expectations. By any standard, this was a huge miss . . . but somehow stocks were better on the day.

But the drop of the market is also huge. Nobody expects so many stocks to get to mid single-digit P/E's either.

So, I hope the market god calls it even and cuts us some slack.

 

[newporttony]

I am getting the sense that the bottom is near by the level of hysteria that accompanied the jobs report:


This is almost indescribably terrible. In the past six months the U.S. has lost 1.55 million jobs, almost as many as were lost in the whole 2001 recession, which included 9/11 and the two months after. The pace of job losses is accelerating alarmingly, as this report attests, with steep drops in most sectors but the biggest deterioration in services — down 370,000 in November after 153,000 in October. Note education/health and governmentt added 59,000, so core private payrolls even worse than headline. Desperate. –Ian Shepherdson, High Frequency Economics

These are god-awful numbers. The economy is headed downhill and the brakes are not working. There are so many layoff announcements that it is hard to keep track of. Some businesses are cutting jobs in anticipation of tougher times. This is especially true for retail, manufacturing and finance, which accounts for the bulk of jobs in the country. They want to trim fats and stay lean and mean for the tough times ahead. Also, business spending will be a drag on the economy in the foreseeable future. –Sung Won Sohn, Smith School of Business and Economics

This was much worse than was expected and represents wholesale capitulation. The threat of a widespread depression is now real and present. –Peter Morici, University of Maryland

 

[Bikerdude]

It's always a good sign when stocks can rise on bad news. It means a lot of pessimism is already priced in to the market. Not only is a 500K job loss a huge number in and of it self, it was almost 200k more than "street" expectations. By any standard, this was a huge miss . . . but somehow stocks were better on the day. Although I'm afraid we're still closer to the "end of the beginning" than the beginning of the end of this crisis, I like today's stock action better than any of the much larger one day gainers we've had recently.

Probably just a bear market bounce due to an over sold market. I don't think we are in a new "bull" yet.

 

[NW-Bound]

Probably just a bear market bounce due to an over sold market. I don't think we are in a new "bull" yet.

I myself simply hope that we thread water for a while. As long as I do not set a new personal "low", which coincided with the market on Nov 20, I am OK with it. I won't be buying nor selling for a while, sitting at around 50% equity right now.

 

[Gone4Good]

Probably just a bear market bounce due to an over sold market. I don't think we are in a new "bull" yet.

Probably, but we won't know until after the fact. Unemployment is always a trailing indicators while the stock market looks ahead. While my guess is we won't see a sustained rally for some time, we could be at a market plateau, which would be a welcome change from the vertical down market we've been experiencing.

 

[Zoocat]

I wonder why so many rely on the adage: the market bottoms when the hysteria gets manic. Who came up with that? Why do you believe it unequivicably? I know that people behave predictably and perhaps behavioral economics plays into this theory.

But there is the possibility, and not exactly remote either, that things are going to get worse next year and the market, reacting to further corporate losses, unemployment, foreclosures, state government insolvency, and more federal bailouts, may decide to anticipate even worse returns and fall further.

then there's the international component. I don't even want to speculate there.

Just throwing it out there. I think it's a problem (and a danger) to rely on old homilies to explain past markets during an unpredictable crisis like this one.

 

[MichaelB]

I wonder why so many rely on the adage: the market bottoms when the hysteria gets manic. Who came up with that? Why do you believe it unequivicably? I know that people behave predictably and perhaps behavioral economics plays into this theory.

But there is the possibility, and not exactly remote either, that things are going to get worse next year and the market, reacting to further corporate losses, unemployment, foreclosures, state government insolvency, and more federal bailouts, may decide to anticipate even worse returns and fall further.

then there's the international component. I don't even want to speculate there.

Just throwing it out there. I think it's a problem (and a danger) to rely on old homilies to explain past markets during an unpredictable crisis like this one.

Hi Oldbabe

I think there is some truth to the adage. It's the final irrationality that creates much of the subsequent opportunity. Problem is, it's hard to tell the difference between rational pessimism and fear driven panic until after the fact. Beforehand they both look quite similar.

I find it very helpful to filter out most of the opinions and pronouncements and listen to just a few - but listen to them over long periods of time. I also look for opinions made by people that seem to share similar risk tolerance.

Michael

 

[Midpack]

I wonder why so many rely on the adage: the market bottoms when the hysteria gets manic. Who came up with that? Why do you believe it unequivicably? I know that people behave predictably and perhaps behavioral economics plays into this theory.

But there is the possibility, and not exactly remote either, that things are going to get worse next year and the market, reacting to further corporate losses, unemployment, foreclosures, state government insolvency, and more federal bailouts, may decide to anticipate even worse returns and fall further.

then there's the international component. I don't even want to speculate there.

Just throwing it out there. I think it's a problem (and a danger) to rely on old homilies to explain past markets during an unpredictable crisis like this one.

There is evidence to support the adage, but this time it 'could be different' as you suggest. And I don't think most of us are discounting the possibility that things could get worse before they get better.

