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Old 02-03-2018, 12:33 PM   #101
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Bull or bear 3x ETF? It makes a big difference.
That's the $64,000 question.

I'm thinking heads=long, tails=short.
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Old 02-03-2018, 12:43 PM   #102
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It came with big drops in housing prices, plenty of foreclosures, and unemployment exceeding 10%.
Hey! My sob story tops yours and I am sticking to it!
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Old 02-03-2018, 12:57 PM   #103
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There is an extreme confidence in stocks issued throughout this thread that is interesting to me from a investment indicator view. The anguish of 2009 has been utterly vanquished, though our hero’s at the Federal Reserve still bear the weight of 4.5 Trillion in debt purchased (equal to 60% of all US government debt issued at our optimistic outlook of October 2007) they used to pull us upon their shoulders from the mortgage mania investing malaise, and no dispersal of the burden of that debt appears to be forthcoming.
+1, the extreme confidence is interesting to me also. 2008/2009 seems to be a distant memory for a whole lot of folks.
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Old 02-03-2018, 01:07 PM   #104
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Well, January 31 was my annual rebalancing day and it took my AA down from 66% stocks to my target of 60% -- so I guess I was a little lucky to take a little off the table...
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Old 02-03-2018, 01:37 PM   #105
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That's the $64,000 question.

I'm thinking heads=long, tails=short.
Only $64K? Then, you have not bet enough. Multiply that by 10x, then we are talking.
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Old 02-03-2018, 02:38 PM   #106
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An interesting quote from Jonathan Clements:

Quote:
The dice have no memory. The coin can’t recall the last toss. And the stock market doesn’t care about your investment history.
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Old 02-03-2018, 03:31 PM   #107
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Also enjoying the "show", especially the ridiculous media commentary. But remembering the important things: I'm apparently over the cold/flu/sinus infection (at least until it comes round again, if it does), and Im' upright and breathing. this last especially in the light of just hearing about a former mega corp colleague who succumbed to the flu at only age 66. Very nice guy too.

Also, its very early in whatever this is going to be. Dip, correction, bear, whatever.
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Old 02-03-2018, 03:34 PM   #108
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Here's a good, current visualization of how long it has been since a correction https://www.yardeni.com/pub/sp500corrbear.pdf. The coloring choice is pretty bad - bluish purple are corrections greater than 5%, and pinkish purple are bears.

Figure 1 (2008-2018) is pretty, Figure 2 (2000-2009) is ugly.

Nothing but up since January 2016.

Those where great graphs of history. Thnaks
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Old 02-03-2018, 03:43 PM   #109
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Being a car guy, I need to know what you bought!

I have a 2009 Pontiac Solstice with over 400 WHP that I only put 600 miles on last year. Living in Ohio and having kids makes it very difficult to get it out. The good news is, my parents are moving to Arizona in 3 months and I'm secretly giving it to my Dad. He worked 47 long years and doesn't like spending money, but he won't have a choice in the matter
I bought a certified pre-owned 2016 Audi TTS. Powerful and really fun to drive. All wheel drive for getting around here and up my steep drive. Red leather interior. The nav/infotainment system is fantastic. 12 speakers and only 2 usable seats. 6:1 speaker-to-seat ratio is about right

I love buying CPO. The car was 18 months old when I got it with ~17K miles on it. I got it for ~25% below MSRP with a four year warranty and the first $1500 of maintenance included (which was actually an accident...dealer didn't realize the car came with that until we were finalizing the paperwork).

Those Solstice's are really cool. 400 HP on that little car? You could probably put swings on it and make it fly.
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Old 02-03-2018, 04:03 PM   #110
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This thread reminds me of the threads and posts in October of 2007 and the flak I encountered when a member posted that he was already 100% in stocks and wished he had more money to invest after the “correction” of the first few days of October — the stock market had fallen in the summer about 10% and then rose back to the level it had been and began to fall off in October and I merely posted that is how markets top, when everyone who wants to buy has their stock quota. By 2009 most of the confidence had been eroded by the large losses, however the bond component really kept portfolios from disaster. There is an extreme confidence in stocks issued throughout this thread that is interesting to me from a investment indicator view. The anguish of 2009 has been utterly vanquished, though our hero’s at the Federal Reserve still bear the weight of 4.5 Trillion in debt purchased (equal to 60% of all US government debt issued at our optimistic outlook of October 2007) they used to pull us upon their shoulders from the mortgage mania investing malaise, and no dispersal of the burden of that debt appears to be forthcoming.
It's funny you posted this. Earlier today I was going to post about hitting a all time high in March 2008, and being down 37% less than a year later, and with that I was outperforming the market by quite a lot. Those folks out there thinking down 3.85% from the SP 500 means "time to buy" may be right or may not be right this time. Regardless, I know that when the peak is eventually reached that much of that late money will be flushed out on the way down, and those thinking they can buy the dip (catch the falling knife) will find their fingers sliced right off.

I'm still betting (with my $) that the peak hasn't been seen. Having said that, I have been a net seller over the last six months trying to nudge my equity allocations down and will continue to do so a little at a time. No need to be a pig.
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Old 02-03-2018, 05:10 PM   #111
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This is a short term blip, and it's an opportunity to buy. Maybe it will slip further, but not for long.