Fortunately most of us on this forum are not kids anymore and we've seen these things play out over and over, not only with markets/investments but countless other areas. And so we've all come to realize a convincing case can (and will) be made for anything along the continuum between unbridled optimism and paralyzing pessimism. Since no one has a crystal ball, this is a debate between glass half full and glass half empty...have at it.

 

[Dawg52]

I've done a much better job of avoiding watching doom and gloom tv this past week. Haven't read much on it here either. Staying busy with my work project and making a little money, which is a good thing. Heck, yesterday was the first day I looked at my brokerage account all week. Feel much better about it all too. The knots on my head are slowly going away.

I do still take my meds.

 

[Spanky]

Heck, yesterday was the first day I looked at my brokerage account all week. Feel much better about it all too.

I looked at the mine on Friday. It was still way down -- cannot honestly say that I feel good about it.

 

[Dawg52]

I looked at the mine on Friday. It was still way down -- cannot honestly say that I feel good about it.

I didn't mean about my balance, just feel better about everything because I'm not looking at my balance often or doom and gloom tv.

 

[Moemg]

I looked at the mine on Friday. It was still way down -- cannot honestly say that I feel good about it.

I do not feel good about my balance but it is what it is . When I retired I had a lot of surplus built into my budget so my lifestyle will not change . I've cut back on my travelling but now I'm rethinking that because I'd rather go now while I'm still able to enjoy it.

 

[Frugality_of_Apathy]

In case you had any doubt in the accuracy of my new theory that down is the new up, just look at today's returns. +500k jobs lost last month but we're up 250 points. That's change you can believe in.

Unfortunately this is always the way it is. Wall Street doesn't care about jobs they care about profits.

It's always been the case that when a company's profits forcast falls short their stock drops but when they announce that they are laying off half their employees the stock will shoot right back up ensuring the CEO a nic bonus from the board of directors that year.

Investors are so short sighted, all they see is less employees to pay= bigger profits that year! they don't really care that they just cut production by 50% so next year they are going to make far less money unless they lay off more people. Works great when you're at the helm of a company you didn't build up and you aren't going to be with when times get too bad. Bad for the economy though.

 

[haha]

I wonder why so many rely on the adage: the market bottoms when the hysteria gets manic. Who came up with that? Why do you believe it unequivicably? I know that people behave predictably and perhaps behavioral economics plays into this theory.

You underestimate us by saying that we rely on old homilies. Most of us have seen this over and over; this is no homily, it is an understanding of what tends to happen.

Speaking for myself only, I know that stocks can continue to go down. But one should make the decision before she goes out on the field- I am going to play, or I want to stay on the sidelines. If she is going to play, play hard when the deck is rich. Not the time to take a potty-break.

Ha

 

[Zoocat]

I hope no one felt I was questioning their intelligence. But I have learned, through hard experience, to question and be skeptical. Especially of those who seem so certain they are right. I think this economic downturn has re-emphasized my skepticism.

 

[Sparky]

Normal? I heard that the average 4% gain or loss in the market in the last 60 years happened about once every 500 days. However, since September 2008, that has happened about once every 3 days. You tell me about normal...

 

[haha]

I hope no one felt I was questioning their intelligence. But I have learned, through hard experience, to question and be skeptical. Especially of those who seem so certain they are right. I think this economic downturn has re-emphasized my skepticism.

It is always wise to be skeptical of others. For the most part I too feel that what is said here or anywhere else should be taken with a grain of salt. But that leaves you with two choices- either work out your own framework for investing, or stick to a very conservative allocation and never change it, or only change it only on some age-related schedule that you work out in advance of stress. What you probably should not do is change to a more conservative plan because equity quotes are down. I guess one exception might be if you know you could still survive on whatever you still have, and you have no faith that you could hang on until your networth recovers. I would do almost anything to avoid being caught in this position.

I want to be very clear. I am not sure that I am right to currently have a constructive posture toward the equity markets. What I am sure of is that based on past history the odds now favor investment in equities, rather than dis-investment. If you want to say past history may not count, I have to admit that you are right in this statement.

But I am a practical person and I have to work with what I have, so I am pretty much all in. What I can do now if I want to increase exposure is trade speculative bonds for stocks, but I probably won't. My committment to equities may be excessive, but I doubt that my timing will turn out to be wrong given a little time.

I know for sure that if I ever was willing to be close to 100% invested, now would likely be a good time. And prior to this recent meltdown, I haven't been willing to be 100% invested since 2004 or 2005. So far this time around I made one clear mistake- I underestimated how far down many excellent companies might go.

If anyone is interested, I have commented on stocks and investments from time to time. It's all here. I am definitely not a perma-bull, at least with regard to investing.

Ha

 

[Bestwifeever]

Also it's been discussed here (as well as written about in the news) the market may recover well in advance of the rest of the economy. So yes, the US stock market could have hit bottom already even if the next year or two are tougher than this one.