Other than inflation, there is nothing keeping this equities market down. And inflation may even propel it further.
  • Taxes are cut beginning this month, giving millions of Americans more money to spend.
  • Millions of employees received $1,000 bonuses that otherwise would not have. Most of that money will be spent.
  • Many companies have announced expanding operations in the US. That is money to be spent too.
  • The USD is/was getting weaker, making non-USD purchases more expensive. It will create a more competitive environment for US companies.
  • Corporate taxes have been cut, which should increase profitability and therefore make shares cheaper in terms of PE ratios.
  • Even if companies do more stock purchases, it results in higher demand for shares and less stock shares available. Both increase price.
  • Consumer confidence is high, that translates to spending and increases sales and profits for companies.

The market was over-bought. It is digesting the gains. Waiting too long to pounce will result in buying at a higher price than before the small correction.
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Old 02-03-2018, 06:07 PM   #112
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This is a short term blip, and it's an opportunity to buy. Maybe it will slip further, but not for long....
All solid observations and I think you are correct. While the market can move strongly on bursts of emotion, in the long run it reflects the economy at large, which is still improving. When the LEI turns down, then the bear will come.
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Old 02-03-2018, 07:03 PM   #113
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Seriously, I do not see anything yet that can cause the market to drop as it did in 2002 or 2008. It's just the high valuation that only needs a nudge to trigger a correction.

That said, looking forward we will not have the outrageous increase of the last couple of years. The prospect of improving economy is already baked into the price. So, more volatility, but not substantially higher highs.

I will look at these gyrations as opportunities to trade in/out a bit to pick up a bit more money, as the return looking forward will be ho hum as Bogle and many others have said (and they were made fun of).
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Old 02-03-2018, 08:00 PM   #114
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All solid observations and I think you are correct. While the market can move strongly on bursts of emotion, in the long run it reflects the economy at large, which is still improving. When the LEI turns down, then the bear will come.
Personally, I think all the good news possible and then some has been already been baked into the 2017 early 2018 rally, including low interest rates and low inflation. Now there will be headwinds, IMO.
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Old 02-03-2018, 08:28 PM   #115
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Talking Heads

Virtually every talking head expert predicted a great 2018 and that the bubble would continue throuhgout this entire year. Now, these same experts are saying they saw it coming and "it was long overdue". Like I always say about people who claim to be able to predict the future: "where were they on 9/10 ?"
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Old 02-03-2018, 09:08 PM   #116
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My point exactly. 2016 may seen like a long time since a correction, but if you compare the 2011 to 2015 period, that was even longer. We got close in 2012, but 2012, 2013, 2014 didn't have them, so that annual 10% correction rule has not held this decade as we've only had four so far: 2010, 2011, 2015 and 2016. Technically a correction is a 10% decline or more as Yardeni notes below the graph.

But you are right in that there haven't even been 5% drops since early 2016.
Looks like there wasn't a down 10% decline from 2004 through 2007 either.

I always wondered where that 10% decline happening every year on average rule came from when I heard it. It must have been a 20th century pattern.

Oh wait - there were big gaps in the 1990s too!
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Old 02-03-2018, 09:11 PM   #117
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Though I did almost spit out my coffee yesterday when someone replied to a comment I made in reddit and told me I'd be stupid not to be in gold and he just hopes and prays when this market crashes I don't need to go back to work.

oh boy, has this guy been holding onto gold since it hit $2000 and still waiting for a rally?
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Old 02-03-2018, 09:24 PM   #118
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Seriously, I do not see anything yet that can cause the market to drop as it did in 2002 or 2008. It's just the high valuation that only needs a nudge to trigger a correction.

That said, looking forward we will not have the outrageous increase of the last couple of years. The prospect of improving economy is already baked into the price. So, more volatility, but not substantially higher highs.

I will look at these gyrations as opportunities to trade in/out a bit to pick up a bit more money, as the return looking forward will be ho hum as Bogle and many others have said (and they were made fun of).
I think a 2% growth rate is baked in. We are now headed for 3.5% growth, even as much as a 5.4% growth as indicated by the first quarter numbers.

If the economy grows at 4% for an extended period of years, we have a lot more upside in this market. We are over-extended a bit now, but with a sustained 4%+ growth rate you better fasten your seat belt.
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Old 02-04-2018, 12:06 PM   #119
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I am seriously considering taking our RMDs tomorrow. Our returns ytd are stellar and if Friday reflects a change in market direction having extra cash in a taxable account will give us the opportunity to buy back at a lower price point. Another option would be to convert RMDs to cash in the tIRAs and let that $ sit earning interest in a money market account until there is something I want to buy in our taxable account.

We aren't big spenders as you can see that interest growing tax free in our tIRAs is worthy of taking into account.

What would you do?
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Old 02-04-2018, 12:26 PM   #120
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I am seriously considering taking our RMDs tomorrow. Our returns ytd are stellar and if Friday reflects a change in market direction having extra cash in a taxable account will give us the opportunity to buy back at a lower price point. Another option would be to convert RMDs to cash in the tIRAs and let that $ sit earning interest in a money market account until there is something I want to buy in our taxable account.

We aren't big spenders as you can see that interest growing tax free in our tIRAs is worthy of taking into account.

What would you do?
You can always convert to enough cash inside your IRA to cover your RMD. Then pull it out anytime during the year.

Sorry, I see you already listed this as your second option.
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